ex10_3.htm


     

    
      
         

      

      
         

        
          

        

      

      
        
          EXHIBIT
10.3

          EXECUTION 
COPY

        

      

    

     

    Pilgrim’s Pride
Corporation

     

    Limited Duration Waiver
Agreement

     

    This Limited Duration Waiver Agreement (herein, the " Agreement ") is made as of October 26,
2008, by and among PILGRIM’S PRIDE CORPORATION, a Delaware corporation (the
" Servicer "), PILGRIM’S PRIDE FUNDING
CORPORATION, a Delaware limited liability company (the " Seller " and, together with
the Servicer, the " Seller
Parties "), the PURCHASERS AND PURCHASER AGENTS ON THE SIGNATURE PAGES
HERETO (collectively, the " Purchasers ")
and BMO CAPITAL MARKETS CORP., as administrator (in such capacity, together with
its successors and assigns, the " Administrator ").

     

    Recitals:

     

        A. Fairway and each other purchaser from time to time
party to the Receivables Purchase Agreement (as defined below) (collectively,
the " Purchasers "
and, together with the Administrator, the " Waiving
Parties ") currently purchase and make reinvestments of undivided
percentage ownership interests with regard to the Participation from the Seller
on the terms and conditions set forth in that certain Amended and Restated
Receivables Purchase Agreement dated as of September 26, 2008, by and among the
Servicer, the Seller, the Purchasers and the Administrator (as amended,
restated, supplemented or otherwise modified from time to time, the " Receivables
Purchase Agreement ").


     

        B. The Servicer has informed the Waiving Parties
that the Servicer was not in compliance with clause (v) of Exhibit IV to the
Receivables Purchase Agreement (Fixed Charge Coverage Ratio) as of
September 27, 2008 and expects that it will not be in compliance with
clause (t) of Exhibit IV to the Receivables Purchase Agreement (Leverage Ratio)
(each such instance of noncompliance being hereinafter referred to collectively
as the " Subject
Default "). 

     

        C.
The Seller Parties have requested that the Waiving Parties waive the Subject
Default during the period ending November 26, 2008, and the Waiving Parties are
willing to do so subject to the terms and conditions contained in this
Agreement.

     

    Now, Therefore, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

     

        1. Incorporation of
Recitals; Defined Terms. The Seller Parties acknowledge that the Recitals
set forth above are true and correct in all material respects. The defined terms
in the Recitals set forth above are hereby incorporated into this Agreement by
reference. All other capitalized terms used herein without definition shall have
the same meanings herein as such terms have in the Receivables Purchase
Agreement. 

     

        2.
Amounts
Owing. The Seller Parties acknowledge and agree that there are amounts
outstanding, including Investment and Discount in respect of the Participation
and other amounts, that are payable by the Originator, the Seller or the
Servicer, as applicable, to the Purchasers and the Administrator (and any other
Indemnified Party and Affected Person under the Transaction Documents, as
applicable), and such amounts (together with interest and fees thereon) are
justly and truly owing by the Seller without defense, offset or counterclaim.


     

        3.
Limited
Duration Waiver. Subject to the terms and conditions contained in this
Agreement, the Waiving Parties waive the Subject Default but only for the period
(the "Waiver
Period") beginning October 28, 2008, and ending on November 26, 2008 (the
"Scheduled
Waiver Expiration Date"). The foregoing waiver shall become null and void
on the Scheduled Waiver Expiration Date and from and after the Scheduled Waiver
Expiration Date the Administrator and the Purchasers shall have all rights and
remedies available to them as a result of the occurrence of the Subject Default
as though this waiver had never been granted.

     

        4.
Additional
Agreements. The Seller Parties further agree that: 

     

            (a) The Administrator
(or its counsel) shall have the right to engage on behalf of the Purchasers a
financial advisor, selected by the Administrator and acceptable to the
Purchasers, to review, evaluate and advise the Administrator and the Purchasers
as to the reports, analyses and cash flow forecasts and other materials prepared
by the Seller’s and the Servicer’s financial consultants relating to the
financial condition, operating performance, and business prospects of the Seller
and the Servicer and their Subsidiaries and to perform such other information
gathering or evaluation acts as may be reasonably requested by the
Administrator, and the reasonable costs and expenses of such financial advisor
shall be borne by the Seller and constitute part of the Seller’s obligations
outstanding under the Receivables Purchase Agreement. Each of the Seller and the
Servicer shall take reasonable steps to make available to such financial advisor
and its representatives such information respecting the financial condition,
operating performance, and business prospects of the Seller and the Servicer and
their Subsidiaries as may be reasonably requested and shall make the Seller’s
and the Servicer’s financial consultants, officers, employees, and independent
public accountants available with reasonable prior notice to discuss such
information with such financial advisor and its representatives.

