SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 2, 1997
SMITHFIELD FOODS, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 0-2258 52-0845861
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
999 WATERSIDE DRIVE
SUITE 900
NORFOLK, VIRGINIA 23510
(Address of principal executive Zip Code)
offices)
Registrant's telephone number, including area code (757) 365-3000
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Item 5 Other Events
On August 28, 1997, the shareholders of Smithfield Foods, Inc.
("Smithfield Foods"), a Delaware corporation, and the sole shareholder of
Smithfield Foods Virginia, Inc. ("Smithfield Foods Virginia"), a Virginia
corporation and a wholly owned subsidiary of Smithfield Foods, approved a
proposal to reincorporate the holding company by means of a proposed Agreement
and Plan of Merger (the "Agreement") between Smithfield Foods and Smithfield
Foods Virginia. Under the terms of the Agreement, Smithfield Foods was merged
into Smithfield Foods Virginia (the "Merger"). The Merger was effective
September 2, 1997 (the "Effective Date"). The principal reason for the Merger
was to avoid the Delaware franchise tax. Under current law, by reincorporating
in Virginia, the company will save approximately $149,000 dollars per year in
franchise taxes.
Also on August 28, 1997, the respective shareholders of Smithfield
Foods and Smithfield Foods Virginia approved a resolution increasing the
authorized shares of each company from 25 million shares of common stock, par
value $0.50 per share, to 100 million shares of common stock, par value $0.50
per share. As of July 11, 1997, 19,200,681 shares of common stock of Smithfield
Foods were outstanding and as of July 26, 1997, one share of common stock of
Smithfield Foods Virginia was outstanding.
In addition, on August 28, 1997 the Boards of Directors of Smithfield
Foods Virginia authorized a two-for-one stock split of the company's common
stock. The stock split entitles each shareholder to receive one additional share
for each outstanding share of common stock held of record as of the close of
business on September 12, 1997. The shares will be distributed on or about
September 26, 1997. The stock split will be effected in the form of a dividend,
using the increased shares authorized by the shareholder action described above.
A copy of the press release for (i) the increase in the authorized
shares, (ii) the Merger and (iii) the stock split is filed as Exhibit 1 hereto.
The following is a more detailed description of these matters.
Effect of Merger
Upon the Effective Date, each share of common stock of Smithfield Foods
was converted into one share of Smithfield Foods Virginia common stock, par
value $0.50 per share. Such shares are, like Smithfield Foods' stock had been,
trading in the national over-the-counter market and are authorized for quotation
on the NASDAQ National Market under the symbol "SFDS". Smithfield Food believes
the Merger constitutes a tax-free reorganization under Section 368(a) of the
Internal Revenue Code.
Smithfield Foods does not expect that the Merger will have any impact
on its operations or the operations of its business. The mailing address will be
the same. Smithfield Foods Virginia will continue to conduct business as
Smithfield Foods conducted it, with the same directors, officers and personnel.
Smithfield Foods Virginia's subsidiaries continue to operate under the same
names and conduct business in the same manner as prior to the Merger, with the
same directors, officers and personnel.
On September 2, 1997, Smithfield Foods Virginia's corporate name became
Smithfield Foods, Inc. Hereinafter, Smithfield Foods Virginia will be referred
to as the "Company".
Description of the Company's Capital Stock
A copy of the Company's Articles of Incorporation (and all amendments
thereto), and the Company's By-laws, are filed as Exhibits 2 and 3 hereto.
Common Stock
Holders of the Company's common stock, par value $0.50 per share, (the
"Common Shares"), are entitled to one vote per share on all matters to be voted
upon by the shareholders. Holders of the Common Shares do not have cumulative
voting rights, and therefore holders of a majority of the shares voting for the
election of directors can elect all of the directors. In such event, the holders
of the remaining shares will not be able to elect any directors. Holders of the
Common Shares are entitled to receive such dividends as may be declared from
time to time by the Company's Board of Directors (the "Board") out of funds
legally available therefor, after payment of dividends required to be paid on
outstanding "Preferred Shares," as defined below, if any. In the event of the
liquidation, dissolution or winding up of the Company, the holders of Common
Shares are entitled to share ratably in all assets remaining after payment of
liabilities, subject to prior distribution rights of Preferred Shares then
outstanding, if any. The Common Shares have no preemptive or conversion rights
and are not subject to further calls or assessments by the Company. The Common
Shares outstanding are validly issued, fully paid and nonassessable. The
Transfer Agent and Registrar for the Common Shares is First Union National Bank,
Charlotte, North Carolina.
Preferred Stock
The Board has the authority, without any vote or action by the
shareholders, to issue Company preferred stock in one or more series and to fix
the designations, preferences, rights, qualifications, limitations and
restrictions thereof, including the voting rights, dividends rights, dividend
rate, conversion rights, terms of redemption (including sinking fund
provisions), redemption price or prices, liquidation preferences and the number
of shares constituting any series. There are no shares of Company preferred
stock outstanding, and there are no agreements or understandings for the
designation of any series of Company preferred stock or the issuance of shares
thereunder, except pursuant to the preferred shares purchase rights plan
summarized below.
Shareholder Rights Plan
On August 28, 1997, the Board declared a dividend of one preferred
share purchase right (a "Right") for each outstanding Common Share. The dividend
is payable on September 2, 1997 (the "Record Date") to the shareholders of
record on that date (i.e., following the consummation of the Merger). Each Right
entitles the registered holder to purchase from the Company one one-thousandth
of a Series A Junior Participating Preferred Share of the Company, $1.00 par
value per share (the "Preferred Shares") at a price of $37.50 (subject to
adjustment as provided in the Rights Agreement) per one one-thousandth of a
Preferred Share (the "Purchase Price"), subject to adjustment. The Purchase
Price of $37.50 takes into account the already-declared one-for-one Common
Shares dividend which the Board of Directors declared on August 28, 1997,
payable on or about September 26, 1997, to holders of record of the Common
Shares on September 12, 1997 (and Rights will also be issued in respect of the
shares to be issued pursuant to such dividend). The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and First Union National Bank, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 20% or more of the
outstanding Common Shares or (ii) 10 business days (or such later date as may be
determined by action of the Board prior to such time as any person or group of
affiliated persons becomes an Acquiring Person) following the commencement of,
or announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 20% or more of the outstanding Common Shares (the earlier of such dates
being the "Distribution Date"), the Rights will be evidenced, with respect to
any of the Common Shares outstanding as of the Record Date, by such Common Share
certificate with a copy of a Summary of Rights To Purchase Preferred Shares
attached thereto, in the case of Common Shares for which certificates have been
issued, and, in the case of uncertificated Common Shares, by the registration of
ownership of Common Shares in the Company's share register.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), upon transfer or new issuance of Common
Shares, new Common Share certificates issued after the Record Date, in the case
of certificated Common Shares, and, in the case of uncertificated Common Shares,
the initial transaction statement issued with respect to such Common Shares,
will contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights), the
transfer of any Common Shares outstanding as of the Record Date, including in
the case of certificated Common Shares surrender for transfer of any
certificates therefor even without such notation or a copy of a Summary of
Rights To Purchase Preferred Shares attached thereto, will also constitute the
transfer of the Rights associated with such Common Shares. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Company's Common Shares as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on May 31, 2001 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
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The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares; (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares; or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date (in addition to the already-declared stock
dividend referred to above).
Preferred Shares purchasable upon exercise of the Rights will be
nonredeemable. Each Preferred Share will have a minimum preferential quarterly
dividend rate of $1.00 per share, but will be entitled to an aggregate dividend
of 1,000 times the dividend declared on the Common Shares. In the event of
liquidation, the holders of the Preferred Shares will receive a preferential
liquidation payment equal to the greater of $37,500 (which figure takes into
account the already-declared stock dividend) or 1,000 times the payment made per
Common Share. Each Preferred Share will have 1,000 votes, voting together with
the Common Shares. Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be
entitled to receive 1,000 times the amount received per Common Share. These
rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares dividend, liquidation and
voting rights, the value of a one one-thousandth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or group of affiliated
or associated persons becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the right
to receive upon exercise that number of Common Shares having a market value of
two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board may exchange the Rights (other than Rights
owned by such person or group which will have become void), in whole or in part,
at an exchange ratio of one Common Share, or one one-thousandth of a Preferred
Share (or of a share of a class or series of the Company's preferred stock
having equivalent rights, preferences and privileges), per Right (subject to
adjustment).
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With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of 20% or more of the outstanding
Common Shares, the Board may redeem the Rights in whole, but not in part, at a
price of $.0001 per Right (the "Redemption Price"). The redemption of the Rights
may be made effective at such time on such basis with such conditions as the
Board in its sole discretion may establish. Immediately upon any redemption of
the Rights, the right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board without the consent
of the holders of the Rights, except that from and after such time as any person
or group of affiliated or associated persons becomes an Acquiring Person no such
amendment may adversely affect the interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement is filed as Exhibit 4 hereto. A copy of
the form of Rights Certificate is filed as Exhibit 5 hereto. A copy of the
Rights Agreement is available free of charge from the Company upon request to
the Corporate Secretary.
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Item 7. Exhibits.
1. Press Release, "Smithfield Foods, Inc. Announces Two-For-One
Stock Split; Stockholders Approve Increase In Shares and
Reincorporation to Virginia".
2. Articles of Incorporation of the Company, and amendments
thereto.
3. By-laws of the Company.
4. Rights Agreement dated as of September 1, 1997 between the
Company and First Union National Bank, Charlotte, North
Carolina as Rights Agent.
5. Form of Rights Certificate (attached as Exhibit A to the
Rights Agreement referred to in Exhibit 4 hereto).
6. Form of Stock Certificate of Company.
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SIGNATURE
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, thereto duly authorized.
September 5, 1997
Smithfield Foods, Inc.
/s/ Aaron D. Trub
------------------------------
By: Aaron D. Trub
Vice President, Treasurer and Secretary
Exhibit 1
For more information:
Aaron D. Trub
(757) 365-3000
SMITHFIELD FOODS, INC. ANNOUNCES TWO-FOR-ONE STOCK SPLIT;
STOCKHOLDERS APPROVE INCREASE IN SHARES AND REINCORPORATION TO VIRGINIA
NORFOLK, Virginia, August 28, 1997 -- Smithfield Foods, Inc.
(NASDAQ:SFDS) today announced that the Board of Directors of the Company
declared a two-for-one stock split of the Company's common stock. The stock
split will be effected in the form of a stock dividend, using shares authorized
by stockholder action at the Company's 1997 Annual Meeting of Stockholders held
today. The stock split entitles each stockholder to receive one additional share
for each outstanding share of common stock held of record as of the close of
business on September 12, 1997. The shares will be distributed on or about
September 26, 1997.
"This stock split demonstrates our confidence in the continued growth
and bright future of our Company and reflects our goal of continuing to enhance
stockholder value," said Joseph W. Luter, III, Chairman and Chief Executive
Officer. "This action makes our market price more accessible to a larger number
of individual investors, which should expand the market for our stock and
enhance liquidity."
At the Annual Meeting, stockholders approved a proposed amendment to
the Company's Certificate of Incorporation increasing the number of shares of
common stock which the Company is authorized to issue from 25 million to 100
million. "The increase in the number of shares of authorized common stock will
benefit the Company and its stockholders by giving the Company needed
flexibility in its corporate planning and in responding to developments in the
Company's business, including possible financing and acquisition transactions,
stock splits or dividends, issuances of shares in connection with employee
benefit programs and for general corporate purposes," Mr. Luter said.
