SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended August 2, 1998
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from...............to............................
COMMISSION FILE NUMBER 0-2258
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
(757) 365-3000
Virginia 52-0845861
- ------------------- -----------------
(State of (I.R.S. Employer
Incorporation) Identification
Number)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
----- -----
Shares outstanding at
Class September 9, 1998
- -------------------------- ---------------------
Common Stock, $.50 par value 37,537,362
1-13
<PAGE>
SMITHFIELD FOODS, INC.
CONTENTS
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Condensed Balance Sheets - August 2, 1998 and May 3,
1998 3-4
Consolidated Condensed Statements of Operations - 13 Weeks Ended
August 2, 1998 and 13 Weeks Ended July 27, 1997 5
Consolidated Condensed Statements of Cash Flows - 13 Weeks Ended
August 2, 1998 and 13 Weeks Ended July 27, 1997 6
Notes to Consolidated Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 12
2-13
<PAGE>
PART I. FINANCIAL INFORMATION
SMITHFIELD FOODS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
( In thousands) August 2, 1998 May 3, 1998
-------------- -----------
ASSETS (Unaudited)
<S> <C>
Current assets:
Cash and cash equivalents $ 37,944 $ 60,522
Accounts receivable, net 177,991 156,091
Inventories 294,938 249,511
Prepaid expenses and other current assets 36,324 44,999
---------- ----------
Total current assets 547,197 511,123
---------- ----------
Property, plant and equipment 820,214 705,872
Less accumulated depreciation (245,395) (233,652)
---------- ----------
Net property, plant and equipment 574,819 472,220
---------- ----------
Other assets:
Investments in partnerships 33,572 49,940
Goodwill 17,463 12,360
Other 60,785 38,002
---------- ----------
Total other assets 111,820 100,302
---------- ----------
$1,233,836 $1,083,645
========== ==========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3-13
<PAGE>
SMITHFIELD FOODS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands) August 2, 1998 May 3, 1998
- -------------- -------------- -----------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 12,165 $ -
Current portion of long-term debt and
capital lease obligations 12,871 8,511
Accounts payable 123,042 118,909
Accrued expenses and other current
liabilities 120,945 124,515
---------- ----------
Total current liabilities 269,023 251,935
---------- ----------
Long-term debt and capital lease obligations 539,144 407,272
---------- ----------
Other noncurrent liabilities:
Pension and post-retirement benefits 32,633 38,486
Other 37,101 24,942
---------- ----------
Total other noncurrent liabilities 69,734 63,428
---------- ----------
Shareholders' equity:
Preferred stock, $1.00 par value, 1,000,000
authorized shares - -
Common stock, $.50 par value, 100,000,000
authorized shares; 37,537,362 issued 18,769 18,769
Additional paid-in capital 96,971 96,971
Retained earnings 239,945 245,270
Accumulated other comprehensive income 250 -
---------- ----------
Total shareholders' equity 355,935 361,010
---------- ----------
$1,233,836 $1,083,645
========== ==========
See accompanying notes to consolidated condensed financial statements.
4-13
<PAGE>
SMITHFIELD FOODS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
13 Weeks Ended 13 Weeks Ended
(In thousands, except per share data) August 2, 1998 July 27, 1997
- ------------------------------------- -------------- --------------
<S> <C>
Sales $865,823 $914,963
Cost of sales 793,046 839,779
-------- --------
Gross Profit 72,777 75,184
Selling, general and administrative expenses 57,997 49,192
Depreciation expense 12,939 9,715
Interest expense 9,706 7,367
Nonrecurring charge - 12,600
-------- --------
Loss before income taxes (7,865) (3,690)
Income taxes (benefit) (2,540) 2,851
-------- --------
Net loss $ (5,325) $ (6,541)
======== ========
Net loss per common share:
Basic $ (.14) $ (.17)
======== ========
Diluted $ (.14) $ (.17)
======== ========
Average common shares outstanding:
Basic 37,537 37,527
======== ========
Diluted 37,537 37,527
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5-13
<PAGE>
SMITHFIELD FOODS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
13 Weeks 13 Weeks
Ended Ended
(In thousands) August 2, 1998 July 27, 1998
- -------------- -------------- -------------
<S> <C>
Cash flows from operating activities:
Net loss $ (5,325) $ (6,541)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 13,939 10,471
Loss (gain) on sale of property, plant and
equipment 588 (460)
Changes in operating assets and liabilities,
net of effect of Acquisitions:
Accounts receivable (18,109) (13,080)
Inventories (21,577) (13,250)
Prepaid expenses and other current
assets (10,981) (2,579)
Other assets 574 1,565
Accounts payable, accrued expenses
and other liabilities (11,504) (2,057)
-------- --------
Net cash used in operating activities (52,395) (25,931)
-------- --------
Cash flows from investing activities:
Capital expenditures (19,997) (18,518)
Business acquisitions, net of cash (23,837) (10,123)
Proceeds from sale of property, plant and equipment 7 148
Investments in partnerships (2,278) (6,731)
-------- --------
Net cash used in investing activities (46,105) (35,224)
-------- --------
Cash flows from financing activities:
Net repayments on notes payable - (75,000)
Net borrowings on long-term credit facility 77,000 215,000
Principal payments on long-term debt and capital
lease obligations (1,078) (78,280)
Exercise of common stock options - 83
-------- --------
Net cash provided by financing activities 75,922 61,803
-------- --------
Net increase (decrease) in cash and cash equivalents (22,578) 648
Cash and cash equivalents at beginning of period 60,522 25,791
-------- --------
Cash and cash equivalents at end of period $ 37,944 $ 26,439
======== ========
Supplemental disclosures of cash flow information:
Cash payments during period:
Interest (net of amount capitalized) $ 6,049 $ 7,298
======== ========
Income taxes $ 39 $ 1,409
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
6-13
<PAGE>
SMITHFIELD FOODS, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) These statements should be read in conjunction with the Consolidated
Financial Statements and related notes which are included in the Company's
Annual Report for the fiscal year ended May 3, 1998.
(2) The interim consolidated condensed financial information furnished herein is
unaudited. The information reflects all adjustments (which include only
normal recurring adjustments) which are, in the opinion of management,
necessary to a fair statement of the financial position and the results of
operations for the periods included in this report.
(3) Inventories consist of the following:
(In thousands) August 2, 1998 May 3, 1998
-------------- -------------- -----------
Fresh and processed meats $192,707 $171,090
Hogs on farms 70,594 49,263
Manufacturing supplies 20,407 18,538
Other 11,230 10,620
-------- --------
$294,938 $249,511
======== ========
(4) Income per basic share is computed based on the average common shares
outstanding during the period. Income per diluted share is computed based on
the average common shares outstanding adjusted for the effect of potential
common shares, such as stock options. The fiscal quarters ended August 2,
1998 and July 27, 1997 reflected net losses, resulting in the Company's
stock options being antidilutive and, thus, excluded from the computation of
income per diluted share. Accordingly, basic income per share and diluted
income per share are the same.
Summarized below are stock option shares outstanding at the end of each
fiscal period which were not included in the computation of income per
diluted share because (a) the assumed exercise of the options would be
antidilutive, or (b) the average exercise price of the options was greater
than the average market price of the common shares.
August 2, 1998 July 27, 1997
-------------- -------------
Antidilutive stock option shares 3,451,000 3,061,000
Average option price per share $10.81 $8.92
Stock options shares above exercise
price 65,000 -
Average option price per share $32.42 -
(5) The Company has adopted Statement of Financial Accounting Standards
No. 128, "Reporting Comprehensive Income," effective for the first
quarter of fiscal 1999. The components of comprehensive loss, net
of related tax, consist of:
(in thousands) August 2, 1998 July 27, 1997
------------- -------------- -------------
Net loss $(5,325) $(6,541)
Unrealized gains on securities 250 -
------- -------
Comprehensive loss $(5,075) $(6,541)
======= =======
As of August 2, 1998, accumulated other comprehensive income, net of
related tax, consisted of unrealized gains on securities of $250,000. As of
July 27, 1997, there were no components of accumulated other comprehensive
income.
(6) In August 1997, the U.S. District Court for the Eastern District of Virginia
imposed $12.6 million in civil penalties against the Company in a civil
action brought by the U.S. Environmental Protection Agency. This amount is
reflected as a nonrecurring charge in the thirteen weeks ended July 27,
1997. The Company has appealed this decision to the U.S. Court of Appeals
for the Fourth Circuit.
(7) In fiscal 1998, the Board of Directors of the Company declared a 2-for-1
stock split of the Company's common stock. Common shares outstanding and net
loss per share amounts have been adjusted in the consolidated condensed
statements of operations to reflect the stock split.
7-13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Smithfield Foods, Inc. (the "Company") is comprised of a Meat Processing Group
("MPG") and a Hog Production Group ("HPG"). The MPG consists of five pork
processing subsidiaries, Gwaltney of Smithfield, Ltd. ("Gwaltney"), John Morrell
& Co. ("John Morrell"), Lykes Meat Group, Inc. ("Lykes"), Partrick Cudahy
Incorporated ("Patrick Cudahy") and The Smithfield Packing Company, Incorporated
("Smithfield Packing"). The HPG consists of Brown's of Carolina, Inc.
("Brown's"), an 86%-owned subsidiary of the Company; a 50% interest in
Smithfield-Carroll's ("Smithfield-Carroll's"), a joint hog production
arrangement between the Company and an affiliate of Carroll's Foods, Inc., and a
74% interest in Circle Four ("Circle Four"), a joint hog production arrangement
with certain of the principal hog suppliers for the Company's Eastern
operations. Brown's and Smithfield-Carroll's produce hogs in North Carolina and
Virginia which are sold to the MPG. Circle Four produces hogs in Utah which are
sold to an unrelated party.
RECENT DEVELOPMENTS
In December 1997, the Company reached an irrevocable agreement with members of
the Schneider family, the controlling shareholders, to purchase all of their
shares in Schneider Corporation ("Schneider") as part of an offer by the Company
to acquire all of the shares of Schneider. Schneider produces and markets fresh
pork and a full line of processed meats in Canada and had revenues in its fiscal
year ended October 1997 of US$512.7 million. A lawsuit contesting the
acquisition was filed by a Canadian competitor and other Schneider shareholders.
