AGREEMENT BETWEEN PILGRIM'S PRIDE CORPORATION
AND CERTAIN SRAREHOLDERS
AGREEMENT MADE this 28th day of November, 1996, by, between and among
LONNIE A. PILGRIM, LONNIE KEN PILGRIM, GRETA PILGRIM OWENS, and PATRICK
WAYNE PILGRIM (herein singly called "Shareholder" and collectively
called "Shareholders"), and PILGRIM'S PRIDE CORPORATION, a Delaware
corporation with its principal offices at 110 South Texas Street,
Pittsburg, Texas (herein called the "Company").
PRELIMINARY STATEMENT
In order to meet its continuing business needs, the Company will incur
after the date of this Agreement certain indebtedness by reason of credit
extended to it by certain creditors who will require one or more of the
Shareholders to guarantee such indebtedness as a condition to extending such
credit ("Guaranteed Indebtedness").
As a condition to any Shareholder's being contingently liable as a
Guarantor on any Guaranteed Indebtedness all of the Shareholders require
that all Shareholders shall be liable ratably with their shares in the
Company for each such Guaranteed Indebtedness either as a Guarantor or as
an Indemnitor of such Shareholders who are Guarantors and that the Company
shall pay each Shareholder a reasonable fee for such guaranty or indemnity
undertaking.
AGREEMENT
In consideration of the premises and the mutual covenants contained
herein it is understood and agreed to by the parties hereto as follows:
1. GUARANTY OF GUARANTEED INDEBTEDNESS.
1.01. GUARANTY. In reliance upon the representations and warranties
herein and subject to the terms and conditions hereof, during the term of this
Agreement any Shareholder shall, when required by the Company, guarantee any
Eligible Indebtedness to be incurred by the Company in form and substance
satisfactory to the related creditor ("Guaranty"). Any Eligible
Indebtedness so guaranteed is herein referred to as "Guaranteed Indebtedness."
1.02. ELIGIBLE INDEBTEDNESS. The term "Eligible indebtedness" shall
mean any indebtedness to be incurred by the Company after the date of this
Agreement and required by its business needs by reason of credit to be extended
to the Company by a creditor who shall require one or more of the Shareholders
to guarantee such indebtedness as a condition to extending such credit
to the Company. For purposes of this Agreement a resolution by the
Board of Directors that such indebtedness is required by the business needs of
the Company shall be binding and conclusive upon all parties to this Agreement.
1.03. CONDITION PRECEDENT TO ISSUANCE OF GUARANTY. No Shareholder
shall be required to issue a Guaranty until they have been furnished a
certificate of the Secretary of the Company certifying (i) the Eligible
Indebtedness (including the maximum amount of indebtedness, the name of the
creditor and the terms and conditions thereof) to be so guaranteed; (ii) a
resolution of the Board of Directors of the Company authorizing the Company to
incur the Eligible Indebtedness; and (iii) the principal amount of all
Guaranteed Indebtedness then outstanding.
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2. INDEMNIFICATION OF GUARANTOR.
2.01. INDEMNITY. All Shareholders shall indemnify a Shareholder
who issues a Guaranty ("Guarantor") against all loss, cost and expense
(including reasonable attorneys' fees) which Guarantor shall incur with the
respect to the Guaranty ("Total Indemnified Amount"); provided, however, that
each Shareholder's liability of indemnity hereunder shall be several and shall
be limited to an amount which is equal to that proportion of the Total
Indemnified Amount as the shares of Common Stock of the Company owned of record
or beneficially by such Shareholder on the date of issuance of such Guaranty
shall bear to the shares of Common Stock of the Company owned of record or
beneficially by all Shareholders (including Guarantor) on the date of issuance
of the Guaranty ("Indemnity"). Any Shareholder who is contingently
liable on an Indemnity is herein referred to as "Indemnitor".
