PILGRIM'S PRIDE CORPORATION
SECOND AMENDMENT TO SECURITY AGREEMENT
RE: ACCOUNTS RECEIVABLE, FARM PRODUCTS AND INVENTORY
Reference is hereby made to that certain Security Agreement Re:
Accounts Receivable, Farm Products and Inventory dated as of May 27, 1993,
as amended (the "SECURITY AGREEMENT"), from the undersigned, Pilgrim's
Pride Corporation, a Delaware corporation (the "COMPANY") to Harris Trust
and Savings Bank, not individually but as agent (the "AGENT") for itself
and such other lenders (collectively the "BANKS" and individually a "BANK")
which from time to time become parties to that certain Secured Credit
Agreement dated as of May 27, 1993, as amended and restated pursuant to the
Amended and Restated Secured Credit Agreement dated as of August 11, 1997,
as amended, among the Company, the Agent and the Banks (the "CREDIT
AGREEMENT"). All defined terms used herein shall have the same meanings as
in the Security Agreement unless otherwise defined herein.
Concurrently herewith, the Company, the Agent and the Banks are
amending the Credit Agreement to permit the Company to enter into accounts
receivable securitization transactions from time to time. Also
concurrently herewith the Company and Pilgrim's Pride Funding Corporation,
a Delaware corporation ("FUNDING CORP.") are entering into a Purchase and
Contribution Agreement pursuant to which the Company will sell to Funding
Corp. all or substantially all of the Company's Receivables. Funding Corp.
will then sell an undivided interest in all of such Receivables to Pooled
Accounts Receivable Capital Corporation ("PAR CAPITAL") pursuant to a
Receivables Purchase Agreement among the Company, Funding Corp., PAR
Capital and Nesbitt Burns Securities, Inc. In connection with the
amendment to the Credit Agreement described above and the sales described
above the Company has requested that the Agent release its security
interest in the Company's Receivables under the Security Agreement and the
Agent is willing to do so, all on the terms and conditions set forth
herein. Accordingly, the Agent and the Company hereby agree as follows:
1. The Agent hereby releases the security interest granted to it by
the Company pursuant to the Security Agreement in any and all right, title
and interest of the Company, whether now owned or existing or hereafter
created, acquired or arising, in and to the following (the "RELEASED
COLLATERAL"):
(a) all Receivables (as hereinafter defined) of the Company that
are sold or purported to be sold by Company to PPFC pursuant to the
Purchase and Sale Agreement (the "SOLD RECEIVABLES");
(b) all Related Security with respect to Sold Receivables;
(c) all monies due or to become due with respect to any of the
foregoing;
(d) all books and records related to any of the foregoing; and
(e) all proceeds of any of the foregoing (as defined in the
applicable UCC) including without limitation, all funds which are
received by Company, the PPFC or the Servicer, from or on behalf of
the Obligors in payment of any amounts owed (including without
limitation, finance charges, interest and all other charges) in
respect of any Sold Receivable, or are applied to such amounts owed by
the Company (including without limitation, insurance payments, if any,
that Company or the Servicer applies in the ordinary course of its
business to amounts owed in respect of any Sold Receivable).
As used herein, the following terms shall have the following meanings:
"CONTRACT" means, with respect to any Sold Receivable, any and
all contracts, understandings, instruments, agreements, invoices,
notes, or other writings pursuant to which such Sold Receivable arises
or which evidences such Sold Receivable or under which an Obligor
becomes or is obligated to make payment in respect of such Sold
Receivable.
"OBLIGOR" means, with respect to any Sold Receivable the Person
obligated to make payments pursuant to the Contract relating to such
Sold Receivable.
"PAR" means Pooled Accounts Receivable Capital Corporation, a
Delaware corporation, as purchaser under the Receivables Purchase
Agreement.
"PERSON" means an individual, partnership, corporation (including
a business trust), joint stock company, trust, unincorporated
association, joint venture, limited liability company or other entity,
or a government or any political subdivision or agency thereof.
"PILGRIM'S PRIDE" means Pilgrim's Pride Corporation, a Delaware
corporation.
"PPFC" means Pilgrim's Pride Funding Corporation, a Delaware
corporation.
"PURCHASE AND SALE AGREEMENT" means that certain Purchase and
Sale Agreement dated as of June __, 1998, between Company and PPFC, as
amended, supplemented, amended and restated or otherwise modified from
time to time.
"RECEIVABLE" means any indebtedness and other obligations owed to
the Company or any right of the Company to payment from or on behalf
of an Obligor, whether constituting an account, chattel paper,
instrument or general intangible, arising in connection with the sale
of goods or the rendering of services by the Company, and includes,
without limitation, the obligation to pay any finance charges, fees
and other charges with respect thereto. Indebtedness and other
obligations arising from any one transaction, including, without
limitation, indebtedness and other obligations represented by an
individual invoice or agreement, shall constitute a Receivable
separate from a Receivable consisting of the indebtedness and other
obligations arising from any other transaction.
"RECEIVABLES PURCHASE AGREEMENT" means that certain Receivables
Purchase Agreement dated as of June __, 1998 among Company, as
servicer, PPFC, as seller, PAR, as purchaser and Nesbitt Burns
Securities Inc., as agent for PAR.
"RELATED SECURITY" means, with respect to any Sold Receivable:
(i) all of the Secured Party's interest in any goods, and
documentation or title evidencing the shipment or storage of any
goods, relating to any sale giving rise to such Sold Receivable;
(ii) all other security interests or liens and property
subject thereto from time to time purporting to secure payment of
such Sold Receivable, whether pursuant to the Contract related to
such Sold Receivable or otherwise, together with all UCC
financing statements or similar filings signed by an Obligor
relating thereto; and
(iii) all guaranties, indemnities, insurance and other
agreements (including the related Contract) or arrangements of
whatever character from time to time supporting or securing
payment of such Sold Receivable or otherwise relating to such
Sold Receivable whether pursuant to the Contract related to such
Sold Receivable or otherwise.
"SERVICER" means Pilgrim's Pride, as initial Servicer together
with its successors and permitted assigns in such capacity.
2. The term "COLLATERAL" as used in the Security Agreement shall no
longer include the Released Collateral.
3. Intentionally Omitted.
4. Intentionally Omitted.
5. Intentionally Omitted.
6. Without limiting the foregoing, the Company hereby agrees that,
notwithstanding the execution and delivery hereof, (i) all rights and
remedies of the Agent under the Security Agreement, (ii) any liens or
security interests created or provided for thereunder except liens and
security interests in the Released Collateral, and (iii) all obligations of
the Company thereunder are, and as amended hereby shall remain, in full
force and effect for the benefit and security of all the Secured
Obligations. Nothing herein contained shall in any manner affect or impair
the liens and security interest created and provided for by the Security
Agreement as to the indebtedness which would be secured thereby prior to
giving effect hereto.
7. The Company hereby repeats and reaffirms all covenants,
agreements, representations and warranties contained in the Security
Agreement as supplemented hereby, each and all of which covenants,
agreements, representations and warranties are and shall remain applicable
to the Collateral and all the Secured Obligations.
8. The Company hereby represents and warrants to the Banks that as
of the date hereof and as of the time that this Amendment becomes
effective, each of the representations and warranties set forth in the
Security Agreement as amended hereby are and shall be and remain true and
correct and the Company shall be in full compliance with all of the terms
and conditions of the Security Agreement as amended hereby and no event of
default under the Security Agreement as amended hereby, or any other event
which with the lapse of time, the giving of notice or both would constitute
such an event of default, shall have occurred and be continuing.
9. Reference to this specific Amendment need not be made in any
note, document, letter, certificate, the Credit Agreement, the Term Credit
Agreement, the Reimbursement Agreement, the Security Agreement or any
communication issued or made pursuant to or with respect to the Credit
Agreement, the Term Credit Agreement, the Reimbursement Agreement, or the
Security Agreement, any reference to the Security Agreement being
sufficient to refer to the Security Agreement as amended hereby.
10. This Amendment may be executed in any number of counterparts, and
by the different parties on different counterparts, all of which taken
together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each
of such counterparts shall for all purposes be deemed to be an original.
This Amendment shall be governed by the internal laws of the State of
Illinois.
Upon execution hereof by the Agent and the Company in the manner
hereinafter set forth, this Amendment shall be a contract between said
parties for the purposes hereinabove set forth.
Dated as of June __, 1998.
PILGRIM'S PRIDE CORPORATION
By
Its________________________________
HARRIS TRUST AND SAVINGS BANK,
individually and as Agent
By
Its_______________________________
PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of June 26, 1998
among
PILGRIM'S PRIDE FUNDING CORPORATION
and
PILGRIM'S PRIDE CORPORATION
TABLE OF CONTENTS
SCHEDULES
SCHEDULE 5.13 Office Locations
SCHEDULE 5.14 Trade Names
EXHIBITS
EXHIBIT A Form of Purchase Report
EXHIBIT B Form of Company Note
EXHIBIT C Form of Opinion of Originator's Counsel
PURCHASE AND CONTRIBUTION AGREEMENT
THIS PURCHASE AND CONTRIBUTION AGREEMENT (as amended, supplemented
or modified from time to time, this "AGREEMENT"), dated as of June 26,
1998, is between PILGRIM'S PRIDE CORPORATION, a Delaware corporation
(APILGRIM'S PRIDE@), individually as the Originator (the "ORIGINATOR")
and as the initial Servicer and PILGRIM'S PRIDE FUNDING CORPORATION, a
Delaware corporation (the ACOMPANY@), as purchaser and contributee.
DEFINITIONS
Unless otherwise indicated, certain terms that are capitalized and
used throughout this Agreement are defined in EXHIBIT I to the
Receivables Purchase Agreement of even date herewith (as amended,
supplemented or otherwise modified from time to time, the "RECEIVABLES
PURCHASE AGREEMENT"), among the Company, Pilgrim's Pride, as initial
Servicer, POOLED ACCOUNTS RECEIVABLE CAPITAL CORPORATION (the
"PURCHASER"), and NESBITT BURNS SECURITIES, INC., as agent for Purchaser
(together with its successors and assigns, the "AGENT").
BACKGROUND
1. The Company is a special purpose corporation, all of the
capital stock of which is wholly-owned by Pilgrim's Pride.
2. In order to finance their respective businesses, the Originator
wishes to sell certain Receivables and Related Rights from time to time
to the Company, and the Company is willing, on the terms and subject to
the conditions set forth herein, to purchase such Receivables and Related
Rights from Originator.
3. The Company intends to sell to Purchaser an undivided variable
percentage interest in its Receivables and Related Rights pursuant to the
Receivables Purchase Agreement in order to finance its purchases of
certain Receivables and Related Rights hereunder.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE AND CONTRIBUTE
I.1. AGREEMENT TO PURCHASE AND SELL. On the terms and subject to the
conditions set forth in this Agreement (including ARTICLE IV), and in
consideration of the Purchase Price, Originator agrees to sell to the Company,
and does hereby sell to the Company, and the Company agrees to purchase from
Originator, and does hereby purchase from Originator, without recourse and
without regard to collectibility, all of Originator's right, title and interest
in and to:
(a) each Receivable of Originator that existed and was owing to
Originator as of the close of Originator's business on June 25, 1998
Closing Date") (other than the Receivables and Related Rights contributed
by Originator to the Company pursuant to Section 3.1 (the "CONTRIBUTED
RECEIVABLES"));
(b) each Receivable created or originated by Originator from the
close of Originator's business on the Closing Date to and including the
Purchase and Sale Termination Date;
(c) all rights to, but not the obligations under, all Related
Security;
(d) all monies due or to become due with respect to any of the
foregoing;
(e) all books and records related to any of the foregoing; and
(f) all proceeds thereof (as defined in the UCC) received on or
after the date hereof including, without limitation, all funds which
either are received by Originator, the Company or the Servicer from or on
behalf of the Obligors in payment of any amounts owed (including, without
limitation, finance charges, interest and all other charges) in respect
of Receivables, or are applied to such amounts owed by the Obligors
(including, without limitation, insurance payments, if any, that
Originator or the Servicer (if other than Originator) applies in the
ordinary course of its business to amounts owed in respect of any
Receivable).
All purchases and contributions hereunder shall be made without recourse,
but shall be made pursuant to and in reliance upon the representations,
warranties and covenants of Originator set forth in this Agreement and
each other Transaction Document. The Company's foregoing commitment to
purchase such Receivables and the proceeds and rights described in
SUBSECTIONS (C) through (F) of this SECTION 1.1 (collectively, the
"RELATED RIGHTS") is herein called the "PURCHASE FACILITY."
I.2. TIMING OF PURCHASES.
(a) CLOSING DATE PURCHASES. Originator's entire right, title and
interest in (i) each Receivable that existed and was owing to Originator
as of the close of Originator's business on the Closing Date, (other than
Contributed Receivables), (ii) all Related Rights with respect thereto
shall be deemed to have been sold to the Company on the Closing Date.
(b) REGULAR PURCHASES. After the Closing Date, each Receivable
created or originated by Originator and described in SECTION 1.1(B)
hereof and all Related Rights shall be purchased and owned by the Company
(without any further action) upon the creation or origination of such
Receivable.
I.3. CONSIDERATION FOR PURCHASES.
On the terms and subject to the conditions set forth in this Agreement,
the Company agrees to make all Purchase Price payments to the Originator,
and to reflect all contributions, in accordance with ARTICLE III.
I.4. PURCHASE AND SALE
TERMINATION DATE. The "PURCHASE AND SALE TERMINATION DATE" shall be the
earlier to occur of (a) the date of the termination of this Agreement
pursuant to SECTION 8.2 and (b) the Payment Date immediately following
the day on which the Originator shall have given notice to the Company
that the Originator desires to terminate this Agreement.
As used herein, "PAYMENT DATE" means (i) the Closing Date and (ii)
each Business Day thereafter that the Originator is open for business.
I.5. INTENTION OF THE PARTIES. It is the express intent of the parties
hereto that the transfers of the Receivables and Related Rights by Originator to
the Company, as contemplated by this Agreement be, and be treated as, sales or
contributions, as applicable, and not as secured loans secured by the
Receivables and Related Rights. If, however, notwithstanding the intent
of the parties, such transactions are deemed to be loans, Originator
hereby grants to the Company a first priority security interest in all of
Originator's right, title and interest in and to the Receivables and the
Related Rights now existing and hereafter created, all monies due or to
become due and all amounts received with respect thereto, and all
proceeds thereof, to secure all of Originator's obligations hereunder.
ARTICLE II
CALCULATION OF PURCHASE PRICE
II.1. CALCULATION OF PURCHASE PRICE. On each Servicer Report Date, the
Servicer shall deliver to the Company, the Agent and Originator a report in
substantially the form of EXHIBIT A (each such report being herein called a
"PURCHASE REPORT") with respect to the matters set forth therein and the
Company's purchases of Receivables from Originator
(a) that are to be made on the Closing Date (in the case of the
Purchase Report to be delivered on the Closing Date), or
(b) that were made during the period commencing on the Servicer
Report Date immediately preceding such Servicer Report Date to (but not
including) such Servicer Report Date (in the case of each subsequent
Purchase Report).
The "PURCHASE PRICE" (to be paid to Originator in accordance with the
terms of ARTICLE III) for the Receivables and the Related Rights that are
purchased hereunder shall be determined in accordance with the following
formula:
PP = OB X FMVD
WHERE:
PP = Purchase Price for each Receivable as calculated on the
relevant Payment Date.
OB = the Outstanding Balance of such Receivable.
FMVD = Fair Market Value Discount, as measured on such Payment
Date, which is equal to the quotient (expressed as
percentage) of (a) one DIVIDED by (b) the sum of (i) one,
plus (ii) the product of (A) the Prime Rate on such
Payment Date, and (B) a fraction, the numerator of which
is the Average Maturity (calculated as of the last day of
the calendar month next preceding such Payment Date) and
the denominator of which is 365.
"PRIME RATE" means a PER ANNUM rate equal to the "prime rate" as
published in the "Money Rates" section of The Wall Street Journal or such
other publication as determined by the Agent in its sole discretion.
ARTICLE III
CONTRIBUTION OF RECEIVABLES; PAYMENT OF PURCHASE PRICE
III.1. CONTRIBUTION OF RECEIVABLES.
On the Closing Date, Pilgrim's Pride shall, and hereby does, contribute
to the capital of the Company, Receivables and Related Rights with
respect thereto consisting of each Receivable of Pilgrim's Pride that
existed and was owing to Pilgrim's Pride on the Closing Date, beginning
with the oldest of such Receivables and continuing chronologically
thereafter, and all or an undivided interest in the most recent of such
contributed Receivables such that the aggregate Outstanding Balance of
all such contributed Receivables shall be equal to $2,500,000.
III.2. INITIAL PURCHASE PRICE PAYMENT. On the terms and subject to the
conditions set forth in this Agreement, the Company agrees to pay to Originator
the Purchase Price for the purchase of Receivables to be made on the Closing
Date, partially in cash in the amount of the proceeds of the Purchase made by
the Purchaser on the Closing Date under the Receivables Purchase Agreement, and
partially by issuing a promissory note in the form of EXHIBIT B to
Originator with an initial principal balance equal to the remaining
Purchase Price (as such promissory note may be amended, supplemented,
indorsed or otherwise modified from time to time, together with all
promissory notes issued from time to time in substitution therefor or
renewal thereof in accordance with the Transaction Documents, being
herein called the "COMPANY NOTE").
III.3. SUBSEQUENT PURCHASE PRICE PAYMENTS. On each Business Day falling
after the Closing Date and on or prior to the Purchase and Sale Termination
Date, on the terms and subject to the conditions set forth in this Agreement,
the Company shall pay to Originator the Purchase Price for the Receivables sold
by Originator to the Company on such Business Day, in cash, to the extent
provided under SECTION 1.2 of the Receivables Purchase Agreement, and to
the extent any of such Purchase Price remains unpaid, such remaining
portion of such Purchase Price shall be paid by means of an automatic
increase to the outstanding principal amount of the Company Note issued
to Originator.
Servicer shall make all appropriate record keeping entries with respect
to the Company Notes or otherwise to reflect the foregoing payments and
to reflect adjustments pursuant to SECTION 3.4, and Servicer's books and
records shall constitute rebuttable presumptive evidence of the principal
amount of and accrued interest on any Company Note at any time.
Furthermore, Servicer shall hold the Company Notes for the benefit of the
Originator, and all payments under the Company Notes shall be made to the
Servicer for the account of the applicable payee thereof. Originator
hereby irrevocably authorizes Servicer to mark the Company Notes
"CANCELLED" and to return such Company Notes to the Company upon the
final payment thereof after the occurrence of the Purchase and Sale
Termination Date.
III.4. SETTLEMENT AS TO SPECIFIC RECEIVABLES AND DILUTION.
(a) If on the day of purchase or contribution of any Receivable
from Originator hereunder, any of the representations or warranties set
forth in SECTION 5.4 or 5.11 of Originator is not true with respect to
such Receivable or as a result of any action or inaction of Originator,
on any day any of such representations or warranties set forth in SECTION
5.4 or 5.11 is no longer true with respect to such a Receivable, then the
Purchase Price (or in the case of a Contributed Receivable, the
Outstanding Balance of such Receivable (the "CONTRIBUTED VALUE")) with
respect to such Receivables shall be reduced by an amount equal to the
Outstanding Balance of such Receivable and shall be accounted to
Originator as provided in SUBSECTION (C) below; PROVIDED, that if the
Company thereafter receives payment on account of Collections due with
respect to such Receivable, the Company promptly shall deliver funds to
Originator.
(b) If, on any day, the Outstanding Balance of any Receivable
(including any Contributed Receivable) purchased (or contributed)
hereunder is reduced or adjusted as a result of any defective, rejected,
returned goods or services, or any discount or other adjustment made by
Originator, the Company or the Servicer or any offset, setoff or dispute
between Originator or the Servicer and an Obligor as indicated on the
books of the Company (or, for periods prior to the Closing Date, the
books of Originator), then the Purchase Price or the Contributed Value,
as the case may be, with respect to such Receivable shall be reduced by
the amount of such net reduction and shall be accounted to Originator as
provided in SUBSECTION (C) below.
(c) Any reduction in the Purchase Price (or Contributed Value) of
any Receivable pursuant to SUBSECTION (A) or (B) above shall be applied
as a credit for the account of the Company against the Purchase Price of
Receivables subsequently purchased by the Company from Originator
hereunder; PROVIDED, HOWEVER if there have been no purchases of
Receivables from Originator (or insufficiently large purchases of
Receivables) to create a Purchase Price sufficient to so apply such
credit against, the amount of such credit
(i) shall be paid in cash to the Company by Originator in the
manner and for application as described in the following proviso, or
(ii) shall be deemed to be a payment under, and shall be deducted
from the principal amount outstanding under, the Company Note
payable to Originator to the extent permitted under clause (o) of
Exhibit IV of the Receivables Purchase Agreement;
PROVIDED, FURTHER, that at any time (y) when a Termination Event or
Unmatured Termination Event exists under the Receivables Purchase
Agreement or (z) on or after the Purchase and Sale Termination Date, the
amount of any such credit shall be paid by Originator to the Company by
deposit in immediately available funds into the Collection Account for
application by Servicer to the same extent as if Collections of the
applicable Receivable in such amount had actually been received on such
date.
(d) Each Purchase Report (other than the Purchase Report delivered
on the Closing Date) shall include, in respect of the Receivables
previously generated by Originator (including the Contributed
Receivables), a calculation of the aggregate reductions described in
SUBSECTION (A) or (B) relating to such Receivables since the last
Purchase Report delivered hereunder, as indicated on the books of the
Company (or, for such period prior to the Closing Date, the books of
Originator).
III.5. RECONVEYANCE OF RECEIVABLES.
In the event that Originator has paid to the Company the full Outstanding
Balance of any Receivable pursuant to SECTION 3.4, the Company shall
reconvey such Receivable to Originator, without representation or
warranty, but free and clear of all liens created by the Company.
ARTICLE IV
CONDITIONS OF PURCHASES
IV.1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial purchase
hereunder is subject to the condition precedent that the Company shall have
received, on or before the Closing Date, the following, each (unless otherwise
indicated) dated the Closing Date, and each in form, substance and date
satisfactory to the Company:
(a) A copy of the resolutions of the Board of Directors of
Originator approving the Transaction Documents to be delivered by it and
the transactions contemplated hereby and thereby, certified by the
Secretary or Assistant Secretary of Originator;
(b) Good standing certificates for Originator issued as of a recent
date acceptable to Servicer by the Secretary of State of the jurisdiction
of Originator=s incorporation and the jurisdiction where Originator=s
chief executive office is located;
(c) A certificate of the Secretary or Assistant Secretary of Originator
certifying the names and true signatures of the officers authorized on
Originator's behalf to sign the Transaction Documents to be delivered by
it (on which certificate the Company and Servicer (if other than
Originator) may conclusively rely until such time as the Company and the
Servicer shall receive from Originator a revised certificate meeting the
requirements of this SUBSECTION (C));
(d) The articles of incorporation of Originator, duly certified by
the Secretary of State of the jurisdiction of Originator=s incorporation
as of a recent date acceptable to Servicer, together with a copy of the
by-laws of Originator, each duly certified by the Secretary or an
Assistant Secretary of Originator;
(e) Copies of the proper financing statements (Form UCC-1) that
have been duly executed and name Originator as the assignor and the
Company as the assignee (and Purchaser as assignee of the Company) of the
Receivables generated by Originator and Related Rights or other, similar
instruments or documents, as may be necessary or, in Servicer's or the
Agent's opinion, desirable under the UCC of all appropriate jurisdictions
or any comparable law of all appropriate jurisdictions to perfect the
Company's ownership interest in all Receivables and Related Rights in
which an ownership interest may be assigned to it hereunder;
(f) A written search report from a Person satisfactory to Servicer
and the Agent listing all effective financing statements that name
Originator as debtor or assignor and that are filed in the jurisdictions
in which filings were made pursuant to the foregoing SUBSECTION (E),
together with copies of such financing statements (none of which, except
for those described in the foregoing SUBSECTION (E), shall cover any
Receivable or any Related Right), and tax and judgment lien search
reports from a Person satisfactory to Servicer and the Agent showing no
evidence of such liens filed against Originator;
(g) Favorable opinion of Godwin & Carlton, special counsel to
Originator, in the forms of EXHIBIT C;
(h) Evidence (i) of the execution and delivery by each of the
parties thereto of each of the other Transaction Documents to be executed
and delivered in connection herewith and (ii) that each of the conditions
precedent to the execution, delivery and effectiveness of such other
Transaction Documents has been satisfied to the Company's satisfaction;
and
(i) A certificate from an officer of Originator to the effect that
Servicer and Originator have placed on the most recent, and have taken
all steps reasonably necessary to ensure that there shall be placed on
subsequent, summary master control data processing reports the following
legend (or the substantive equivalent thereof): "THE RECEIVABLES
DESCRIBED HEREIN HAVE BEEN SOLD TO PILGRIM'S PRIDE FUNDING CORPORATION
PURSUANT TO A PURCHASE AND CONTRIBUTION AGREEMENT, DATED AS OF June 26,
1998, AMONG PILGRIM'S PRIDE, AND PILGRIM'S PRIDE FUNDING CORPORATION; AND
AN INTEREST IN THE RECEIVABLES DESCRIBED HEREIN HAS BEEN GRANTED TO
POOLED ACCOUNTS RECEIVABLES CAPITAL CORPORATION, PURSUANT TO A
RECEIVABLES PURCHASE AGREEMENT, DATED AS OF June 26, 1998, AMONG
PILGRIM'S PRIDE FUNDING CORPORATION, PILGRIM'S PRIDE, POOLED ACCOUNTS
RECEIVABLE CAPITAL CORPORATION AND NESBITT BURNS SECURITIES, INC., AS
AGENT."
IV.2. CERTIFICATION AS TO REPRESENTATIONS AND WARRANTIES. Originator, by
accepting the Purchase Price related to each purchase of Receivables (and
Related Rights)generated by Originator, shall be deemed to have
certified that the representations and warranties contained in ARTICLE V
are true and correct on and as of such day, with the same effect as
though made on and as of such day.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR
In order to induce the Company to enter into this Agreement and to
make purchases and accept contributions hereunder, Originator, hereby
makes with respect to itself the representations and warranties set forth
in this ARTICLE V.
V.1. ORGANIZATION AND GOOD STANDING. Originator has been duly organized
and is validly existing as a corporation in good standing under the laws of the
state of its incorporation, with power and authority to own its properties and
to conduct its business as such properties are presently owned and such
business is presently conducted.
V.2. DUE QUALIFICATION. Originator is duly
licensed or qualified to do business as a foreign corporation in good
standing in the jurisdiction where its chief executive office and
principal place of business are located and in all other jurisdictions in
which (a) the ownership or lease of its property or the conduct of its
business requires such licensing or qualification and (b) the failure to
be so licensed or qualified would reasonably be expected to have a
Material Adverse Effect.
V.3. POWER AND AUTHORITY; DUE AUTHORIZATION. Originator has (a) all
necessary corporate power, authority and legal right (i) to execute and deliver,
and perform its obligations under, each Transaction Document to which it is a
party, and (ii) to generate, own, sell, contribute and assign Receivables and
Related Rights on the terms and subject to the conditions herein and
therein provided; and (b) duly authorized such execution and delivery and
such sale, contribution and assignment and the performance of such
obligations by all necessary corporate action.
V.4. VALID SALE OR CONTRIBUTION; BINDING OBLIGATIONS. Each sale or
contribution, as the case may be, of Receivables and Related Rights made by
Originator pursuant to this Agreement shall constitute a valid sale or
contribution, as the case may be, transfer, and assignment thereof to the
Company, enforceable against creditors of, and purchasers from, Originator; and
this Agreement constitutes, and each other Transaction Document to be
signed by Originator, when duly executed and delivered, will constitute,
a legal, valid, and binding obligation of Originator, enforceable in
accordance with its terms; except in each case as enforceability may be
limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
V.5. NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the other Transaction Documents and the fulfillment of the
terms hereof or thereof will not (a) conflict with, result in any breach of any
of the terms and provisions of, or constitute (with or without notice or lapse
of time or both) a default under (i) Originator's certificate of incorporation
or by-laws, or (ii) any indenture, loan agreement, mortgage, deed of trust, or
other agreement or instrument to which it is a party or by which it is bound,
(b) result in the creation or imposition of any Adverse Claim upon any of
its properties pursuant to the terms of any such indenture, loan
agreement, mortgage, deed of trust, or other agreement or instrument,
other than the Transaction Documents, or (c) violate any law or any
order, rule, or regulation applicable to it of any court or of any
federal, state or foreign regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over it or any of
its properties.
V.6. PROCEEDINGS. There is no litigation or, to
Originator's knowledge, any proceeding or investigation pending before
any court, regulatory body, arbitrator, administrative agency, or other
tribunal or governmental instrumentality (a) asserting the invalidity of
any Transaction Document, (b) seeking to prevent the sale or contribution
of Receivables and Related Rights to the Company or the consummation of
any of the other transactions contemplated by any Transaction Document,
or (c) seeking any determination or ruling that could reasonably be
expected to have a Material Adverse Effect.
V.7. BULK SALES ACT. No transaction contemplated
hereby requires compliance with any bulk sales act or similar law.
V.8. GOVERNMENT APPROVALS. Except for the
filing of the UCC financing statements referred to in ARTICLE IV, all of
which, at the time required in ARTICLE IV, shall have been duly made and
shall be in full force and effect, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for Originator's due execution, delivery and
performance of any Transaction Document to which it is a party, as
seller.
V.9. FINANCIAL CONDITION.
(a) On the date hereof, and on the date of each sale of Receivables
by Originator to the Company (both before and after giving effect to such
sale), Originator shall be Solvent.
(b) The consolidated balance sheets of Originator and its
consolidated subsidiaries as of December 31, 1997, and the related
statements of income and shareholders' equity of Originator and its
consolidated subsidiaries for the fiscal year then ended certified by
Originator's independent accountants, copies of which have been furnished
to the Company, present fairly the consolidated financial position of
Originator and its consolidated subsidiaries for the period ended on such
date, all in accordance with generally accepted accounting principles
consistently applied; and since such date no event has occurred that has
had, or is reasonably likely to have, a Material Adverse Effect.
V.10. MARGIN REGULATIONS. No use of any
funds acquired by Originator under this Agreement will conflict with or
contravene any of Regulations G, T, U and X promulgated by the Board of
Governors of the Federal Reserve System from time to time.
V.11. QUALITY OF TITLE.
(a) Each Receivable (together with the Related Rights) which is to
be sold or contributed to the Company hereunder is or shall be owned by
Originator, free and clear of any Adverse Claim. Whenever the Company
makes a purchase, or accepts a contribution, hereunder, it shall have
acquired a valid and perfected ownership interest (free and clear of any
Adverse Claim) in all Receivables generated by Originator and all
Collections related thereto, and in Originator's entire right, title and
interest in and to the other Related Rights with respect thereto.
(b) No effective financing statement or other instrument similar in
effect covering any Receivable generated by Originator or any right
related to any such Receivable is on file in any recording office except
such as may be filed in favor of the Company or the Originator, as the
case may be, in accordance with this Agreement or in favor of the
Purchaser in accordance with the Receivables Purchase Agreement.
(c) Unless otherwise identified to the Company in the related
Purchase Report, each Receivable purchased or contributed hereunder is on
the date of purchase or contribution an Eligible Receivable.
V.12. ACCURACY OF INFORMATION. Nofactual written information furnished or
to be furnished in writing by Originator, to the Company, the Purchaser or the
Agent for purposes of or in connection with any Transaction Document or any
transaction contemplated hereby or thereby is, and no other such factual written
information hereafter furnished (and prepared) by Originator, to the
Company, the Purchaser, or the Agent pursuant to or in connection with
any Transaction Document, taken as a whole, will be inaccurate in any
material respect as of the date it was furnished or (except as otherwise
disclosed to the Company at or prior to such time) as of the date as of
which such information is dated or certified, or shall contain any
material misstatement of fact or omitted or will omit to state any
material fact necessary to make such information, in the light of the
circumstances under which any statement therein was made, not materially
misleading on the date as of which such information is dated or
certified.
V.13. OFFICES. Originator's principal place of business
and chief executive office is located at the address set forth under
Originator's signature hereto, and the offices where Originator keeps all
its books, records and documents evidencing the Receivables, the related
Contracts and all other agreements related to such Receivables are
located at the addresses specified on SCHEDULE 5.13 (or at such other
locations, notified to Servicer and the Agent in accordance with SECTION
6.1(F), in jurisdictions where all action required by SECTION 7.3 has
been taken and completed).
V.14. TRADE NAMES. Except as disclosed on
SCHEDULE 5.14, Originator does not use any trade name other than its
actual corporate name. From and after the date that fell five (5) years
before the date hereof, Originator has not been known by any legal name
other than its corporate name as of the date hereof, nor has Originator
been the subject of any merger or other corporate reorganization except
as disclosed on SCHEDULE 5.14.
V.15. TAXES. Originator has filed all material tax returns and
reports required by law to have been filed by it and has paid all taxes
and governmental charges thereby shown to be owing, except any such taxes
which are not yet delinquent or are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in
accordance with generally accepted accounting principles shall have been
set aside on its books.
V.16. LICENSES AND LABOR CONTROVERSIES.
(a) Originator has not failed to obtain any licenses, permits,
franchises or other governmental authorizations necessary to the
ownership of its properties or to the conduct of its business, which
violation or failure to obtain would be reasonably likely to have a
Material Adverse Effect; and
(b) There are no labor controversies pending against Originator
that have had (or are reasonably likely to have) a Material Adverse
Effect.
V.17. COMPLIANCE WITH APPLICABLE LAWS. Originator is in compliance, in
all material respects, with the requirements of (i) all applicable laws, rules,
regulations, and orders of all governmental authorities (including, without
limitation, Regulation Z, laws, rules and regulations relating to usury, truth
in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy and all other
consumer laws applicable to the Receivables and related Contracts)
(excluding with respect to environmental matters which are covered by
CLAUSE (II)), and (ii) to the best of its knowledge, all applicable
environmental laws, rules, regulations and orders of all governmental
authorities.
V.18. RELIANCE ON SEPARATE LEGAL IDENTITY. Originator is aware that
Purchaser and the Agent are entering into the Transaction Documents to which
they are parties in reliance upon the Company's identity as a legal entity
separate from Originator.
V.19. PURCHASE PRICE. The purchase price payable
by the Company to Originator hereunder is intended by Originator and
Company to be consistent with the terms that would be obtained in an
arm's length sale. The Servicer's Fee payable to Originator is intended
to be consistent with terms that would be obtained in an arm's length
servicing arrangement.
V.20. CERTAIN DEFINITIONS. With respect to
this Agreement, the terms "Material Adverse Effect" and "Solvent" are
defined as follows:
"MATERIAL ADVERSE EFFECT" means, with respect to any event or
circumstance, a material adverse effect on:
(i) the business, assets, financial condition of Originator;
(ii) the ability of Originator or the Servicer (if it is the
Originator) to perform its obligations under the Receivables
Purchase Agreement or any other Transaction Document to which it is
a party or the performance of any such obligations;
(iii) the validity or enforceability of the Receivables
Purchase Agreement or any other Transaction Document;
(iv) with respect to the Purchase and Contribution Agreement,
the status, existence, perfection, priority or enforceability of
Company's interest in the Receivables or Related Rights; or
(v) the validity or enforceability of the Receivables.
"SOLVENT" means, with respect to any Person at any time, a
condition under which:
(i) the fair value and present fair saleable value of such
Person's total assets is, on the date of determination, greater than
such Person's total liabilities (including contingent and
unliquidated liabilities) at such time;
(ii) such Person is and shall continue to be able to
pay all of its liabilities as such liabilities mature; and
(iii) such Person does not have unreasonably small capital
with which to engage in its current and in its anticipated business.
For purposes of this definition:
(A) the amount of a Person's contingent or unliquidated
liabilities at any time shall be that amount which, in light of all
the facts and circumstances then existing, represents the amount
which can reasonably be expected to become an actual or matured
liability;
(B) the "fair value" of an asset shall be the amount which may
be realized within a reasonable time either through collection or
sale of such asset at its regular market value;
(C) the "regular market value" of an asset shall be the amount
which a capable and diligent business person could obtain for such
asset from an interested buyer who is willing to purchase such asset
under ordinary selling conditions; and
(D) the "present fair saleable value" of an asset means the amount
which can be obtained if such asset is sold with reasonable
promptness in an arm's length transaction in an existing and not
theoretical market.
ARTICLE VI
COVENANTS OF THE ORIGINATOR
VI.1. AFFIRMATIVE COVENANTS. From the
date hereof until the first day following the Final Payout Date,
Originator will, unless the Company and the Agent shall otherwise consent
in writing:
(a) COMPLIANCE WITH LAWS, ETC. Comply in all material respects
with all applicable laws, rules, regulations and orders, including those
with respect to the Receivables generated by it and the related Contracts
and other agreements related thereto.
(b) PRESERVATION OF CORPORATE EXISTENCE. Preserve and maintain its
corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in
good standing as a foreign corporation in each jurisdiction where the
failure to preserve and maintain such existence, rights, franchises,
privileges and qualification could reasonably be expected to have a
Material Adverse Effect.
(c) RECEIVABLES REVIEW. (i) At any time and from time to time (but
not more than twice during the term of this Agreement so long as no
Termination Event has occurred and is continuing) during regular business
hours, upon reasonable prior notice, permit the Company and/or the Agent,
or their respective agents or representatives, (A) to examine, to audit
and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in the
possession or under the control of Originator relating to the Receivables
and Related Rights, including, without limitation, the Contracts and
other agreements related thereto, and (B) to visit Originator's offices
and properties for the purpose of examining such materials described in
the foregoing CLAUSE (A) and discussing matters relating to the
Receivables and Related Rights or Originator's performance hereunder with
any of the officers or employees of Originator having knowledge of such
matters; and (ii) without limiting the provisions of CLAUSE (I) next
above, from time to time on request of the Agent, permit certified public
accountants or other auditors acceptable to the Agent to conduct a review
of its books and records with respect to the Receivables and Related
Rights.
(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Maintain an ability
to recreate records evidencing the Receivables in the event of the
destruction of the originals thereof.
(e) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CONTRACTS. At its
expense timely and fully perform and comply with all provisions,
covenants and other promises required to be observed by it under the
related Contracts and all other agreements related to the Receivables and
Related Rights.
(f) LOCATION OF RECORDS. Keep its principal place of business and
chief executive office, and the offices where it keeps its records
concerning or related to Receivables and Related Rights, at the
address(es) referred to in SCHEDULE 5.13 or, upon 30 days' prior written
notice to the Company and the Agent, at such other locations in
jurisdictions where all action required by SECTION 7.3 shall have been
taken and completed.
(g) CREDIT AND COLLECTION POLICIES. Comply in all material respects
with its Credit and Collection Policy in connection with the Receivables
and the related Contracts.
(h) SEPARATE CORPORATE EXISTENCE OF THE COMPANY. Take such actions
as shall be required in order that:
(i) the Company's operating expenses (other than certain
organization expenses and expenses incurred in connection with the
preparation, negotiation and delivery of the Transaction Documents)
will not be paid by Originator;
(ii) the Company's books and records will be maintained
separately from those of Originator;
(iii) all financial statements of Originator that are
consolidated to include the Company will contain detailed notes
clearly stating that (A) all of the Company's assets are owned by
the Company, and (B) the Company is a separate entity with creditors
who have received interests in the Company's assets;
(iv) Originator will strictly observe corporate formalities in
its dealing with the Company;
(v) Originator shall not commingle its funds with any funds of
the Company;
(vi) Originator will maintain arm's length relationships with
the Company, and Originator will be compensated at market rates for
any services it renders or otherwise furnishes to the Company; and
(vii) Originator will not be, and will not hold itself out to be,
responsible for the debts of the Company or the decisions or actions
in respect of the daily business and affairs of the Company.
(i) POST OFFICE BOXES. Within 30 days after the date hereof, deliver to
the Agent (with a copy for Purchaser) a certificate from an authorized
officer of Originator to the effect that (i) the name of the renter of
all post office boxes into which Collections may from time to time be
mailed have been changed to the name of the Company (unless such post
office boxes are in the name of the relevant Lock-Box Banks) and (ii) all
relevant postmasters have been notified that each of Servicer and the
Agent are authorized to collect mail delivered to such post office boxes
(unless such post office boxes are in the name of the relevant Lock-Box
Banks).
VI.2. REPORTING REQUIREMENTS. From the
date hereof until the first day following the Purchase and Sale
Termination Date, Originator shall, unless the Agent and the Company
shall otherwise consent in writing, furnish to the Company and the Agent:
(a) PROCEEDINGS. As soon as possible and in any event within three
Business Days after Originator has knowledge thereof, written notice to
the Company and the Agent of (i) all pending proceedings and
investigations of the type described in SECTION 5.6 not previously
disclosed to the Company and/or the Agent and (ii) all material adverse
developments that have occurred with respect to any previously disclosed
proceedings and investigations.
(b) OTHER. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables, the Related
Rights or Originator's performance hereunder that the Company or the
Agent may from time to time reasonably request in order to protect the
interests of the Company, the Purchaser, the Agent or any other Affected
Party under or as contemplated by the Transaction Documents.
VI.3. NEGATIVE COVENANTS. From the date
hereof until the date following the Final Payout Date, Originator agrees
that, unless the Agent and the Company shall otherwise consent in
writing, it shall not:
(a) SALES, LIENS, ETC. Except as otherwise provided herein or in
any other Transaction Document, sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any
Adverse Claim upon or with respect to, any Receivable or related
Contract, Collections or Related Security, or any interest therein, or
assign any right to receive income in respect thereof.
(b) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as otherwise
permitted in SECTION 4.2(A) of the Receivables Purchase Agreement or in
accordance with the Credit and Collection Policy, extend, amend or
otherwise modify the terms of any Receivable in any material respect, or
amend, modify or waive, in any material respect, any term or condition of
any Contract related thereto (which term or condition relates to payments
under, or the enforcement of, such Contract).
(c) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Make any
change in the character of its business or materially alter its Credit
and Collection Policy, which change would, in either case, materially
change the credit standing required of particular Obligors or potential
Obligors or impair, in any material respect, the collectibility of the
Receivables generated by it.
(d) RECEIVABLES NOT TO BE EVIDENCED BY PROMISSORY NOTES OR CHATTEL
PAPER. Take any action to cause or permit any Receivable generated by it
to become evidenced by any "instrument" or "chattel paper" (as defined in
the applicable UCC) unless such "instrument" or "chattel paper" shall be
delivered to the Company (which in turn shall deliver the same to the
Purchaser (or the Agent on its behalf)).
(e) MERGERS, ACQUISITIONS, SALES, ETC. Merge or consolidate with
another Person (except pursuant to a merger or consolidation involving
Originator where Originator is the surviving corporation), or convey,
transfer, lease or otherwise dispose of (whether in one or in a series of
transactions), all or substantially all of its assets (whether now owned
or hereafter acquired), other than pursuant to this Agreement.
(f) LOCK-BOX BANKS. Make any changes in its instructions to
Obligors regarding Collections or add or terminate any Lock-Box Bank
unless the requirements of CLAUSE (I) of EXHIBIT IV of the Receivables
Purchase Agreement have been met.
(g) ACCOUNTING FOR PURCHASES. Account for or treat (whether in
financial statements or otherwise) the transactions contemplated hereby
in any manner other than as sales of the Receivables and Related Security
by Originator to the Company.
(h) TRANSACTION DOCUMENTS. Enter into, execute, deliver or
otherwise become bound by any agreement, instrument, document or other
arrangement that restricts the right of Originator to amend, supplement,
amend and restate or otherwise modify, or to extend or renew, or to waive
any right under, this Agreement or any other Transaction Documents.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES
VII.1. RIGHTS OF THE COMPANY. Originator
hereby authorizes the Company and the Servicer or their respective
designees to take any and all steps in Originator's name necessary or
desirable, in their respective determination, to collect all amounts due
under any and all Receivables and Related Rights, including, without
limitation, endorsing Originator's name on checks and other instruments
representing Collections and enforcing such Receivables and the
provisions of the related Contracts that concern payment and/or
enforcement of rights to payment.
VII.2. RESPONSIBILITIES OF
ORIGINATOR. Anything herein to the contrary notwithstanding:
(a) Originator agrees, to direct, and hereby grants to each of the
Company and the Agent the authority to direct, all Obligors to make
payments of Receivables directly to a Lock-Box Account at a Lock-Box
Bank. Originator further agrees to transfer any Collections that it
receives directly, to Servicer (for deposit to such a Lock-Box Account)
within one Business Day of receipt thereof, and agrees that all such
Collections shall be deemed to be received in trust for the Company.
(b) Originator shall perform its obligations hereunder, and the
exercise by the Company or its designee of its rights hereunder shall not
relieve Originator from such obligations.
(c) None of the Company, Servicer, Purchaser or the Agent shall
have any obligation or liability to any Obligor or any other third Person
with respect to any Receivables, Contracts related thereto or any other
related agreements, nor shall the Company, Servicer, Purchaser or the
Agent be obligated to perform any of the obligations of Originator
thereunder.
(d) Originator hereby grants to Servicer an irrevocable power of
attorney, with full power of substitution, coupled with an interest, to
take in the name of Originator all steps necessary or advisable to
indorse, negotiate or otherwise realize on any writing or other right of
any kind held or transmitted by Originator or transmitted or received by
the Company (whether or not from Originator) in connection with any
Receivable or Related Right.
VII.3. FURTHER ACTION EVIDENCING
PURCHASES. Originator agrees that from time to time, at its expense, it
will promptly execute and deliver all further instruments and documents,
and take all further action that the Company or Servicer may reasonably
request in order to perfect, protect or more fully evidence the
Receivables (and the Related Rights) purchased by, or contributed to, the
Company hereunder, or to enable the Company to exercise or enforce any of
its rights hereunder or under any other Transaction Document. Without
limiting the generality of the foregoing, upon the request of the
Company, Originator will:
(a) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate; and
(b) mark the summary master control data processing records with
the legend set forth in SECTION 4.1(I).
Originator hereby authorizes the Company or its designee to file one or
more financing or continuation statements, and amendments thereto and
assignments thereof, relative to all or any of the Receivables (and the
Related Rights) now existing or hereafter generated by Originator. If
Originator fails to perform any of its agreements or obligations under
this Agreement, the Company or its designee may (but shall not be
required to) itself perform, or cause performance of, such agreement or
obligation, and the expenses of the Company or its designee incurred in
connection therewith shall be payable by Originator as provided in
SECTION 9.1.
VII.4. APPLICATION OF COLLECTIONS.
Any payment by an Obligor in respect of any indebtedness owed by it to
Originator shall, except as otherwise specified by such Obligor or
otherwise required by contract or law and unless otherwise instructed by
the Company or the Agent, be applied FIRST, as a Collection of any
Receivables of such Obligor, in the order of the age of such Receivables,
starting with the oldest of such Receivables, and SECOND, to any other
indebtedness of such Obligor.
ARTICLE VIII
PURCHASE AND SALE TERMINATION EVENTS
VIII.1. PURCHASE AND SALE TERMINATION EVENTS.
Each of the following events or occurrences described in this SECTION 8.1 shall
constitute a "PURCHASE AND SALE TERMINATION EVENT":
(a) The Facility Termination Date (as defined in the Receivables
Purchase Agreement) shall have occurred; or
(b) Originator shall fail to make any payment or deposit to be made by
it hereunder when due and such failure shall remain unremedied for one
Business Day after notice; or
(c) Any representation or warranty made or deemed to be made by
Originator (or any of its officers) under or in connection with this
Agreement, any other Transaction Document or any other information or
report delivered pursuant hereto or thereto shall prove to have been
false or incorrect in any material respect when made or deemed made; or
(d) Originator shall fail to perform or observe in any material
respect any agreement contained in any of SECTIONS 6.1(H) or 6.3; or
(e) Originator shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed and such failure shall remain unremedied for thirty
(30) days after written notice thereof shall have been given by Servicer,
the Agent or the Company to Originator; or
(f) (i) Originator or any of its subsidiaries shall generally not pay
its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against Originator or any of its subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry
of an order for relief or the appointment of a receiver, trustee, or
other similar official for it or for all or any substantial part of its
property and, in the case of any such proceeding instituted against it
(but not instituted by it), such proceeding shall remain undismissed or
unstayed for a period of 30 days; or () Originator or any of its
subsidiaries shall take any corporate action to authorize any of the
actions set forth in CLAUSE (I) above in this SECTION 8.1(F);
(g) A contribution failure shall occur with respect to any benefit
plan sufficient to give rise to a lien under Section 302(f) of ERISA, or
the Internal Revenue Service shall, or shall indicate its intention in
writing to Originator to, file notice of a lien asserting a claim or
claims pursuant to the Code with regard to any of the assets of
Originator, or the Pension Benefit Guaranty Corporation shall, or shall
indicate its intention in writing to Originator or an ERISA Affiliate to,
either file notice of a lien asserting a claim pursuant to ERISA with
regard to any assets of Originator or an ERISA Affiliate or terminate any
benefit plan that has unfunded benefit liabilities; or
(h) The Internal Revenue Service shall file notice of a lien pursuant to
Section 6373 of the Internal Revenue Code with regard to any of assets of
Originator and such lien shall not have been released within ten Business
Days, or the Pension Benefit Guaranty Corporation shall, or shall
indicate its intention to, file notice of a lien pursuant to Section 4068
of ERISA with regard to any of the assets of the Originator.
VIII.2. REMEDIES.
(i) OPTIONAL TERMINATION. Upon the occurrence of a Purchase
and Sale Termination Event, the Company (and not Servicer) shall
have the option by notice to the Originator (with a copy to the
Agent) to declare the Purchase and Sale Termination Date to have
occurred.
(ii) REMEDIES CUMULATIVE. Upon any termination of the Purchase
Facility pursuant to this SECTION 8.2, the Company shall have, in
addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC of
each applicable jurisdiction and other applicable laws, which rights
shall be cumulative. Without limiting the foregoing, the occurrence
of the Purchase and Sale Termination Date shall not deny the Company
any remedy in addition to termination of the Purchase Facility to
which the Company may be otherwise appropriately entitled, whether
at law or equity.
ARTICLE IX
INDEMNIFICATION
IX.1. INDEMNITIES BY THE
ORIGINATOR. Without limiting any other rights which the Company may have
hereunder or under applicable law, the Originator hereby agrees to
indemnify the Company and each of its assigns, officers, directors,
employees and agents (each of the foregoing Persons being individually
called a "PURCHASE AND SALE INDEMNIFIED PARTY"), forthwith on demand,
from and against any and all damages, losses, claims, judgments,
liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being
collectively called "PURCHASE AND SALE INDEMNIFIED AMOUNTS") awarded
against or incurred by any of them arising out of or as a result of the
following:
(a) the transfer by Originator of an interest in any Receivable or
Related Right to any Person other than the Company;
(b) the breach of any representation or warranty made by Originator
under or in connection with this Agreement or any other Transaction
Document, or any information or report delivered by Originator pursuant
hereto or thereto which shall have been false or incorrect in any
material respect when made or deemed made;
(c) the failure by Originator to comply with any applicable law,
rule or regulation with respect to any Receivable or the related
Contract, or the nonconformity of any Receivable or the related Contract
with any such applicable law, rule or regulation;
(d) the failure to vest and maintain vested in the Company an
ownership interest in the Receivables generated by Originator and Related
Rights free and clear of any Adverse Claim, other than an Adverse Claim
arising solely as a result of an act of the Company, whether existing at
the time of the purchase or contribution of such Receivables or at any
time thereafter;
(e) the failure of Originator to file with respect to itself, or
any delay by Originator in filing, financing statements or other similar
instruments or documents under the UCC of any applicable jurisdiction or
other applicable laws with respect to any Receivables or purported
Receivables generated by Originator or Related Rights, whether at the
time of any purchase or contribution or at any subsequent time;
(f) any dispute, claim, offset or defense (other than discharge in
bankruptcy) of an Obligor to the payment of any Receivable or purported
Receivable generated by Originator (including, without limitation, a
defense based on such Receivables or the related Contracts not being a
legal, valid and binding obligation of such Obligor enforceable against
it in accordance with its terms), or any other claim resulting from the
goods or services related to any such Receivable or the furnishing of or
failure to furnish such goods or services;
(g) any product liability claim or any other claim involving health
or safety issues, arising out of or in connection with goods or services
that are the subject of any Receivable;
(h) any litigation, proceeding or investigation against Originator;
(i) any tax or governmental fee or charge (other than any tax
excluded pursuant to the proviso below), all interest and penalties
thereon or with respect thereto, and all out-of-pocket costs and
expenses, including the reasonable fees and expenses of counsel in
defending against the same, which may arise by reason of the purchase,
contribution or ownership of the Receivables or any Related Right
connected with any such Receivables; and
(j) any failure of Originator to perform its duties or obligations in
accordance with the provisions of this Agreement or any other Transaction
Document;
EXCLUDING, HOWEVER, (i) Purchase and Sale Indemnified Amounts to the
extent resulting from gross negligence or willful misconduct on the part
of a Purchase and Sale Indemnified Party, (ii) any indemnification which
has the effect of recourse for non-payment of the Receivables due to
credit reasons to any indemnitor (except as otherwise specifically
provided under this SECTION 9.1) and (iii) any tax based upon or measured
by net income or gross receipts.
If for any reason the indemnification provided above in this SECTION
9.1 is unavailable to a Purchase and Sale Indemnified Party or is
insufficient to hold such Purchase and Sale Indemnified Party harmless,
then the Originator shall contribute to the amount paid or payable by
such Purchase and Sale Indemnified Party as a result of such loss, claim,
damage or liability to the maximum extent permitted under applicable law.
ARTICLE X
MISCELLANEOUS
X.1. AMENDMENTS, ETC.
(a) The provisions of this Agreement may from time to time be
amended, modified or waived, if such amendment, modification or waiver is
in writing and consented to by the Company, the Agent and the Originator
(with respect to an amendment) or by the Company (with respect to a
waiver or consent by it).
(b) No failure or delay on the part of the Company, Servicer,
Originator or any third party beneficiary in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power or right. No
notice to or demand on the Company, Servicer, or Originator in any case
shall entitle it to any notice or demand in similar or other
circumstances. No waiver or approval by the Company or Servicer under
this Agreement shall, except as may otherwise be stated in such waiver or
approval, be applicable to subsequent transactions. No waiver or
approval under this Agreement shall require any similar or dissimilar
waiver or approval thereafter to be granted hereunder.
X.2. NOTICES, ETC. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in
writing (including facsimile communication) and shall be personally
delivered or sent by express mail or courier or by certified mail,
postage-prepaid, or by facsimile, to the intended party at the address or
facsimile number of such party set forth under its name on the signature
pages hereof or at such other address or facsimile number as shall be
designated by such party in a written notice to the other parties hereto.
All such notices and communications shall be effective, (i) if personally
delivered or sent by express mail or courier or if sent by certified
mail, when received, and (ii) if transmitted by facsimile, when sent,
receipt confirmed by telephone or electronic means.
X.3. NO WAIVER; CUMULATIVE
REMEDIES. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.
X.4. BINDING EFFECT;
ASSIGNABILITY. This Agreement shall be binding upon and inure to the
benefit of the Company and Originator and their respective successors and
permitted assigns; PROVIDED, HOWEVER, that Originator may not assign its
rights hereunder or any interest herein or delegate its duties hereunder
without the prior consent of the Company and the Agent. This Agreement
shall create and constitute the continuing obligations of the parties
hereto in accordance with its terms, and shall remain in full force and
effect until the date after the Purchase and Sale Termination Date on
which the Originator has received payment in full for all Receivables and
Related Rights purchased pursuant to SECTION 1.1 hereof. The rights and
remedies with respect to any breach of any representation and warranty
made by Originator pursuant to ARTICLE V and the indemnification and
payment provisions of ARTICLE IX and SECTION 10.6 shall be continuing and
shall survive any termination of this Agreement.
X.5. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF).
X.6. COSTS, EXPENSES AND TAXES. In
addition to the obligations of the Originator under ARTICLE IX,
Originator agrees to pay on demand:
(a) all reasonable costs and expenses in connection with the
enforcement of this Agreement and the other Transaction Documents; and
(b) all stamp and other similar taxes and fees payable or determined to
be payable in connection with the execution, delivery, filing and
recording of this Agreement or the other Transaction Documents, and
agrees to indemnify each Purchase and Sale Indemnified Party against any
liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.
X.7. SUBMISSION TO JURISDICTION.
EACH PARTY HERETO HEREBY IRREVOCABLY (a) SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY COURT OF THE STATE OF ILLINOIS OR OF THE UNITED
STATES FOR THE NORTHERN DISTRICT OF ILLINOIS, OVER ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT; (b)
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH STATE OR UNITED STATES FEDERAL COURT; (c)
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE
LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING; (d) CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS
IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS
TO SUCH PERSON AT ITS ADDRESS SPECIFIED IN SECTION 10.2; AND (e) TO THE
EXTENT ALLOWED BY LAW, AGREES THAT A NONAPPEALABLE 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 SECTION 10.7 SHALL AFFECT THE
COMPANY'S RIGHT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO BRING ANY ACTION OR PROCEEDING AGAINST ORIGINATOR OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTIONS.
X.8. WAIVER OF JURY TRIAL. EACH PARTY
HERETO EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY
OTHER TRANSACTION DOCUMENT, OR UNDER ANY AMENDMENT, INSTRUMENT OR
DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
X.9. CAPTIONS AND CROSS REFERENCES; INCORPORATION BY REFERENCE.
The various captions (including, without limitation, the table of contents) in
this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement. References
in this Agreement to any underscored Section or Exhibit are to such
Section or Exhibit of this Agreement, as the case may be. The Exhibits
hereto are hereby incorporated by reference into and made a part of this
Agreement.
X.10. EXECUTION IN COUNTERPARTS. This
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together
shall constitute one and the same Agreement.
X.11. ACKNOWLEDGMENT AND AGREEMENT. By
execution below, Originator expressly acknowledges and agrees that all of
the Company's rights, title, and interests in, to, and under this
Agreement shall be assigned by the Company to the Purchaser pursuant to
the Receivables Purchase Agreement, and Originator consents to such
assignment. Each of the parties hereto acknowledges and agrees that the
Agent and the Purchaser are third party beneficiaries of the rights of
the Company arising hereunder and under the other Transaction Documents
to which Originator is a party.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of
the date first above written.
PILGRIM'S PRIDE FUNDING CORPORATION
By:
Name:
Title:
110 S. Texas Street
Pittsburg, Texas 75686
Attention: Clifford E. Butler
Telephone: (903)855-1000
Facsimile: (903)855-4934
PILGRIM'S PRIDE CORPORATION
By:
Name:
Title:
110 S. Texas Street
Pittsburg, Texas 75686
Attention: Clifford E. Butler
Telephone: (903)855-1000
Facsimile: (903)855-4934
Acknowledged and consented by:
PILGRIM'S PRIDE CORPORATION,
as initial Servicer
By:
Name:
Title:
110 S. Texas Street
Pittsburg, Texas 75686
Attention: Rick Cogdill
Telephone: (903)855-1000
Facsimile: (903)855-4934
RECEIVABLES PURCHASE AGREEMENT
among
PILGRIM'S PRIDE FUNDING CORPORATION,
as Seller,
PILGRIM'S PRIDE CORPORATION,
as Servicer,
POOLED ACCOUNTS RECEIVABLE CAPITAL CORPORATION,
as Purchaser,
and
NESBITT BURNS SECURITIES INC.,
as Agent.
TABLE OF CONTENTS
PAGE||
||
EXHIBITS
Exhibit I Definitions.........................................I-1
Exhibit II Conditions of Purchases...........................II-1
Exhibit III Representations and Warranties..................III-1
Exhibit IV Covenants.........................................IV-1
Exhibit V Termination Events..................................V-1
SCHEDULES
Schedule I Credit and Collection Policy.......................I-1
Schedule II Lock-Box Bank and Lock-Box Account...............II-1
Schedule III Trade Names....................................III-1
Schedule IV Accounting Periods...............................IV-1
Annex A Form of Lockbox Agreement
Annex B Form of Notice of Purchase
Annex C Form of Collection Account Agreement
Annex D Form of Liquidation Account Agreement
Annex E Form of Servicer Report
RECEIVABLES PURCHASE AGREEMENT
This RECEIVABLES PURCHASE AGREEMENT (this "AGREEMENT") is entered
into as of June 26, 1998 among PILGRIM=S PRIDE FUNDING CORPORATION, a
Delaware corporation, as seller (the "SELLER"), PILGRIM=S PRIDE
CORPORATION, a Delaware corporation ("Pilgrim's Pride"), as initial
servicer (in such capacity, together with its successors and permitted
assigns in such capacity, the "SERVICER"), POOLED ACCOUNTS RECEIVABLE
CAPITAL CORPORATION, a Delaware corporation (the "PURCHASER"), and
NESBITT BURNS SECURITIES INC., a Delaware corporation ("NESBITT BURNS")
as agent for the Purchaser (in such capacity, together with its
successors and assigns in such capacity, the "AGENT").
PRELIMINARY STATEMENTS. Certain terms that are capitalized and used
throughout this Agreement are defined in EXHIBIT I to this Agreement.
References in the Exhibits hereto to "the Agreement" refer to this
Agreement, as amended, modified or supplemented from time to time.
The Seller desires to sell, transfer and assign an undivided
variable percentage interest in a pool of receivables, and the Purchaser
desires to acquire such undivided variable percentage interest, as such
percentage interest shall be adjusted from time to time based upon, in
part, reinvestment payments which are made by the Purchaser and
additional incremental payments made to the Seller.
In consideration of the mutual agreements, provisions and covenants
contained herein, the parties hereto agree as follows:
ARTICLE I.
AMOUNTS AND TERMS OF THE PURCHASES.
Section I.1 PURCHASE FACILITY. (a) On the terms and conditions
hereinafter set forth, the Purchaser hereby agrees to purchase and make
reinvestments of undivided percentage ownership interests with regard to the
Participation from the Seller from time to time during the period from the date
hereof to the Facility Termination Date. Under no circumstances shall the
Purchaser make any such purchase or reinvestment if, after giving effect to
such purchase or reinvestment, the aggregate outstanding Investment of the
Participation would exceed the Purchase Limit.
(b) The Seller may, upon at least 30 Business Days' notice to the
Agent, terminate the purchase facility provided in this SECTION 1 in
whole or, from time to time, irrevocably reduce in part the unused
portion of the Purchase Limit; PROVIDED that each partial reduction shall
be in the amount of at least $1,000,000, or an integral multiple of
$100,000 in excess thereof.
Section I.2. MAKING PURCHASES. (a) Each purchase (but
not reinvestments) of undivided ownership interests with regard to the
Participation hereunder shall be made upon the Seller's irrevocable
written notice in the form of Annex B delivered to the Agent in
accordance with SECTION 5.2 (which notice must be received by the Agent
prior to 11:00 a.m., Chicago time) on the second Business Day next
preceding the date of such proposed purchase. Each such notice of any
such proposed purchase shall specify the desired amount and date of such
purchase and the desired duration of the initial Yield Period for the
resulting Participation. The Agent shall select the duration of such
initial Yield Period, and each subsequent Yield Period in its discretion;
PROVIDED that it shall use reasonable efforts, taking into account market
conditions, to accommodate Seller's preferences.
(b) On the date of each purchase (but not reinvestments) of
undivided ownership interests with regard to the Participation hereunder,
the Purchaser shall, upon satisfaction of the applicable conditions set
forth in EXHIBIT II hereto, make available to the Agent at its office at
111 West Monroe Street, Chicago, Illinois 60603, the amount of such
purchase (set forth in each notice delivered in accordance with Section
1.2(a)) in same day funds, and after the Agent's receipt of such funds,
the Agent shall make such funds immediately available to the Seller at
such office.
(c) Effective on the date of each purchase pursuant to this
SECTION 1.2 and each reinvestment pursuant to SECTION 1.4, the Seller
hereby sells and assigns to the Purchaser an undivided percentage
ownership interest in (i) each Pool Receivable then existing, (ii) all
Related Security with respect to such Pool Receivables, and (iii)
Collections with respect to, and other proceeds of, such Pool Receivables
and Related Security.
(d) To secure all of the Seller's obligations (monetary or
otherwise) under this Agreement and the other Transaction Documents to
which it is a party, whether now or hereafter existing or arising, due or
to become due, direct or indirect, absolute or contingent, the Seller
hereby grants to the Purchaser a security interest in all of the Seller's
right, title and interest (including without limitation any undivided
interest of the Seller) in, to and under all of the following, whether
now or hereafter owned, existing or arising: (A) all Pool Receivables,
(B) all Related Security with respect to each such Pool Receivable, (C)
all Collections with respect to each such Pool Receivable, (D) the Lock
Box Accounts and all amounts on deposit therein representing proceeds of
the Pool Receivables and proceeds of the Related Security with respect
thereto, the Collection Account and Liquidation Account and all amounts
on deposit therein and all certificates and instruments, if any, from
time to time evidencing such Lock Box Accounts, Collection Account and
Liquidation Account and such amounts on deposit therein, and (E) all
proceeds of, and all amounts received or receivable under any or all of,
the foregoing. The Purchaser shall have, with respect to the property
described in this SECTION 1.2(D), and in addition to all the other rights
and remedies available to the Purchaser, all the rights and remedies of a
secured party under any applicable UCC.
Section I.3. PARTICIPATION COMPUTATION.
The Participation shall be initially computed on the date of the initial
purchase hereunder. Thereafter until the Termination Date, the
Participation shall be automatically recomputed (or deemed to be
recomputed) on each Business Day other than a Termination Day. The
Participation, as computed (or deemed recomputed) as of the day
immediately preceding the Termination Date, shall thereafter remain
constant. The Participation shall become zero when the Investment
thereof and Discount thereon shall have been paid in full, all the
amounts owed by the Seller hereunder to the Purchaser, the Agent, and any
other Indemnified Party or Affected Person are paid in full and the
Servicer shall have received the accrued Servicing Fee thereon.
Section I.4. SETTLEMENT PROCEDURES.
(a) Collection of the Pool Receivables shall be administered by the
Servicer in accordance with the terms of this Agreement. The Seller shall
provide to the Servicer on a timely basis all information needed for such
administration, including notice of the occurrence of any Termination Day
and current computations of the Participation.
(b) The Servicer shall, on each day on which Collections of Pool
Receivables are received (or deemed received) by the Seller or Servicer,
transfer such Collections from the Lock-Box Account(s) and deposit on
such day such Collections into the Collection Account. With respect to
all Collections on deposit in the Collection Account on such day, the
Servicer shall:
(i) if such day is not a Termination Day, set aside within the
Collection Account (or if such day is a Termination Day, transfer to
the Liquidation Account) for the benefit of the Purchaser, out of
the percentage of such Collections represented by the Participation,
FIRST an amount equal to the Discount accrued through such day for
each Portion of Investment and not previously set aside and SECOND,
to the extent funds are available therefor, an amount equal to the
Servicing Fee, the Commitment Fee and the Program Fee accrued
through such day for the Participation and not previously set aside;
and
(ii) subject to SECTION 1.4(F), if such day is not a Termination
Day, remit to the Seller, on behalf of the Purchaser, the remainder
of the percentage of such Collections, represented by the
Participation, to the extent representing a return on the
Investment; such Collections shall be automatically reinvested in
Pool Receivables, and in the Related Security and Collections and
other proceeds with respect thereto, and the Participation shall be
automatically recomputed pursuant to SECTION 1.3; IT BEING
UNDERSTOOD, that prior to remitting to the Seller the remainder of
such Collections by way of reinvestment in Pool Receivables, the
Servicer shall have calculated the Participation on such day, and if
such Participation shall exceed 100% of the Net Receivables Pool
Balance on such day, such Collections shall not be remitted to the
Seller but shall be transferred to the Liquidation Account for the
benefit of the Purchaser in accordance with PARAGRAPH (III) below;
(iii) if such day is a Termination Day, (A) transfer to the
Liquidation Account for the benefit of the Purchaser (x) the amounts
set aside in the Collection Account for the benefit of the Purchaser
pursuant to PARAGRAPH (i) above and not so previously transferred to
the Liquidation Account, and (y) the entire remainder of the
percentage of the Collections represented by the Participation;
PROVIDED that so long as the Facility Termination Date has not
occurred if any amounts are so transferred to the Liquidation
Account on any Termination Day and thereafter the conditions set
forth in SECTION 2 of EXHIBIT II are satisfied or are waived by the
Agent, such amounts previously transferred to the Liquidation
Account shall, to the extent representing a return on the
Investment, be reinvested in accordance with the preceding PARAGRAPH
(II) on the day of such subsequent satisfaction or waiver of
conditions; and (B) transfer to the Liquidation Account for the
Purchaser the entire remainder of the Collections in the Collection
Account represented by the Seller's share of the Collections, if
any; PROVIDED that so long as the Facility Termination Date has not
occurred if any amounts are so transferred to the Liquidation
Account pursuant to CLAUSE (B) above on any Termination Day and
thereafter, the conditions set forth in SECTION 2 of EXHIBIT II are
satisfied or are waived by the Agent, such previously set aside
amounts shall be distributed to the Seller on the day of such
subsequent satisfaction or waiver of conditions; PROVIDED, FURTHER,
if any amounts are so transferred to the Liquidation Account on any
Termination Day and thereafter the Investment, Program Fees,
Discount and Servicing Fees with respect to the Participation and
all other amounts payable by the Seller to the Purchaser, the Agent
of any other Indemnified Party or Affected Person hereunder shall
have been paid in full, any remaining amounts on deposit in the
Liquidation Account shall be distributed to the Seller for its own
account; and
(iv) during such times as amounts are required to be reinvested
in accordance with the foregoing PARAGRAPH (II) or the proviso to
PARAGRAPH (III), release to the Seller (subject to SECTION 1.4(F))
for its own account any Collections in excess of such amounts, the
amounts that are required to be set aside within the Collection
Account pursuant to PARAGRAPH (I) above and (z) in the event the
Seller is not the Servicer, all reasonable and appropriate out-of-
pocket costs and expenses of such Servicer of servicing, collecting
and administering the Pool Receivables.
(c) The Servicer shall deposit into the Purchaser's Account (or
such other account designated by the Agent), on the last day of each
Settlement Period relating to a Portion of Investment:
(i) Collections held on deposit in the Collection Account and
the Liquidation Account for the benefit of the Purchaser pursuant to
SECTION 1.4(B)(I) in respect of accrued Discount and the Program
Fees and Commitment Fees with respect to such Portion of Investment;
(ii) Collections held on deposit in the Liquidation Account for
the benefit of the Purchaser pursuant to SECTION 1.4(F) with respect
to such Portion of Investment; and
(iii) the lesser of (x) the amount of Collections then held on
deposit in the Liquidation Account for the benefit of the Purchaser
pursuant to SECTION 1.4(B)(III) and (y) such Portion of Investment.
The Servicer shall deposit to its own account from Collections held on
deposit in the Collection Account and the Liquidation Account pursuant
to SECTION 1.4(B)(I) in respect of the accrued Servicing Fee, an amount
equal to such accrued Servicing Fee.
(d) Upon receipt of funds deposited into the Purchaser's Account
pursuant to SECTION 1.4(C) with respect to any Portion of Investment, the
Agent shall cause such funds to be distributed as follows:
(i) if such distribution occurs on a day that is not a
Termination Day, FIRST to the Purchaser in payment in full of all
accrued Discount with respect to such Portion of Investment, SECOND,
to the Purchaser in payment of accrued and unpaid Program Fees and
Commitment Fees, and THIRD, if the Servicer has set aside amounts in
respect of the Servicing Fee pursuant to SECTION 1.4(B)(I) and has
not deposited such amounts to its own account pursuant to SECTION
1.4(C), to the Servicer (payable in arrears on the last day of each
calendar month) in payment in full of accrued Servicing Fees so set
aside with respect to such Portion of Investment; and
(ii) if such distribution occurs on a Termination Day, FIRST to
the Purchaser in payment in full of all accrued Discount with
respect to such Portion of Investment, SECOND to the Purchaser in
payment in full of such Portion of Investment, THIRD to the
Purchaser in payment of accrued and unpaid Program Fees and
Commitment Fees, FOURTH, if Seller or any of its Affiliates is not
the Servicer, to the Servicer in payment in full of all accrued
Servicing Fees with respect to such Portion of Investment, and
FIFTH, if the Investment and accrued Discount with respect to each
Portion of Investment have been reduced to zero, and all accrued
Servicing Fees payable to the Servicer (if other than the Seller)
have been paid in full, to the Purchaser, the Agent and any other
Indemnified Party or Affected Person in payment in full of any other
amounts owed thereto by the Seller hereunder and then to the
Servicer (if the Servicer is the Seller) in payment in full of all
accrued Servicing Fees.
After the Investment, Program Fees, Discount and Servicing Fees with
respect to the Participation, and any other amounts payable by the Seller
to the Purchaser, the Agent or any other Indemnified Party or Affected
Person hereunder, have been paid in full, all additional Collections with
respect to the Participation shall be paid to the Seller for its own
account.
(c) For the purposes of this SECTION 1.4:
(i) if on any day the Outstanding Balance of any Pool Receivable is
reduced or adjusted as a result of any defective, rejected,
returned, repossessed or foreclosed goods or services, or any
discount, rebate or other adjustment made by the Seller, the
Originator or Servicer, or any setoff or dispute between the Seller,
the Originator or the Servicer (if the Servicer is Pilgrim=s Pride
or an Affiliate thereof) and an Obligor, the Seller shall be deemed
to have received on such day a Collection of such Pool Receivable in
the amount of such reduction or adjustment;
(ii) if on any day any of the representations or warranties in
PARAGRAPHS (F) or (L) of EXHIBIT III is not true with respect to any
Pool Receivable, the Seller shall be deemed to have received on such
day a Collection of such Pool Receivable in full;
(iii) except as provided in PARAGRAPH (I) or (II) of this
SECTION 1.4(E), or as otherwise required by applicable law or the
relevant Contract, all Collections received from an Obligor of any
Receivable shall be applied to the Receivables of such Obligor in
the order of the age of such Receivables, starting with the oldest
such Receivable, unless such Obligor designates in writing its
payment for application to specific Receivables; and
(iv) if and to the extent the Agent or the Purchaser shall be
required for any reason to pay over to an Obligor (or any trustee,
receiver, custodian or similar official in any Insolvency
Proceeding) any amount received by it hereunder, such amount shall
be deemed not to have been so received but rather to have been
retained by the Seller and, accordingly, the Agent or the Purchaser,
as the case may be, shall have a claim against the Seller for such
amount, payable when and to the extent that any distribution from or
on behalf of such Obligor is made in respect thereof.
(f) If at any time the Seller shall wish to cause the reduction of
a Portion of Investment (but not to commence the liquidation, or
reduction to zero, of the entire Investment of the Participation), the
Seller may do so as follows:
(i) the Seller shall give the Agent at least five Business
Days' prior written notice thereof (including the amount of such
proposed reduction and the proposed date on which such reduction
will commence),
(ii) on the proposed date of commencement of such reduction and
on each day thereafter, the Servicer shall cause Collections with
respect to such Portion of Investment not to be reinvested until the
amount thereof not so reinvested shall equal the desired amount of
reduction, and
(iii) the Servicer shall hold such Collections in the Liquidation
Account for the benefit of the Purchaser, for payment to the Agent
on the last day of the current Settlement Period relating to such
Portion of Investment, and the applicable Portion of Investment
shall be deemed reduced in the amount to be paid to the Agent only
when in fact finally so paid;
provided that,
A. the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of $500,000, and the
entire Investment of the Participation after giving effect to such
reduction shall be not less than $1,000,000 unless the entire
Investment shall have been reduced to zero,
B. the Seller shall choose a reduction amount, and the date
of commencement thereof, so that to the extent practicable such
reduction shall commence and conclude in the same Yield Period, and
C. if two or more Portions of Investment shall be outstanding
at the time of any proposed reduction, such proposed reduction shall
be applied, unless the Seller shall otherwise specify in the notice
given pursuant to SECTION 1.4(F)(I), to the Portion of Investment
with the shortest remaining Yield Period.
Section I.5. FEES. The Seller shall pay to the Agent
certain fees in the amounts and on the dates set forth in a letter of
even date herewith between the Seller and the Agent (as the same may be
amended, amended and restated, supplemented or modified, the "FEE
LETTER") delivered pursuant to SECTION 1 of EXHIBIT II, as such letter
agreement may be amended, supplemented or otherwise modified from time to
time.
Section I.6. PAYMENTS AND COMPUTATIONS, ETC
(a) All amounts to be paid or deposited by the Seller
or the Servicer hereunder shall be paid or deposited no later than noon
(Chicago time) on the day when due in same day funds to the Purchaser's
Account. All amounts received after noon (Chicago time) will be deemed
to have been received on the immediately succeeding Business Day.
(b) The Seller shall, pay interest on any amount not paid or
deposited by the Seller or Servicer when due hereunder, at an interest
rate equal to 2.0% PER ANNUM above the Base Rate, payable on demand.
(c) All computations of interest under SUBSECTION (B) above and all
computations of Discount, fees, and other amounts hereunder shall be made
on the basis of a year of 360 days (other than Discount calculated of the
Base Rate which shall be computed on the basis of a year of 365 or 366
days, as the case may be) for the actual number of days elapsed.
Whenever any payment or deposit to be made hereunder shall be due on a
day other than a Business Day, such payment or deposit shall be made on
the next succeeding Business Day and such extension of time shall be
included in the computation of such payment or deposit.
(d) Notwithstanding anything to the contrary in this SECTION 1.6, it is
the intention of the parties hereto to conform strictly to applicable
usury laws and, the obligations of the Seller to the Purchaser under this
Agreement shall be subject to the limitation that payments of interest
(or of other amounts constituting interest under applicable law) to the
Purchaser shall not be required to the extent that receipt thereof would
be in excess of the Highest Lawful Rate (as defined below), or otherwise
contrary to provisions of law applicable to Purchaser limiting rates of
interest which may be charged or collected by Purchaser. Accordingly, if
amounts paid in respect of interest under this Agreement would exceed the
Highest Lawful Rate or otherwise be usurious under applicable law
(including the federal and state laws of the United States of America, or
of any other jurisdiction whose laws may be mandatorily applicable) then,
notwithstanding anything to the contrary in this Agreement, it is agreed
as follows as to Purchaser: (i) the provisions of this SUBSECTION (D)
shall govern and control over any other provision in this Agreement; (ii)
the aggregate of all consideration which constitutes interest under
applicable law that is contracted for, charged or received under this
Agreement by Purchaser shall under no circumstances exceed the maximum
amount of interest allowed by applicable law (such maximum lawful
interest rate, if any, with respect to such Purchaser herein called the
"HIGHEST LAWFUL RATE"), and all amounts owed under this Agreement shall
be held subject to reduction and (x) the amount of interest which would
otherwise be payable to Purchaser hereunder shall be automatically
reduced to the amount allowed under applicable law and (y) any unearned
interest paid by the Seller in excess of the Highest Lawful Rate shall be
credited to the Seller by Purchaser; and (iii) if at any time the
interest provided pursuant to this Agreement, together with any other
fees, late charges and other sums payable pursuant to or in connection
with this Agreement and deemed interest under applicable law, exceeds
that amount which would have accrued at the Highest Lawful Rate, the
amount of interest and any such fees, charges and sums to accrue to
Purchaser pursuant to this Agreement shall be limited, notwithstanding
anything to the contrary in this Agreement to that amount which would
have accrued at the Highest Lawful Rate for the Purchaser, but any
subsequent reductions, as applicable, shall not reduce the interest to
accrue pursuant to this Agreement below the Purchaser's Highest Lawful
Rate until the total amount of interest payable to Purchaser (including
all consideration which constitutes interest) equals the amount of
interest which would have been payable to Purchaser (including all
consideration which constitutes interest) assuming a varying rate per
annum equal to the interest provided pursuant to this Agreement at all
times in effect, PLUS the amount of fees which would have been received
but for the effect of this SUBSECTION (D). For purposes of Article 5069-
1.04, Vernon's Texas Civil Statutes, as amended, to the extent, if any,
applicable to the Purchaser, the Seller agrees that the Highest Lawful
Rate for Purchaser shall be the "indicated (weekly) rate ceiling" as
defined in said Article, provided that Purchaser may also rely, to the
extent permitted by applicable laws, on alternative maximum rates of
interest under other laws applicable to Purchaser if greater. To the
extent that Texas law shall be applicable to the determination of the
Highest Lawful Rate of Purchaser, the provisions of Chapter 15 of
Subtitle 3, Title 79 of the Revised Civil Statutes of Texas, 1925, as
amended, shall not apply to this Agreement.
Section I.7. DIVIDING OR COMBINING PORTIONS OF THE INVESTMENT OF
THE PARTICIPATION. The Seller may, on the last day of any Yield Period,
either (i) divide the Investment of the Participation into two or more
portions (each, a "PORTION OF INVESTMENT") equal, in aggregate, to the
Investment of the Participation, PROVIDED that after giving effect to
such division the amount of each such Portion of Investment shall be not
less than $1,000,000, or (ii) combine any two or more Portions of
Investment outstanding on such last day and having Yield Periods ending
on such last day into a single Portion of Investment equal to the
aggregate of the Investment of such Portions of Investment.
Section I.8. INCREASED COSTS. (a) If the Agent, the
Purchaser, any Liquidity Bank, any other Program Support Provider or any
of their respective Affiliates (each an "AFFECTED PERSON") reasonably
determines that the existence of or compliance with (i) any law or
regulation or any change therein or in the interpretation or application
thereof, in each case adopted, issued or occurring after the date hereof
or (ii) any request, guideline or directive from any central bank or
other Governmental Authority (whether or not having the force of law)
issued or occurring after the date of this Agreement affects or would
affect the amount of capital required or expected to be maintained by
such Affected Person and such Affected Person determines that the amount
of such capital is increased by or based upon the existence of any
commitment to make purchases of or otherwise to maintain the investment
in Pool Receivables related to this Agreement or any related liquidity
facility or credit enhancement facility and other commitments of the same
type, then, upon demand by such Affected Person (with a copy to the
Agent), the Seller shall within 15 days of demand pay to the Agent, for
the account of such Affected Person, from time to time as specified by
such Affected Person, additional amounts sufficient and reasonably
calculated to compensate such Affected Person in the light of such
circumstances, to the extent that such Affected Person reasonably
determines such increase in capital to be allocable to the existence of
any of such commitments. A certificate as to such amounts submitted to
the Seller and the Agent by such Affected Person shall be conclusive and
binding for all purposes absent manifest error.
(b) If, due to either (i) the introduction of or any change (other
than any change by way of imposition or increase of reserve requirements
referred to in SECTION 1.9) in or in the interpretation of any law or
regulation or (ii) compliance with any guideline or request from any
central bank or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to any Affected
Person of agreeing to purchase or purchasing, or maintaining the
ownership of the Participation in respect of which Discount is computed
by reference to the Eurodollar Rate, then, upon demand by such Affected
Person, the Seller shall immediately pay to such Affected Person, from
time to time as specified, additional amounts sufficient to compensate
such Affected Person for such increased costs. A certificate as to such
amounts submitted to the Seller by such Affected Person shall be
conclusive and binding for all purposes absent manifest error.
(c) Each Affected Person will notify Seller and the Agent promptly
after it has received official notice of any event occurring after the
date hereof which will entitle such Affected Person to such additional
amounts as compensation pursuant to this SECTION 1.8. Such additional
amounts shall accrue from the date as to which such Affected Person
becomes subject to such additional costs as a result of such event (or if
such notice of such event is not given to Seller by such Affected Person
within 90 days after such Affected Person received such official notice
of such event, from the date which is 90 days prior to the date such
notice is given to Seller by such Affected Person).
Section I.9. REQUIREMENTS OF LAW. (a) In the
event that any Affected Person reasonably determines that the existence
of or compliance with (i) any law or regulation or any change therein or
in the interpretation or application thereof, in each case adopted,
issued or occurring after the date hereof or (ii) any request, guideline
or directive from any central bank or other Governmental Authority
(whether or not having the force of law) issued or occurring after the
date of this Agreement:
(i) does or shall subject such Affected Person to any tax of
any kind whatsoever with respect to this Agreement, any increase in
the Participation or in the amount of Investment relating thereto,
or does or shall change the basis of taxation of payments to such
Affected Person on account of Collections, Discount or any other
amounts payable hereunder (excluding taxes imposed on the overall
net income or gross receipts of such Affected Person, and franchise
taxes imposed on such Affected Person, by the jurisdiction under the
laws of which such Affected Person is organized or a political
subdivision thereof);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for
the account of, purchases, advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of
such Affected Person which are not otherwise included in the
determination of the Eurodollar Rate or the Base Rate hereunder; or
(iii) does or shall impose on such Affected Person any other
condition;
and the result of any of the foregoing is (x) to increase the cost to
such Affected Person of acting as Agent, or of agreeing to purchase or
purchasing or maintaining the ownership of undivided ownership interests
with regard to the Participation (or interests therein) or any Portion of
Investment in respect of which Discount is computed by reference to the
Eurodollar Rate or the Base Rate or (y) to reduce any amount receivable
hereunder (whether directly or indirectly) funded or maintained by
reference to the Eurodollar Rate or the Base Rate, then, in any such
case, within 15 days demand by such Affected Person the Seller shall pay
such Affected Person any additional amounts sufficient and reasonably
calculated to compensate such Affected Person for such additional cost or
reduced amount receivable; provided, however, that such amount shall be
reduced by the net amount of any off setting tax benefit which such
Affected Person receives as a result of such additional cost. All such
amounts shall be payable as incurred. A certificate from such Affected
Person to the Seller certifying, in reasonably specific detail, the basis
for, calculation of, and amount of such additional costs or reduced
amount receivable shall be conclusive in the absence of manifest error;
PROVIDED, however, that no Affected Person shall be required to disclose
any confidential or tax planning information in any such certificate.
(b) Each Affected Person will notify Seller and the Agent promptly after
it has received official notice of any event occurring after the date
hereof which will entitle such Affected Person to such additional amounts
as compensation pursuant to this SECTION 1.9. Such additional amounts
shall accrue from the date as to which such Affected Person becomes
subject to such additional costs as a result of such event (or if such
notice of such event is not given to Seller by such Affected Person
within 90 days after such Affected Person received such official notice
of such event, from the date which is 90 days prior to the date such
notice is given to Seller by such Affected Person).
Section I.10. INABILITY TO DETERMINE EURODOLLAR RATE. In the event that
the Agent shall have determined prior to the first day of any Yield Period
(which determination shall be conclusive and binding upon the parties hereto)
by reason of circumstances affecting the interbank Eurodollar market, either
(a) dollar deposits in the relevant amounts and for the relevant Yield
Period are not available, (b) adequate and reasonable means do not exist
for ascertaining the Eurodollar Rate for such Yield Period or (c) the
Eurodollar Rate determined pursuant hereto does not accurately reflect
the cost to the Purchaser (as conclusively determined by the Agent) of
maintaining any Portion of Investment during such Yield Period, the Agent
shall promptly give telephonic notice of such determination, confirmed in
writing, to the Seller prior to the first day of such Yield Period. Upon
delivery of such notice (a) no Portion of Investment shall be funded
thereafter at the Bank Rate determined by reference to the Eurodollar
Rate, unless and until the Agent shall have given notice to the Seller
that the circumstances giving rise to such determination no longer exist,
and (b) with respect to any outstanding Portions of Investment then
funded at the Bank Rate determined by reference to the Eurodollar Rate,
such Bank Rate shall automatically be converted to the Bank Rate
determined by reference to the Base Rate at the respective last days of
the then-current Yield Periods relating to such Portions of Investment.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section II.1.REPRESENTATIONS AND WARRANTIES; COVENANTS.
The Seller hereby makes the representations and warranties, and hereby agrees
to perform and observe the covenants, set forth in EXHIBITS III and IV,
respectively hereto.
Section II.2. TERMINATION EVENTS. If any of
the Termination Events set forth in EXHIBIT V hereto shall occur and be
continuing, the Agent may, by notice to the Seller, declare the Facility
Termination Date to have occurred (in which case the Facility Termination
Date shall be deemed to have occurred); PROVIDED that, automatically upon
the occurrence of any event (without any requirement for the passage of
time or the giving of notice) described in SUBSECTION (G), (I) or (K) of
EXHIBIT V, the Facility Termination Date shall occur. Upon any such
declaration, occurrence or deemed occurrence of the Facility Termination
Date, the Purchaser and the Agent shall have, in addition to the rights
and remedies which they may have under this Agreement, all other rights
and remedies provided after default under the UCC and under other
applicable law, which rights and remedies shall be cumulative.
ARTICLE III.
INDEMNIFICATION
Section III.1. (a) INDEMNITIES BY THE SELLER. Without limiting any other
rights that the Agent or the Purchaser or any of their respective Affiliates,
employees, agents, successors, transferees or assigns (each, an "INDEMNIFIED
PARTY") may have hereunder or under applicable law, the Seller hereby agrees to
indemnify each Indemnified Party from and against any and all claims,
damages, expenses, losses and liabilities (including Attorney Costs) (all
of the foregoing being collectively referred to as "INDEMNIFIED AMOUNTS")
arising out of or resulting from this Agreement or other Transaction
Documents (whether directly or indirectly) or the use of proceeds of
purchases or reinvestments or the ownership of the Participation, or any
interest therein, or in respect of any Receivable or any Contract,
excluding, however, (a) Indemnified Amounts to the extent resulting from
gross negligence or willful misconduct on the part of such Indemnified
Party, (b) recourse (except as otherwise specifically provided in this
Agreement) for uncollectible Receivables to be written off consistent
with the Credit and Collection Policy, or (c) any overall gross receipts
or net income taxes or franchise taxes imposed on such Indemnified Party
by the jurisdiction under the laws of which such Indemnified Party is
organized or any political subdivision thereof. Without limiting or
being limited by the foregoing, and subject to the exclusions set forth
in the preceding sentence, the Seller shall pay on demand to each
Indemnified Party any and all amounts necessary to indemnify such
Indemnified Party from and against any and all Indemnified Amounts
relating to or resulting from any of the following:
(i) the failure of any Receivable included in the calculation
of the Net Receivables Pool Balance as an Eligible Receivable to be
an Eligible Receivable, the failure of any information contained in
a Servicer Report to be true and correct, or the failure of any
other information provided to the Purchaser or the Agent with
respect to Receivables or this Agreement to be true and correct;
(ii) the failure of any representation or warranty or statement
made or deemed made by the Seller (or any of its officers) under or
in connection with this Agreement to have been true and correct in
all respects when made;
(iii) the failure by the Seller to comply with any applicable
law, rule or regulation with respect to any Pool Receivable or the
related Contract; or the failure of any Pool Receivable or the
related Contract to conform to any such applicable law, rule or
regulation;
(iv) the failure to vest in the Purchaser a valid and
enforceable (A) perfected undivided percentage ownership interest,
to the extent of the Participation, in the Receivables in, or
purporting to be in, the Receivables Pool and the Related Security
and Collections with respect thereto and (B) first priority
perfected security interest in the items described in SECTION
1.2(D), in each case, free and clear of any Adverse Claim;
(v) the failure to have filed, or any delay in filing, financing
statements or other similar instruments or documents under the UCC
of any applicable jurisdiction or other applicable laws with respect
to any Receivables in, or purporting to be in, the Receivables Pool
and the Related Security and Collections in respect thereof, whether
at the time of any purchase or reinvestment or at any subsequent
time;
(vi) any dispute, claim, offset or defense (other than discharge
in bankruptcy or similar insolvency proceeding of the Obligor) of
the Obligor to the payment of any Receivable in, or purporting to be
in, the Receivables Pool (including, without limitation, a defense
based on such Receivable or the related Contract not being a legal,
valid and binding obligation of such Obligor enforceable against it
in accordance with its terms), or any other claim resulting from the
sale of the goods or services related to such Receivable or the
furnishing or failure to furnish such goods or services or relating
to collection activities with respect to such Receivable (if such
collection activities were performed by the Seller or any of its
Affiliates acting as Servicer or by any agent or independent
contractor retained by the Seller or any of its Affiliates);
(vii) any failure of the Seller to perform its duties or
obligations in accordance with the provisions hereof or to perform
its duties or obligations under the Contracts;
(viii) any products liability or other claim, investigation,
litigation or proceeding arising out of or in connection with
merchandise, insurance or services which are the subject of any
Contract;
(ix) the commingling of Collections of Pool Receivables at any
time with other funds;
(x) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of purchases or reinvestments
or the ownership of the Participation or in respect of any
Receivable, Related Security or Contract;
(xi) any reduction in Investment as a result of the distribution
of Collections pursuant to SECTION 1.4(E)(IV), in the event that all
or a portion of such distributions shall thereafter be rescinded or
otherwise must be returned for any reason; or
(xii) any tax or governmental fee or charge (other than any tax
upon or measured by net income or gross receipts or franchise tax),
all interest and penalties thereon or with respect thereto, and all
reasonable out-of-pocket costs and expenses, including the
reasonable fees and expenses of counsel in defending against the
same, which may arise by reason of the purchase or ownership of the
Participation, or other interests in the Receivables Pool or in any
Related Security or Contract.
(b) INDEMNITY BY THE SERVICER. Without limiting any other rights which
any such person may have hereunder under applicable law, Servicer hereby
agrees to indemnify each Indemnified Party, forthwith on demand, from and
against any and all Indemnified Amounts awarded against or incurred by
any of them arising out of or relating to:
(i) any representation or warranty made by Servicer under
or in connection with any Transaction Document or any information or
report delivered by or on behalf of Servicer pursuant hereto, which
shall have been false, incorrect or misleading in any material
respect when made or deemed made;
(ii) the failure by Servicer to comply with any
applicable law, rule or regulation (including truth in lending, fair
credit billing, usury, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) with
respect to any Pool Receivable or other related Contract; or
(iii) any failure of Servicer to perform its duties,
covenants and obligations in accordance with the applicable
provisions of this Agreement.
ARTICLE IV.
ADMINISTRATION AND COLLECTIONS
Section IV.1. APPOINTMENT OF SERVICER.
(a) The servicing, administering and collection of the Pool Receivables
shall be conducted by the Person so designated from time to time as
Servicer in accordance with this SECTION 4.1. Upon (but not prior to),
the occurrence of a Termination Event, the Agent may designate as
Servicer any Person (including itself) to succeed the Servicer or any
successor Servicer, on the condition in each case that any such Person so
designated shall agree to perform the duties and obligations of the
Servicer pursuant to the terms hereof. Until the Agent gives notice to
the Seller and Pilgrim's Pride (in accordance with this SECTION 4.1) of
the designation of a new Servicer, Pilgrim=s Pride is hereby designated
as, and hereby agrees to perform the duties and obligations of, the
Servicer pursuant to the terms hereof.
(b) Upon the designation of a successor Servicer as set forth in
SECTION 4.1(A) hereof, the Servicer agrees that it will terminate its
activities as Servicer hereunder in a manner which the Agent determines
will facilitate the transition of the performance of such activities to
the new Servicer, and the Servicer shall cooperate with and assist such
new Servicer. Such cooperation shall include (without limitation) access
to and transfer of records and use by the new Servicer of all licenses or
software necessary or desirable to collect the Pool Receivables and the
Related Security.
(c) The Servicer acknowledges that, in making their decision to
execute and deliver this Agreement, the Agent and the Purchaser have
relied on the Servicer's agreement to act as Servicer hereunder.
Accordingly, the Servicer agrees that it will not voluntarily resign as
Servicer.
(d) The Servicer may delegate its duties and obligations hereunder to
any subservicer (each, a "SUB-SERVICER"); provided that, in each such
delegation (i) such Sub-Servicer shall agree in writing, to perform the
duties and obligations of the Servicer pursuant to the terms hereof, (ii)
the Servicer shall remain primarily liable to the Purchaser and the Agent
for the performance of the duties and obligations so delegated, (iii) the
Seller, the Agent and the Purchaser shall have the right to look solely
to the Servicer for performance and (iv) the terms of any agreement with
any Sub-Servicer shall provide that the Agent may terminate such
agreement upon the termination of the Servicer hereunder by giving notice
of its desire to terminate such agreement to the Servicer (and the
Servicer shall provide appropriate notice to such Sub-Servicer).
Section IV.2. DUTIES OF SERVICER. (a) The Servicer shall take or cause to
be taken all such action as may be necessary or advisable to collect each Pool
Receivable from time to time, all in accordance with this Agreement and all
applicable laws, rules and regulations, with reasonable care and diligence, and
in accordance with the Credit and Collection Policy. The Servicer shall set
aside for the accounts of the Seller and the Purchaser the amount of the
Collections to which each is entitled in accordance with ARTICLE I hereto.
The Servicer may, in accordance with the Credit and Collection Policy, extend
the maturity of any Pool Receivable (but not beyond thirty (30) days) and
extend the maturity or adjust the Outstanding Balance of any Defaulted
Receivable as the Servicer may determine to be appropriate to maximize
Collections thereof; PROVIDED, HOWEVER, that (i) such extension or
adjustment shall not alter the status of such Pool Receivable as a
Delinquent Receivable or a Defaulted Receivable or limit the rights of
the Purchaser or the Agent under this Agreement and (ii) if a Termination
Event has occurred and is continuing and Pilgrim=s Pride or any of its
Affiliates is still serving as Servicer, the Servicer may make such
extension or adjustment only upon the prior written approval of the
Agent. The Seller shall deliver to the Servicer and the Servicer shall
hold for the benefit of the Seller and the Agent (for the benefit of the
Purchaser and individually) in accordance with their respective
interests, all records and documents (including without limitation
computer tapes or disks) with respect to each Pool Receivable.
Notwithstanding anything to the contrary contained herein, the Agent may
direct the Servicer to commence or settle any legal action to enforce
collection of any Pool Receivable or to foreclose upon or repossess any
Related Security; PROVIDED, HOWEVER, that no such direction may be given
unless a Termination Event has occurred.
(b) The Servicer's obligations hereunder shall terminate on the
Final Payout Date. After such termination the Servicer shall promptly
deliver to the Seller all books, records and related materials that the
Seller previously provided to the Servicer in connection with this
Agreement.
Section IV.3. ESTABLISHMENT AND USE OF CERTAIN ACCOUNTS.
(a) LOCK-BOX ACCOUNTS. Prior to the initial purchase hereunder,
the Seller shall enter into Lock-Box Agreements establishing the Lock-Box
Accounts listed on SCHEDULE II with all of the Lock-Box Banks, and
deliver original counterparts thereof to the Agent.
(b) COLLECTION ACCOUNT. The Servicer agrees to establish the Collection
Account on or before the date of the first purchase hereunder. The
Collection Account shall be used to accept the transfer of Collections of
Pool Receivables from the Lock-Box Accounts pursuant to SECTION 1.4(B)
and for such other purposes described in the Transaction Documents.
(c) LIQUIDATION ACCOUNT. The Servicer agrees to establish the
Liquidation Account on or before the date of the first purchase
hereunder. The Liquidation Account shall be used to receive transfers of
certain amounts of the Purchaser's share of Collections of Pool
Receivables prior to the Settlement Dates and for such other purposes
described in the Transaction Documents. No funds other than those
transferred in accordance with SECTION 1.4 shall be intentionally
transferred into the Liquidation Account.
(d) PERMITTED INVESTMENTS. Any amounts in the Liquidation Account
or the Collection Account, as the case may be, may be invested by the
Liquidation Account Bank or Collection Account Bank, respectively, at
Servicer's direction, in Permitted Investments, so long as Purchaser's
interest in such Permitted Investments is perfected and such Permitted
Investments are subject to no Adverse Claims other than those of the
Purchaser provided hereunder.
(e) CONTROL OF LOCK-BOX ACCOUNTS. The Agent may at any time
following the occurrence and during the continuance of a Termination
Event give notice to each Lock-Box Bank, the Collection Account Bank and
the Liquidation Account Bank that the Agent is exercising its rights
under the Lock-Box Agreements, the Collection Account Agreement and the
Liquidation Account Agreement to do any or all of the following: (i) to
have the exclusive ownership and control of the Lock-Box Accounts to the
extent provided in the related Lock-Box Agreement, the Collection Account
and the Liquidation Account transferred to the Agent and to exercise
exclusive dominion and control over the funds deposited therein, (ii) to
have the proceeds that are sent to the respective Lock-Box Accounts be
redirected pursuant to its instructions rather than deposited in the
applicable Lock-Box Account, and (iii) to take any or all other actions
permitted under the applicable Lock-Box Agreement, the Collection Account
Agreement and the Liquidation Account Agreement. The Seller hereby
agrees that if the Agent at any time takes any action set forth in the
preceding sentence, the Agent shall have exclusive control of the
proceeds (including Collections) of all Pool Receivables and the Seller
hereby further agrees to take any other action that the Agent may
reasonably request to transfer such control. Any proceeds of Pool
Receivables received by the Seller or the Servicer, thereafter shall be
sent immediately to the Agent. The parties hereto hereby acknowledge
that if at any time the Agent takes control of any Lock-Box Account, the
Collection Account and the Liquidation Account, the Agent shall not have
any rights to the funds therein in excess of the unpaid amounts due to
the Agent, the Purchaser or any other Person hereunder.
Section IV.4. ENFORCEMENT RIGHTS. (a) At any
time following the occurrence and during the continuance of a Termination
Event:
(i) the Agent may direct the Obligors that payment of all amounts
payable under any Pool Receivable be made directly to the Agent or
its designee;
(ii) the Agent may instruct the Seller or the Servicer to give
notice of the Purchaser's interest in Pool Receivables to each
Obligor, which notice shall direct that payments be made directly to
the Agent or its designee, and upon such instruction from the Agent
the Seller or the Servicer, as applicable, shall give such notice at
the expense of the Seller; PROVIDED, that if the Seller or the
Servicer fails to so notify each Obligor, the Agent may so notify
the Obligors; and
(iii) the Agent may request the Seller or the Servicer to, and
upon such request the Seller or the Servicer, as applicable, shall,
(A) assemble all of the records necessary or desirable to collect
the Pool Receivables and the Related Security, and transfer or
license to any new Servicer the use of all software necessary or
desirable to collect the Pool Receivables and the Related Security,
and make the same available to the Agent or its designee at a place
selected by the Agent, and (B) segregate all cash, checks and other
instruments received by it from time to time constituting
Collections with respect to the Pool Receivables in a manner
acceptable to the Agent and, promptly upon receipt, remit all such
cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Agent or its designee.
(b) The Seller hereby authorizes the Agent, and irrevocably
appoints the Agent as its attorney-in-fact with full power of
substitution and with full authority in the place and stead of the
Seller, which appointment is coupled with an interest, to take after the
occurrence and during the continuance of a Termination Event any and all
steps in the name of the Seller and on behalf of the Seller necessary or
desirable, in the determination of the Agent, 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. Notwithstanding anything to the contrary contained in this
SUBSECTION (B), none of the powers conferred upon such attorney-in-fact
pursuant to the immediately preceding sentence shall subject such
attorney-in-fact to any liability if any action taken by it shall prove
to be inadequate or invalid, nor shall they confer any obligations upon
such attorney-in-fact in any manner whatsoever, except to the extent
arising out of the negligence or willful misconduct of such attorney-in-
fact.
Section IV.5. RESPONSIBILITIES OF THE SELLER. Anything herein to the
contrary notwithstanding, the Seller shall (i) perform all of its obligations,
if any, under the Contracts related to the Pool Receivables to the same extent
as if interests in such Pool Receivables had not been transferred hereunder,
and the exercise by the Agent or the Purchaser of its rights hereunder shall
not relieve the Seller from such obligations and (ii) pay when due any taxes,
including, without limitation, any sales taxes payable in connection with
the Pool Receivables and their creation and satisfaction. The Agent and
the Purchaser shall not have any obligation or liability with respect to
any Pool Receivable, any Related Security or any related Contract, nor
shall any of them be obligated to perform any of the obligations of the
Seller under any of the foregoing.
Section IV.6. SERVICING FEE. The Servicer shall
be paid a fee, through distributions contemplated by SECTION 1.4(D),
equal to 0.50% PER ANNUM of the average outstanding Net Receivables Pool
Balance.
ARTICLE V.
MISCELLANEOUS
Section V.1. AMENDMENTS, ETC. No amendment or
waiver of any provision of this Agreement or consent to any departure by
the Seller or Servicer therefrom shall be effective unless in a writing
signed by the Agent, and, in the case of any amendment, by the Seller and
the Servicer and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given; PROVIDED, HOWEVER, that no such material amendment shall be
effective until the Rating Agencies have notified the Servicer and the
Agent in writing that such action will not result in a reduction or
withdrawal of the rating of any Notes. No failure on the part of the
Purchaser or Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
Section V.2. NOTICES, ETC. All notices and other
communications hereunder shall, unless otherwise stated herein, be in
writing (which shall include facsimile communication) and sent or
delivered, to each party hereto, at its address set forth under its name
on the signature pages hereof or at such other address as shall be
designated by such party in a written notice to the other parties hereto.
Notices and communications by facsimile shall be effective when sent (and
shall be followed by hard copy sent by first class mail), and notices and
communications sent by other means shall be effective when received.
Section V.3. ASSIGNABILITY. (a) This Agreement and
the Purchaser's rights and obligations herein (including ownership of the
Participation) shall be assignable, in whole or in part, by the Purchaser
and its successors and assigns with the prior written consent of the
Seller; PROVIDED, HOWEVER, that such consent shall not be unreasonably
withheld; and PROVIDED, FURTHER, that no such consent shall be required
if the assignment is made to any Affiliate of the Purchaser, any
Liquidity Bank or other Program Support Provider or any Person which is
(i) in the business of issuing Notes (including, without limitation, PAR)
and (ii) associated with or administered by the Agent or any Affiliate of
the Agent (each such Person, a "NOTE ISSUER"). Each assignor may, in
connection with the assignment, disclose to the applicable assignee any
information relating to the Seller or the Pool Receivables furnished to
such assignor by or on behalf of the Seller, the Purchaser or the Agent.
Upon the assignment of such rights and obligations by the Purchaser in
accordance with this SECTION 5.3, the assignee receiving such assignment
shall have all of the rights of the Purchaser with respect to the
Transaction Documents and the Investment (or such portion thereof as has
been assigned).
(b) The Purchaser may at any time grant to one or more banks or
other institutions (each a "LIQUIDITY BANK") party to the Liquidity
Agreement or to any other Program Support Provider participating
interests or security interests in the Participation. In the event of
any such grant by the Purchaser of a participating interest to a
Liquidity Bank or other Program Support Provider, the Purchaser shall
remain responsible for the performance of its obligations hereunder. The
Seller agrees that each Liquidity Bank or other Program Support Provider
shall be entitled to the benefits of SECTIONS 1.8, 1.9 and 1.10.
(c) This Agreement and the rights and obligations of the Agent
hereunder shall be assignable, in whole or in part, by the Agent and its
successors and assigns; PROVIDED HOWEVER, if such assignment is to a
Person other than an Affiliate of the Agent or its successors and
assigns, then such assignment shall require the prior consent of the
Seller (which consent shall not be unreasonably withheld).
(d) Except as provided in SECTION 4.1(D), neither the Seller nor
the Servicer may assign its rights or delegate its obligations hereunder
or any interest herein without the prior written consent of the Agent.
(e) Without limiting any other rights that may be available under
applicable law, the rights of the Purchaser may be enforced through it or
by its agents.
Section V.4. COSTS, EXPENSES AND TAXES. () In addition to the rights of
indemnification granted under SECTION 3.1 hereof, the Seller agrees to pay on
demand all reasonable costs and expenses in connection with the preparation,
execution, delivery and administration (including periodic auditing of Pool
Receivables) of this Agreement, the Liquidity Agreement, and the other
documents and agreements to be delivered hereunder, including all
reasonable costs and expenses relating to the amending, amending and
restating, modifying or supplementing of this Agreement, the Liquidity
Agreement and the other documents and agreements to be delivered
hereunder and the waiving of any provisions thereof, and including in all
cases, without limitation, Attorney Costs for the Agent, the Purchaser
and their respective Affiliates and agents with respect thereto and with
respect to advising the Agent, the Purchaser and their respective
Affiliates and agents as to their rights and remedies under this
Agreement and the other Transaction Documents, and all reasonable costs
and expenses, if any (including Attorney Costs), of the Agent, the
Purchaser and their respective Affiliates and agents, in connection with
the enforcement of this Agreement and the other Transaction Documents.
(b) In addition, the Seller shall pay on demand any and all stamp and
other taxes and fees payable in connection with the execution, delivery,
filing and recording of this Agreement or the other documents or
agreements to be delivered hereunder (other than taxes payable on the
gross receipts or income of any Indemnified Party), and agrees to save
each Indemnified Party harmless from and against any liabilities with
respect to or resulting from any delay in paying or omission to pay such
taxes and fees.
Section V.5. NO PROCEEDINGS; LIMITATION ON PAYMENTS. Each of the Seller,
the Servicer, the Agent, each assignee of the Participation or any interest
therein, and each Person which enters into a commitment to purchase the
Participation or interests therein, hereby covenants and agrees that it
will not institute against, or join any other Person in instituting
against, any Note Issuer (including PAR), any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding
under any federal or state bankruptcy or similar law, for one year and
one day after the latest maturing Note issued by any such Note Issuer is
paid in full.
Section V.6. CONFIDENTIALITY. Unless otherwise
required by applicable law (including the disclosure requirement of
applicable securities laws), the Seller agrees to maintain the
confidentiality of this Agreement and the other Transaction Documents
(and all drafts thereof) in communications with third parties and
otherwise; PROVIDED that this Agreement may be disclosed to (a) third
parties to the extent such disclosure is made pursuant to a written
agreement of confidentiality in form and substance reasonably
satisfactory to the Agent and (b) the Seller's legal counsel and auditors
if they agree to hold it confidential; PROVIDED that only the terms and
conditions of this agreement may be revealed to such parties and not the
details of any fees, pricing or interest rates.
Section V.7. GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF), EXCEPT TO THE EXTENT THAT THE
PERFECTION (OR THE EFFECT OF PERFECTION OR NON-PERFECTION) OF THE
INTERESTS OF THE PURCHASER IN THE POOL RECEIVABLES AND THE OTHER ITEMS
DESCRIBED IN SECTION 1.2(D) IS GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF TEXAS.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS OR OF THE UNITED STATES
FOR THE NORTHERN DISTRICT OF ILLINOIS, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH OF THE PURCHASER, THE SELLER, THE SERVICER AND THE
AGENT CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-
EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PURCHASER, THE
SELLER, THE SERVICER AND THE AGENT IRREVOCABLY WAIVES, TO THE MAXIMUM
EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED
HERETO. THE PURCHASER, THE SELLER, THE SERVICER AND THE AGENT EACH WAIVE
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY ILLINOIS LAW.
Section V.8. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and
the same agreement.
Section V.9. SURVIVAL OF TERMINATION.
The provisions of SECTIONS 1.8, 1.9, 1.10, 3.1, 5.4, 5.5, 5.6, 5.7 and
5.10 shall survive any termination of this Agreement.
Section V.10. WAIVER OF JURY TRIAL. THE
PURCHASER, THE SELLER, THE SERVICER AND THE AGENT EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS OR
OTHERWISE. THE PURCHASER, THE SELLER, THE SERVICER AND THE AGENT EACH
AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE
PARTIES HERETO FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY
PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
Section V.11. ENTIRE AGREEMENT. THIS AGREEMENT
AND THE OTHER TRANSACTION DOCUMENTS EMBODIES THE ENTIRE AGREEMENT AND
UNDERSTANDING BETWEEN THE PURCHASER, THE SELLER, THE SERVICER AND THE
AGENT, AND SUPERSEDES ALL PRIOR OR CONTEMPORANEOUS AGREEMENTS AND
UNDERSTANDINGS OF SUCH PERSONS, VERBAL OR WRITTEN, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF.
Section V.12. HEADINGS. The captions and headings of
this Agreement and in any Exhibit hereto are for convenience of reference
only and shall not affect the interpretation hereof or thereof.
Section V.13. PURCHASER'S LIABILITIES. The obligations of the Purchaser
under this Agreement are solely the corporate obligations of the Purchaser. No
recourse shall be had for any obligation or claim arising out of or based upon
this Agreement against any stockholder, employee, officer, director or
incorporator of the Purchaser; PROVIDED, HOWEVER, that this SECTION 5.13 shall
not relieve any such Person of any liability it might otherwise have for its
own gross negligence or willful misconduct. The agreements provided in this
SECTION 5.13 shall survive termination of this Agreement.
(continued on following page)
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date
first above written.
PILGRIM'S PRIDE FUNDING CORPORATION,
as Seller
By:
Name:
Title:
110 S. Texas Street
Pittsburg, Texas 75686
Attention: Clifford E. Butler
Telephone: (903)855-1000
Facsimile: (903)855-4934
PILGRIM'S PRIDE CORPORATION,
as initial Servicer
By:
Name:
Title:
110 S. Texas Street
Pittsburg, Texas 75686
Attention: Clifford E. Butler
Telephone: (903)855-1000
Facsimile: (903)855-4934
NESBITT BURNS SECURITIES INC., as Agent
By:
Name:
Title:
By:
Name:
Title:
111 West Monroe Street
Chicago, Illinois 60603
Attention: David J. Kucera
Telephone: (312) 461-3893
Facsimile: (312) 461-6327
POOLED ACCOUNTS RECEIVABLE CAPITAL
CORPORATION, as Purchaser
By:
Name:
Title:
c/o Broad Street Contract Services, Inc.
Two Wall Street
New York, New York 10005
Attention: Dwight Jenkins
Telephone: (212) 346-9007
Facsimile: (212) 346-9012
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits), the following
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).
Unless otherwise indicated, all Section, Annex, Exhibit and Schedule
references in this Exhibit are to Sections of and Annexes, Exhibits and
Schedules to the Agreement.
"ADVERSE CLAIM" means a lien, security interest or other charge
or encumbrance, or any other type of preferential arrangement, it being
understood that a lien, security interest or other charge or encumbrance,
or any other type of preferential arrangement, in favor of the Purchaser
shall not constitute an Adverse Claim.
"AFFECTED PERSON" has the meaning set forth in SECTION 1.8.
"AFFILIATE" means, as to any Person, any other Person that,
directly or indirectly, is in control of, is controlled by or is under
common control with such Person or is a director or officer of such
Person, except that with respect to the Purchaser, Affiliate shall mean
the holder(s) of its capital stock.
"AGENT" has the meaning set forth in the preamble to the
Agreement.
"APPLICABLE MARGIN" has the meaning set forth in the Fee
Letter.
"ATTORNEY COSTS" means and includes all fees and disbursements
of any law firm or other external counsel, the allocated cost of internal
legal services and all disbursements of internal counsel, to be paid as
set forth in the Fee Letter.
"AVERAGE MATURITY" means at any time that period of days equal
to the average days sales outstanding of the Pool Receivables calculated
by the Servicer in the then most recent Servicer Report; PROVIDED, that
if the Agent shall disagree with any such calculation, the Agent may
reasonably recalculate such Average Maturity, and any such recalculation
upon disclosure to Servicer and Seller shall be prima facie evidence of
such Average Maturity.
"BANK OF MONTREAL" means Bank of Montreal, a Canadian chartered
bank.
"BANK RATE" for any Yield Period for any Portion of Investment
of the Participation means an interest rate PER ANNUM equal to the
Applicable Margin above the Eurodollar Rate for such Yield Period;
provided, further, that in the case of
(i) any Yield Period on or prior to the first day of which the
Agent shall have been notified by a Liquidity Bank or the
Purchaser that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or
any central bank or other Governmental Authority asserts that
it is unlawful, for such Liquidity Bank or the Purchaser to
fund any Portion of Investment (based on the Eurodollar Rate)
set forth above (and such Liquidity Bank or the Purchaser, as
applicable, shall not have subsequently notified the Agent that
such circumstances no longer exist),
(ii) any Yield Period of one to (and including) 13 days,
(iii) any Yield Period as to which the Agent does not
receive notice, by no later than 12:00 noon (Chicago time) on
(w) the second Business Day preceding the first day of such
Yield Period that the Seller desires that the related Portion
of Investment be funded at the CP Rate, (x) the third Business
Day preceding the first day of such Yield Period that the
Seller desires that the related Portion of Investment be funded
at the Bank Rate, or (y) the Seller has given the notice
contemplated by clause (w) of this CLAUSE (III) and the Agent
shall have notified the Seller that funding the related Portion
of Investment at the CP Rate is unacceptable to the Purchaser,
or
(iv) any Yield Period relating to a Portion of Investment
which is less than $1,000,000,
the "BANK RATE" for each such Yield Period shall be an interest rate per
annum equal to the Base Rate in effect on each day of such Yield Period.
Notwithstanding the foregoing, the "BANK RATE" for each day in a Yield
Period occurring during the continuance of a Termination Event shall be
an interest rate equal to 2% PER ANNUM above the Base Rate in effect on
such day.
"BANKRUPTCY CODE" means the United States Bankruptcy Reform Act
of 1978 (11 U.S.C. ' 101, ET SEQ.), as amended from time to time.
"BASE RATE" means for any day, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate shall be at all
times equal to the rate of interest most recently announced by Bank of
Montreal at its branch in Chicago, Illinois as its prime commercial rate
for United States loans made in the United States.
"BUSINESS DAY" means any day on which (i) both (A) the Agent at
its branch office in Chicago, Illinois is open for business and (B)
commercial banks in New York City are not authorized or required to be
closed for business, and (ii) if this definition of "Business Day" is
utilized in connection with the Eurodollar Rate, dealings are carried out
in the London interbank market.
"CHANGE IN CONTROL" means the occurrence of any of the
following circumstances:
(a) any Person or two or more Persons acting in concert acquire
beneficial ownership (within the meaning of Rule 13d-3 of the SEC under
the Securities Exchange Act of 1934), directly or indirectly, of
Securities of Pilgrim=s Pride (or other Securities convertible into such
Securities) representing 25% or more of the combined voting power of all
Securities of entitled to vote in the election of directors;
(b) during any period of up to 12 consecutive months, whether
commencing before or after the date hereof, the membership of the Board
of Directors of Pilgrim's Pride changes for any reason (other than by
reason of death, disability, or scheduled retirement) so that the
majority of the Board of Directors is made up of Persons who were not
directors at the beginning of such 12 month period; or
(c) Pilgrim's Pride ceases to own at least 100% of the
outstanding capital stock of the Seller.
"CLOSING DATE" has the meaning set forth in SECTION 1.1 of the
Purchase and Contribution Agreement.
"COLLECTION ACCOUNT" means that certain bank account maintained
at Pilgrim Bank in Pittsburg, Texas which is (i) identified as the
"PILGRIM=S PRIDE FUNDING CORPORATION COLLECTION ACCOUNT," (ii) pledged,
on a first-priority basis, to the Purchaser pursuant to SECTION 1.2(D),
and (iii) is governed by the Collection Account Agreement.
"COLLECTION ACCOUNT AGREEMENT" means a letter agreement, in the
form of ANNEX C to the Agreement, among the Seller, the Agent and the
Collection Account Bank, as the same may be amended, supplemented,
amended and restated, or otherwise modified from time to time in
accordance with the Agreement.
"COLLECTION ACCOUNT BANK" means the bank holding the Collection
Account.
"COLLECTION DELAY PERIOD" means 0.5 times the Average Maturity
or such other number of days as the Agent may from time to time select
(after consultation with the Seller) upon three Business Days' notice to
the Seller.
"COLLECTIONS" means, with respect to any Pool Receivable, (a)
all funds which are received by the Seller or the Servicer in payment of
any amounts owed in respect of such Receivable (including, without
limitation, purchase price, finance charges, interest and all other
charges), or applied to amounts owed in respect of such Receivable
(including, without limitation, insurance payments and net proceeds of
the sale or other disposition of repossessed goods or other collateral or
property of the related Obligor or any other Person directly or
indirectly liable for the payment of such Pool Receivable and available
to be applied thereon), (b) all Collections deemed to have been received
pursuant to SECTION 1.4(E) and (c) all other proceeds of such Receivable.
"COMMITMENT FEE" has the meaning set forth in the Fee Letter.
"COMPANY NOTE" has the meaning set forth in SECTION 3.2 of the
Purchase and Contribution Agreement.
"CONCENTRATION PERCENTAGE" means, for any Obligor, the
percentage equal to (a) the aggregate Outstanding Balances of all
Eligible Receivables of such Obligor DIVIDED BY (b) the aggregate
Outstanding Balances of all Eligible Receivables then in the Receivables
Pool.
"CONTRACT" means, with respect to any Receivable, any and all
contracts, understandings, instruments, agreements, invoices, notes, or
other writings pursuant to which such Receivable arises or which
evidences such Receivable or under which an Obligor becomes or is
obligated to make payment in respect of such Receivable.
"CONTRIBUTED RECEIVABLES" shall have the meaning set forth in
SECTION 3.1 of the Purchase and Contribution Agreement.
"CONTRIBUTED VALUE" has the meaning set forth in SECTION 3.4 of
the Purchase and Contribution Agreement.
"CP RATE" for any Yield Period for any Portion of Investment of
the Participation means, to the extent the Purchaser funds such Portion
of Investment for such Yield Period by issuing Notes, a rate PER ANNUM
equal to the sum of (i) the rate (or if more than one rate, the weighted
average of the rates) at which Notes of the Purchaser having a term equal
to such Yield Period and to be issued to fund such Portion of Investment
may be sold by any placement agent or commercial paper dealer selected by
the Agent on behalf of the Purchaser, as agreed between each such agent
or dealer and the Agent and notified by the Agent to the Servicer;
PROVIDED, that if the rate (or rates) as agreed between any such agent or
dealer and the Agent with regard to any Yield Period for such Portion of
Investment is a discount rate (or rates), then such rate shall be the
rate (or if more than one rate, the weighted average of the rates)
resulting from converting such discount rate (or rates) to an interest-
bearing equivalent rate per annum, PLUS (ii) the commissions and charges
charged by such placement agent or commercial paper dealer with respect
to such Notes, expressed as a percentage of such face amount and
converted to an interest-bearing equivalent rate PER ANNUM.
"CREDIT AND COLLECTION POLICY" means those receivables credit
and collection policies and practices of the Servicer in effect on the
date of the Agreement and described in SCHEDULE I hereto, as modified in
compliance with the Agreement.
"DEBT" means (i) indebtedness for borrowed money, (ii) obligations
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations to pay the deferred purchase price of property or services,
(iv) obligations as lessee under leases which shall have been or should
be, in accordance with generally accepted accounting principles, recorded
as capital leases, (v) obligations under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of kinds referred to in
CLAUSES (I) through (IV) above, and (vi) liabilities in respect of
unfunded vested benefits under plans covered by Title IV of ERISA.
"DEFAULT RATIO" means the ratio (expressed as a percentage and
rounded upward to the nearest 1/100 of 1%) computed as of the last day of
each Fiscal Month by dividing (i) the aggregate Outstanding Balance of
all Pool Receivables that became Defaulted Receivables during such Fiscal
Month or that would have been Defaulted Receivables on such day had they
not been written off the books of the Seller during such month by (ii)
the Outstanding Balance of the Pool Receivables as of such day.
"DEFAULTED RECEIVABLE" means a Receivable:
(i) as to which any payment, or part thereof, remains
unpaid for more than 75 days from the invoice date for such
Receivable;
(ii) as to which the Obligor thereof or any other Person
obligated thereon or owning any Related Security in respect
thereof has taken any action, or suffered any event to occur,
of the type described in PARAGRAPH (G) of EXHIBIT V hereto; or
(iii) which, consistent with the Credit and Collection
Policy, would be written off the Seller's books as
uncollectible.
"DELINQUENCY RATIO" means the ratio (expressed as a percentage
and rounded upward to the nearest 1/100 of 1%) computed as of the last
day of each Fiscal Month by dividing (i) the aggregate Outstanding
Balance of all Pool Receivables that were Delinquent Receivables on such
day by (ii) the aggregate Outstanding Balance of all Pool Receivables on
such day.
"DELINQUENT RECEIVABLE" means a Receivable which is not a
Defaulted Receivable and:
(i) as to which any payment, or part thereof, remains
unpaid for more than 45 days from the invoice date for such
Receivable; or
(ii) which, consistent with the Credit and Collection
Policy, would be classified as delinquent by the Seller.
"DESIGNATED OBLIGOR" means, at any time, all Obligors except
any Obligor as to which the Agent has given notice to Seller that such
Obligor shall not be considered a Designated Obligor, such notice to
become effective on the last day of the Fiscal Month in which such notice
is given.
"DILUTION RATIO" means, for any Fiscal Month, the ratio (expressed as a
percentage and rounded upwards to the nearest 1/100th of 1%) of (a) the
extent to which the aggregate Outstanding Balance of all Pool Receivables
during such period that have been reduced or adjusted as a result of any
defective, rejected, returned, repossessed or foreclosed goods or
services, or any discount or adjustment made by Seller or Servicer or any
dispute between the Seller or the Servicer and an Obligor, to (b) the
aggregate amount of Collections of Pool Receivables actually received
during such period.
"DISCOUNT" means:
(i) for the Portion of Investment of the Participation
for any Yield Period to the extent the Purchaser will be
funding such Portion of Investment on the first day of such
Yield Period through the issuance of Notes,
CPR x I x ED + TF
360
(ii) for the Portion of Investment of the Participation
for any Yield Period to the extent the Purchaser will not be
funding such Portion of Investment on the first day of such
Yield Period through the issuance of Notes,
ED
BR x I x Year + TF
where:
BR = the Bank Rate for the Portion of Investment of the
Participation for such Yield Period
I = the Portion of Investment of the Participation during
such Yield Period
CPR = the CP Rate for the Portion of Investment of the
Participation for such Yield Period
ED = the actual number of days during such Yield Period
Year = if such Portion of Capital is funded based upon: (i) the
Eurodollar Rate, 360 days, and (ii) the Base Rate,
365 or 366 days, as applicable
TF = the Termination Fee, if any, for the Portion of
Investment of the Participation for such Yield Period
PROVIDED, HOWEVER, that during the occurrence and continuance of a
Termination Event, the CP Rate shall not be available and Discount for
each Portion of Capital shall be determined for each day in a Yield
Period using a rate equal to the Base Rate in effect on such day plus
2.0%; PROVIDED, FURTHER, that no provision of the Agreement shall require
the payment or permit the collection of Discount in excess of the maximum
permitted by applicable law; and PROVIDED, FURTHER, that Discount for the
Portion of Investment of the Participation shall not be considered paid
by any distribution to the extent that at any time all or a portion of
such distribution is rescinded or must otherwise be returned for any
reason.
"DISCOUNT RESERVE" for the Participation at any time means (a)
the sum of (i) the Termination Discount at such time for the
Participation, and (ii) the then accrued and unpaid Discount for the
Participation, divided by (b) 1 minus the Loss Reserve.
"DIVIDENDS" means any dividend or distribution (in cash or
obligations) on any shares of any class of Seller=s capital stock or any
warrants, options or other rights with respect to shares of any class of
Seller=s capital stock.
"ELIGIBLE RECEIVABLES" means, at any time, Receivables:
(i the Obligor of which is (i) a United States resident,
(ii) not a government or a governmental subdivision, affiliate
or agency, (iii) not an Affiliate of Pilgrim=s Pride or any
Affiliate of Pilgrim=s Pride, and (iv) not subject to an
exchange agreement with the Originator;
(ii which are denominated and payable only in U.S. dollars
in the United States;
(iii which have a stated maturity and which stated maturity
is not more than 60 days after the date on which such
Receivable was invoiced;
(iv which arise under a Contract which is in full force and
effect and which is a legal, valid and binding obligation of
the related Obligor, enforceable against such Obligor in
accordance with its terms; except as enforceability may be
limited by (i) bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in
equity or at law or (ii) the availability of the remedy of
specific performance or any other equitable remedies subject to
the discretion of the courts;
(v which conform in all material respects with all
applicable laws, rulings and regulations in effect;
(vi which are not the subject of any asserted dispute, offset,
hold back defense, Adverse Claim or other claim and which do
not arise from the sale of inventory which is subject to any
Adverse Claim;
(vii which comply with the requirements of the Credit and
Collection Policy;
(viii which arise from the sale and delivery of goods or
services in the ordinary course of Seller=s business;
(ix which do not require the consent of the related Obligor
to be sold or assigned;
(x which have not been modified or restructured since their
creation, except as permitted pursuant to SECTION 4.2 of the
Agreement;
(xi in which the Seller owns good and valid title and which
are freely assignable by the Seller;
(xii for which the Purchaser shall have a valid and
enforceable undivided percentage ownership interest, to the
extent of the Participation, and a valid and enforceable first
priority perfected security interest therein and in the Related
Security and Collections with respect thereto, in each case
free and clear of any Adverse Claim;
(xiii which constitute accounts (and the Purchaser has not
informed the Seller that such account is not acceptable) as
defined in the UCC, and which are not evidenced by instruments
or chattel paper;
(xiv which are not Defaulted Receivables or Delinquent
Receivables;
(xv the Obligor of which is not the Obligor of Defaulted
Receivables in an aggregate amount in excess of 10% of the
aggregate Outstanding Balance of all Receivables of such
Obligor;
(xvi the Obligor of which is a Designated Obligor; and
(xvii which do not constitute "bill and hold" or "goods on
consignment" receivables;
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute of similar
import, together with the regulations thereunder, in each case as in
effect from time to time. References to sections of ERISA also refer to
any successor sections.
"ERISA AFFILIATE" shall mean with respect to any Person, at any time,
each trade or business (whether or not incorporated) that would, at the
time, be treated together with such Person as a single employer under
Section 4001 of ERISA or Sections 414(b), (c), (m) or (o) of the Code.
"EURODOLLAR RATE" means, for any Yield Period, an interest rate
per annum (rounded upward to the nearest 1/100th of 1%) determined
pursuant to the following formula:
Eurodollar Rate = LIBOR
1.00 - Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means, for any Yield Period,
the maximum reserve percentage (expressed as a decimal, rounded
upward to the nearest 1/100th of 1%) in effect on the date LIBOR for
such Yield Period is determined under regulations issued from time
to time by the Federal Reserve Board for determining the maximum
reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to "Eurocurrency" funding
(currently referred to as "Eurocurrency liabilities") having a term
comparable to such Yield Period; and
"FACILITY TERMINATION DATE" means the earlier of (a) June 25,
2003 and (b) the current scheduled termination date of the commitments of
the Liquidity Banks under the Liquidity Agreement.
"FEDERAL FUNDS RATE" means, for any period, the PER ANNUM rate
set forth in the weekly statistical release designated as H.15(519), or
any successor publication, published by the Federal Reserve Board
(including any such successor, "H.15(519)") for such day opposite the
caption "Federal Funds (Effective)". If on any relevant day such rate is
not yet published in H.15(519), the rate for such day will be the rate
set forth in the daily statistical release designated as the Composite
3:30 p.m. Quotations for U.S. Government Securities, or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, the "Composite 3:30 p.m. Quotation") for such day
under the caption "Federal Funds Effective Rate." If on any relevant day
the appropriate rate for such previous day is not yet published in either
H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day
will be the arithmetic mean as determined by the Agent of the rates for
the last transaction in overnight Federal funds arranged prior to 9:00
a.m. (New York time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System, or any entity succeeding to any of its principal
functions.
"FEE LETTER" has the meaning set forth in SECTION 1.5.
"FINAL PAYOUT DATE" means the date following the Facility Termination
Date on which no Investment or Discount in respect of the Participation
under the Agreement shall be outstanding and all other amounts payable by
the Originator, the Seller or the Servicer to the Purchaser, the Agent or
any other Affected Person under the Transaction Documents shall have been
paid in full.
"FISCAL MONTH" means each accounting period listed on SCHEDULE
IV hereto, as updated with respect to additional accounting periods by
notice from the Servicer to the Agent.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any body or entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including without limitation
any court, and any Person owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
"HARRIS" means Harris Trust and Savings Bank.
"INDEMNIFIED AMOUNTS" has the meaning set forth in SECTION 3.1.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 3.1.
"INSOLVENCY PROCEEDING" means (a) any case, action or
proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidations, receivership,
dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of its
creditors generally or any substantial portion of its creditors; in each
case (a) and (b) undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
"INVESTMENT" means the amount paid to the Seller in respect of
the Participation by the Purchaser pursuant to the Agreement, or such
amount divided or combined in accordance with SECTION 1.7, in each case
reduced from time to time by Collections distributed and applied on
account of such Investment pursuant to SECTION 1.4(D). If such Investment
shall have been reduced by any distribution and thereafter all or a
portion of such distribution is rescinded or must otherwise be returned
for any reason, such Investment shall be increased by the amount of such
rescinded or returned distribution, as though it had not been made.
"INVESTMENT GRADE" means, with respect to any Person's long
term public senior debt securities, a rating of at least BBB- by
Standard & Poor's or Baa3 by Moody's Investors Service, Inc.; PROVIDED,
that if such Person's long term public senior debt securities are rated
by more than one of the foregoing rating agencies, then each such rating
agency which rates such securities shall have given them a rating at
least equal to the categories specified above.
"LIBOR" means the rate of interest per annum (i) for deposits in U.S.
dollars for a period equal to such Yield Period which appears on Telerate
Page 3750 or (ii) if such rate does not appear on Telerate Page 3750,
determined by the Liquidity Agent to be the arithmetic mean (rounded
upward, if necessary, to the nearest 1/100th of 1%) of the rates of
interest per annum notified to the Liquidity Agent as the rate of
interest at which dollar deposits in the approximate amount of the
Investment associated with such Yield Period would be offered to major
banks in the London interbank market at their request, in each case at or
about 11:00 a.m. (London time) on the second Business Day prior to the
commencement of such Yield Period.
"LIQUIDATION ACCOUNT" means that certain bank account
maintained at Harris Trust and Savings Bank in Chicago, Illinois which is
(i) identified as the "PILGRIM=S PRIDE FUNDING CORPORATION LIQUIDATION
ACCOUNT," (ii) pledged, on a first-priority basis, to the Purchaser
pursuant to SECTION 1.2(D), and (iii) is governed by the Liquidation
Account Agreement.
"LIQUIDATION ACCOUNT AGREEMENT" means a letter agreement, in
the form of EXHIBIT VII to the Agreement, among the Seller, the Agent and
the Liquidation Account Bank, as the same may be amended, supplemented,
amended and restated, or otherwise modified from time to time in
accordance with the Agreement.
"LIQUIDATION ACCOUNT BANK" means the bank holding the
Liquidation Account.
"LIQUIDITY AGENT" means Harris in its capacity as Liquidity
Agent pursuant to the Liquidity Agreement.
"LIQUIDITY AGREEMENT" means that certain Liquidity Asset
Purchase Agreement dated as of June 26, 1998, in form and substance
satisfactory to the Rating Agencies and the Agent and entered into among
Harris, such other financial institutions as may be parties thereto,
Harris, as Liquidity Agent, Nesbitt Burns, as servicing agent, and PAR,
as amended, amended and restated, supplemented or otherwise modified from
time to time.
"LIQUIDITY BANK" has the meaning set forth in SECTION 5.3(B).
"LOCK-BOX ACCOUNT" means an account maintained at a bank or
other financial institution for the purpose of receiving Collections
established pursuant to SECTION 4.3 and as listed on SCHEDULE II.
"LOCK-BOX AGREEMENT" means an agreement, in substantially the
form of ANNEX A, between the Seller and each Lock-Box Bank.
"LOCK-BOX BANK" means any of the banks or other financial
institutions holding one or more Lock-Box Accounts.
"LOSS PERCENTAGE" means, on any date, the greatest of (i) 4 times the sum
of (x) the highest average of the Default Ratios for any three
consecutive calendar months during the twelve most recent calendar
months, plus (y) the highest average of the Dilution Ratios for any three
consecutive calendar months during the twelve most recent calendar
months, (ii) 3.5 times the quotient (expressed as a percentage) of (x)
the aggregate Outstanding Balance of the Eligible Receivables then
included in the Net Receivable Pool Balance of the non-Investment Grade
Obligor with the greatest amount of Receivables included in the Net
Receivables Pool Balance DIVIDED by (y) Net Receivables Pool Balance on
such date, and (iii) 10%.
"LOSS RESERVE" means, for the Participation, on any date, an
amount equal to
LP x NRPB
where:
LP = the Loss Percentage for the Participation on such
date.
NRPB = Net Receivables Pool Balance.
"LOSS-TO-LIQUIDATION RATIO" means the ratio (expressed as a
percentage and rounded upward to the nearest 1/100th of 1%) computed as
of the last day of each Fiscal Month by dividing (i) the aggregate
Outstanding Balance of all Pool Receivables written off by the Seller, or
which should have been written off by the Seller in accordance with the
Credit and Collection Policy, during such Fiscal Month by (ii) the
aggregate amount of Collections of Pool Receivables actually received
during such period.
"MATERIAL ADVERSE EFFECT" has the meaning set forth in SECTION
5.20 of the Purchase and Contribution Agreement.
"MOODY'S" means Moody's Investors Service, Inc.
"NET RECEIVABLES POOL BALANCE" means at any time an amount
equal to the sum of (a) the aggregate Outstanding Balances of Eligible
Receivables then in the Receivables Pool MINUS (b) the aggregate amount
of any accounts payable which are greater than 15 days past the date on
which such accounts payable became due, owed by Pilgrim's Pride to any
Poultry Grower under any Poultry Growing Arrangement, MINUS (c) the
aggregate amount by which the Outstanding Balance of the Eligible
Receivables of each Obligor then in the Receivables Pool exceeds the
product of (A) the Normal Concentration Percentage for such Obligor
multiplied by (B) the Outstanding Balance of the Eligible Receivables
then in the Receivables Pool.
"NORMAL CONCENTRATION PERCENTAGE" for any Obligor means at any
time 3% if such Obligor is not a Special Obligor, or if such Obligor is a
Special Obligor, 6% if such Special Obligor is rated A- or better by S&P
and A3 or better by Moody=s, and 5% if such Special Obligor is not so
rated but is rated at least BBB- by S&P and Baa3 by Moody's.
"NOTE ISSUER" has the meaning set forth in SECTION 5.3(A).
"NOTES" means short-term promissory notes issued or to be
issued by any Note Issuer (including, without limitation, PAR) to fund
its investments in accounts receivable or other financial assets.
"OBLIGOR" means, with respect to any Receivable, the Person
obligated to make payments pursuant to the Contract relating to such
Receivable.
"Originator" means Pilgrim's Pride.
"OUTSTANDING BALANCE" of any Receivable at any time means the
then outstanding principal balance thereof.
"PAR" means Pooled Accounts Receivable Capital Corporation, a
Delaware corporation.
"PARTICIPATION" means, at any time, the undivided percentage
ownership interest in (i) each and every Pool Receivable now existing or
hereafter arising, other than any Pool Receivable that arises on or after
the Facility Termination Date, (ii) all Related Security with respect to
such Pool Receivables, and (iii) all Collections with respect to, and
other proceeds of, such Pool Receivables and Related Security. Such
undivided percentage interest shall be computed as
I + DR + LR + SFR
NRB
where:
I = the Investment of the Participation at the time of
computation.
DR = the Discount Reserve of the Participation at the time
of computation.
LR = the Loss Reserve of the Participation at the time of
computation.
SFR = the Servicing Fee Reserve of the Participation at the
time of computation.
NRB = the Net Receivables Pool Balance at the time of
computation.
The Participation shall be determined from time to time pursuant to the
provisions of SECTION 1.3.
"PAYMENT DATE" has the meaning set forth in SECTION 1.4 of the Purchase
and Contribution Agreement.
"PERMITTED INVESTMENTS" means (a) certificates of deposit that
are not represented by instruments, have a maturity of one week or less
and are issued by the Collection Account Bank, Liquidation Account Bank
(with respect to the investment of funds in the Collection Account or
Liquidation Account, respectively) or Bank of Montreal and (b) the Notes
(rated by each Rating Agency not lower than the respective current
ratings assigned by the Rating Agencies to the Notes issued by PAR)
having maturities not to exceed 60 days; PROVIDED, HOWEVER, that the
Agent (on behalf of Purchaser) may, from time to time, upon three
Business Days' prior written notice to Servicer, remove from the scope of
"Permitted Investments" certificates of deposit of any such Bank(s) and
specify to be within such scope, certificates of deposit of any other
bank.
"PERSON" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, limited liability company or other entity, or
a government or any political subdivision or agency thereof.
"PILGRIM'S PRIDE" has the meaning set forth in the preamble to
the Agreement.
"POOL RECEIVABLE" means a Receivable in the Receivables Pool.
"PORTION OF INVESTMENT" has the meaning set forth in
SECTION 1.7. In addition, at any time when the Investment of the
Participation is not divided into two or more portions, "Portion of
Investment" means 100% of the Investment of the Participation.
"POULTRY GROWER" means any Person engaged in the business of
raising and caring for live poultry.
"POULTRY GROWING ARRANGEMENT" means any growout contract,
marketing agreement or any other arrangement under which a Poultry Grower
raises and cares for live poultry.
"PRIME RATE" has the meaning set forth in SECTION 2.1 of the
Purchase and Contribution Agreement.
"PROGRAM FEE" has the meaning set forth in the Fee Letter.
"PROGRAM SUPPORT PROVIDER" means and includes any Liquidity
Bank and any other or additional Person (other than any customer of the
Purchaser) now or hereafter extending credit or having a commitment to
extend credit to or for the account of, or to make purchases from, the
Purchaser or issuing a letter of credit, surety bond or other instrument
to support any obligations arising under or in connection with PAR's
securitization program.
"PROGRAM SUPPORT AGREEMENT" means and includes the Liquidity Agreement
and any other agreement entered into by any Program Support Provider
providing for the issuance of one or more letters of credit for the
account of the Purchaser, the issuance of one or more surety bonds for
which the Purchaser is obligated to reimburse the applicable Program
Support Provider for any drawings thereunder, the sale by the Purchaser
to any Program Support Provider of the Participation (or portions
thereof) and/or the making of loans and/or other extensions of credit to
the Purchaser in connection with the Purchaser's securitization program,
together with any letter of credit, surety bond or other instrument
issued thereunder.
"PURCHASE AND CONTRIBUTION AGREEMENT" means the Purchase and
Contribution Agreement, dated as of June 26, 1998, among the Originator,
the Servicer and the Seller, as the same may be modified, supplemented,
amended and amended and restated from time to time in accordance with the
Transaction Documents.
"PURCHASE AND SALE INDEMNIFIED AMOUNT" has the meaning set
forth in SECTION 9.1 of the Purchase and Contribution Agreement.
"PURCHASE AND SALE INDEMNIFIED PARTY" has the meaning set forth
in SECTION 9.1 of the Purchase and Contribution Agreement.
"PURCHASE AND SALE TERMINATION DATE" has the meaning set forth
in SECTION 1.4 of the Purchase and Contribution Agreement.
"PURCHASE AND SALE TERMINATION EVENT" has the meaning set forth
in SECTION 8.1 of the Purchase and Contribution Agreement.
"PURCHASE LIMIT" means $60,000,000, as such amount may be
reduced pursuant to SECTION 1.1(B). References to the unused portion of
the Purchase Limit shall mean, at any time, the Purchase Limit minus the
then outstanding Investment of the Participation under the Agreement.
"PURCHASE FACILITY" has the meaning set forth in SECTION 1.1 of
the Purchase and Contribution Agreement.
"PURCHASE PRICE" has the meaning set forth in SECTION 2.1 of
the Purchase and Contribution Agreement.
"PURCHASE REPORT" has the meaning set forth in SECTION 2.1 of
the Purchase and Contribution Agreement.
"PURCHASER" has the meaning set forth in the preamble to the
Agreement.
"PURCHASER'S ACCOUNT" means the special account of the Purchaser maintained at
the office of Harris Trust and Savings Bank in Chicago, Illinois, or such other
account as may be so designated in writing by the Agent to the Seller and the
Servicer.
"RATE VARIANCE FACTOR" means 1.50.
"RATING AGENCIES" means Moody's and S&P.
"RECEIVABLE" means any indebtedness and other obligations owed
to the Originator or Seller or any right of the Originator or Seller to
payment from or on behalf of an Obligor, whether constituting an account,
chattel paper, instrument or general intangible, arising in connection
with the sale of goods or the rendering of services by the Originator or
the Seller, and includes, without limitation, the obligation to pay any
finance charges, fees and other charges with respect thereto.
Indebtedness and other obligations arising from any one transaction,
including, without limitation, indebtedness and other obligations
represented by an individual invoice or agreement, shall constitute a
Receivable separate from a Receivable consisting of the indebtedness and
other obligations arising from any other transaction.
"RECEIVABLES POOL" means at any time all of the then
outstanding Receivables.
"RELATED RIGHTS" has the meaning set forth in SECTION 1.1 of
the Purchase and Contribution Agreement.
"RELATED SECURITY" means, with respect to any Receivable:
(i) all of the Seller's interest in any goods (including
returned goods), and documentation or title evidencing the
shipment or storage of any goods (including returned goods),
relating to any sale giving rise to such Receivable;
(ii) all other security interests or liens and property
subject thereto from time to time purporting to secure payment
of such Receivable, whether pursuant to the Contract related to
such Receivable or otherwise, together with all UCC financing
statements or similar filings signed by an Obligor relating
thereto; and
(iii) all guaranties, indemnities, insurance and other
agreements (including the related Contract) or arrangements of
whatever character from time to time supporting or securing
payment of such Receivable or otherwise relating to such
Receivable whether pursuant to the Contract related to such
Receivable or otherwise.
"S&P" means Standard and Poor's a division of the McGraw Hill
Companies, Inc.
"SELLER" has the meaning set forth in the preamble to the
Agreement.
"SERVICER" has the meaning set forth in the preamble to the Agreement.
"SERVICER REPORT" means a report, in substantially the form of
ANNEX E hereto, furnished by the Servicer to the Agent pursuant to the
Agreement.
"SERVICER REPORT DATE" means the 15th Business Day following
the last day of each Fiscal Month.
"SERVICING FEE" shall mean the fee referred to in SECTION 4.6.
"SERVICING FEE RESERVE" for the Participation at any time means
the sum of (i) the unpaid Servicing Fee relating to the Participation
accrued to such time, plus (ii) an amount equal to (a) the Net
Receivables Pool Balance at the time of computation multiplied by (b) the
product of (x) the percentage per annum at which the Servicing Fee is
accruing on such date and (y) a fraction having the sum of the Average
Maturity plus the Collection Delay Period (each as in effect at such
date) as its numerator and 360 as its denominator.
"SETTLEMENT PERIOD" for each Portion of Investment means each
period commencing on the first day and ending on the last day of each
Yield Period for such Portion of Investment and, on and after the
Termination Date, such period (including, without limitation, a period of
one day) as shall be selected from time to time by the Agent.
"SOLVENT" has the meaning set forth in SECTION 5.20 of the
Purchase and Contribution Agreement.
"SPECIAL OBLIGOR" means an Obligor having a long-term public
senior debt rating of at least Investment Grade or which has been
approved by the Agent and the Surety Bond Provider; PROVIDED, HOWEVER,
each of the Rating Agencies shall have provided a notice in writing to
the Agent to the effect that the inclusion of such Obligor as a Special
Obligor will not result in the downgrading or withdrawal of such Rating
Agencies' current rating of the Notes.
"SUB-SERVICER" shall have the meaning set forth in SECTION
4.1(D).
"SURETY BOND PROVIDER" means MBIA Insurance Corporation, a
stock insurance company organized under the laws of the State of New
York.
"TERMINATION DATE" means the earlier of (i) the Business Day
which the Seller so designates by notice to the Agent at least 30
Business Days in advance and (ii) the Facility Termination Date.
"TERMINATION DAY" means (i) each day on which the conditions
set forth in SECTION 2 of EXHIBIT II are not satisfied and (ii) each day
which occurs on or after the Termination Date.
"TERMINATION DISCOUNT" means, for the Participation on any date, an
amount equal to the Rate Variance Factor on such date multiplied by the
product of (i) the Investment of the Participation on such date and (ii)
the product of (a) the Base Rate for the Participation plus 2% per annum
for a 30-day Yield Period deemed to commence on such date and (b) a
fraction having as its numerator the sum of the Average Maturity plus the
Collection Delay Period (each as in effect at such date) and 360 as its
denominator.
"TERMINATION EVENT" has the meaning specified in EXHIBIT V.
"TERMINATION FEE" means, for any Yield Period during which a
Termination Day occurs, the amount, if any, by which (i) the additional
Discount (calculated without taking into account any Termination Fee or
any shortened duration of such Yield Period pursuant to CLAUSE (IV) of
the definition thereof) which would have accrued during such Yield Period
on the reductions of Investment of the Participation relating to such
Yield Period had such reductions remained as Investment, exceeds (ii) the
income, if any, received by the Purchaser from the Purchaser investing
the proceeds of such reductions of Investment, as determined by the
Agent, which determination shall be binding and conclusive for all
purposes, absent manifest error.
"TRANSACTION DOCUMENTS" means the Agreement, the Fee Letter,
the Purchase and Contribution Agreement, the Lock-Box Agreements, the
Collection Account Agreement, the Liquidation Account Agreement and all
other certificates, instruments, UCC financing statements, reports,
notices, agreements and documents executed or delivered under or in
connection with the Agreement, in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
the Agreement.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the applicable jurisdiction.
"UNMATURED TERMINATION EVENT" means an event which, with the
giving of notice or lapse of time, or both, would constitute a
Termination Event.
"YIELD PERIOD" means, with respect to each Portion of
Investment:
(a) initially the period commencing on the date of a purchase
pursuant to SECTION 1.2 and ending such number of days as the Seller
shall select, subject to the approval of the Agent pursuant to
SECTION 1.2, up to 60 days after such date; and
(b) thereafter each period commencing on the last day of the
immediately preceding Yield Period for any Portion of Investment of
the Participation and ending such number of days (not to exceed 60
days) as the Seller shall select, subject to the approval of the
Agent pursuant to SECTION 1.2, on notice by the Seller received by
the Agent (including notice by telephone, confirmed in writing) not
later than 11:00 a.m. (Chicago time) on such last day, EXCEPT that
if the Agent shall not have received such notice or approved such
period on or before 11:00 a.m. (Chicago time) on such last day, such
period shall be one day; PROVIDED, that
(i) any Yield Period in respect of which Discount is
computed by reference to the Bank Rate shall be a period from
one to and including 60 days;
(ii) any Yield Period (other than of one day) which would
otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day; PROVIDED,
HOWEVER, if Discount in respect of such Yield Period is
computed by reference to the Eurodollar Rate, and such Yield
Period would otherwise end on a day which is not a Business
Day, and there is no subsequent Business Day in the same
calendar month as such day, such Yield Period shall end on the
next preceding Business Day;
(iii) in the case of any Yield Period of one day, (A) if
such Yield Period is the initial Yield Period for a purchase
pursuant to SECTION 1.2, such Yield Period shall be the day of
purchase of the Participation; (B) any subsequently occurring
Yield Period which is one day shall, if the immediately
preceding Yield Period is more than one day, be the last day of
such immediately preceding Yield Period, and, if the
immediately preceding Yield Period is one day, be the day next
following such immediately preceding Yield Period; and (C) if
such Yield Period occurs on a day immediately preceding a day
which is not a Business Day, such Yield Period shall be
extended to the next succeeding Business Day; and
(iv) in the case of any Yield Period for any Portion of
Investment of the Participation which commences before the
Termination Date and would otherwise end on a date occurring
after the Termination Date, such Yield Period shall end on such
Termination Date and the duration of each Yield Period which
commences on or after the Termination Date shall be of such
duration as shall be selected by the Agent.
OTHER TERMS. All accounting terms not specifically defined herein
shall be construed in accordance with generally accepted accounting
principles. All terms used in Article 9 of the UCC in the State of
Texas, and not specifically defined herein, are used herein as defined in
such Article 9. Unless the context otherwise requires, "or" means
"and/or," and "including" (and with correlative meaning "include" and
"includes") means including without limiting the generality of any
description preceding such term.
EXHIBIT II
CONDITIONS OF PURCHASES
1. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The initial
purchase under the Agreement is subject to the conditions precedent that
the Agent shall have received on or before the date of such purchase the
following, each in form and substance (including the date thereof)
satisfactory to the Agent:
(a A counterpart of this Agreement and the other Transaction
Documents duly executed by the parties thereto.
(b Certified copies of (i) the resolutions of the Board of
Directors of each of the Seller, the Servicer and the Originator
authorizing the execution, delivery, and performance by the Seller, the
Servicer and the Originator of the Transaction Documents to which they
are a party, (ii) all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to the Agreement
and the other Transaction Documents and (iii) the certificate of
incorporation and by-laws of the Seller, the Servicer and the Originator.
(c A certificate of the Secretary or Assistant Secretary of
each of the Seller, the Servicer and the Originator certifying the names
and true signatures of its officers authorized to sign the Agreement and
the other Transaction Documents to which it is a party. Until the Agent
receives a subsequent incumbency certificate from the Seller, the
Servicer and the Originator in form and substance satisfactory to the
Agent, the Agent shall be entitled to rely on the last such certificate
delivered to it by the Seller, the Servicer and the Originator, as the
case may be.
(d Acknowledgment copies, or time-stamped receipt copies of
proper financing statements, duly filed on or before the date of such
initial purchase under the UCC of all jurisdictions that the Agent may
deem necessary or desirable in order to perfect the interests of the
Purchaser contemplated by the Agreement and other Transaction Documents.
(e Acknowledgment copies, or time-stamped receipt copies of
proper financing statements, if any, necessary to release all security
interests and other rights of any Person in the Receivables, Contracts or
Related Security previously granted by the Seller.
(f Completed UCC requests for information, dated on or before the
date of such initial purchase, listing the financing statements referred to in
SUBSECTION (E) above and all other effective financing statements filed
in the jurisdictions referred to in SUBSECTION (E) above that name the
Seller as debtor, together with copies of such other financing statements
(none of which shall cover any Receivables, Contracts or Related
Security), and similar search reports with respect to federal tax liens
and liens of the Pension Benefit Guaranty Corporation in such
jurisdictions as the Agent may request, showing no such liens on any of
the Receivables, Contracts or Related Security.
(g Copies of executed (i) Lock-Box Agreements with the Lock-
Box Banks, (ii) the Collection Account Agreement with the Collection
Account Bank, and (iii) the Liquidation Account Agreement with the
Liquidation Account Bank.
(h Favorable opinions of Godwin & Carlton, counsel for the
Seller, in form and substance acceptable to the Agent and as to corporate
and such other matters as the Agent may reasonably request.
(i Favorable opinions of Godwin & Carlton, counsel for the
Seller, substantially in form of any substance acceptable to the Agent
and as to bankruptcy matters.
(j a pro-forma Servicer Report.
(k Evidence (i) of the execution and delivery by each of the
parties thereto of the Purchase and Contribution Agreement and all
documents, agreements and instruments contemplated thereby (which
evidence shall include copies, either original or facsimile, of each of
such documents, instruments and agreements), (ii) that each of the
conditions precedent to the execution and delivery of the Purchase and
Contribution Agreement has been satisfied to the Agent's satisfaction,
and (iii) that the initial purchases under the Purchase and Contribution
Agreement have been consummated.
(l Evidence of payment by the Seller of all accrued and
unpaid fees (including those contemplated by the Fee Letter), costs and
expenses to the extent then due and payable on the date thereof, together
with Attorney Costs of the Agent to the extent invoiced prior to or on
such date, plus such additional amounts of Attorney Costs as shall
constitute the Agent's reasonable estimate of Attorney Costs incurred or
to be incurred by it through the closing proceedings; including any such
costs, fees and expenses arising under or referenced in SECTION 5.4.
(m The Fee Letter between the Seller and the Agent
contemplated by SECTION 1.5.
(n Good standing certificates with respect to the Seller, the
Originator and the Servicer issued by the Secretaries of State of the
States of such Person's organization and principal place of business.
(o Such other approvals, opinions or documents as the Agent
may reasonably request.
2. CONDITIONS PRECEDENT TO ALL PURCHASES AND REINVESTMENTS. Each
purchase (including the initial purchase) and each reinvestment shall be
subject to the further conditions precedent that:
(a in the case of each purchase, the Servicer shall have
delivered to the Agent on or prior to such purchase, in form and
substance satisfactory to the Agent, a completed Servicer Report with
respect to the immediately preceding Fiscal Month, dated within 40 days
prior to the date of such purchase together with a listing by Obligor of
all Receivables and such additional information as may reasonably be
requested by the Agent;
(b on the date of such purchase or reinvestment the following
statements shall be true (and acceptance of the proceeds of such purchase
or reinvestment shall be deemed a representation and warranty by the
Seller that such statements are then true):
(i the representations and warranties contained in EXHIBIT
III are true and correct on and as of the date of such purchase or
reinvestment as though made on and as of such date; and
(ii no event has occurred and is continuing, or would
result from such purchase or reinvestment, that constitutes a
Termination Event or an Unmatured Termination Event; and
(iii in the case of purchases only, no event of the type
described in CLAUSE(E) of EXHIBIT V has occurred and is continuing;
and
(c the Agent shall have received such other approvals,
opinions or documents as it may reasonably request.
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants as follows:
(a The Seller is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware,
and is duly qualified to do business, and is in good standing, as a
foreign corporation in every jurisdiction where the nature of its
business requires it to be so qualified unless any failure to be so
qualified would not materially adversely effect the business, operations
or financial condition of Seller or the ability of Seller to perform its
obligations under this Agreement or the other Transaction Documents or
the collectibility of the Receivables or the validity or enforceability
of this Agreement or other Transaction Documents.
(b The execution, delivery and performance by the Seller of
the Agreement and the other Transaction Documents to which it is a party,
including the Seller's use of the proceeds of purchases and
reinvestments, (i) are within the Seller's corporate powers, (ii) have
been duly authorized by all necessary corporate action, (iii) do not
contravene or result in a default under or conflict with (1) the Seller's
charter or by-laws, (2) any law, rule or regulation applicable to the
Seller, (3) any contractual restriction binding on or affecting the
Seller or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its property,
and (iv) do not result in or require the creation of any Adverse Claim
upon or with respect to any of its properties. The Agreement and the
other Transaction Documents to which it is a party have been duly
executed and delivered by the Seller.
(c No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority or other Person is
required for the due execution, delivery and performance by the Seller of
the Agreement or any other Transaction Document to which it is a party
other than those previously obtained or UCC filings.
(e Each of the Agreement and the other Transaction Documents
to which it is a party constitutes the legal, valid and binding
obligation of the Seller enforceable against the Seller in accordance
with its terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by general principles of
equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) There is no pending or threatened action or proceeding affecting the
Seller before any Governmental Authority or arbitrator which could
reasonably be expected to materially adversely affect the business,
operations, property, financial or other condition or operations of the
Seller, the ability of the Seller to perform its obligations under the
Agreement or the other Transaction Documents or the collectibility of the
Receivables, or which affects or purports to affect the legality,
validity or enforceability of the Agreement or the other Transaction
Documents.
(f) The Seller is the legal and beneficial owner of the Pool
Receivables and Related Security, free and clear of any Adverse Claim;
upon each purchase or reinvestment, the Purchaser shall acquire a valid
and enforceable perfected undivided percentage ownership interest, to the
extent of the Participation, in each Pool Receivable then existing or
thereafter arising and in the Related Security and Collections and other
proceeds, with respect thereto, free and clear of any Adverse Claim; the
Agreement creates a security interest in favor of the Purchaser in the
items described in SECTION 1.2(D), and the Purchaser has a first priority
perfected security interest in such items, free and clear of any Adverse
Claims. No effective financing statement or other instrument similar in
effect covering any Contract or any Pool Receivable or the Related
Security or Collections with respect thereto or any Lock-Box Account is
on file in any recording office, except those filed in favor of the
Purchaser relating to the Agreement.
(g) Each Servicer Report, information, exhibit, financial
statement, document, book, record or report furnished or to be furnished
at any time by or on behalf of the Seller to the Agent in connection with
the Agreement is or will be accurate in all material respects as of its
date or (except as otherwise disclosed to the Agent at such time) as of
the date so furnished, and no such item contains or will contain any
untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained
therein, in the light of the circumstances under which they were made,
not misleading.
(h) The principal place of business and chief executive office
(as such terms are used in the UCC) of the Seller and the office where
the Seller keeps its records concerning the Receivables are located at
the address referred to in PARAGRAPH (B) of EXHIBIT IV.
(i) The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts of the Seller
at such Lock-Box Banks, are specified in SCHEDULE II to the Agreement (or
at such other Lock-Box Banks and/or with such other Lock-Box Accounts as
have been notified to the Agent in accordance with the Agreement) and all
Lock-Box Accounts are subject to Lock-Box Agreements. All Obligors have
been directed to make all payment with respect to each Contract to a
Lock-Box Account.
(j) The Seller is not in violation of any order of any court,
arbitrator or Governmental Authority.
(k) No proceeds of any purchase or reinvestment will be used
for any purpose that violates any applicable law, rule or regulation,
including, without limitation, Regulations G or U of the Federal Reserve
Board.
(l) Each Pool Receivable included as an Eligible Receivable in the
calculation of the Net Receivables Pool Balance is an Eligible Receivable
as of the date of such calculation.
(m) No event has occurred and is continuing, or would result
from a purchase in respect of, or reinvestment in respect of, the
Participation or from the application of the proceeds therefrom, which
constitutes a Termination Event.
(n) The Seller and the Servicer have complied in all material
respects with the Credit and Collection Policy with regard to each
Receivable.
(o) The Seller has complied with all of the terms, covenants
and agreements contained in the Agreement and the other Transaction
Documents.
(p) The Seller's complete corporate name is set forth in the
preamble to the Agreement, and the Seller does not use and has not during
the last six years used any other corporate name, trade name, doing-
business name or fictitious name, except as set forth on SCHEDULE III and
except for names first used after the date of the Agreement and set forth
in a notice delivered to the Agent pursuant to PARAGRAPH (L)(VII) of
EXHIBIT IV.
(q) Seller has filed all federal and other tax returns and
reports required by law to have been filed by it and has paid all taxes
and governmental charges thereby shown to be owing.
(r) The Seller is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(s) The consolidated balance sheet of Pilgrim=s Pride as at
December 31, 1997, a copy of which has been furnished to the Agent,
fairly presents the financial condition of Pilgrim=s Pride, as at such
date, and since the date of such balance sheet, there has been no
material adverse change in the financial condition of the Seller or
Pilgrim's Pride or the ability of the Seller or the Originator to perform
their obligations under the Agreement or the other Transaction Documents
to which it is a party or the collectibility of the Pool Receivables, or
which affects the legality, validity or enforceability of the Agreement
or the other Transaction Documents.
(t) There is no pending or threatened action or proceeding
affecting the Seller, Servicer or the Originator before any Governmental
Authority or arbitrator which could reasonably be expected to have a
materially adversely affect the business, operations, property, financial
or other condition or operations of such Person, the ability of such
Person to perform its obligations under the Agreement or the other
Transaction Documents or the collectibility of the Pool Receivables, or
which affects or purports to affect the legality, validity or
enforceability of the Agreement or the other Transaction Documents.
EXHIBIT IV
COVENANTS
COVENANTS OF THE SELLER AND THE SERVICER. Until the latest of the
Facility Termination Date, the date on which no Investment of or Discount
in respect of the Participation shall be outstanding or the date all
other amounts owed by the Seller under the Agreement to the Purchaser,
the Agent and any other Indemnified Party or Affected Person shall be
paid in full:
(a) COMPLIANCE WITH LAWS, ETC. Each of the Seller and the
Servicer shall comply in all material respects with all applicable laws,
rules, regulations and orders, and preserve and maintain its corporate
existence, rights, franchises, qualifications, and privileges except to
the extent that the failure so to comply with such laws, rules and
regulations or the failure so to preserve and maintain such existence,
rights, franchises, qualifications, and privileges would not materially
adversely affect the collectibility of the Receivables or the
enforceability of any related Contract or the ability of the Seller or
the Servicer to perform its obligations under any related Contract or
under the Agreement.
(b) OFFICES, RECORDS AND BOOKS OF ACCOUNT, ETC. The Seller
(i) shall keep its principal place of business and chief executive office
(as such terms are used in the UCC) and the office where it keeps its
records concerning the Receivables at the address of the Seller set forth
under its name on the signature page to the Agreement or, upon at least
30 days' prior written notice of a proposed change to the Agent, at any
other locations in jurisdictions where all actions reasonably requested
by the Agent to protect and perfect the interest of the Purchaser in the
Receivables and related items (including without limitation the items
described in SECTION 1.2(D)) have been taken and completed and (ii) shall
provide the Agent with at least 60 days' written notice prior to making
any change in the Seller's name or making any other change in the
Seller's identity or corporate structure (including a merger) which could
render any UCC financing statement filed in connection with this
Agreement "seriously misleading" as such term is used in the UCC; each
notice to the Agent pursuant to this sentence shall set forth the
applicable change and the effective date thereof. The Seller also will
maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records evidencing
Receivables and related Contracts in the event of the destruction of the
originals thereof), and keep and maintain all documents, books, records,
computer tapes and disks and other information reasonably necessary or
advisable for the collection of all Receivables (including, without
limitation, records adequate to permit the daily identification of each
Receivable and all Collections of and adjustments to each existing
Receivable).
(c) PERFORMANCE AND COMPLIANCE WITH CONTRACTS AND CREDIT AND COLLECTION
POLICY. The Seller shall, at its expense, timely and fully perform and
comply with all material provisions, covenants and other promises
required to be observed by it under the Contracts related to the
Receivables, and timely and fully comply in all material respects with
the Credit and Collection Policy with regard to each Receivable and the
related Contract.
(d) OWNERSHIP INTEREST, ETC. The Seller shall, at its
expense, take all action necessary or desirable to establish and maintain
a valid and enforceable undivided ownership interest, to the extent of
the Participation, in the Pool Receivables and the Related Security and
Collections and other proceeds with respect thereto, and a first priority
perfected security interest in the items described in SECTION 1.2(D), in
each case free and clear of any Adverse Claim, in favor of the Purchaser,
including, without limitation, taking such action to perfect, protect or
more fully evidence the interest of the Purchaser under the Agreement as
the Purchaser, through the Agent, may request.
(e) SALES, LIENS, ETC. The Seller shall not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse Claim upon or with respect to, any or all of
its right, title or interest in, to or under, any item described in
SECTION 1.2(D) (including without limitation the Seller's undivided
interest in any Receivable, Related Security, or Collections, or upon or
with respect to any account to which any Collections of any Receivables
are sent), or assign any right to receive income in respect of any items
contemplated by this PARAGRAPH (E).
(f) EXTENSION OR AMENDMENT OF RECEIVABLES. Except as provided
in the Agreement, neither the Seller nor the Servicer shall extend the
maturity or adjust the Outstanding Balance or otherwise modify the terms
of any Pool Receivable, or amend, modify or waive any term or condition
of any related Contract.
(g) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY.
Neither the Seller nor the Servicer shall make any material change in the
character of its business or in the Credit and Collection Policy, or any
change in the Credit and Collection Policy that would adversely affect
the collectibility of the Receivables Pool or the enforceability of any
related Contract or the ability of the Seller or Servicer to perform its
obligations under any related Contract or under the Agreement. Neither
the Seller nor the Servicer shall make any other material change in the
Credit and Collection Policy without the prior written consent of the
Agent.
(h) AUDITS. Each of the Seller and the Servicer shall, from
time to time during regular business hours upon reasonable notice as
requested by the Agent, permit the Agent, or its agents or
representatives, (i) to examine and make copies of and abstracts from all
books, records and documents (including, without limitation, computer
tapes and disks) in the possession or under the control of the Seller or
the Servicer relating to Receivables and the Related Security, including,
without limitation, the related Contracts, and (ii) to visit the offices
and properties of the Seller and the Servicer for the purpose of
examining such materials described in clause (i) above, and to discuss
matters relating to Receivables and the Related Security or the Seller's
or Servicer's performance hereunder or under the Contracts with any of
the officers, employees, agents or contractors of the Seller having
knowledge of such matters.
(i) CHANGE IN LOCK-BOX BANKS, LOCK-BOX ACCOUNTS AND PAYMENT INSTRUCTIONS
TO OBLIGORS. Neither the Seller nor the Servicer shall add or terminate
any bank as a Lock-Box Bank or any account as a Lock-Box Account from
those listed in Schedule II to the Agreement, or make any change in its
instructions to Obligors regarding payments to be made to the Seller or
the Servicer or payments to be made to any Lock-Box Account (or related
post office box), unless the Agent shall have consented thereto in
writing and the Agent shall have received copies of all agreements and
documents (including without limitation Lock-Box Agreements) that it may
request in connection therewith.
(j) DEPOSITS TO LOCK-BOX ACCOUNTS. The Seller shall, or shall
cause the Servicer to, (i) instruct all Obligors to make payments of all
Receivables to one or more Lock-Box Accounts or to post office boxes to
which only Lock-Box Banks have access (and shall instruct the Lock-Box
Banks to cause all items and amounts relating to such Receivables
received in such post office boxes to be removed and deposited into a
Lock-Box Account on a daily basis), and (ii) deposit, or cause to be
deposited, any Collections of Pool Receivables received by it or the
Servicer into Lock-Box Accounts not later than one Business Day after
receipt thereof. Each Lock-Box Account, the Collection Account and the
Liquidation Account shall at all times be subject to a Lock-Box
Agreement, Collection Account Agreement or Liquidation Account Agreement,
respectively. Neither the Seller nor the Servicer will deposit or
otherwise credit, or cause or permit to be so deposited or credited, to
any Lock-Box Account cash or cash proceeds other than Collections of Pool
Receivables.
(k) MARKING OF RECORDS. At its expense, the Seller (or the
Servicer on its behalf) shall mark its master data processing records
relating to Pool Receivables and related Contracts, including with a
legend evidencing that the undivided percentage ownership interests with
regard to the Participation related to such Receivables and related
Contracts have been sold in accordance with the Agreement.
(l) REPORTING REQUIREMENTS. The Seller will provide to the
Agent (in multiple copies, if requested by the Agent) the following:
(i) as soon as available and in any event within 60 days
after the end of the first three quarters of each fiscal year of the
Seller and Pilgrim=s Pride, balance sheets of the Seller and
Pilgrim's Pride and its subsidiaries as of the end of such quarter
and statements of income and retained earnings of the Seller and
Pilgrim's Pride and its subsidiaries for the period commencing at
the end of the previous fiscal year and ending with the end of such
quarter, certified by the chief financial officer of the Seller and
Pilgrim's Pride, as applicable;
(ii) as soon as available and in any event within 120 days
after the end of each fiscal year of the Seller and Pilgrim's Pride,
a copy of the annual report for such year for the Seller and
Pilgrim's Pride and its subsidiaries, containing financial
statements for such year audited by a nationally recognized
independent certified public accountants;
(iii) as soon as available and in any event not later than the Servicer
Report Date, a Servicer Report as of the Fiscal Month ended
immediately prior to such Servicer Report Date;
(iv) as soon as possible and in any event within five
Business Days after an officer of the Seller or Servicer obtains
knowledge of the occurrence of each Termination Event or event
which, with the giving of notice or lapse of time, or both, would
constitute a Termination Event, a statement of the chief financial
officer of the Seller setting forth details of such Termination
Event or event and the action that the Seller has taken and proposes
to take with respect thereto;
(v) promptly after the filing or receiving thereof, copies
of all reports and notices that the Seller or any Affiliate files
under ERISA with the Internal Revenue Service or the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor or that the
Seller or any Affiliate receives from any of the foregoing or from
any multiemployer plan (within the meaning of Section 4001(a)(3) of
ERISA) to which the Seller or any Affiliate is or was, within the
preceding five years, a contributing employer, in each case in
respect of the assessment of withdrawal liability or an event or
condition which could, in the aggregate, result in the imposition of
liability on the Seller and/or any such Affiliate in excess of
$5,000,000;
(vi) at least thirty days prior to any change in the
Seller's name or any other change requiring the amendment of UCC
financing statements, a notice setting forth such changes and the
effective date thereof;
(vii) such other information respecting the Receivables or
the condition or operations, financial or otherwise, of the Seller
or any of its Affiliates as the Agent may from time to time
reasonably request;
(viii) promptly after the Seller obtains knowledge thereof,
notice of any litigation, investigation or proceeding which may
exist at any time between the Seller or the Servicer, on the one
hand, and any other Person if not cured or if adversely determined,
as the case may be, would be reasonably expected to have a material
adverse effect on the business, operations, property or financial or
other condition of the Seller, the Originator or the Servicer, as
the case may be; and
(ix) promptly after the Seller obtains knowledge thereof,
notice of a material adverse change in the business, operations,
property or financial or other condition of the Seller.
(m) SEPARATE CORPORATE EXISTENCE. Each of the Seller and the Servicer
hereby acknowledges that Purchaser and the Agent are entering into the
transactions contemplated by the Agreement and the Transaction Documents
in reliance upon the Seller's identity as a legal entity separate from
the Servicer and the Originator. Therefore, from and after the date
hereof, the Seller and the Servicer shall take all reasonable steps to
continue the Seller's identity as a separate legal entity and to make it
apparent to third Persons that the Seller is an entity with assets and
liabilities distinct from those of the Servicer, the Originator and any
other Person, and is not a division of the Servicer or the Originator or
any other Person. Without limiting the generality of the foregoing and
in addition to and consistent with the covenant set forth in
PARAGRAPH (A) of this EXHIBIT IV, the Seller and the Servicer shall take
such actions as shall be required in order that:
(i) The Seller will be a limited purpose corporation whose
primary activities are restricted in its certificate of
incorporation to purchasing Receivables from the Originator,
entering into agreements for the servicing of such Receivables,
selling undivided interests in such Receivables and conducting such
other activities as it deems necessary or appropriate to carry out
its primary activities;
(ii) Not less than one member of Seller's Board of
Directors (the "INDEPENDENT DIRECTORS") shall be individuals who are
not direct, indirect or beneficial stockholders, officers,
directors, employees, affiliates, associates, customers or suppliers
of the Originator or any of its Affiliates. The Seller's Board of
Directors shall not approve, or take any other action to cause the
commencement of a voluntary case or other proceeding with respect to
the Seller under any applicable bankruptcy, insolvency,
reorganization, debt arrangement, dissolution or other similar law,
or the appointment of or taking possession by, a receiver,
liquidator, assignee, trustee, custodian, or other similar official
for the Seller unless in each case the Independent Directors shall
approve the taking of such action in writing prior to the taking of
such action. The Independent Directors' fiduciary duty shall be to
the Seller (and creditors) and not to the Seller's shareholders in
respect of any decision of the type described in the preceding
sentence. In the event an Independent Director resigns or otherwise
ceases to be a director of the Seller, there shall be selected a
replacement Independent Director who shall not be an individual
within the proscriptions of the first sentence of this CLAUSE (II)
or any individual who has any other type of professional
relationship with the Originator or any of its Affiliates or any
management personnel of any such Person or Affiliate and who shall
be (x) a tenured professor at a business or law school, (y) a
retired judge or (z) an established independent member of the
business community, having a sound reputation and experience
relative to the duties to be performed by such individual as an
Independent Director;
(iii) No Independent Director shall at any time serve as a
trustee in bankruptcy for the Originator or any Affiliate thereof;
(iv) Any employee, consultant or agent of the Seller will
be compensated from the Seller's own bank accounts for services
provided to the Seller except as provided herein in respect of the
Servicer's Fee. The Seller will engage no agents other than a
servicer for the Receivables, which servicer will be fully
compensated for its services to the Seller by payment of the
Servicer's Fee;
(v) The Seller will contract with the Servicer to perform for
the Seller all operations required on a daily basis to service its
Receivables. The Seller will pay the Servicer a monthly fee based
on the level of Receivables being managed by the Servicer. The
Seller will not incur any material indirect or overhead expenses for
items shared between the Seller and the Originator or any Affiliate
thereof which are not reflected in the Servicer's Fee. To the
extent, if any, that the Seller and the Originator or any Affiliate
thereof share items of expenses not reflected in the Servicer's Fee,
such as legal, auditing and other professional services, such
expenses will be allocated to the extent practical on the basis of
actual use or the value of services rendered, and otherwise on a
basis reasonably related to the actual use or the value of services
rendered, it being understood that Pilgrim=s Pride shall pay all
expenses relating to the preparation, negotiation, execution and
delivery of the Transaction Documents, including, without
limitation, legal and other fees;
(vi) The Seller's operating expenses will not be paid by
the Originator or any Affiliate thereof unless the Seller shall have
agreed in writing with such Person to reimburse such Person for any
such payments;
(vii) The Seller will have its own separate mailing address
and stationery;
(viii) The Seller's books and records will be maintained
separately from those of the Originator or any Affiliate thereof;
(ix) Any financial statements of the Originator or any
Affiliate thereof which are consolidated to include the Seller will
contain detailed notes clearly stating that the Seller is a separate
corporate entity and has sold ownership interests in the Seller's
accounts receivable;
(x) The Seller's assets will be maintained in a manner
that facilitates their identification and segregation from those of
the Originator and any Affiliate thereof;
(xi) The Seller will strictly observe corporate formalities
in its dealings with the Originator and any Affiliate thereof, and
funds or other assets of the Seller will not be commingled with
those of the Originator or any Affiliate thereof. The Seller shall
not maintain joint bank accounts or other depository accounts to
which the Originator or any Affiliate thereof (other than Pilgrim's
Pride in its capacity as Servicer) has independent access. None of
the Seller's funds will at any time be pooled with any funds of the
Originator or any Affiliate thereof;
(xii) The Seller shall pay to the Originator the marginal increase
(or, in the absence of such increase, the market amount of its
portion) of the premium payable with respect to any insurance policy
that covers the Seller and any Affiliate thereof, but the Seller
shall not, directly or indirectly, be named or enter into an
agreement to be named, as a direct or contingent beneficiary or loss
payee, under any such insurance policy, with respect to any amounts
payable due to occurrences or events related to the Originator or
any Affiliate thereof; and
(xii) The Seller will maintain arm's length relationships
with the Originator and any Affiliate thereof. The Originator or
any Affiliate thereof that renders or otherwise furnishes services
to the Seller will be compensated by the Seller at market rates for
such services. Neither the Seller nor the Originator or any
Affiliate thereof will be or will hold itself out to be responsible
for the debts of the other or the decisions or actions respecting
the daily business and affairs of the other.
(n) MERGERS, ACQUISITIONS, SALES, ETC.
(i) The Seller shall not
(A) be a party to any merger or consolidation, or
directly or indirectly purchase or otherwise acquire, whether
in one or a series of transactions, all or substantially all of
the assets or any stock of any class of, or any partnership or
joint venture interest in, any other Person, or sell, transfer,
assign, convey or lease any of its property and assets
(including, without limitation, any Pool Receivable or any
interest therein) other than pursuant to this Agreement;
(B) make, incur or suffer to exist an investment in,
equity contribution to, loan, credit or advance to, or payment
obligation in respect of the deferred purchase price of
property from, any other Person, except for obligations
incurred pursuant to the Transaction Documents; or
(C) create any direct or indirect Subsidiary or otherwise
acquire direct or indirect ownership of any equity interests in
any other Person.
(o) RESTRICTED PAYMENTS.
(i) GENERAL RESTRICTION. Except in accordance with this
SUBPARAGRAPH (I), the Seller shall not (A) purchase or redeem any
shares of its capital stock, (B) declare or pay any Dividend or set
aside any funds for any such purpose, (C) prepay, purchase or redeem
any subordinated indebtedness of the Seller, (D) lend or advance any
funds or (E) repay any loans or advances to, for or from the
Originator. Actions of the type described in this CLAUSE (I) are
herein collectively called "RESTRICTED PAYMENTS".
(ii) TYPES OF PERMITTED PAYMENTS. Subject to the
limitations set forth in CLAUSE (III) below, the Seller may make
Restricted Payments so long as such Restricted Payments are made
only to the Originator and only in one or more of the following
ways:
(A) Seller may make cash payments (including prepayments)
on the Company Notes in accordance with their terms; and
(B) if no amounts are then outstanding under the Company
Notes, the Seller may declare and pay Dividends.
(iii) SPECIFIC RESTRICTIONS. The Seller may make Restricted
Payments only out of Collections paid or released to the Seller
pursuant to SECTIONS 1.4(B). Furthermore, the Seller shall not pay,
make or declare
(A) any Dividend if, after giving effect thereto,
Seller's Tangible Net Worth would be less than 2.5 Million
Dollars ($2,500,000); or
(B) any Restricted Payment (including any Dividend) if,
after giving effect thereto, any Termination Event or Unmatured
Termination Event shall have occurred and be continuing.
(p) USE OF SELLER'S SHARE OF COLLECTIONS. The Seller shall
apply its share of Collections to make payments in the following order of
priority: FIRST, the payment of its expenses (including, without
limitation, the obligations payable to Purchaser, the Affected Persons
and the Agent under the Transaction Documents), SECOND, the payment of
accrued and unpaid interest on the Company Notes, THIRD, the payment of
the outstanding principal amount of the Company Notes, and FOURTH, other
legal and valid corporate purposes.
(q) AMENDMENTS TO CERTAIN DOCUMENTS.
(i) The Seller shall not amend, supplement, amend and
restate, or otherwise modify the Purchase and Contribution
Agreement, the Company Notes, any other document executed under the
Purchase and Contribution Agreement, the Collection Account
Agreement, the Lock-Box Agreements, the Liquidation Account
Agreement or the Seller's certificate of incorporation or by-laws,
except (A) in accordance with the terms of such document, instrument
or agreement and (B) with the advance written consent of the Agent.
(ii) The Seller shall not, and shall not permit the
Originator to enter into or otherwise become bound by, any
agreement, instrument, document or other arrangement that restricts
its right to amend, supplement, amend and restate or otherwise
modify, or to extend or renew, or to waive any right under, this
Agreement or any other Transaction Document.
(r) INCURRENCE OF INDEBTEDNESS. The Seller shall not (i)
create, incur or permit to exist, any Debt or liability or (ii) cause or
permit to be issued for its account any letters of credit or bankers'
acceptances, except for Debt incurred pursuant to the Company Notes and
liabilities incurred pursuant to or in connection with the Transaction
Documents or otherwise permitted therein.
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
(a) The Servicer, the Originator or Seller shall fail to make
when due any payment or deposit to be made by it under the Agreement or
any other Transaction Document and such failure shall continue unremedied
for two Business Days; or
(b) Pilgrim's Pride (or any Affiliate thereof) shall fail to
transfer to any successor Servicer when required any rights, pursuant to
the Agreement, which Pilgrim's Pride (or such Affiliate) then has as
Servicer; or
(c) Any representation or warranty made or deemed made by the
Seller, the Originator or the Servicer (or any of their respective
officers) under or in connection with the Agreement or any information or
report delivered by the Seller or the Servicer pursuant to the Agreement
shall prove to have been incorrect or untrue in any material respect when
made or deemed made or delivered; PROVIDED, HOWEVER, if the violation of
this PARAGRAPH (C) by the Seller or Servicer may be cured without any
potential or actual detriment to the Purchaser, the Agent, or any Program
Support Provider, the Seller or the Servicer as applicable shall have 30
days from the earlier of (i) such Person's knowledge of such failure and
(ii) notice to such Person of such failure to cure any such violation,
before a Termination Event shall occur so long as such Person is
diligently attempting to effect such cure; or
(d) The Seller, the Originator or the Servicer shall fail to
perform or observe any other term, covenant or agreement contained in the
Agreement or any other Transaction Document on its part to be performed
or observed and any such failure shall remain unremedied for 30 days
after the Seller, the Originator or Servicer, as applicable, has notice
or knowledge thereof (or, with respect to a failure to deliver the
Servicer Report pursuant to the Agreement, such failure shall remain
unremedied for five Business Days); or
(e) The Seller or the Originator shall fail to pay any principal of
or premium or interest on any of its Debt which is outstanding in a
principal amount of at least $5,000,000 in the aggregate when the same
becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace period, if any, specified in the
agreement, mortgage, indenture or instrument relating to such Debt; or
any other event shall occur or condition shall exist under any agreement,
mortgage, indenture or instrument relating to any such Debt and shall
continue after the applicable grace period, if any, specified in such
agreement, mortgage, indenture or instrument, if the effect of such event
or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), redeemed, purchased or defeased, or an offer to
repay, redeem, purchase or defease such Debt shall be required to be
made, in each case prior to the stated maturity thereof; or
(f) The Agreement or any purchase or any reinvestment pursuant
to the Agreement shall for any reason (other than pursuant to the terms
hereof) (i) cease to create, or the Participation shall for any reason
cease to be, a valid and enforceable perfected undivided percentage
ownership interest to the extent of the Participation in each Pool
Receivable and the Related Security and Collections and other proceeds
with respect thereto, free and clear of any Adverse Claim or (ii) cease
to create with respect to the items described in SECTION 1.2(D), or the
interest of the Purchaser with respect to such items shall cease to be, a
valid and enforceable first priority perfected security interest, free
and clear of any Adverse Claim; or
(g) The Seller or the Originator shall generally not pay its
debts as such debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against
the Seller or the Originator seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or unstayed for a period
of 30 days, or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar official
for, it or for any substantial part of its property) shall occur; or
Seller or the Originator shall take any corporate action to authorize any
of the actions set forth above in this PARAGRAPH (G); or
(h) As of the last day of any Fiscal Month (i) the arithmetic
average for the most recent three Fiscal Months of (A) the Default Ratios
shall exceed 4.0% or (B) the Delinquency Ratios shall exceed 7.0% or (ii)
the arithmetic average of the Loss-to-Liquidation Ratios for the most
recent twelve Fiscal Months shall exceed 1.0%; or
(i) The Participation shall exceed 100% and such condition
shall continue unremedied for five Business Days; or
(j) A Change in Control shall occur; or
(k) The Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Internal Revenue Code with regard to any
assets of Seller or the Originator and such lien shall not have been
released within ten Business Days, or the Pension Benefit Guaranty
Corporation shall, or shall indicate its intention to, file notice of a
lien pursuant to Section 4068 of ERISA with regard to any of the assets
of Seller; or
(l) Seller's Tangible Net Worth shall be less than 2.5 million dollars
($2,500,000).
ANNEX A
FORM OF LOCK-BOX AGREEMENT
[Letterhead of Seller]
LOCK-BOX AGREEMENT
___________, 199__
[Name and Address of
Lock-Box Bank]
Gentlemen:
Reference is made to our [lock-box]1/ account[s] no[s]. maintained
with you (the "Account[S]"). Pursuant to a Receivables Purchase
Agreement dated as of June 26, 1998 among us, as Seller, [_________] as
Servicer, [Pooled Accounts Receivable Capital Corporation], as purchaser
together with its successors and assigns in such capacity, the
"Purchaser"), and Nesbitt Burns Securities Inc., as agent for the
Purchaser (the "Agent"), we have assigned and/or may hereafter assign to
the Purchaser one or more undivided percentage ownership interests in
accounts, chattel papers, instruments or general intangibles
(collectively, "Receivables") with respect to which payments are or may
hereafter be made to the Account[s], and have granted to the Purchaser a
security interest in such Receivables, the Account[s], amounts on deposit
therein and related property. Your execution of this letter agreement is
a condition precedent to our continued maintenance of the Account[s] with
you.
We hereby transfer exclusive ownership and control of the Account[s]
to the Agent on behalf of the Purchaser, subject only to the condition
subsequent that the Agent shall have given you notice of its election to
assume such ownership and control, which notice may be in the form
attached hereto as Exhibit A or in any other form that gives you
reasonable notice of such election.
**FOOTNOTES**
1/ Delete in the case of direct wire transfer accounts.
We hereby irrevocably instruct you, at all times from and after the date
of your receipt of notice from the Agent as described above, to make all
payments to be made by you out of or in connection with the Account[s]
directly to the Agent, at its address set forth below its signature
hereto or as the Agent otherwise notifies you, for the account of the
Purchaser (account #__________, ABA #_________), or otherwise in
accordance with the instructions of the Agent.
We also hereby notify you that, at all times from and after the date
of your receipt of notice from the Agent as described above, the Agent
shall be irrevocably entitled to exercise in our place and stead any and
all rights in respect of or in connection with the Account[s], including,
without limitation, (a) the right to specify when payments are to be made
out of or in connection with the Account[s] and (b) the right to require
preparation of duplicate monthly bank statements on the Account[s] for
the Agent's audit purposes and mailing of such statements directly to an
address specified by the Agent.
Notice from the Agent may be personally served or sent by Telex,
facsimile or U.S. mail, certified return receipt requested, to the
address, [Telex] or facsimile number set forth under your signature to
this letter agreement (or to such other address, [Telex] or facsimile
number as to which you shall notify the Agent in writing). If notice is
given by [Telex] or facsimile, it will be deemed to have been received
when the notice is sent [and the answerback is received (in the case of
Telex)] or receipt is confirmed by telephone or other electronic means
(in the case of facsimile). All other notices will be deemed to have
been received when actually received or, in the case of personal
delivery, delivered.
By executing this letter agreement, you acknowledge and consent to
the existence of the Agent's right to ownership and control of the
Account[s] and the Purchaser's security interest in the Account[s] and
amounts from time to time on deposit therein and agree that from the date
hereof the Account[s] shall be maintained by you for the benefit of, and
amounts from time to time therein held by you as agent for, the Agent on
the terms provided herein. The Account[s] [is/are] to be titled "[Name
of Seller] and Nesbitt Burns Securities Inc. as the Agent for the
Purchaser, its successors and assigns, as their interests may appear."
Except as otherwise provided in this letter agreement, payments to the
Account[s] are to be processed in accordance with the standard procedures
currently in effect. All service charges and fees with respect to the
Account[s] shall continue to be payable by us as under the arrangements
currently in effect.
By executing this letter agreement, you irrevocably waive and agree
not to assert, claim or endeavor to exercise, irrevocably bar and estop
yourself from asserting, claiming or exercising, and acknowledge that you
have not heretofore received a notice, writ, order or any form of legal
process from any other person or entity asserting, claiming or
exercising, any right of set-off, banker's lien or other purported form
of claim with respect to [any of] the Account[s] or any funds from time
to time therein. Except for your right to payment of your service
charges and fees and to make deductions for returned items, you shall
have no rights in the Account[s] or funds therein. To the extent you may
ever have such rights, you hereby expressly subordinate all such rights
to all rights of the Agent.
You may terminate this letter agreement by canceling the Account[s]
maintained with you, which cancellation and termination shall become
effective only upon thirty days' prior written notice thereof from you to
the Agent. Incoming [mail addressed to] [wire transfers to] the
Account[s] received after such cancellation shall be forwarded in
accordance with the Agent's instructions. This letter agreement may also
be terminated upon written notice to you by the Agent stating that the
Receivables Purchase Agreement pursuant to which this letter agreement
was obtained is no longer in effect. Except as otherwise provided in
this paragraph, this letter agreement may not be terminated or amended
without the prior written consent of the Agent. This letter agreement
may be executed in any number of counterparts, and by the parties hereto
on separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute
one and the same agreement.
Please acknowledge your agreement to the terms set forth in this
letter agreement by signing the two copies of this letter agreement
enclosed herewith in the space provided below, sending one such signed
copy to the Agent at its address provided above and returning the other
signed copy to us.
Very truly yours,
[NAME OF SELLER]
By:________________________________
Name:______________________________
Title:_____________________________
Acknowledged and agreed to as of the date
first written above:
NESBITT BURNS SECURITIES INC.,
as Agent
By:________________________________
Name:______________________________
Title:_____________________________
Address for notice:
111 West Monroe Street
Floor 20 East
Chicago, Illinois 60603
Attention: James P. Walsh, Director
Telephone:
Facsimile: (312) 461-6327
[NAME OF LOCK-BOX BANK]
By:________________________________
Name:______________________________
Title:_____________________________
Address for notice:
Attention:
Telex No.:
(Answerback:)
Telephone:
Facsimile:
EXHIBIT A to
Lock-Box Agreement
[Nesbitt Burns Securities Inc.]
[Name and Address
of Lock-Box Bank]
Re: [Name of Seller]
[Lock-Box]*2/ ACCOUNT NO[s]. [and ]
Gentlemen:
Reference is made to the letter agreement dated [_______, 199_](the
"Letter Agreement") among [Name of Seller], as Servicer, [Pooled Accounts
Receivable Capital Corporation] (or any successors and assigns thereof,
the "Purchaser"), the undersigned, as Agent and you concerning the above
described [lock-box]* account[s] (the "Account[s]"). We hereby give you
notice of our assumption of ownership and control of the Account[s] as
provided in the Letter Agreement.
We hereby instruct you to make all payments to be made by you out of
or in connection with the Account[s] [directly to the undersigned, at
[our address set forth above], for the account of the Purchaser (account
no. )].
[other instructions]
Very truly yours,
NESBITT BURNS SECURITIES INC.,
as Agent
By:________________________________
Name:______________________________
Title:_____________________________
**FOOTNOTES**
2*/ Delete in the case of direct wire transfer accounts.