The Court dismissed these claims, which have since been appealed and heard,
although a decision has not yet been rendered.
On September 1, 1998, the Company acquired 100% of the common stock of
Societe Bretonne De Salaisons ("SBS"), the largest private-label
manufacturer of ham, pork shoulder and bacon products in France, with annual
sales of approximately US$115.0 million.
RESULTS OF OPERATIONS
During the current quarter, the Company increased its investment in Circle Four
from 37% to 74%, requiring the Company to consolidate the accounts of Circle
Four and to discontinue using the equity method of accounting for Circle Four.
The impact of this consolidation on the consolidated condensed balance sheet as
of August 2, 1998 was to increase total assets $121.7 million and long-term debt
$54.0. The Company's operating results for the first quarter ended August 2,
1998 include those of Circle Four for nine weeks.
While the Company has consolidated the accounts of Circle Four in
the accompanying consolidated condensed financial statements, it is
negotiating the sale of a substantial portion of its investment in Circle
Four to a related party.
13 Weeks Ended July 27, 1997 -
13 Weeks Ended August 2, 1998
- ------------------------------
Sales in the first quarter of fiscal 1999 decreased $49.1 million, or 5.4%, from
the comparable period in fiscal 1998. The decrease in sales reflected a 16.7%
decrease in unit sales prices reflecting the impact of significantly lower live
hog costs, which were not totally offset by a 12.5% increase in sales tonnage
and the inclusion of the operating results of Circle Four. The increase in sales
tonnage reflected a 12.1% increase in fresh pork tonnage, an 11.0% increase in
processed meats tonnage and a 16.2% increase in the tonnage of other products.
The increase in fresh pork tonnage was primarily related to operations of the
second shift of John Morrell's Sioux City, Iowa plant which was temporarily
shutdown in the first quarter of fiscal 1998.
Cost of sales decreased $46.7 million, or 5.6%, in the first quarter of
fiscal 1999, reflecting a 30.5% decrease in live hog costs offset by increased
sales tonnage, the inclusion of the operating results of Circle Four and a loss
incurred in the Company's commodity hedging program on certain anticipatory hog
purchase hedges that locked in raw material costs at relatively high prices.
These positions were closed out in June and July.
8-13
<PAGE>
Gross profit in the first quarter of fiscal 1999 decreased $2.4 million,
or 3.2%, from the comparable period in fiscal 1998. The decrease in gross profit
was primarily due to substantially lower margins at the HPG, reflecting sharply
lower hog prices, and the loss in the commodity hedging program partially offset
by improved margins on higher sales of fresh pork and processed meats at the
MPG.
Selling, general and administrative expenses increased $8.8 million, or
17.9%, in the first quarter of fiscal 1999 from the comparable period in fiscal
1998. The increase was primarily due to higher selling, marketing and product
promotion costs associated with intensive efforts to market branded fresh pork
and processed meats and the inclusion of the operating results of Circle Four.
Depreciation expense increased $3.2 million, or 33.2%, in the first
quarter of fiscal 1999 from the comparable period in fiscal 1998. The increase
was related to completed capital projects at several of the Company's processing
plants and the inclusion of the operating results of Circle Four.
Interest expense increased $2.3 million, or 31.7%, in the first quarter of
fiscal 1999 from the comparable period in fiscal 1998, reflecting the higher
cost of long-term debt placed in the fourth quarter of fiscal 1998 and the
inclusion of the operating results of Circle Four.
A nonrecurring charge of $12.6 million in the first quarter of fiscal 1998
reflected the imposition of civil penalties against the Company by the U.S.
District Court for the Eastern District of Virginia in a civil action brought by
the U.S. Environmental Protection Agency. The Company has appealed the Court's
judgment to the U.S. Court of Appeals for the Fourth Circuit.
Income before taxes in the first quarter of fiscal 1999 was adversely
affected by a loss of $3.7 million at the HPG compared to a profit of $10.4
million in the same period of fiscal 1998.
The effective income tax rate for the first quarter of fiscal 1999 was
32.3% compared with 32.0%, excluding the nonrecurring charge, in the
corresponding period in fiscal 1998.
Reflecting the factors previously discussed, the Company incurred a net
loss of $5.3 million, or $.14 per diluted share, in the first quarter of fiscal
1999 compared with a net loss of $6.5 million, or $.17 per diluted share, in the
comparable period of fiscal 1998. Excluding the nonrecurring charge, net income
was $6.1 million, or $.15 per diluted share, in the first quarter of fiscal
1998.
The operating results of the MPG and the HPG are influenced by several
factors, including the supply and price levels of hogs, and, as a result, are
largely counter-cyclical in nature. While the Company expects to incur losses at
the HPG for the remainder of fiscal 1999, these losses should be offset by
improved margins at the MPG.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash used in operations totaled $52.4 million, in the first
quarter of fiscal 1999, primarily related to an increase in the level of
accounts receivable and a seasonal build-up of inventories for the fall holiday
season.
The Company's capital expenditures totaled $20.0 million in the first
quarter of fiscal 1999. These capital expenditures included renovations and
expansion projects at several of the Company's processing plants, additional hog
production facilities at Circle Four and replacement systems associated with the
Year 2000. In addition, the Company invested $23.5 million in Circle Four and
acquired all of the capital stock of a processed meats company in Iowa for $6.5
million in cash and $2.0 million in notes. These capital expenditures and
acquisitions were funded with borrowings under the Company's revolving credit
facility.
As of August 2, 1998, the Company had definitive commitments of $25.2
million for capital expenditures primarily to increase its processed meats
capacity at several of its processing plants and to replace and upgrade portions
of its hardware and software in response to the Year 2000 issue.
9-13
<PAGE>
YEAR 2000
The Company began addressing the potential exposure associated with the Year
2000 during fiscal 1998. The Company has completed the hardware and application
software inventory of its information technology ("IT") and non-IT systems.
Management has approved the plan necessary to remediate, upgrade, and replace
the affected systems to be Year 2000 compliant. A corrective five-point action
plan has been developed including: 1) analysis and planning, 2) allocation of
resources and commencing correction, 3) remediation, correction and replacement,
4) testing, and 5) development of contingency plans.
The Company is in the second phase of this plan, allocating resources and
commencing corrective action. Critical systems are being given the highest
priority. These systems include any necessary technology used in manufacturing
or administration with date-sensitive information which is critical to the
day-to-day operations of the business. The replacement, remediation and testing
of all critical non-IT and IT systems is expected to be completed by the end of
June 1999. The Company has expensed approximately $.07 million to date including
$.03 million in the first quarter of fiscal 1999 for the Year 2000, primary
related to planning and evaluating system status. The forecasted cost of the
Year 2000 solution, including hardware and software replacement, is expected to
be approximately $31.7 million. The Company estimates $18.5 million will be
capitalized in accordance with generally accepted accounting principles. These
expenditures are anticipated to be incurred through December 1999.
Third party risk is being proactively assessed through inquiries and
questionnaires. Significant vendors, electronic commerce customers and financial
institutions have been sent inquiries about the status of their compliance for
the Year 2000. Additionally, the Company will follow-up the inquiries and
questionnaires with interviews. This process is expected to be an ongoing
evaluation and at this point management cannot determine the level of risk
associated with third parties.
The Company believes its planning efforts are adequate to address its Year
2000 concerns. The Company is not at a stage to determined a worse case
scenario; however the Company is developing including evaluating the criticality
of each manufacturing process, determining possible manual alternatives
including the purchase of additional inventory and related storage for
production supplies.
While the Company believes it is taking the appropriate steps to address
its readiness for the Year 2000, the costs of the project and expected
completion dates are dependent upon the continued availability of certain
resources and other factors. There can be no guarantee that these estimates will
be achieved, and actual results could differ materially from those anticipated.
Specific factors that could influence the results may include, but are not
limited to, the availability and cost of personnel trained in this area, and the
ability to locate and correct all relevant computer codes and similar
uncertainties.
FORWARD-LOOKING STATEMENTS
This Form 10-Q may contain "forward-looking" information within the meaning of
the federal securities laws. The forward-looking information may include, among
other information, statements concerning the Company's outlook for the future.
There may also be other statements of beliefs, future plans and strategies or
anticipated events and similar expressions concerning matters that are not
historical facts. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors that could cause the actual
results, performance or achievements of Smithfield, or industry results, to
differ materially from any future results, performance or achievements expressed
or implied by such forward-looking statements. Such risks, uncertainties, and
other important factors include, among others: availability and prices of raw
materials, product pricing, competitive environment and related market
conditions, operating efficiencies, access to capital, integration of
acquisitions and changes in, or the failure or inability to comply with
governmental regulations, including without limitation environmental and health
regulations.
10-13
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) Annual meeting of Shareholders held August 27, 1998.
(b) Not applicable.
(c) There were 37,537,362 shares of Company's Common Stock outstanding
as of July 10, 1998, the record date for the 1998 Annual Meeting of
Shareholders. A total of 29,376,584 shares were voted. All of
management's nominees for directors of the corporation were elected
with the following vote:
Votes Broker
Director Nominee Votes For Withheld Non-Voters
---------------- --------- -------- ----------
Robert L. Burrus, Jr. 28,246,212 1,130,372 0
F.J. Faison, Jr. 28,998,137 378,447 0
Joel W. Greenberg 29,030,837 345,747 0
George E. Hamilton, Jr. 29,000,692 375,892 0
Richard J. Holland 29,033,787 342,797 0
Roger R. Kapella 29,010,661 365,923 0
Lewis R. Little 29,009,361 367,223 0
Joseph W. Luter, III 29,007,901 368,683 0
William H. Prestage 28,998,567 378,017 0
Joseph B. Sebring 28,404,312 972,272 0
Timothy A. Seely 28,998,812 377,772 0
Aaron D. Trub 29,009,661 366,923 0
A proposal to ratify the adoption of the Smithfield Foods, Inc. 1998 Stock
Incentive Plan was approved by the shareholders with the following vote:
Votes Broker
Votes For Votes Against Withheld Non-Votes
--------- ------------- -------- ---------
29,269,021 1,989,956 117,607 0
A proposal to ratify the selection of Arthur Andersen LLP as independent
public accountants of the Company for the fiscal year ending May 2, 1999
was approved by the shareholders with the following vote:
Votes Broker
Votes For Votes Against Withheld Non-Votes
---------- ------------- -------- ---------
29,151,182 203,091 22,311 0
(d) Not applicable.