Stockholders also approved a proposed agreement and plan of
reincorporation and merger pursuant to which the Company's state of
incorporation will change from Delaware to Virginia. The reincorporation will be
accomplished by merging the Company into a newly formed Virginia corporation and
converting each share of the Company's common stock into one share of the common
stock of the Virginia corporation. As a successor to the Company, the Virginia
corporation will continue to conduct business as the Company presently conducts
it, with the same directors, officers and personnel. Following the
reincorporation, the Company's subsidiaries will continue to operate under their
present names and will conduct business in the same manner as at present, with
the same officers, directors and personnel.
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The reincorporation will take effect upon the filing of documents with
the Delaware Secretary of State and the Virginia State Corporation Commission.
After the effective time, certificates that represent shares of the common stock
of the Delaware corporation will automatically represent the same number of
shares of the Virginia corporation. The CUSIP number assigned to the shares will
not change and the shares will continue to be traded in the national
over-the-counter market and authorized for quotation on The Nasdaq National
Market under the symbol "SFDS." Like its predecessor, the Virginia corporation
has adopted a shareholder rights plan.
The principal reason for the reincorporation is to avoid the Delaware
corporate franchise tax. "The change of the Company's state of incorporation
from Delaware to Virginia will result in a tax savings to the Company of
approximately $150,000 per year," stated Mr. Luter.
In other action at the Annual Meeting, stockholders re-elected each of
the board's 14 current directors to serve another one-year term, approved an
incentive bonus plan applicable to the Company's chief operating officer, and
ratified the selection of Arthur Andersen LLP as independent public accountants
of the Company for the current fiscal year.
Smithfield Foods, Inc. is a leading hog producer, pork processor and
fresh pork and processed meats marketer. The Company's brands include Smithfield
Lean Generation Pork, Smithfield Premium, Gwaltney, Patrick Cudahy, John
Morrell, Lykes, Esskay, Kretschmar, Valleydale, Jamestown, Dinner Bell, Realean,
Patrick's Pride, Great, Tobin's First Prize, Peyton's and others.
# # #
Exhibit 2
SMITHFIELD FOODS VIRGINIA, INC.
ARTICLES OF INCORPORATION
ARTICLE I
NAME
The name of the Corporation is Smithfield Foods Virginia, Inc.
ARTICLE II
PURPOSE
The Corporation shall have the power to engage in any lawful business
not required by the Virginia Stock Corporation Act to be stated in the Articles
of Incorporation.
ARTICLE III
AUTHORIZED SHARES
3.1 Number and Designation. The aggregate number and designation of shares which
the Corporation shall have the authority to issue and the par value per share
are as follows:
Class Number of Shares Par Value
- ----- ---------------- ---------
Preferred 1,000,000 $1.00
Common 25,000,000 $0.50
3.2 Preemptive Rights. No holder of outstanding shares of any class shall have
any preemptive right with respect to (i) any shares of any class of the
Corporation, whether now or hereafter
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authorized, (ii) any warrants, rights or options to purchase any such shares, or
(iii) any obligations convertible into or exchangeable for any such shares or
into warrants, rights or options to purchase any such shares.
3.3 Shareholder Approval.
An amendment to the Articles of Incorporation of the Corporation shall
be approved if a majority of the votes entitled to be cast by each voting group
entitled to vote on such action are cast in favor of such action. Subject to the
right of holders of any series of Preferred Stock to elect or remove directors
under specified circumstances, at a special meeting of shareholders called
expressly for that purpose, any director may be removed for cause by a vote of
the holders of a majority of the shares entitled to vote at an election of
directors. Any merger or share exchange to which the Corporation is a party or
any direct or indirect sale, lease, exchange or other disposition of all or
substantially all of the Corporation's property, otherwise than in the usual and
regular course of business, shall be approved if a majority of the votes
entitled to be cast by each voting group entitled to vote on such action are
cast in favor of such action; provided, however, that this sentence shall not
affect the power of the Board of Directors to condition its submission of any
plan of merger, share exchange or direct or indirect sale, lease, exchange or
other disposition of all or substantially all of the Corporation's property,
otherwise than
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in the usual and regular course of business, on any basis, including the
requirement of a greater vote.
ARTICLE IV
PREFERRED SHARES
4.1 Issuance in Series. The Board of Directors is authorized to issue the
Preferred Shares from time to time in one or more series and to provide for the
designation, preferences, limitations and relative rights of the shares of each
series by the adoption of Articles of Amendment to the Articles of Incorpo
ration of the Corporation setting forth:
(i) The maximum number of shares in the series and the
designation of the series, which designation shall distin guish the shares
thereof from the shares of any other series or class;
(ii) Whether shares of the series shall have special,
conditional or limited voting rights, or no right to vote, except to the extent
prohibited by law;
(iii) Whether shares of the series are redeemable or
convertible (x) at the option of the Corporation, a share holder or another
person or upon the occurrence of a designated event, (y) for cash, indebtedness,
securities or other property, and (z) in a designated amount or in an amount
determined in accordance with a designated formula or by reference to extrinsic
data or events;
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(iv) Any right of holders of shares of the series to
distributions, calculated in any manner, including the rate or rates of
dividends, and whether dividends shall be cumulative, noncumulative or
partially cumulative;
(v) The amount payable upon the shares of the series in the
event of voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Corporation;
(vi) Any preference of the shares of the series over the
shares of any other series or class with respect to distributions,
including dividends, and with respect to distributions upon the
liquidation, dissolution or winding up of the affairs of the
Corporation; and
(vii) Any other preferences, limitations or specified rights
(including a right that no transaction of a specified nature shall be
consummated while any shares of such series remain outstanding except
upon the assent of all or a specified portion of such shares) now or
hereafter permitted by the laws of the Commonwealth of Virginia and not
incon sistent with the provisions of this Section 4.1.
4.2 Articles of Amendment. Before the issuance of any shares of a
series, Articles of Amendment establishing such series shall be filed with and
made effective by the State Corporation Commission of Virginia, as required by
law.
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ARTICLE V
COMMON SHARES
5.1 Voting Rights. The holders of outstanding Common Shares shall, to the
exclusion of the holders of any other class of shares of the Corporation, have
the sole power to vote for the election of directors and for all other purposes
without limita tion, except (i) as otherwise provided in the Articles of Amend
ment establishing any series of Preferred Shares or (ii) as may be required by
law.
5.2 Distributions. Subject to the rights of the holders of shares, if
any, ranking senior to the Common Shares as to divi dends or rights in the
liquidation, dissolution or winding up of the affairs of the Corporation, the
holders of the Common Shares shall be entitled to distributions, including
dividends, when declared by the Board of Directors and to the net assets of the
Corporation upon the liquidation, dissolution or winding up of the affairs of
the Corporation.
ARTICLE VI
REGISTERED OFFICE AND REGISTERED AGENT
The address of the initial registered office of the Corpo ration, which
is located in the County of Henrico, Virginia, is 5511 Staples Mill Road,
Richmond, Virginia 23228. The initial registered agent of the Corporation is
Edward R. Parker, whose
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business office is identical with the registered office and who is a resident of
Virginia and a member of the Virginia State Bar.
ARTICLE VII
LIMIT ON LIABILITY AND INDEMNIFICATION
7.1 Definitions. For purposes of this Article the following definitions shall
apply:
(i) "Corporation" means this Corporation only and no
predecessor entity or other legal entity;
(ii) "expenses" include counsel fees, expert witness fees,
and costs of investigation, litigation and appeal, as well as any
amounts expended in asserting a claim for indemnification;
(iii) "liability" means the obligation to pay a judg ment,
settlement, penalty, fine, or other such obligation, including, without
limitation, any excise tax assessed with respect to an employee benefit
plan;
(iv) "legal entity" means a corporation, partnership, joint
venture, trust, employee benefit plan or other enter prise;
(v) "predecessor entity" means a legal entity the existence
of which ceased upon its acquisition by the Corporation in a merger or
otherwise; and
(vi) "proceeding" means any threatened, pending, or
completed action, suit, proceeding or appeal whether civil,
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criminal, administrative or investigative and whether formal or
informal.
7.2 Limit on Liability. In every instance in which the Virginia Stock
Corporation Act, as it exists on the date hereof or may hereafter be amended,
permits the limitation or elimi nation of liability of directors or officers of
a corporation to the corporation or its shareholders, the directors and officers
of this Corporation shall not be liable to the Corporation or its shareholders.
7.3 Indemnification of Directors and Officers. The Corpo ration shall
indemnify any individual who is, was or is threatened to be made a party to a
proceeding (including a proceeding by or in the right of the Corporation)
because such individual is or was a director or officer of the Corporation or
because such individual is or was serving the Corporation, or any other legal
entity in any capacity at the request of the Corpo ration while a director or
officer of the Corporation, against all liabilities and reasonable expenses
incurred in the proceed ing except such liabilities and expenses as are incurred
because of such individual's willful misconduct or knowing violation of the
criminal law. Service as a director or officer of a legal entity controlled by
the Corporation shall be deemed service at the request of the Corporation. The
determination that indemnification under this Section 7.3 is permissible and the
evaluation as to the reasonableness of expenses in a specific case shall be
made, in the case of a director, as provided by
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law, and in the case of an officer, as provided in Section 7.4 of this Article;
provided, however, that if a majority of the directors of the Corporation has
changed after the date of the alleged conduct giving rise to a claim for
indemnification, such determination and evaluation shall, at the option of the
person claiming indemnification, be made by special legal counsel agreed upon by
the Board of Directors and such person. Unless a deter mination has been made
that indemnification is not permissible, the Corporation shall make advances and
reimbursements for expenses incurred by a director or officer in a proceeding
upon receipt of an undertaking from such director or officer to repay the same
if it is ultimately determined that such director or officer is not entitled to
indemnification. Such undertaking shall be an unlimited, unsecured general
obligation of the director or officer and shall be accepted without reference to
such director's or officer's ability to make repayment. The termination of a
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent shall not of itself create a presumption that a
director or officer acted in such a manner as to make such director or officer
ineligible for indemnification. The Corporation is authorized to contract in
advance to indemnify and make advances and reimbursements for expenses to any of
its directors or officers to the same extent provided in this Section 7.3.
7.4 Indemnification of Others. The Corporation may, to a lesser
extent or to the same extent that it is required to
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provide indemnification and make advances and reimbursements for expenses to its
directors and officers pursuant to Section 7.3, provide indemnification and make
advances and reimbursements for expenses to its employees and agents, the
directors, officers, employees and agents of its subsidiaries and predecessor
entities, and any person serving any other legal entity in any capacity at the
request of the Corporation, and may contract in advance to do so. The
determination that indemnification under this Section 7.4 is permissible, the
authorization of such indemnification and the evaluation as to the
reasonableness of expenses in a specific case shall be made as authorized from
time to time by general or specific action of the Board of Directors, which
action may be taken before or after a claim for indemnifi cation is made, or as
otherwise provided by law. No person's rights under Section 7.3 of this Article
shall be limited by the provisions of this Section 7.4.
7.5 Miscellaneous. The rights of each person entitled to
indemnification under this Article shall inure to the benefit of such person's
heirs, executors and administrators. Special legal counsel selected to make
determinations under this Article may be counsel for the Corporation.
