SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended MARCH 30, 1996
Commission file number 1-9273
PILGRIM'S PRIDE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 75-1285071
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 SOUTH TEXAS, PITTSBURG, TX 75686-0093
(Address of principal executive offices) (Zip code)
(903) 855-1000
(Telephone number of principle executive offices)
NOT APPLICABLE
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter periods that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
COMMON STOCK $.01 PAR VALUE--- 27,589,250 SHARES AS OF MAY 13, 1996
<PAGE>
<COVER>
This Amended 10-Q is being filed to correct the SEC's required Submission
Type Tag. The tag has been corrected to reflect the correct Type as required
by the SEC.
</COVER>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PILGRIM'S PRIDE CORPORATION
Date 5/13/96 Clifford E. Butler
Vice Chairman of the Board,
Chief Financial Officer and
Secretary and Treasurer
in his respective capacity
as such
CREDIT AGREEMENT
This CREDIT AGREEMENT dated as of January 31, 1996 is entered into
among PILGRIM'S PRIDE, S.A. DE C.V., (the ``BORROWER'') and INTERNATIONALE
NEDERLANDEN (U.S.) CAPITAL CORPORATION (the ``LENDER''), PILGRIM'S PRIDE
CORPORATION (the ``COMPANY''), AVICOLA PILGRIM'S PRIDE DE MEXICO, S.A. DE
C.V. (the ``PARENT''), COMPANIA INCUBADORA AVICOLA PILGRIM'S PRIDE, S.A. DE
C.V., PRODUCTORA Y DISTRIBUIDORA DE ALIMENTOS, S.A. DE C.V., IMMOBILIARIA
AVICOLA PILGRIM'S PRIDE, S. DE R.L. DE C.V. and CIA. INCUBADORA HIDALGO,
S.A. DE C.V. The Borrower, the Lender, the Company and the Parent agree as
follows:
SECTION 1.
DEFINITIONS
1.@ DEFINED TERMS.
As used in this Agreement, the following terms have the following
meanings:
``ACCOUNTS RECEIVABLE'' means with respect to Parent and its
Subsidiaries any right to payment owed by any Person (other than an
affiliate of Parent or any of its Subsidiaries) that is due within one
year from any invoice date for goods sold or leased or for services
rendered no matter how evidenced, including, but not limited to,
accounts receivable, contract rights, notes, drafts, acceptances and
other forms of obligations and receivables, all as determined in
conformity with GAAP.
``AGREEMENT'' means this Credit Agreement, as amended,
supplemented or modified from time to time.
``APPLICABLE MARGIN'' means, with respect to each LIBO Rate Loan
and Prime Rate Loan, the rate of interest per annum shown below for
the range of Leverage Ratio specified for each column:
<TABLE>
<CAPTION>
<0.45 *.45 TO 1 AND *.50 TO 1 AND *.60 TO 1
LEVERAGE RATIO TO 1 <0.5 TO 1 <.60 TO 1 AND <.70 TO 1
<S> <C> <C> <C> <C>
LIBO Rate Loans 1.75% 2.125% 2.375% 2.75%
Prime Rate Loans 1.00% 1.125% 1.375% 1.75%
</TABLE>
Not later than 5 Business Days after receipt by the Lender of the
financial statements called for by Section 7.4 of the Company Credit
Agreement for the applicable fiscal quarter of Company, the Lender
shall determine the Leverage Ratio for the applicable period and shall
promptly notify the Borrower of such determination and of any change
in the Applicable Margins resulting therefrom. Any such change in the
Applicable Margins shall be effective as of the date the Lender so
notifies the Borrower with respect to all Loans outstanding on such
date, and such new Applicable Margins shall continue in effect until
the effective date of the next quarterly redetermination in accordance
with this Section. Each determination of the Leverage Ratio and
Applicable Margins by the Lender in accordance shall be conclusive and
binding absent manifest error. From the Closing Date until the date
the Applicable Margins are first adjusted as set forth above, the
Applicable Margins shall be (x) 2.375% per annum with respect to each
LIBO Rate Loan and 1.375% per annum with respect to each Prime Rate
Loan.
``BORROWER'' has the meaning set forth in the introductory
paragraph of this Agreement.
``BORROWING'' has the meaning assigned that term in
subsection 2.1.
``BUSINESS DAY'' means a day other than a Saturday, Sunday or a
day on which commercial banks in New York or the New York Stock
Exchange are authorized or required by law to close.
``CAPITAL LEASE'' means, as applied to any Person, any lease of
any property (whether real, personal or mixed) by that Person as
lessee which would, in accordance with GAAP, be required to be
accounted for as a capital lease on the balance sheet of that Person.
``CLOSING DATE'' means the date of execution of this Agreement by
the parties hereto.
``COMMITMENT'' means the amount of $10,000,000 as such amount may
be reduced pursuant to subsection 2.1D.
``COMPANY'' has the meaning set forth in the introductory
paragraph of this Agreement.
``COMPANY CREDIT AGREEMENT'' means that certain Secured Credit
Agreement dated as of May 27, 1993 by and among Company, Harris Trust
and Savings Bank, individually and as agent thereunder, and the other
lenders party thereto, as such agreement may be amended, supplemented
or modified from time to time.
``COMPANY CUMULATIVE NET OPERATING PROFITS'', means, an amount
determined as of the last day of a fiscal quarter or fiscal year of
Company equal to (a) gross revenues LESS (b) cost of goods sold, LESS
(c) sales, general and administrative expenses, all as determined on a
consolidated cumulative basis for Company and its Subsidiaries from
the first day of such fiscal year through the date of determination.
``CONSOLIDATED CURRENT ASSETS'' means, at any date of
determination, the total assets of the Parent and its Subsidiaries on
a consolidated basis which may properly be classified as current
assets in conformity with GAAP.
``CONSOLIDATED CURRENT LIABILITIES'' means, at any date of
determination, the consolidated liabilities of the Parent and its
Subsidiaries which may properly be classified as current liabilities
in conformity with GAAP, excluding liabilities classified on the
financial statements of Borrower as a ``return of capital payable'' in
accordance with the Parent's historical accounting practices.
``DEBT'' means with respect to any Person as of any time the same
is to be determined, the aggregate of:
(a) all indebtedness, obligations and liabilities of such Person
with respect to borrowed money (including by the issuance of debt
securities);
(b) all guaranties, endorsements and other contingent
obligations of such Person with respect to indebtedness arising from
money borrowed by others;
(c) all reimbursement and other obligations with respect to
letters of credit, bankers acceptances, customer advances and other
extensions of credit whether or not representing obligations for
borrowed money;
(d) the aggregate of the principal components of all leases and
other agreements for the use, acquisition or retention of real or
personal property which are required to be capitalized under generally
accepted accounting principles consistently applied;
(e) all indebtedness, obligations and liabilities representing
the deferred purchase price property or services; and
(f) all indebtedness secured by a lien on the Property of such
Person, whether or not such Person has assumed or become liable for
the payment of such indebtedness.
``DOLLARS'' and ``$'' means Dollars in lawful currency of the
United States of America.
``FEDERAL FUNDS RATE'' means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is
a Business Day, the average of the quotations for such day on such
transactions received by the Lender from three Federal funds brokers
of recognized standing selected by the Lender.
``GAAP'' means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession.
``GUARANTOR'' means each of Company, Parent, Compania Incubadora
Avicola Pilgrim's Pride, S.A. de C.V., Productora y Distribuidora de
Alimentos, S.A. de C.V., Immobiliaria Avicola Pilgrim's Pride, S. de
R.L. de C.V., and CIA. Incubadora Hidalgo, S.A. de C.V. and
``GUARANTORS'' means Company, Parent, Compania Incubadora Avicola
Pilgrim's Pride, S.A. de C.V., Productora y Distribuidora de
Alimentos, S.A. de C.V., Immobiliaria Avicola Pilgrim's Pride, S. de
R.L. de C.V., and CIA. Incubadora Hidalgo, S.A. de C.V., collectively.
``GUARANTY'' means that certain Guaranty dated as of the Closing
Date in substantially the form of EXHIBIT B annexed hereto, executed
and delivered by each Guarantor pursuant to subsection 4.1A.
``HIGHEST LAWFUL RATE'' has the meaning set forth in
subsection 8.10.