11-13
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits
Exhibit 3.2 - By-Laws of the Registrant, as amended to date.
Exhibit 4.5 - Five-Year Credit Agreement dated as of July 10, 1997, among
Smithfield Foods, Inc., the Subsidiary Guarantors party thereto, the
Lenders party thereto, and The Chase Manhattan Bank, as Administrative
Agent, relating to a $300,000,000 secured five-year revolving credit
facility (incorporated by reference to Exhibit 4.5 of the Company's
Annual Report on Form 10-K for its fiscal year ended April 27, 1997
filed with the Commission on July 25, 1997); Amendment Number One
to the Five-Year Credit Agreement dated as of November 19, 1997
(incorporated by reference to Exhibit 4.5 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended February 1, 1998 filed
with the Commission on March 17, 1998); and Amendment Number Two to the
Five-Year Credit Agreement dated as of August 26, 1998.
Exhibits 27 - Financial Data Schedule
B. Reports on Form 8-K.
The Registrant filed no reports on Form 8-K during the quarter for which
this report is filed.
12-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SMITHFIELD FOODS, INC.
/s/ AARON D. TRUB
------------------------
Aaron D. Trub
Vice President, Chief Financial Officer and Secretary
/s/ C. LARRY POPE
------------------------
C. Larry Pope
Vice President, Finance
Date: September 11, 1998
13-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SMITHFIELD FOODS, INC..
_____________________________
Aaron D. Trub
Vice President, Chief Financial Officer and Secretary
_______________________________
C. Larry Pope
Vice President, Finance
Date: September 11, 1998
13-13
EXHIBIT 3.2
-----------------------------------------------------
BYLAWS
OF
SMITHFIELD FOODS, INC.
As Amended and Restated on August 27, 1998
-----------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
SHAREHOLDERS
<S> <C>
SECTION 1.1 ANNUAL MEETINGS...........................................................................1
SECTION 1.2 SPECIAL MEETINGS..........................................................................2
SECTION 1.3 NOTICE OF MEETINGS........................................................................2
SECTION 1.4 RECORD DATE...............................................................................3
SECTION 1.5 ORGANIZATION..............................................................................4
SECTION 1.6 ADJOURNMENTS..............................................................................4
SECTION 1.7 WAIVER OF NOTICE; ATTENDANCE AT MEETING...................................................4
SECTION 1.8 QUORUM AND VOTING REQUIREMENTS............................................................4
SECTION 1.9 PROXIES...................................................................................5
SECTION 1.10 INSPECTORS OF ELECTIONS...................................................................7
SECTION 1.11 LIST OF SHAREHOLDERS ENTITLED TO VOTE.....................................................8
SECTION 1.12 CONDUCT OF MEETINGS.......................................................................8
ARTICLE II
DIRECTORS
SECTION 2.1 GENERAL POWERS............................................................................9
SECTION 2.2 NUMBER AND TERM...........................................................................9
SECTION 2.3 NOMINATION; ELECTION......................................................................9
SECTION 2.4 RESIGNATION; REMOVAL.....................................................................11
SECTION 2.5 VACANCIES................................................................................11
SECTION 2.6 MEETINGS OF THE BOARD....................................................................12
SECTION 2.7 NOTICE OF MEETINGS.......................................................................12
SECTION 2.8 WAIVER OF NOTICE; ATTENDANCE AT MEETING..................................................13
SECTION 2.9 QUORUM; VOTING...........................................................................13
SECTION 2.10 TELEPHONE PARTICIPATION..................................................................13
SECTION 2.11 ACTION WITHOUT MEETING...................................................................13
SECTION 2.12 ORGANIZATION.............................................................................14
SECTION 2.13 REGULATIONS; MANNER OF ACTING............................................................14
SECTION 2.14 COMPENSATION.............................................................................14
SECTION 2.15 DIRECTOR EMERITUS........................................................................14
i
<PAGE>
ARTICLE III
COMMITTEES OF THE BOARD
SECTION 3.1 CONSTITUTION OF COMMITTEES...............................................................15
SECTION 3.2 AUTHORITY OF COMMITTEE...................................................................15
SECTION 3.3 EXECUTIVE COMMITTEE......................................................................15
SECTION 3.4 AUDIT COMMITTEE..........................................................................16
SECTION 3.5 COMPENSATION COMMITTEE...................................................................16
SECTION 3.6 PROCEEDINGS..............................................................................17
ARTICLE IV
OFFICERS
SECTION 4.1 OFFICERS GENERALLY.......................................................................17
SECTION 4.2 ELECTION.................................................................................17
SECTION 4.3 REMOVAL OF OFFICERS......................................................................18
SECTION 4.4 AUTHORITY AND DUTIES OF OFFICERS.........................................................18
SECTION 4.5 CHAIRMAN OF THE BOARD....................................................................18
SECTION 4.6 CHIEF EXECUTIVE OFFICER..................................................................18
SECTION 4.7 CHIEF FINANCIAL OFFICER..................................................................19
SECTION 4.8 SECRETARY................................................................................19
SECTION 4.9 VOTING SECURITIES OF OTHER CORPORATIONS..................................................19
SECTION 4.10 BONDS....................................................................................19
ARTICLE V
CAPITAL STOCK
SECTION 5.1 FORM.....................................................................................20
SECTION 5.2 TRANSFER AGENTS AND REGISTRARS...........................................................20
SECTION 5.3 TRANSFERS................................................................................20
SECTION 5.4 RESTRICTIONS ON TRANSFER.................................................................20
SECTION 5.5 LOST CERTIFICATES........................................................................21
SECTION 5.6 HOLDER OF RECORD.........................................................................21
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.1 FISCAL YEAR..............................................................................21
SECTION 6.2 SEAL.....................................................................................21
SECTION 6.3 EXECUTION OF INSTRUMENTS.................................................................21
SECTION 6.4 CONSTRUCTION.............................................................................22
SECTION 6.5 AMENDMENTS...............................................................................22
</TABLE>
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ARTICLE I
SHAREHOLDERS
SECTION 1.1 ANNUAL MEETINGS. (a) The Corporation shall hold an annual
meeting of the shareholders for the election of directors and for the
transaction of such other business as properly may come before the meeting at
such place, either within or without the Commonwealth of Virginia, and at such
date and time as may be designated from time to time by resolution of the Board
of Directors and set forth in the notice or waiver of notice of the meeting.
(b) At an annual meeting of the shareholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be (i)
specified in the notice of the meeting (or any supplement thereto) given by or
at the direction of the Board of Directors, (ii) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, or (iii)
otherwise properly brought before the meeting by a shareholder. For business to
be properly brought before an annual meeting by a shareholder, the shareholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a shareholder's notice must be delivered to or mailed
and received at the principal executive offices of the Corporation (i) on or
after June 1st and before July 1st of the year in which the annual meeting will
be held, if clause (ii) of this sentence is not applicable, or (ii) not less
than 60 days before the date of the annual meeting if the meeting date is
earlier than August 1st or later than August 31st. In addition, for business to
be brought properly before the meeting by a shareholder, such shareholder's
notice to the Secretary must set forth as to each matter the shareholder
proposes to bring before such meeting (i) a brief description of the business
desired to be brought before the meeting, including the complete text of any
resolutions to be presented and the reasons for wanting to conduct such
business, (ii) the name and address, as they appear on the Corporation's books,
of the shareholder proposing such business, (iii) the class and number of shares
of capital stock of the Corporation which are beneficially owned by the
shareholder, and (iv) any material interest of the shareholder in such business.
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(c) No business shall be conducted at an annual meeting of the
shareholders except in accordance with the procedures set forth in Section
1.1(b). The presiding officer of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business has not been properly brought
before the meeting in accordance with the provisions of Section 1.1(b), in which
event such business not properly brought before the meeting shall not be
transacted.
(d) Notwithstanding the foregoing provisions of this Section
1.1, a shareholder seeking to have a proposal included in the Corporation's
proxy statement for a meeting of the shareholders shall comply with the
requirements of Regulation 14A under the Securities Exchange Act of 1934, as
amended from time to time, or with any successor regulation.
SECTION 1.2 SPECIAL MEETINGS. Special meetings of shareholders for any
purpose or purposes may be called at any time (i) by the Chairman of the Board,
the Chief Executive Officer or the President, if any, pursuant to a notice
delivered to the Secretary or (ii) by the Board of Directors pursuant to a
resolution approved by a majority of the entire Board of Directors, and no
business shall be conducted at such meeting other than the business set forth in
such notice or resolution. Such special meetings shall be held at such places,
either within or without the Commonwealth of Virginia, and at such date and time
as shall be specified in such notice or resolution.
SECTION 1.3 NOTICE OF MEETINGS. (a) The Corporation shall notify
shareholders of the date, time, and place of each annual and special
shareholders' meeting. Such notice shall be given no less than 10 nor more than
60 days before the meeting date except that notice of a shareholders' meeting to
act on an amendment to the articles of incorporation, a plan of merger or share
exchange, a proposed sale, lease, exchange or other disposition of all or
substantially all of the property of the Corporation otherwise than in the usual
and regular course of business, or the dissolution of the Corporation shall be
given not less than 25 nor more than 60 days before the meeting date. Unless the
Virginia Stock Corporation Act or the Articles of Incorporation require
otherwise, the Corporation is required to give notice only to shareholders
entitled to vote at the meeting.
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(b) Unless the Virginia Stock Corporation Act or the Articles
of Incorporation require otherwise, notice of an annual meeting need not state
the purpose or purposes for which the meeting is called. Notice of a special
meeting shall state the purpose or purposes for which the meeting is called.
(c) If an annual or special meeting is adjourned to a
different date, time, or place, notice need not be given if the new date, time,
or place is announced at the meeting before adjournment. If a new record date
for the adjourned meeting is or shall be given under Section 1.4 hereof,
however, notice of the adjourned meeting shall be given under this Section to
persons who are shareholders as of the new record date.
(d) Notwithstanding the foregoing, no notice of a meeting of
the shareholders need be given to a shareholder if (i) an annual report and
proxy statements for two consecutive annual meetings of shareholders or (ii)
all, and at least two, checks in payment of dividends or interest on securities
during a 12-month period, have been sent by first-class United States mail, with
postage thereon prepaid, addressed to the shareholder at his address as it
appears on the share transfer books of the Corporation, and returned
undeliverable. The obligation of the Corporation to give notice of meetings of
the shareholders to any such shareholder shall be reinstated once the
Corporation has received a new address for such shareholder for entry on its
share transfer books.
(e) Notice of a meeting of the shareholders may be
communicated in person, by telephone, telegraph, teletype, or other form of wire
or wireless communication, or by mail (including electronic mail) or private
carrier. Written notice to a shareholder is effective when mailed, if mailed
postpaid and correctly addressed to the shareholder's address shown on the
Corporation's current record of shareholders.
SECTION 1.4 RECORD DATE. The Board of Directors shall fix, in advance,
a record date in order to make a determination of the shareholders for any
purpose. The record date may not be more than 70 days before the meeting or
action requiring a determination of shareholders. A determination of
shareholders entitled to notice of or to vote at a shareholders' meeting is
effective for any adjournment of the meeting unless the Board of Directors fixes
a new record date, which it shall do if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.
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SECTION 1.5 ORGANIZATION. At every meeting of shareholders, the
presiding officer shall be the first listed among the following officers who is
present and able to preside at such meeting: the Chairman of the Board, the
Chief Executive Officer, the President, if any, the Chief Operating Officer, if
any, any Executive Vice President, the Chief Financial Officer and the
Secretary. In the absence of all of the foregoing persons, the meeting shall be
presided over by a chairman designated by the Board of Directors, or in the
absence of such designation, by a chairman chosen at the meeting. The Secretary,
or in his absence, an Assistant Secretary, if any, or in his absence, an
appointee of the presiding officer shall act as secretary of the meeting.
SECTION 1.6 ADJOURNMENTS. Subject to the provisions of Section 1.3
hereof, any meeting of shareholders, annual or special, may adjourn from time to
time to reconvene at a different date, time or place. At the adjourned meeting
the Corporation may transact any business which might have been transacted at
the original meeting.
SECTION 1.7 WAIVER OF NOTICE; ATTENDANCE AT MEETING. A shareholder may
waive any notice required by the Virginia Stock Corporation Act, the Articles of
Incorporation, or these Bylaws before or after the date and time of the meeting
that is the subject of such notice. The waiver shall be in writing, be signed by
the shareholder entitled to the notice and be delivered to the Secretary for
inclusion in the minutes or filing with the corporate records. A shareholder's
attendance at a meeting (i) waives objection to lack of notice or defective
notice of the meeting unless the shareholder, at the beginning of the meeting,
objects to holding the meeting or transacting business at the meeting and (ii)
waives objection to consideration of a particular matter at the meeting that is
not within the purpose or purposes described in the meeting notice unless the
shareholder objects to considering the matter when it is presented.
SECTION 1.8 QUORUM AND VOTING REQUIREMENTS. (a) Each outstanding share
of common stock shall be entitled to one vote on each matter submitted to a vote
at a meeting of the shareholders. Shares of other classes and series shall be
entitled to such vote as may be provided in the Articles of Incorporation.
(b) Shares entitled to vote as a separate voting group may
take action on any matter at a meeting only if a quorum of those shares exists
with respect to that matter. Unless otherwise required by law, a majority of the
votes entitled to be cast on a matter by a voting group constitutes a quorum of
that voting group for action on that
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matter. Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or shall be set for that
adjourned meeting. If a quorum exists, action on a matter, other than the
election of directors, by a voting group is approved if the votes cast within
the voting group favoring the action exceed the votes cast opposing the action,
unless a greater number of affirmative votes is required by law. Directors shall
be elected by a plurality of the votes cast by the shares entitled to vote in
the election at a meeting at which a quorum is present, unless a different vote
is required by the Articles of Incorporation. Less than a quorum may adjourn a
meeting.
SECTION 1.9 PROXIES.
(a) A shareholder may vote his shares in person or by proxy.
(b) Without limiting the manner in which a shareholder may
authorize another person or persons to act for him as proxy pursuant to
subsection (a) of this Section, the following shall constitute a valid means by
which a shareholder may grant such authority:
(1) A shareholder may execute a writing authorizing
another person or persons to act for him as proxy. Execution may be
accomplished by the shareholder or his authorized officer, director,
employee or agent signing such writing or causing his or her signature
to be affixed to such writing by any reasonable means including, but
not limited to, by facsimile signature.
(2) A shareholder may authorize another person or
persons to act for him as proxy by transmitting or authorizing the
transmission of a telegram, cablegram or other means of electronic
transmission to the person who will be the holder of the proxy or to a
proxy solicitation firm, proxy support service organization or like
agent duly authorized by the person who will be the holder of the proxy
to receive such transmission, provided that any such telegram,
cablegram or other means of electronic transmission must either set
forth or be submitted with information from which it can be determined
that the telegram, cablegram, or other electronic transmission was
authorized by the shareholder. If it is determined that such telegrams,
cablegrams or other electronic transmissions are valid, the inspectors
or, if there are no inspectors, such other
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persons making that determination shall specify the information upon
which they relied.
(3) Any copy, facsimile, telecommunication or other
reliable reproduction of the writing or transmission created pursuant
to this paragraph (b) of this Section may be submitted or used in lieu
of the original writing or transmission for any and all purposes for
which the original writing or transmission could be used, provided that
such copy, facsimile, telecommunication or other reproduction shall be
a complete reproduction of the entire original writing or transmission.
(c) An appointment of a proxy is effective when received by
the Secretary or other officer or agent authorized to tabulate votes. An
appointment is valid for 11 months unless a longer period is expressly provided
in the appointment form.
(d) An appointment of a proxy is revocable by the shareholder
unless the appointment form conspicuously states that it is irrevocable and the
appointment is coupled with an interest. An appointment made irrevocable under
this paragraph (d) is revoked when the interest with which it is coupled is
extinguished. A transferee for value of shares subject to an irrevocable
appointment may revoke the appointment if he did not know of its existence when
he acquired the shares and the existence of the irrevocable appointment was not
noted conspicuously on the certificate representing the shares or on the
information statement for shares without certificates.
(e) The death or incapacity of the shareholder appointing a
proxy shall not affect the right of the Corporation to accept the proxy's
authority unless notice of the death or incapacity is received by the Secretary
or other officer or agent authorized to tabulate votes before the proxy
exercises his authority under the appointment.
(f) Subject to any legal limitations on the right of the
Corporation to accept the vote or other action of a proxy and to any express
limitation on the proxy's authority appearing on the face of the appointment
form, the Corporation is entitled to accept the proxy's vote or other action as
that of the shareholder making the appointment. Any fiduciary who is entitled to
vote any shares may vote such shares by proxy.
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SECTION 1.10 INSPECTORS OF ELECTIONS. (a) The Corporation shall, in
advance of any meeting of shareholders, appoint one or more inspectors to act at
the meeting and to make a written report thereof. The Corporation may designate
one or more persons as alternate inspectors to replace any inspector who fails
to act. If no inspector or alternate is able to act at a meeting of
shareholders, the person presiding at the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of his
ability.
(b) The inspectors shall: (i) ascertain the number of shares
outstanding and the voting power of each; (ii) determine the shares represented
at the meeting and the validity of proxies and ballots; (iii) count all votes
and ballots; (iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors; and
(v) certify their determination of the number of shares represented at the
meeting, and their count of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors.
(c) The date and time of the opening and the closing of the
polls for each matter upon which the shareholders will vote at a meeting shall
be announced at the meeting. No ballot, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the inspectors after the
closing of the polls unless the circuit court of the city or county where the
Corporation's principal office is located or, if none in the Commonwealth of
Virginia, where its registered office is located, upon application by a
shareholder, shall determine otherwise.
(d) In determining the validity and counting of proxies and
ballots, the inspectors shall be limited to an examination of the proxies, any
envelopes submitted with those proxies, any information provided in accordance
with paragraph (b)(2) of Section 1.9 hereof, ballots and the regular books and
records of the Corporation, except that the inspectors may consider other
reliable information for the limited purpose of reconciling proxies and ballots
submitted by or on behalf of banks, brokers, their nominees or similar persons
which represent more votes than the holder of a proxy is authorized by the
record owner to cast or more votes than the shareholder holds of record. If the
inspectors consider other reliable information for the limited purpose
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permitted herein, the inspectors at the time they make their certification
pursuant to paragraph (b)(v) of this Section 1.10 shall specify the precise
information considered by them including the person or persons from whom they
obtained the information, when the information was obtained, the means by which
the information was obtained and the basis for the inspectors' belief that such
information is accurate and reliable.
SECTION 1.11 LIST OF SHAREHOLDERS ENTITLED TO VOTE. (a) The officer or
agent having charge of the share transfer books of the Corporation shall make,
at least 10 days before each meeting of shareholders, a complete list of the
shareholders entitled to vote at the meeting or any adjournment thereof, with
the address of and the number of shares held by each. The list shall be arranged
by voting group and within each voting group by class or series of shares. For a
period of 10 days prior to the meeting, such list shall be kept on file at the
registered office of the Corporation or at its principal office or at the office
of its transfer agent or registrar and shall be subject to inspection by any
shareholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any shareholder during the whole time of the meeting for
the purpose thereof. The original share transfer books shall be prima facie
evidence as to which shareholders are entitled to examine such list or transfer
books or to vote at any meeting of the shareholders. The right of a shareholder
to inspect such list prior to the meeting shall be subject to the conditions and
limitations set forth by law.
(b) If the requirements of this Section have not been
substantially complied with, the meeting shall, on the demand of any shareholder
in person or by proxy, be adjourned until such requirements are met. Refusal or
failure to prepare or make available the shareholders' list does not affect the
validity of action taken at the meeting prior to the making of any such demand,
but any action taken by the shareholders after the making of any such demand
shall be invalid and of no effect.