Indemnification pursuant to this Article shall not be exclusive of any other
right of indemnification to which any person may be entitled, including
indemnification pursuant to a valid contract, indemnification by legal entities
other than the Corporation and indemnification under policies of insurance
purchased and maintained by the Corporation
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or others. However, no person shall be entitled to indemnification by the
Corporation to the extent such person is indemnified by another, including an
insurer. The Corporation is authorized to purchase and maintain insurance
against any liability it may have under this Article or to protect any of the
persons named above against any liability arising from their service to the
Corporation or any other legal entity at the request of the Corporation
regardless of the Corporation's power to indemnify against such liability. The
provisions of this Article shall not be deemed to preclude the Corporation from
entering into contracts otherwise permitted by law with any individuals or legal
entities, including those named above. If any provision of this Article or its
application to any person or circumstance is held invalid by a court of
competent jurisdic tion, the invalidity shall not affect other provisions or
appli cations of this Article, and to this end the provisions of this Article
are severable.
7.6 Amendments. No amendment, modification or repeal of this Article
shall diminish the rights provided hereunder to any person arising from conduct
or events occurring before the adoption of such amendment, modification or
repeal.
Dated: July 24, 1997
By:____________________________________
Sam Young Garrett, Incorporator
-10-
SMITHFIELD FOODS VIRGINIA, INC.
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION
1. Name. The name of the Corporation is Smithfield Foods Virginia,
Inc.
2. The Amendment. The Amendment, a copy of which is attached hereto as
Exhibit "A", deletes Article III, Section 3.1 of the Articles of Incorporation
and substitutes, in lieu thereof, a new Article III Section 3.1 increasing the
number of authorized common shares.
3. Board Action. The Board of Directors approved a resolution on August
28, 1997 finding it to be in the best interest of the Corporation to adopt an
Amendment to the Articles of Incorporation of the Corporation, increasing the
number of authorized shares of Common Stock of the Corporation and directed that
it be submitted to a vote of the sole shareholder.
4. Shareholder Action: On August 28, 1997, the amendment was approved
by the written consent of the sole shareholder.
<PAGE>
Dated:____________________ SMITHFIELD FOODS VIRGINIA, INC.
--------------------------------
By: Aaron D. Trub
Title: Vice President, Secretary
and Treasurer
COMMONEALTH OF VIRGINIA:
__________ OF _______________:
The undersigned Notary Public in and for the jurisdiction aforesaid
hereby certifies that Aaron D. Trub, Vice President, Secretary and Treasurer of
Smithfield Foods Virginia, Inc., signed the foregoing Articles of Amendment,
dated as of August 28, 1997, and acknowledged the same before me.
Given under my hand this _____ day of _____________, 1997.
My commission expires ____________________.
---------------------------------
Notary Public
[SEAL]
<PAGE>
Exhibit A
ARTICLE III
AUTHORIZED SHARES
3.1 Number and Designation. The number and designation of shares that
the Corporation shall have authority to issue and the par value
per share are as follows:
Number of
Class Shares Par Value
----- ------ ---------
Preferred 1,000,000 $1.00
Common 100,000,000 $0.50
SMITHFIELD FOODS VIRGINIA, INC.
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION
1. Name. The name of the Corporation is Smithfield Foods Virginia,
Inc.
2. The Amendment. The Amendment, a copy of which is attached hereto as
Exhibit "A", deletes Article I of the Articles of Incorporation and substitutes,
in lieu thereof, a new Article I changing the name of the Corporation.
3. Board Action. The Board of Directors approved a resolution on
August 28, 1997 finding it to be in the best interest of the Corporation to
change the name of the Corporation.
4. Shareholder Action: Shareholder action is not required pursuant to
Section 13.1-706(5) of the Virginia Code.
<PAGE>
Dated:____________________ SMITHFIELD FOODS VIRGINIA, INC.
------------------------------------
By: Aaron D. Trub
Title: Vice President, Secretary and Treasurer
COMMONWEALTH OF VIRGINIA:
__________ OF _______________:
The undersigned Notary Public in and for the jurisdiction aforesaid
hereby certifies that Aaron D. Trub, Vice President, Secretary and Treasurer of
Smithfield Foods Virginia, Inc., signed the foregoing Articles of Amendment,
dated as of August 28, 1997, and acknowledged the same before me.
Given under my hand this _____ day of _____________, 1997.
My commission expires ____________________.
---------------------------------
Notary Public
[SEAL]
<PAGE>
Exhibit A
ARTICLE I
NAME
The name of the Corporation is Smithfield Foods, Inc.
SMITHFIELD FOODS VIRGINIA, INC.
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION
1. Name. The name of the Corporation is Smithfield Foods Virginia, Inc
(the "Corporation").
2. The Amendment. Pursuant to Sections 13.1-639 and 13.1-689 of the
Virginia Stock Corporation Act, the Board of Directors of the Corporation
effective as of September 1, 1997, duly adopted the following amendment to the
Articles of Incorporation of the Corporation, adding new Section 4.3 thereto
which sets forth the designation and number of shares of a series of Preferred
Stock of the Corporation and certain preferences, limitations and relative
rights thereof:
4.3 Series A Junior Participating Preferred Shares
(a) Designation and Amount. Pursuant to a resolution
adopted by the Board of Directors of the Corporation on August 28,
1997, 100,000 preferred shares (of $1.00 par value) are hereby
constituted as a series of preferred shares of the Corporation which
shall be designated as "Series A Junior Participating Preferred Shares"
(the "Series A Preferred Shares"), the preferences and relative,
optional and other special rights of which and the qualifications,
limitations or restrictions of which shall be as set forth herein.
(b) Dividends and Distribution.
(i) Subject to the prior and superior rights
of the holders of any preferred shares of any series ranking
prior and superior to the Series A Preferred Shares with
respect to dividends, the holders of Series A Preferred
Shares, in preference to the holders of Common Shares, par
value $.50 per share (the "Common Shares"), of the Corporation
shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the fifteenth
day of January, April, July and October in each year (each
such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Shares, in an amount per
share (rounded to the nearest cent) equal to the greater of
(X)$1.00 or (Y) subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate
<PAGE>
per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in Common
Shares or a subdivision of the outstanding Common Shares (by
reclassification or otherwise), declared on the Common Shares,
since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a
share of Series A Preferred Shares. In the event the
Corporation shall at any time declare or pay any dividend on
Common Shares payable in Common Shares, or effect a
subdivision or combination or consolidation of the outstanding
Common Shares (by reclassification or otherwise than by
payment of a dividend in Common Shares) into a greater or
lesser number of Common Shares, then in each such case the
amount to which holders of Series A Preferred Shares were
entitled immediately prior to such event under clause (Y) of
the preceding sentence shall be adjusted by multiplying such
amount by a fraction the numerator of which is the number of
Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
The Corporation shall declare a dividend or
distribution on the Series A Preferred Shares as provided in
this paragraph (i) immediately after it declares a dividend or
distribution on the Common Shares (other than a dividend
payable in Common Shares); provided that, in the event no
dividend or distribution shall have been declared on the
Common Shares during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series A
Preferred Shares shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
Dividends shall begin to accrue and be cumulative on
outstanding Series A Preferred Shares from the Quarterly
Dividend Payment Date next preceding the date of issue of such
Series A Preferred Shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly
Dividend Payment Date, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares,
or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination
of holders of Series A Preferred Shares entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment
Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment
<PAGE>
Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the Series A Preferred Shares in an amount
less than the total amount of such dividends at the time
accrued and payable on such shares shall be allocated pro rata
on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for
the determination of holders of Series A Preferred Shares
entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 60
days prior to the date fixed for the payment thereof.
(c) Voting Rights. The holders of Series A
Preferred Shares shall have the following voting rights:
(i) Subject to the provision for adjustment
hereinafter set forth, each share of Series A Preferred Shares
shall entitle the holder thereof to 1,000 votes on all matters
submitted to a vote of the shareholders of the Corporation. In
the event the Corporation shall at any time declare or pay any
dividend on Common Shares payable in Common Shares, or effect
a subdivision or combination or consolidation of the
outstanding Common Shares (by reclassification or otherwise
than by payment of a dividend in Common Shares) into a greater
or lesser number of Common Shares, then in each such case the
number of votes per share to which holders of Series A
Preferred Shares were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction the
numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is
the number of Common Shares that were outstanding immediately
prior to such event.
(ii) Except as otherwise provided herein or
by law, the holders of Series A Preferred Shares and the
holders of Common Shares shall vote together as one class on
all matters submitted to a vote of shareholders of the
Corporation.
(iii) Except as set forth herein, holders of
Series A Preferred Shares shall have no special voting rights
and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Shares as set
forth herein) for taking any corporate action.
<PAGE>
(d) Certain Restrictions.
(i) Whenever quarterly dividends or other
dividends or distributions payable on the Series A Preferred
Shares as provided in paragraph (b) are in arrears, thereafter
and until all accrued and unpaid dividends and distributions,
whether or not declared, on Series A Preferred Shares
outstanding shall have been paid in full, the Corporation
shall not:
(A) declare or pay dividends on,
make any other distributions on, or redeem or
purchase or otherwise acquire for consideration any
shares of the Corporation ranking junior (either as
to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Shares;
(B) declare or pay dividends on or
make any other distributions on any shares of the
Corporation ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding
up) with the Series A Preferred Shares, except
dividends paid ratably on the Series A Preferred
Shares and all such parity shares on which dividends
are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are
then entitled;
(C) redeem or purchase or otherwise
acquire for consideration any shares of the
Corporation ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding
up) with the Series A Preferred Shares, provided that
the Corporation may at any time redeem, purchase or
otherwise acquire any such parity shares in exchange
for any shares of the Corporation ranking junior
(either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred
Shares; or
(D) purchase or otherwise acquire
for consideration any Series A Preferred Shares, or
any shares of the Corporation ranking on a parity
with the Series A Preferred Shares, except in
accordance with a purchase offer made in writing or
by publication (as determined by the Board of
Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration
of the respective annual dividend rates and other
relative rights and preferences of the respective
series and classes shall determine in good faith will
result in fair and equitable treatment among the
respective series or classes.
<PAGE>
(ii) The Corporation shall not permit any
subsidiary of the Corporation to purchase or otherwise acquire
for consideration any shares of the Corporation unless the
Corporation could, under subparagraph (i) of this paragraph
(d), purchase or otherwise acquire such shares at such time
and in such manner.
(e) Reacquired Shares. Any Series A Preferred Shares
purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after
the acquisition thereof. All such shares shall upon their
cancellation, and upon the taking of any action required by
applicable law, become authorized but unissued preferred
shares and may be reissued as part of a new series of
preferred shares to be created by resolution or resolutions of
the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
(f) Liquidation, Dissolution or Winding Up.
Upon any voluntary liquidation, dissolution or winding up
of the Corporation, no distribution shall be made:
(A) to the holders of shares of the
Corporation ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the
Series A Preferred Shares unless, prior thereto, the
holders of Series A Preferred Shares shall have
received $37,500 per share, plus an amount equal to
accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such
payment, provided that the holders of Series A
Preferred Shares shall be entitled to receive an
aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 1,000
times the aggregate amount to be distributed per
share to holders of Common Shares, or
(B) to the holders of shares of the
Corporation ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding
up) with the Series A Preferred Shares, except
distributions made ratably on the Series A Preferred
Shares and all other such parity shares in proportion
to the total amounts to which the holders of all such
shares are entitled upon such liquidation,
dissolution or winding up.