``INTEREST PAYMENT DATE'' means, as to any Prime Rate Loan until
payment in full, the Maturity Date and the last day of each March,
June, September and December commencing on the first of such days to
occur after a Prime Rate Loan is made. As to any LIBO Rate Loan with
an Interest Period of three months or less, until payment in full, the
last day of such Interest Period and the Maturity Date, and as to any
LIBO Rate Loan with an Interest Period in excess of three months,
until payment in full, (i) the same day of each three months following
the beginning of such Interest Period, (ii) the last day of such
Interest Period and (iii) the Maturity Date.
``INTEREST PERIOD'' means, with respect to any LIBO Rate Loan:
(i) initially, the period commencing on, as the case may
be, the Borrowing or conversion date with respect to such LIBO
Rate Loan and ending one, two, three or six months thereafter as
selected by the Borrower in its notice of Borrowing as provided
in subsection 2.1B or its notice of conversion as provided in
subsection 2.4; and
(ii) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such LIBO Rate
Loan and ending one, two, three or six months thereafter as
selected by the Borrower in its notice of continuation as
provided in subsection 2.4;
PROVIDED, that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(a) if any Interest Period for a LIBO Rate Loan would
otherwise end on a day which is not a LIBO Business Day, that
Interest Period shall be extended to the next succeeding LIBO
Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which
event such Interest Period shall end on the immediately preceding
LIBO Business Day;
(b) the Borrower may not select an Interest Period with
respect to any portion of principal of a LIBO Rate Loan which
extends beyond a date on which the Borrower is required to make a
scheduled payment of that portion of principal; and
(c) there shall be no more than six Interest Periods with
respect to LIBO Loans outstanding at any time.
``INVENTORY'' means all raw materials, work in process, finished
goods and goods held for sale or lease or furnished or to be furnished
under contracts of service in which Parent or any of its Subsidiaries
now has or hereafter acquires any right, all as determined in
conformity with GAAP.
``LEVERAGE RATIO'' means the ratio for the Company and its
Subsidiaries of (a) the aggregate outstanding principal amount of all
Debt (other than Debt consisting of reimbursement and other
obligations with respect to undrawn letters of credit) to (b) the sum
of the aggregate outstanding principal amount of all Debt included in
the clause (a) above PLUS Net Worth.
``LENDER'', has the meaning set forth in the introductory
paragraph of this Agreement.
``LENDING OFFICE'' means Lender's office located at its address
identified on the signature pages hereof as its Lending Office, or
such other office as such Lender may hereafter designate as its
Lending Office by notice to the Borrower.
``LIBO BUSINESS DAY'' means a day which is a Business Day and on
which dealings in Dollar deposits may be carried out in the London
interbank market.
``LIBO RATE'' means, for each Interest Period (i) the rate of
interest determined by the Lender at which deposits for the relevant
Interest Period would be offered to the Lender in the approximate
amount of the relevant LIBO Rate Loan in the London interbank market
upon request of the Lender at 11:00 A.M. (London time) on the day
which is two (2)LIBO Business Days prior to the first day of such
Interest Period, divided by (ii) a number equal to 1.0 minus the
aggregate (but without duplication) of the rates (expressed as a
decimal fraction) of reserve requirements in effect on the day which
is two (2) LIBO Business Days prior to the beginning of such Interest
Period (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors
of the Federal Reserve System or other governmental authority having
jurisdiction with respect thereto, as in effect at the time the Lender
quotes the rate to the Borrower) for Eurocurrency funding of domestic
assets (currently referred to as ``Eurocurrency liabilities'' in
Regulation D of such Board) which are required to be maintained by a
member bank of such System (such rate to be adjusted to the next
higher 1/16 of 1%).
``LIBO RATE LOANS'' means Loans hereunder at such time as they
accrue interest at a rate based upon the LIBO Rate.
``LIEN'' means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including any
conditional sale or other title retention agreement, any lease in the
nature thereof, and any agreement to give any security interest).
``LOANS'' means loans made by the Lender to the Borrower pursuant
to subsection 2.1.
``LOAN DOCUMENTS'' means this Agreement, the Note, the Guaranty,
and any other document required by the Lender in connection with this
Agreement and/or the credit extended hereunder.
``MATURITY DATE'' means January 31, 1998.
``NET WORTH'' means the Total Assets minus the Total Liabilities
of the Company and its Subsidiaries, all determined on a consolidated
basis in accordance with GAAP.
``NOTE'' has the meaning assigned that term in subsection 2.1E.
``PARENT'' has the meaning set forth in the introductory
paragraph to this Agreement.
``PARENT CUMULATIVE NET OPERATING PROFITS'', means, an amount
determined as of the last day of each fiscal quarter of each fiscal
year of Parent equal to (a) gross revenues LESS (b) cost of goods
sold, LESS (c) sales, general and administrative expenses, all as
determined on a consolidated cumulative basis for Parent and its
Subsidiaries from the first day of such fiscal year through the date
of determination.
``PERSON'' means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of
whatever nature.
``POTENTIAL EVENT OF DEFAULT'' means a condition or event which,
after notice or lapse of time or both, would constitute an Event of
Default if that condition or event were not cured or removed within
any applicable grace or cure period.
``PRIME RATE'' means the higher of (i) the Federal Funds Rate
PLUS 1/2 of 1% per annum and (ii) the average of the prime commercial
lending rates of The Chase Manhattan Bank, National Association (or
its successor by merger with Chemical Bank), Citibank, N.A. and Morgan
Guaranty Trust Company of New York, as announced from time to time at
their respective head offices, it being understood that such rates are
simply reference rates and may not necessarily be the rates of
interest charged to their most creditworthy customers or the lowest of
their respective reference rates. The Prime Rate shall be adjusted
automatically on and as of the effective date of any change in any
such lending rate.
``PRIME RATE LOANS'' means Loans hereunder at such time as they
accrue interest at a rate based upon the Prime Rate.
``REGULATIONS G, T, U AND X'' means Regulations G, T, U and X,
respectively, promulgated by the Board of Governors of the Federal
Reserve System, as amended from time to time, and any successors
thereto.
``SUBSIDIARY'' means a corporation of which shares of stock
having ordinary voting power (other than stock having such power only
by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation are at
the time owned, directly, or indirectly through one or more
intermediaries, or both, by the Borrower.
``TOTAL ASSETS'' means, at any date, the aggregate amount of
assets of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
``TOTAL LIABILITIES'' means, at any date, the aggregate amount of
all liabilities of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
2.@ OTHER DEFINITIONAL PROVISIONS.
A. All terms defined in this Agreement shall have the defined
meanings when used in the Note or Guaranty or any certificate or other
document made or delivered pursuant hereto.
B. As used herein, in the Note and in the Guaranty, and any
certificate or other document made or delivered pursuant hereto, accounting
terms not defined in subsection 1.1, and accounting terms partly defined in
subsection 1.1 to the extent not defined, shall have the respective
meanings given to them under GAAP.
C. The words ``hereof'', ``herein'' and ``hereunder'' and words of
similar import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are to this Agreement unless
otherwise specified.
SECTION 2.
THE LOANS
1.C THE LOANS.
A. THE COMMITMENT. The Lender agrees, on the terms and conditions
hereinafter set forth, to make loans (``LOANS'') to the Borrower from time
to time during the period from the date hereof to and including the
Maturity Date in an aggregate amount not to exceed the lesser of (x) the
Commitment or (y) an amount equal to 300% of the Accounts Receivable and
Inventory of Parent and its Subsidiaries as of the last day of Parent's
fiscal month immediately preceding the date of the proposed Borrowing, as
such amount may be reduced pursuant to subsection 2.1D. Each borrowing
under this Section (a ``BORROWING'') shall be in a minimum amount of
$100,000 and in an integral multiple of $50,000; PROVIDED that a Loan
consisting of a LIBO Rate Loan shall be in a minimum amount of $500,000 or
an integral multiple of $100,000 above such amount. Within the limits of
the Commitment and prior to the Maturity Date, the Borrower may borrow,
repay pursuant to subsection 2.2C and reborrow under this subsection 2.1A.