     

            (b) The Seller (or
the Servicer on its behalf) shall provide to the Administrator and the
Purchasers a 13-week cash flow forecast (the " Forecast ")
showing projected cash receipts and cash disbursements of the Seller and the
Servicer and their Subsidiaries over the following 13-week period, together with
a reconciliation of actual cash receipts and cash disbursements of the Seller
and the Servicer and their Subsidiaries from the prior week against the cash
flow forecast previously furnished to the Administrator and the Purchasers and
showing any deviations on a cumulative basis), prepared by the Servicer and in
form and substance, and with such detail, as the Administrator may request. Each
Forecast shall be provided to the Administrator and the Purchasers no later than
5:00 p.m. Central time, on Wednesday of each week (beginning October 29,
2008).

     

            (c) [Intentionally
Omitted].

     

            (d) No later than
October 31, 2008, the Seller shall deliver to the Administrator and the
Purchasers a budget for the 90-day period ending January 31, 2009, in form and
substance satisfactory to the Administrator and the Purchasers and their
financial advisors.

     

            (e) No later than
October 28, 2008, the Seller and the Servicer shall permit the Administrator or
its administrators or representatives to begin to conduct an on-site audit in
accordance with clause (h) of Exhibit IV to the Receivables Purchase Agreement,
and each of the Seller Parties hereby agrees (i) that this clause (k)
constitutes reasonable notice of such audit as contemplated by the Receivables
Purchase Agreement and (ii) to pay on demand in immediately available funds all
fees and expenses in connection therewith.

     

            (f) No later than November 26, 2008,
with respect to any accounts or lock-boxes that are or were in the name of the
Seller but are not listed on  Schedule I 
hereto(such accounts and lock-boxes, collectively, the " Unscheduled
Accounts "), the Seller shall (i) (A) enter into lock-box agreements
in form and substance reasonably satisfactory to the Administrator and covering
such Unscheduled Accounts with the applicable lock-box banks, and deliver
original counterparts thereof to the Administrator and/or (B) instruct each
Obligor to make payments of all Receivables to a Lock-Box Account or lock-box
listed on Schedule
I hereto instead of to such Unscheduled Account or (ii) enter into
other arrangements covering such Unscheduled Accounts reasonably acceptable to
the Administrator; for the avoidance of doubt, the term "Lock-Box Account"
includes, without limitation, the Collection Account and the Liquidation
Account. A breach of this clause (e) shall constitute a Termination Event under
the Receivables Purchase Agreement.

     

        5.
Waiver
Termination. As used in this Agreement, "Waiver
Termination" shall mean the occurrence of the Scheduled Waiver Expiration
Date, or, if earlier, the occurrence of any one or more of the following events:
(a) any Unmatured Termination Event or Termination Event, in each case
other than the Subject Default; (b) any failure by the Seller or the
Servicer for any reason to comply with any term, condition, or provision
contained in this Agreement; (c) any representation made by the Seller or
the Servicer in this Agreement or pursuant to it proves to be incorrect or
misleading in any material respect when made; (d) the CoBank Limited
Duration Waiver (as defined in Section 13(b) hereof) shall for any reason
not be or shall cease to be in full force and effect or is declared to be null
and void, or CoBank or any other party to the Amended and Restated Credit
Agreement dated as of September 21, 2006, among the Servicer, CoBank, ACB, as
Administrative, Documentation and Collateral Agent for the benefit of the
present and future Syndication Parties and as a Syndication Party, Lead Arranger
and Book Manager thereunder (" Co-Bank "),
Farm Credit Services of America, FLCA, as Co-Arranger and as a Syndication
Party, and the other Syndication Parties party thereto, as amended,
supplemented, restated and otherwise modified from time to time (as so amended,
supplemented, restated and otherwise modified from time to time, the " CoBank
Credit Agreement ") takes any
action for the purpose of terminating, repudiating or rescinding the CoBank
Limited Duration Waiver or any of its obligations thereunder; (e) the
Credit Agreement Limited Duration Waiver (as defined in Section 13(c)
hereof) shall for any reason not be or shall cease to be in full force and
effect or is declared to be null and void, or the Credit Agent (as defined
below) or any other party to the Fourth Amended and Restated Secured Credit
Agreement dated as of February 8, 2007, among Seller, as a borrower, To-Ricos,
Ltd., To-Ricos Distribution, Ltd., the various banks party thereto and Bank of
Montreal, as agent (the " Credit
Agent "), as
amended, supplemented and otherwise modified (as so
amended, supplemented and otherwise modified, the " Credit
Agreement "), takes
any action for the purpose of terminating, repudiating or rescinding the Credit
Agreement Limited Duration Waiver or any of its obligations thereunder or (f)
the Servicer shall pay any interest on its 8-3/8% Senior Subordinated Notes due
2017 (as defined in the 2007 Senior Subordinated Indenture (as defined in the
Credit Agreement)) or its 7-5/8% Senior Notes due May 1, 2015 (as defined in the
2007 Senior Indenture (as defined in the Credit Agreement)) (such interest
payments under this clause (f), collectively, the " Indenture
Interest Payments "). Upon the occurrence of a Waiver Termination, the
Waiver Period is automatically terminated and the Administrator and the
Purchasers are then permitted and entitled, with respect to the Subject Default
and any other Termination Event then in existence, under the Receivables
Purchase Agreement, including without limitation Section 4.4 thereof, among
other things, to do all things necessary or desirable, in the determination of
the Administrator, to collect any and all amounts or portions thereof due under
any and all Pool Receivables or Related Security, including, without limitation,
endorsing the name of the Seller on checks and other instruments representing
Collections and enforcing such Pool Receivables, Related Security and the
related Contracts, to cease making purchases and reinvestments, to permanently
terminate the commitments thereunder, to accelerate the Seller’s indebtedness,
obligations and liabilities under the Transaction Documents, and to exercise any
other rights and remedies that may be available under the Transaction Documents
or applicable law.