In the event the Corporation shall at any time declare or pay
any dividend on Common Shares payable in Common Shares, or
effect a subdivision or combination or consolidation of the
<PAGE>
outstanding Common Shares (by reclassification or otherwise
than by payment of a dividend in Common Shares) into a greater
or lesser number of Common Shares, then in each such case the
aggregate amount to which holders of Series A Preferred Shares
were entitled immediately prior to such event under the
proviso in clause (A) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the
numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is
the number of Common Shares that were outstanding immediately
prior to such event.
(g) Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the Common Shares
are exchanged for or changed into other shares or securities,
cash and/or any other property, then in any such case the
Series A Preferred Shares shall at the same time be similarly
exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 1,000
times the aggregate amount of shares, securities, cash and/or
any other property (payable in kind), as the case may be, into
which or for which each share of Common Shares is changed or
exchanged. In the event the Corporation shall at any time
declare or pay any dividend on Common Shares payable in Common
Shares, or effect a subdivision or combination or
consolidation of the outstanding Common Shares (by
reclassification or otherwise than by payment of a dividend in
Common Shares) into a greater or lesser number of Common
Shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of
Series A Preferred Shares shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number
of Common Shares outstanding immediately after such event and
the denominator of which is the number of Common Shares that
were outstanding immediately prior to such event.
(h) No Redemption. The Series A Preferred Shares
shall not be redeemable.
(i) Ranking. The Series A Preferred Shares shall be
junior to all other series of the Corporation's preferred
shares as to the payment of dividends and the distribution of
assets, except to the extent a series is made pari passu with
the Series A Preferred Shares.
<PAGE>
(j) Amendment. The Certificate of Incorporation of
the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special
rights of the Series A Preferred Shares so as to affect them
adversely without the affirmative vote of the holders of
two-thirds or more of the outstanding Series A Preferred
Shares voting together as a single class.
3. This amendment was adopted by the Board of Directors of the
Corporation without shareholder action and shareholder action was not required.
<PAGE>
Dated:____________________ SMITHFIELD FOODS VIRGINIA, INC.
-----------------------------------
By: Joseph W. Luter, III
Title: Chairman of the Board, Chief
Executive Officer
COMMONWEALTH OF VIRGINIA:
__________ OF _______________:
The undersigned Notary Public in and for the jurisdiction aforesaid
hereby certifies that Joseph W. Luter, Chairman of the Board and Chief Executive
Officer of Smithfield Foods Virginia, Inc., signed the foregoing Articles of
Amendment, dated as of August 28, 1997, and acknowledged the same before me.
Given under my hand this _____ day of _____________, 1997.
My commission expires ____________________.
---------------------------------
Notary Public
[SEAL]
Exhibit 3
BY-LAWS
of
SMITHFIELD FOODS, INC.
JULY 25, 1997
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meeting. A meeting of stockholders of the corporation
shall be held annually either at the principal office of the company in the
State of Virginia, or at such other place within or without the State of
Virginia, as may be designated from time to time by the Board of Directors and
stated in the notice of the meeting. The time and place of the meeting shall be
fixed from time to time by the Board of Directors and if no such time and place
be so fixed, the annual meeting shall be held at two o'clock in the afternoon on
the first Wednesday in June of each year for the purpose of electing Directors
and for the transaction of such other business as may be brought before the
meeting.
Written notice of the annual meeting shall be mailed at least ten nor
more than sixty days prior to the meeting to each stockholder of record at his
address as the same appears on the record of shareholders of the company.
Section 2. Special Meetings. Special meetings of the stockholders of
the corporation may be held either at the principal office of the corporation in
<PAGE>
the State of Virginia, or at such other place within or without the State of
Virginia, as may be designated from time to time by the Board of Directors and
stated in the notice of the meeting, and may be called by the Board of Directors
of the corporation, by the Executive Committee of such Board, by the President
or by the Chairman of the Board.
Written notice of each special meeting, stating the day, hour and place
thereof, and the general terms of the business to be transacted thereat, shall
be mailed at least ten and no more than sixty days prior to the meeting to each
stockholder of record at his address as the same appears in the record of
shareholders of the corporation.
Section 3. Quorum. At any meeting of the stockholders, the holders of a
majority of the issued and outstanding stock of the corporation entitled to vote
thereat, present in person or represented by proxy, shall constitute a quorum
for the transaction of business. If there be less than a quorum, the holders of
a majority of the stock present or represented may adjourn the meeting from time
to time.
Section 4. Voting. At any meeting of the stockholders every owner of
shares entitled to vote may vote, in person or by proxy, and shall have one vote
for each such share standing in his name on the transfer books of the
corporation as of the record date. At all elections of directors the voting
shall be by ballot, and the Board of Directors or, if the Board shall not have
acted, the Chairman presiding at any meeting of stockholders, shall have power
to appoint two or more persons to act as election inspectors to receive,
<PAGE>
canvass, and report the votes cast for such purpose by the stockholders at such
meeting; however, no candidate for the office of director shall be appointed as
inspector at any meeting for the election of directors.
Section 5. Presiding Officer. The President, or in his absence, the
Executive Vice President or other officer of the corporation shall preside at
all meetings of the stockholders, unless the Board of Directors appoints another
stockholder who accepts the appointment to act as Chairman of the meeting.
Section 6. Secretarial Officer. The Secretary of the corporation
shall act as secretary of all meetings of the stockholders unless the Chairman
appoints another stockholder who accepts the appointment to act as secretary of
the meeting.
ARTICLE II
DIRECTORS
Section 1. Function. The property, business, and affairs of the
corporation shall be managed and controlled by its Board of Directors.
Section 2. Number, Term and Qualification. The Board of Directors shall
consist of no less than three (3) nor more than seventeen (17) members, the
precise number to be determined from time to time by the affirmative vote of not
less than a majority of the directors at a meeting where a quorum is present.
Each director shall hold office until his death, resignation, retirement,
removal, disqualification or until his successor is elected and qualified.
<PAGE>
Directors need not be residents of the State of Delaware or shareholders of the
corporation. No individual shall be named or elected as a director without his
prior written or oral approval. A stockholder entitled to vote in the election
of directors may nominate one or more persons for election as a director at an
annual or special meeting of stockholders only if written notice of such
stockholder's intent to make such nomination has been given, either by personal
delivery to the Secretary of the corporation not later than the close of
business on the tenth day following the date on which notice of such meeting is
first mailed to stockholders or by United States mail, postage prepaid, to the
Secretary of the corporation postmarked not later than the tenth day following
the date on which notice of such meeting is first mailed to stockholders. Each
notice required by this section shall set forth: (1) the name and address of the
stockholder who intends to make the nomination; (2) the name, address and
principal occupation of each proposed nominee; (3) a representation that the
stockholder is entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to nominate the person or persons specified in the
notice; and (4) the consent of each proposed nominee to serve as a director of
the corporation if so elected. The Chairman of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
<PAGE>
Section 3. Vacancies. Whenever a vacancy occurs on the Board of
Directors, by reason of death, resignation, retirement, removal,
disqualification, increase in the number of directors or otherwise, it may be
filled by a majority of the remaining directors, though less than a quorum,
until the next Annual Meeting of the stockholders.
Section 4. Meetings of the Board. The organizational meeting of the
Board of Directors shall be held in each year after the adjournment of the
annual stockholders' meeting and on the same day. If a quorum of directors be
not present on the day appointed for the organizational meeting, the meeting
shall be adjourned to some convenient day. No notice need be given of the
organizational meeting of the Board.
Meetings of the Board of Directors shall be held at such place within
or outside the State of Virginia as may from time to time be fixed by resolution
of the Board or as may be specified in the call of any meeting. Regular meetings
of the Board of Directors shall be held at such times as may from time to time
be fixed by resolution of the Board, and no notice need be given of such regular
meetings. Special meetings of the Board may be held at any time upon the call of
the President or the Chairman of the Board or not less than one-third of the
directors then in office by oral, telegraphic or written notice, duly served on
or sent or mailed to each director not less than three days before such meeting.
Special meetings may be held without notice if all the directors are present or
if those not present waive notice of the meeting in writing, either before or
after the meeting.
<PAGE>
Section 5. Quorum. At meetings of the Board of Directors, the Chairman
of the Board, the President or a designated Vice President shall preside. A
majority of the members of the Board of Directors shall constitute a quorum for
the transaction of business, but less than a quorum may adjourn any meeting from
time to time until a quorum shall be present, whereupon the meeting may be held,
and adjourned, without further notice. The act of a majority of directors
present at a meeting where a quorum is present shall be the act of the Board of
Directors.
Section 6. Action Without a Meeting. Any action of the Board of
Directors may be taken without a meeting if written consent to the action to be
taken signed by all the members of the Board is filed in the Minute Book of the
Corporation prior to the taking of such action.
Section 7. Compensation. In addition to reimbursement of his reasonable
expenses incurred in attending meetings or otherwise in connection with his
attention to the affairs of the corporation, each director as such, and as a
member of the Executive Committee or of any other committee of the Board, shall
be entitled to receive such remuneration as may be fixed from time to time by
the Board of Directors, in the form of either fees for attendance at meetings of
the Board and committees thereof, or of payment at the rate of a fixed sum per
month, or a combination of both methods of payment; but no director who receives
a salary as an officer of the corporation shall receive any additional
remuneration as a director or member of any committee of the Board.
<PAGE>
ARTICLE III
COMMITTEES
Section 1. Executive Committee; Other Committees. The Board of
Directors may, by resolution adopted by a vote of a majority of the directors,
designate three (3) or more of their number, including in each case, the
President, as an Executive Committee. While the Board of Directors is not in
session, the Executive Committee, if there then be such a committee, shall have
and may exercise the authority of the Board of Directors in the management of
the business and affairs of the corporation other than those of corporate policy
and subject to the other restrictions hereinafter set out and further subject to
such limitations as the Board may from time to time impose. In no event shall
the Executive Committee or any other committee have the authority to (i) approve
or recommend to shareholders action that requires the approval of the
shareholders; (ii) fill vacancies on the board or on any of its committees;
(iii) amend the Articles of Incorporation; (iv) adopt, amend or repeal these
Bylaws; (v) approve a plan of merger consolidation; (vi) authorize or approve a
distribution, except according to a general formula or method prescribed by the
board of directors; or, (vii) elect officers or fix their compensation. The
Executive Committee shall have the power to authorize the seal of the
corporation to be affixed to all papers which may require it.
<PAGE>
In addition to an Executive Committee, the Board of Directors may, by
resolution of a majority of the directors present at any meeting at which a
quorum is present, designate other committees of limited authority, each such
committee to consist of three (3) or more directors.
Unless the Board of Directors by resolution otherwise provide, the
Executive Committee and each other committee shall choose its own chairman and
secretary. The Executive Committee and each other committee shall record all its
acts and proceedings and report the same from time to time to the Board of
Directors.
Regular meetings of any such committee, of which no notice shall be
necessary, may be held at such time and in such place as shall be fixed by a
majority of the committee. Special meetings of any such committee may be called
at the request of any member of any such committee. Notice of each special
meeting of such a committee shall be given by the person calling the same as
provided by these By-Laws for special meetings of the full Board. Notice of any
such meetings may be waived as provided by these By-Laws in the case of meetings
of the full Board.
A majority of any such committee shall constitute a quorum for the
transaction of business, and the act of a majority of those present at any
meeting at which a quorum is present shall be the act of the committee. Members
of any such committee shall only act as a committee and the individual members
shall have no power as such.