B. MAKING THE LOANS. The Borrower may borrow under the Commitment
on any Business Day if the Borrowing is to consist of a Prime Rate Loan and
on any LIBO Business Day if the Borrowing is to consist of a LIBO Rate
Loan; PROVIDED that the Borrower shall give the Lender irrevocable notice
(which notice must be received by the Lender prior to 12:00 Noon., New York
time) (i) three LIBO Business Days prior to the requested Borrowing date in
the case of a LIBO Rate Loan, and (ii) on or before the requested Borrowing
date in the case of a Prime Rate Loan, specifying (A) the amount of the
proposed Borrowing, (B) the requested date of the Borrowing, (C) whether
the Borrowing is to consist of a LIBO Rate Loan or a Prime Rate Loan,
(D) if the Loan is to be a LIBO Rate Loan, the length of the Interest
Period therefor and certifying that the amount of the proposed Borrowing,
together with the aggregate principal amount of any outstanding Loans does
not exceed 300% of the Accounts Receivable and Inventory of Parent and its
Subsidiaries as of the last day of Parent's fiscal month most recently
ended. Upon satisfaction of the applicable conditions set forth in
Section 4, the proceeds of all such Loans will then be made available to
the Borrower by the Lender by crediting the account of the Borrower at
Lender's Lending office, or as otherwise directed by the Borrower.
The notice of Borrowing may be given orally (including telephonically)
or in writing (including telex or facsimile transmission) and any conflict
regarding a notice or between an oral notice and a written notice
applicable to the same Borrowing shall be conclusively determined by the
Lender's books and records. The Lender's failure to receive any written
notice of a particular Borrowing shall not relieve the Borrower of its
obligations to repay the Borrowing made and to pay interest thereon. The
Lender shall not incur any liability to the Borrower in acting upon any
notice of Borrowing which the Lender believes in good faith to have been
given by a Person duly authorized to borrow on behalf of the Borrower.
C. COMMITMENT FEE. The Borrower agrees to pay to the Lender a
commitment fee on the average daily unused portion of the Commitment from
the Closing Date until the Maturity Date at the rate of 1/2 of one percent
(1%) per annum, payable on the last day of each calendar quarter commencing
the first such date occurring after the date of this Agreement, and on the
Maturity Date.
D. REDUCTION OF THE COMMITMENT. The Borrower shall have the right,
upon at least two (2) Business Days' notice to the Lender, to terminate in
whole or reduce in part the unused portion of the Commitment, without
premium or penalty; PROVIDED that each partial reduction shall be in the
aggregate amount of $500,000 or an integral multiple of $100,000 above such
amount and that such reduction shall not reduce the Commitment to an amount
less than the amount outstanding hereunder on the effective date of the
reduction.
E. THE NOTE. The Loans made by the Lender pursuant hereto shall be
evidenced by a promissory note or notes of the Borrower, substantially in
the form of Exhibit A, with appropriate insertions (the ``NOTE''), payable
to the order of the Lender and representing the obligation of the Borrower
to pay the aggregate unpaid principal amount of all Loans made by the
Lender, with interest thereon as prescribed in Section 2.3. The Lender is
hereby authorized to record in its books and records and on any schedule
annexed to the Note, the date and amount of each Loan made by the Lender,
and the date and amount of each payment of principal thereof, and in the
case of LIBO Rate Loans, the Interest Period and interest rate with respect
thereto and any such recordation shall constitute PRIMA FACIE evidence of
the accuracy of the information so recorded; PROVIDED that failure by the
Lender to effect such recordation shall not affect the Borrower's
obligations hereunder. Prior to the transfer of a Note, the Lender shall
record such information on any schedule annexed to and forming a part of
such Note.
F. LOAN FEE. Upon execution of this Agreement and on the first
anniversary of the Closing Date, the Borrower shall pay to the Lender a
non-refundable fee in the amount of $25,000.
2.F REPAYMENT.
A. MANDATORY REPAYMENTS. The aggregate principal amount of the
Loans outstanding on the Maturity Date, together with accrued interest
thereon, shall be due and payable in full on the Maturity Date.
B. OTHER REPAYMENTS REQUIREMENT. If for any reason prior to the
Maturity Agreement, either (x) all obligations for money borrowed and with
respect to letters of credit issued pursuant to the Company Credit
Agreement are repaid in full or (y) Lender shall no longer be a ``Bank''
under the Company Credit Agreement, at the request of the Lender, all or
such portion of the Loans designated by the Lender shall be repaid and the
Commitments with respect thereto terminated. In addition, if at any time
outstanding Loans exceed an amount equal to 300% of Accounts Receivable and
Inventory of Parent and its Subsidiaries as of the last day of the fiscal
month most recently ended, Borrower shall repay Loans, no later than three
Business Days after obtaining knowledge of the existence of such excess, in
an amount equal to the excess of (x) the aggregate principal amount of all
outstanding Loans over (y) 300% of the amount of such Accounts Receivables
and Inventory.
C. OPTIONAL REPAYMENTS. The Borrower may, at its option repay the
Loans, in whole or in part, at any time and from time to time; PROVIDED
that the Lender shall have received from the Borrower notice of any such
payment at least one (1) Business Day prior to the date of the proposed
payment if such date is not the last day of the then current Interest
Period for each Loan being paid, in each case specifying the date and the
amount of payment. Partial payments hereunder shall be in an aggregate
principal amount of the lesser of $50,000 or any whole multiple thereof.
3.C INTEREST RATE AND PAYMENT DATES.
A. PAYMENT OF INTEREST. Interest with respect to each Loan shall be
payable in arrears on each Interest Payment Date for such Loan.
B. PRIME RATE LOANS. Loans which are Prime Rate Loans shall bear
interest on the unpaid principal amount thereof at a rate per annum equal
to the lesser of (x) Prime Rate PLUS the Applicable Margin and (y) the
Highest Lawful Rate.
C. LIBO RATE LOANS. Loans which are LIBO Rate Loans shall bear
interest for each Interest Period with respect thereto on the unpaid
principal amount thereof at a rate per annum equal to the lesser of (x) the
LIBO Rate determined for such Interest Period in accordance with the terms
hereof plus the Applicable Margin or (y) the Highest Lawful Rate.
4.C CONTINUATION AND CONVERSION OPTIONS.
The Borrower may elect from time to time to convert its outstanding
Loans from Loans bearing interest at a rate determined by reference to one
basis to Loans bearing interest at a rate determined by reference to an
alternative basis by giving the Lender (i) irrevocable notice of an
election to convert Loans to Prime Rate Loans and (ii) at least three (3)
LIBO Business Days' prior irrevocable notice of an election to convert
Loans to LIBO Rate Loans, PROVIDED that any conversion of Loans other than
Prime Rate Loans shall only be made on the last day of an Interest Period
with respect thereto; PROVIDED, FURTHER that, no Loan may be converted to a
Loan other than a Prime Rate Loan so long as an Event of Default or
Potential Event of Default has occurred and is continuing. The Borrower
may elect from time to time to continue its outstanding LIBO Rate Loans
upon the expiration of the Interest Period(s) applicable thereto by giving
to the Lender at least three (3) LIBO Business Days' prior irrevocable
notice of continuation of a LIBO Rate Loan and the succeeding Interest
Period(s) of such continued Loan or Loans will commence on the last day of
the Interest Period of the Loan to be continued; PROVIDED that no Loan may
be continued as a Loan other than a Prime Rate Loan so long as an Event of
Default or Potential Event of Default has occurred and is continuing. Each
notice electing to convert or continue a Loan shall specify: (i) the
proposed conversion/continuation date; (ii) the amount of the Loan to be
converted/continued; (iii) the nature of the proposed
continuation/conversion; and (iv) in the case of a conversion to, or
continuation of a Loan other than a Prime Rate Loan, the requested Interest
Period, and shall certify that no Event of Default or Potential Event of
Default has occurred and is continuing. On the date on which such
conversion or continuation is being made the Lender shall take such action
as is necessary to effect such conversion or continuation. In the event
that no notice of continuation or conversion is received by the Lender with
respect to outstanding Loans other than Prime Rate Loans, upon expiration
of the Interest Period(s) applicable thereto, such Loans shall convert to
Prime Rate Loans. Subject to the limitations set forth in this Section and
in the definition of Interest Period, all or any part of outstanding Loans
may be converted or continued as provided herein, PROVIDED that partial
conversions or continuations with respect to Loans other than Prime Rate
Loans shall be in an aggregate minimum amount of $500,000 and in an
integral multiple of $100,000.
SECTION 3.
GENERAL PROVISIONS CONCERNING THE LOANS
1.C USE OF PROCEEDS.