2.02. TERMINATION OF INDEMNITY. Notwithstanding the termination
of this Agreement an Indemnity with respect to a Guaranty which shall have
been issued shall continue until (i) the related Guaranteed Indebtedness shall
have been paid in full by the Company; or (ii) the Guarantor shall have been
released from the Guaranty by the creditor; or (iii) the Indemnity shall have
been discharged in full by payment required of the Shareholders under the
Indemnity or otherwise, whichever shall first occur ("Indemnity Termination
Date").
3. GUARANTY OR INDEMNITY FEE.
3.01. GENERAL. So long as a Guaranty shall be outstanding the
Company shall pay a fee to each Shareholder for the undertaking herein
by such Shareholder under a Guaranty issued on or after the date of this
Agreement or an Indemnity covering such Guaranty computed and subject to
limitations as provided herein ("Fee").
3.02. DETERMINATION AND PAYMENT OF FEES ATTRIBUTABLE TO EACH
SHAREHOLDER. The total Fees which shall accrue with respect to any calendar
quarter shall be an amount equal to 1/4th of a percent multiplied by the
average daily balance of the principal amount of Guaranteed Indebtedness
outstanding during such calendar quarter. The total Fees for a particular
calendar quarter shall be apportioned among the Shareholders in the
proportion that they share the contingent liability of such Guaranteed
Indebtedness, however, in no event will a guaranteeing Shareholder receive less
than 5-percent of the allocable fee. For this purpose contingent liability
shall be determined under Section 2.01 hereof except that each Guarantor's
liability shall be deemed an Indemnity and shall be limited to such amount as
such Guarantor would be contingently liable as an Indemnitor rather than a
Guarantor. All Fees shall be paid quarterly within 45 days after the end of
each calendar quarter.
4. REPRESENTATIONS AND WARRANTIES.
4.01. Representations and Warranties of Company. Company represents and
warrant to the Shareholders that:
(a) GUARANTIES REQUIRED BY CREDITORS. Certain creditors or
proposed creditors of the Company (including certain lessors) have
advised the Company that they will not extend credit to the Company
after the date of this Agreement without the Guaranty of Lonnie A.
Pilgrim, or other Shareholders of the Company.
(b) CREDIT REQUIRED BY THE BUSINESS NEEDS OF COMPANY. All
Guaranteed Indebtedness will be required by the business needs of the
Company.
4.02. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS. Each
Shareholder represents and warrants to the other Shareholder and to the Company
that:
(a) CONDITION TO CONTINGENT LIABILITY. As a condition to
such Shareholder's being contingently liable with respect to his
Guaranty or Indemnity herein such Shareholder requires (i) that all
of the Shareholders shall be liable contingently as provided in this
Agreement (either as a Guarantor or as an Indemnitor of such
Shareholders who are Guarantors) ratably with their shares in the
Company for each such Guaranteed Indebtedness; and (ii) that the Company
shall pay each such Shareholder a reasonable fee for such undertaking'
as Guarantor or Indemnitor.
(b) SHARE OWNERSHIP . Each Shareholder now owns of record or
beneficially such number of shares, $1 par value, of Common Stock of the
Company as is set forth opposite his signature subscribed at the end of
this Agreement.
4.03. REPRESENTATIONS OF PARTIES AS TO REASONABLENESS OF FEES. Each
party hereto represents that the amount of Fees to be paid to each Shareholder
as provided herein is reasonable under the circumstances.
5. MISCELLANEOUS.
5.01. PRIOR AGREEMENT. This Agreement shall supersede any obligation to
issue a Guaranty in the future or any Indemnity with respect to such future
Guaranty as shall have been required by any such prior Agreement among
Shareholders.
5.02. NOTICES. All communications and notices hereunder shall be in
writing and shall be mailed or delivered to the respective Shareholder at
their addresses as appear herein below in this Agreement or to the Company at
its mailing address, P.O. Box 93, Pittsburg, Texas 75686 or delivered to its
principal office, 110 South Texas Street, Pittsburg, Texas. The Company or
any Shareholder may change it or his address where all communications and
notices may be sent hereunder by addressing notice of such change in the manner
above provided.