<PAGE>
The Board of Directors shall have the power at any time to change the
members of, fill vacancies in, and discharge any such committee, either with or
without cause. The appointment of any director to any such committee, if not
sooner terminated, shall automatically terminate upon the expiration of his term
as a director or upon the earlier cessation of his membership on the Board of
Directors.
Section 2. Records. All actions by any committee shall be reported to
the Board of Directors at a meeting succeeding such action and recorded as a
part of the minutes of said meeting. All such actions shall be subject to
revision, alteration, and approval by the Board of Directors; provided that no
rights or acts of third parties shall be affected by such revision or
alteration.
ARTICLE IV
OFFICERS
Section 1. Election. The Board of Directors may elect from its own
number a Chairman of the Board and shall elect from its own number a President
of the corporation. In addition, the Board shall elect a Treasurer and a
Secretary, and may elect an Executive Vice President and one or more Vice
Presidents and such other officers or assistant officers as in its opinion are
desirable for the conduct of the business of the corporation.
<PAGE>
Section 2. Removal. Any officer of the corporation shall be subject to
removal at any time by affirmative vote of a majority of the whole Board of
Directors. Any agent, or employee, other than officers appointed by the Board of
Directors, shall hold office at the discretion of the officer appointing them.
In its discretion, the Board of Directors may leave any office unfilled,
excepting the office of President, Treasurer, and Secretary, which shall be
filled in the event of vacancy as soon as practicable.
Section 3. Chairman of the Board. The Chairman of the Board of
Directors, if elected, or failing his election, the President, shall preside at
all meetings of the Board of Directors and shall perform such other duties as
may be prescribed from time to time by the Board of Directors.
Section 4. President. The President shall be the chief executive and
administrative officer of the corporation. He shall preside at all meetings of
the stockholders and, in the absence of the Chairman of the Board, if any, at
meetings of the Board of Directors. He shall exercise such duties as customarily
pertain to the office of President and shall have general and active supervision
over the property, business, and affairs of the corporation and over its several
officers. He shall perform such other duties as may be prescribed from time to
time by the Board of Directors or by the By-Laws. He, or his designee, shall
have full power and authority on behalf of the corporation to attend and to vote
at any meeting of the stockholders of any corporation in which the corporation
<PAGE>
may hold stock, and may exercise on behalf of the corporation any and all of the
rights and powers incident to the ownership of such stock at any such meeting,
and shall have power and authority to execute and deliver proxies and consents
on behalf of the corporation in connection with the exercise by the corporation
of the rights and powers incident to the ownership of such stock. He may appoint
agents and employees, other than those elected by the Board of Directors. He may
sign, execute and deliver in the name of the corporation powers of attorney,
contracts, bonds, notes, corporate obligations and other documents. He may
perform personally and upon his own initiative any duties assigned to or
normally performed by any other officer pursuant to the By-Laws or act of the
Board of Directors.
Section 5. Executive Vice President. The Executive Vice President,
subject to the direction of the President, shall have such powers and pursuant
thereto may perform the duties of the President in his absence or disability.
The Executive Vice President shall perform such other duties as may be
prescribed from time to time.
Section 6. Vice Presidents. The Vice Presidents, subject to the
direction of the President, shall have such powers and perform such duties as
may be prescribed from time to time. In the absence or disability of the
President and the Executive Vice President, the Vice President designated by the
Board so to do shall perform the duties and exercise the powers of the
President.
<PAGE>
Section 7. Treasurer. The Treasurer, subject to the direction of the
President, shall have general responsibility for and custody of the books of
account and all funds and securities of the corporation and have general
supervision of the collection and disbursement of funds of the corporation. If
so required, he shall give bond for the faithful performance of his duties in
such sum and with such surety as shall be approved by the Board of Directors or
the President. He shall perform such other duties as may be prescribed from time
to time.
Section 8. Secretary. The Secretary, subject to the direction of the
President, shall have general responsibility for and custody of the minutes of
all meetings of the stockholders and of the Board of Directors and of all
committees appointed by the Board. He shall have general responsibility for and
custody of the corporate seal, the transfer books, and other records and
documents of the corporation not pertaining to the performance of duties vested
in other officers. He shall cause notice to be given of meetings of
stockholders, of the Board of Directors, and of all committees appointed by the
Board of Directors. He shall perform such other duties as may be prescribed from
time to time.
Section 9. Vacancies. In case any office shall become vacant, the Board
of Directors shall have power to fill such vacancies. In case of the absence or
disability of any officer, the Board of Directors or the President may delegate
the powers or duties of any officer to another officer or a director for the
time being.
<PAGE>
ARTICLE V
CAPITAL STOCK
Section 1. Form. Certificates for stock of the Corporation shall be in
such form as the Board of Directors may from time to time prescribe and shall be
signed by the President or a Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary. If certificates are signed
by a Transfer Agent, acting in behalf of the corporation, and a Registrar, the
signatures of the officers of the corporation may be facsimile. In case any
officer who signed, or whose facsimile signature has been used on any
certificate shall cease to be such officer for any reason before the certificate
has been delivered by the corporation, such certificate may nevertheless be
adopted by the corporation and issued and delivered as though the person who
signed it or whose facsimile signature has been used thereon had not ceased to
be such officer.
Section 2. Transfer Agents and Registrars. The Board of Directors shall
have power to appoint one or more Transfer Agents and Registrars for the
transfer and registration of certificates of stock of any class, and may require
that such stock certificates be countersigned and registered by one or more of
such Transfer Agents and Registrars.
<PAGE>
Section 3. Transfers. Shares of stock of the corporation shall be
transferable on the transfer books of the corporation only by the holder of
record thereof in person or by duly authorized attorney, upon surrender and
cancellation of certificates for a like number of shares.
Section 4. Transfer Books. The Board of Directors may fix in advance a
date not less than ten nor more than sixty days preceding the date of any
meeting of stockholders, or the date for the payment of any dividend or the date
of allotment of rights of the date when any change or conversion or exchange of
stock shall go into effect, as a record date for the determination of the
shareholders entitled to notice of and to vote at any such meeting, or entitled
to receive payment of any such dividends, or any such allotment of rights, or to
exercise the rights in respect to any such dividend, or allotment of rights, or
exercise such rights, as the case may be, notwithstanding any transfer of any
stock on the transfer books of the corporation after any such record date.
Section 5. Lost Certificates. In case any certificate for the stock of
the corporation shall be lost, stolen or destroyed, the corporation may require
such proof of the fact and such indemnity to be given to it and to its Transfer
Agent and Registrar, if any, as shall be deemed necessary or advisable by the
Board of Directors.
Section 6. Holder of Record. The Corporation shall be entitled to treat
the holder of record of any share or shares of stock as the holder thereof in
<PAGE>
fact, and shall not be bound to recognize any equitable or other claim to or
interest in such shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise specifically provided
by law.
Section 7. Inspection. The transfer books shall be open for at least
three business hours each business day for inspection by any judgment creditor
of the corporation or any person who shall have been for at least six (6) months
immediately preceding his demand a record holder of not less than one percent
(1%) of the outstanding shares of the corporation, or by any officer, director,
or any committee or person holding or authorized in writing by the holders of at
least five percent (5%) of all the outstanding shares of the corporation.
Persons so entitled to inspect the transfer books may make extracts therefrom.
This right of inspection shall not extend to any person who has used or proposes
to use the information so obtained otherwise than to protect his interest in the
corporation, or has within two (2) years sold or offered for sale any list of
stockholders of the corporation or any other corporation, or has aided or
abetted any person in procuring any stock list for any such purpose.
ARTICLE VI
MISCELLANEOUS
Section 1. Fiscal Year. The Board of Directors shall have power to fix
and to change the fiscal year of the corporation. Unless otherwise determined by
the Board, the corporation's fiscal year shall be the 52 or 53 week period which
ends on the Sunday nearest to April 30.
<PAGE>
Section 2. Waiver of Notice. Any notice required to be given under the
provisions of these By-Laws or otherwise may be waived before, at or after the
meeting by the stockholder, director, or officer to whom such notice is required
to be given.
Section 3. Seal. The corporate seal shall have the name of the
corporation and the word "seal" inscribed thereon, and may be engraved, printed,
impressed or drawn in facsimile upon any document where appropriate.
Section 4. Amendments. The Board of Directors shall have the power to
add any provisions or to alter or repeal any provision of these By-Laws by vote
of a majority of all of the directors present and voting at any duly constituted
meeting of the Board, if a statement of the proposed action shall have been
included in the notice or waiver of notice of such meeting of the Board. The
stockholders may take similar actions with respect to these By-Laws by the vote
of a majority of the stockholders present and voting at any duly constituted
meeting, if a statement of the proposed action shall have been included in the
notice or waiver of notice of such meeting of stockholders.
Section 5. Liability. No person shall be liable to the corporation for
loss or damage suffered by it on account of any action taken or omitted to be
taken by him in good faith as an officer of the corporation, or of any other
<PAGE>
corporation which he serves as an officer at the request of the corporation, if
such person (a) exercised and used the same degree of care and skill as a
prudent man would have exercised or used under the circumstances in the conduct
of his own affairs, or (b) took or omitted to take such action in reliance upon
advice of counsel for the corporation or upon statements made or information
furnished by officers or employees of the corporation which he had reasonable
grounds to believe. The liabilities of directors of the corporation for action
taken or omitted to be taken by them in their capacity as such shall be governed
by the relevant provisions of the Certificate of Incorporation of the
corporation, and to the extent consistent therewith, by these By-Laws. The
foregoing shall not be exclusive of other rights and defenses to which he may be
entitled as a matter of law.
Section 6. Indemnification and Advancement of Expenses. The corporation
shall indemnify, and shall make advance payment of litigation expenses to, in
each case to the fullest extent permitted by law, any person made, or threatened
to be made, a party to any pending, threatened or completed action, suit or
proceeding (whether civil, criminal, administrative, arbitrative or
investigative) by reason of the fact that he, his testator, or intestate is or
was a director, officer or employee of the corporation.
Exhibit 4
SMITHFIELD FOODS, INC.,
A VIRGINIA CORPORATION
AND
FIRST UNION NATIONAL BANK
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 1, 1997
------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
1. Certain Definitions......................................................................................1
2. Appointment of Rights Agent..............................................................................4
3. Issue of Right Certificates..............................................................................4
4. Form of Right Certificates...............................................................................5
5. Countersignature and Registration........................................................................6
6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates.......................6
7. Exercise of Rights; Purchase Price; Expiration Date of Rights............................................6
8. Cancellation and Destruction of Right Certificates.......................................................7
9. Availability of Preferred Shares.........................................................................7
10. Preferred Shares Record Date.............................................................................8
11. Adjustment of Purchase Price, Number of Shares or Number of Rights.......................................8
12. Certificate of Adjusted Purchase Price or Number of Shares..............................................13
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power....................................13
14. Fractional Rights and Fractional Shares.................................................................13
15. Rights of Action........................................................................................14
16. Agreement of Right Holders..............................................................................14
17. Right Certificate Holder Not Deemed a Shareholder.......................................................15
18. Concerning the Rights Agent.............................................................................15
19. Merger or Consolidation or Change of Name of Rights Agent...............................................15
20. Duties of Rights Agent..................................................................................16
21. Change of Rights Agent..................................................................................17
22. Issuance of New Right Certificates......................................................................18
23. Redemption..............................................................................................18
24. Exchange................................................................................................18
25. Notice of Certain Events................................................................................19
26. Notices.................................................................................................20
27. Supplements and Amendments..............................................................................20
28. Successors..............................................................................................20
29. Benefits of this Agreement..............................................................................20
30. Severability............................................................................................20
31. Governing Law...........................................................................................21
32. Counterparts............................................................................................21
33. Descriptive Headings....................................................................................21
</TABLE>
EXHIBITS
Exhibit A - Form of Right Certificate
Exhibit B - Summary of Rights to Purchase Preferred Shares
<PAGE>
RIGHTS AGREEMENT
This Rights Agreement (this "Agreement") dated as of September 1, 1997
is entered into between Smithfield Foods, Inc., a Virginia corporation (the
"Company"), and First Union National Bank, a national banking association, as
rights agent (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
of the Company outstanding on September 2, 1997, (the "Record Date"), each Right
representing the right to purchase one one-thousandth of a Preferred Share, upon
the terms and subject to the conditions herein set forth, and has further
authorized and directed the issuance of one Right with respect to each Common
Share that shall become outstanding between the Record Date and the earliest of
the Distribution Date, the Redemption Date and the Final Expiration Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the Common Shares of the Company then
outstanding, but shall not include the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any Subsidiary of the Company, or
any entity holding Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as
the result of an acquisition of Common Shares by the Company which, by reducing
the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 20% or more of the Common Shares of the
Company then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 20% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company and shall, after such
share purchases by the Company, become the Beneficial Owner of any additional
Common Shares of the Company, then such Person shall be deemed to be an
"Acquiring Person." Notwithstanding the foregoing, if the Board of Directors of
the Company determines in good faith that a Person who would otherwise be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of Common Shares so that such Person
would no longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement.
(b) "Affiliate" shall have the meaning ascribed to such term
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement.
(c) "Associate" shall have the meaning ascribed to such term
in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in
effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns,
directly or indirectly;
<PAGE>
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable
immediately or only after the passage of time)
pursuant to any agreement, arrangement or
understanding (other than customary agreements
with and between underwriters and selling group
members with respect to a bona fide public
offering of securities), or upon the exercise of
conversion rights, exchange rights, rights
(other than these Rights), warrants or options,
or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or
to beneficially own, securities tendered
pursuant to a tender or exchange offer made by
or on behalf of such Person or any of such
Person's Affiliates or Associates until such
tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to
any agreement, arrangement or understanding;
provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to
beneficially own, any security if the agreement,
arrangement or understanding to vote such
security (1) arises solely from a revocable
proxy or consent given to such Person in
response to a public proxy or consent
solicitation made pursuant to, and in accordance
with, the applicable rules and regulations
promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor
report); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such
Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or
understanding (other than customary agreements
with and between underwriters and selling group
members with respect to a bona fide public
offering of securities) for the purpose of
acquiring, holding, voting (except to the extent
contemplated by the proviso to Section
1(d)(ii)(B)) or disposing of any securities of
the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
(e) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in Norfolk, Virginia or
Charlotte, North Carolina are authorized or obligated by law or executive order
to close.
(f) "Close of Business" on any given date shall mean 5:00
P.M., Norfolk, Virginia time, on such date; provided, however, that, if such
date is not a Business Day, it shall mean 5:00 P.M., Norfolk, Virginia time, on
the next succeeding Business Day.
(g) "Common Shares" when used with reference to the Company
shall mean the shares of Common Stock, par value $.50 per share, of the Company.
"Common Shares" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting power
of such other Person or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.
(h) "Company" shall have the meaning set forth in the preamble
hereof.
<PAGE>
(i) "current per share market price" shall have the meaning
set forth in Section 11(d) hereof.
(j) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.
(k) "equivalent preferred shares" shall have the meaning set
forth in Section 11(b) hereof.
(l) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(m) "Exchange Ratio" shall have the meaning set forth in
Section 24(a) hereof.
(n) "Final Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(o) "NASDAQ" shall mean the National Association of Securities
Dealers, Inc. Automated Quotations System.
(p) "Person" shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger
or otherwise) of such entity.
(q) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, of $1.00 par value per
share, of the Company having the rights and preferences
set forth in the Articles of Amendment establishing such
series of preferred stock.
(r) "Purchase Price" shall have the meaning set forth in
Section 7(b) hereof.
(s) "Record Date" shall have the meaning set forth in the
second paragraph hereof.
(t) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.
(u) "Redemption Price" shall have the meaning set forth in
Section 23(a) hereof.
(v) "Rights Agent" shall have the meaning set forth in the
preamble hereof.
(w) "Right" shall have the meaning set forth in the second
paragraph hereof.
(x) "Right Certificate" shall have the meaning set forth in
Section 3(a) hereof.
(y) "Security" shall have the meaning set forth in Section
11(d) hereof.
(z) "Shares Acquisition Date" shall mean the first date of
public announcement by the Company or an Acquiring Person
that an Acquiring Person has become such.
(aa) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of
the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.
(bb) "Summary of Rights" shall have the meaning set forth in
Section 3(b) hereof.
(cc) "Trading Day" shall have the meaning set forth in Section
11(d) hereof.
<PAGE>
Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall, prior to the Distribution
Date, also be the holders of the Common Shares) in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issue of Right Certificates. (a) Until the earlier of (i)
the tenth day after the Shares Acquisition Date or (ii) the tenth business day
(or such later date as may be determined by action of the Board of Directors of
the Company prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company or any entity holding Common Shares for or pursuant to
the terms of any such plan) of, or of the first public announcement of the
intention of any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or of any Subsidiary of the Company or
any entity holding Common Shares for or pursuant to the terms of any such plan)
to commence, a tender or exchange offer the consummation of which would result
in any Person becoming the Beneficial Owner of Common Shares aggregating 20% or
more of the then outstanding Common Shares (the earlier of such dates being
herein referred to as the "Distribution Date"), (x) the Rights associated with
Common Shares for which share certificates have been issued will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates for
Common Shares registered in the names of the holders thereof (which certificates
shall also be deemed to be Right Certificates) and not by separate Right
Certificates, (y) the Rights associated with uncertificated Common Shares will
be evidenced (subject to the provisions of Section 3(b) hereof) by the
registration of the Common Shares in the Company's share register in the names
of the holders thereof (which registration shall also be deemed to be
registration of ownership of the associated Right) and not by separate Right
Certificates and (z) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares. As soon as
practicable after the Distribution Date, the Company will prepare and execute,
the Rights Agent will countersign, and the Company will send or cause to be sent
(and the Rights Agent will, if requested, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Shares as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially the form of
Exhibit A hereto (a "Right Certificate"), evidencing one Right for each share of
Common Shares so held. As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred
Shares, in substantially the form of Exhibit B hereto (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights attached thereto. With respect to
uncertificated Common Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by the registration of the
Common Shares in the Company's share register in the names of the holders
thereof. Until the Distribution Date (or the earlier of the Redemption Date or
the Final Expiration Date), the transfer of any Common Shares outstanding on the
Record Date, including in the case of Common Shares represented by certificates
the surrender for transfer of any such certificate with or without a copy of the
Summary of Rights attached thereto, shall also constitute the transfer of the
Rights associated with such Common Shares.
(c) Certificates for Common Shares which become outstanding,
or initial transaction or subsequent periodic statements issued with respect to
uncertificated Common Shares (whether upon issuance out of authorized but
unissued Common Shares, issuance out of treasury, or issuance upon transfer or
exchange of outstanding Common Shares) after the Record Date but prior to the
earliest of the Distribution
<PAGE>
Date, the Redemption Date or the Final Expiration Date shall have impressed on,
printed on, written on or otherwise affixed to them, in the case of share
certificates, the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Smithfield
Foods, Inc. and First Union National Bank, dated as of September 1,
1997 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of Smithfield Foods, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced
by this certificate. Smithfield Foods, Inc. will mail to the holder of
this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances, as
set forth in the Rights Agreement, Rights issued to any Person who
becomes an Acquiring Person (as defined in the Rights Agreement) will
become null and void.
and in the case of initial transaction or subsequent periodic statements with
respect to uncertificated Common Shares, the following legend:
The registration in the share register of Smithfield Foods, Inc. of the
shares of common stock to which this initial transaction statement
relates also evidences and entitles the registered holder of such
shares to certain rights as set forth in a Rights Agreement between
Smithfield Foods, Inc. and First Union National Bank, dated as of
September 1, 1997 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of Smithfield Foods, Inc. Under
certain circumstances, as set forth in the Rights Agreement, such
Rights will be evidenced by separate certificates and will no longer be
evidenced by this certificate. Smithfield Foods, Inc. will mail to the
holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. Under certain
circumstances, as set forth in the Rights Agreement, Rights issued to
any Person who becomes an Acquiring Person (as defined in the Rights
Agreement) will become null and void.
With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
With respect to such initial transaction or subsequent periodic statements
containing the foregoing legend, until the Distribution Date, the Rights
associated with the Common Shares with respect to which such statements are
issued shall be evidenced solely by the registration of ownership of such Common
Shares in the share register of the Company, and the registration of transfer of
ownership in such share register shall also constitute the transfer of the
Rights associated with the Common Shares whose ownership is so transferred. In
the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights associated with the Common Shares which are
no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit A hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or automated
quotation system on which the Rights may from time to time be listed or quoted,
or to conform to usage. Subject to the provisions of Section 22 hereof, the
Right Certificates shall entitle the holders thereof to purchase such number of
one one-thousandths of a Preferred Share as shall be set forth therein at the
price
<PAGE>
per one one-thousandth of a Preferred Share set forth therein, but the number of
such one one-thousandths of a Preferred Share and the Purchase Price shall be
subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. In
case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the Person who signed such Right Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by any Person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate although at the date of the execution of this Rights Agreement any
such Person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates. Subject to the provisions of Section 14 hereof, at
any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earlier of the Redemption Date
or the Final Expiration Date, any Right Certificate or Right
Certificates (other than Right Certificates representing Rights that
have become void pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right
Certificates entitling the registered holder to purchase a like number
of one one-thousandths of a Preferred Share as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase.
Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent, and shall surrender
the Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the principal office of the Rights Agent.
Thereupon the Rights Agent shall countersign and deliver to the Person
entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer, split up, combination or exchange of
Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein), in whole or in
part, at any time after the Distribution Date, upon surrender of the Right
Certificate,
<PAGE>
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the principal office of the Rights Agent, together with
payment of the Purchase Price for each one one-thousandth of a Preferred Share
as to which the Rights are exercised, at or prior to the earliest of (i) the
Close of Business on May 31, 2001 (the "Final Expiration Date"), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date") or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.
(b) The Purchase Price for each one one-thousandth of a
Preferred Share purchasable pursuant to the exercise of a Right shall initially
be $37.50, and shall be subject to adjustment from time to time as provided in
Section 11 or 13 hereof (the "Purchase Price") and shall be payable in lawful
money of the United States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly executed,
accompanied by payment of the Purchase Price for the shares to be purchased and
an amount equal to any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 hereof by certified
check, cashier's check or money order payable to the order of the Company, the
Rights Agent shall thereupon promptly (i) (A) requisition from any transfer
agent of the Preferred Shares certificates for the number of Preferred Shares to
be purchased and the Company hereby irrevocably authorizes any such transfer
agent to comply with all such requests, or (B) requisition from the depositary
agent depositary receipts representing such number of one one-thousandths of a
Preferred Share as are to be purchased (in which case certificates for the
Preferred Shares represented by such receipts shall be deposited by the transfer
agent of the Preferred Shares with such depositary agent) and the Company hereby
directs such depositary agent to comply with such request; (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof; (iii)
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder; and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 14 hereof.
Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Right Certificates to the Company, or shall, at the written request of
the Company, destroy such cancelled Right Certificates, and, in such case, shall
deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Preferred Shares. The Company covenants and
agrees that it will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise in full of all outstanding Rights in accordance with Section 7. The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Preferred Shares delivered upon exercise of Rights
shall,
<PAGE>
at the time of delivery of the certificates for such Preferred Shares (subject
to payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction that no
such tax is due.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Shares transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the
date of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in
the event any Person becomes an Acquiring Person, each holder of a Right shall
thereafter have a right to receive, upon exercise thereof at a price equal to
the then current Purchase Price multiplied by the number of one one-thousandths
of a Preferred Share for which a Right is then exercisable, in accordance with
the terms of this Agreement and in
<PAGE>
lieu of Preferred Shares, such number of Common Shares of the Company as shall
equal the result obtained by (A) multiplying the then current Purchase Price by
the number of one one-thousandths of a Preferred Share for which a Right is then
exercisable and dividing that product by (B) 50% of the then current per share
market price of the Company's Common Shares (determined pursuant to Section
11(d) hereof) on the date of the occurrence of such event. In the event that any
Person shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which would eliminate or
diminish the benefits intended to be afforded by the Rights.
From and after the occurrence of such event, any Rights that are or
were acquired or beneficially owned by any Acquiring Person (or any Associate or
Affiliate of such Acquiring Person) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
this Agreement. No Right Certificate shall be issued pursuant to Section 3 that
represents Rights beneficially owned by an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to the preceding sentence shall be cancelled.
(iii) In the event that there shall not be
sufficient Common Shares authorized but unissued to permit the exercise in full
of the Rights in accordance with the foregoing subparagraph (ii), the Company
shall take all such action as may be necessary to authorize additional Common
Shares for issuance upon exercise of the Rights. In the event the Company shall,
after good faith effort, be unable to take all such action as may be necessary
to authorize such additional Common Shares, the Company shall substitute, for
each Common Share that would otherwise be issuable upon exercise of a Right, a
number of Preferred Shares or fraction thereof such that the current per share
market price of one Preferred Share multiplied by such number or fraction is
equal to the current per share market price of one Common Share as of the date
of issuance of such Preferred Shares or fraction thereof.
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares on such record date,
the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
<PAGE>
record date is fixed; and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making
of a distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent) of the portion of the assets or evidences
of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security" for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive Trading
Days immediately prior to such date; provided, however, that in the event that
the current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in each such
case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case, as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use, or, if on any
such date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors of the
Company. The term "Trading Day" shall mean a day on which the principal national
securities exchange or automated quotation system on which the Security is
listed or admitted to trading or quoted is open for the transaction of business
or, if the Security is not listed or admitted to trading on any national
securities exchange or quoted on any automated quotation system, a Business Day.
(ii) For the purpose of any computation hereunder,
the "current per share market price" of the Preferred Shares shall be determined
in accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares
<PAGE>
shall be conclusively deemed to be the current per share market price of the
Common Shares as determined pursuant to Section 11(d)(i) (appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof), multiplied by one thousand. If neither the Common Shares
nor the Preferred Shares are publicly held or so listed or traded, "current per
share market price" shall mean the fair value per share as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent.
(e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one one-millionth
of a Preferred Share or one ten-thousandth of any other share or security as the
case may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If, as a result of an adjustment made pursuant to Section
11(a) hereof, the holder of any Right thereafter exercised shall become entitled
to receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Preferred Shares contained in Section 11(a) through (c), inclusive, and the
provisions of Sections 7, 9, 10 and 13 with respect to the Preferred Shares
shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to
any adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as
provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a Preferred Share (calculated to the nearest one
one-millionth of a Preferred Share) obtained by (A) multiplying (x) the number
of one one- thousandths of a share covered by a Right immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (B) dividing the product so obtained by the
Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights in substitution
for any adjustment in the number of one one-thousandths of a Preferred Share
purchasable upon the exercise of a Right. Each of the Rights outstanding after
such adjustment of the number of Rights shall be exercisable for the number of
one one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section
<PAGE>
11(i), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandths of a Preferred Share issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-thousandths of a Preferred Share which were expressed in the initial Right
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below one one-thousandth of the then par value, if
any, of the Preferred Shares issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it, in its sole discretion, shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Shares, issuance wholly for cash of any Preferred Shares at less than
the current market price, issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred Shares or
issuance of rights, options or warrants referred to hereinabove in Section
11(b), hereafter made by the Company to holders of its Preferred Shares shall
not be taxable to such shareholders.
(n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
number of one one-thousandths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-thousandths of a Preferred Share so purchasable immediately prior to
such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the
number of Common Shares outstanding immediately after such event, and (B) each
Common Share outstanding immediately after such event shall have issued with
respect to it that number of Rights which each Common Share outstanding
immediately prior to such event had issued
<PAGE>
with respect to it. The adjustments provided for in this Section 11(n) shall be
made successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. In the event, directly or indirectly, at any time after a Person
has become an Acquiring Person, (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly-owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that (i) each holder of a Right (except as otherwise provided herein) shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the then current Purchase Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Agreement and in lieu of Preferred Shares,
such number of Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price of
the Common Shares of such other Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer; (ii) the issuer of such Common Shares shall thereafter be liable for,
and shall assume, by virtue of such consolidation, merger, sale or transfer, all
the obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company" shall thereafter be deemed to refer to such issuer; and (iv) such
issuer shall take such steps (including, but not limited to, the reservation of
a sufficient number of its Common Shares in accordance with Section 9 hereof) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the exercise of
the Rights. The Company shall not consummate any such consolidation, merger,
sale or transfer unless prior thereto the Company and such issuer shall have
executed and delivered to the Rights Agent a supplemental agreement so
providing. The Company shall not enter into any transaction of the kind referred
to in this Section 13 if at the time of such transaction there are any rights,
warrants, instruments or securities outstanding or any agreements or
arrangements which, as a result of the consummation of such transaction, would
eliminate or substantially diminish the benefits intended to be afforded by the
Rights. The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Right Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the current market value of a whole
Right. For the purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price for any day shall be the
<PAGE>
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case, as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of
Preferred Shares (other than fractions which are integral multiples of one
one-thousandth of a Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share). Fractions of Preferred Shares in integral multiples of one
one-thousandth of a Preferred Share may, at the election of the Company, be
evidenced by depositary receipts, pursuant to an appropriate agreement between
the Company and a depositary selected by it; provided that such agreement shall
provide that the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners of
the Preferred Shares represented by such depositary receipts. In lieu of
fractional Preferred Shares that are not integral multiples of one
one-thousandth of a Preferred Share, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one Preferred Share. For the purposes of this Section 14(b), the
current market value of a Preferred Share shall be the closing price of a
Preferred Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
<PAGE>
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the
Person in whose name the Right Certificate (or, prior to the Distribution Date,
the associated Common Shares certificate, in the case of certificated Common
Shares, or, in the case of uncertificated Common Shares, the associated Common
Shares reflected on the Company's share register) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Right Certificates or, in the case of
certificated Common Shares, the associated Common Shares certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any notice to
the contrary.
Section 17. Right Certificate Holder Not Deemed a Shareholder. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust powers of the Rights Agent or any successor Rights Agent, shall
be the successor to the Rights Agent under this Agreement without the execution
or filing of any paper or any further fact on the part of any of the parties
hereto; provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent
<PAGE>
and deliver such Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the name of the
predecessor Rights Agent or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company
and any other Person only for its own negligence, bad faith or willful
misconduct.
(d) The Rights Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 11(a)(ii) hereof) or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Section 3, 11, 13, 23 or 24, or the ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right Certificates after actual
notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant to
this Agreement or any Right Certificate or as to whether any Preferred Shares
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
<PAGE>
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Secretary or the Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in
the selection and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares or Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the Commonwealth of Virginia or of the state of North Carolina (or of any
other state of the United States so long as such corporation is authorized to do
business as a banking institution in the Commonwealth of Virginia or in the
state of North Carolina), in good standing, having an office in the Commonwealth
of Virginia, the state of North Carolina or the state of New York, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $50 million. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor
<PAGE>
Rights Agent and each transfer agent of the Common Shares or Preferred Shares,
and mail a notice thereof in writing to the registered holders of the Right
Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Rights Agent or the appointment of the successor
Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company may,
at its option, at any time prior to such time as any Person becomes an Acquiring
Person, redeem all but not less than all the then outstanding Rights at a
redemption price of $.0001 per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights by the Board of Directors of the Company
may be made effective at such time, on such basis and with such conditions as
the Board of Directors of the Company, in its sole discretion, may establish.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to paragraph (a) of
this Section 23, and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of Directors
of the Company ordering the redemption of the Rights, the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Shares. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof, and other than in connection with the purchase of Common
Shares prior to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may, at
its option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section 3(a)
or Section 11(a)(ii) hereof) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "Exchange Ratio"). Notwithstanding
the foregoing, the Board of Directors of the Company shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any entity holding Common Shares for or pursuant to the terms of
any such plan), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to paragraph (a) of
this Section 24 and without any further action and without any notice, the right
to exercise such Rights shall terminate and the only right thereafter of a
holder of such Rights shall be to receive that number of Common Shares equal to
the number of such Rights held
<PAGE>
by such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 3(a) or Section
11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common
Shares authorized but unissued to permit any exchange of Rights as contemplated
in accordance with this Section 24, the Company shall take all such action as
may be necessary to authorize additional Common Shares for issuance upon
exchange of the Rights. In the event the Company shall, after good faith effort,
be unable to take all such action as may be necessary to authorize such
additional Common Shares, the Company shall substitute, for each Common Share
that would otherwise be issuable upon exchange of a Right, a number of Preferred
Shares or fraction thereof such that the current per share market price of one
Preferred Share multiplied by such number or fraction is equal to the current
per share market price of one Common Share as of the date of issuance of such
Preferred Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Common Share. For the
purposes of this paragraph (d), the current market value of a whole Common Share
shall be the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Shares or to make any other distribution to the holders of its
Preferred Shares (other than a regular quarterly cash dividend), (ii) to offer
to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or Preferred Shares, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Preferred Shares for purposes of such action, and
in the case of any such other action, at least 10 days prior to the date of the
taking of such proposed action
<PAGE>
or the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof
shall occur, then the Company shall as soon as practicable thereafter give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such event
and the consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right Certificate
to or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Smithfield Foods, Inc.
999 Waterside Drive, Suite 900
Norfolk, Virginia 23510
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
First Union National Bank
Corporate Trust Client Services
1525 West W. T. Harris Blvd., 3C3
Charlotte, North Carolina 28288-1153
Attention: Victor W. LaTessa, Vice President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Company may from time to
time supplement or amend this Agreement without the approval of any holders of
Right Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions herein, or to make any other provisions with respect to the Rights
which the Company may deem necessary or desirable, any such supplement or
amendment to be evidenced by a writing signed by the Company and the Rights
Agent; provided, however, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended in any manner which would
adversely affect the interests of the holders of Rights.