The proceeds of the Loans hereunder shall be used by the Borrower for
general working capital purposes of the Borrower and its Subsidiaries.
2.C POST MATURITY INTEREST.
Notwithstanding anything to the contrary contained in subsection 2.3,
if all or a portion of the principal amount of any of the Loans made
hereunder or any interest accrued thereon shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), any such
overdue amount shall bear interest at a rate per annum which is equal to
two percent (2%) above the highest rate which would otherwise be applicable
pursuant to subsection 2.3, payable on demand. In addition, such Loan, if
a Loan other than a Prime Rate Loan, shall be converted to a Prime Rate
Loan at the end of the then current Interest Period therefor.
3.C COMPUTATION OF INTEREST AND FEES.
A. CALCULATIONS. Interest in respect of the Prime Rate Loans shall
be calculated on the basis of a 360 day year for the actual days elapsed.
Any change in the interest rate on a Prime Rate Loan resulting from a
change in the Prime Rate shall become effective as of the opening of
business on the day on which such change in the Prime Rate shall become
effective. Interest in respect of the LIBO Rate Loans shall be calculated
on the basis of a 360 day year for the actual days elapsed.
B. DETERMINATION BY LENDER. Each determination of an interest rate
or fee by the Lender pursuant to any provision of this Agreement shall be
conclusive and binding on the Borrower in the absence of manifest error.
4.B PAYMENTS.
The Borrower shall make each payment of principal, interest and fees
hereunder and under the Note, without set-off or counterclaim, not later
than 2:00 P.M., New York time, on the day when due in lawful money of the
United States of America to the Lender at the office of the Lender
designated from time to time in immediately available funds.
5.B PAYMENT ON NON-BUSINESS DAYS.
Whenever any payment to be made hereunder or under the Note with
respect to Prime Rate Loans shall be stated to be due on a day which is not
a Business Day, such payment may be made on the next succeeding Business
Day, and with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension.
6.B REDUCED RETURN.
If the Lender shall have determined that any applicable law,
regulation, rule or regulatory requirement (``REQUIREMENT'') regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Lender with any request or
directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the Lender's capital as a
consequence of its Commitments and obligations hereunder to a level below
that which would have been achieved but for such Requirement, change or
compliance (taking into consideration the Lender's policies with respect to
capital adequacy) by an amount deemed by the Lender to be material (which
amount shall be determined by the Lender's reasonable allocation of the
aggregate of such reductions resulting from such events), then from time to
time, within five (5) Business Days after demand by the Lender, the
Borrower shall pay to the Lender such additional amount or amounts as will
compensate the Lender for such reduction.
7.B INDEMNITIES, ETC.
A. INDEMNITIES. Whether or not the transactions contemplated hereby
shall be consummated, the Borrower and each Guaranty, jointly and
severally, agree to indemnify, pay and hold the Lender, and the
shareholders, officers, directors, employees and agents of the Lender,
harmless from and against any and all claims, liabilities, losses, damages,
costs and expenses (whether or not any of the foregoing Persons is a party
to any litigation), including, without limitation, reasonable attorneys'
fees and costs (including, without limitation, the reasonable estimate of
the allocated cost of in-house legal counsel and staff) and costs of
investigation, document production, attendance at a deposition, or other
discovery, with respect to or arising out of this Agreement or any other
Loan Document or any use of proceeds hereunder, or any claim, demand,
action or cause of action being asserted against the Borrower, any
Guarantor or any of their respective Subsidiaries (collectively, the
``INDEMNIFIED LIABILITIES''); PROVIDED neither the Borrower nor any
Guarantor shall have any obligation hereunder with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of any
such Persons. If any claim is made, or any action, suit or proceeding is
brought, against any Person indemnified pursuant to this subsection, the
indemnified Person shall notify the Borrower of such claim or of the
commencement of such action, suit or proceeding, and the Borrower and each
Guarantor will assume the defense of such action, suit or proceeding,
employing counsel selected by the Borrower and each Guarantor and
reasonably satisfactory to the indemnified Person, and pay the fees and
expenses of such counsel. This covenant shall survive termination of this
Agreement and payment of the Note.
B. FUNDING LOSSES. The Borrower agrees to indemnify the Lender and
to hold the Lender harmless from any loss or expense including, but not
limited to, any such loss or expense arising from interest or fees payable
by the Lender to lenders of funds obtained by it in order to maintain its
LIBO Rate Loans hereunder, which the Lender may sustain or incur as a
consequence of (i) default by the Borrower in payment of the principal
amount of or interest on the LIBO Rate Loans of the Lender, (ii) default by
the Borrower in making a conversion or continuation after the Borrower has
given a notice thereof, (iii) default by the Borrower in making any payment
after the Borrower has given a notice of payment or (iv) the Borrower
making any payment of a LIBO Rate Loan on a day other than the last day of
the Interest Period for such Loan. For purposes of this subsection and
subsection 3.7, it shall be assumed that the Lender had funded or would
have funded, as the case may be, 100% of its LIBO Rate Loans in the London
interbank market for a corresponding amount and term. The determination by
the Lender of amount owed under subsection 3.7 shall be presumed correct in
the absence of manifest error. This covenant shall survive termination of
this Agreement and payment of the Note.
8.B FUNDING SOURCES.
Nothing in this Agreement shall be deemed to obligate the Lender to
obtain the funds for any Loan in any particular place or manner or to
constitute a representation by the Lender that it has obtained or will
obtain the funds for any Loan in any particular place or manner.
9.B INABILITY TO DETERMINE INTEREST RATE.
In the event that the Lender shall have determined (which
determination shall be conclusive and binding upon the Borrower) that by
reason of circumstances affecting the interbank LIBOR market, adequate and
reasonable means do not exist for ascertaining the LIBO Rate applicable
pursuant to subsection 2.3 for any Interest Period with respect to a LIBO
Rate Loan that will result from a requested LIBO Rate Loan or that such
rate of interest does not adequately cover the cost of funding such Loan,
the Lender shall forthwith give notice of such determination to the
Borrower not later than 1:00 P.M., New York time, on the requested
Borrowing date, the requested conversion date or the last day of an
Interest Period of a Loan which was to have been continued as a LIBO Rate
Loan. If such notice is given and has not been withdrawn (i) any requested
LIBO Rate Loan shall be made as a Prime Rate Loan (or a Loan bearing
interest at such other rate, if any, as may be mutually acceptable to the
Borrower and the Lender), or, at the Borrower's option, such Loan shall not
be made, (ii) any Loan that was to have been converted to a LIBO Rate Loan
shall be continued as, or converted into, a Prime Rate Loan and (iii) any
outstanding LIBO Rate Loan shall be converted, on the last day of the then
current Interest Period with respect thereto, to a Prime Rate Loan. Until
such notice has been withdrawn by the Lender, no further LIBO Rate Loans
shall be made and the Borrower shall not have the right to convert a Loan
to a LIBO Rate Loan. The Lender will review the circumstances affecting
the interbank LIBO market from time to time and the Lender will withdraw
such notice at such time as it shall determine that the circumstances
giving rise to said notice no longer exist.
10.B REQUIREMENTS OF LAW.
In the event that any law, regulation or directive or any change
therein or in the interpretation or application thereof or compliance by
the Lender with any request or directive (whether or not having the force
of law) from any central bank or other governmental authority, agency or
instrumentality:
A. does or shall impose, modify or hold applicable any reserve,
assessment rate, special deposit, compulsory loan or other requirement
against assets held by, or deposits or other liabilities in or for the
account of, advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of the Lender which are not
otherwise included in the determination of any LIBO Rate at the last
Borrowing, conversion or continuation date of a Loan;
B. does or shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or other requirement against
Commitments to extend credit;
C. does or shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the
Lender of making, renewing or maintaining its Commitment or the LIBO
Rate Loans or to reduce any amount receivable thereunder (which
increase or reduction shall be determined by the Lender's reasonable
allocation of the aggregate of such cost increases or reduced amounts
receivable resulting from such events), then, in any such case, the
Borrower shall pay to the Lender, within three Business Days of its
demand, any additional amounts necessary to compensate the Lender for
such additional cost or reduced amount receivable as determined by the
Lender with respect to this Agreement. If the Lender becomes entitled
to claim any additional amounts pursuant to this subsection, it shall
notify the Borrower of the event by reason of which it has become so
entitled. A statement incorporating the calculation as to any
additional amounts payable pursuant to the foregoing sentence
submitted by the Lender to the Borrower shall be conclusive in the
absence of manifest error.
11.C ILLEGALITY.
Notwithstanding any other provisions herein, if any law, regulation,
treaty or directive or any change therein or in the interpretation or
application thereof, shall make it unlawful, impossible, or impracticable
for the Lender to make or maintain LIBO Rate Loans as contemplated by this
Agreement, (a) the commitment of the Lender hereunder to make LIBO Rate
Loans or convert Prime Rate Loans to LIBO Rate Loans shall forthwith be
cancelled and (b) the Lender's Loans then outstanding as LIBO Rate Loans,
if any, shall be converted automatically to Prime Rate Loans on the next
succeeding Interest Payment Date or within such earlier period as allowed
by law. The Borrower hereby agrees to pay the Lender, within three (3)
Business Days of its demand, any additional amounts necessary to compensate
the Lender for any costs incurred by the Lender in making any conversion in
accordance with this subsection, including, but not limited to, any
interest or fees payable by the Lender to lenders of funds obtained by it
in order to make or maintain its LIBO Rate Loans hereunder (the Lender's
notice of such costs, as certified to the Borrower to be conclusive absent
manifest error).
12.C TAXES.
A. Any and all payments made by the Borrower hereunder shall be made
free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges and withholdings (whether
imposed under the laws of the United States or Mexico), and all liabilities
with respect thereto, excluding taxes imposed on net income and all income
and franchise taxes of the United States and any political subdivisions
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as ``TAXES'').
If the Borrower shall be required by law to deduct any Taxes from or in
respect of any sum payable hereunder to the Lender, (i) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable
hereunder) the Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable law.
B. In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, the
obligations (hereinafter referred to as ``OTHER TAXES'').
C. The Borrower will indemnify the Lender for the full amount of
Taxes or Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this subsection)
paid by the Lender and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within 10 days from the date the Lender makes
written demand therefor.
D. Within 10 days after the date of any payment of Taxes, the
Borrower will furnish to the Lender, at its address specified herein, the
original or a certified copy of a receipt evidencing payment thereof. If
no Taxes are payable in respect of any payment hereunder, the Borrower will
furnish to the Lender a certificate from each appropriate taxing authority,
or an opinion of counsel acceptable to the Lender, in either case stating
that such a payment is exempt from or not subject to Taxes.
E. Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements of the Borrower contained in this
subsection 3.12 shall survive the payment in full of the principal of and
interest on the Note.
13.E JUDGMENT.
A. If, for the purposes of obtaining a judgment in any court with
respect to any obligation under any Loan Document, it is necessary to
convert a sum due hereunder in United States dollars into another currency,
the parties agree, to the fullest extent permitted by law, that the rate of
exchange used shall be that at which in accordance with normal lending
procedures the Lender could purchase United States dollars with such other
currency on the Business Day preceding that on which final judgment is
given.
B. The obligation of the Borrower and each Guarantor in respect of
any sum due from time to the Lender under any Loan Document shall,
notwithstanding any judgment in a currency other than United States
dollars, be discharged only to the extent that on the Business Day
following receipt by the Lender of any sum adjudged to be so due in such
other currency the Lender may in accordance with normal banking procedures
purchase United States dollars with such other currency; if the United
States dollars to purchased are less than the sum originally due to the
Lender in United States dollars, the Borrower and Guarantors, jointly and
severally, agree, as a separate obligation and notwithstanding any such
judgment, to indemnify the Lender against such loss, and if the United
States dollars so purchase exceed the sum originally due to the Lender in
United States dollars, the Lender agrees to remit to the Borrower or such
Guarantor, as the case may be, such excess.
SECTION 4.
CONDITIONS OF LENDING
1.B CONDITIONS PRECEDENT TO INITIAL LOANS.
The obligation of the Lender to make its initial Loan is subject to
the conditions precedent that:
A. The Lender shall have received on or before the day of the
initial Borrowing the following, in form and substance satisfactory to
the Lender (and which, if any such document is written in Spanish, at
the request of Lender, shall include an English translation thereof):
(i) The Note issued by the Borrower to the order of the
Lender;
(ii) Copies of the Articles, Certificate of Incorporation
or other organizational document of the Borrower and each
Guarantor, certified by its Secretary or Assistant Secretary,
(iii) Copies of the Bylaws of the Borrower and each
Guarantor, certified by its Secretary or Assistant Secretary;
(iv) Copies of resolutions of the Board of Directors or
other authorizing documents of the Borrower and each Guarantor,
in form and substance satisfactory to the Lender, approving the
Loan Documents and the Borrowings hereunder;
(v) An incumbency certificate executed by the Secretary or
an Assistant Secretary of the Borrower and each Guarantor or
equivalent document, certifying the names and signatures of the
officers of the Borrower and each Guarantor or other Persons
authorized to sign the Loan Documents and the other documents to
be delivered hereunder;
(vi) A favorable opinion of counsel to the Borrower and
Guarantors, in the form of EXHIBIT C hereto, and as to such other
matters as the Lender may reasonably request; and
(vii) Executed copies of the Guaranty.
B. All corporate and legal proceedings and all instruments and
documents in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in content, form and substance
to the Lender and its counsel, and the Lender and such counsel shall have
received any and all further information and documents which the Lender or
such counsel may reasonably have requested in connection therewith, such
documents where appropriate to be certified by proper corporate or
governmental authorities.
2.B CONDITIONS PRECEDENT TO EACH BORROWING.
The obligation of the Lender to make a Loan on the occasion of each
Borrowing (including the initial Borrowing) shall be subject to the further
conditions precedent that on the date of such Borrowing (a) the following
statements shall be true and the Lender shall have received the notice
required by subsection 2.1B, which notice shall be deemed to be a
certification by the Borrower that:
(i) The representations and warranties contained in
subsection 5.1 are true and correct on and as of the date of such
Borrowing as though made on and as of such date,
(ii) No event has occurred and is continuing, or would result
from such Borrowing, which constitutes an Event of Default or
Potential Event of Default, and
(iii) All Loan Documents are in full force and effect.
SECTION 5.
REPRESENTATIONS AND WARRANTIES
1.A REPRESENTATIONS AND WARRANTIES.
The Borrower and each Guarantor represents and warrants as follows:
A. ORGANIZATION. The Borrower and each Guarantor is duly
organized, validly existing and in good standing under the laws of the
state or other jurisdiction of its formation. The Borrower and each
Guarantor is also, in all material respects, duly authorized,
qualified and licensed in all applicable jurisdictions, and under all
applicable laws, regulations, ordinances or orders of public
authorities, to carry on its business in the locations and in the
manner presently conducted.
B. AUTHORIZATION. The execution, delivery and performance by
the Borrower and each Guarantor of the Loan Documents to which it is a
party, and with respect to the Borrower, the making of Borrowings
hereunder, are within the Borrower's and each Guarantor's corporate
powers, have been duly authorized by all necessary corporate action
and do not contravene (i) the Borrower's or any Guarantor's charter,
by-laws or other organizational document or (ii) any law or regulation
(including, without limitation, Regulations G, T, U and X) or any
contractual restriction binding on or affecting the Borrower or any
Guarantor.
C. GOVERNMENTAL CONSENTS. No authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body (except, in the case of Company, routine
reports required pursuant to the Securities Exchange Act of 1934, as
amended), which reports will be made in the ordinary course of
business) is required for the due execution, delivery and performance
by the Borrower and each Guarantor of the Loan Documents to which it
is a party.
D. VALIDITY. Each of the Loan Documents is the binding
obligation of the Borrower and each Guarantor party thereto,
enforceable in accordance with its terms; except in each case as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, moratorium or other similar laws of
general application and equitable principles relating to or affecting
creditors' rights.
E. FINANCIAL CONDITION. The consolidated balance sheet of the
Parent and its Subsidiaries as at September 30, 1995 and the related
statements of income and retained earnings of the Parent and its
consolidated Subsidiaries for such fiscal year, copies of which have
been furnished to the Lender, fairly present the financial condition
of the Parent and its consolidated Subsidiaries as at such dates and
the results of the operations of the Parent and its consolidated
Subsidiaries for the respective periods ended on such dates, all in
accordance with GAAP, consistently applied, and since September 30,
1995, there has been no material adverse change in the business,
operations, properties, assets or condition (financial or otherwise)
of the Parent and its Subsidiaries, taken as a whole.
F. LITIGATION. There is no pending or threatened action or
proceeding affecting the Borrower, any Guarantor or any of their
respective Subsidiaries before any court, governmental agency or
arbitrator, which may materially and adversely affect the consolidated
financial condition or operations of the Borrower or any Guarantor or
which may have a material adverse effect on the Borrower's or any
Guarantor's ability to perform its obligations under the Loan
Documents, having regard for its other financial obligations.
G. DISCLOSURE. No representation or warranty of the Borrower
or any Guarantor contained in this Agreement or any other document,
certificate or written statement furnished to the Lender by or on
behalf of the Borrower or any Guarantor for use in connection with the
transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact (known
to the Borrower or any Guarantor in the case of any document not
furnished by it) necessary in order to make the statements contained
herein or therein not misleading. There is no fact known to the
Borrower or any Guarantor (other than matters of a general economic
nature) which materially adversely affects the business, operations,
property, assets or condition (financial or otherwise) of the Borrower
or any Guarantor and their respective Subsidiaries, taken as a whole,
which has not been disclosed herein or in such other documents,
certificates and statements furnished to the Lender for use in
connection with the transactions contemplated hereby.
H. REPRESENTATIONS AND WARRANTIES INCORPORATED FROM COMPANY
CREDIT AGREEMENT. Each of the representations and warranties given by
Company pursuant to the Company Credit Agreement are true and correct
in all material respects as of the date made (whether given on or
after the Closing Date) and such representations and warranties are
hereby incorporated herein by this reference with the same effect as
though set forth in their entirety herein, subject to the
qualifications set forth in the Company Credit Agreement.
SECTION 6.
COVENANTS
1.H AFFIRMATIVE COVENANTS.
So long as the Note shall remain unpaid or the Lender shall have any
Commitment hereunder, the Parent will, unless the Lender shall otherwise
consent in writing:
A. FINANCIAL INFORMATION. Furnish to the Lender:
(i) Copies of all financial and other information delivered
pursuant to Section 7.4 of the Company Credit Agreement as and
when delivered thereunder.
(ii) Not later than 45 days after the end of each fiscal
month of Parent, a compliance certificate, in form and substance
satisfactory to the Lender, demonstrating in reasonable detail
compliance with the restrictions contained in subsections 6.2A
and 6.2B hereof.
B. OTHER NOTICES AND INFORMATION. Deliver to the Lender:
(i) promptly upon any officer of the Parent or the Borrower
obtaining knowledge (a) of any condition or event which
constitutes an Event of Default or Potential Event of Default,
(b) that any Person has given any notice to the Parent or any
Subsidiary of the Parent or taken any other action with respect
to a claimed default or event or condition of the type referred
to in subsection 7.1E, (c) of the institution of any litigation
involving an alleged liability (including possible forfeiture of
property) of the Parent or any of its Subsidiaries equal to or
greater than $500,000 or any adverse determination in any
litigation involving a potential liability of the Parent or any
of its Subsidiaries equal to or greater than $500,000, or (d) of
a material adverse change in the business, operations,
properties, assets or condition (financial or otherwise) of the
Parent and its Subsidiaries, taken as a whole, an officers'
certificate specifying the nature and period of existence of any
such condition or event, or specifying the notice given or action
taken by such holder or Person and the nature of such claimed
default, Event of Default, Potential Event of Default, event or
condition, and what action the Parent has taken, is taking and
proposes to take with respect thereto;
(ii) promptly, and in any event within ten (10) days after
request, such other information and data with respect to the
Parent or any of its Subsidiaries as from time to time may be
reasonably requested by the Lender.
C. CORPORATE EXISTENCE, ETC. At all times preserve and keep in
full force and effect its and its Subsidiaries' corporate existence
and rights and franchises material to its business and those of each
of its Subsidiaries; PROVIDED, HOWEVER, that the corporate existence
of any such Subsidiary may be terminated if such termination is in the
best interest of the Parent and Borrower and is not materially
disadvantageous to the holder of any Note.
D. PAYMENT OF TAXES AND CLAIMS. Pay, and cause each of its
Subsidiaries to pay, all taxes, assessments and other governmental
charges imposed upon it or any of its properties or assets or in
respect of any of its franchises, business, income or property before
any penalty or interest accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law
have or may become a lien upon any of its properties or assets, prior
to the time when any penalty or fine shall be incurred with respect
thereto; PROVIDED that no such charge or claim need be paid if being
contested in good faith by appropriate proceedings promptly instituted
and diligently conducted and if such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall
have been made therefor.
E. MAINTENANCE OF PROPERTIES; INSURANCE. Maintain or cause to
be maintained in good repair, working order and condition all material
properties used or useful in the business of the Parent and its
Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof. The Parent
will maintain or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to its properties and
business and the properties and business of its Subsidiaries against
loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar
businesses and similarly situated, of such types and in such amounts
as are customarily carried under similar circumstances by such other
corporations.
F. INSPECTION. Permit any authorized representatives
designated by the Lender to visit and inspect any of the properties of
the Parent or any of its Subsidiaries, including its and their
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and accounts
with its and their officers and independent public accountants, all at
such reasonable times during normal business hours and as often as may
be reasonably requested.
G. COMPLIANCE WITH LAWS, ETC. Exercise, and cause each of its
Subsidiaries to exercise, all due diligence in order to comply with
the requirements of all applicable laws, rules, regulations and orders
of any governmental authority, including, without limitation, all
environmental laws, rules, regulations and orders, noncompliance with
which would materially adversely affect the business, properties,
assets, operations or condition (financial or otherwise) of the Parent
and its Subsidiaries, taken as a whole.
2.G NEGATIVE COVENANTS.
So long as any Note shall remain unpaid or the Lender shall have any
Commitment hereunder, the Parent will not, and, with respect to subdivision
C below, Company will not, without the written consent of the Lender:
A. CURRENT RATIO. Permit the ratio of Consolidated Current
Assets to Consolidated Current Liabilities at any time to be less than
1.0 to 1.0.
B. MINIMUM NET OPERATING PROFITS. Company will not permit
Company Cumulative Net Operating Profits to be less than
(x) $5,000,000 for the fiscal quarter ending March 31, 1996,
(y) $9,000,000 for the fiscal quarter ending June 30, 1996 and
(z) $29,100,000 for fiscal year 1996. Parent will not permit Parent
Cumulative Net Operating Profits (x) for fiscal year 1996, to be less
than negative $12,000,000 as of the end of any fiscal quarter and
(y) for each fiscal year thereafter, as of the end of any fiscal
quarter, to be less than $1.
C. LIENS, ETC. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Lien upon or with
respect to any of its properties, whether now owned or hereafter
acquired, or assign, or permit any of its Subsidiaries to assign, any
right to receive income, in each case to secure any Debt of any
Person.
D. DEBT. Create or suffer to exist, or permit any of its
Subsidiaries to create or suffer to exist, any Debt, other than
(i) Debt reflected on the Parent's financial statements referred to in
subsection 5.1E hereof and other Debt existing on the date hereof;
(ii) Debt owed to the Lender; (iii) Debt of a Subsidiary of Borrower
to another Subsidiary of Borrower or to the Borrower, (iv) Debt owed
to Parent or Company; PROVIDED that no such indebtedness owed to
Parent or Company shall be required to be repaid or shall be prepaid,
in whole or in part, at any time any Loan is outstanding; (v) ordinary
course trade payables and (vi) obligations not in excess of $2,000,000
with respect to Capital Leases.
E. DIVIDENDS, ETC. Declare or pay any dividends, purchase or
otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as
such, or permit any of its Subsidiaries to purchase or otherwise
acquire for value any stock of the Borrower.
F. CONSOLIDATION, MERGER. Consolidate with or merge into any
other corporation or entity except that a Subsidiary of the Borrower
may consolidate with or merge into the Borrower, PROVIDED that the
Borrower shall be the surviving entity of such merger or
consolidation, and PROVIDED, FURTHER, that immediately after the
consummation of such consolidation or merger there shall exist no
condition or event which constitutes an Event of Default or a
Potential Event of Default.
G. LOANS, INVESTMENTS, SECONDARY LIABILITIES. Make or permit
to remain outstanding, or permit any Subsidiary to make or permit to
remain outstanding, any loan or advance to, or guarantee, induce or
otherwise become contingently liable, directly or indirectly, in
connection with the obligations, stock or dividends of, or own,
purchase or acquire any stock, obligations or securities of or any
other interest in, or make any capital contribution to, any other
Person, except that the Borrower and its Subsidiaries may:
(i) own, purchase or acquire commercial paper rated Moody's
P-I, municipal bonds rated Moody's AA or better, direct
obligations of the United States of America or its agencies, and
obligations guaranteed by the United States of America;
(ii) acquire and own stock, obligations or securities
received from customers in connection with debts created in the
ordinary course of business owing to the Borrower or a
Subsidiary;
(iii) continue to own the existing capital stock of its
Subsidiaries;
(iv) endorse negotiable instruments for deposit or
collection or similar transactions in the ordinary course of
business;
(v) allow the Borrower's Subsidiaries to make or permit to
remain outstanding advances from the Borrower's Subsidiaries to
the Borrower;
(vi) make or permit to remain outstanding loans or advances
to the Borrower's Subsidiaries;
(vii) make or permit to remain outstanding Loans to
employees in an aggregate principal amount not in excess of
$500,000;
(viii) Company may make loans to Parent; and
(ix) short term investments with a maturity of 90 days or
less in major Mexican banking institutions.
H. ASSET SALES. Convey, sell, lease, transfer or otherwise
dispose of, or permit any Subsidiary to convey, sell, lease, transfer
or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its or any Subsidiary's business,
property or fixed assets outside the ordinary course of business,
whether now owned or hereafter acquired, except that the Borrower and
its Subsidiaries may convey, sell, lease, transfer or otherwise
dispose of business, property or fixed assets for consideration which
in the aggregate do not exceed 5% of the aggregate book value of the
consolidated assets of Parent and its Subsidiaries as of the Closing
Date.
3.H INCORPORATION OF COVENANTS FROM COMPANY CREDIT AGREEMENT.
The Borrower and each of the Guarantors hereby agrees that it will
honor and perform each of the covenants and other obligations set forth in
the Company Credit Agreement, to the extent applicable to the Borrower or
such Guarantor, and each such covenant and other obligation is hereby
incorporated herein by this reference with the same effect as though set
forth in their entirety herein, subject to the qualifications set forth in
the Company Credit Agreement, as it may be amended from time to time.
SECTION 7.
EVENTS OF DEFAULT
1.H EVENTS OF DEFAULT.
If any of the following events (``EVENTS OF DEFAULT'') shall occur and
be continuing:
A. The Borrower shall fail to pay any installment of the
principal when due, or shall fail to pay any installment of interest
or other amount payable hereunder when due, within two (2) Business
Days after notice from Lender; or
B. Any representation or warranty made by the Borrower or any
Guarantor herein or by the Borrower or any Guarantor (or any of their
respective officers) in connection with this Agreement shall prove to
have been incorrect in any material respect when made; or
C. Company shall fail to retain voting control of Parent and,
indirectly through Parent, Borrower; or
D. The Borrower or any Guarantor shall fail to perform or
observe any term, covenant or agreement contained in this Agreement
other than those referred to in subsections 7.1A and B above on its
part to be performed or observed and any such failure shall remain
unremedied for thirty (30) days after the Borrower or such Guarantor
knows of such failure; or
E. (i) The Borrower, any Guarantor or any of their respective
Subsidiaries shall (A) fail to pay any principal of, or premium or
interest on, any Debt, the aggregate outstanding principal amount of
which is at least $1,000,000 (excluding Debt evidenced by the Note),
when due (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
or instrument relating to such Debt, or (B) fail to perform or observe
any term, covenant or condition on its part to be performed or
observed under any agreement or instrument relating to any such Debt,
when required to be performed or observed, and such failure shall
continue after the applicable grace period, if any, specified in such
agreement or instrument; or
F. (i) The Borrower, any Guarantor or any of their respective
Subsidiaries shall commence any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief
of debtors, seeking to have an order for relief entered with respect
to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for all or any substantial part of
its assets, or the Borrower, any Guarantor or any of their respective
Subsidiaries shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower, any
Guarantor or any of their respective Subsidiaries any case, proceeding
or other action of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication
or appointment or (B) remains undismissed, undischarged or unbonded
for a period of thirty (30) days; or (iii) there shall be commenced
against the Borrower, any Guarantor or any of their respective
Subsidiaries any case, proceeding or other action seeking issuance of
a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been
vacated, discharged, or stayed or bonded pending appeal within thirty
(30) days from the entry thereof; or (iv) the Borrower, any Guarantor
or any of their respective Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) and
(iii) above; or (v) the Borrower, any Guarantor or any of their
respective Subsidiaries shall generally not, or shall be unable to, or
shall admit in writing its inability to, pay its debts as they become
due; or
G. One or more judgments or decrees shall be entered against
the Borrower, any Guarantor or any of their respective Subsidiaries
involving in the aggregate a liability (not paid or fully covered by
insurance) equal to or greater than $2,000,000 and all such judgments
or decrees shall not have been vacated, discharged, or stayed or
bonded pending appeal within thirty (30) days from the entry thereof;
or
H. The Guaranty, for any reason other than satisfaction in full
of all obligations of the Borrower under the Loan Documents, ceases to
be in full force and effect or is declared null and void, or any
Guarantor denies that it has any further liability under such guaranty
or gives notice to such effect;
THEN, (i) upon the occurrence of any Event of Default described in
clause F above, the Commitment shall immediately terminate and all Loans
hereunder with accrued interest thereon, and all other amounts owing under
this Agreement, the Note and the other Loan Documents shall automatically
become due and payable; and (ii) upon the occurrence of any other Event of
Default, the Lender may, by notice to the Borrower, declare the Commitment
to be terminated forthwith, whereupon the Commitment shall immediately
terminate, and/or, by notice to the Borrower, declare the Loans hereunder,
with accrued interest thereon, and all other amounts owing under this
Agreement, the Note and the other Loan Documents to be due and payable
forthwith, whereupon the same shall immediately become due and payable.
Except as expressly provided above in this subsection, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.
SECTION 8.
MISCELLANEOUS
1.H AMENDMENTS, ETC.
No amendment or waiver of any provision of the Loan Documents nor
consent to any departure by the Borrower or any Guarantor therefrom, shall
in any event be effective unless the same shall be in writing and signed by
the Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
2.H NOTICES, ETC.
Except as otherwise set forth in this Agreement, all notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telex or facsimile communication) and mailed or telegraphed or
telexed or sent by facsimile or delivered, if to the Borrower or any
Guarantor, at their addresses set forth on the signature page hereof; and
if to the Lender, at its address set forth on the signature page hereof;
or, as to each party, at such other address as shall be designated by such
party in a written notice to the other parties. All such notices and
communications shall be effective when deposited in the mails, delivered to
the telegraph company, sent by telex or sent by facsimile, respectively,
except that notices and communications to the Lender pursuant to Section 2
or 7 shall not be effective until received by the Lender.
3.H RIGHT OF SETOFF; DEPOSIT ACCOUNTS.
Upon and after the occurrence of any Event of Default, the Lender is
hereby authorized by the Borrower, at any time and from time to time,
without notice, (a) to set off against, and to appropriate and apply to the
payment of, the obligations and liabilities of the Borrower under the Loan
Documents (whether matured or unmatured, fixed or contingent or liquidated
or unliquidated) any and all amounts owing by the Lender to the Borrower
(whether payable in Dollars or any other currency, whether matured or
unmatured, and, in the case of deposits, whether general or special, time
or demand and however evidenced) and (b) pending any such action, to the
extent necessary, to hold such amounts as collateral to secure such
obligations and liabilities and to return as unpaid for insufficient funds
any and all checks and other items drawn against any deposits so held as
the Lender in its sole discretion may elect. The Borrower and each
Guarantor hereby grants to the Lender a security interest in all deposits
and accounts maintained with the Lender. The Lender is authorized to debit
any account maintained with it or any affiliate of Lender by the Borrower
and each Guarantor for any amount of principal, interest or fees which are
then due and owing to the Lender. The rights of the Lender under this
subsection are in addition to other rights and remedies (including other
rights of set-off) which the Lender may have.
4.H NO WAIVER; REMEDIES.