SECTION 1.12 CONDUCT OF MEETINGS. The Board of Directors of the
Corporation may, to the extent not prohibited by law, adopt by resolution such
rules and regulations for the conduct of the meeting of shareholders as it shall
deem appropriate. Except to the extent inconsistent with such rules and
regulations as adopted by the Board of Directors, the presiding officer of any
meeting of shareholders shall have the right and authority to prescribe such
rules, regulations and procedures and to do all such acts as, in the judgment of
such officer, are appropriate for the proper conduct of the
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meeting. Such rules, regulations or procedures, whether adopted by the Board of
Directors or prescribed by the presiding officer, may to the extent not
prohibited by law include, without limitation, the following: (i) the
establishment of an agenda or order of business for the meeting; (ii) rules and
procedures for maintaining order at the meeting and the safety of those present;
(iii) limitations on attendance at or participation in the meeting to
shareholders of record of the Corporation, their duly authorized and constituted
proxies and any such other persons as the presiding officer shall determine;
(iv) restrictions on the entry to the meeting after the time fixed for the
commencement thereof; and (v) limitations on the time allotted to questions or
comments by participants. Unless, and to the extent, determined by the Board of
Directors or the presiding officer of the meeting, meetings of shareholders
shall not be required to be held in accordance with the rules of parliamentary
procedure.
ARTICLE II
DIRECTORS
SECTION 2.1 GENERAL POWERS. The Corporation shall have a Board of
Directors. All corporate powers shall be exercised by or under the authority of,
and the business and affairs of the Corporation managed under the direction of,
the Board of Directors, subject to any limitation set forth in the Articles of
Incorporation.
SECTION 2.2 NUMBER AND TERM. The Board of Directors shall consist of
not less than three nor more than 16 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. Except as provided in
Section 2.5 hereof, directors shall be elected at each annual meeting of the
shareholders and shall serve for a term expiring at the next annual meeting of
the shareholders following their election. A decrease in the number of directors
shall not shorten an incumbent director's term. Despite the expiration of a
director's term, he shall continue to serve until his successor is elected and
qualified or until there is a decrease in the number of directors.
SECTION 2.3 NOMINATION; ELECTION. (a) No person shall be eligible for
election as a director unless nominated (i) by the Board of Directors upon
recommendation of any nominating committee or otherwise, or (ii) by a
shareholder entitled to vote on the election of directors pursuant to the
procedures of this Section 2.3(a). Nominations, other than those made by the
Board of Directors, may be made
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only by a shareholder who is a shareholder of record of a class of shares
entitled to vote for the election of directors at the time of the giving of the
notice hereinafter described in this Section 2.3 and only if written notice of
the shareholder's intent to nominate one or more persons for election as
directors has been given, either by personal delivery or by United States
certified mail, postage prepaid, addressed to the Secretary of the Corporation
at the principal office of the Corporation and received (i) on or after June 1st
and before July 1st of the year in which the meeting is held, if the meeting is
an annual meeting and clause (ii) is not applicable, or (ii) not less than 60
days before the date of an annual meeting, if the meeting date is earlier than
August 1st or later than August 31st, or (iii) not later than the close of
business on the tenth day following the day on which notice of a special meeting
of the shareholders called for the purpose of electing directors is first mailed
to the shareholders.
(b) Each such shareholder's notice shall contain the following
information:
(i) as to the shareholder giving the notice (A) the
name and address of such shareholder as they appear on the
Corporation's stock transfer books, (B) the class and number of shares
of stock of the Corporation beneficially owned by such shareholder, (C)
a representation that such shareholder is a shareholder of record and
intends to appear in person or by proxy at such meeting to nominate the
person or persons specified in the notice, and (D) a description of all
arrangements or understandings, if any, between such shareholder and
each nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be
made; and
(ii) as to each person whom the shareholder wishes to
nominate for election as a director: (A) the name, age, business
address and residential address of each such nominee, (B) the principal
occupation or employment of each such nominee, (C) the class and number
of shares of the Corporation which are beneficially owned, directly or
indirectly, by each such nominee or over which such nominee has voting
control, and (D) such other information concerning each such nominee as
would be required under the rules of the Securities and Exchange
Commission to be included in a proxy statement soliciting proxies for
the election of directors;
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and such notice shall include a signed consent by each such nominee to serve as
a director of the Corporation if elected and a written statement by such nominee
to the effect that the information about him in the notice is correct.
(c) Except as provided in Section 2.5 hereof or in the
Articles of Incorporation, the directors shall be elected by the holders of the
common shares at each annual meeting of the shareholders and those persons who
receive the greatest number of votes shall be deemed elected even though they do
not receive a majority of the votes cast. No individual shall be named or
elected as a director without his prior consent.
SECTION 2.4 RESIGNATION; REMOVAL. A director may resign at any time
upon delivering a written notice of resignation, signed by such director, to the
Board of Directors, the Chairman of the Board, the President, if any, or the
Secretary. Unless a later date is specified therein, such resignation shall take
effect upon delivery. The shareholders may remove one or more directors with or
without cause. If a director is elected by a voting group, only the shareholders
of that voting group may vote to remove him. Unless the Articles of
Incorporation require a greater vote, a director may be removed if the number of
votes cast to remove him constitutes a majority of the votes entitled to be cast
at an election of directors of the voting group or voting groups by which such
director was elected. A director may be removed by the shareholders only at a
meeting called for the purpose of removing him and the meeting notice must state
that the purpose, or one of the purposes, of the meeting is removal of the
director.
SECTION 2.5 VACANCIES. A vacancy on the Board of Directors, including a
vacancy resulting from the removal of a director or an increase in the number of
directors, may be filled by (i) the shareholders, (ii) the Board of Directors or
(iii) the affirmative vote of a majority of the remaining directors though less
than a quorum of the Board of Directors and may, in the case of a resignation
that will become effective at a specified later date, be filled before the
vacancy occurs but the new director may not take office until the vacancy
occurs.
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SECTION 2.6 MEETINGS OF THE BOARD. (a) The annual meeting of the Board
of Directors for the purpose of electing officers and for the transaction of
such other business as may properly come before the meeting shall be held as
soon as possible following the annual meeting of shareholders. The Board of
Directors may also adopt a schedule of additional meetings which, together with
the annual meeting referred to in the preceding sentence, shall be considered
the regular meetings of the Board of Directors. Regular meetings may be held at
such places within or without the Commonwealth of Virginia and at such times as
the Chairman of the Board or the Board of Directors shall designate from time to
time. If no place is designated, regular meetings shall be held at the principal
executive offices of the Corporation.
(b) Special meetings of the Board of Directors may be called
by the Chairman of the Board, the Chief Executive Officer, the President, if
any, or not less than one-third of the directors then in office and shall be
held at such times and at such places, within or without the Commonwealth of
Virginia, as the person or persons calling the meetings shall designate. If no
such place is designated in the notice of the meeting, it shall be held at the
principal executive offices of the Corporation.
SECTION 2.7 NOTICE OF MEETINGS. (a) No notice need be given of
regular meetings of the Board of Directors.
(b) Notices of special meetings of the Board of Directors
shall be given to each director in person or delivered to his residence or
business address (or such other place as he may have directed in writing) not
less than 24 hours before the meeting by mail, messenger, telecopier, telegraph
or other means of written communication or by telephoning such notice to him.
Any such notice shall set forth the time and place of the meeting and state the
purpose for which it is called.
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SECTION 2.8 WAIVER OF NOTICE; ATTENDANCE AT MEETING. (a) A director may
waive any notice required by law, the Articles of Incorporation or these Bylaws
before or after the date and time stated in the notice and such waiver shall be
equivalent to the giving of such notice. Except as provided in paragraph (b) of
this Section, the waiver shall be in writing, signed by the director entitled to
the notice and filed with the minutes or corporate records.
(b) A director's attendance at or participation in a meeting
waives any required notice to him of the meeting unless the director, at the
beginning of the meeting or promptly upon his arrival, objects to holding the
meeting or transacting business at the meeting and does not thereafter vote for
or assent to action taken at the meeting.
SECTION 2.9 QUORUM; VOTING. A majority of the number of directors
determined by the Board of Directors pursuant to these Bylaws shall constitute a
quorum for the transaction of business at a meeting of the Board of Directors.
If a quorum is present when a vote is taken, the affirmative vote of a majority
of the directors present is the act of the Board of Directors. A director who is
present at a meeting of the Board of Directors or a committee of the Board of
Directors when corporate action is taken is deemed to have assented to the
action taken unless (i) he objects, at the beginning of the meeting or promptly
upon his arrival, to holding it or transacting specified business at the meeting
or (ii) he votes against or abstains from the action taken.
SECTION 2.10 TELEPHONE PARTICIPATION. The Board of Directors may permit
any or all directors to participate in a regular or special meeting by, or
conduct the meeting through the use of, any means of communication by which all
directors participating may simultaneously hear each other during the meeting. A
director participating in a meeting by this means is deemed to be present in
person at the meeting.
SECTION 2.11 ACTION WITHOUT MEETING. Action required or permitted to be
taken at a meeting of the Board of Directors may be taken without a meeting if
the action is taken by all members of the Board. The action shall be evidenced
by one or more written consents stating the action taken, signed by each
director either before or after the action is taken and included in the minutes
or filed with the corporate records. Action taken under this section shall be
effective when the last director signs the consent
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unless the consent specifies a different effective date in which event the
action taken is effective as of the date specified therein provided the consent
states the date of execution by each director.
SECTION 2.12 ORGANIZATION. Meetings of the Board of Directors shall be
presided over by the Chairman of the Board, or in his absence by a chairman
chosen at the meeting. The Secretary, if present, shall act as secretary of the
meeting, but in his absence the chairman of the meeting may appoint any person
to act as secretary of the meeting.
SECTION 2.13 REGULATIONS; MANNER OF ACTING. To the extent consistent
with applicable law, the Articles of Incorporation, and these Bylaws, the Board
of Directors may adopt such rules and regulations for the conduct of meetings of
the Board of Directors and for the management of the property, affairs and
business of the Corporation as the Board of Directors may deem appropriate.
SECTION 2.14 COMPENSATION. The Board of Directors may fix the
compensation of directors and may provide for the payment of all expenses
incurred by them in attending meetings of the Board of Directors or any
Committee thereof.
SECTION 2.15 DIRECTOR EMERITUS. The Board of Directors may appoint to
the position of Director Emeritus any retiring director who has served not less
than five years as a director of the Corporation. Such person so appointed shall
have the title of "Director Emeritus" and shall be entitled to receive notice
of, and to attend all meetings of the Board, but shall not in fact be a
director, shall not be entitled to vote, and shall not be counted in determining
a quorum of the Board and shall not have any of the duties or liabilities of a
director under law.
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ARTICLE III
COMMITTEES OF THE BOARD
SECTION 3.1 CONSTITUTION OF COMMITTEES. The Board of Directors may, by
resolution adopted by a vote of a majority of the directors then in office,
create one or more committees and appoint members of the Board of Directors to
serve on them. Except as otherwise provided in these Bylaws, each such committee
shall consist of two or more members who serve at the pleasure of the Board of
Directors.
SECTION 3.2 AUTHORITY OF COMMITTEE. To the extent specified by the
Board of Directors, each committee may exercise the authority of the Board of
Directors, except that a committee may not (i) approve or recommend to the
shareholders action that is required by law to be approved by shareholders, (ii)
fill vacancies on the Board of Directors 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 not requiring shareholder approval, (vi) authorize
or approve a distribution, except according to a general formula or method
prescribed by the Board of Directors or (vii) authorize or approve the issuance
or sale or contract for sale of shares, or determine the designation and
relative rights, preferences, and limitations of a class or series of shares;
provided, however, that the Board of Directors may authorize a committee, or a
senior executive officer of the Corporation, to do so within limits specifically
prescribed by the Board of Directors.
SECTION 3.3 EXECUTIVE COMMITTEE. The Board of Directors shall appoint
each year an Executive Committee consisting of not less than two directors.
During the intervals between the meetings of the Board of Directors, the
Executive Committee shall have and may exercise, to the fullest extent permitted
by law, all of the powers and authority of the Board of Directors in the
management of the property, affairs and business of the Corporation, except to
the extent such powers or authority are limited by the provisions of Section 3.2
hereof.
By-Laws, Page 15
<PAGE>
SECTION 3.4 AUDIT COMMITTEE. The Board of Directors shall appoint each
year an Audit Committee consisting of not less than three members, a majority of
whom shall be non-management unaffiliated directors (as defined in Section 6.4
hereof). The Audit Committee shall perform such duties as its members consider
necessary or desirable properly to evaluate and generally to supervise the
Corporation's internal financial controls and accounting procedures, including
the following:
(1) recommending independent public accountants for the
Corporation to the Board of Directors;
(2) determining that the scope of the audit is adequate and
approving the audit fee;
(3) reviewing audit results with the Corporation's independent
public accountants; and
(4) recommending the policy for the scope, frequency, and
method of internal audit reports and reviewing the results thereof.
SECTION 3.5 COMPENSATION COMMITTEE. The Board of Directors shall
appoint each year a Compensation Committee consisting of not less than three
members, a majority of whom shall be non-management unaffiliated directors (as
defined in Section 6.4 hereof). The duties of the Compensation Committee shall
include the following:
(1) reviewing current management compensation programs,
including salaries, bonuses and fringe benefits and the creation of new
officerships;
(2) reviewing and reporting to the Board of Directors on the
funding and adequacy of existing retirement programs, and reporting on
management's recommendations on major changes to existing and creation
of new retirement programs;
(3) awarding and administering pursuant to existing authority,
the Corporation's stock incentive programs and reviewing and
recommending similar future programs, if any;
(4) reviewing top management organization, assisting the Chief
Executive Officer in determining that the Corporation has adequate
depth and breadth of management; and
(5) reviewing the Corporation's programs for attracting,
developing and compensating management personnel.
By-Laws, Page 16
<PAGE>
SECTION 3.6 PROCEEDINGS. The provisions of these Bylaws which govern
meetings, action without meetings, notice and waiver of notice, and quorum
requirements of the Board of Directors shall apply to committees of directors
and their members as well. Subject to applicable law, the Articles of
Incorporation and these Bylaws, each such committee may fix its own rules of
procedure and may meet at such place within or without the Commonwealth of
Virginia, at such time and upon such notice, if any, as it shall determine from
time to time. Each such committee shall keep minutes of its proceedings and
shall, if requested, report such proceedings to the Board of Directors at the
meeting of the Board of Directors next following any such proceedings.
ARTICLE IV
OFFICERS
SECTION 4.1 OFFICERS GENERALLY. The officers of the Corporation shall
be a Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer
and a Secretary. The Board of Directors at its discretion may also elect a
President, a Chief Operating Officer, a Treasurer, a Controller, one or more
Executive Vice Presidents, one or more Vice Presidents with such further title
or titles as it desires to confer, and one or more Assistant Secretaries,
Assistant Treasurers, Assistant Controllers, and other assistant officers in
such numbers as the Board of Directors may determine. Any number of offices may
be held by the same person. Except for the Chairman of the Board, no officer
need be a director of the Corporation.
SECTION 4.2 ELECTION. Officers shall be elected by the Board of
Directors. The Chief Executive Officer may from time to time appoint other
officers. Officers elected by the Board of Directors shall hold office, unless
sooner removed, until the next annual meeting of the Board of Directors or until
their successors are elected. Officers appointed by the Chief Executive Officer
shall hold office, unless sooner removed, until their successors are appointed.
The action of the Chief Executive Officer in appointing officers shall be
reported to the next regular meeting of the Board of Directors after it is
taken. Any officer may resign at any time upon written notice to the Board of
Directors or the officer appointing him and such resignation shall be effective
when notice is delivered unless the notice specifies a later effective date.
By-Laws, Page 17
<PAGE>
SECTION 4.3 REMOVAL OF OFFICERS. The Board of Directors may remove any
officer at any time, with or without cause. The Chief Executive Officer may
remove any officer he appoints at any time, with or without cause. Such action
shall be reported to the next regular meeting of the Board of Directors after it
is taken. Any removal of an officer shall be without prejudice to the right to
the recovery of damages for breach of the contract rights, if any, of the person
removed. Election or appointment of an officer shall not of itself create
contract rights.
SECTION 4.4 AUTHORITY AND DUTIES OF OFFICERS. The officers of the
Corporation shall have such authority and shall exercise such powers and perform
such duties as are customary for their respective offices and as may be
specified in these Bylaws or as may be determined from time to time by the Board
of Directors, except that in any event each officer shall exercise such powers
and perform such duties as may be required by law.
SECTION 4.5 CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the shareholders and directors at which he is present
and shall have general control and supervision of the policies and operations of
the Corporation, except as may be limited by the Board of Directors, the
Articles of Incorporation or these Bylaws. He shall have the authority to remove
or suspend any employee or agent of the Corporation elected or appointed by the
Board of Directors. The Chairman of the Board shall perform such other duties
and have such other powers as the Board of Directors may from time to time
prescribe.
SECTION 4.6 CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall
see that all orders and resolutions of the Board of Directors are carried into
effect. He shall manage and administer the Corporation's business and affairs
and shall also perform all duties and exercise all powers usually pertaining to
the office of a chief executive officer of a corporation, except as may be
limited by the Board of Directors, the Articles of Incorporation or these
Bylaws. The Chief Executive Officer may sign, execute and deliver in the name of
the Corporation powers of attorney, contracts, bonds, notes, corporate
obligations and other documents. He shall have the authority to cause the
employment or appointment of such employees and agents of the Corporation (other
than those elected by the Board of Directors) as the conduct of the business of
the Corporation may require, to fix their compensation, and to remove or suspend
any employee or agent appointed by the Chief Executive Officer.
By-Laws, Page 18
<PAGE>
SECTION 4.7 CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have charge of and be responsible for all securities, funds, receipts and
disbursements of the Corporation, and shall deposit or cause to be deposited, in
the name of the Corporation, all monies or valuable effects in such banks, trust
companies or other depositories as shall, from time to time, be selected by or
under authority granted by the Board of Directors; he shall be custodian of the
financial records of the Corporation; he shall keep or cause to be kept full and
accurate records of all receipts and disbursements of the Corporation and shall
render to the Chairman of the Board, the Chief Executive Officer, the President,
if any, and the Board of Directors, whenever requested, an account of the
financial condition of the Corporation; and he shall perform such other duties
as may be assigned to him by the Chief Executive Officer or the Board of
Directors.
SECTION 4.8 SECRETARY. The Secretary, subject to the direction of the
Chief Executive Officer, shall have general responsibility for and custody of
the minutes of all meetings of the shareholders 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 shareholders, of the Board of Directors, and of all committees
appointed by the Board of Directors. He shall perform such other duties as from
time to time may be assigned to him by the Chairman of the Board or the Board of
Directors or as may be required by law.
SECTION 4.9 VOTING SECURITIES OF OTHER CORPORATIONS. Unless otherwise
provided by the Board of Directors, any one of the Chairman of the Board, the
Chief Executive Officer, the President, the Secretary or any Assistant Secretary
shall have the power (and may appoint from time to time any other person) to act
for and vote on behalf of the Corporation at all meetings of the shareholders of
any corporation in which the Corporation holds stock or in connection with the
consent of the shareholders in lieu of any such meeting.
SECTION 4.10 BONDS. The Board of Directors may require that any or all
officers, employees and agents of the Corporation give bond to the Corporation,
with sufficient sureties, conditioned upon the faithful performance of the
duties of their respective offices or positions.
By-Laws, Page 19
<PAGE>
ARTICLE V
CAPITAL STOCK
SECTION 5.1 FORM. Shares of the Corporation shall, when fully paid, be
evidenced by certificates containing such information as is required by law and
approved by the Board of Directors. Certificates for stock of the Corporation
shall be signed by the Chairman of the Board, the Chief Executive Officer, the
President or a Vice President and by the Secretary or an Assistant Secretary of
the Corporation. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
SECTION 5.2 TRANSFER AGENTS AND REGISTRARS. The Board of Directors
shall have power to appoint one or more transfer agents or 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 or registrars.
SECTION 5.3 TRANSFERS. Upon surrender to the Corporation or to the
transfer agent or registrar of a certificate for shares endorsed or accompanied
by a written assignment signed by the holder of record or by his duly authorized
attorney-in-fact, it shall be the duty of the Corporation or its duly appointed
transfer agent or registrar, to issue a new certificate to the person entitled
thereto, to cancel the old certificate, and to record the transaction on the
books of the Corporation.
SECTION 5.4 RESTRICTIONS ON TRANSFER. A lawful restriction on the
transfer or registration of transfer of shares is valid and enforceable against
the holder or a transferee of the holder if the restriction complies with the
requirements of law and its existence is noted conspicuously on the front or
back of the certificate representing the shares. Unless so noted, a restriction
is not enforceable against a person without knowledge of the restriction.
By-Laws, Page 20
<PAGE>
SECTION 5.5 LOST CERTIFICATES. The Corporation may issue a new stock
certificate in the place of any certificate theretofore issued by it, alleged to
have been lost, stolen or destroyed, and the Corporation may require the owner
of the lost, stolen or destroyed certificate, or his legal representative, to
give the Corporation a bond (or such other agreement, undertaking or security as
the Corporation shall determine is appropriate) sufficient to indemnify it
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
SECTION 5.6 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 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.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.1 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.
SECTION 6.2 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 6.3 EXECUTION OF INSTRUMENTS. The Chairman of the Board and the
Chief Executive Officer each may enter into any contract or execute and deliver
any instrument in the name and on behalf of the Corporation. The Board of
Directors, the Chairman of the Board or the Chief Executive Officer may
authorize any other officer, employee or agent to enter into any contract or
execute and deliver any instrument in the name and on behalf of the Corporation.
Any such authorization may be general or limited to specific contracts or
instruments.
By-Laws, Page 21
<PAGE>
SECTION 6.4 CONSTRUCTION. In the event of any conflict between the
provisions of these Bylaws as in effect from time to time and the provisions of
the Articles of Incorporation of the Corporation as in effect from time to time,
the provisions of the Articles of Incorporation shall be controlling. As used in
these Bylaws, the term "Articles of Incorporation" shall mean the articles of
incorporation of the Corporation filed with the State Corporation Commission
pursuant to ss.13.1-618 of the Virginia Stock Corporation Act, as amended from
time to time. As used herein, unless the context otherwise requires: (i) the
terms defined herein shall have the meaning set forth herein for all purposes;
(ii) the terms "include," "includes," and "including" are deemed to be followed
by "without limitation" whether or not they are in fact followed by such words
or words of like import; (iii) "writing," "written" and comparable terms refer
to printing, typing, handwriting and other means of reproducing words in a
visible form; (iv) "hereof," "herein," "hereunder" and comparable terms refer to
the entirety of these Bylaws and not to any particular article, section or other
subdivision hereof; and (v) references to any gender include references to all
genders, and references to the singular include references to the plural and
vice versa. As used in these Bylaws, the term "non-management unaffiliated
director" means a director who (i) is not a full-time officer or employee of the
Corporation or a former full-time officer or employee of the Corporation who has
a consulting arrangement with the Corporation; (ii) is not related (by blood,
marriage or adoption, not more remote than first cousin) to any other director,
or to any officer of the Corporation or any of its subsidiaries; and (iii) is
not an owner of more than 5% of equity interest in any entity engaged in one or
more transactions with the Corporation or any of its subsidiaries involving (a)
payments in excess of 5% of the lesser of the entity's or the Corporation's
consolidated revenues, or (b) loans to the Corporation or any of its
subsidiaries exceeding 5% of the lesser of the consolidated assets of the
Corporation or the lender.
SECTION 6.5 AMENDMENTS. These Bylaws may be amended or repealed, and
new Bylaws may be made, at any regular or special meeting of the Board of
Directors. Bylaws made by the Board of Directors may be repealed or changed and
new Bylaws may be made by the shareholders, and the shareholders may prescribe
that any Bylaw made by them shall not be altered, amended or repealed by the
Board of Directors.
By-Laws, Page 22
EXHIBIT 4.5
CONFORMED COPY
AMENDMENT NO. 2
AMENDMENT NO. 2 dated as of August 26, 1998 among SMITHFIELD FOODS,
INC., a corporation duly organized and validly existing under the laws of the
State of Virginia (the "Borrower"); the SUBSIDIARY GUARANTORS party hereto (the
"Subsidiary Guarantors"); the LENDERS party hereto (the "Lenders"); and THE
CHASE MANHATTAN BANK, as agent for the Lenders (in such capacity, the
"Administrative Agent").
The parties hereto are parties to a Credit Agreement dated as of
July 15, 1997 (as amended to and in effect on the date hereof, the "Credit
Agreement"). Capitalized terms used but not otherwise defined herein have the
meanings given them in the Credit Agreement. The parties wish to amend certain
definitions and financial covenants in the Credit Agreement.
Section 1. Amendments. Subject to the execution and delivery hereof
by the Borrower, the Subsidiary Guarantors, the Required Lenders and the
Administrative Agent, but effective as of May 3, 1998, the Credit Agreement is
hereby amended as follows:
A. General. All references in the Credit Agreement to the
Credit Agreement (including indirect references) shall be deemed to be
references to the Credit Agreement as amended hereby.
B. New Definitions. Section 1.01 of the Credit Agreement shall
be amended by adding the following new definitions in the appropriate
alphabetical locations:
"Consolidated EBIT" means, for any period, an amount equal to (a)
the sum for such period of (i) Consolidated Net Income, (ii) to the extent
subtracted in determining such Consolidated Net Income, provisions for (x)
taxes based on income and (y) Consolidated Interest Expense minus (b) any
items of gain (or plus any items of loss) which were included in
determining such Consolidated Net Income and were not realized in the
ordinary course of business.
"Current Inventory" means, as at any date with respect to any
Person, all Inventory (i) that is owned by (and in the possession or under
the control of) such Person as at such date, (ii) that is not subject to
any Lien, (iii) that meets all standards imposed by any governmental
agency or department or division thereof having regulatory authority over
such inventory, its use or sale, (iv) for which such Person has made full
and final payment and (v) that is currently usable in the manufacturing
process or saleable in the normal course of such Person's business without
any notice to, or consent of, any governmental agency or department or
division thereof (excluding however, except to the extent that the
Required Lenders otherwise agree with respect to any specific customer or
third-party processor, any such Inventory that has been shipped to a
customer of such Person, including third-party processors, even if on a
consignment or "sale or return" basis, and excluding repair and
replacement parts for machinery and equipment). Notwithstanding anything
in clause (v) of the foregoing sentence to the contrary (but subject to
clauses (i) through (iv) of the foregoing sentence), Current Inventory
shall include but not be limited to all barrows, gilts, boars, sows,
feeder pigs, suckling pigs, nursery pigs and commercial sows and boars,
multiplier hogs, nucleus hogs and other hogs (collectively, "Hogs") at the
time of determination owned and being raised at facilities owned by such
Person or at facilities subject to an exclusive contract with such Person
(i.e., the operator of such facility has no similar contract with any
other Person) for the feeding and raising of Hogs.
"Current Receivables" means, as at any date with respect to any
Person, the aggregate amount of all accounts (as defined in the Uniform
Commercial Code) of such Person arising from the sale by such Person of
Inventory in the ordinary course of its business and which accounts are
not subject to any Lien, other than the following accounts (determined
without duplication):
(a) any account not payable in a currency freely
convertible into Dollars,
(b) any account that is not paid within 60 days after the date
of the invoice for the related inventory,
(c) any account owing from a subsidiary or Affiliate of such
Person,
(d) any account owing from an account debtor that is insolvent
or the subject of a bankruptcy case,
(e) any account that is more than 28 days past due,
(f) all accounts of any account debtor if more than 20% of the
aggregate amount of the accounts owing from such account debtor are
more than 28 days past due,
(g) all accounts owing from any account debtor if the accounts
owing from such account debtor and its Affiliates at the time exceed
10% of all accounts then payable to the Obligors,
(h) any account as to which there is any unresolved dispute
with the respective account debtor (but only to the extent of the
amount thereof in dispute),
(i) any account representing an obligation for goods sold on
consignment, approval or a sale-or-return basis or subject to any
other repurchase, return or offset arrangement,
(j) any amount as to which there is an offsetting liability
from the Borrower, any Subsidiary or any Affiliate of the Borrower
(but only to the extent of the amount of such offsetting liability),
and
(k) all amounts reserved by any Subsidiary or Affiliate of the
Borrower related to advertising and promotional programs for the
respective account debtor (excluding general promotional reserves
that are not reserved on a specific account basis).
C. Amended Definitions. The definition of "Consolidated Fixed
Charges" in Section 1.01 of the Credit Agreement shall be deleted, and Section
1.01 of the Credit Agreement shall be amended by amending the following
definitions to read in their entirety as follows:
"Aggregate Consideration" means, in connection with any Acquisition,
an amount equal to (a) the aggregate consideration, in whatever form
(including, without limitation, cash payments, the principal amount of
promissory notes given by the Borrower or any Subsidiary Guarantor and
Indebtedness assumed by the Borrower or any Subsidiary Guarantor in
connection with such Acquisition or Indebtedness for which the Borrower or
any Subsidiary Guarantor becomes liable, as maker, guarantor or otherwise,
in connection with such Acquisition, the aggregate amount payable to
acquire, extend and exercise any option, the aggregate amount payable
under non-competition agreements and management agreements, and the fair
market value of other property delivered, but excluding consideration in
the form of common stock of the Borrower) paid, delivered or assumed by
the Borrower and its Subsidiaries for such Acquisition minus (b) the sum
of (i) the amount, if any, of any increase in the Consolidated Borrowing
Base resulting from such Acquisition on the date of the Consummation
thereof and (ii) to the extent not included in the foregoing clause (i),
an amount equal to 75% of the aggregate amount of Current Inventory and
Current Receivables acquired by the Borrower and its Subsidiaries in
connection with such Acquisition.
"Capital Expenditures" means, with respect to any Person, for any
period, all expenditures made and liabilities incurred during such period
for the acquisition of assets (including any replacement in the ordinary
course of business without reduction for sales, retirements or
replacements) which are not, in accordance with GAAP, treated as expense
items for such Person in the year made or incurred or as a prepaid expense
applicable to a future year or years, and shall include all Capital Lease
Obligations, but shall not include expenditures made or liabilities
incurred during such period for Acquisitions or (except as provided in the
last sentence of this definition) Investments. The amount of Capital
Expenditures in any period shall be calculated without duplication in
accordance with GAAP. Notwithstanding the foregoing, with respect to the
acquisition of replacement sows by the Borrower or any of its Subsidiaries
in the ordinary course of business, the amount included in Capital
Expenditures shall be the acquisition cost of such sows, reduced by the
proceeds received by the Borrower or any of its Subsidiaries from the sale
of the replaced sows. For purposes of Section 6.12(f) hereof, "Capital
Expenditures" shall also include expenditures for Investments of the type
specified in sections (e) and (f) of the definition of Permitted
Investments.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United
States of America), in each case maturing within one year from the
date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, the highest credit rating obtainable from S&P or from
Moody's;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date
of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic
office of any commercial bank organized under the laws of the United
States of America or any State thereof which has a combined capital
and surplus and undivided profits of not less than $500,000,000;
(d) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above
and entered into with a financial institution satisfying the
criteria described in clause (c) above;
(e) subject to the limitations of Section 6.12(f), the common
stock of the Borrower; and
(f) subject to the limitations of Section 6.12(f), capital
stock of corporations in similar or related businesses to that of
the Borrower and listed on the New York Stock Exchange, NASDAQ, and
the American Stock Exchange.
D. Additional Representation. Article III of the Credit Agreement
shall be amended by adding new Section 3.16, to read as follows:
SECTION 3.16 Year 2000. Any reprogramming required to permit the
proper functioning, prior to, in and following the year 2000, of (i) the
Borrower's computer systems and (ii) equipment containing embedded
microchips (including systems and equipment supplied by others or with
which the Borrower's systems interface) and the testing of all such
systems and equipment, as so reprogrammed, will be completed by September
30, 1999, such that any effect of the year 2000 will not be a Material
Adverse Effect. The cost to the Borrower of such reprogramming and testing
and of the reasonably foreseeable consequences of year 2000 to the
Borrower (including, without limitation, reprogramming errors and the
failure of others' systems or equipment) will not result in a Default or a
Material Adverse Effect.
E. Amended Covenant. Section 6.12(e) of the Credit Agreement shall
be amended to read in its entirety as follows:
(e) The Borrower will not permit the ratio of Consolidated EBIT to
Consolidated Interest Expense for any period of four consecutive fiscal
quarters of the Borrower to be less than 2.5 to 1.
F. Additional Reporting Covenant. Section 5.01 of the Credit
Agreement shall be amended by deleting "and" from the end of subsection (g)
thereof, replacing the period at the end of subsection (h) thereof with "; and"
and adding a new clause, to read as follows:
(i) on or prior to each September 1 and April 1 beginning on or
prior to September 1, 1998, a written report, in form and substance
reasonably acceptable to the Administrative Agent and the Lenders,
describing the status of the Borrower's compliance with Section 6.14.
G. Amended Reporting Covenant. Section 5.01(g) of the Credit
Agreement shall be amended to read in its entirety as follows:
(g) as soon as available after the end of each fiscal year of the
Borrower, a report (prepared at the expense of the Borrower) of an
independent collateral auditor (which may be, or be affiliated with, one
of the Lenders) approved by the Administrative Agent with respect to the
Receivables and Inventory components included in the Consolidated
Borrowing Base which report shall indicate that, based upon a review by
such auditors of the Receivables (including, without limitation,
verification with respect to the amount, aging, identity and credit of the
respective account debtors and the billing practices of the Borrower and
its Subsidiaries) and Inventory (including, without limitation,
verification as to the value, location and respective types), the
information set forth in the Borrowing Base Certificate then most recently
received by the Administrative Agent hereunder is accurate and complete in
all material respects;
H. Additional Negative Covenant. Article VI of the Credit Agreement
shall be amended by adding new Section 6.14, to read as follows:
6.14 Year 2000 Compliance. The Borrower will assure that (a) any
reprogramming required to permit the property functioning, prior to, in
and following the year 2000, of (i) the Borrower's computer systems and
(ii) equipment containing embedded microchips (including systems and
equipment supplied by others or with which the Borrower's systems
interface) and the testing of all such systems and equipment, as so
reprogrammed, will be completed by September 30, 1999, such that any
effect of the year 2000 will not be a Material Adverse Effect.
Section 2. Representations and Warranties. The Borrower hereby
represents and warrants to the Lenders and the Administrative Agent that the
representations and warranties set forth in Article III of the Credit
Agreement (as amended by this Amendment No. 2) are on the date hereof true
and complete as if made on and as of such date and as if each reference in
such representations and warranties to the Credit Agreement included
reference to such agreement as amended by this Amendment No. 2.
Section 3. Miscellaneous. Except as herein provided, the Credit
Agreement shall remain unchanged and in full force and effect. This
Amendment No. 2 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and
any of the parties hereto may execute this Amendment No. 2 by signing any
such counterpart and sending the same by telecopier, mail messenger or
courier to the Administrative Agent or counsel to the Administrative Agent.
This Amendment No. 2 shall be governed by, and construed in accordance with,
the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 2 to be duly executed as of the day and year first above written.
SMITHFIELD FOODS, INC.
By /s/Aaron D. Trub
-----------------------------
Name: Aaron D. Trub
Title: Vice President
Chief Financial Officer
Secretary
THE SMITHFIELD PACKING COMPANY,
INCORPORATED
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
GWALTNEY OF SMITHFIELD, LTD.
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
PATRICK CUDAHY INCORPORATED
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
JOHN MORRELL & CO.
By/s/Aaron D. Trub
-------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
LYKES MEAT GROUP, INC.
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
BROWN'S OF CAROLINA, INC.
By/s/Aaron D. Trub
-----------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
HANCOCK'S OLD FASHIONED COUNTRY
HAMS, INC.
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
VALLEYDALE FOODS, INC.
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
COPAZ PACKING CORPORATION
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
SUNNYLAND, INC.
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
SMITHFIELD PACKING-LANDOVER, INC.
By/s/Aaron D. Trub
------------------------------
Name: Aaron D. Trub
Title: Secretary and Treasurer
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent
By/s/Gary L. Spevak
------------------------------
Name: Gary L. Spevak
Title: Vice President
COOPERATIEVE CENTRALE RAIFFEISEN -
BOERENLEENBANK B.A. "RABOBANK
NEDERLAND", NEW YORK BRANCH
By/s/Dana W. Hemenway
-----------------------------
Name: Dana W. Hemenway
Title: Vice President
By/s/W. Pieter C. Kodde
-----------------------------
Name: W. Pieter C. Kodde
Title: Vice President
AGRIBANK, FCB
By/s/J. Hathaway
-----------------------------
Name: J. Hathaway
Title: Director
CREDIT AGRICOLE INDOSUEZ
By/s/David Bouhl
-----------------------------
Name: David Bouhl
Title: First Vice President
By/s/W. Leroy Startz
-----------------------------
Name: W. Leroy Startz
Title: First Vice President
DG BANK, DEUTSCHE
GENOSSENSCHAFTSBANK,
CAYMAN ISLANDS BRANCH
By/s/Kurt A. Morris
-----------------------------
Name: Kurt A. Morris
Title: Vice President
By/s/Bobby Ryan Oliver, Jr.
-----------------------------
Name: Bobby Ryan Oliver, Jr.
Title: Vice President
NATIONSBANK, N.A.
By/s/Barry P. Sullivan
-----------------------------
Name: Barry P. Sullivan
Title: Vice President
U.S. Bancorp Ag Credit, Inc.
(f/k/a FBS AG CREDIT, INC.)
By/s/Stephan A. McWilliams
-----------------------------
Name: Stephan A. McWilliams
Title: Vice President
SUNTRUST BANK, ATLANTA
By/s/Robert V. Honeycutt
-----------------------------
Name: Robert V. Honeycutt
Title: Vice President
By/s/Gregory L. Cannon
-----------------------------
Name: Gregory L. Cannon
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.
By
Name:
Title:
DRESDNER BANK AG
By/s/Thomas A. Esposito
------------------------------
` Name: Thomas A. Esposito
Title: Assistant Treasurer
By/s/A.R. Morris
------------------------------
Name: A. Richard Morris
Title: First Vice President
FARM CREDIT SERVICES OF THE MIDLANDS, PCA
By/s/James R. Knuth
------------------------------
Name: James R. Knuth
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
By/s/Greg Hennenfent
------------------------------
Name: Greg Hennenfent
Title: Vice President
<PAGE>
SANWA BANK LIMITED
By/s/Dominic J. Sorresso
------------------------------
Name: Dominic J. Sorresso
Title: Vice President
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By/s/Suresh S. Tata
------------------------------
Name: Suresh S. Tata
Title: Senior Vice President
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-02-1999
<PERIOD-END> AUG-02-1998
<CASH> 37,944
<SECURITIES> 0
<RECEIVABLES> 179,792
<ALLOWANCES> 1,801
<INVENTORY> 294,938
<CURRENT-ASSETS> 547,197
<PP&E> 820,214
<DEPRECIATION> 245,395
<TOTAL-ASSETS> 1,233,836
<CURRENT-LIABILITIES> 269,023
<BONDS> 539,144
0
0
<COMMON> 18,769
<OTHER-SE> 337,166
<TOTAL-LIABILITY-AND-EQUITY> 1,233,836
<SALES> 865,823
<TOTAL-REVENUES> 865,823
<CGS> 793,046
<TOTAL-COSTS> 793,046
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 9,706
<INCOME-PRETAX> (7,865)
<INCOME-TAX> (2,540)
<INCOME-CONTINUING> (5,325)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,325)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>