     

        6. Limited Waiver and
Reservation of Rights. The Seller Parties acknowledge and agree that
immediately upon expiration or termination of the Waiver Period, the
Administrator and the Purchasers have all of their rights and remedies with
respect to the Subject Default to the same extent, and with the same force and
effect, as if the waiver contained herein had not been granted. The Seller
Parties will not assert and hereby forever waives any right to assert that the
Administrator or the Purchasers are obligated in any way to continue to waive
the Subject Default beyond the Waiver Period or to forbear from enforcing their
rights or remedies with respect to the Subject Default after the Waiver Period
or that the Administrator and the Purchasers are not entitled to act on the
Subject Default after the occurrence of a Waiver Termination as if such default
had just occurred and the Waiver Period had never existed. The Seller Parties
acknowledge that none of the Administrator or the Purchasers have made any
representations as to what actions, if any, such party will take after the
Waiver Period or upon the occurrence of any Waiver Termination, Unmatured
Termination Event or Termination Event, and the Purchasers and the Administrator
must and do hereby specifically reserve any and all rights, remedies, and claims
they have (after giving effect hereto) with respect to the Subject Default and
each other default or Termination Event that may occur. 

     

        7.
Acknowledgement of
Liens. The Seller Parties hereby acknowledge and agree that all
indebtedness, obligations and liabilities of the Seller owing to the
Administrator and the Purchasers arising out of or in any manner relating to the
Transaction Documents shall continue to be secured by liens and security
interests on all of the Receivables, Contracts and Related Security and all
other collateral pursuant to the Transaction Documents heretofore or hereafter
executed and delivered by the Seller or the Servicer, and nothing
herein contained shall in any manner affect or impair the priority of the liens
and security interests created and provided for thereby as to the indebtedness,
obligations, and liabilities which would be secured thereby prior to giving
effect to this Agreement. 

     

        8.
Representations and
Warranties. Each of the Seller Parties represents and warrants to the
Administrator and the Purchasers that:

     

         (a) each
Seller Party has full right and authority to enter into this Agreement and to
perform all of its obligations hereunder; 

     

            (b) this Agreement and the
performance or observance by the Seller Parties of any of the matters and things
herein or therein provided for do not (i) contravene or constitute a
default under any provision of law or any judgment, injunction, order or decree
binding upon any Seller Party or any provision of the organizational documents
(e.g.,
certificate or articles of incorporation and by-laws) of any Seller Party, or
(ii) contravene or constitute a default under any covenant, indenture or
agreement of or affecting any Seller Party or any of its Property;

     

              
(c) the obligations of each Seller Party under this Agreement and each of the
Transaction Documents executed and delivered by it are legal, valid, enforceable
(except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors’ rights generally) and subsisting and not subject to set-off, defense
(other than payment) or counterclaim; 

     

              
(d) no Unmatured Termination Event or Termination Event (other than the Subject
Default) has occurred and is continuing; 

     

              
(e) as of the close of business in Chicago, Illinois on September 24, 2008, the
undrawn amount of all commitments under the CoBank Credit Agreement was
$143,000,000 and the undrawn amount of all revolving credit commitments under
the Credit Agreement was $35,500,000;