No failure on the part of the Lender to exercise, and no delay in
exercising, any right under any of the Loan Documents shall operate as a
waiver thereof; nor shall any single or partial exercise of any right under
any of the Loan Documents preclude any other or further exercise thereof or
the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
5.H COSTS AND EXPENSES.
The Borrower and the Guarantors, jointly and severally, agree to pay
on demand all costs and expenses of the Lender (including attorney's fees
and the reasonable estimate of the allocated cost of in-house counsel and
staff) in connection with the preparation, amendment, modification,
enforcement (including, without limitation, in appellate, bankruptcy,
insolvency, liquidation, reorganization, moratorium or other similar
proceedings) or restructuring of the Loan Documents.
6.H PARTICIPATIONS.
The Lender may sell, assign, transfer, negotiate or grant
participations to other financial institutions in all or part of the
obligations of the Borrower and the Guarantors outstanding under the Loan
Documents, PROVIDED that any such sale, assignment, transfer, negotiation
or participation shall be in compliance with the applicable federal and
state securities laws; and PROVIDED, FURTHER that any assignee or
transferee agrees to be bound by the terms and conditions of this
Agreement. The Lender may, in connection with any actual or proposed
assignment or participation, disclose to the actual or proposed assignee or
participant, any information relating to the Borrower, the Guarantors or
any of their respective Subsidiaries.
7.H EFFECTIVENESS; BINDING EFFECT; GOVERNING LAW.
This Agreement shall become effective when it shall have been executed
by the Borrower, each Guarantor, and the Lender and thereafter shall be
binding upon and inure to the benefit of the Borrower, each Guarantor, the
Lender and their respective successors and assigns, except that neither the
Borrower nor any Guarantor shall have the right to assign its rights
hereunder or any interest herein or under any Loan Document without the
prior written consent of the Lender. THIS AGREEMENT AND THE NOTE(S) SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT GIVING EFFECT TO ITS CHOICE OF LAW DOCTRINE.
8.H WAIVER OF JURY TRIAL.
THE BORROWER, EACH GUARANTOR AND THE LENDER HEREBY AGREE TO WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR
ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION AND THE LENDER/BORROWER/GUARANTOR RELATIONSHIP THAT IS BEING
ESTABLISHED. The scope of this waiver is intended to be all-encompassing
of any and all disputes that may be filed in any court and that relate to
the subject matter of this transaction, including without limitation,
contract claims, tort claims, breach of duty claims, and all other common
law and statutory claims. The Lender, the Borrower and each Guarantor
acknowledge that this waiver is a material inducement to enter into a
business relationship, that each has already relied on the waiver in
entering into this Agreement, and that each will continue to rely on the
waiver in their related future dealings. The Lender, the Borrower and each
Guarantor further warrant and represent that each has reviewed this waiver
with its legal counsel, and that each knowingly and voluntarily waives its
jury trial rights following consultation with legal counsel. THIS WAIVER
IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE LOAN DOCUMENTS, OR TO
ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOAN. In the event of
litigation, this Agreement may be filed as a written consent to a trial by
the court.
9.H CONSENT TO JURISDICTION; VENUE; LENDER FOR SERVICE OF PROCESS.
All judicial proceedings brought against the Borrower or any
Guarantor, with respect to this Agreement and the other Loan Documents may
be brought in any state or federal court of competent jurisdiction in The
City of New York or in the State of New York, and by execution and delivery
of this Agreement, the Borrower and each Guarantor, accepts for itself and
in connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees
to be bound by any judgment rendered thereby in connection with this
Agreement. The Borrower and each Guarantor irrevocably waives any right it
may have to assert the doctrine of FORUM NON CONVENIENS or to object to
venue to the extent any proceeding is brought in accordance with this
subsection. The Borrower and each Guarantor designates and appoints CT
Corporation Systems and such other Persons as may hereafter be selected by
the Borrower or any Guarantor, as the case may be, irrevocably agreeing in
writing to so serve as its agent to receive on its behalf service of all
process in any such proceedings in any such court, such service being
hereby acknowledged by the Borrower and each Guarantor to be effective and
binding service in every respect. A copy of any such process so served
shall be mailed by registered mail to the Borrower or such Guarantor at its
address provided in the applicable signature page hereto, except that
unless otherwise provided by applicable law, any failure to mail such copy
shall not affect the validity of service of process. If any agent
appointed by the Borrower or any Guarantor refuses to accept service, the
Borrower and each Guarantor hereby agree that service upon it by mail shall
constitute sufficient notice. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right
of the Lender to bring proceedings against the Borrower or any Guarantor in
courts of any jurisdiction.
10.H LAWFUL RATE.
All agreements between the Borrower, any Guarantor and the Lender,
whether now existing or hereafter arising and whether written or oral, are
expressly limited so that in no contingency or event whatsoever, whether by
reason of demand or acceleration of the maturity of any of the indebtedness
hereunder or otherwise, shall the amount contracted for, charged, received,
reserved, paid or agreed to be paid to the Lender for the use, forbearance,
or detention of the funds advanced hereunder or otherwise, or for the
performance or payment of any covenant or obligation contained in any
document executed in connection herewith, exceed the highest lawful rate
permissible under applicable law (the ``HIGHEST LAWFUL RATE''), it being
the intent of the Borrower, each Guarantor and the Lender in the execution
hereof and of the Loan Documents to contract in strict accordance with
applicable usury laws. If, as a result of any circumstances whatsoever,
fulfillment by the any of the Borrower, any Guarantor or the Lender of any
provision hereof or of any of such documents, at the time performance of
such provision shall be due, shall involve transcending the limit of
validity prescribed by applicable usury law or result in the Lender having
or being deemed to have contracted for, charged, reserved or received
interest ( or amounts deemed to be interest) in excess of the maximum,
lawful rate or amount of interest allowed by applicable law to be so
contracted for, charged, reserved or received by the Lender, then, ipso
facto, the obligation to be fulfilled by the Borrower, or any Guarantor, as
the case may be, shall be reduced to the limit of such validity, and if,
from any such circumstance, the Lender shall ever receive interest or
anything which might be deemed interest under applicable law which would
exceed the Highest Lawful Rate, such amount which would be excessive
interest shall be refunded to the Borrower or such Guarantor, as the case
may be, or, to the extent (i) permitted by applicable law and (ii) such
excessive interest does not exceed the unpaid principal balance of the Note
and the amounts owing on other obligations of the Borrower or such
Guarantor, as the case may be, to the Lender under any Loan Document
applied to the reduction of the principal amount owing on account of the
Note or the amounts owing on other obligations of the Borrower or such
Guarantor, as the case may be, to the Lender under any Loan Document and
not to the payment of interest. All interest paid or agreed to be paid to
the Lender shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full period of the
indebtedness hereunder until payment in full of the principal of the
indebtedness hereunder (including the period of any renewal or extension
thereof) so that the interest on account of the indebtedness hereunder for
such full period shall not exceed the highest amount permitted by
applicable law. This paragraph shall control all agreements between the
Borrower, the Guarantors, and the Lender.
11.H ENTIRE AGREEMENT.
This Agreement with Exhibits and the other Loan Documents embody the
entire agreement and understanding between the parties hereto and
supersedes all prior agreements and understandings relating to the subject
matter hereof.
12.H SEPARABILITY OF PROVISIONS.
In case any one or more of the provisions contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein
shall not in any way be affected or impaired thereby.
13.H 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 taken together
shall constitute one and the same agreement.
[Remainder of page intentionally left blank.]
<PAGE>
EXECUTION
CREDIT AGREEMENT
DATED AS OF JANUARY 31, 1996
AMONG
PILGRIM'S PRIDE, S.A. DE C.V.,
AS BORROWER,
PILGRIM'S PRIDE CORPORATION,
AVICOLA PILGRIM'S PRIDE DE MEXICO, S.A. DE C.V.,
COMPANIA INCUBADORA AVICOLA PILGRIM'S PRIDE, S.A. DE C.V.,
PRODUCTORA Y DISTRIBUIDORA DE ALIMENTOS, S.A. DE C.V.,
IMMOBILIARIA AVICOLA PILGRIM'S PRIDE, S. DE R.L. DE C.V.,
AND
CIA. INCUBADORA HIDALGO, S.A. DE C.V.,
AS GUARANTORS,
AND
INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION,
AS LENDER