Section 28. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of Common Shares) any legal or equitable right,
<PAGE>
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
Commonwealth of Virginia and for all purposes shall be governed by and construed
in accordance with the laws of Commonwealth of Virginia applicable to contracts
to be made and performed entirely within such Commonwealth.
Section 32. Counterparts. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
FIRST UNION NATIONAL BANK
By: /s/ Victor W. LaTessa
---------------------
Name: Victor W. LaTessa
Title: Vice President
ATTEST: SMITHFIELD FOODS, INC.
By: /s/ Aaron D. Trub By: /s/ Joseph W. Luter, III
----------------------------- -------------------------------
Name: Aaron D. Trub Name: Joseph W. Luter, III
Title: Vice President, Treasurer and Title: Chairman of the Board and Chief
Secretary Executive Officer
<PAGE>
Exhibit A
Form of Right Certificate
Certificate No. R-
_______ Rights
NOT EXERCISABLE AFTER MAY 31, 2001 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.0001 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
SMITHFIELD FOODS, INC.
This certifies that _________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of September 1, 1997 (the "Rights Agreement"), between
Smithfield Foods, Inc., a Virginia corporation (the "Company"), and First Union
National Bank (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., Richmond, Virginia time, on May 31, 2001 at the
principal office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-thousandth of a fully paid non-assessable share of Series
A Junior Participating Preferred Stock, $1.00 par value per share, of the
Company, (the "Preferred Shares") at a purchase price of $37.50 (subject to
adjustment as provided in the Rights Agreement) per one one-thousandth of a
Preferred Share (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one
one-thousandths of a Preferred Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of September 2, 1997, based on the Preferred Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of one one-thousandths of a Preferred Share which may be
purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Right Certificate (i) may be redeemed by the Company at a redemption
price of $.0001 per Right or (ii) may be exchanged
<PAGE>
in whole or in part for Preferred Shares or shares of the Company's Common
Stock, par value $0.50 per share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but, in lieu thereof, a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ______, ____.
FIRST UNION NATIONAL BANK
By: _______________________________
Name:
Title:
ATTEST: SMITHFIELD FOODS, INC.
By: ______________________________ By: _______________________________
Name: Name:
Title: Title:
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED, _____________________________ hereby sells,
assigns and transfers unto __________________________________ (Please print name
and address of transferee) this Right Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
_______________________________ Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: _____________________ , ______
Signature
________________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
________________________________
--------------------------------
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by
the Right Certificate.)
To: Smithfield Foods, Inc.
The undersigned hereby irrevocably elects to exercise______Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: __________________, _______
Signature
____________________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
--------------------------------------------------------
<PAGE>
Form of Reverse Side of Right Certificate -- continued
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
____________________________________
--------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
<PAGE>
Exhibit B
Summary of Rights to Purchase Preferred Shares
On August 28, 1997, the Board of Directors of Smithfield Foods, Inc., a
Virginia corporation (the "Company"), declared a dividend of one preferred share
purchase right (a "Right") for each outstanding share of Common Stock, par value
$0.50 per share, of the Company (the "Common Shares"). The dividend is payable
on September 2, 1997 (the "Record Date") to the shareholders of record on that
date. Each Right entitles the registered holder to purchase from the Company one
one-thousandth of a Series A Junior Participating Preferred Share of the
Company, $1.00 par value per share (the "Preferred Shares") at a price of $37.50
(subject to adjustment as provided in the Rights Agreement) per one
one-thousandth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The Purchase Price of $37.50 takes into account the already-declared
one-for-one Common Shares dividend which the Board of Directors declared on
August 28, 1997, payable on or about September 26, 1997, to holders of record of
the Common Shares on September 12, 1997. The description and terms of the Rights
are set forth in a Rights Agreement (the "Rights Agreement") between the Company
and First Union National Bank, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 20% or more of the
outstanding Common Shares or (ii) 10 business days (or such later date as may be
determined by action of the Board of Directors of the Company prior to such time
as any person or group of affiliated persons becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 20% or more of the outstanding Common Shares
(the earlier of such dates being the "Distribution Date"), the Rights will be
evidenced, with respect to any of the Common Shares outstanding as of the Record
Date, by such Common Share certificate with a copy of this Summary of Rights
attached thereto, in the case of Common Shares for which certificates have been
issued, and, in the case of uncertificated Common Shares, by the registration of
ownership of Common Shares in the Company's share register.
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares. Until the Distribution Date (or earlier
redemption or expiration of the Rights), upon transfer or new issuance of Common
Shares, new Common Share certificates issued after the Record Date, in the case
of certificated Common shares, and, in the case of uncertificated Common Shares,
the initial transaction statement issued with respect to such Common Shares,
will contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights), the
transfer of any Common Shares outstanding as of the Record Date, including in
the case of certificated Common Shares surrender for transfer of any
certificates therefor even without such notation or a copy of this Summary of
Rights being attached thereto, will also constitute the transfer of the Rights
associated with such Common Shares. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Company's Common
Shares as of the close of business on the Distribution Date and such separate
Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on May 31, 2001 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
<PAGE>
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares; (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then-current market price of the Preferred Shares; or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date (other than the already-declared stock dividend
referred to in the first paragraph above).
Preferred Shares purchasable upon exercise of the Rights will be
nonredeemable. Each Preferred Share will have a minimum preferential quarterly
dividend rate of $1.00 per share, but will be entitled to an aggregate dividend
of 1,000 times the dividend declared on the Common Shares. In the event of
liquidation, the holders of the Preferred Shares will receive a preferential
liquidation payment equal to the greater of $37,500 or 1,000 times the payment
made per Common Share. Each Preferred Share will have 1,000 votes, voting
together with the Common Shares. Finally, in the event of any merger,
consolidation or other transaction in which Common Shares are exchanged, each
Preferred Share will be entitled to receive 1,000 times the amount received per
Common Share. These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of a one one-thousandth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or group of affiliated
or associated persons becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the right
to receive upon exercise that number of Common Shares having a market value of
two times the exercise price of the Right.
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Common Share, or
one one-thousandth of a Preferred Share (or of a share of a class or series of
the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-thousandth of a Preferred
<PAGE>
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
At any time prior to the acquisition by a person or group of affiliated
or associated persons of beneficial ownership of 20% or more of the outstanding
Common Shares, the Board of Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.0001 per Right (the "Redemption Price").
The redemption of the Rights may be made effective at such time on such basis
with such conditions as the Board of Directors in its sole discretion may
establish. Immediately upon any redemption of the Rights, the right to exercise
the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from and
after such time as any person or group of affiliated or associated persons
becomes an Acquiring Person no such amendment may adversely affect the interests
of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated
September 2, 1997. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
* * * * * *
Exhibit 5
Form of Right Certificate
Certificate No. R-
_______ Rights
NOT EXERCISABLE AFTER MAY 31, 2001 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.0001 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
SMITHFIELD FOODS, INC.
This certifies that _________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of September 1, 1997 (the "Rights Agreement"), between
Smithfield Foods, Inc., a Virginia corporation (the "Company"), and First Union
National Bank (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., Richmond, Virginia time, on May 31, 2001 at the
principal office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-thousandth of a fully paid non-assessable share of Series
A Junior Participating Preferred Stock, $1.00 par value per share, of the
Company, (the "Preferred Shares") at a purchase price of $37.50 (subject to
adjustment as provided in the Rights Agreement) per one one-thousandth of a
Preferred Share (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one
one-thousandths of a Preferred Share which may be purchased upon exercise
hereof) set forth above, and the Purchase Price set forth above, are the number
and Purchase Price as of September 2, 1997, based on the Preferred Shares as
constituted at such date. As provided in the Rights Agreement, the Purchase
Price and the number of one one-thousandths of a Preferred Share which may be
purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Right Certificate (i) may be redeemed by the Company at a redemption
price of $.0001 per Right or (ii) may be exchanged in whole or in part for
Preferred Shares or shares of the Company's Common Stock, par value $0.50 per
share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced
<PAGE>
hereby (other than fractions which are integral multiples of one one-thousandth
of a Preferred Share, which may, at the election of the Company, be evidenced by
depositary receipts), but, in lieu thereof, a cash payment will be made, as
provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of ______, ____.
FIRST UNION NATIONAL BANK
By: ___________________________
Name:
Title:
ATTEST: SMITHFIELD FOODS, INC.
By: ______________________________ By: ___________________________
Name: Name:
Title: Title:
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate.)
FOR VALUE RECEIVED,__________________________ hereby sells, assigns
and transfers unto ________________________________ (Please print name and
address of transferee) this Right Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
___________________________________ Attorney, to transfer the within Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: __________________,_________
Signature
__________________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
__________________________________
--------------------------------------------------------
<PAGE>
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights represented by
the Right Certificate.)
To: Smithfield Foods, Inc.
The undersigned hereby irrevocably elects to exercise______Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
(Please print name and address)
Dated: ___________________,_____
Signature
__________________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
--------------------------------------------------------
<PAGE>
Form of Reverse Side of Right Certificate -- continued
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
Signature
__________________________________
--------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
Exhibit 6
FORM OF STOCK CERTIFICATE
COMMON STOCK
A CORPORATION ORGANIZED UNDER THE LAWS
OF THE COMMONWEALTH OF VIRGINIA
Smithfield Foods, Inc.
CUSIP 832248 10 8
SHARES OF COMMON STOCK
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT IS THE OWNER
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF
SMITHFIELD FOODS, INC.
transferable only on the books of the Corporation by the holder hereof in person
or by duly authorized attorney, upon surrender of this certificate properly
endorsed. This certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Articles of Incorporation
of the Corporation to all of which the holder hereof by the acceptance of this
certificate assents. This certificate is not valid unless countersigned by the
Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
DATED: Countersigned:
First Union National Bank
(Charlotte, NC)
TRANSFER AGENT
BY AUTHORIZED SIGNATURE
SECRETARY CHAIRMAN AND CHIEF
EXECUTIVE OFFICER
<PAGE>
SMITHFIELD FOODS, INC.
----------
A full statement of the designations, preferences, limitations and
relative rights of the shares of each class of stock which the Corporation is
authorized to issue and the variations in the relative rights and preferences
between the shares of each series of Preferred Stock which the Corporation is
authorized to issue so far as the same have been fixed and determined and the
authority of the board of directors to fix and determine the relative rights and
preferences of subsequent series will be furnished the holder hereof without
charge upon request to the Secretary of the Corporation or to the Transfer Agent
named on the face hereof.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- . . Custodian . . .
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act . . . . . . . . . . . . .
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, _____________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- -------------------------------------------------------------------------------
________________________________________________________________shares of the
capital stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint _______________________________________________________
Attorney to transfer the said stock on the books of the within named Corporation
with full power of substitution in the premises.
Dated ____________________
----------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Smithfield
Foods, Inc. and First Union National Bank, dated as of September 1,
1997 (the "Rights Agreement"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of Smithfield Foods, Inc. Under certain
circumstances, as set forth in the Rights Agreement, such Rights will
be evidenced by separate certificates and will no longer be evidenced
by this certificate. Smithfield Foods, Inc. will mail to the holder of
this certificate a copy of the Rights Agreement without charge after
receipt of a written request therefor. Under certain circumstances, as
set forth in the Rights Agreement, Rights issued to any Person who
becomes an Acquiring Person (as defined in the Rights Agreement) may
become null and void.
SIGNATURE(S) GUARANTEED ______________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND
LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO S.E.C. RULE 17AD-15.