5.03. EXPENSES. Inasmuch as this Agreement is for the primary
benefit of the Company, the Company shall pay all counsel fees and other
expenses incurred in connection with the preparation and execution of this
Agreement.
5.04. SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. All
representations, warranties and covenants made by each Shareholder or the
Company herein or in any certificate or other instrument delivered by and
pursuant hereto or in connection herewith, shall be deemed to have been relied
upon by all parties hereto, and shall survive throughout the term of this
Agreement and for two years thereafter regardless of any investigation made by
or on behalf of any party hereto.
5.05. CONTROLLING LAW. The validity of this Agreement shall be
governed by the laws of the State of Texas, and this Agreement shall be
construed and in force in accordance with the laws of the State of Texas.
5.06. BENEFIT. This Agreement shall be binding upon and inure to the
benefit of (i) any successor of the Company by statutory merger or
consolidation; and (ii) the estates of the respective Shareholders except
that the death of a Shareholder shall discharge such deceased Shareholder's
obligation to either issue a Guaranty or incur an Indemnity, with respect to
Eligible Indebtedness to be incurred after such Shareholder's death but nothing
herein shall affect such deceased Shareholder's obligation of Guaranty or
Indemnity with respect to Guaranteed Indebtedness incurred prior to his death.
5.07. PERFORMANCE. Time is of the essence in this Agreement. All
obligations of any party are performable in Camp County, Texas.
5.08. ENTIRE AGREEMENT. This instrument contains the entire Agreement
between the parties hereto with the respect to the transactions contemplated
herein. No modification, alteration or amendment to this Agreement nor any
waiver of any provision hereof shall be valid or effective unless in writing
and executed by all parties hereto.
5.09. SEVERABILITY. If any part of this Agreement is judicially held
to be invalid, unenforceable or void, such holding shall not have the effect of
invalidating or voiding the remainder of this Agreement not so declared, or
any part thereof, the parties hereby agreeing that the part or parts so held
to be invalid, unenforceable or void shall be deemed to have been
stricken here from with the same force and effect as if such part or parts had
never been included herein.
5.10. TERMINATION OF AGREEMENT.
(a) GENERAL. Unless sooner terminated by the consent of
all the parties hereto this Agreement shall terminate upon the earlier
of:
(1) NOTICE EXPIRATION OF TIME. Expiration of 10 years
after the date of this Agreement.
(2) NOTICE BY MAJORITY OF SHAREHOLDERS. Expiration of 30
days after a majority in interest of the Shareholders shall have
given written notice to the Company to such effect on or after
January 1, 1997.
(3) DEATH OF MAJORITY IN INTEREST OF SHAREHOLDERS. Upon
the death of any Shareholder if immediately after such death
less than a majority in interest of the Shareholders shall then
be living.
(b) DETERMINATION OF MAJORITY IN INTEREST. The respective
interests of the Shareholders for purposes of determining a "majority in
interest" shall be determined on the basis of their respective ownership
of record and beneficially of shares of Common Stock of the Company at
the particular time in question.
(c) EFFECT OF TERMINATION. Upon the termination of this
Agreement the obligations of all parties hereto shall then be
discharged in full except that all Guaranties and Indemnities then
outstanding shall remain in full force according to their respective
terms and conditions, and the Company shall pay the Fees to the
Shareholders with respect to Guaranteed Indebtedness outstanding
after termination as provided in Article 3.
This Agreement is signed and delivered on the date and year first above
set forth in multiple counterparts each of which shall be an original.
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Attest PILGRIM'S PRIDE CORPORATION
By:
Assistant Secretary Chief Financial Officer
SHAREHOLDERS
Shares Now Owned
Name of Record Or
(SIGNATURES) ADDRESS BENEFICIALLY
PO Box 93 16,648,727
Lonnie A. Pilgrim Pittsburg, TX 75686
Patty Pilgrim (wife ofLonnie A. Pilgrim)
Lonnie Ken Pilgrim Pittsburg, TX 75686 375,500
Greta Pilgrim Owens 375,500
370,982
Patrick Wayne Pilgrim
17,770,709