     

                    
(f) the Servicer has decided that during the Waiver Period it will not make the
Indenture Interest Payments; and

     

                    (g)
Each Seller Party represents and warrants that (i) each of the Lock-Box Accounts
and lock-boxes set forth on Schedule I hereto is subject to a Lock-Box
Agreement, (ii) the Lock-Box Accounts and lock-boxes set forth on Schedule I
hereto cover all of the accounts and lock-boxes into which Obligors are
instructed to deposit Collections and any other amounts related to Receivables
and (iii) all Obligors have been instructed to make payments of all Receivables
(A) only to one or more of the Lock-Box Accounts or lock-boxes set forth on
Schedule I hereto or (B) solely with respect to any Unscheduled Accounts, as
otherwise reasonably acceptable to the Administrator.

     

        9.
Amendments
and agreements. 

     

            (a)
 Exhibit
I to the Receivables Purchase Agreement is hereby amended by adding
the following new definition thereto in the appropriate alphabetical
order:

     

    " October
PPC Limited Duration Waiver Agreement " means the Pilgrim’s Pride
Corporation Limited Duration Waiver Agreement, dated as of October 26, 2008,
among Pilgrim’s Pride Corporation, Pilgrim’s Pride Funding Corporation, the
various purchasers and purchaser agents party thereto and BMO Capital Markets
Corp.

     

            (b)
The definition of "Waiver Period" set forth in  Exhibit
 I to the Receivables Purchase Agreement is hereby amended and
restated in its entirety as follow:

     

                 
" Waiver
Period " means the period beginning on September 26, 2008 and ending
on the earliest of (a) the date of the Waiver Termination (as defined in the PPC
Limited Duration Waiver Agreement) if such Waiver Termination is not the result
of the Scheduled Waiver Expiration Date (as defined in the PPC Limited Duration
Waiver Agreement), (b) the Scheduled Waiver Expiration Date (as defined in the
October PPC Limited Duration Waiver Agreement) and (c) the date of the Waiver
Termination (as defined in the October PPC Limited Duration Waiver
Agreement).

     

            (c)
Based solely on the Seller Parties’ representations and warranties set forth in
Section 8(g), and solely so long as such representations and warranties continue
to be true and correct, the Administrator and the Purchasers acknowledge and
agree that they do not presently intend to direct Obligors to redirect funds
during the Waiver Period;  provided ,
that such acknowledgment is not in limitation of, and the Administrator and the
Purchasers specifically reserve, the right to exercise any and all enforcement
rights and remedies under the Transaction Documents, including, without
limitation, Section 4.4 of the Receivables Purchase
Agreement.

     

            (d)
The Administrator and the Purchasers acknowledge and agree that the Seller
Parties’ election not to make the Indenture Interest Payments during the Waiver
Period shall not, during the Waiver Period, constitute a Termination Event under
clause (e) of the Exhibit V to the Receivables Purchase Agreement. 

     

            (e) On or before 5:00
pm Chicago time on October 27, 2008, the Seller shall:

     

                (i) pay to the
Administrator in immediately available funds of (x) an upfront fee equal to the
product of (i) 0.10%  multiplied
by (ii) the Purchase Limit
and (y) out-of-pocket expenses in an amount equal to $20,000;
and

     

                (ii) pay to Mayer
Brown LLP, counsel to the Administrator and the Purchasers, in immediately
available funds (x) $174,293.79 in outstanding legal fees and (y) any other
current legal fees and expenses referred to in Section 12
below.

     

        10.
Release. For
value received, including without limitation, the agreements of the
Administrator and the Purchasers in this Agreement, each Seller Party hereby
releases the Administrator, each Purchaser, each Indemnified Party and their
respective current and former shareholders, directors, officers, agents,
employees, attorneys, consultants, and professional advisors (collectively, the
"Released
Parties") of and from any and all demands, actions, causes of action,
suits, controversies, acts and omissions, liabilities, and other claims of every
kind or nature whatsoever, both in law and in equity, known or unknown, which
such Seller Party has or ever had against the Released Parties from the
beginning of the world to this date arising in any way out of the existing
financing arrangements between the Seller Parties, the Administrator and the
Purchasers, and each Seller Party further acknowledges that, as of the date
hereof, it does not have any counterclaim, set-off, or defense against the
Released Parties, each of which each Seller Party hereby expressly
waives.

     

        11.
Transaction
Documents Remain Effective. Except as expressly set forth in this
Agreement, the Transaction Documents and all of the obligations of the Seller
Parties thereunder, the rights and benefits of the Administrator and Purchasers
thereunder, and the liens and security interests created thereby remain in full
force and effect. Without limiting the foregoing, each Seller Party agrees to
comply with all of the terms, conditions, and provisions of the Transaction
Documents except to the extent such compliance is irreconcilably inconsistent
with the express provisions of this Agreement. This Agreement and the
Transaction Documents are intended by the Administrator and the Purchasers as a
final expression of their agreement and are intended as a complete and exclusive
statement of the terms and conditions of that agreement.

     

        12.
Fees and
Expenses. The Seller and the Servicer shall pay on demand all fees and
expenses (including attorneys’ fees) incurred by the Administrator and its
counsel in connection with this Agreement and the other instruments and
documents being executed and delivered in connection herewith, and all fees and
expenses of counsel to the Administrator with respect to the securitization
facility subject to the Receivables Purchase Agreement.

     

        13.
Conditions
Precedent. The effectiveness of this Agreement is subject to the
satisfaction of the following conditions precedent: 

     

            (a) the Seller
Parties, the Administrator, and the Purchasers shall have executed and delivered
this Agreement on or before October 28, 2008;

     

            (b) the Administrator
shall have received a copy of a fully executed limited duration waiver from the
lenders party to the CoBank Credit Agreement and CoBank, as agent for such
lenders, waiving any default under the CoBank Credit Agreement that is analogous
to the Subject Default for a period ending no earlier that the Scheduled Waiver
Expiration Date, which limited duration waiver shall not contain any terms or
provisions that are not contained in this Agreement materially adverse to the
Administrator and the Purchasers or that are, in any material respect, more
favorable to the lenders under the CoBank Credit Agreement than the terms of
this Agreement are favorable to the Administrator and the Purchasers, and which
otherwise shall be in form and substance reasonably satisfactory to the
Administrator (the " CoBank
Limited Duration Waiver "), provided
that the CoBank Limited Duration Waiver may require the Servicer to grant
mortgages and deeds of trust to CoBank, as agent under the CoBank Credit
Agreement, on real property and buildings and improvements thereon that are
currently unencumbered, and such limited duration waiver shall be effective;
and

     

            (c) the Administrator
shall have received a copy of a fully executed limited duration waiver from the
lenders party to the Credit Agreement and the Credit Agent, waiving any default
under the Credit Agreement that is analogous to the Subject Default for a period
ending no earlier that the Scheduled Waiver Expiration Date, which limited
duration waiver shall not contain any terms or provisions that are not contained
in this Agreement materially adverse to the Administrator and the Purchasers or
that are, in any material respect, more favorable to the lenders under the
Credit Agreement than the terms of this Agreement are favorable to the
Administrator and the Purchasers, and which otherwise shall be in form and
substance reasonably satisfactory to the Administrator (the " Credit
Agreement Limited Duration Waiver "), and such limited duration waiver
shall be effective.

     

        14.
Miscellaneous.
By its acceptance hereof, each Seller Party hereby represents that it has the
necessary power and authority to execute, deliver, and perform the undertakings
contained herein, and that this Agreement constitutes the valid and binding
obligation of such Seller Party enforceable against it in accordance with its
terms. Any provision of this Agreement held invalid, illegal, or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such invalidity, illegality, or unenforceability without affecting the
validity, legality, and enforceability of the remaining provision hereof; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction. The parties hereto hereby
acknowledge and agree that this Agreement shall constitute a Transaction
Document for all purposes of the Receivables Purchase Agreement and the other
Transaction Documents. Unless otherwise expressly stated herein, the provisions
of this Agreement shall survive the termination of the Waiver Period. This
Agreement may be executed in counterparts and by different parties on separate
counterpart signature pages, each of which constitutes an original and all of
which taken together constitute one and the same instrument. Delivery of
executed counterparts of this Agreement by telecopy shall be effective as an
original. This Agreement shall be governed by Texas law and shall be governed
and interpreted on the same basis as the Receivables Purchase
Agreement.

     

    [Signature Pages to Follow]

     

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

     

    Pilgrim’s Pride Corporation, as Servicer

     

    By 

     

    Name:

     

    Title:

     

    Pilgrim’s Pride Funding Corporation, as Seller

     

    By 

     

    Name:

     

    Title:

     

     

     

     

     

    Accepted and agreed to:

     

    BMO Capital Markets Corp., as Administrator

     

    By 

     

    Name:

     

    Title:

     

     

     

    BMO Capital Markets Corp., as Purchaser Agent

     

    By 

     

    Name:

     

    Title:

     

     

     

     

     

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

     

    By 

     

    Name:

     

    Title: