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 February 1, 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.
999 Waterside Drive, Suite 900
Norfolk, Virginia 23510
(757) 365-3000
Virginia 52-0845861
- --------------------------- -------------------------
(State of Incorporation) (I.R.S. Employer
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
Class Shares outstanding at March 16, 1998
- ----------------------------- -----------------------------------------
Common Stock, $.50 par value 37,537,362
1-16
<PAGE>
SMITHFIELD FOODS, INC.
CONTENTS
<TABLE>
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
<S> <C>
Consolidated Condensed Balance Sheets - February 1, 1998 and April 27, 1997 3-4
Consolidated Condensed Statements of Income - 14 Weeks Ended February 1,
1998 and 13 Weeks Ended January 26, 1997 and 40 Weeks Ended February 1,
1998 and 39 Weeks Ended January 26, 1997 5
Consolidated Condensed Statements of Cash Flows - 40 Weeks Ended February 1, 1998
and 39 Weeks Ended January 26, 1997 6
Notes to Consolidated Condensed Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of 9-12
Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13-14
Item 6. Exhibits and Reports on Form 8-K 14-15
</TABLE>
2-16
PART I. FINANCIAL INFORMATION
SMITHFIELD FOODS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
(In thousands) February 1, 1998 April 27, 1997
---------------- --------------
ASSETS (Unaudited)
<S> <C>
Current assets:
Cash $ 36,416 $ 25,791
Accounts receivable, net 161,227 166,094
Inventories 252,460 253,276
Prepaid expenses and other current assets 55,101 43,217
---------- ---------
Total current assets 505,204 488,378
---------- ---------
Property, plant and equipment 687,926 614,393
Less accumulated depreciation (223,336) (187,518)
---------- ---------
Net property, plant and equipment 464,590 426,875
---------- ---------
Other assets:
Investments in partnerships 53,287 44,582
Other 39,487 35,419
---------- ---------
Total other assets 92,774 80,001
---------- ---------
$1,062,568 $ 995,254
========== =========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3-16
<PAGE>
SMITHFIELD FOODS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
(In thousands) February 1, 1998 April 27, 1997
- -------------- ---------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited)
<S> <C>
Current liabilities:
Notes payable $ - $ 77,500
Current portion of long-term debt and capital lease obligations 9,036 7,800
Accounts payable 120,836 132,268
Accrued expenses and other current liabilities 143,077 106,498
---------- --------
Total current liabilities 272,949 324,066
---------- --------
Long-term debt and capital lease obligations 386,211 288,486
---------- --------
Other noncurrent liabilities:
Pension and post-retirement benefits 47,978 55,320
Other 15,094 19,896
---------- --------
Total other noncurrent liabilities 63,072 75,216
---------- --------
Stockholders' equity:
Preferred stock, $1.00 par value, 1,000,000 authorized shares
Common stock, $.50 par value, 100,000,000 and 25,000,000
authorized shares; 37,527,362 and 19,196,681 issued 18,769 9,598
Additional paid-in capital 96,971 113,661
Retained earnings 224,596 191,870
Treasury stock, at cost, 437,000 shares - (7,643)
---------- --------
Total stockholders' equity 340,336 307,486
---------- --------
$1,062,568 $995,254
========== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4-16
<PAGE>
SMITHFIELD FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
14 Weeks 13 Weeks 40 Weeks 39 Weeks
Ended Ended Ended Ended
(In thousands, except per share data) February 1, 1998 January 26, 1997 February 1, 1998 January 26, 1997
- ------------------------------------- ---------------- ---------------- ---------------- ----------------
<S> <C>
Sales $1,095,999 $1,080,979 $2,993,661 $2,943,075
Cost of sales 979,336 992,275 2,707,844 2,722,032
---------- ---------- ---------- ----------
Gross profit 116,663 88,704 285,817 221,043
Selling, general and
administrative expenses 64,157 48,423 166,526 135,296
Depreciation expense 11,018 9,036 31,086 26,141
Interest expense 8,424 7,278 23,827 20,378
Nonrecurring charge - - 12,600 -
---------- ---------- ---------- ----------
Income before income taxes 33,064 23,967 51,778 39,228
Income taxes 9,345 8,233 19,052 13,731
---------- ---------- ---------- ----------
Net income $ 23,719 $ 15,734 $ 32,726 $ 25,497
=========== =========== ========== ==========
Net income per common share:
Basic $.63 $.43 $.87 $.68
===== ===== ===== =====
Diluted $.60 $.40 $.82 $.66
===== ===== ===== =====
Average common shares outstanding:
Basic 37,537 36,073 37,531 36,046
====== ====== ====== ======
Diluted 39,781 38,926 39,687 37,137
====== ====== ====== ======
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5-16
<PAGE>
SMITHFIELD FOODS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
40 Weeks 39 Weeks
Ended Ended
(In thousands) February 1, 1998 January 26, 1997
- -------------- ---------------- ----------------
<S> <C>
Cash flows from operating activities:
Net income $ 32,726 $ 25,497
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 33,592 28,451
Decrease (increase) in accounts receivable 9,813 (39,680)
Decrease (increase) in inventories 8,820 (980)
Increase in prepaid expenses and other current assets (10,405) (3,925)
Decrease (increase) in other assets 4,313 (9,271)
(Decrease) increase in other liabilities (1,227) 19,544
Gain on sale of property, plant and equipment (764) (2,893)
-------- --------
Net cash provided by operating activities 76,868 16,743
-------- --------
Cash flows from investing activities:
Capital expenditures (73,287) (47,258)
Business acquisitions, net of cash (6,997) (34,086)
Proceeds from sale of property, plant and equipment 1,161 3,452
Investments in partnerships (8,705) (7,387)
-------- --------
Net cash used in investing activities (87,828) (85,279)
-------- --------
Cash flows from financing activities:
Net repayments on notes payable (75,000) (10,063)
Proceeds from issuance of long-term debt 2,900 146,250
Proceeds from long-term credit facility 177,000 -
Principal payments on long-term debt and capital lease obligations (83,439) (74,876)
Exercise of common stock options 124 1,270
Preferred dividends - (1,012)
-------- --------
Net cash provided by financing activities 21,585 61,569
-------- --------
Net increase (decrease) in cash 10,625 (6,967)
Cash at beginning of period 25,791 28,529
-------- --------
Cash at end of period $ 36,416 $ 21,562
======== ========
Supplemental disclosures of cash flow information:
Cash payments during period:
Interest (net of amount capitalized) $ 22,337 $ 19,421
======== ========
Income taxes $ 3,886 $ 7,968
======== ========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
6-16
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 April 27, 1997.
(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) February 1, 1998 April 27, 1997
-------------- ---------------- --------------
Fresh and processed meats $172,533 $183,480
Hogs on farms 51,536 44,563
Manufacturing supplies 18,218 15,732
Other 10,173 9,501
-------- --------
$252,460 $253,276
======== ========
(4) In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings per Share," ("SFAS 128") which is effective this quarter. All
earnings per share amounts for all periods are presented to conform to SFAS
128 requirements. The computation for basic and dilutive net income per
share follows:
<TABLE>
<CAPTION>
14 Weeks 13 Weeks 40 Weeks 39 Weeks
(In thousands, Ended Ended Ended Ended
except per share data) Feb. 1, 1998 Jan. 26, 1997 Feb. 1, 1998 Jan. 26, 1997
------------------------ ------------ ------------- ------------ -------------
<S> <C>
Net income $23,719 $15,734 $32,726 $25,497
Dividends on preferred stock - (337) - (1,012)
------- -------- ------- -------
Net income available to common
stockholders $23,719 $15,397 $32,726 $24,485
======= ======= ======= =======
Average common shares
outstanding:
Basic 37,537 36,073 37,531 36,046
Dilutive stock options 2,244 1,520 2,156 1,091
Dilutive convertible
preferred stock - 1,333 - -
------- ------- ------- -------
Diluted 39,781 38,926 39,687 37,137
======= ======= ======= =======
Net income per common share
Basic $.63 $.43 $.87 $.68
======= ======= ======= =======
Diluted $.60 $.40 $.82 $.66
======= ======= ======= =======
</TABLE>
7-16
<PAGE>
(5) On February 9, 1998, the Company issued $200 million of 10-year 7.625%
senior subordinated notes. The net proceeds from the sale of the notes were
used to repay indebtedness classified as long-term debt under the Company's
revolving credit facilities with the balance invested temporarily in
short-term marketable debt securities.
(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 40 weeks ended
February 1, 1998. In December 1997, the Company filed an appeal of the
Court's judgment with the U.S. Court of Appeals for the Fourth Circuit.
(7) In August 1997, 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 income per share amounts have been adjusted in the consolidated
condensed statements of income to reflect the stock split. Also in August
1997, the Company's stockholders approved an increase in the number of
authorized common shares from 25,000,000 to 100,000,000 and approved the
reincorporation of the Company in Virginia from Delaware. The
reincorporation does not affect the manner in which the Company operates.
Since Virginia law does not recognize treasury stock, the shares previously
classified as treasury stock were returned to unissued resulting in a
reduction in common stock and additional paid-in capital for the cost basis
of the shares.
8-16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Smithfield Foods, Inc. (the "Company"), as a holding company, conducts its pork
processing operations through five principal subsidiaries: Gwaltney of
Smithfield, Ltd. ("Gwaltney") and The Smithfield Packing Company, Incorporated
("Smithfield Packing"), both based in Smithfield, Virginia; John Morrell & Co.
("John Morrell"), based in Cincinnati, Ohio; Patrick Cudahy, Incorporated
("Patrick Cudahy"), based in Cudahy, Wisconsin; and Lykes Meat Group, Inc.
("Lykes"), based in Plant City, Florida. The Company also conducts hog
production operations through its 86-percent owned subsidiary, Brown's of
Carolina, Inc. ("Brown's"), and through a 50-percent interest in
Smithfield-Carroll's ("Smithfield-Carroll's"), a joint hog production
arrangement between the Company and Carroll's Foods of Virginia, Inc., an
affiliate of Carroll's Foods, Inc., one of the largest hog producers in the
United States. Both Brown's and Smithfield-Carroll's produce hogs for the
Company's pork processing plants in Bladen County, North Carolina and
Smithfield, Virginia. The Company is also a 33-percent participant in the Circle
Four joint hog production arrangement ("Circle Four") with Carroll's Foods,
Inc., Murphy Family Farms, Inc. and Prestage Farms, Inc., three of the largest
hog producers in the United States, which conducts hog production operations in
Milford, Utah. The hogs produced by Circle Four are sold to an unrelated party.
RECENT DEVELOPMENT
On December 18, 1997, the Company announced that it had reached an agreement
with the members of the Schneider family who control approximately 75% of the
voting common shares ("Schneider Common Shares") and 17% of the nonvoting Class
A Shares ("Schneider Class A Shares") of Schneider Corporation ("Schneider"), a
Canadian meat processor based in Kitchener, Ontario, on the terms of a proposed
offer to purchase such shares. Based on filings made by Schneider with the
Ontario Securities Commission, as of December 18, 1997, there are 738,954
Schneider Common Shares and 6,105,565 Schneider Class A Shares outstanding.
Under the agreement, the Company has agreed to make a registered public
exchange offer to acquire any and all Schneider Common Shares and Schneider
Class A Shares on the basis of 0.5415 of an exchangeable share ("Exchangeable
Share") of a newly incorporated, wholly-owned Canadian subsidiary of the Company
for each share of Schneider. Under the agreement, the members of the Schneider
family party to the agreement have committed to tender all of their Schneider
shares into the offer. Each whole Exchangeable Share may be exchanged for one
share of the Company's Common Stock. For purposes of establishing the exchange
ratio, the parties agreed on a value of $25.00 (Can.) for each Schneider share
and $32.50 (U.S.) for each Company share. The Exchangeable Shares will have
voting, dividend and liquidation rights that are, as nearly as practicable,
equivalent to those of the Company's Common Stock.
Schneider products include bacon, hams, sausages, specialty sausage,
wieners, sliced meats, deli meats and grocery entrees. According to Schneider's
most recent audited financial statements filed with the Ontario Securities
Commission, prepared in accordance with Canadian generally accepted accounting
principles, for Schneider's fiscal year ended October 25, 1997, Schneider
recorded sales of $813.4 million (Can.) and at such date Schneider had total
assets of $278.0 million (Can.) and total debt of $87.5 million (Can.).
Subject to regulatory approvals and customary conditions, the Company
expects to consummate its exchange offer in April 1998, but there can be no
assurance that the proposed transaction will be consummated as expected. If all
Schneider Common Shares and Schneider Class A Shares are tendered and accepted
in the Company's exchange offer, the Company would over time issue approximately
3.8 million shares of the Company's Common Stock upon surrender of the
Exchangeable Shares. The Schneider Board of Directors has not made any
recommendation with respect tot he Company's proposed offer, and has announced a
position of "no recommendation" with respect to the competing tender offer by
Maple Leaf Foods, Inc. ("Maple Leaf") of $29.00 (Can.) cash (or, at the
offeree's option, equivalent value in Maple Leaf stock, provided such amount
does not exceed 6.2 million Maple Leaf common shares in the aggregate) per
Schneider share.
In January 1998, certain shareholders of Schneider Class A Shares
commenced an action in a court in Ontario, Canada, seeking, among other things,
an order that Schneider's Board of Directors acted in an oppressive manner in
regard to certain action taken in support of the Company's offer and the
Company's agreement with the Schneider family, an order permitting holders of
the Schneider Class A Shares to convert such shares into the Company's Common
Stock, and an order enjoining the making of the Company's offer. In February,
two other lawsuits (including one by Maple Leaf) were commenced seeking
substantially the same remedies as in the first lawsuit. The Company
anticipates that all the lawsuits will be tried together in April 1998.
9-16
<PAGE>
RESULTS OF OPERATIONS
The fiscal quarter ended February 1, 1998 represented 14 weeks of operations
compared to 13 weeks in the fiscal quarter ended January 26, 1997. Accordingly,
sales and all expense categories in the 14 weeks and the 40 weeks ended February
1, 1998 reflect the impact of an additional week of operations in comparison to
the corresponding periods in fiscal 1997.
14 Weeks Ended February 1, 1998 -
13 Weeks Ended January 26, 1997
Sales in the third quarter of fiscal 1998 increased $15.0 million, or 1.4%, from
the comparable period in fiscal 1997. The increase in sales reflected a 14.0%
increase in sales tonnage offset by an 11.1% decrease in unit sales prices
reflecting the impact of lower live hog costs. The increase in sales tonnage
reflected an 18.2% increase in fresh pork tonnage and a 3.5% increase in
processed meats tonnage.
Cost of sales decreased $12.9 million, or 1.3%, in the third quarter of
fiscal 1998, reflecting a 25.1% decrease in live hog costs offset by the
increased sales tonnage.
Gross profit in the third quarter of fiscal 1998 increased $28.0
million, or 31.5%, from the comparable period in fiscal 1997. The increase in
gross profit was primarily due to sharply improved margins on higher sales of
fresh pork and improved margins on higher sales of processed meats.
Selling, general and administrative expenses increased $15.7 million,
or 32.5%, in the third quarter of fiscal 1998 from the comparable period in
fiscal 1997. The increase was primarily due to higher selling, marketing and
product promotion costs associated with intensified efforts to market branded
fresh pork and processed meats.
Depreciation expense increased $2.0 million, or 21.9%, in the third
quarter of fiscal 1998 from the comparable period in fiscal 1997. The increase
was related to completed capital projects at several of the Company's processing
plants.
Interest expense increased $1.1 million, or 15.7%, in the third quarter
of fiscal 1998 from the comparable period in fiscal 1997, reflecting the funding
of capital projects.
Income before taxes in the third quarter of fiscal 1998 was adversely
affected by a $3.1 million loss at the Company's hog production group, compared
to a $5.5 million profit in the same period of fiscal 1997. The Company's hog
production group consists of the Company's ownership interests in Brown's,
Smithfield-Carroll's and Circle Four. During the 14 weeks ended February 1,
1998, the Company obtained 11.0% of the hogs it processed from Brown's and
Smithfield-Carroll's.
The effective income tax rate for the third quarter of fiscal 1998,
excluding the nonrecurring charge, was 28.3% compared with 34.4% in the
corresponding period in fiscal 1997, reflecting a lower tax rate on increased
foreign sales, benefits related to certain insurance contracts and the use of
employment related tax credits.
Reflecting the factors previously discussed, net income increased to
$23.7 million, or $.60 per diluted share, in the third quarter of fiscal 1998
compared with net income of $15.7 million, or $.40 per diluted share, in the
comparable period of fiscal 1997.
10-16
<PAGE>
40 Weeks Ended February 1, 1998 -
39 Weeks Ended January 26, 1997
Sales in the first nine months of fiscal 1998 increased $50.6 million, or 1.7%,
from the comparable period in fiscal 1997. The increase in sales reflected a
7.2% increase in sales tonnage offset by a 5.1% decrease in unit sales prices
reflecting the impact of lower live hog costs. The increase in sales tonnage
reflected a 5.7% increase in fresh pork tonnage combined with a 12.8% increase
in processed meats tonnage.
Costs of sales in the first nine months of fiscal 1998 were flat from
the comparable period of fiscal 1997 reflecting the increase sales tonnage which
was offset by lower unit costs reflecting lower live hog costs.
Gross profit in the first nine months of fiscal 1998 increased $64.8
million, or 29.3%, from the comparable period in fiscal 1997. The increase in
gross profit reflected improved margins on higher sales tonnage of both fresh
pork and processed meats.
Selling, general and administrative expenses increased $31.2 million,
or 23.1%, in the first nine months of fiscal 1998 from the comparable period in
fiscal 1997. The increase was related to the inclusion of the operations of
Lykes, which was acquired in November 1996, for the full fiscal period, and to
higher selling, marketing and product promotion costs associated with
intensified efforts to market branded fresh pork and processed meats.
Depreciation expense increased $4.9 million, or 18.9%, in the first
nine months of fiscal 1998 from the comparable period in fiscal 1997. The
increase was related to the inclusion of the operations of Lykes for the full
fiscal period and completed capital projects at several of the Company's
processing plants.
Interest expense increased $3.4 million, or 16.9%, in the first nine
months of fiscal 1998 from the comparable period in fiscal 1997. The increase
primarily reflected the interest costs on borrowings to finance the acquisition
of Lykes for the full fiscal period and the funding of capital projects.
A nonrecurring charge of $12.6 million 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 income taxes in the first nine months of fiscal 1998
benefited from a $12.5 million profit at the Company's hog production group
compared to a $16.8 million profit in the same period of fiscal 1997. During the
40 weeks ended February 1, 1998, the Company obtained 10.9% of the hogs it
processed from Brown's and Smithfield-Carroll's.
The effective income tax rate for the first nine months of fiscal 1998,
excluding the nonrecurring charge, decreased to 29.6% from 35.0% in the
corresponding period in fiscal 1997, reflecting a lower tax rate on increased
foreign sales, benefits related to certain insurance contracts and employment
related tax credits.
Excluding the nonrecurring charge, net income was $45.3 million, or
$1.12 per diluted share, for the first nine months of fiscal 1998. Including the
nonrecurring charge, net income in the first nine months of fiscal 1998 was
$32.7 million, or $.82 per diluted share, compared to net income of $25.5
million, or $.66 per diluted share, in the comparable period in fiscal 1997.
11-16
LIQUIDITY AND CAPITAL RESOURCES
In the first nine months of fiscal 1998, the Company's cash provided by
operations totaled $76.9 million. This increase in cash was the result of
profitable operations, noncash charges and decreased levels of accounts
receivable and inventories related to lower live hog costs.
The Company's capital expenditures totaled $73.3 million in the first
nine months of fiscal 1998. These capital expenditures included renovations and
expansion projects at several of the Company's processing plants, as well as the
acquisition of an idle slaughter facility in South Dakota and a hog production
operation in North Carolina. Additionally, the Company acquired substantially
all of the assets and business of Curly's Foods, Inc., based in Sioux City, Iowa
and certain of the assets and business of Mohawk Packing Co., based in San Jose,
California, both further processors primarily for the foodservice trade, for an
aggregate $15.9 million in cash plus $11.8 million of assumed liabilities.
The capital expenditures and acquisitions were funded with cash from
operations and borrowings under the Company's revolving credit facilities. Prior
to July 1997, the Company maintained $300 million of credit facilities,
consisting of a 364-day $225 million revolver and a two-year $75 million
revolver (the "Old Credit Facilities"). In July 1997, the Company and certain of
its subsidiaries entered into a loan agreement with a bank group providing for
$350 million in senior secured revolving credit facilities, consisting of a
five-year $300 million revolving credit facility and a 364-day $50 million
revolving credit facility (together, the "Revolving Credit Facilities"). In
connection with this refinancing, the Company repaid all borrowings under the
Old Credit Facilities, which were terminated. All credit facility borrowings
outstanding at February 1, 1998 were borrowed under the five-year revolving
credit facility and are reflected as long-term debt in the Company's financial
statements.
On February 9, 1998, the Company issued $200 million of 10-year 7.625%
senior subordinated notes in a transaction exempt from registration requirements
of the U.S. Securities Act. Substantially all the proceeds from the sale of the
notes were used to repay the Revolving Credit Facilities, with the balance
invested in short-term marketable debt securities. On February 10, 1998, the
364-day $50 million revolving credit facility was terminated. The issuance of
the $200 million of senior subordinated notes combined with internally generated
funds, provides the Company with significant flexibility to finance future
capital expenditures as well as expansion of its processed meats business
through strategic acquisitions and joint ventures.
As of February 1, 1998, the Company had definitive commitments of $13.1
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. The Company
believes that the total costs of the Year 2000 issue will not have a material
effect on the Company's results of operations nor pose significant operational
problems.
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 belief, future plans and strategies or
anticipated events and similar expressions concerning matters that are not
historical facts. The forward-looking information and statements in this Form
10-Q are subject to risks and uncertainties, including availability and prices
of raw materials, product pricing, competitive environment and related market
conditions, operating efficiencies, access to capital and actions of
governments (including agencies and courts), that could cause actual results to
differ materially from those expressed in or implied by the information or
statements.
12-16
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Regulation Generally. Like other participants in the meat processing
industry, the Company is subject to various laws and regulations administered by
United States, state and other government entities, including the Environmental
Protection Agency ("EPA") and corresponding state agencies such as the Virginia
State Water Control Board ("VSWCB"), the Virginia Department of Environmental
Quality ("VDEQ"), the North Carolina Department of Environment and Natural
Resources ("DENR"), the Iowa Department of Natural Resources and the South
Dakota Department of Environment and Natural Resources, as well as the United
States Department of Agriculture, the United States Food and Drug Administration
and the United States Occupational Safety and Health Administration. Management
believes that the Company presently is in compliance with all such laws and
regulations in all material respects, and that continued compliance with these
standards will not have a material adverse effect on the Company's financial
position or results of operations. Furthermore, with respect to the litigation
and investigations discussed below, the Company believes that the ultimate
resolution of these suits will not have a material adverse effect on its
financial position or annual results of operations.
Permit Violations At Smithfield Packing And Gwaltney Plants;
Administrative Consent Orders; Connection To HRSD System. The National Pollutant
Discharge Elimination System permit (the "discharge permit") for the Smithfield
Packing and Gwaltney plants in Smithfield, Virginia, as modified by the VSWCB in
1990, imposed more stringent effluent limitations on phosphorus and two species
of nitrogen (ammonia and Total Kjeldahl Nitrogen) than the wastewater treatment
facilities at those plants were designed to meet. To achieve compliance with
these new limitations, the Company agreed to discontinue wastewater discharges
into the Pagan River and connect its wastewater treatment facilities to the
regional sewage collection and treatment system operated by the Hampton Roads
Sanitation District ("HRSD"), when available. This agreement was embodied in an
administrative consent order issued by the VSWCB in 1991 (the "1991 Order"). The
VSWCB issued a second consent order (the "1994 Order") which concerned
compliance with other discharge permit terms pending connection to the HRSD
system.
The Company connected its Gwaltney and Smithfield Packing wastewater
treatment facilities to the HRSD system in June 1996 and July 1997,
respectively, which were the earliest dates that the HRSD could serve those
individual plants. To prepare for making these connections, the Company made
more than $2.7 million in capital expenditures to upgrade its existing
wastewater treatment facilities. The Company must continue to operate these
facilities to produce a wastewater suitable for treatment in the HRSD system
and, in addition, pay the HRSD approximately $1.8 million per year for
wastewater treatment. The Company will account for these wastewater treatment
costs as current period charges in the years in which such costs are incurred.
These wastewater treatment facilities no longer make any discharges
that are subject to regulation under the discharge permit. However, before being
connected to the HRSD system, these facilities exceeded applicable discharge
permit and consent orders limitations as discussed below.
Record-Keeping Violations. Under its discharge permit, the Company
regularly tested wastewater to determine compliance with applicable effluent
limitations. United States and state laws require that records of such tests be
maintained for three years. Failure to maintain these records may result in the
imposition of civil penalties, and criminal sanctions may be imposed in the
event of false reporting or destruction of records. In July 1994, the Company
learned that records of many tests conducted from 1991 through early 1994 could
not be found. Despite a careful search, most of these records were never found
and are believed to have been destroyed. The employee responsible for the
supervision of the tests and the maintenance of the test records was replaced
and subsequently terminated. In October 1996, that former employee entered a
guilty plea and was convicted in the United States District Court for the
Eastern District of Virginia of 23 violations of the United States Clean Water
Act, including records destruction and making false reports. Eight of these
violations related to his duties as the Company's employee, while 15 violations
were committed during his outside consulting activities for public and private
entities unrelated to the Company. In January 1998, several Smithfield employees
responsible for wastewater treatment were subpoenaed and testified before a
federal grand jury in Norfolk, Virginia. Subsequently, the grand jury issued
subpoenas requiring production of various environmental materials relating to
the Company's Smithfield, Virginia wastewater. Neither the Company nor any of
its other present or former employees has been charged with any criminal
violation arising from these matters, but there can be no assurance that charges
will not be brought.
13-16
<PAGE>
EPA Suit. On August 8, 1997, in United States of America v. Smithfield
Foods, Inc. et al. (Civil Case No. 2:96:cv1204), a federal judge for the United
States District Court for the Eastern District of Virginia imposed a $12.6
million civil penalty on the Company and its Smithfield Packing and Gwaltney
subsidiaries. The Company recognized a nonrecurring charge of $12.6 million
during the first quarter of fiscal 1998 with respect to this penalty. This suit
was brought by the EPA for violations of the United States Clean Water Act
before the Company's wastewater treatment facilities were connected to the HRSD
system. The court found 6,982 days of violation. The Company asserted in its
defense that approximately 5,500 of these violations were excused by the 1991
and 1994 Orders, which were issued by VSWCB in its role as primary enforcement
authority under the federal-state Clean Water Act program. The Court held that
the EPA was not bound by its awareness of, and failure to object to, those
orders. The Company has appealed this and other aspects of the court's decision
to the United States Court of Appeals for the Fourth Circuit in Richmond,
Virginia. There can be no assurance as to the outcome of such appeal or any
subsequent proceedings regarding this matter.
Suit by Commonwealth Of Virginia. On August 30, 1996, VDEQ filed a
civil suit under the laws of the Commonwealth of Virginia against the Company in
the Circuit Court of the County of Isle of Wight, Virginia. This suit alleged a
total of 22,517 discharge permit violations at the Gwaltney and Smithfield
Packing facilities during the period from 1986 until such facilities were
connected to the HRSD system in 1996 and 1997, respectively. The difference in
the number of total violations charged by the EPA and the Commonwealth of
Virginia is mainly attributable to their different methods of counting
violations. The same categories of violations were involved in both suits,
except that the Commonwealth of Virginia did not charge the Company with any
permit violation excused by the 1991 and 1994 Orders. The Commonwealth's total
was larger in part because the Commonwealth counted every missing record as a
separate violation, and the EPA counted the number of days records were missing.
In addition, the Commonwealth's suit alleged a separate violation for each
failure to test chlorine levels every hour, failure to make certain required
reports, and failure on certain days to properly staff the Company's facilities.
While each violation is subject to a maximum penalty of $25,000, the
Commonwealth's civil penalties policy is designed to recapture any economic
benefit which accrued to the violator as a result of the noncompliance, and to
impose a surcharge penalty for having committed such violations. In addition,
the policy would increase the amount of penalties based upon the extent of
environmental damage caused by the violations.
At the beginning of the July 1997 trial of its case, the Commonwealth
contended that the Company should pay a total of $6 million for the violations
alleged, which included an alleged economic benefit of $4 million. In the middle
of the trial, however, the Commonwealth voluntarily dismissed its suit. One week
later, the Commonwealth refiled the same suit in Isle of Wight County Circuit
Court. The Company has asked the Court to dismiss this second suit on double
jeopardy and res judicata grounds. If the Commonwealth's charges go to trial
again, the Company will argue that no economic benefit accrued to the Company
and that no environmental damage was caused by the violations. There can be no
assurance as to the outcome of any such proceeding.
Bladen County, North Carolina Plant. The Company has been notified that
DENR is considering enforcement action with respect to alleged violations of
wastewater discharge limits at Smithfield's Bladen County, North Carolina plant.
There can be no assurance as to the result of this investigation, but the
Company does not expect the result to have a significant impact on the Company's
financial position or results of operations.
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits
Exhibit 2.1 Lock-Up Agreement, dated as of December 18, 1997,
between Smithfield Foods, Inc. and the members of the
Schneider family set forth in Schedule B thereto
(incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement of Form S-4 filed
with the Commission on February 18, 1998,
registration number 333-91388).
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 Form 10-K Annual
Report for the fiscal year ended April 27, 1997); and
Amendment No. 1 to the Five-Year Credit Agreement
dated as of November 19, 1997.
Exhibit 4.5(a) 364-Day 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 $50,000,000 secured 364-day
revolving credit facility (incorporated by reference
to Exhibit 4.5(a) of the Company's Form 10-K Annual
Report for the fiscal year ended April 27, 1997); and
Amendment No. 1 to the 364-Day Credit Agreement dated
as of November 19, 1997.
14-16
<PAGE>
Exhibit 4.6 Note Purchase Agreement dated as of July 15, 1996,
among Smithfield Foods, Inc. and each of the
Purchasers listed on Annex 1 thereto, relating to
$140,000,000 of senior secured notes (incorporated by
reference to Exhibit 4.7 to the Company's Form 10-Q
Quarterly Report for the fiscal quarter ended July
28, 1996); Amendment Number One to the Note Purchase
Agreement dated as of July 15, 1997 (incorporated by
reference to Exhibit 4.6 of the Company's Form 10-K
Annual Report for the fiscal year ended April 27,
1997); and Amendment Number Two to the Note Purchase
Agreement dated as of December 1, 1997.
Exhibit 4.8 Indenture dated as of February 9, 1998, between
Smithfield Foods, Inc. and SunTrust Bank,
Atlanta, relating to the Company's issuance of
$200,000,000 of 7-5/8% senior subordinated notes due
2008.
Exhibit 4.8(a) Purchase Agreement dated as of February 4, 1998,
between Smithfield Foods, Inc. and Chase Securities
Inc. relating to the Company's issuance of
$200,000,000 of 7-5/8% senior subordinated notes due
2008.
Exhibit 4.8(b) Exchange and Registration Rights Agreement dated as
of February 9, 1998, between Smithfield Foods, Inc.
and Chase Securities Inc. relating to the Company's
issuance of $200,000,000 of 7-5/8% senior
subordinated notes due 2008.
Exhibit 27 Financial Data Schedule
B. Reports on Form 8-K
1. A Current Report on Form 8-K for December 18, 1997, was
filed with the Securities and Exchange Commission on
December 24, 1997 to report, under Item 5, that the
Company had reached an agreement with members of the
Schneider Family who control approximately 75% of the
voting shares and 17% of the nonvoting shares of Schneider
Corporation on the terms of a proposed offer to purchase
such shares.
15-16
<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, Secretary and Treasurer
/s/ C. LARRY POPE
-----------------------------
C. Larry Pope
Vice President and Controller
Date: March 16, 1998
16-16
Execution Copy
AMENDMENT NO. 1
AMENDMENT NO. 1 dated as of November 19, 1997, among
SMITHFIELD FOODS, INC., a corporation duly organized and validly existing under
the laws of the State of Virginia (the "Borrower"); each of the Subsidiaries of
the Borrower identified under the caption "SUBSIDIARY GUARANTORS" on the
signature pages hereto (individually, a "Subsidiary Guarantor" and,
collectively, the "Subsidiary Guarantors" and, together with the Borrower, the
"Obligors"); each of the lenders that is a signatory hereto (individually, a
"Lender" and, collectively, the "Lenders"); and THE CHASE MANHATTAN BANK as
agent for the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
The Borrower, the Subsidiary Guarantors, the Lenders and the
Administrative Agent are parties to a Five-Year Credit Agreement dated as of
July 15, 1997 (as heretofore modified and supplemented and in effect on the date
hereof, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for extensions of credit to be made by said Lenders to the Borrower in
an aggregate principal or face amount not exceeding $300,000,000.
The Borrower, the Subsidiary Guarantors, the Lenders and the
Administrative Agent wish to amend the Credit Agreement in certain respects, and
accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined
in this Amendment No. 1, terms defined in the Credit Agreement
are used herein as defined therein.
Section 2. Amendments. Subject to the satisfaction of
the conditions precedent specified in Section 4 below, but
effective as of the date hereof, the Credit Agreement shall be
amended as follows:
2.01. References in the Credit Agreement (including references
to the Credit Agreement as amended hereby) to "this Agreement" (and indirect
references such as "hereunder", "hereby", "herein" and "hereof") shall be deemed
to be references to the Credit Agreement as amended hereby.
2.02. The definition of "Capital Expenditures" in Section 1.01
of the Credit Agreement shall be amended to read as follows:
<PAGE>
- 2 -
"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
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.
2.03. Section 1.01 of the Credit Agreement shall be amended by
adding the following new definitions and inserting the same in the appropriate
alphabetical locations:
"'Joint Venture' means any Investment by the Borrower or any
of its Subsidiaries as a joint venturer or partner in any Person (other
than a Subsidiary) principally engaged in a business in which the
Borrower and its Subsidiaries are permitted by Section 6.03(b) to be
engaged.
"'Net Cash Proceeds' means the aggregate cash proceeds
received by the Borrower from its issuance of the Senior Subordinated
Notes, net of transaction fees, costs and expenses incurred by the
Borrower in connection with such issuance."
"'Senior Subordinated Notes' means senior subordinated notes
issued by the Borrower prior to December 31, 1998 having the material
terms and conditions set forth in the offering memorandum relating
thereto, a copy of which has been furnished to the Lenders prior to
November __, 1997, and any additional series of senior subordinated
notes issued by the Borrower at the same rate of interest, and having
substantially the same material terms and conditions, as such senior
subordinated notes on or before the first anniversary of the date of
issuance of such senior subordinated notes, as the same shall, subject
to
<PAGE>
- 3 -
Section 6.14, be modified and supplemented and in effect
from time to time."
2.04. Sections 6.04(b), (c) and (e) of the Credit Agreement
shall be amended to read as follows:
"(b) Investments by the Borrower existing on the date hereof
in the capital stock of its Subsidiaries and Investments by the
Borrower existing on the date hereof described in Part B of Schedule
3.14;"
"(c) Investments made by the Borrower in any Subsidiary
and made by any Subsidiary in the Borrower or any other
Subsidiary;"
"(e) Investments constituting Acquisitions or Joint
Ventures permitted by Section 6.12(f);"
2.05. The proviso contained in Section 6.08 of the Credit
Agreement shall be amended by (a) substituting a comma for "and" immediately
preceding clause (vi) thereof and (b) adding a new clause (vii) thereto reading
as follows:
"and (vii) clause (a) of the foregoing shall not apply to any
requirement that obligations of the Borrower or its Subsidiaries, as
the case may be, that are pari passu or subordinated in right of
payment to the Senior Subordinated Notes or the guaranties by
Subsidiaries of the Borrower in respect thereof, as the case may be,
may not be secured unless the Senior Subordinated Notes and/or such
guaranties are at least equally and ratably secured"
2.06. Section 6.12(c) of the Credit Agreement shall be amended
to read as follows:
"(c) The Borrower will not permit the ratio of Consolidated
Total Liabilities to Consolidated Tangible Net Worth on any date to be
more than the ratio set forth below opposite the period during which
such date falls:
Period Ratio
From the Effective Date through
May 2, 1998 3.50 to 1
From May 3, 1998 and thereafter 3.25 to 1
2.07. Section 6.12(f) of the Credit Agreement shall be amended
to read as follows:
"(f) (1) Except as permitted by Section 6.12(f)(2) below, the
Borrower will not permit the sum (without duplication) of (i) Capital
Expenditures made by the Borrower and its Subsidiaries in any fiscal
year of the Borrower plus (ii) the Aggregate Consideration for all
Acquisitions made by the Borrower and its Subsidiaries in such fiscal
year plus (iii) an amount (not less than zero) equal to any net
increase from the beginning of such fiscal year through the end of such
fiscal year in the aggregate amount of Investments in Joint Ventures,
to exceed the higher of (x) the sum of Consolidated Net Income plus
depreciation for the Borrower and its Subsidiaries for such fiscal year
or (y) $100,000,000."
(2) The sum (without duplication) of (i) Capital Expenditures
made by the Borrower and its Subsidiaries in any fiscal year of the
Borrower plus (ii) the Aggregate Consideration for all Acquisitions
made by the Borrower and its Subsidiaries in such fiscal year plus
(iii) an amount (not less than zero) equal to any net increase from the
beginning of such fiscal year through the end of such fiscal year in
the aggregate amount of Investments in Joint Ventures may exceed the
limit established by Section 6.12(f)(1), provided that the aggregate
amount of all such excesses permitted by this Section 6.12(f)(2) for
all fiscal years of the Borrower shall not exceed the Net Cash Proceeds
of the Senior Subordinated Notes received by the Borrower at or prior
to the time of determination."
2.08. Article VI of the Credit Agreement is hereby amended by
adding the following new Section 6.14 and inserting the same in the appropriate
numerical location:
"SECTION 6.14. Senior Subordinated Notes. If any
Default then exists or would result therefrom, the Borrower
shall not, and shall not permit any of its Subsidiaries to,
purchase, redeem, retire or otherwise acquire for value, or
set apart any money for a sinking, defeasance or other
analogous fund for the purchase, redemption, retirement or
other acquisition of, or make any voluntary payment or
prepayment of the principal of or interest on, or any other
amount owing in respect of, the Senior Subordinated Notes,
except (subject to the terms of subordination thereof) for
regularly scheduled payments of principal and interest in
respect thereof required pursuant to the terms) hereof. The
Borrower shall not, and shall not permit any of its
Subsidiaries to, consent to any modification, supplement or
waiver of any of the provisions of any agreement, instrument or other
document evidencing or relating to the Senior Subordinated Notes
without the prior consent of the Administrative Agent (with the
approval of the Required Lenders) if such modification, supplement or
waiver would be adverse in any material respect to the interests of the
Borrower, any of its Subsidiaries or any of the Lenders."
Section 3. Representations and Warranties. The Borrower
represents and warrants to the Lenders that the representations and warranties
set forth in Article III of the Credit Agreement are true and complete on the
date hereof as if made on and as of the date hereof and as if each reference in
said Article III to "this Agreement" included reference to this Amendment No. 1.
Section 4. Conditions Precedent. The amendments to the Credit
Agreement set forth in Section 2 hereof shall become effective, as of the date
hereof, upon (a) the execution and delivery of this Amendment No. 1 by the
Obligors, the Required Lenders and the Administrative Agent and (b) in the case
of the effectiveness of the amendment set forth in Section 2.06 hereof, the
issuance by the Borrower of the Senior Subordinated Notes referred to in Section
2.03 hereof in an aggregate principal amount of not less than $100,000,000.
Section 5. Acknowledgment. The Administrative Agent
acknowledges that it has received the projections and certificate referred to in
Section 6.01(f) of the Credit Agreement sufficient to allow the Borrower to
issue Senior Subordinated Notes in an aggregate principal amount of up to
[$125,000,000] bearing interest at a rate not exceeding 10% per annum.
Section 6. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and effect. This
Amendment No. 1 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. 1 by signing any such
counterpart. This Amendment No. 1 shall be governed by, and construed in
accordance with, the law of the State of New York.
<PAGE>
- 4 -
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be duly executed and delivered as of the day and year first
above written.
SMITHFIELD FOODS, INC.
By_________________________
Name: Aaron D. Trub
Title: Vice President,
Secretary and Treasurer
THE SMITHFIELD PACKING COMPANY,
INCORPORATED
By_________________________
Name: Aaron D. Trub
Title: Secretary
GWALTNEY OF SMITHFIELD, LTD.
By_________________________
Name: Aaron D. Trub
Title: Secretary
PATRICK CUDAHY INCORPORATED
By_________________________
Name: Aaron D. Trub
Title: Secretary
JOHN MORRELL & CO.
By_________________________
Name: Aaron D. Trub
Title: Secretary
LYKES MEAT GROUP, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
BROWN'S OF CAROLINA, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
HANCOCK'S OLD FASHIONED COUNTRY
HAMS, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
VALLEYDALE FOODS, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
COPAZ PACKING CORPORATION
By_________________________
Name: Aaron D. Trub
Title: Secretary
SUNNYLAND, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
SMITHFIELD PACKING-LANDOVER, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
<PAGE>
- 5 -
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent
By_________________________
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN -
BOERENLEENBANK B.A. "RABOBANK
NEDERLAND", NEW YORK BRANCH
By_________________________
Name:
Title:
By_________________________
Name:
Title:
AGRIBANK, FCB
By_________________________
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
By_________________________
Name:
Title:
By_________________________
Name:
Title:
DG BANK, DEUTSCHE
GENOSSENSCHAFTSBANK,
CAYMAN ISLANDS BRANCH
By_________________________
Name:
Title:
By_________________________
Name:
Title:
NATIONSBANK, N.A.
By_________________________
Name:
Title:
FBS AG CREDIT, INC.
By_________________________
Name:
Title:
SUNTRUST BANK, ATLANTA
By_________________________
Name:
Title:
By_________________________
Name:
Title:
<PAGE>
- 6 -
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By_________________________
Name:
Title:
DRESDNER BANK AG
By_________________________
Name:
Title:
FARM CREDIT SERVICES OF THE
MIDLANDS, PCA
By_________________________
Name:
Title:
HARRIS TRUST AND SAVINGS BANK
By_________________________
Name:
Title:
SANWA BANK LIMITED
By_________________________
Name:
Title:
<PAGE>
- 7 -
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By_________________________
Name:
Title:
Execution Copy
AMENDMENT NO. 1 to Exhibit 4.5(A)
AMENDMENT NO. 1 dated as of November 19, 1997, among
SMITHFIELD FOODS, INC., a corporation duly organized and validly existing under
the laws of the State of Virginia (the "Borrower"); each of the Subsidiaries of
the Borrower identified under the caption "SUBSIDIARY GUARANTORS" on the
signature pages hereto (individually, a "Subsidiary Guarantor" and,
collectively, the "Subsidiary Guarantors" and, together with the Borrower, the
"Obligors"); each of the lenders that is a signatory hereto (individually, a
"Lender" and, collectively, the "Lenders"); and THE CHASE MANHATTAN BANK as
agent for the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
The Borrower, the Subsidiary Guarantors, the Lenders and the
Administrative Agent are parties to a 364-Day Credit Agreement dated as of July
15, 1997 (as heretofore modified and supplemented and in effect on the date
hereof, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for extensions of credit to be made by said Lenders to the Borrower in
an aggregate principal amount not exceeding $50,000,000.
The Borrower, the Subsidiary Guarantors, the Lenders and the
Administrative Agent wish to amend the Credit Agreement in certain respects, and
accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined
in this Amendment No. 1, terms defined in the Credit Agreement
are used herein as defined therein.
Section 2. Amendments. Subject to the satisfaction of
the conditions precedent specified in Section 4 below, but
effective as of the date hereof, the Credit Agreement shall be
amended as follows:
2.01. References in the Credit Agreement (including references
to the Credit Agreement as amended hereby) to "this Agreement" (and indirect
references such as "hereunder", "hereby", "herein" and "hereof") shall be deemed
to be references to the Credit Agreement as amended hereby.
2.02. The definition of "Capital Expenditures" in Section 1.01
of the Credit Agreement shall be amended to read as follows:
<PAGE>
- 2 -
"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
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.
2.03. Section 1.01 of the Credit Agreement shall be amended by
adding the following new definitions and inserting the same in the appropriate
alphabetical locations:
"'Joint Venture' means any Investment by the Borrower or any
of its Subsidiaries as a joint venturer or partner in any Person (other
than a Subsidiary) principally engaged in a business in which the
Borrower and its Subsidiaries are permitted by Section 6.03(b) to be
engaged.
"'Net Cash Proceeds' means the aggregate cash proceeds
received by the Borrower from its issuance of the Senior Subordinated
Notes, net of transaction fees, costs and expenses incurred by the
Borrower in connection with such issuance."
"'Senior Subordinated Notes' means senior subordinated notes
issued by the Borrower prior to December 31, 1998 having the material
terms and conditions set forth in the offering memorandum relating
thereto, a copy of which has been furnished to the Lenders prior to
November __, 1997, and any additional series of senior subordinated
notes issued by the Borrower at the same rate of interest, and having
substantially the same material terms and conditions, as such senior
subordinated notes on or before the first anniversary of the date of
issuance of such senior subordinated notes, as the same shall, subject
to
<PAGE>
- 3 -
Section 6.14, be modified and supplemented and in effect
from time to time."
2.04. Sections 6.04(b), (c) and (e) of the Credit Agreement
shall be amended to read as follows:
"(b) Investments by the Borrower existing on the date hereof
in the capital stock of its Subsidiaries and Investments by the
Borrower existing on the date hereof described in Part B of Schedule
3.14;"
"(c) Investments made by the Borrower in any Subsidiary
and made by any Subsidiary in the Borrower or any other
Subsidiary;"
"(e) Investments constituting Acquisitions or Joint
Ventures permitted by Section 6.12(f);"
2.05. The proviso contained in Section 6.08 of the Credit
Agreement shall be amended by (a) substituting a comma for "and" immediately
preceding clause (vi) thereof and (b) adding a new clause (vii) thereto reading
as follows:
"and (vii) clause (a) of the foregoing shall not apply to any
requirement that obligations of the Borrower or its Subsidiaries, as
the case may be, that are pari passu or subordinated in right of
payment to the Senior Subordinated Notes or the guaranties by
Subsidiaries of the Borrower in respect thereof, as the case may be,
may not be secured unless the Senior Subordinated Notes and/or such
guaranties are at least equally and ratably secured"
2.06. Section 6.12(c) of the Credit Agreement shall be amended
to read as follows:
"(c) The Borrower will not permit the ratio of Consolidated
Total Liabilities to Consolidated Tangible Net Worth on any date to be
more than the ratio set forth below opposite the period during which
such date falls:
Period Ratio
------ -----
From the Effective Date through
May 2, 1998 3.50 to 1
From May 3, 1998 and thereafter 3.25 to 1
2.07. Section 6.12(f) of the Credit Agreement shall be amended
to read as follows:
<PAGE>
- 4 -
"(f) (1) Except as permitted by Section 6.12(f)(2) below, the
Borrower will not permit the sum (without duplication) of (i) Capital
Expenditures made by the Borrower and its Subsidiaries in any fiscal
year of the Borrower plus (ii) the Aggregate Consideration for all
Acquisitions made by the Borrower and its Subsidiaries in such fiscal
year plus (iii) an amount (not less than zero) equal to any net
increase from the beginning of such fiscal year through the end of such
fiscal year in the aggregate amount of Investments in Joint Ventures,
to exceed the higher of (x) the sum of Consolidated Net Income plus
depreciation for the Borrower and its Subsidiaries for such fiscal year
or (y) $100,000,000."
(2) The sum (without duplication) of (i) Capital Expenditures
made by the Borrower and its Subsidiaries in any fiscal year of the
Borrower plus (ii) the Aggregate Consideration for all Acquisitions
made by the Borrower and its Subsidiaries in such fiscal year plus
(iii) an amount (not less than zero) equal to any net increase from the
beginning of such fiscal year through the end of such fiscal year in
the aggregate amount of Investments in Joint Ventures may exceed the
limit established by Section 6.12(f)(1), provided that the aggregate
amount of all such excesses permitted by this Section 6.12(f)(2) for
all fiscal years of the Borrower shall not exceed the Net Cash Proceeds
of the Senior Subordinated Notes received by the Borrower at or prior
to the time of determination."
2.08. Article VI of the Credit Agreement is hereby amended by
adding the following new Section 6.14 and inserting the same in the appropriate
numerical location:
"SECTION 6.14. Senior Subordinated Notes. If any
Default then exists or would result therefrom, the Borrower
shall not, and shall not permit any of its Subsidiaries to,
purchase, redeem, retire or otherwise acquire for value, or
set apart any money for a sinking, defeasance or other
analogous fund for the purchase, redemption, retirement or
other acquisition of, or make any voluntary payment or
prepayment of the principal of or interest on, or any other
amount owing in respect of, the Senior Subordinated Notes,
except (subject to the terms of subordination thereof) for
regularly scheduled payments of principal and interest in
respect thereof required pursuant to the terms) hereof. The
Borrower shall not, and shall not permit any of its
Subsidiaries to, consent to any modification, supplement or
waiver of any of the provisions of any agreement, instrument
<PAGE>
- 5 -
or other document evidencing or relating to the Senior Subordinated
Notes without the prior consent of the Administrative Agent (with the
approval of the Required Lenders) if such modification, supplement or
waiver would be adverse in any material respect to the interests of the
Borrower, any of its Subsidiaries or any of the Lenders."
Section 3. Representations and Warranties. The Borrower
represents and warrants to the Lenders that the representations and warranties
set forth in Article III of the Credit Agreement are true and complete on the
date hereof as if made on and as of the date hereof and as if each reference in
said Article III to "this Agreement" included reference to this Amendment No. 1.
Section 4. Conditions Precedent. The amendments to the Credit
Agreement set forth in Section 2 hereof shall become effective, as of the date
hereof, upon (a) the execution and delivery of this Amendment No. 1 by the
Obligors, the Required Lenders and the Administrative Agent and (b) in the case
of the effectiveness of the amendment set forth in Section 2.06 hereof, the
issuance by the Borrower of the Senior Subordinated Notes referred to in Section
2.03 hereof in an aggregate principal amount of not less than $100,000,000.
Section 5. Acknowledgment. The Administrative Agent
acknowledges that it has received the projections and certificate referred to in
Section 6.01(f) of the Credit Agreement sufficient to allow the Borrower to
issue Senior Subordinated Notes in an aggregate principal amount of up to
[$125,000,000] bearing interest at a rate not exceeding 10% per annum.
Section 6. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and effect. This
Amendment No. 1 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. 1 by signing any such
counterpart. This Amendment No. 1 shall be governed by, and construed in
accordance with, the law of the State of New York.
<PAGE>
- 6 -
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be duly executed and delivered as of the day and year first
above written.
SMITHFIELD FOODS, INC.
By_________________________
Name: Aaron D. Trub
Title: Vice President,
Secretary and Treasurer
THE SMITHFIELD PACKING COMPANY,
INCORPORATED
By_________________________
Name: Aaron D. Trub
Title: Secretary
GWALTNEY OF SMITHFIELD, LTD.
By_________________________
Name: Aaron D. Trub
Title: Secretary
PATRICK CUDAHY INCORPORATED
By_________________________
Name: Aaron D. Trub
Title: Secretary
JOHN MORRELL & CO.
By_________________________
Name: Aaron D. Trub
Title: Secretary
LYKES MEAT GROUP, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
<PAGE>
- 7 -
BROWN'S OF CAROLINA, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
HANCOCK'S OLD FASHIONED COUNTRY
HAMS, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
VALLEYDALE FOODS, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
COPAZ PACKING CORPORATION
By_________________________
Name: Aaron D. Trub
Title: Secretary
SUNNYLAND, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
SMITHFIELD PACKING-LANDOVER, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
<PAGE>
- 8 -
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent
By_________________________
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN -
BOERENLEENBANK B.A. "RABOBANK
NEDERLAND", NEW YORK BRANCH
By_________________________
Name:
Title:
By_________________________
Name:
Title:
AGRIBANK, FCB
By_________________________
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
By_________________________
Name:
Title:
By_________________________
Name:
Title:
<PAGE>
- 9 -
DG BANK, DEUTSCHE
GENOSSENSCHAFTSBANK,
CAYMAN ISLANDS BRANCH
By_________________________
Name:
Title:
By_________________________
Name:
Title:
NATIONSBANK, N.A.
By_________________________
Name:
Title:
FBS AG CREDIT, INC.
By_________________________
Name:
Title:
SUNTRUST BANK, ATLANTA
By_________________________
Name:
Title:
By_________________________
Name:
Title:
<PAGE>
- 10 -
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By_________________________
Name:
Title:
DRESDNER BANK AG
By_________________________
Name:
Title:
FARM CREDIT SERVICES OF THE
MIDLANDS, PCA
By_________________________
Name:
Title:
HARRIS TRUST AND SAVINGS BANK
By_________________________
Name:
Title:
SANWA BANK LIMITED
By_________________________
Name:
Title:
<PAGE>
- 11 -
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By_________________________
Name:
Title:
--------------
SMITHFIELD FOODS, INC.
--------------
AMENDMENT NUMBER TWO
TO NOTE PURCHASE AGREEMENT DATED AS OF JULY 15, 1996
AMENDMENT DATED AS OF DECEMBER 1, 1997
<PAGE>
AMENDMENT NUMBER TWO
AMENDMENT NUMBER TWO (this "Agreement"), dated as of December 1, 1997,
to the separate Note Purchase Agreements, each dated as of July 15, 1996,
between SMITHFIELD FOODS, INC., a Delaware corporation (the "Company"), formerly
known as Smithfield Foods Virginia, Inc. and each of the Persons listed on Annex
1 thereto (collectively, the "Purchasers").
RECITALS:
A. The Company entered into those certain separate Note Purchase
Agreements, each dated as of July 15, 1996, (as amended from time to time and as
in effect immediately prior to the effectiveness of this Agreement, the
"Existing Note Purchase Agreement," and, as amended by this Agreement, the
"Amended Note Purchase Agreement"), with the Purchasers, pursuant to which the
Company authorized, issued and sold, and certain of the Purchasers purchased (as
set forth on Annex 1 thereto):
(a) $2,825,000 in aggregate principal amount of its six and
twenty-four one-hundredths percent (6.24%) Series A Senior Secured
Notes Due November 1, 1998 (as amended, restated or otherwise modified
from time to time, the "Series A Notes"),
(b) $9,852,942 in aggregate principal amount of its eight and
forty-one one-hundredths percent (8.41%) Series B Senior Secured Notes
Due August 1, 2006 (as amended, restated or otherwise modified from
time to time, the "Series B Notes"),
(c) $40,000,000 in aggregate principal amount of its eight and
thirty-four one-hundredths percent (8.34%) Series C Senior Secured
Notes Due August 1, 2003 (as amended, restated or otherwise modified
from time to time, the "Series C Notes"),
(d) $9,000,000 in aggregate principal amount of its nine and
eighty one-hundredths percent (9.80%) Series D Senior Secured Notes Due
August 1, 2003 (as amended, restated or otherwise modified from time to
time, the "Series D Notes"),
(e) $9,250,000 in aggregate principal amount of its ten and
seventy five one-hundredths percent (10.75%) Series E Senior Secured
Notes Due August 1, 2005 (as amended, restated or otherwise modified
from time to time, the "Series E Notes"),
(f) $100,000,000 in aggregate principal amount of its eight
and fifty-two one-hundredths percent (8.52%) Series F Senior Secured
Notes Due August 1, 2006 (as amended, restated or otherwise modified
from time to time, the "Series F Notes"),
(g) $14,000,000 in aggregate principal amount of its nine and
eighty-five one-hundredths percent (9.85%) Series G Senior Secured
Notes Due November 1, 2006 (as amended, restated or otherwise modified
from time to time, the "Series G Notes"), and
(h) $14,779,412 in aggregate principal amount of its eight and
forty-one- hundredths percent (8.41%) Series H Senior Secured Notes Due
August 1, 2004 (as amended, restated or otherwise modified from time to
time, the "Series H Notes").
<PAGE>
The Series A Notes, the Series B Notes, the Series C Notes, the Series D Notes,
the Series E Notes, the Series F Notes, the Series G Notes and the Series H
Notes are herein referred to, individually, as a "Note," and collectively, as
the "Notes."
B. As of the Effective Date (defined below), the Purchasers are the
holders of all of the outstanding Notes; the holders of the Notes on the
Effective Date are herein referred to as the "Holders."
C. Gwaltney of Smithfield, Ltd., John Morrell & Co., The Smithfield
Packing Company, Incorporated, SFFC, Inc., Patrick Cudahy Incorporated, Brown's
of Carolina, Inc., Lykes Meat Group, Inc., Hancock's Old Fashioned Country Hams,
Inc. and Sunnyland, Inc. (collectively, the "Guarantors"), each a Wholly-Owned
Subsidiary, are guarantors of the obligations of the Company in respect of,
among other things, the Notes, pursuant to that certain Joint and Several
Guaranty dated as of July 15, 1996.
D. The Company has requested that the Holders agree to amend certain
provisions of the Existing Note Purchase Agreement.
E. Subject to the terms and conditions set forth in this Agreement, the
Company and the Holders are willing to amend the Existing Note Purchase
Agreement in the manner specified on certain Exhibits hereto and as more
particularly set forth herein.
AGREEMENT:
NOW THEREFORE, for valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Holders agree as follows:
SECTION 1. WARRANTIES AND REPRESENTATIONS.
To induce the Holders to enter into this Agreement, the Company and
each of the Guarantors represent and warrant to each of the Holders that as of
the Effective Date (as hereinafter defined):
1.1 Corporate Organization and Authority.
The Company and each Subsidiary:
(a) is a corporation duly incorporated, validly existing and
in good standing under the laws of its jurisdiction of incorporation;
(b) has all legal and corporate power and authority to own and
operate its Properties and to carry on its business as now conducted
and as presently proposed to be conducted;
(c) has all necessary licenses, certificates and permits to
own and operate its Properties and to carry on its business as now
conducted and as presently proposed to be conducted, except where the
failure to have such licenses, certificates and permits,
2
<PAGE>
in the aggregate, could not reasonably be expected to have a Material
Adverse Effect; and
(d) has duly qualified or has been duly licensed, and is
authorized to do business and is in good standing, as a foreign
corporation, in each state in the United States of America and in each
other jurisdiction where the failure to be so qualified or licensed and
authorized and in good standing, in the aggregate for all such
failures, could reasonably be expected to have a Material Adverse
Effect.
1.2 Authorization, etc.
(a) This Agreement has been duly authorized by all necessary
corporate action on the part of the Company and each of the Guarantors.
Each of this Agreement, the Amended Note Purchase Agreement and each
other Financing Document (as defined in the Amended Note Purchase
Agreement, the "Financing Documents") constitutes a legal, valid and
binding obligation of the Company or the Guarantors, as applicable,
enforceable, in each case, against the Company or such Guarantor, as
applicable, in accordance with its terms, except as such enforceability
may be limited by
(i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and
(ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
(b) The Holders are the record owners of all of the
outstanding Notes.
(c) The Guarantors are the only Persons which have an
outstanding Guaranty of the Notes.
1.3 Litigation.
There are no proceedings pending, or, to the knowledge of the Company
or the Guarantors, threatened, against or affecting the Company, any Guarantor
or any other Subsidiary, or any of their respective Properties in any court or
before any governmental authority or arbitration board or tribunal that, either
individually or in the aggregate, conflict with or interfere with the ability of
the Company or any of the Guarantors to execute and deliver this Agreement and
to perform their respective obligations hereunder, under the Amended Note
Purchase Agreement and under each of the other Financing Documents.
1.4 No Conflicts, etc.
The execution and delivery by the Company and the Guarantors of this
Agreement and the performance by the Company and the Guarantors of their
respective obligations under each of this Agreement, the Amended Note Purchase
Agreement and the other Financing Documents to which they are a party do not
conflict with, result in any breach in any of the provisions of, constitute a
default under, violate or result in the creation of any Lien upon any Property
of the Company or any Subsidiary under the provisions of:
3
<PAGE>
(a) any charter document, agreement with shareholders or
bylaws of the Company or any Subsidiary;
(b) any agreement, instrument or conveyance by which the
Company or any Subsidiary or any of their respective Properties may be
bound or affected; or
(c) any statute, rule or regulation or any order, judgment or
award of any court, tribunal or arbitrator by which the Company or any
Subsidiary or any of their respective Properties may be bound or
affected.
1.5 Governmental Consent.
The execution and delivery by the Company and the Guarantors of this
Agreement and the performance by the Company and the Guarantors of their
respective obligations hereunder, under the Amended Note Purchase Agreement and
the other Financing Documents to which they are a party do not require any
consents, approvals or authorizations of, or filings, registrations or
qualifications with, any governmental authority on the part of the Company or
any Subsidiary under the circumstances and conditions contemplated by this
Agreement, the Amended Note Purchase Agreement or the other Financing Documents.
1.6 Compliance with Law.
Neither the Company nor any Subsidiary:
(a) is in violation of any law, ordinance, governmental rule
or regulation to which it is subject; or
(b) has failed to obtain any license, permit, franchise or
other governmental authorization necessary to the ownership of its
Property or to the conduct of its business;
which violation or failure to obtain might, either individually or in the
aggregate, have a material adverse effect on the business, prospects, profits,
Properties or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or the ability of the Company or the Guarantors
to perform any of their respective obligations set forth in this Agreement, the
Amended Note Purchase Agreement or the other Financing Documents.
1.7 Existence of Defaults.
Immediately prior to, and after giving effect to, the Note Purchase
Agreement Amendment (as such term is defined in Section 2 hereof), no condition
exists that would constitute a Default or an Event of Default under the Note
Purchase Agreement or the Amended Note Purchase Agreement, as the case may be.
4
<PAGE>
1.8 Disclosure.
Neither this Agreement nor any written statement furnished by the
Company or any Guarantor to any Holder in connection herewith contains any
untrue statement of a material fact or omits a material fact necessary to make
the statements contained therein or herein not misleading. There is no fact that
the Company has not disclosed to the Holders in writing that has had or, so far
as the Company can now reasonably foresee, could reasonably be expected to have
a material adverse effect on the business, prospects, profits, Properties or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or the ability of the Company or any Guarantor to perform any of their
respective obligations set forth in this Agreement, the Amended Note Purchase
Agreement or the other Financing Documents.
SECTION 2. AMENDMENT, DIRECTION; AFFIRMATIONS.
2.1 Amendment to Existing Documents.
The Company and the Guarantors, and, subject to the satisfaction of the
conditions set forth in Section 3 hereof, the Holders, each hereby consents and
agrees that the Existing Note Purchase Agreement is hereby amended in the manner
and as specified in Exhibit A to this Agreement (such amendment provided for in
Exhibit A is herein collectively referred to as the "Note Purchase Agreement
Amendment").
2.2 Affirmation of Obligations under Amended Note Purchase Agreement
and Notes.
The Company hereby acknowledges and affirms all of its obligations
under the terms of the Amended Note Purchase Agreement, the Notes and each of
the other Financing Documents to which it is a party.
2.3 Affirmation of Obligations under Joint and Several Guaranty and
Financing Documents.
Each of the Guarantors hereby acknowledges and affirms all of its
obligations under the terms of the Joint and Several Guaranty and each other
Financing Document to which it is a party.
SECTION 3. CONDITIONS TO EFFECTIVENESS OF NOTE PURCHASE AGREEMENT AMENDMENT.
The Note Purchase Agreement Amendment shall not become effective unless
all of the following conditions precedent shall have been satisfied in full on
or before 5:00 p.m. (Hartford, Connecticut time) on January 30, 1998 (the date
of such satisfaction being herein referred to as the "Effective Date"):
5
<PAGE>
3.1 Execution and Delivery of this Agreement.
The Company and each of the Guarantors shall have executed and
delivered to each of the Holders an original counterpart of this Agreement.
3.2 No Defaults; Warranties and Representations True.
No Default or Event of Default shall exist, and the warranties and
representations set forth in Section 1 hereof shall be true and correct on the
Effective Date.
3.3 Authorization of Transactions.
The Company and each of the Guarantors shall have authorized, by all
necessary corporate action, the execution and delivery of this Agreement and the
performance of all obligations of, and the satisfaction of all conditions
pursuant to this Section 3 by, and the consummation of all transactions
contemplated by the Amended Note Purchase Agreement and the other Financing
Documents by, the Company and each of the Guarantors.
3.4 Legal Opinions.
The Holders shall have received legal opinions as to such matters as
the Holders and their special counsel shall request in connection with the
transactions contemplated by this Agreement.
3.5 Fees.
The Company shall have paid the fees as set forth on Schedule 1 hereto.
3.6 Expenses.
The Company shall have paid all costs and expenses of the Holders
relating to this Agreement in accordance with Section 4.5 hereof.
3.7 Confirmation of Holders' Satisfaction.
Each of the Holders shall have delivered to the Company a written
statement substantially in the form of Exhibit B hereto (and the Company shall
have acknowledged and agreed to such statement) confirming such Holder's
satisfaction with respect to certain of the conditions specified in this Section
3.
SECTION 4. MISCELLANEOUS.
4.1 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND
THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, INTERNAL VIRGINIA LAW, EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT
6
<PAGE>
WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH
STATE.
4.2 Duplicate Originals.
Two or more duplicate originals of this Agreement may be signed by the
parties, each of which shall be an original but all of which together shall
constitute one and the same instrument. This Agreement may be executed in one or
more counterparts and shall be effective when at least one counterpart shall
have been executed by each party hereto, and each set of counterparts that,
collectively, show execution by each party hereto shall constitute one duplicate
original.
4.3 Waivers and Amendments.
Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated orally, or by any action or inaction, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
4.4 Section Headings.
The titles of the Sections hereof appear as a matter of convenience
only, do not constitute a part of this Agreement and shall not affect the
construction hereof.
4.5 Costs and Expenses.
The Company shall pay all costs and expenses of the Holders relating to
this Agreement, including, but not limited to, the statement for reasonable fees
and disbursements of the Holders' special counsel presented to the Company on
the Effective Date. The Company will also pay, upon receipt thereof, each
additional statement for reasonable fees and disbursements of the Holders'
special counsel rendered after the Effective Date in connection with this
Agreement or the Financing Documents.
4.6 Survival.
All warranties, representations, certifications and covenants made by
the Company or any of the Guarantors in this Agreement shall be considered to
have been relied upon by the Holders and shall survive the execution and
delivery of this Agreement, regardless of any investigation made by or on behalf
of the Holders.
4.7 Time of Essence.
Time is and shall be of the essence in the satisfaction of all the
conditions set forth in Section 3 of this Agreement.
4.8 Defined Terms.
Capitalized terms used herein and not defined herein shall have the
meanings assigned to them in the Amended Note Purchase Agreement.
7
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf by a duly authorized officer or agent
thereof.
SMITHFIELD FOODS, INC.
By:
-------------------------------
Name:
Title:
GWALTNEY OF SMITHFIELD, LTD.
By:
-------------------------------
Name:
Title:
JOHN MORRELL & CO.
By:
-------------------------------
Name:
Title:
THE SMITHFIELD PACKING COMPANY,
INCORPORATED
By:
-------------------------------
Name:
Title:
<PAGE>
SFFC, INC.
By:
-------------------------------
Name:
Title:
PATRICK CUDAHY INCORPORATED
By:
-------------------------------
Name:
Title:
BROWN'S OF CAROLINA, INC.
By:
-------------------------------
Name:
Title:
LYKES MEAT GROUP, INC.
By:
-------------------------------
Name:
Title:
<PAGE>
HANCOCK'S OLD FASHIONED COUNTRY
HAMS, INC.
By:
-------------------------------
Name:
Title:
SUNNYLAND, INC.
By:
-------------------------------
Name:
Title:
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
By:
-------------------------------------------------
Name:
Title:
JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY
By:
-------------------------------------------------
Name:
Title:
MELLON BANK, N.A., solely in its capacity as Trustee for the NYNEX MASTER
PENSION TRUST, (as directed by John Hancock Mutual Life Insurance Company), and
not in its individual capacity
By:
-------------------------------------------------
Name:
Title:
<PAGE>
MELLON BANK, N.A., solely in its capacity as Trustee for the AT&T MASTER PENSION
TRUST, (as directed by John Hancock Mutual Life Insurance Company), and not in
its individual capacity
By:
-------------------------------------------------
Name:
Title:
THE MARITIME LIFE ASSURANCE COMPANY
By:
-------------------------------------------------
Name:
Title:
By:
-------------------------------------------------
Name:
Title:
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
By:
-------------------------------------------------
Name:
Title:
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
By:
-------------------------------------------------
Name:
Title:
INDEPENDENT LIFE AND ACCIDENT INSURANCE COMPANY
By:
-------------------------------------------------
Name:
Title:
<PAGE>
ACADEMY LIFE INSURANCE COMPANY
By:
-------------------------------------------------
Name:
Title:
PEOPLES SECURITY LIFE INSURANCE COMPANY
By:
-------------------------------------------------
Name:
Title:
UNITED OF OMAHA LIFE INSURANCE COMPANY
By:
-------------------------------------------------
Name:
Title:
COMPANION LIFE INSURANCE COMPANY
By:
-------------------------------------------------
Name:
Title:
By:
-------------------------------------------------
Name:
Title:
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By:
-------------------------------------------------
Name:
Title:
<PAGE>
CM LIFE INSURANCE COMPANY
By:
-------------------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
AMENDMENT TO EXISTING NOTE PURCHASE AGREEMENT
ss.1. Section 6.4 of the Existing Note Purchase Agreement is hereby
amended to read in its entirety as follows:
6.4 Current Ratio.
The Company shall not at any time permit the ratio of
Consolidated Current Assets to Consolidated Current Liabilities to be
less than 1.05 to 1.00.
ss.2. Section 6.5 of the Existing Note Purchase Agreement is hereby
amended to read in its entirety as follows:
6.5 Consolidated Working Capital.
The Company shall not at any time permit Consolidated Working
Capital to be less than Thirty Five Million Dollars ($35,000,000).
ss.3. Section 6.6(e) of the Existing Note Purchase Agreement is hereby
amended to read in its entirety as follows:
(e) Additional Funded Debt of the Company and the Subsidiaries
if, after giving effect thereto and any concurrent application of the
proceeds of such Funded Debt, (i) Consolidated Funded Debt would not
exceed 65% of Consolidated Total Capitalization and (ii) Consolidated
Senior Funded Debt would not exceed 55% of the result of (A)
Consolidated Total Capitalization minus (B) Senior Subordinated Debt.
ss.4. Section 6.11 of the Existing Note Purchase Agreement is hereby
amended to read in its entirety as follows:
6.11 Total Liabilities.
The Company shall not at any time permit the ratio of Consolidated
Total Liabilities to Consolidated Tangible Net Worth to exceed (a) 3.50 to 1 at
any time after July 15, 1997 and prior to May 3, 1998 and (b) 3.25 to 1 at any
time on or after May 3, 1998.
ss.5. Section 6.12(a)(i) of the Existing Note Purchase Agreement is
hereby amended to read in its entirety as follows:
6.12 Restricted Payments and Restricted Investments.
(a) Limitation on Restricted Payments and Restricted
Investments. The Company shall not, and shall not permit any Subsidiary
to, at any time declare or make or incur any liability to declare or
make any Restricted Payment (other than Restricted Payments comprised
solely of Distributions to the Company or a Wholly-Owned Subsidiary in
respect of the capital stock of a Subsidiary ("Permitted
Distributions")) or make or authorize any Restricted Investment, unless
EXHIBIT A-1
<PAGE>
(i) immediately after giving effect to the proposed
Restricted Payment or Restricted Investment, the aggregate
amount of Supplemental Restricted Investments made or
authorized after the Closing Date does not exceed fifty
million dollars ($50,000,000) and the aggregate amount of all
Restricted Payments (other than Permitted Distributions) and
Restricted Investments (other than Supplemental Restricted
Investments) made or authorized after the Closing Date does
not exceed the sum of
(A) twenty-five million dollars
($25,000,000); plus
(B) twenty-five percent (25%) of the
aggregate Consolidated Net Income (or, in case such
aggregate Consolidated Net Income shall be a deficit,
minus one hundred percent (100%) of such deficit) for
the period commencing on the Closing Date and ending
on the date of such proposed transaction; plus
(C) one hundred percent (100%) of the
aggregate net cash proceeds received by the Company
after the Closing Date from the issuance or sale of
shares of capital stock of the Company (other than
Mandatory Redeemable Stock);
ss.6. Section 9.1 of the Existing Note Purchase Agreement is hereby
amended to add the following definition of "Senior Subordinated Debt" in the
appropriate alphabetical position in such section:
Senior Subordinated Debt -- means, at any time, the aggregate amount of
Debt of the Company outstanding at such time which has the terms and conditions
described in the Company's Preliminary Offering Memorandum (draft dated January
15, 1998) prepared by Chase Securities, Inc. for its $125,000,000 issue of
Senior Subordinated Notes due 2007.
ss.7. Section 9.1 of the Existing Note Purchase Agreement is hereby
amended to add the following definition of "Supplemental Restricted Investment"
in the appropriate alphabetical position in such section:
Supplemental Restricted Investment -- means a Restricted Investment, or
any part thereof, which the Company shall have designated in writing to each of
the holders of the Notes as of the date such Restricted Investment is made as a
"Supplemental Restricted Investment."
ss.8. Section 9.1 of the Existing Note Purchase Agreement is hereby
amended to add the following definition of "Consolidated Senior Funded Debt" in
the appropriate alphabetical order in such section:
Consolidated Senior Funded Debt -- means, at any time, the result of
(a) Consolidated Funded Debt at such time minus (b) Senior Subordinated Debt at
such time.
ss.9. The definition of "Consolidated Current Liabilities" is
hereby amended to read in its entirety as follows:
Consolidated Current Liabilities -- means, at any time, the aggregate
amount of current liabilities of the Company and the Subsidiaries as would be
shown on a consolidated balance
EXHIBIT A-2
<PAGE>
sheet for such Persons at such time plus (to the extent not otherwise included
therein) liabilities in respect of Excluded Funded Debt.
ss.10. The definition of "Funded Debt" in Section 9.1 of the
Existing Note Purchase Agreement is hereby amended to read in its entirety as
follows:
Funded Debt -- means, at any time, with respect to any Person, without
duplication:
(a) All Debt of such Person (including without limitation, the
current portion thereof) that by its terms or by the terms of any
instrument or agreement relating thereto matures, or that is otherwise
payable or unpaid, more than one (1) year from, or is directly or
indirectly renewable or extendable at the option of such Person to a
date more than one (1) year (including, without limitation, an option
of the debtor under revolving credit or similar agreement of obligating
the lender or lenders to extend credit over a period of more than one
(1) year) from, the date of the creation of such Debt (notwithstanding
that such Debt may be under certain contingencies payable on demand or
within one (1) year after such date of creation) provided that, with
respect to the Company and the Subsidiaries, such Debt shall not
include (to the extend otherwise included therein) Excluded Funded
Debt;
(b) all Capital Lease Obligations of such Person; and
(c) all Debt of such Person of the type specified (e) of the
definition of "Debt" provided such Debt of such Person is in respect of
or in support of Funded Debt of another Person.
ss.11. Section 9.1 of the Existing Note Purchase Agreement is hereby
amended to delete the definition of "Deemed Funded Debt" and to amend the
definition of "Excluded Funded Debt" to read in its entirety as follows:
Excluded Funded Debt -- means, at any time, the aggregate amount of the
Debt of the Company and the Subsidiaries outstanding at such time under the
Credit Facility.
EXHIBIT A-3
<PAGE>
EXHIBIT B
FORM OF CONFIRMATION OF HOLDERS' SATISFACTION
Confirmation of Holders' Satisfaction
To: Smithfield Foods, Inc. (the "Company")
Date: January 27, 1998
Re: Amendment Number Two, dated as of December 1, 1997, to the
separate Note Purchase Agreements each dated as of July 15,
1996 (the "Amendment Agreement"), among the Company, the
Guarantors and other Persons party thereto (such other Persons
herein collectively referred to as the "Holders")
Ladies and Gentlemen:
The undersigned (the "Holders") are the Holders referred to above. In
accordance with Section 3.7 of the Amendment Agreement, each Holder hereby
confirms that, based on certain warranties, representations and certifications
made, and certain documents delivered, by or on behalf of the Company and the
Guarantors pursuant to the Amendment Agreement, such Holder is satisfied with
respect to the conditions specified in Sections 3.1, 3.4, 3.5 and 3.6 of the
Amendment Agreement.
This confirmation shall not be construed as a waiver of any rights or
remedies that the Holder may have in the event that any such warranty,
representation or certification made by the Company or any of the Guarantors
shall have been false or misleading when made.
[HOLDERS]
By________________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
SMITHFIELD FOODS, INC.
By________________________________
Name:
Title:
EXHIBIT B-1
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1
Amendment Fees
=======================================================================================================================
Name of Entity Amount of Fee Contact Name and Address
=======================================================================================================================
<S> <C> <C>
John Hancock Mutual Life $10,000.00 John Tisdale, Esq.
Insurance Company John Hancock Mutual Life
Insurance Company
200 Clarendon Street, 50th Floor
Boston, MA 02117
- -----------------------------------------------------------------------------------------------------------------------
The Northwestern Mutual Life $10,000.00 Mark C. Boyle, Esq.
Insurance Company The Northwestern Mutual Life
Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
- -----------------------------------------------------------------------------------------------------------------------
The Variable Annuity Life $8,666.67 David G. Castano, Esq.
Insurance Company American General Corporation
2929 Allen Parkway, A37-01
Houston, TX 77019
Independent Life and Accident $1,333.33
Insurance Company
- -----------------------------------------------------------------------------------------------------------------------
Academy Life Insurance $2,857.14 Paul Houk, Esq.
Company Stites & Harbison
400 West Market Street, Suite 1800
Louisville, KY 40202
Peoples Security Life $7,142.86
Insurance Company
- -----------------------------------------------------------------------------------------------------------------------
United of Omaha Life $10,000.00 Gary Garrison, Esq.
Insurance Company Mutual of Omaha
Mutual of Omaha Plaza
Omaha, NE 68175-1008
- -----------------------------------------------------------------------------------------------------------------------
Massachusetts Mutual Life $10,000.00 Wallace G. Rodger, Esq.
Insurance Company Massachusetts Mutual Life
Insurance Company
1295 State Street, F461
Springfield, MA 01111
=======================================================================================================================
</TABLE>
<PAGE>
SCHEDULE 1 - 1
Execution Copy
AMENDMENT NO. 1
AMENDMENT NO. 1 dated as of November 19, 1997, among
SMITHFIELD FOODS, INC., a corporation duly organized and validly existing under
the laws of the State of Virginia (the "Borrower"); each of the Subsidiaries of
the Borrower identified under the caption "SUBSIDIARY GUARANTORS" on the
signature pages hereto (individually, a "Subsidiary Guarantor" and,
collectively, the "Subsidiary Guarantors" and, together with the Borrower, the
"Obligors"); each of the lenders that is a signatory hereto (individually, a
"Lender" and, collectively, the "Lenders"); and THE CHASE MANHATTAN BANK as
agent for the Lenders (in such capacity, together with its successors in such
capacity, the "Administrative Agent").
The Borrower, the Subsidiary Guarantors, the Lenders and the
Administrative Agent are parties to a Five-Year Credit Agreement dated as of
July 15, 1997 (as heretofore modified and supplemented and in effect on the date
hereof, the "Credit Agreement"), providing, subject to the terms and conditions
thereof, for extensions of credit to be made by said Lenders to the Borrower in
an aggregate principal or face amount not exceeding $300,000,000.
The Borrower, the Subsidiary Guarantors, the Lenders and the
Administrative Agent wish to amend the Credit Agreement in certain respects, and
accordingly, the parties hereto hereby agree as follows:
Section 1. Definitions. Except as otherwise defined
in this Amendment No. 1, terms defined in the Credit Agreement
are used herein as defined therein.
Section 2. Amendments. Subject to the satisfaction of
the conditions precedent specified in Section 4 below, but
effective as of the date hereof, the Credit Agreement shall be
amended as follows:
2.01. References in the Credit Agreement (including references
to the Credit Agreement as amended hereby) to "this Agreement" (and indirect
references such as "hereunder", "hereby", "herein" and "hereof") shall be deemed
to be references to the Credit Agreement as amended hereby.
2.02. The definition of "Capital Expenditures" in Section 1.01
of the Credit Agreement shall be amended to read as follows:
Amendment No. 1
<PAGE>
- 2 -
"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
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.
2.03. Section 1.01 of the Credit Agreement shall be amended by
adding the following new definitions and inserting the same in the appropriate
alphabetical locations:
"'Joint Venture' means any Investment by the Borrower or any
of its Subsidiaries as a joint venturer or partner in any Person (other
than a Subsidiary) principally engaged in a business in which the
Borrower and its Subsidiaries are permitted by Section 6.03(b) to be
engaged.
"'Net Cash Proceeds' means the aggregate cash proceeds
received by the Borrower from its issuance of the Senior Subordinated
Notes, net of transaction fees, costs and expenses incurred by the
Borrower in connection with such issuance."
"'Senior Subordinated Notes' means senior subordinated notes
issued by the Borrower prior to December 31, 1998 having the material
terms and conditions set forth in the offering memorandum relating
thereto, a copy of which has been furnished to the Lenders prior to
November __, 1997, and any additional series of senior subordinated
notes issued by the Borrower at the same rate of interest, and having
substantially the same material terms and conditions, as such senior
subordinated notes on or before the first anniversary of the date of
issuance of such senior subordinated notes, as the same shall, subject
to
Amendment No. 1
<PAGE>
- 3 -
Section 6.14, be modified and supplemented and in effect
from time to time."
2.04. Sections 6.04(b), (c) and (e) of the Credit Agreement
shall be amended to read as follows:
"(b) Investments by the Borrower existing on the date hereof
in the capital stock of its Subsidiaries and Investments by the
Borrower existing on the date hereof described in Part B of Schedule
3.14;"
"(c) Investments made by the Borrower in any Subsidiary
and made by any Subsidiary in the Borrower or any other
Subsidiary;"
"(e) Investments constituting Acquisitions or Joint
Ventures permitted by Section 6.12(f);"
2.05. The proviso contained in Section 6.08 of the Credit
Agreement shall be amended by (a) substituting a comma for "and" immediately
preceding clause (vi) thereof and (b) adding a new clause (vii) thereto reading
as follows:
"and (vii) clause (a) of the foregoing shall not apply to any
requirement that obligations of the Borrower or its Subsidiaries, as
the case may be, that are pari passu or subordinated in right of
payment to the Senior Subordinated Notes or the guaranties by
Subsidiaries of the Borrower in respect thereof, as the case may be,
may not be secured unless the Senior Subordinated Notes and/or such
guaranties are at least equally and ratably secured"
2.06. Section 6.12(c) of the Credit Agreement shall be amended
to read as follows:
"(c) The Borrower will not permit the ratio of Consolidated
Total Liabilities to Consolidated Tangible Net Worth on any date to be
more than the ratio set forth below opposite the period during which
such date falls:
Period Ratio
From the Effective Date through
May 2, 1998 3.50 to 1
From May 3, 1998 and thereafter 3.25 to 1
2.07. Section 6.12(f) of the Credit Agreement shall be amended
to read as follows:
Amendment No. 1
<PAGE>
- 4 -
"(f) (1) Except as permitted by Section 6.12(f)(2) below, the
Borrower will not permit the sum (without duplication) of (i) Capital
Expenditures made by the Borrower and its Subsidiaries in any fiscal
year of the Borrower plus (ii) the Aggregate Consideration for all
Acquisitions made by the Borrower and its Subsidiaries in such fiscal
year plus (iii) an amount (not less than zero) equal to any net
increase from the beginning of such fiscal year through the end of such
fiscal year in the aggregate amount of Investments in Joint Ventures,
to exceed the higher of (x) the sum of Consolidated Net Income plus
depreciation for the Borrower and its Subsidiaries for such fiscal year
or (y) $100,000,000."
(2) The sum (without duplication) of (i) Capital Expenditures
made by the Borrower and its Subsidiaries in any fiscal year of the
Borrower plus (ii) the Aggregate Consideration for all Acquisitions
made by the Borrower and its Subsidiaries in such fiscal year plus
(iii) an amount (not less than zero) equal to any net increase from the
beginning of such fiscal year through the end of such fiscal year in
the aggregate amount of Investments in Joint Ventures may exceed the
limit established by Section 6.12(f)(1), provided that the aggregate
amount of all such excesses permitted by this Section 6.12(f)(2) for
all fiscal years of the Borrower shall not exceed the Net Cash Proceeds
of the Senior Subordinated Notes received by the Borrower at or prior
to the time of determination."
2.08. Article VI of the Credit Agreement is hereby amended by
adding the following new Section 6.14 and inserting the same in the appropriate
numerical location:
"SECTION 6.14. Senior Subordinated Notes.
If any Default then exists or would result therefrom, the Borrower
shall not, and shall not permit any of its Subsidiaries to,
purchase, redeem, retire or otherwise acquire for value, or
set apart any money for a sinking, defeasance or other
analogous fund for the purchase, redemption, retirement or
other acquisition of, or make any voluntary payment or
prepayment of the principal of or interest on, or any other
amount owing in respect of, the Senior Subordinated Notes,
except (subject to the terms of subordination thereof) for
regularly scheduled payments of principal and interest in
respect thereof required pursuant to the terms) hereof. The
Borrower shall not, and shall not permit any of its
Subsidiaries to, consent to any modification, supplement or
waiver of any of the provisions of any agreement, instrument
Amendment No. 1
<PAGE>
- 5 -
or other document evidencing or relating to the Senior Subordinated
Notes without the prior consent of the Administrative Agent (with the
approval of the Required Lenders) if such modification, supplement or
waiver would be adverse in any material respect to the interests of the
Borrower, any of its Subsidiaries or any of the Lenders."
Section 3. Representations and Warranties. The Borrower
represents and warrants to the Lenders that the representations and warranties
set forth in Article III of the Credit Agreement are true and complete on the
date hereof as if made on and as of the date hereof and as if each reference in
said Article III to "this Agreement" included reference to this Amendment No. 1.
Section 4. Conditions Precedent. The amendments to the Credit
Agreement set forth in Section 2 hereof shall become effective, as of the date
hereof, upon (a) the execution and delivery of this Amendment No. 1 by the
Obligors, the Required Lenders and the Administrative Agent and (b) in the case
of the effectiveness of the amendment set forth in Section 2.06 hereof, the
issuance by the Borrower of the Senior Subordinated Notes referred to in Section
2.03 hereof in an aggregate principal amount of not less than $100,000,000.
Section 5. Acknowledgment. The Administrative Agent
acknowledges that it has received the projections and certificate referred to in
Section 6.01(f) of the Credit Agreement sufficient to allow the Borrower to
issue Senior Subordinated Notes in an aggregate principal amount of up to
[$125,000,000] bearing interest at a rate not exceeding 10% per annum.
Section 6. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and effect. This
Amendment No. 1 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. 1 by signing any such
counterpart. This Amendment No. 1 shall be governed by, and construed in
accordance with, the law of the State of New York.
Amendment No. 1
<PAGE>
- 6 -
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 1 to be duly executed and delivered as of the day and year first
above written.
SMITHFIELD FOODS, INC.
By_________________________
Name: Aaron D. Trub
Title: Vice President,
Secretary and Treasurer
THE SMITHFIELD PACKING COMPANY,
INCORPORATED
By_________________________
Name: Aaron D. Trub
Title: Secretary
GWALTNEY OF SMITHFIELD, LTD.
By_________________________
Name: Aaron D. Trub
Title: Secretary
PATRICK CUDAHY INCORPORATED
By_________________________
Name: Aaron D. Trub
Title: Secretary
JOHN MORRELL & CO.
By_________________________
Name: Aaron D. Trub
Title: Secretary
LYKES MEAT GROUP, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
Amendment No. 1
<PAGE>
- 7 -
BROWN'S OF CAROLINA, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
HANCOCK'S OLD FASHIONED COUNTRY
HAMS, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
VALLEYDALE FOODS, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
COPAZ PACKING CORPORATION
By_________________________
Name: Aaron D. Trub
Title: Secretary
SUNNYLAND, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
SMITHFIELD PACKING-LANDOVER, INC.
By_________________________
Name: Aaron D. Trub
Title: Secretary
Amendment No. 1
<PAGE>
- 8 -
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent
By_________________________
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN -
BOERENLEENBANK B.A. "RABOBANK
NEDERLAND", NEW YORK BRANCH
By_________________________
Name:
Title:
By_________________________
Name:
Title:
AGRIBANK, FCB
By_________________________
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
By_________________________
Name:
Title:
By_________________________
Name:
Title:
Amendment No. 1
<PAGE>
- 9 -
DG BANK, DEUTSCHE
GENOSSENSCHAFTSBANK,
CAYMAN ISLANDS BRANCH
By_________________________
Name:
Title:
By_________________________
Name:
Title:
NATIONSBANK, N.A.
By_________________________
Name:
Title:
FBS AG CREDIT, INC.
By_________________________
Name:
Title:
SUNTRUST BANK, ATLANTA
By_________________________
Name:
Title:
By_________________________
Name:
Title:
Amendment No. 1
<PAGE>
- 10 -
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By_________________________
Name:
Title:
DRESDNER BANK AG
By_________________________
Name:
Title:
FARM CREDIT SERVICES OF THE
MIDLANDS, PCA
By_________________________
Name:
Title:
HARRIS TRUST AND SAVINGS BANK
By_________________________
Name:
Title:
SANWA BANK LIMITED
By_________________________
Name:
Title:
Amendment No. 1
<PAGE>
- 11 -
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH
By_________________________
Name:
Title:
Amendment No. 1
<PAGE>
EXHIBIT 4.8
EXECUTION COPY
SMITHFIELD FOODS, INC.
7 5/8% Senior Subordinated Notes due 2008
INDENTURE
Dated as of February 9, 1998
SUNTRUST BANK, ATLANTA
as Trustee
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310 (a)(1) .................................... 6.10
(a)(2) .................................... 6.10
(a)(3) .................................... N.A.
(a)(4) .................................... N.A.
(b) .................................... 6.8; 6.10
(c) .................................... N.A.
311 (a) .................................... 6.11
(b) .................................... 6.11
(c) .................................... N.A.
312 (a) .................................... 2.5
(b) .................................... 10.3
(c) .................................... 10.3
313 (a) .................................... 6.6
(b)(1) .................................... N.A.
(b)(2) .................................... 6.6
(c) .................................... 6.6
(d) .................................... 6.6
314 (a) .................................... 3.2; 10.2
(b) .................................... N.A.
(c)(1) .................................... 10.4
(c)(2) .................................... 10.4
(c)(3) .................................... N.A.
(d) .................................... N.A.
(e) .................................... 10.5
(f) .................................... 3.9
315 (a) .................................... 6.1
(b) .................................... 6.5; 10.2
(c) .................................... 6.1
(d) .................................... 6.1
(e) .................................... 5.11
316 (a)(last sentence) .................................... 10.6
(a)(1)(A) .................................... 5.5
(a)(1)(B) .................................... 5.4
(a)(2) .................................... N.A.
(b) .................................... 5.7
317 (a)(1) .................................... 5.8
(a)(2) .................................... 5.9
(b) .................................... 2.4
318 (a) .................................... 11.1
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
<S> <C>
Definitions and Incorporation by Reference.................................. 1
SECTION 1.1. Definitions.............................................................................. 1
SECTION 1.2. Other Definitions........................................................................ 20
SECTION 1.3. Incorporation by Reference of Trust Indenture Act........................................ 20
SECTION 1.4. Rules of Construction.................................................................... 21
ARTICLE II
The Securities................................................ 21
SECTION 2.1. Form, Dating............................................................................. 21
SECTION 2.2. Execution and Authentication............................................................. 27
SECTION 2.3. Registrar and Paying Agent............................................................... 28
SECTION 2.4. Paying Agent To Hold Money in Trust...................................................... 29
SECTION 2.5. Securityholder Lists..................................................................... 29
SECTION 2.6. Transfer and Exchange.................................................................... 29
SECTION 2.7. Form of Certificate to be Delivered in Connection with
Transfers to Institutional Accredited Investors............................................... 32
SECTION 2.8. Form of Certificate to be Delivered in Connection with
Transfers Pursuant to Regulation S............................................................ 34
SECTION 2.9. Mutilated, Destroyed, Lost or Stolen Securities.......................................... 35
SECTION 2.10. Outstanding Securities.................................................................. 36
SECTION 2.11. Temporary Securities.................................................................... 36
SECTION 2.12. Cancellation............................................................................ 37
SECTION 2.13. Payment of Interest; Defaulted Interest................................................. 37
SECTION 2.14. Computation of Interest................................................................. 38
SECTION 2.15. CUSIP Numbers........................................................................... 38
ARTICLE III
Covenants.................................................. 38
SECTION 3.1. Payment of Securities.................................................................... 38
SECTION 3.2. SEC Reports.............................................................................. 39
SECTION 3.3. Limitation on Indebtedness............................................................... 39
SECTION 3.4. Limitation on Layering................................................................... 41
SECTION 3.5. Limitation on Restricted Payments........................................................ 41
SECTION 3.6. Limitation on Restrictions on Distributions from Restricted
Subsidiaries.................................................................................. 43
SECTION 3.7. Limitation on Sales of Assets and Subsidiary Stock....................................... 44
SECTION 3.8. Limitation on Transactions with Affiliates............................................... 47
SECTION 3.9. Change of Control........................................................................ 48
- i -
<PAGE>
<CAPTION>
Page
SECTION 3.10. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries....................................................................... 49
SECTION 3.11. Limitation on Liens..................................................................... 50
SECTION 3.12. Limitation on Issuances of Guarantees of Indebtedness by
Restricted Subsidiaries....................................................................... 50
SECTION 3.13. Limitation on Lines of Business......................................................... 51
SECTION 3.14. Maintenance of Office or Agency......................................................... 51
SECTION 3.15. Money for Security Payments to Be Held in Trust......................................... 52
SECTION 3.16. Corporate Existence..................................................................... 53
SECTION 3.17. Payment of Taxes and Other Claims....................................................... 54
SECTION 3.18. Maintenance of Properties............................................................... 54
SECTION 3.19. Insurance............................................................................... 54
SECTION 3.20. Compliance with Laws.................................................................... 54
SECTION 3.21. Compliance Certificate.................................................................. 54
SECTION 3.22. Further Instruments and Acts............................................................ 55
ARTICLE IV
Successor Company and Successor Guarantor .................................. 55
SECTION 4.1. When Company May Merge or Otherwise Dispose of Assets.................................... 55
SECTION 4.2. When a Note Guarantor May Merge or Otherwise Dispose of
Assets........................................................................................ 56
ARTICLE V
Defaults and Remedies............................................ 57
SECTION 5.1. Events of Default........................................................................ 57
SECTION 5.2. Acceleration............................................................................. 59
SECTION 5.3. Other Remedies........................................................................... 60
SECTION 5.4. Waiver of Past Defaults.................................................................. 60
SECTION 5.5. Control by Majority...................................................................... 60
SECTION 5.6. Limitation on Suits...................................................................... 61
SECTION 5.7. Rights of Holders to Receive Payment..................................................... 61
SECTION 5.8. Collection Suit by Trustee............................................................... 61
SECTION 5.9. Trustee May File Proofs of Claim......................................................... 61
SECTION 5.10. Priorities.............................................................................. 62
SECTION 5.11. Undertaking for Costs................................................................... 62
ARTICLE VI
Trustee................................................... 62
SECTION 6.1. Duties of Trustee........................................................................ 62
SECTION 6.2. Rights of Trustee........................................................................ 63
SECTION 6.3. Individual Rights of Trustee............................................................. 64
SECTION 6.4. Trustee's Disclaimer..................................................................... 64
SECTION 6.5. Notice of Defaults....................................................................... 64
- ii -
<PAGE>
<CAPTION>
Page
SECTION 6.6. Reports by Trustee to Holders............................................................ 65
SECTION 6.7. Compensation and Indemnity............................................................... 65
SECTION 6.8. Replacement of Trustee................................................................... 66
SECTION 6.9. Successor Trustee by Merger.............................................................. 67
SECTION 6.10. Eligibility; Disqualification........................................................... 67
SECTION 6.11. Preferential Collection of Claims Against Company....................................... 67
ARTICLE VII
Discharge of Indenture; Defeasance...................................... 67
SECTION 7.1. Discharge of Liability on Securities; Defeasance......................................... 67
SECTION 7.2. Conditions to Defeasance................................................................. 68
SECTION 7.3. Application of Trust Money............................................................... 69
SECTION 7.4. Repayment to Company..................................................................... 70
SECTION 7.5. Indemnity for U.S. Government Obligations................................................ 70
SECTION 7.6. Reinstatement............................................................................ 70
ARTICLE VIII
Amendments.................................................. 71
SECTION 8.1. Without Consent of Holders............................................................... 71
SECTION 8.2. With Consent of Holders.................................................................. 72
SECTION 8.3. Compliance with Trust Indenture Act...................................................... 73
SECTION 8.4. Revocation and Effect of Consents and Waivers............................................ 73
SECTION 8.5. Notation on or Exchange of Securities.................................................... 73
SECTION 8.6. Trustee To Sign Amendments............................................................... 73
ARTICLE IX
Subordination................................................ 74
SECTION 9.1. Agreement To Subordinate................................................................. 74
SECTION 9.2. Liquidation, Dissolution, Bankruptcy..................................................... 74
SECTION 9.3. Default on Senior Indebtedness........................................................... 74
SECTION 9.4. Acceleration of Payment of Securities.................................................... 75
SECTION 9.5. When Distribution Must Be Paid Over...................................................... 75
SECTION 9.6. Subrogation.............................................................................. 75
SECTION 9.7. Relative Rights.......................................................................... 75
SECTION 9.8. Subordination May Not Be Impaired by Company............................................. 76
SECTION 9.9. Rights of Trustee and Paying Agent....................................................... 76
SECTION 9.10. Distribution or Notice to Representative................................................ 76
SECTION 9.11. Article IX Not To Prevent Events of Default or Limit Right
To Accelerate................................................................................. 76
SECTION 9.12. Trust Moneys Not Subordinated........................................................... 76
SECTION 9.13. Trustee Entitled To Rely................................................................ 77
SECTION 9.14. Trustee To Effectuate Subordination..................................................... 77
SECTION 9.15. Trustee Not Fiduciary for Holders of Senior Indebtedness................................ 77
- iii -
<PAGE>
<CAPTION.
Page
SECTION 9.16. Reliance by Holders of Senior Indebtedness on Indebtedness
on Subordination Provisions. ................................................................. 77
ARTICLE X
Miscellaneous................................................ 78
SECTION 10.1. Trust Indenture Act Controls............................................................ 78
SECTION 10.2. Notices................................................................................. 78
SECTION 10.3. Communication by Holders with other Holders............................................. 79
SECTION 10.4. Certificate and Opinion as to Conditions Precedent...................................... 79
SECTION 10.5. Statements Required in Certificate or Opinion........................................... 79
SECTION 10.6. When Securities Disregarded............................................................. 80
SECTION 10.7. Rules by Trustee, Paying Agent and Registrar............................................ 80
SECTION 10.8. Legal Holidays.......................................................................... 80
SECTION 10.9. Governing Law........................................................................... 80
SECTION 10.10. No Recourse Against Others............................................................. 80
SECTION 10.11. Successors............................................................................. 81
SECTION 10.12. Multiple Originals..................................................................... 81
SECTION 10.13. Variable Provisions.................................................................... 81
SECTION 10.14. Qualification of Indenture............................................................. 81
SECTION 10.15. Table of Contents; Headings............................................................ 81
</TABLE>
EXHIBIT A Form of the Initial Note
EXHIBIT B Form of the Exchange Note
- iv -
<PAGE>
INDENTURE dated as of February 9, 1998, among SMITHFIELD FOODS, INC., a Virginia
corporation (the "Company"), and SunTrust Bank, Atlanta, a banking corporation
duly organized and existing under the laws of the State of Georgia (the
"Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
7 5/8% Senior Subordinated Notes due 2008 (the "Initial Notes") and, if and when
issued in exchange for Initial Notes as provided in the Registration Rights
Agreement (as hereinafter defined), the Company's 7 5/8% Senior Subordinated
Notes due 2008 (the "Exchange Notes" and, together with the Initial Notes, the
"Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Acquired Indebtedness" means Indebtedness (i) of a Person or
any of its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary or (ii) assumed in connection with the acquisition of assets from
such Person, in each case whether or not incurred by such Person in connection
with, or in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to have
been incurred, with respect to clause (i) of the preceding sentence, on the date
such Person becomes a Restricted Subsidiary and, with respect to clause (ii) of
the preceding sentence, on the date of consummation of such acquisition of
assets. Notwithstanding the foregoing, no Person (other than the Company or any
Subsidiary of the Company) in whom a Receivables Entity makes an Investment in
connection with a Qualified Receivables Transaction shall be deemed to be an
Affiliate of the Company or any of its Subsidiaries solely by reason of such
Investment.
"Additional Assets" means: (i) any property or assets (other
than Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Related Business, (ii) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or another Restricted Subsidiary or (iii) Capital Stock
constituting a minority interest in any Person that at such time is or will
thereupon become a Restricted Subsidiary; provided, however, that, in the case
of clauses (ii) and (iii) of this definition, such Restricted Subsidiary is
primarily engaged in a Related Business.
"Affiliate" of any specified Person means (i) any other
Person, directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person, (ii) any Person who is a
director or officer (a) of such Person, (b) of any Subsidiary of such Person or
(c) of any Person described in clause (i) above and (iii) any beneficial owner
of shares representing 5% or more of the total voting power of the Voting Stock
(on a fully diluted basis) of the Company or of rights or warrants to purchase
such
<PAGE>
2
Voting Stock (whether or not currently exercisable) and any Person who would be
an Affiliate of any such beneficial owner pursuant to clauses (i) and (ii). For
the purposes of this definition, "control" when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer, or other
issuance or disposition (or series of related sales, leases, transfers, issuance
or dispositions that are part of a common plan) of shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries (including
any disposition by means of a sale and leaseback, merger, consolidation or
similar transaction, but excluding any disposition by means of any pledge of
assets or stock by the Company or any of its Subsidiaries otherwise permitted
under this Indenture, and any transaction or series of related transactions from
which the Company or any of its Subsidiaries receive an aggregate consideration
of less than $500,000) other than (i) a disposition by a Restricted Subsidiary
to the Company or by the Company or a Restricted Subsidiary to a Wholly-Owned
Subsidiary, (ii) a disposition of assets held for resale in the ordinary course
of business, (iii) the sale of Temporary Cash Investments in the ordinary course
of business, (iv) the sale or other disposition of damaged, worn, unneeded or
obsolete equipment in the ordinary course of business, (v) for purposes of
Section 3.7 only, a disposition subject to Section 3.5, (vi) the sale of other
assets so long as the fair market value of the assets disposed of pursuant to
this clause (vi) does not exceed $2.0 million in the aggregate in any fiscal
year and $10.0 million in the aggregate prior to February 15, 2008, (vii) any
disposition of assets pursuant to and in accordance with the provisions of
Section 3.9 and/or Article IV, (viii) sales or other dispositions of assets for
consideration at least equal to the fair market value of the assets sold or
disposed of, to the extent that the consideration received would constitute
Additional Assets or an Investment in a Permitted Joint Venture that in each
case complies with Section 3.5 and (ix) sales of accounts receivable and related
assets of the type specified in the definition of "Qualified Receivables
Transaction" to a Receivables Entity for the fair market value thereof,
including cash in an amount at least equal to 75% of the book value thereof as
determined in accordance with GAAP.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate assumed in making calculations in accordance with FAS 13) of the
total obligations of the lessee for rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by (ii) the sum of all
such payments.
<PAGE>
3
"Bank Indebtedness" means any and all amounts payable under or
in respect of the Revolving Credit Facilities and any Refinancing Indebtedness
with respect to the foregoing, as amended from time to time, including
principal, premium (if any), interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to the
Company whether or not a claim for postfiling interest is allowed in such
proceedings), fees, charges, expenses, reimbursement obligations, guarantees and
all other amounts payable thereunder or in respect thereof (including, without
limitation, cash collateralization of letters of credit).
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board
of Directors with respect to the relevant matter.
"Borrowing Base" means, as of the date of determination, an
amount equal to the sum, without duplication of (i) 75% of the net book value of
the Company's and its Restricted Subsidiaries' accounts receivable at such date
and (ii) 75% of the net book value of the Company's and its Restricted
Subsidiaries' inventories at such date. Net book value shall be determined in
accordance with GAAP and shall be that reflected on the most recent available
balance sheet (it being understood that the accounts receivable and inventories
of an acquired business may be included if such acquisition has been completed
on or prior to the date of determination).
"Business Day" means a day other than a Saturday, Sunday or
other day on which commercial banking institutions are authorized or required by
law to close in New York City or Atlanta, Georgia.
"Capital Stock" of any Person means (i) with respect to any
Person that is a corporation, any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) equity of such Person, including any Preferred Stock, and
(ii) with respect to any Person that is not a corporation, any and all
partnership or other equity interests of such Person but in each case excluding
any debt securities convertible into such equity.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP, and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease.
"Cash Equivalents" means (i) securities issued or directly and
fully guaranteed or insured by the United States government or any agency or
instrumentality thereof, (ii) certificates of deposit, time deposits and
eurodollar time deposits with maturities of one year or less from the date of
acquisition, bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any commercial bank having capital
and surplus in excess of $500 million and the commercial paper of the holding
company of which
<PAGE>
4
is rated at least "A-1" or the equivalent thereof by S&P or "P-1" or the
equivalent thereof by Moody's, (iii) repurchase obligations for underlying
securities of the types described in clauses (i) and (ii) entered into with any
financial institution meeting the qualifications specified in clause (ii) above,
(iv) commercial paper rated "A-1" or the equivalent thereof by S&P or "P-1" or
the equivalent thereof by Moody's and in each case maturing within one year
after the date of acquisition thereof, (v) investment funds investing 95% of
their assets in securities of the type described in clauses (i)-(iv) above.
"Change of Control" means the occurrence of any of the
following events:
(i) any sale, transfer or other conveyance, whether direct or
indirect, of all or substantially all of the fair market value of
assets of the Company on a consolidated basis, in one transaction or a
series of related transactions, to any Person or Persons other than the
Company or one or more of its Restricted Subsidiaries;
(ii) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more
Permitted Holders, is or becomes the "beneficial owner" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person
shall be deemed to have "beneficial ownership" of all shares that any
such Person has the right to acquire within one year), directly or
indirectly, of more than 50% of the Voting Stock of the Company (or its
successor by merger, consolidation or purchase of all or substantially
all of its assets);
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
(together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Company was approved by a vote of a majority of the directors of the
Company then still in office who were either directors at the beginning
of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority
of the Board of Directors then in office; or
(iv) the adoption of a plan relating to the liquidation or
dissolution of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Smithfield Foods, Inc. until a successor
replaces it and, thereafter, means such successor.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA of the Company and its
Restricted Subsidiaries for the period of the most recent four consecutive
fiscal quarters ending prior to the date of such determination for which
consolidated financial statements of the Company are available to (ii)
Consolidated Interest Expense of the Company and its Restricted Subsidiaries for
such four consecutive fiscal quarters; provided, however, that (1) if the
Company or any Restricted
<PAGE>
5
Subsidiary has Incurred any Indebtedness since the beginning of such period that
remains outstanding on such date of determination or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence
of Indebtedness, EBITDA and Consolidated Interest Expense for such period shall
be calculated after giving effect on a pro forma basis to such Indebtedness as
if such Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period, (2) if since the beginning of such
period the Company or any Restricted Subsidiary shall have made any Asset
Disposition, the EBITDA for such period shall be reduced by an amount equal to
the EBITDA (if positive) directly attributable to the assets that are the
subject of such Asset Disposition for such period or increased by an amount
equal to the EBITDA (if negative) directly attributable thereto for such period
and Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged (to the extent the related commitment is
permanently reduced) with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Disposition for such period (or, if
the Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the Indebtedness of
such Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness after such
sale), (3) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary) or an
acquisition of assets, including any Investment in a Restricted Subsidiary or
any acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all of
an operating unit of a business, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto (including
the Incurrence of any Indebtedness and including the pro forma expenses and cost
reductions calculated on a basis consistent with Regulation S-X of the
Securities Act) as if such Investment or acquisition occurred on the first day
of such period and without regard to clause (ii) of the definition of
Consolidated Net Income and (4) if since the beginning of such period any Person
(that subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period) shall
have made any Asset Disposition or any Investment or acquisition of assets that
would have required an adjustment pursuant to clause (2) or (3) above if made by
the Company or a Restricted Subsidiary during such period, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Asset Disposition, Investment or acquisition
of assets occurred on the first day of such period. For purposes of this
definition, whenever pro forma effect is to be given to a transaction, the pro
forma calculations shall be determined in good faith by a responsible financial
or accounting Officer of the Company. If any Indebtedness bears a floating rate
of interest and is being given pro forma effect, the interest expense on such
Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term as at the date of determination in
excess of 12 months).
<PAGE>
6
"Consolidated Interest Expense" means, for any period, the
total consolidated cash and non-cash interest expense (excluding capitalized
interest) of the Company and its Restricted Subsidiaries determined in
accordance with GAAP, plus, to the extent incurred by the Company and its
Restricted Subsidiaries in such period but not included in such interest
expense, (i) interest expense attributable to Capitalized Lease Obligations and
imputed interest with respect to Attributable Debt, (ii) amortization of debt
discount and debt issuance cost (other than those debt discounts and debt
issuance costs incurred on the Issue Date), (iii) capitalized interest, (iv)
non-cash interest expense, (v) commissions, discounts and other fees and charges
attributable to letters of credit and bankers' acceptance financing, (vi)
interest actually paid by the Company or any Restricted Subsidiary under any
Guarantee of Indebtedness or other obligation of any other Person, (vii) net
costs associated with Hedging Obligations (or minus net gains associated with
Hedging Obligations), (viii) the product of (A) Preferred Stock dividends in
respect of all Preferred Stock of Restricted Subsidiaries and Disqualified Stock
of the Company held by Persons other than the Company or a Wholly- Owned
Subsidiary multiplied by (B) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of the Company, expressed as a decimal, in each case,
determined on a consolidated basis in accordance with GAAP and (ix) the cash
contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or fees
to any Person (other than the Company) in connection with Indebtedness Incurred
by such plan or trust. For purposes of the foregoing, gross interest expense
shall be determined after giving effect to any net payments made or received by
the Company and its Restricted Subsidiaries with respect to Interest Rate
Agreements.
"Consolidated Net Income" means, for any period, without
duplication, the consolidated net income (loss) of the Company and its
Restricted Subsidiaries; provided, however, that there shall not be included in
such Consolidated Net Income: (i) any net income (loss) of any Person if such
Person is not a Restricted Subsidiary, except that (A) subject to the
limitations contained in clause (iv) below, the Company's equity in the net
income of any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations contained in clause
(iii) below) and (B) the Company's equity in a net loss of any such Person for
such period shall be included in determining such Consolidated Net Income, (ii)
any net income (loss) of any Person acquired by the Company or a Restricted
Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition, (iii) any net income (loss) of any Restricted
Subsidiary if such Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to the Company, except that (A)
subject to the limitations contained in (iv) below, the Company's equity in the
net income of any such Restricted Subsidiary for such period shall be included
in such Consolidated Net Income up to the aggregate amount of cash distributed
by such Restricted Subsidiary during such period to the Company or another
Restricted Subsidiary as a dividend (subject, in the case of a dividend that
could have been made to another Restricted Subsidiary, to the limitation
contained in this clause) and (B) the Company's equity in a net loss of any such
Person for
<PAGE>
7
such period shall be included in determining such Consolidated Net Income, (iv)
any gain (but not loss) realized upon the sale or other disposition of any asset
of the Company or its Restricted Subsidiaries (including pursuant to any
Sale/Leaseback Transaction) that is not sold or otherwise disposed of in the
ordinary course of business and any gain (but not loss) realized upon the sale
or other disposition of any Capital Stock of any Person, (v) any extraordinary
gain or loss, (vi) the cumulative effect of a change in accounting principles
and (vii) for purposes of clause (a)(3)(A) of Section 3.5, amounts otherwise
included in Consolidated Net Income that have the effect of reducing the
aggregate amount of Investments under clause (vii) of the definition of
Permitted Investments.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event or condition that is, or after
notice or passage of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning set forth in
Section 2.13.
"Depositary" means The Depository Trust Company, its nominees
and their respective successors and assigns, or such other depository
institution hereinafter appointed by the Company.
"Designated Senior Indebtedness" means (i) the Bank
Indebtedness and the Senior Secured Notes and (ii) any other Senior Indebtedness
which, at the date of determination, has an aggregate principal amount of or
under which, at the date of determination, the holders thereof are committed to
lend up to, at least $25.0 million and is specifically designated by the Company
in the instrument evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock of such Person that by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable or exercisable) or
upon the happening of any event (i) matures or is mandatorily redeemable
pursuant to a sinking fund obligation or otherwise, (ii) is convertible or
exchangeable for Indebtedness or Disqualified Stock or (iii) is redeemable at
the option of the holder thereof, in whole or in part, in each case on or prior
to 123 days after the Stated Maturity of the Securities; provided, that any
Capital Stock that would not constitute Disqualified Stock but for provisions
thereof giving holders thereof the right to require such Person to repurchase or
redeem such Capital Stock upon the occurrence of an "asset sale" or "change of
control" occurring prior to the Stated Maturity of the Notes shall not
constitute Disqualified Stock if the "asset sale" or "change of control"
provisions applicable to such Capital Stock are no more favorable to the holders
of such Capital Stock than the provisions contained in Sections 3.7 and 3.9 and
such Capital Stock specifically provides that such Person will not repurchase or
redeem any such stock pursuant to such provision prior to the Company's
repurchase of such Notes as are required to be repurchased pursuant to Sections
3.7 and 3.9.
<PAGE>
8
"EBITDA" means, for any period, the Consolidated Net Income
for such period, plus, without duplication and to the extent deducted in
calculating such Consolidated Net Income, (i) income tax expense, (ii)
Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization of
intangibles and (v) other non-cash charges or non-cash losses (other than
non-cash charges to the extent they represent an accrual of or reserve for cash
charges in any future period or amortization of a prepaid expense that was paid
in a prior period), less, without duplication, non-cash items increasing
Consolidated Net Income of such Person for such period (excluding any items
which represent the reversal of any accrual of, or cash reserve for, anticipated
cash charges in any prior period); provided, that if any Restricted Subsidiary
is not directly or indirectly owned 100% by the Company, EBITDA shall be reduced
(to the extent not otherwise reduced in accordance with GAAP) by an amount equal
to (A) the amount of the EBITDA attributable to such Restricted Subsidiary
multiplied by (B) the quotient of (1) the number of shares of outstanding common
Equity Interests of such Restricted Subsidiary not owned directly or indirectly
by the Company on the last day of such period by the Company divided by (2) the
total number of shares of outstanding common Equity Interests of such Restricted
Subsidiary on the last day of such period.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means any public or private sale of common
stock of the Company (excluding Disqualified Stock), other than public offerings
with respect to the Company's common stock registered on Form S-8.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fiscal Year" means the fiscal year of the Company ending on
the Sunday closest to April 30 of each year or such other fiscal year as may be
determined by the Company and the Board of Directors and of which the Trustee
shall receive written notice pursuant to Section 3.21 hereof.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect on the Issue Date, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
nonfinancial obligation of any other Person and any obligation, direct or
indirect, contingent or otherwise, of such Person (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
such other obligation of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities
<PAGE>
9
or services, to take-or-pay, or to maintain financial statement conditions or
otherwise) or (ii) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered in the Note Register.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Subsidiary at the time it becomes a Subsidiary. Any Indebtedness issued
at a discount (including Indebtedness on which interest is payable through the
issuance of additional Indebtedness) shall be deemed incurred at the time of
original issuance of the Indebtedness at the initial accreted amount thereof.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication): (i) the principal of and premium (if
any) in respect of indebtedness of such Person for borrowed money, (ii) the
principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto) (other
than obligations with respect to letters of credit securing obligations (other
than obligations described in clauses (i), (ii) and (v)) entered into in the
ordinary course of business of such Person to the extent that such letters of
credit are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the third business day following receipt by such Person
of a demand for reimbursement following payment on the letter of credit), (iv)
all obligations of such Person to pay the deferred and unpaid purchase price of
property or services (except Trade Payables), which purchase price is due more
than six months after the date of placing such property in final service or
taking final delivery and title thereto or the completion of such services, (v)
all Capitalized Lease Obligations and Attributable Debt of such Person, (vi) the
redemption, repayment or other repurchase amount of such Person with respect to
any Disqualified Stock or, with respect to any Subsidiary of the Company, any
Preferred Stock (but excluding, in each case, any accrued dividends), (vii) all
Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person; provided, however,
that the amount of Indebtedness of such Person shall be the lesser of (A) the
fair market value of such asset at such date of determination and (B) the amount
of such Indebtedness of such other Person, (viii) all Indebtedness of other
Persons to the extent Guaranteed by such Person and (ix) to the extent not
otherwise included in this definition, net Hedging Obligations of such Person
(such obligations to be equal at any time
<PAGE>
10
to the termination value of such agreement or arrangement giving rise to such
Hedging Obligation that would be payable by such Person at such time).
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are, in conformity with GAAP, recorded as accounts receivable on
the balance sheet of the Company or its Restricted Subsidiaries) or other
extension of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person. For purposes of the definition of
"Unrestricted Subsidiary" and Section 3.5, (i) "Investment" shall include the
portion (proportionate to the Company's equity interest in such Subsidiary) of
the fair market value of the net assets of any Subsidiary of the Company at the
time that such Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Subsidiary as a Restricted
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to
(x) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time of such redesignation; and (ii) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its fair market value
at the time of such transfer, in each case as determined in good faith either by
the Board of Directors or Senior Management.
"Issue Date" means the date on which the Initial Notes are
originally issued.
"Legal Holiday" has the meaning ascribed to it in Section
10.8.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof, any option or other
agreement to sell, or any filing of, or any agreement to give any security
interest).
"Moody's" means Moody's Investors Service, Inc., and its
successors.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any
<PAGE>
11
other consideration received in the form of assumption by the acquiring Person
of Indebtedness or other obligations relating to the properties or assets that
are the subject of such Asset Disposition or received in any other non-cash
form) therefrom, in each case net of (i) all legal, title and recording tax
expenses, commissions and other fees and expenses incurred (including fees and
expenses of counsel, accountants and investment bankers), and all Federal,
state, provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset Disposition, (ii) all
payments made on any Indebtedness that is secured by any assets subject to such
Asset Disposition, in accordance with the terms of any Lien upon such assets, or
that must by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law, be repaid out of the proceeds from such Asset
Disposition, (iii) all distributions and other payments required to be made to
minority interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition, (iv) appropriate amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
assets disposed of in such Asset Disposition and retained by the Company or any
Restricted Subsidiary after such Asset Disposition and (v) any portion of the
purchase price from an Asset Disposition placed in escrow (whether as a reserve
for adjustment of the purchase price, or for satisfaction of indemnities in
respect of such Asset Disposition); provided, however, that upon the termination
of such escrow, Net Available Cash shall be increased by any portion of funds
therein released to the Company or any Restricted Subsidiary.
"Net Cash Proceeds" means, with respect to any issuance or
sale of Capital Stock or Indebtedness, the cash proceeds of such issuance or
sale net of attorneys' fees, accountants' fees, underwriters' or placement
agents' fees, discounts or commissions and brokerage, consultant and other fees
actually incurred in connection with such issuance or sale and net of taxes paid
or payable as a result thereof.
"Non-Recourse Indebtedness" means Indebtedness (i) as to which
neither the Company nor any of its Restricted Subsidiaries (a) provides credit
support pursuant to any undertaking, agreement or instrument that would
constitute Indebtedness or (b) is directly or indirectly liable and (ii) no
default with respect to which would permit (upon notice, lapse of time or both)
any holder of any other Indebtedness of the Company or any of its Restricted
Subsidiaries to declare a default on such Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity.
"Note Guarantee" means any guarantee that may from time to
time be executed and delivered by a Restricted Subsidiary pursuant to Section
3.12.
"Note Guarantor" means any Subsidiary that has issued a Note
Guarantee.
"Note Register" means the register of Securities, maintained
by the Trustee, pursuant to Section 2.3.
"Offering Memorandum" means the Offering Memorandum dated
February 4, 1998 relating to the Initial Notes; provided that after the issuance
of Exchange Notes, all
<PAGE>
12
references herein to "Offering Memorandum" with respect to the Exchange Notes
shall be deemed references to the prospectus relating to the Exchange Notes.
"Officer" means any of the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Operating Officer, any Vice
President, the Treasurer, the Secretary or the Controller of the Company.
"Officers' Certificate" means a certificate signed by two or
more Officers.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee.
"Permitted Employee Payments" means Restricted Payments by the
Company or any Restricted Subsidiary in respect of (i) the repurchase of Capital
Stock by the Company or any Restricted Subsidiary from an employee of the
Company or any Restricted Subsidiary or their assigns, estates or heirs upon the
death, retirement or termination of such employee or (ii) loans or advances to
employees of the Company or any of its Subsidiaries made in the ordinary course
of business.
"Permitted Holders" means Joseph W. Luter, III or any Person
the majority of the equity interests of which is beneficially owned by Joseph W.
Luter, III.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in (i) a Restricted Subsidiary, the Company or a
Person that will, upon the making of such Investment, become a Restricted
Subsidiary; provided, however, that the primary business of such Restricted
Subsidiary is a Related Business, (ii) another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Restricted Subsidiary; provided, however, that the primary business of such
Person is a Related Business, (iii) Temporary Cash Investments, (iv) receivables
owing to the Company or any Restricted Subsidiary, if created or acquired in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; provided, however, that such trade terms may include such
concessionary trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances, (v) securities received as consideration in
Asset Dispositions made in compliance with Section 3.7 with the exception of
securities received as consideration for Asset Dispositions of any property,
plant, equipment or other facility closed and designated in accordance with
clause (a)(ii) of Section 3.7, (vi) Investments in existence on the Issue Date
(but not in excess of the amount of such Investments in existence on the Issue
Date without giving effect to increases or decreases attributable to accounting
for the net income of such Investments or subsequent changes in value), (vii)
any Investment by the Company or a Wholly-Owned Subsidiary in a Receivables
Entity or any Investment by a Receivables Entity in any other Person in
connection with a Qualified Receivables Transaction; provided that any
Investment in a Receivables Entity is in the form of a Purchase Money Note or an
Equity Interest and (viii) additional Investments in a Related Business having
an aggregate fair market value, taken together with all other
<PAGE>
13
Investments made pursuant to this clause (viii) that are at that time
outstanding, not to exceed 15% of Total Assets at the time of such Investment
(with the fair market value of each Investment being measured at the time made
and without giving effect to subsequent changes in value).
"Permitted Joint Venture" means any Person in which the
Company or a Restricted Subsidiary owns, directly or indirectly, an ownership
interest (other than a Subsidiary) and whose primary business is related,
ancillary or complementary to any of the businesses of the Company and its
Restricted Subsidiaries at the time of determination.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
that is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Private Exchange Securities" shall have the meaning set forth
in the Registration Rights Agreement.
"Purchase Money Note" means a promissory note of a Receivables
Entity evidencing a line of credit, which may be irrevocable, from the Company
or any Subsidiary of the Company in connection with a Qualified Receivables
Transaction to a Receivables Entity, which note shall be repaid from cash
available to the Receivables Entity, other than amounts required to be
established as reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts owing to such investors and amounts paid in connection with the purchase
of newly generated receivables.
"QIB" means any "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act).
"Qualified Receivables Transaction" means any transaction or
series of transactions that may be entered into by the Company or any of its
Subsidiaries pursuant to which the Company or any of its Subsidiaries may sell,
convey or otherwise transfer to (a) a Receivables Entity (in the case of a
transfer by the Company or any of its Subsidiaries) and (b) any other Person (in
the case of a transfer by a Receivables Entity), or may grant a security
interest in, any accounts receivable (whether now existing or arising in the
future) of the Company or any of its Subsidiaries, and any assets related
thereto including, without limitation, all collateral securing such accounts
receivable, all contracts and all guarantees or other obligations in respect of
such accounts receivable, proceeds of such accounts receivable and other assets
which are customarily transferred or in respect of which security interests are
<PAGE>
14
customarily granted in connection with asset securitization transactions
involving accounts receivable.
"Receivables Entity" means a Wholly-Owned Subsidiary of the
Company (or another Person in which the Company or any Subsidiary of the Company
makes an Investment and to which the Company or any Subsidiary of the Company
transfers accounts receivable and related assets) which engages in no activities
other than in connection with the financing of accounts receivable and which is
designated by the Board of Directors of the Company (as provided below) as a
Receivables Entity, (a) no portion of the Indebtedness or any other obligations
(contingent or otherwise) of which (i) is guaranteed by the Company or any
Subsidiary of the Company (excluding guarantees of obligations (other than the
principal of, and interest on, Indebtedness) pursuant to Standard Securitization
Undertakings), (ii) is recourse to or obligates the Company or any Subsidiary of
the Company in any way other than pursuant to Standard Securitization
Undertakings or (iii) subjects any property or asset of the Company or any
Subsidiary of the Company, directly or indirectly, contingently or otherwise, to
the satisfaction thereof, other than pursuant to Standard Securitization
Undertakings, (b) with which neither the Company nor any Subsidiary of the
Company has any material contract, agreement, arrangement or understanding other
than on terms no less favorable to the Company or such Subsidiary than those
that might be obtained at the time from Persons that are not Affiliates of the
Company, other than fees payable in the ordinary course of business in
connection with servicing accounts receivable, and (c) to which neither the
Company nor any Subsidiary of the Company has any obligation to maintain or
preserve such entity's financial condition or cause such entity to achieve
certain levels of operating results. Any such designation by the Board of
Directors of the Company shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the resolution of the Board of Directors of the
Company giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"Recourse Indebtedness" means Indebtedness that is not
Non-Recourse Indebtedness.
"Refinancing Indebtedness" means Indebtedness that is Incurred
to refund, refinance, replace, renew, repay or extend (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances", and "refinanced"
shall have a correlative meaning) any Indebtedness existing on the Issue Date or
Incurred in compliance with the Indenture (including Indebtedness of the Company
that refinances Indebtedness of any Restricted Subsidiary (to the extent
permitted by the Indenture) and Indebtedness of any Restricted Subsidiary that
refinances Indebtedness of another Restricted Subsidiary (except that a Note
Guarantor shall not refinance Indebtedness of a Restricted Subsidiary that is
not a Note Guarantor)) including Indebtedness that refinances Refinancing
Indebtedness; provided, however, that (i) the Refinancing Indebtedness has a
Stated Maturity no earlier than the Stated Maturity of the Indebtedness being
refinanced, (ii) the Refinancing Indebtedness has an Average Life at the time
such Refinancing Indebtedness is Incurred that is equal to or greater than the
Average Life of the Indebtedness being refinanced and (iii) such Refinancing
Indebtedness is Incurred in an aggregate principal amount (or if issued with
original issue discount, an aggregate issue price) that is equal to or less than
the aggregate principal amount
<PAGE>
15
(or if issued with original issue discount, the aggregate accreted value) then
outstanding of the Indebtedness being refinanced, plus fees, underwriting
discounts, premiums, unpaid accrued interest and other costs and expenses
incurred in connection with such Refinancing Indebtedness; provided further,
however, that Refinancing Indebtedness shall not include (x) Indebtedness of a
Restricted Subsidiary that refinances Indebtedness of the Company or (y)
Indebtedness of the Company or a Restricted Subsidiary that refinances
Indebtedness of an Unrestricted Subsidiary.
"Registered Exchange Offer" shall have the meaning set forth
in the Registration Rights Agreement.
"Registration Rights Agreement" means the Exchange and
Registration Rights Agreement, dated February 9, 1998, between the Company and
Chase Securities Inc.
"Related Business" means any business which is the same as or
related, complementary or ancillary to any of the businesses of the Company and
its Restricted Subsidiaries on the date of this Indenture.
"Representative" means the trustee, agent or representative
(if any) for an issue of Senior Indebtedness.
"Restricted Investment" means any Investment other than a
Permitted Investment.
"Restricted Period" means the 40 consecutive days beginning on
and including the later of (A) the day on which the Initial Notes are offered to
persons other than distributors (as defined in Regulation S under the Securities
Act) and (B) the Issue Date.
"Restricted Securities Legend" means the Private Placement
Legend set forth in clause (A) of Section 2.1(c) or the Regulation S Legend set
forth in clause (B) of Section 2.1(c), as applicable.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary.
"Revolving Credit Facilities" means the collective reference
to (i) the Five-Year Credit Agreement, dated as of July 15, 1997, among the
Company, the subsidiary guarantors thereto, the lenders party thereto and The
Chase Manhattan Bank, as administrative agent and (ii) the 364-Day Credit
Agreement dated as of July 15, 1997, among the Company, the subsidiary
guarantors thereto, the lenders party thereto and The Chase Manhattan Bank, as
administrative agent, each as may be amended, supplemented or modified from time
to time and any renewal, extension, refunding, restructuring, replacement or
refinancing thereof (whether with the original administrative agent and lenders
or another administrative agent or agents or one or more other lenders and
whether provided under the original Revolving Credit Facilities or one or more
other credit or other agreements or indentures).
<PAGE>
16
"Sale/Leaseback Transaction" means any direct or indirect
arrangement relating to property now owned or hereafter acquired by the Company
or a Restricted Subsidiary whereby the Company or such Restricted Subsidiary
transfers such property to a Person and the Company or such Restricted
Subsidiary leases it from such Person, other than leases between the Company and
a Wholly-Owned Subsidiary or between Wholly-Owned Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company
secured by a Lien.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depositary), or any successor Person
thereto and shall initially be the Trustee.
"Senior Indebtedness" means, whether outstanding on the Issue
Date or thereafter issued, (i) Bank Indebtedness and the Senior Secured Notes
and (ii) all other Indebtedness of the Company, including interest and fees
thereon, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that the obligations in respect
of such Indebtedness are not superior in right of, or are subordinated to,
payment to the Securities; provided, however, that Senior Indebtedness will not
include (1) any obligation of the Company to any Subsidiary, (2) any liability
for Federal, state, foreign, local or other taxes owed or owing by the Company,
(3) any accounts payable or other liability to trade creditors arising in the
ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities), (4) any Indebtedness, Guarantee or obligation of
the Company that is expressly subordinate or junior in right of payment to any
other Indebtedness, Guarantee or obligation of the Company, including any Senior
Subordinated Indebtedness and any Subordinated Indebtedness or (5) any Capital
Stock.
"Senior Management" means with respect to the Company or any
of its Subsidiaries, as the case may be, any one of the Chairman of the Board,
the Chief Executive Officer, the President and the Chief Operating Officer or
any combination of the foregoing.
"Senior Secured Notes" means collectively, the 6.24% Series A
Senior Secured Notes Due November 1, 1998, the 8.41% Series B Senior Secured
Notes Due August 1, 2006, the 8.34% Series C Senior Secured Notes Due August 1,
2003, the 9.80% Series D Senior Secured Notes Due August 1, 2003, the 10.75%
Series E Senior Secured Notes Due August 1, 2005, the 8.52% Series F Senior
Secured Notes Due August 1, 2006, the 9.85% Series G Senior Secured Notes Due
November 1, 2006 and the 8.41% Series H Senior Secured Notes Due August 1, 2004,
each issued pursuant to the Note Purchase Agreement, dated as of July
<PAGE>
17
15, 1996, among the Company and each of the several purchasers named therein, as
the same may be amended, supplemented or otherwise modified from time to time.
"Senior Subordinated Indebtedness" means any Indebtedness that
is pari passu in right of payment to the Securities.
"Shelf Registration Statement" has the meaning ascribed
thereto in the Registration Rights Agreement.
"Significant Subsidiary" means any Restricted Subsidiary that
is a "Significant Subsidiary" of the Company within the meaning of Rule 1-02
under Regulation S-X promulgated by the SEC.
"S&P" means Standard & Poor's Ratings Service, a division of
The McGraw- Hill Companies, Inc., and its successors.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Company or any
Subsidiary of the Company which are reasonably customary in an accounts
receivable transaction.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer, unless such
contingency has occurred).
"Subordinated Indebtedness" means any Indebtedness of the
Company (whether outstanding on the date of this Indenture or thereafter
Incurred) which is subordinate or junior in right of payment to the Securities
pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership or
joint venture interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person
or (ii) one or more Subsidiaries of such Person.
"Successor Company" shall have the meaning assigned thereto in
clause (i) of Section 4.1.
"Successor Guarantor" shall have the meaning assigned thereto
in clause (i) of Section 4.2.
"Temporary Cash Investments" means any of the following: (i)
any Investment in direct obligations (x) of the United States of America or any
agency thereof or obligations
<PAGE>
18
Guaranteed by the United States of America or any agency thereof or (y) of any
foreign country recognized by the United States of America rated at least "A" by
S&P or "A-1" by Moody's, (ii) Investments in time deposit accounts, certificates
of deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company that is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America having capital and surplus
aggregating in excess of $250.0 million (or the foreign currency equivalent
thereof) and whose long-term debt is rated "A" by S&P or "A-1" by Moody's, (iii)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) or (ii) above entered into with
a bank meeting the qualifications described in clause (ii) above, (iv)
Investments in commercial paper, maturing not more than 270 days after the date
of acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America or any
foreign country recognized by the United States of America with a rating at the
time as of which any Investment therein is made of "P-1" (or higher) according
to Moody's or "A-1" (or higher) according to S&P, (v) Investments in securities
with maturities of six months or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by S&P or "A" by Moody's and (vi) any money market deposit accounts
issued or offered by a domestic commercial bank or a commercial bank organized
and located in a country recognized by the United States of America, in each
case, having capital and surplus in excess of $250.0 million (or the foreign
currency equivalent thereof), or investments in money market funds complying
with the risk limiting conditions of Rule 2a-7 (or any short-term successor
rule) of the SEC, under the Investment Company Act of 1940, as amended.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act
of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb), as in effect from time to time.
"Total Assets" means, with respect to any Person, the total
consolidated assets of such Person and its Restricted Subsidiaries, as shown on
the recent balance sheet of such Person.
"Trade Payables" means, with respect to any Person, any
accounts payable or any indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person arising in the ordinary course of
business in connection with the acquisition of goods or services.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means such successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
<PAGE>
19
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Restricted Subsidiary of the Company (including any newly acquired or newly
formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property
of, the Company or any Restricted Subsidiary (except a Restricted Subsidiary
which upon such designation becomes an Unrestricted Subsidiary in accordance
with this Indenture); provided that (i) such designation would be permitted
under Section 3.5, (ii) no portion of the Indebtedness or any other obligation
(contingent or otherwise) of such Subsidiary (A) is Guaranteed by the Company or
any Restricted Subsidiary, (B) is Recourse Indebtedness or (C) subjects any
property or asset of the Company or any Restricted Subsidiary, directly or
indirectly, contingently or otherwise, to the satisfaction thereof, and (iii) no
default or event of default with respect to any Indebtedness of such Subsidiary
would permit any holder of any Indebtedness of the Company or any Restricted
Subsidiary to declare such Indebtedness of the Company or any Restricted
Subsidiary due and payable prior to its maturity. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided,
that immediately after giving effect to such designation (x) the Company could
Incur $1.00 of additional Indebtedness under Section 3.3(a) and (y) no Default
or Event of Default shall have occurred and be continuing. Any such designation
by the Board of Directors shall be evidenced to the Trustee by promptly filing
with the Trustee a copy of the Board Resolution giving effect to such
designation and an Officers' Certificate that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of an entity means all classes of Capital Stock
of such entity then outstanding and normally entitled to vote in the election of
directors or all interests in such entity with the ability to control the
management or actions of such entity.
"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the
Company, 80% or more of the Capital Stock of which (other than directors'
qualifying shares) is owned directly or indirectly by the Company.
<PAGE>
20
SECTION 1.2. Other Definitions.
Defined in
Term Section
"Affiliate Transaction"................................... 3.8
"Agent Member"............................................ 2.1(d)
"Bankruptcy Law".......................................... 5.1
"Blockage Notice"......................................... 9.3
"covenant defeasance option".............................. 7.1(b)
"Custodian"............................................... 5.1
"Definitive Securities"................................... 2.1(e)
"Event of Default"........................................ 5.1
"Global Securities"....................................... 2.1(a)
"legal defeasance option"................................. 7.1(b)
"Offer" .................................................. 3.7(b)
"pay the Securities"...................................... 9.3
"Paying Agent"............................................ 2.3
"Payment Blockage Period"................................. 9.3
"Registrar"............................................... 2.3
"Regulation S"............................................ 2.1(a)
"Resale Restriction Termination Date"..................... 2.6
"Restricted Payment"...................................... 3.5
"Rule 144A"............................................... 2.1(a)
SECTION 1.3. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by the TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
<PAGE>
21
SECTION 1.4. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that would
be shown on a balance sheet of the issuer dated such date prepared in accordance
with GAAP; and
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater.
ARTICLE II
The Securities
SECTION 2.1. Form, Dating and Terms. (a) The Initial Notes
are being offered and sold by the Company pursuant to a Purchase Agreement,
dated February 4, 1998, between the Company and Chase Securities Inc. (the
"Purchase Agreement").
Initial Notes offered and sold to qualified institutional
buyers (as defined in Rule 144A under the Securities Act ("Rule 144A")) in the
United States of America (the "Rule 144A Notes") will be issued on the Issue
Date in the form of a permanent global Security substantially in the form of
Exhibit A, which is hereby incorporated by reference and expressly made a part
of this Indenture (the "Rule 144A Global Note"), deposited with the Trustee, as
custodian for the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The Rule 144A Global Note may be
represented by more than one certificate, if so required by the Depositary's
rules regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Rule 144A Global Note may
from time to time be increased or decreased by adjustments made on
<PAGE>
the records of the Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
Initial Notes offered and sold outside the United States of
America (the "Regulation S Note") in reliance on Regulation S under the
Securities Act ("Regulation S") shall be issued in the form of a permanent
global Security substantially in the form of Exhibit A (the "Regulation S Global
Note") deposited with the Trustee, as custodian for the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The Regulation S Global Note may be represented by more than one
certificate, if so required by the Depositary's rules regarding the maximum
principal amount to be represented by a single certificate. The aggregate
principal amount of the Regulation S Global Note may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depositary or its nominee, as hereinafter provided.
Initial Notes resold to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) in the
United States of America (the "Institutional Accredited Investor Note") will be
issued in the form of a permanent global Security substantially in the form of
Exhibit A (the "Institutional Accredited Investor Global Note") deposited with
the Trustee, as custodian for the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The Institutional
Accredited Investor Global Note may be represented by more than one certificate,
if so required by the Depositary's rules regarding the maximum principal amount
to be represented by a single certificate. The aggregate principal amount of the
Institutional Accredited Investor Global Note may from time to time be increased
or decreased by adjustments made on the records of the Trustee, as custodian for
the Depositary or its nominee, as hereinafter provided.
Exchange Notes exchanged for interests in the Rule 144A Note,
the Regulation S Note and the Institutional Accredited Investor Note will be
issued in the form of a permanent global Note substantially in the form set
forth in Exhibit B hereto, which is hereby incorporated by reference and
expressly made a part of this Indenture, deposited with the Trustee as
hereinafter provided, with the applicable legend set forth in Section 2.1(c)
hereof (the "Exchange Global Note"). The Exchange Global Note may be represented
by more than one certificate, if so required by the Depositary's rules regarding
the maximum principal amount to be represented by a single certificate.
The Rule 144A Global Note, the Regulation S Global Note, the
Exchange Global Note and the Institutional Accredited Investor Global Note are
sometimes collectively herein referred to as the "Global Securities."
The principal of (and premium, if any) and interest on the
Securities shall be payable at the office or agency of the Company maintained
for such purpose in The City of New York, or at such other office or agency of
the Company as may be maintained for such purpose pursuant to Section 2.3;
provided, however, that, at the option of the Company, each installment of
interest may be paid by (i) check mailed to addresses of the Persons entitled
<PAGE>
23
thereto as such addresses shall appear on the Note Register or (ii) wire
transfer or other electronic funds transfer to an account located in the United
States maintained by the payee.
The Private Exchange Securities shall be in the form of
Exhibit A. The Securities may have notations, legends or endorsements required
by law, stock exchange rule or usage, in addition to those set forth on Exhibits
A and B. The Company and the Trustee shall approve the forms of the Securities
and any notation, endorsement or legend on them. Each Security shall be dated
the date of its authentication. The terms of the Securities set forth in Exhibit
A and Exhibit B are part of the terms of this Indenture and, to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to be bound by such terms.
(b) Denominations. The Securities shall be issuable only in
fully registered form, without coupons, and only in denominations of $1,000 and
any integral multiple thereof.
(c) Restrictive Legends. Unless and until (i) an Initial Note
is sold under an effective registration statement or (ii) an Initial Note is
exchanged for an Exchange Note in connection with an effective registration
statement, in each case pursuant to the Registration Rights Agreement, (A) such
Rule 144A Global Note and the Institutional Accredited Investor Global Note
shall bear the following legend (the "Private Placement Legend") on the face
thereof:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, ON ITS OWN
BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED
SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR
TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL
<PAGE>
24
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN
THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT
THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT
OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A
TRANSACTION INVOLVING A MINIMUM PRINCIPAL AMOUNT OF $250,000 OF
SECURITIES, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER
OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR (F) TO REQUIRE THE DELIVERY
OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM AND (ii) PURSUANT TO CLAUSE (E), TO
REQUIRE THAT THE TRANSFEROR DELIVER TO THE TRUSTEE A LETTER FROM THE
TRANSFEREE SUBSTANTIALLY IN THE FORM OF ANNEX A TO THE OFFERING
MEMORANDUM DATED FEBRUARY 4, 1998. IN CONNECTION WITH ANY TRANSFER OF
THIS SECURITY WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH HEREON RELATING TO THE MANNER OF
SUCH TRANSFER AND SUBMIT THIS SECURITY TO THE TRUSTEE. THIS LEGEND WILL
BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE."; and
(B) the Regulation S Global Note shall bear the following
legend (the "Regulation S Legend") on the face thereof:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS NOT A
U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE
WITH REGULATION S UNDER THE SECURITIES ACT ("REGULATION S"), (2) BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE")
<PAGE>
25
WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF
AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY
WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY),
ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG
AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A
PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E) OR
(F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (ii) PURSUANT
TO CLAUSE (E), TO REQUIRE THAT THE TRANSFEROR DELIVER TO THE TRUSTEE A
LETTER FROM THE TRANSFEREE SUBSTANTIALLY IN THE FORM OF ANNEX A TO THE
OFFERING MEMORANDUM DATED FEBRUARY 4, 1998. IN CONNECTION WITH ANY
TRANSFER OF THIS SECURITY WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE
HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH HEREON RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS SECURITY TO THE TRUSTEE. THIS
LEGEND WILL BE REMOVED AFTER 40 CONSECUTIVE DAYS BEGINNING ON AND
INCLUDING THE LATER OF (A) THE DAY ON WHICH THE SECURITIES ARE OFFERED
TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN REGULATION S) AND (B)
THE DATE OF THE CLOSING OF THE ORIGINAL OFFERING. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.".
The Global Securities, whether or not an Initial Note, shall
bear the following legend on the face thereof:
<PAGE>
26
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW
YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED
IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE
HEREOF."
(d) Book-Entry Provisions. (i) This Section 2.1(d) shall apply
only to Global Securities deposited with the Trustee, as custodian for the
Depositary.
(ii) Each Global Security initially shall (x) be registered in
the name of the Depositary for such Global Security or the nominee of such
Depositary, (y) be delivered to the Trustee as custodian for such Depositary and
(z) bear legends as set forth in Section 2.1(c).
(iii) Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depositary or by the Trustee as the
custodian of the Depositary or under such Global Security, and the Depositary
may be treated by the Company, the Trustee and any agent of the Company or the
Trustee as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of the Depositary governing the exercise of the
rights of a holder of a beneficial interest in any Global Security.
(iv) In connection with any transfer of a portion of the
beneficial interest in a Global Security pursuant to subsection (e) of this
Section to beneficial owners who are required to hold Definitive Securities (as
defined below), the Security Trustee shall reflect on its books and records the
date and a decrease in the principal amount of such Global Security in an amount
equal to the principal amount of the beneficial interest in the Global Security
to be transferred, and the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Definitive Securities of like tenor and
amount.
<PAGE>
27
(v) In connection with the transfer of an entire Global
Security to beneficial owners pursuant to subsection (e) of this Section, such
Global Security shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall authenticate
and deliver, to each beneficial owner identified by the Depositary in exchange
for its beneficial interest in such Global Security, an equal aggregate
principal amount of Definitive Securities of authorized denominations.
(e) Definitive Securities. Except as provided below, owners of
beneficial interests in Global Securities will not be entitled to receive
certificated Securities ("Definitive Securities"). If required to do so pursuant
to any applicable law or regulation, beneficial owners may obtain Definitive
Securities in exchange for their beneficial interests in a Global Security upon
written request in accordance with the Depositary's and the Registrar's
procedures. In addition, Definitive Securities shall be transferred to all
beneficial owners in exchange for their beneficial interests in a Global
Security if (i) the Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for such Global Security or the Depositary
ceases to be a clearing agency registered under the Exchange Act, at a time when
the Depositary is required to be so registered in order to act as Depositary,
and in each case a successor depositary is not appointed by the Company within
90 days of such notice or, (ii) the Company executes and delivers to the Trustee
and Registrar an Officers' Certificate stating that such Global Security shall
be so exchangeable or (iii) an Event of Default has occurred and is continuing
and the Registrar has received a request from the Depositary.
(f) Any Definitive Security delivered in exchange for an
interest in a Global Security pursuant to Section 2.1(d)(iv) and (v) shall,
except as otherwise provided by paragraph (c) of Section 2.6, bear the
applicable legend regarding transfer restrictions applicable to the Definitive
Security set forth in Section 2.1(c).
(g) The registered holder of a Global Security may grant
proxies and otherwise authorize any person, including Agent Members and persons
that may hold interests through Agent Members, to take any action which a Holder
is entitled to take under this Indenture or the Securities.
SECTION 2.2. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. If an
Officer whose signature is on a Security no longer holds that office at the time
the Trustee authenticates the Security, the Security shall be valid
nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually authenticates the Security. The signature of the Trustee on
a Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture.
At any time and from time to time after the execution and
delivery of this Indenture, the Trustee shall authenticate and make available
for delivery: (1) Initial Notes for original issue in an aggregate principal
amount of $200.0 million and (2) Exchange Notes for
<PAGE>
28
issue only in a Registered Exchange Offer pursuant to the Registration Rights
Agreement, and only in exchange for Initial Notes of an equal principal amount,
in each case upon a written order of the Company signed by two Officers or by an
Officer and either an Assistant Treasurer or an Assistant Secretary of the
Company (the "Company Order"). Such Company Order shall specify the amount of
the Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated and whether the Securities are to be Initial
Notes or Exchange Notes. The aggregate principal amount of Securities
outstanding at any time may not exceed $200.0 million except as provided in
Section 2.9.
The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Securities. Unless
limited by the terms of such appointment, any such Authenticating Agent may
authenticate Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent.
In case the Company or any Note Guarantor (if any), pursuant
to Article IV, shall be consolidated or merged with or into any other Person or
shall convey, transfer, lease or otherwise dispose of its properties and assets
substantially as an entirety to any Person, and the successor Person resulting
from such consolidation, or surviving such merger, or into which the Company or
such Note Guarantor shall have been merged, or the Person which shall have
received a conveyance, transfer, lease or other disposition as aforesaid, shall
have executed an indenture supplemental hereto with the Trustee pursuant to
Article IV, any of the Securities authenticated or delivered prior to such
consolidation, merger, conveyance, transfer, lease or other disposition may,
from time to time, at the request of the successor Person, be exchanged for
other Securities executed in the name of the successor Person with such changes
in phraseology and form as may be appropriate, but otherwise in substance of
like tenor as the Securities surrendered for such exchange and of like principal
amount; and the Trustee, upon Company Order of the successor Person, shall
authenticate and deliver Securities as specified in such order for the purpose
of such exchange. If Securities shall at any time be authenticated and delivered
in any new name of a successor Person pursuant to this Section 2.2 in exchange
or substitution for or upon registration of transfer of any Securities, such
successor Person, at the option of the Holders but without expense to them,
shall provide for the exchange of all Securities at the time outstanding for
Securities authenticated and delivered in such new name.
SECTION 2.3. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Company shall
cause each of the Registrar and the Paying Agent to maintain an office or agency
in the Borough of Manhattan, The City of New York. The Registrar shall keep a
register of the Securities and of their transfer and exchange (the "Note
Register"). The Company may have one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional paying
agent.
<PAGE>
29
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of each such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 6.7. The
Company or any of its domestically incorporated Wholly-Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent for the Securities.
SECTION 2.4. Paying Agent To Hold Money in Trust. By at least
10:00 a.m (New York City time) on the date on which any principal of or interest
on any Security is due and payable, the Company shall deposit with the Paying
Agent a sum sufficient to pay such principal or interest when due. The Company
shall require each Paying Agent (other than the Trustee) to agree in writing
that such Paying Agent shall hold in trust for the benefit of Securityholders or
the Trustee all money held by such Paying Agent for the payment of principal of
or interest on the Securities and shall notify the Trustee of any default by the
Company in making any such payment. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate the money held by it as Paying Agent and hold
it as a separate trust fund. The Company at any time may require a Paying Agent
(other than the Trustee) to pay all money held by it to the Trustee and to
account for any funds disbursed by such Paying Agent. Upon complying with this
Section, the Paying Agent (if other than the Company or a Subsidiary) shall have
no further liability for the money delivered to the Trustee. Upon any
bankruptcy, reorganization or similar proceeding with respect to the Company,
the Trustee shall serve as Paying Agent for the Securities.
SECTION 2.5. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.6. Transfer and Exchange.
(a) The following provisions shall apply with respect to any
proposed transfer of a Rule 144A Note or an Institutional Accredited Investor
Note prior to the date which is two years after the later of the date of
original issue and the last date on which the Company or any affiliate of the
Company was the owner of such Notes (or any predecessor thereto) (the "Resale
Restriction Termination Date"):
(i) a transfer of a Rule 144A Note or an Institutional
Accredited Investor Note or a beneficial interest therein to a QIB
shall be made upon the representation of the transferee that it is
purchasing the Security for its own account or an account with
<PAGE>
30
respect to which it exercises sole investment discretion and that it
and any such account is a "qualified institutional buyer" within the
meaning of Rule 144A, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as it has requested pursuant to Rule
144A or has determined not to request such information and that it is
aware that the transferor is relying upon its foregoing representations
in order to claim the exemption from registration provided by Rule
144A;
(ii) a transfer of a Rule 144A Note or an Institutional
Accredited Investor Note or a beneficial interest therein to an
institutional accredited investor shall be made upon receipt by the
Trustee or its agent of a certificate substantially in the form set
forth in Section 2.7 hereof from the proposed transferee and, if
requested by the Company or the Trustee, the delivery of an opinion of
counsel, certification and/or other information satisfactory to each of
them; and
(iii) a transfer of a Rule 144A Note or an Institutional
Accredited Investor Note or a beneficial interest therein to a Non-U.S.
Person shall be made upon receipt by the Trustee or its agent of a
certificate substantially in the form set forth in Section 2.7 hereof
from the proposed transferee and, if requested by the Company or the
Trustee, the delivery of an opinion of counsel, certification and/or
other information satisfactory to each of them.
(b) The following provisions shall apply with respect to any
proposed transfer of a Regulation S Note prior to the expiration of the
Restricted Period:
(i) a transfer of a Regulation S Note or a beneficial
interest therein to a QIB shall be made upon the representation of the
transferee that it is purchasing the Security for its own account or an
account with respect to which it exercises sole investment discretion
and that it and any such account is a "qualified institutional buyer"
within the meaning of Rule 144A, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon
its foregoing representations in order to claim the exemption from
registration provided by Rule 144A;
(ii) a transfer of a Regulation S Note or a beneficial
interest therein to an institutional accredited investor shall be made
upon receipt by the Trustee or its agent of a certificate substantially
in the form set forth in Section 2.7 hereof from the proposed
transferee and, if requested by the Company or the Trustee, the
delivery of an opinion of counsel, certification and/or other
information satisfactory to each of them; and
(iii) a transfer of a Regulation S Note or a beneficial
interest therein to a Non-U.S. Person shall be made upon receipt by the
Trustee or its agent of a certificate substantially in the form set
forth in Section 2.8 hereof from the proposed transferee
<PAGE>
31
and, if requested by the Company or the Trustee, receipt by the Trustee
or its agent of an opinion of counsel, certification and/or other
information satisfactory to each of them.
After the expiration of the Restricted Period, interests in
the Regulation S Note may be transferred without requiring certification set
forth in Section 2.8 or any additional certification.
(c) Restricted Securities Legend. Upon the transfer, exchange
or replacement of Securities not bearing a Restricted Securities Legend, the
Registrar shall deliver Securities that do not bear a Restricted Securities
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Restricted Securities Legend, the Registrar shall deliver only Securities that
bear such Restricted Securities Legend unless there is delivered to the
Registrar an Opinion of Counsel to the effect that neither such legend nor the
related restrictions on transfer are required in order to maintain compliance
with the provisions of the Securities Act.
(d) The Security Registrar shall retain copies of all letters,
notices and other written communications received pursuant to Section 2.1 or
this Section 2.6. The Company shall have the right to inspect and make copies of
all such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Security Registrar.
(e) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges,
the Company shall, subject to the other terms and conditions of this
Article II, execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's or co-registrar's
request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax, assessments, or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charges payable upon
exchange or transfer pursuant to Sections 3.7, 3.9 or 8.5).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Security for a period
beginning (1) 15 Business Days before the mailing of a notice of an
offer to repurchase Securities and ending at the close of business on
the day of such mailing or (2) 15 Business Days before an interest
payment date and ending on such interest payment date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
<PAGE>
32
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(f) No Obligation of the Trustee. (i) The Trustee shall have
no responsibility or obligation to any beneficial owner of a Global Security, a
member of, or a participant in, the Depositary or other Person with respect to
the accuracy of the records of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of any notice or
the payment of any amount or delivery of any Securities (or other security or
property) under or with respect to such Securities. All notices and
communications to be given to the Holders and all payments to be made to Holders
in respect of the Securities shall be given or made only to or upon the order of
the registered Holders (which shall be the Depositary or its nominee in the case
of a Global Security). The rights of beneficial owners in any Global Security
shall be exercised only through the Depositary subject to the applicable rules
and procedures of the Depositary. The Trustee may rely and shall be fully
protected in relying upon information furnished by the Depositary with respect
to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between or
among Depositary participants, members or beneficial owners in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Indenture, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
SECTION 2.7. Form of Certificate to be Delivered in
Connection with Transfers to Institutional Accredited Investors.
[Date]
Smithfield Foods, Inc.
c/o SunTrust Bank, Atlanta
58 Edgewood Avenue
Room 400-Annex
Atlanta, George 30303
Attention: Corporate Trust Department
<PAGE>
33
Dear Sirs:
This certificate is delivered to request a transfer of $
principal amount of the 7 5/8% Senior Subordinated Notes due 2008 (the "Notes")
of Smithfield Foods, Inc. (the "Company").
Upon transfer, the Notes would be registered in the name of
the new beneficial owner as follows:
Name: ___________________________________
Address: ________________________________
Taxpayer ID Number: _____________________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended
(the "Securities Act")) purchasing for our own account or for the account of
such an institutional "accredited investor" at least $250,000 principal amount
of the Notes, and we are acquiring the Notes not with a view to, or for offer or
sale in connection with, any distribution in violation of the Securities Act. We
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of our investment in the Notes and we
invest in or purchase securities similar to the Notes in the normal course of
our business. We and any accounts for which we are acting are each able to bear
the economic risk of our or its investment.
2. We understand that the Notes have not been registered under
the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf of
any investor account for which we are purchasing Notes to offer, sell or
otherwise transfer such Notes prior to the date which is two years after the
later of the date of original issue and the last date on which the Company or
any affiliate of the Company was the owner of such Notes (or any predecessor
thereto) (the "Resale Restriction Termination Date") only (a) to the Company,
(b) pursuant to a registration statement which has been declared effective under
the Securities Act ("Rule 144A"), (c) in a transaction complying with the
requirements of Rule 144A under the Securities Act, to a person we reasonably
believe is a qualified institutional buyer under Rule 144A (a "QIB") that
purchases for its own account or for the account of a QIB and to whom notice is
given that the transfer is being made in reliance on Rule 144A, (d) pursuant to
offers and sales that occur outside the United States within the meaning of
Regulation S under the Securities Act, (e) to an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is purchasing for its own account or for the account of such
an institutional "accredited investor," in each case in a minimum principal
amount of Notes of $250,000 or (f) pursuant to any other available exemption
from the registration requirements of the Securities Act, subject in each of the
foregoing cases to any
<PAGE>
34
requirement of law that the disposition of our property or the property of such
investor account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws. The foregoing restrictions
on resale will not apply subsequent to the Resale Restriction Termination Date.
If any resale or other transfer of the Notes is proposed to be made pursuant to
clause (e) above prior to the Resale Restriction Termination Date, the
transferor shall deliver a letter from the transferee substantially in the form
of this letter to the Company and the Trustee, which shall provide, among other
things, that the transferee is an institutional "accredited investor" (within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and
that it is acquiring such Notes for investment purposes and not for distribution
in violation of the Securities Act. Each purchaser acknowledges that the Company
and the Trustee reserve the right prior to any offer, sale or other transfer
prior to the Resale Termination Date of the Notes pursuant to clauses (d), (e)
or (f) above to require the delivery of an opinion of counsel, certifications
and/or other information satisfactory to the Company and the Trustee.
TRANSFEREE:_____________________
BY______________________________
SECTION 2.8. Form of Certificate to be Delivered in Connection
with Transfers Pursuant to Regulation S.
[Date]
Smithfield Foods, Inc.
c/o SunTrust Bank, Atlanta
58 Edgewood Avenue
Room 400-Annex
Atlanta, George 30303
Attention: Corporate Trust Department
Re: Smithfield Foods, Inc.
7 5/8% Senior Subordinated Notes due 2008 (the "Securities")
Ladies and Gentlemen:
In connection with our proposed sale of $________ aggregate
principal amount of the Securities, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the United States
Securities Act of 1933, as amended (the "Securities Act"), and, accordingly, we
represent that:
(a) the offer of the Securities was not made to a person
in the United States;
<PAGE>
35
(b) either (i) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States or (ii) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(c) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable; and
(d) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
In addition, if the sale is made during a restricted period
and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are
applicable thereto, we confirm that such sale has been made in accordance with
the applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may
be.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:____________________________ _______________________________
Authorized Signature Signature Medallion Guaranteed
SECTION 2.9. Mutilated, Destroyed, Lost or Stolen Securities.
If a mutilated Security is surrendered to the Registrar or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
the Company shall issue and the Trustee shall authenticate a replacement
Security if the requirements of Section 8-405 of the Uniform Commercial Code are
met and the Holder satisfies any other reasonable requirements of the Trustee.
If required by the Trustee or the Company, such Holder shall furnish an
indemnity bond sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee, the Paying Agent, the Registrar and any
co-registrar from any loss that any of them may suffer if a Security is
replaced, then, in the absence of notice to the Company, any Note Guarantor or
the Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute and upon Company Order the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount, bearing a number not contemporaneously outstanding.
<PAGE>
36
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in its discretion
may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
Every new Security issued pursuant to this Section in lieu of
any mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, any Note Guarantor and any
other obligor upon the Securities, whether or not the mutilated, destroyed, lost
or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 2.10. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding in
the event the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.9, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a maturity date money sufficient to pay all
principal and interest payable on that date with respect to the Securities
maturing and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.11. Temporary Securities. Until Definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of Definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate Definitive Securities.
After the preparation of Definitive Securities, the temporary Securities shall
be exchangeable for Definitive Securities upon surrender of the temporary
Securities at any office or agency maintained by the Company for that purpose
and such exchange shall be without charge to the Holder. Upon surrender for
cancellation of any one or more temporary
<PAGE>
37
Securities, the Company shall execute, and the Trustee shall authenticate and
make available for delivery in exchange therefor, one or more Definitive
Securities representing an equal principal amount of Securities. Until so
exchanged, the Holder of temporary Securities shall in all respects be entitled
to the same benefits under this Indenture as a holder of Definitive Securities.
SECTION 2.12. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and return to the Company all Securities surrendered for registration of
transfer, exchange, payment or cancellation and deliver a certificate of such
destruction to the Company. The Company may not issue new Securities to replace
Securities it has paid or delivered to the Trustee for cancellation.
SECTION 2.13. Payment of Interest; Defaulted Interest.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any interest payment date shall be paid to the Person in whose
name such Security (or one or more predecessor Securities) is registered at the
close of business on the regular record date for such interest at the office or
agency of the Company maintained for such purpose pursuant to Section 2.3.
Any interest on any Security which is payable, but is not paid
when the same becomes due and payable and such nonpayment continues for a period
of 30 days shall forthwith cease to be payable to the Holder on the regular
record date by virtue of having been such Holder, and such defaulted interest
and (to the extent lawful) interest on such defaulted interest at the rate borne
by the Securities (such defaulted interest and interest thereon herein
collectively called "Defaulted Interest") shall be paid by the Company, at its
election in each case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities (or their
respective predecessor Securities) are registered at the close of
business on a Special Record Date (as defined below) for the payment of
such Defaulted Interest, which shall be fixed in the following manner.
The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security and the date
(not less than 30 days after such notice) of the proposed payment (the
"Special Interest Payment Date"), and at the same time the Company
shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this clause provided. Thereupon the
Trustee shall fix a record date (the "Special Record Date") for the
payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the Special Interest Payment Date
and not less than 10 days after the receipt by the Trustee of the
notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date, and in the name and at the expense
<PAGE>
38
of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date and Special Interest
Payment Date therefor to be given in the manner provided for in Section
10.2, not less than 10 days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special
Record Date and Special Interest Payment Date therefor having been so
given, such Defaulted Interest shall be paid on the Special Interest
Payment Date to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon
such notice as may be required by such exchange, if, after notice given
by the Company to the Trustee of the proposed payment pursuant to this
clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 2.14. Computation of Interest. Interest on the
Securities shall be computed on the basis of a 360-day year of twelve 30-day
months.
SECTION 2.15. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use).
ARTICLE III
Covenants
SECTION 3.1. Payment of Securities. The Company shall promptly
pay the principal of and interest on the Securities on the dates and in the
manner provided in the Securities and in this Indenture. Principal and interest
shall be considered paid on the date due if on such date the Trustee or the
Paying Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
<PAGE>
39
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law, deduct
or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
SECTION 3.2. SEC Reports. Notwithstanding that the Company may
not remain subject to the reporting requirements of Section 13(a) or 15(d) of
the Exchange Act, the Company will file (if then permitted to do so) with the
SEC and provide (whether or not so filed with the SEC) the Trustee and
Securityholders and prospective Securityholders (upon request) within 15 days of
the date of filing with the SEC or, if not filed, on the date that such reports
would be required to be filed with the SEC if the Company was a reporting
company, with the annual reports and the information, documents and other
reports, which are specified in Sections 13 and 15(d) of the Exchange Act;
provided, however, that the Company shall provide one copy of the exhibits of
the foregoing to the Trustee and shall (upon request) provide additional copies
of such exhibits to any Securityholder or prospective Securityholder. The
Company shall also comply with the other provisions of TIA ss. 314(a).
SECTION 3.3. Limitation on Indebtedness. (a) The Company will
not, and will not permit any Restricted Subsidiary to, Incur any Indebtedness
(including Acquired Indebtedness); provided, however, that the Company and its
Restricted Subsidiaries may Incur Indebtedness if on the date of the Incurrence
of such Indebtedness the Consolidated Coverage Ratio would be equal to or
greater than 2.00:1.00.
(b) Notwithstanding the foregoing paragraph (a), the Company
and its Restricted Subsidiaries may Incur the following Indebtedness:
(i) (A) Indebtedness of the Company Incurred pursuant to the
Revolving Credit Facilities and (B) the Incurrence by a Receivables
Entity of Indebtedness in a Qualified Receivables Transaction that is
nonrecourse to the Company or any Subsidiary of the Company (except for
Standard Securitization Undertakings) in an aggregate principal amount
for Indebtedness Incurred under clauses (A) and (B) outstanding at any
one time not to exceed the greater of (x) $400.0 million, less the
aggregate amount of all repayments of principal actually made under the
Revolving Credit Facilities since the Issue Date with Net Available
Cash from Asset Dispositions pursuant to clause (a)(iii)(A) of Section
3.7 and (y) the Borrowing Base;
(ii) the incurrence by the Company of Indebtedness represented
by the Securities;
(iii) Indebtedness (A) of the Company to any Wholly-Owned
Subsidiary and (B) of any Restricted Subsidiary to the Company or any
other Wholly-Owned Subsidiary; provided, however, that any subsequent
issuance or transfer of any Capital Stock or any other event that
results in any such Wholly-Owned Subsidiary ceasing to be a
Wholly-Owned Subsidiary or any other subsequent transfer of any such
Indebtedness (except to the Company or a Wholly-Owned Subsidiary) will
be deemed,
<PAGE>
40
in each case, an Incurrence of Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(iv) any Indebtedness (other than the Indebtedness described
in clauses (i) or (iii) above) outstanding on the date of this
Indenture, including the Senior Secured Notes and the Guarantees
related thereto, and any Refinancing Indebtedness Incurred in respect
of any Indebtedness described in this clause (iv) or paragraph (a);
(v) Indebtedness represented by the Note Guarantees and
Guarantees of Indebtedness Incurred pursuant to clause (i) above;
(vi) Indebtedness in respect of performance, surety or appeal
bonds provided in the ordinary course of business;
(vii) Indebtedness under Hedging Obligations; provided,
however, that such Hedging Obligations are entered into for bona fide
hedging purposes of the Company or any Restricted Subsidiary in the
ordinary course of business;
(viii) Indebtedness (in addition to Indebtedness described in
clauses (i), (iii) and (iv)) of the Company or any Restricted
Subsidiary attributable to Capitalized Lease Obligations, or Incurred
to finance the acquisition, construction or improvement of fixed or
capital assets, or constituting Attributable Debt in respect of
Sale/Leaseback Transactions, in an aggregate principal amount at any
time outstanding not in excess of $50.0 million;
(ix) Indebtedness of a Restricted Subsidiary issued and
outstanding on or prior to the date on which such Restricted Subsidiary
was acquired by the Company (other than Indebtedness Incurred (A) as
consideration in, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary or was acquired by the Company or (B)
otherwise in connection with, or in contemplation of, such acquisition)
and any Refinancing Indebtedness with respect thereto; provided,
however, that on the date of any such acquisition of a Restricted
Subsidiary, the Company shall have been able to Incur at least an
additional $1.00 of Indebtedness under paragraph (a) above after giving
effect to such acquisition; and
(x) Indebtedness (in addition to Indebtedness described in
clauses (i)-(ix)) in a principal amount which, when taken together with
the principal amount of all other Indebtedness Incurred pursuant to
this clause (x) and then outstanding, will not in the aggregate exceed
$50.0 million.
(c) Notwithstanding the foregoing, the Company will not Incur
any Indebtedness pursuant to the foregoing paragraph (b) if the proceeds thereof
are used, directly or indirectly, to refinance any Subordinated Indebtedness
unless such Indebtedness (i) will be subordinated to the Securities to at least
the same extent as such Subordinated Indebtedness and (ii) will not mature prior
to the Stated Maturity of the Indebtedness to be refinanced or
<PAGE>
41
refunded, and the Average Life of such new Indebtedness is at least equal to the
remaining Average Life of the Indebtedness to be refinanced or refunded.
(d) The Company will not permit any Unrestricted Subsidiary to
Incur any Indebtedness other than Non-Recourse Indebtedness; provided, however,
if any such Indebtedness ceases to be Non-Recourse Indebtedness, such event
shall be deemed to constitute an Incurrence of Indebtedness by the Company or a
Restricted Subsidiary.
(e) For purposes of determining compliance with this Section
3.3, in the event that an item of Indebtedness meets the criteria of more than
one of the types of Indebtedness described in the above clauses, the Company, in
its sole discretion, shall classify such item of Indebtedness at the time of
Incurrence and only be required to include the amount and type of such
Indebtedness in one of such clauses.
SECTION 3.4. Limitation on Layering. The Company will not, and
will not permit any Note Guarantor, if any, to, directly or indirectly, Incur
any Indebtedness (including Acquired Indebtedness) if such Indebtedness is
subordinate in right of payment to any Senior Indebtedness or any Indebtedness
of any Note Guarantor, as the case may be, unless such Indebtedness is either
(a) Senior Subordinated Indebtedness or (b) subordinate in right of payment to
the Securities.
SECTION 3.5. Limitation on Restricted Payments. (a) The
Company will not, and will not permit any Restricted Subsidiary, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or in
respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company) except (x) dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock) and (y) dividends or distributions payable to the Company or any of its
Subsidiaries (and, if such Subsidiary is not directly or indirectly owned 100%
by the Company, to its other stockholders on a pro rata basis), (ii) purchase,
redeem, retire or otherwise acquire for value any Capital Stock of the Company
or any Restricted Subsidiary held by Persons other than the Company or any of
its Subsidiaries, (iii) purchase, repurchase, redeem, prepay interest, defease
or otherwise acquire or retire for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment, any Subordinated Indebtedness
(other than the purchase, repurchase or other acquisition of Subordinated
Indebtedness purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of the
date of acquisition) or (iv) make any Restricted Investment in any Person (any
such dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Investment referred to in clauses (i) through (iv)
being herein referred to as a "Restricted Payment"), if at the time the Company
or such Restricted Subsidiary makes such Restricted Payment: (1) a Default shall
have occurred and be continuing (or would result therefrom); (2) the Company
could not Incur at least an additional $1.00 of Indebtedness under paragraph (a)
of Section 3.3; or (3) the aggregate amount of such Restricted Payment and all
other Restricted Payments (the amount so expended, if other than in cash, to be
determined in good faith by the Company's Board of Directors, whose
determination shall be conclusive and evidenced by a resolution of the Company's
Board of Directors) declared or made subsequent to the date of this Indenture
<PAGE>
42
would exceed the sum of: (A) 50% of the Consolidated Net Income accrued during
the period (treated as one accounting period) commencing on the Issue Date to
the end of the most recent fiscal quarter ending prior to the date of such
Restricted Payment as to which financial results are available (but in no event
ending more than 135 days prior to the date of such Restricted Payment) (or, in
case such Consolidated Net Income shall be a deficit, minus 100% of such
deficit); (B) the aggregate Net Cash Proceeds received by the Company from the
issuance or sale of its Capital Stock (other than Disqualified Stock) or other
cash capital contributions subsequent to the Issue Date (other than an issuance
or sale to a Subsidiary of the Company and other than an issuance or sale to an
employee stock ownership plan or other trust established by the Company or any
of its Subsidiaries for the benefit of their employees to the extent the
purchase by such plan or trust is financed by Indebtedness of such plan or trust
and for which the Company or any Restricted Subsidiary is the lender or is
liable as guarantor or otherwise); (C) the sum of (i) the amount by which
Indebtedness of the Company is reduced on the Company's balance sheet upon the
conversion or exchange (other than by a Subsidiary of the Company) subsequent to
the Issue Date, of any Indebtedness of the Company or its Restricted
Subsidiaries convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any cash or other
property (other than Capital Stock) distributed by the Company upon such
conversion or exchange) and (ii) the aggregate Net Cash Proceeds received by the
Company (less any contingent amounts that the Company may be required to refund
or return) upon the conversion or exchange (other than by a Subsidiary of the
Company) subsequent to the Issue Date of any Indebtedness of the Company or its
Restricted Subsidiaries convertible or exchangeable for Capital Stock (other
than Disqualified Stock); (D) the amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting from (i) repayments of loans
or advances or other transfers of assets to the Company or any Restricted
Subsidiary from Unrestricted Subsidiaries or (ii) the redesignation of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as
provided in the definition of "Investment") not to exceed, in the case of any
Unrestricted Subsidiary, the amount of Investments previously made by the
Company or any Restricted Subsidiary in such Unrestricted Subsidiary, which
amount was treated as a Restricted Payment (and, with respect to clauses (i) and
(ii), without duplication of any amounts included in Consolidated Net Income);
and (E) to the extent that any Restricted Investment that was made after the
Issue Date is sold for cash or otherwise liquidated or repaid for cash, the
lesser of (A) the net proceeds of such sale, liquidation or repayment and (B)
the net book value of such Restricted Investment.
(b) So long as there is no Default or Event of Default
continuing, the provisions of the foregoing paragraph (a) will not prohibit: (i)
any purchase, defeasance or redemption of Capital Stock or Subordinated
Indebtedness of the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary
of the Company or an employee stock ownership plan or other trust established by
the Company or any of its Subsidiaries for the benefit of their employees to the
extent the purchase by such plan or trust is financed by Indebtedness by such
plan or trust and for which the Company or any Restricted Subsidiary is the
lender or is liable as a guarantor or otherwise); provided, however, that (A)
such purchase, defeasance or redemption shall be excluded in subsequent
calculations of the amount of Restricted Payments and (B) the Net
<PAGE>
43
Cash Proceeds from such sale of Capital Stock shall be excluded in calculations
under clause (3) (B) of Section 3.5(a); (ii) any purchase, defeasance or
redemption of Subordinated Indebtedness made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Indebtedness of
the Company that is Refinancing Indebtedness; provided, however, that (A) such
Indebtedness is subordinated to the Senior Indebtedness and the Securities at
least to the same extent as such Subordinated Indebtedness so purchased or
redeemed and (B) such purchase, defeasance or redemption shall be excluded in
subsequent calculations of the amount of Restricted Payments; (iii) dividends
paid within 60 days after the date of declaration thereof if at such date of
declaration such dividend would have complied with the requirements of Section
3.5(a); provided, however, that such dividend shall be included in subsequent
calculations of the amount of Restricted Payments; (iv) any repurchase of an
Equity Interest deemed to occur upon exercise of stock options if such Equity
Interests represent a portion of the exercise price of such options; (v)
Permitted Employee Payments in an aggregate amount not in excess of $5.0
million; provided, however, that such payments shall be included in the
calculation of Restricted Payments; or (vi) the repurchase of common Equity
Interests of Brown's of Carolina, Inc. outstanding but not owned by the Company
on the Issue Date.
SECTION 3.6. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company will not, and will not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness or other obligations owed to the
Company or any other Restricted Subsidiary, (ii) make any loans or advances to
the Company or any other Restricted Subsidiary or (iii) transfer any of its
property or assets to the Company or any other Restricted Subsidiary; except:
(a) any encumbrance or restriction pursuant to an agreement in effect at or
entered into on the Issue Date, including pursuant to this Indenture, the
Revolving Credit Facilities and the Senior Secured Notes; (b) any encumbrance or
restriction with respect to a Restricted Subsidiary pursuant to an agreement
relating to any Indebtedness Incurred by such Restricted Subsidiary prior to the
date on which such Restricted Subsidiary was acquired by the Company (other than
Indebtedness Incurred as consideration in, or to provide all or any portion of
the funds or credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Company) and outstanding on such
date; (c) any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement effecting a refinancing of Indebtedness Incurred
pursuant to an agreement referred to in the preceding clauses (a) or (b) or this
clause (c) or contained in any amendment to an agreement referred to in the
preceding clauses (a) or (b) or this clause (c); provided, however, that the
encumbrances and restrictions contained in any such refinancing agreement or
amendment are no less favorable to the Holders of the Securities taken as a
whole, than the original encumbrances and restrictions contained in such
agreements; (d) in the case of clause (iii) of this Section 3.6, any encumbrance
or restriction (A) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject to a lease,
license or similar contract, (B) by virtue of any transfer of, agreement to
transfer, option or right with respect to, any property or assets of the Company
or any Restricted Subsidiary not otherwise prohibited by this Indenture, (C)
contained in
<PAGE>
44
security agreements securing Indebtedness of a Restricted Subsidiary to the
extent such encumbrance or restrictions restrict the transfer of the property
subject to such security agreements and (D) ordinary course provisions
restricting the assignability of contracts; (e) any restriction with respect to
the Company or a Restricted Subsidiary imposed pursuant to an agreement entered
into for the sale or disposition of all or substantially all the Capital Stock
or assets of the Company or such Restricted Subsidiary pending the closing of
such sale or disposition; (f) restrictions created in connection with a
Qualified Receivables Transaction that, in the good faith determination of the
Board of Directors, are necessary to effect such Qualified Receivables
Transaction; provided that such restrictions apply only to such Receivables
Entity; and (g) any restriction by operation of applicable law.
SECTION 3.7. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company will not, and will not permit any Restricted Subsidiary
to, make any Asset Disposition unless (i) the Company or such Restricted
Subsidiary receives consideration (including by way of relief from, or by any
other Person assuming sole responsibility for, any liabilities, contingent or
otherwise) at the time of such Asset Disposition at least equal to the fair
market value of the shares and assets subject to such Asset Disposition (as
determined in good faith by the management of the Company, or if such Asset
Disposition involves consideration in excess of $20.0 million, by a resolution
of the Board of Directors set forth in an Officers' Certificate delivered to the
Trustee), (ii) at least 75% of the consideration thereof received by the Company
or such Restricted Subsidiary is in the form of cash and/or Cash Equivalents
(except such requirement of cash and/or Cash Equivalents shall not apply to any
property, plant, equipment or other facility closed and designated as unused,
idle or obsolete by either Senior Management or by resolution of the Board of
Directors, and in either case set forth in an Officers' Certificate delivered to
the Trustee) and (iii) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by the Company (or such Restricted Subsidiary,
as the case may be) as follows: (A) first, to the extent the Company or such
Restricted Subsidiary elects (or is required by the terms of Senior
Indebtedness), to prepay, repay or purchase Senior Indebtedness (and to
correspondingly reduce commitments with respect thereto) within 365 days after
the date of such Asset Disposition; (B) second, to the extent of the balance of
Net Available Cash after application in accordance with clause (A), to the
extent the Company or such Restricted Subsidiary elects, to reinvest in
Additional Assets (including by means of an Investment in Additional Assets by a
Restricted Subsidiary with Net Available Cash received by the Company or another
Restricted Subsidiary) within 365 days from the date of such Asset Disposition;
(C) third, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A) and (B), to make an offer to purchase
Securities and Senior Subordinated Indebtedness with similar asset sale
provisions, pro rata at 100% of the tendered principal amount thereof (or 100%
of the accreted value of such other Senior Subordinated Indebtedness so
tendered, if such Senior Subordinated Indebtedness was offered at a discount)
plus accrued and unpaid interest, if any, thereon to the purchase date and (D)
fourth, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A), (B) and (C) above, to fund (to the
extent consistent with any other applicable provision of the Indenture) any
corporate purpose; provided, however, that in connection with any prepayment,
repayment or purchase of Indebtedness pursuant to clause (A) or (C) above, the
Company or such Restricted Subsidiary will retire such Indebtedness and will
cause the
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45
related loan commitment (if any) to be permanently reduced in an amount equal to
the principal amount so prepaid, repaid or purchased. Notwithstanding the
foregoing provisions, the Company and the Restricted Subsidiaries shall not be
required to apply any Net Available Cash in accordance with this covenant except
to the extent that the aggregate Net Available Cash from all Asset Dispositions
that is not yet applied in accordance with this Section 3.7 at any time exceeds
$10.0 million.
For the purposes of this Section 3.7, the following will be
deemed to be cash: (x) the assumption of Indebtedness of the Company (other than
Disqualified Stock of the Company) or any Restricted Subsidiary and the release
of the Company or such Restricted Subsidiary from all liability on such
Indebtedness in connection with such Asset Disposition and (y) securities
received by the Company or any Restricted Subsidiary from the transferee that
are converted within 30 days by the Company or such Restricted Subsidiary into
cash. Upon the completion of the application of the Net Available Cash from any
Asset Disposition pursuant to this paragraph (a), the amount of Net Available
Cash attributable to such Asset Disposition shall be deemed to be zero.
(b) In the event of an Asset Disposition that requires the
purchase of Securities pursuant to Section 3.7(a)(iii)(C), the Company will be
required to apply such Excess Proceeds (as defined below) to the repayment of
the Securities and any other Senior Subordinated Indebtedness outstanding with
similar provisions requiring the Company to make an offer to purchase such
Indebtedness with the proceeds from any Asset Disposition as follows: (A) the
Company will make an offer to purchase (an "Offer") within ten days of such time
from all holders of the Securities in accordance with the procedures set forth
in this Indenture in the maximum principal amount (expressed as a multiple of
$1,000) of Securities that may be purchased out of an amount (the "Note Amount")
equal to the product of such Excess Proceeds multiplied by a fraction, the
numerator of which is the outstanding principal amount of the Securities and the
denominator of which is the sum of the outstanding principal amount of the
Securities and such Senior Subordinated Indebtedness and (B) to the extent
required by such Senior Subordinated Indebtedness to permanently reduce the
principal amount of such Senior Subordinated Indebtedness, the Company will make
an offer to purchase or otherwise repurchase or redeem Senior Subordinated
Indebtedness (a "Pari Passu Offer") in an amount equal to the excess of the
Excess Proceeds over the Note Amount at a purchase price of 100% of their
principal amount plus accrued and unpaid interest (or 100% of the accreted value
of such Senior Subordinated Indebtedness, if such Senior Subordinated
Indebtedness was offered at a discount) to the purchase date in accordance with
the procedures (including prorating in the event of oversubscription) set forth
in this Indenture with respect to the Offer and in the documentation governing
such Senior Subordinated Indebtedness with respect to the Pari Passu Offer. If
the aggregate purchase price of the Securities tendered pursuant to the Offer
and Pari Passu Offer is less than the Excess Proceeds, the remaining Excess
Proceeds will be available to the Company for use in accordance with clause
(a)(iii)(D) above. The Company shall not be required to make an Offer for
Securities pursuant to this Section 3.7 if the Net Available Cash available
therefor (after application of the proceeds as provided in clauses (a)(iii)(A)
and (a)(iii)(B)) above ("Excess Proceeds") is less than $10.0 million (which
lesser amounts shall be carried forward
<PAGE>
46
for purposes of determining whether an Offer is required with respect to the Net
Available Cash from any subsequent Asset Disposition).
(c) (1) Promptly, and in any event within 10 days after the
Company is required to make an Offer, the Company will deliver to the Trustee
and send, by first-class mail to each Holder, a written notice stating that the
Holder may elect to have his Securities purchased by the Company either in whole
or in part (subject to prorating as hereinafter described in the event the Offer
is oversubscribed) in integral multiples of $1,000 of principal amount, at the
applicable purchase price. The notice shall specify a purchase date not less
than 30 days nor more than 60 days after the date of such notice (the "Purchase
Date").
(2) Not later than the date upon which such written notice of
an Offer is delivered to the Trustee and the Holders, the Company will deliver
to the Trustee an Officers' Certificate setting forth (i) the amount of the
Offer (the "Offer Amount"), (ii) the allocation of the Net Available Cash from
the Asset Dispositions as a result of which such Offer is being made and (iii)
the compliance of such allocation with the provisions of Section 3.7(a). Upon
the expiration of the period (the "Offer Period") for which the Offer remains
open, the Company shall deliver to the Trustee for cancellation the Securities
or portions thereof which have been properly tendered to and are to be accepted
by the Company. The Trustee shall, on the Purchase Date, mail or deliver payment
to each tendering Holder in the amount of the purchase price of the Securities
tendered by such Holder to the extent such funds are available to the Trustee.
(3) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice prior to the expiration of
the Offer Period. Each Holder will be entitled to withdraw its election if the
Trustee or the Company receives, not later than one Business Day prior to the
expiration of the Offer Period, a facsimile transmission or overnight mail from
such Holder setting forth the name of such Holder, the principal amount of the
Security or Securities which were delivered for purchase by such Holder and a
statement that such Holder is withdrawing his election to have such Security or
Securities purchased. If at the expiration of the Offer Period the aggregate
principal amount of Securities surrendered by Holders exceeds the Offer Amount,
the Company shall select the Securities to be purchased on a pro rata basis
(with such adjustments as may be deemed appropriate by the Company so that only
Securities in denominations of $1,000, or integral multiples thereof, shall be
purchased). Holders whose Securities are purchased only in part will be issued
new Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(d) The Company will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section 3.7. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 3.7, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Indenture by virtue thereof.
<PAGE>
47
SECTION 3.8. Limitation on Transactions with Affiliates. (a)
The Company will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, enter into or conduct any transaction or series of transactions
(including the purchase, sale, lease or exchange of any property or assets or
the rendering of any service or the making of any Investment) with any Affiliate
of the Company (an "Affiliate Transaction") on terms: (i) that are less
favorable to the Company or such Restricted Subsidiary, as the case may be, than
those that could be obtained at the time of such transaction in arm's-length
dealings with a Person who is not an Affiliate and (ii) that in the event such
Affiliate Transaction involves an aggregate amount in excess of $10.0 million,
are not in writing and have not been approved or negotiated and entered into on
behalf of the Company or such Restricted Subsidiary by Senior Management acting
pursuant to authorizing resolutions adopted by a majority of the members of the
Board of Directors or by a majority of the members of the Board of Directors
having no personal stake in such Affiliate Transaction (and such majority or
majorities, as the case may be, determines that such Affiliate Transaction
satisfies the criteria in clause (i) above). In addition, any Affiliate
Transaction involving aggregate payments or other transfers by the Company and
its Restricted Subsidiaries in excess of $20.0 million will also require an
opinion from an independent investment banking firm or appraiser, as
appropriate, of national prominence, to the effect that the terms of such
transaction are either (i) no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that could be obtained at the time of
such transaction in arm's-length dealings with a Person who is not an Affiliate
or (ii) fair to the Company or such Restricted Subsidiary, as the case may be,
from a financial point of view.
(b) The provisions of Section 3.8(a) shall not prohibit (i) any
Restricted Payment or Permitted Investment permitted to be made pursuant to
Section 3.5, (ii) the performance of the Company's or Restricted Subsidiary's
obligations under any collective bargaining agreement, employee benefit plan,
related trust agreement or any other similar arrangement heretofore or hereafter
entered into in the ordinary course of business, (iii) payment of reasonable
fees and compensation to employees, officers or directors as determined in good
faith by the Company's Board of Directors or senior management (including
indemnification to the fullest extent permitted by applicable law, directors'
and officers' insurance and similar arrangements, employment contracts,
non-competition and confidentiality agreements and similar instruments or
payments) entered into in the ordinary course of business, (iv) maintenance in
the ordinary course of business of reasonable benefit programs or arrangements
for employees, officers or directors, including vacation plans, health and life
insurance plans, SERPs, split-dollar life insurance plans, deferred compensation
plans, and retirement or savings plans and similar plans as determined in good
faith by the Company's Board of Directors or Senior Management, (v) any
transaction between the Company and a Wholly-Owned Subsidiary or between
Wholly-Owned Subsidiaries, (vi) transactions effected as part of a Qualified
Receivables Transaction, (vii) any issuance by the Company of Capital Stock
(other than Disqualified Stock) or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment arrangements,
stock options and stock ownership plans to the extent reasonable, as determined
in good faith by the Company's Board of Directors in the ordinary course of
business, and loans or advances to employees in the ordinary course of business
of the Company or its Restricted Subsidiaries consistent with past practices,
(viii) transactions with customers, suppliers, or purchasers or sellers of goods
<PAGE>
48
or services, in each case, in the ordinary course of business and otherwise in
compliance with the terms of this Indenture which are fair to the Company or the
Restricted Subsidiaries or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated third party, in
the reasonable determination of the Board of Directors of the Company or the
Senior Management thereof, and (ix) any agreement as in effect on the Issue Date
or any amendment thereto (so long as any such amendment is not disadvantageous
to the holders of the Notes in any material respect).
SECTION 3.9. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require the Company to
repurchase all or any part of such Holder's Securities at a purchase price in
cash equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of repurchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date).
(b) In the event that at the time of such Change of Control
the terms of any Indebtedness restrict or prohibit the repurchase of Securities
pursuant to Section 3.9(a), prior to the mailing of the notice to Holders
provided for in Section 3.9(c) but in any event within 30 days following any
Change of Control, the Company shall either (i) repay in full all Indebtedness
or offer to repay in full all such Indebtedness and repay the Indebtedness of
each lender who has accepted such offer or (ii) obtain the requisite consent
under the agreements governing such Indebtedness to permit the repurchase of the
Securities as provided for in Section 3.9(c). The Company will first comply with
the preceding sentence of this Section 3.9(b) before the Company will be
required to make the Change of Control Offer or to purchase the Securities
pursuant to this Section 3.9; provided, that compliance with this clause (b)
will not extend the time periods set forth in Section 3.9(c) for the Company to
make an offer to repurchase the Securities in connection with a Change of
Control.
(c) Subject to the provisions of Section 3.9(b), within 30
days following any Change of Control, the Company shall mail a notice (the
"Change of Control Offer") to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on a record date to
receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts and financial
information regarding such Change of Control;
(3) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed) (the
"Change of Control Payment Date");
<PAGE>
49
(4) that any Security not tendered will continue to accrue
interest pursuant to its terms;
(5) that, unless the Company defaults in the payment of the
purchase price, any Security accepted for payment pursuant to the
Change of Control Offer shall cease to accrue interest on and after the
Change of Control Payment Date; and
(6) the instructions determined by the Company, consistent
with this Section 3.9, that a Holder must follow in order to have its
Securities purchased or to cancel such order of purchase.
(d) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Each Holder will be entitled to withdraw its
election if the Company receives, not later than one Business Day prior to the
purchase date, a telegram, telex, facsimile transmission or letter from such
Holder setting forth the name of such Holder, the principal amount of the
Security or Securities which were delivered for purchase by such Holder and a
statement that such Holder is withdrawing his election to have such Security or
Securities purchased.
(e) On or before the Change of Control Payment Date, the
Company shall: (i) accept for payment Securities or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent
money sufficient to pay the purchase price of all Securities or portions thereof
so accepted and (iii) deliver, or cause to be delivered, to the Trustee, all
Securities or portions thereof so accepted together with an Officers'
Certificate specifying the Securities or portions thereof accepted for payment
by the Company. The Paying Agent shall promptly mail, to the Holders of
Securities so accepted, payment in an amount equal to the purchase price, and
the Trustee shall promptly authenticate and mail to such Holders a new Security
equal in principal amount to any unpurchased portion of the Securities
surrendered; provided that each Security purchased and each new Security issued
shall be in a principal amount of $1,000 or integral multiples thereof.
(f) The Company will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
(g) The Company will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section 3.9. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 3.9, the Company will
comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under this Indenture by virtue thereof.
SECTION 3.10. Limitation on the Sale or Issuance of Capital
Stock of Restricted Subsidiaries. The Company (i) will not, and will not permit
any Restricted Subsidiary to, transfer, convey, lease, sell or otherwise dispose
of any shares of Capital Stock
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50
of a Restricted Subsidiary to any Person (other than to the Company or a
Wholly-Owned Subsidiary) and (ii) will not permit any Restricted Subsidiary,
directly or indirectly, to issue or sell any shares of its Capital Stock (other
than directors' qualifying shares) to any Person (other than to the Company or a
Wholly-Owned Subsidiary); provided, however, that (i) the Company is permitted
to sell all the Capital Stock of a Restricted Subsidiary as long as the Company
is in compliance with the terms of Section 3.7 and (ii) the Company is permitted
to sell less than all of the Capital Stock of a Restricted Subsidiary if (A)
immediately after giving effect to such sale such Restricted Subsidiary would no
longer constitute a Restricted Subsidiary and any Investment in such Person
remaining after giving effect to such sale would have been permitted to be made
under Section 3.5 if made on the date of such issuance or sale and (B) the
Company is in compliance with the terms of Section 3.7.
SECTION 3.11. Limitation on Liens. (a) The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly create, incur, assume or suffer to exist any Lien that secures
obligations under any Senior Subordinated Indebtedness or Subordinated
Indebtedness on any asset or property of the Company or such Restricted
Subsidiary, or any income or profits therefrom, or assign or convey any right to
receive income therefrom, unless the Securities are equally and ratably secured
with the obligations so secured (or senior to, in the event the Lien relates to
a Subordinated Indebtedness) or until such time as such obligations are no
longer secured by a Lien.
(b) The Company will not permit any Note Guarantor to directly
or indirectly create, incur, assume or suffer to exist any Lien that secures
obligations under any Senior Subordinated Indebtedness or Subordinated
Indebtedness of such Note Guarantor on any asset or property of such Note
Guarantor or any income or profits therefrom, or assign or convey any right to
receive income therefrom, unless the Guarantee of such Note Guarantor is equally
and ratably secured with the obligations so secured (or senior to, in the event
the Lien relates to a Subordinated Indebtedness) or until such time as such
obligations are no longer secured by a Lien.
(c) Notwithstanding the foregoing, Liens on assets transferred
to a Receivables Entity or on assets of a Receivables Entity incurred in
connection with a Qualified Receivables Transaction will not require such equal
and ratable security.
SECTION 3.12. Limitation on Issuances of Guarantees of
Indebtedness by Restricted Subsidiaries. (a) The Company will not permit any
Restricted Subsidiary to guarantee the payment of any Indebtedness of the
Company or any Indebtedness of any other Restricted Subsidiary unless (i) such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to the Indenture providing for a Guarantee of payment of the
Securities by such Restricted Subsidiary (a "Note Guarantee") except that with
respect to a guarantee of Indebtedness of the Company (A) if the Securities are
subordinated in right of payment to such Indebtedness, the Note Guarantee shall
be subordinated to such Restricted Subsidiary's guarantee with respect to such
Indebtedness substantially to the same extent as the Securities are subordinated
to such Indebtedness under this Indenture and (B) if such Indebtedness is by its
express terms subordinated in right of payment to the Securities, any such
guarantee of such Restricted Subsidiary with respect to such Indebtedness shall
be
<PAGE>
51
subordinated in right of payment to such Restricted Subsidiary's Note Guarantee
with respect to the Securities substantially to the same extent as such
Indebtedness is subordinated to the Securities; (ii) such Restricted Subsidiary
waives and will not in any manner whatsoever claim or take the benefit or
advantage of, any rights of reimbursement, indemnity or subrogation or any other
rights against the Company or any other Restricted Subsidiary as a result of any
payment by such Restricted Subsidiary under its Note Guarantee; and (iii) such
Restricted Subsidiary shall deliver to the Trustee an Opinion of Counsel to the
effect that (A) such Note Guarantee has been duly executed and authorized and
(B) such Note Guarantee constitutes a valid, binding and enforceable obligation
of such Restricted Subsidiary, subject to bankruptcy, insolvency or similar laws
(including, without limitation, all laws relating to fraudulent transfers) and
general principles of equity; provided that this paragraph (a) shall not be
applicable to any guarantee of any Restricted Subsidiary (x) that (A) existed at
the time such Person became a Restricted Subsidiary and (B) was not incurred in
connection with, or in contemplation of, such Person becoming a Restricted
Subsidiary or (y) that guarantees the payment of obligations of the Company or
any Restricted Subsidiary under the Revolving Credit Facilities, the Senior
Secured Notes or any other Senior Indebtedness and any refunding, refinancing or
replacement thereof, in whole or in part; provided, further that such refunding,
refinancing or replacement thereof constitutes Senior Indebtedness and is not
incurred pursuant to a registered offering of securities under the Securities
Act or a private placement of securities (including under Rule 144A) pursuant to
an exemption from the registration requirements of the Securities Act, which
private placement provides for registration rights under the Securities Act (any
guarantee excluded by operations of this clause (y) being an "Excluded
Guarantee").
(b) Notwithstanding the foregoing and the other provisions of
this Indenture, any Note Guarantee by a Restricted Subsidiary shall provide by
its terms that it shall be automatically and unconditionally released and
discharged upon (i) any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Capital Stock in, or all or
substantially all the assets of, whether by way of merger, consolidation or
otherwise, such Restricted Subsidiary (which sale, exchange or transfer is not
prohibited by this Indenture), (ii) the release or discharge of the guarantee
which resulted in the creation of such Note Guarantee, except a discharge or
release by or as a result of payment under such guarantee or (iii) such
Restricted Subsidiary is designated an Unrestricted Subsidiary of the Company in
accordance with the terms of this Indenture by the Company's Board of Directors.
SECTION 3.13. Limitation on Lines of Business. The Company
will not, and will not permit any Restricted Subsidiary to, engage in any
business other than a Related Business.
SECTION 3.14. Maintenance of Office or Agency. The Company
will maintain in The City of New York, an office or agency where the Securities
may be presented or surrendered for payment, where, if applicable, the
Securities may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Notes and this
Indenture may be served. The corporate trust office of the Trustee, which
initially shall be located at SunTrust Bank, Atlanta c/o The First
<PAGE>
52
Chicago Trust Company, 14 Wall Street, 8th Floor, New York, New York, 10005
Attention: Corporate Trust Department (the "Corporate Trust Office") shall be
such office or agency of the Company, unless the Company shall designate and
maintain some other office or agency for one or more of such purposes. The
Company will give prompt written notice to the Trustee of any change in the
location of any such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside of The City of New York) where the
Securities may be presented or surrendered for any or all such purposes and may
from time to time rescind any such designation; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in The City of New York for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and any change in the location of any such other
office or agency.
SECTION 3.15. Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will, on or
before each due date of the principal of (or premium, if any) or interest on any
of the Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal of (or premium, if any)
or interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee in
writing of its action or failure to so act.
Whenever the Company shall have one or more Paying Agents for
the Securities, it will, on or before each due date of the principal of (or
premium, if any) or interest on any Securities, deposit with any Paying Agent a
sum in same day funds (or New York Clearing House funds if such deposit is made
prior to the date on which such deposit is required to be made) that shall be
available to the Trustee by 10:00 a.m. New York City time on such due date
sufficient to pay the principal (and premium, if any) or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal, premium or interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee in writing of such action
or any failure to so act.
The Company will cause each Paying Agent (other than the
Trustee) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the provisions of this
Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities in trust
for the benefit of the Persons entitled thereto until such sums shall
be paid to such Persons or otherwise disposed of as herein provided;
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53
(b) give the Trustee written notice of any default by the
Company (or any other obligor upon the Securities) in the making of any
payment of principal (and premium, if any) or interest; and
(c) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such sums.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of (or
premium, if any) or interest on any Security and remaining unclaimed for two
years after such principal, premium or interest has become due and payable shall
be paid to the Company on Company Order, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Note shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment to the Company, may at the expense of the
Company cause to be published once, in a leading daily newspaper (if
practicable, The Wall Street Journal (Eastern Edition)) printed in the English
language and of general circulation in New York City, notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication nor shall it be later than
two years after such principal (or premium, if any) or interest shall have
become due and payable, any unclaimed balance of such money then remaining will
be repaid to the Company.
SECTION 3.16. Corporate Existence. Subject to Article IV, the
Company will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and that of each Restricted
Subsidiary and the corporate rights (charter and statutory) licenses and
franchises of the Company and each Restricted Subsidiary; provided, however,
that the Company shall not be required to preserve any such existence (except
the Company), right, license or franchise if the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and each of its Restricted
Subsidiaries, taken as a whole, and that the loss thereof is not, and will not
be, disadvantageous in any material respect to the Holders.
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54
SECTION 3.17. Payment of Taxes and Other Claims. The Company
will pay or discharge or cause to be paid or discharged, before the same shall
become delinquent, (i) all material taxes, assessments and governmental charges
levied or imposed upon the Company or any Subsidiary or upon the income, profits
or property of the Company or any Subsidiary and (ii) all lawful claims for
labor, materials and supplies, which, if unpaid, might by law become a material
liability or lien upon the property of the Company or any Restricted Subsidiary;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which appropriate reserves, if necessary (in the
good faith judgment of management of the Company) are being maintained in
accordance with GAAP.
SECTION 3.18. Maintenance of Properties. The Company will
cause all material properties owned by the Company or any Restricted Subsidiary
or used or held for use in the conduct of its business or the business of any
Restricted Subsidiary to be maintained and kept in normal condition, repair and
working order and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly conducted at all times; provided, however, that
nothing in this Section shall prevent the Company or any of its Restricted
Subsidiaries from discontinuing the maintenance of any of such properties if
such discontinuance is, in the judgment of the Company, desirable in the conduct
of its business or the business of any Restricted Subsidiary and not adverse in
any material respect to the Holders.
SECTION 3.19. Insurance. To the extent available at
commercially reasonable rates, the Company will maintain, and will cause its
Restricted Subsidiaries to maintain, insurance with responsible carriers against
such risks and in such amounts, and with such deductibles, retentions,
self-insured amounts and co-insurance provisions, as are customarily carried by
similar businesses, of similar size in their country of organization, including
professional and general liability, property and casualty loss, workers'
compensation and interruption of business insurance. In the event the Company
determines that insurance satisfying the first sentence of this Section 3.19 is
not available at commercially available rates, it shall provide an Officer's
Certificate to such effect to the Trustee and the Trustee may conclusively rely
on the determinations set forth therein.
SECTION 3.20. Compliance with Laws. The Company shall comply,
and shall cause each of its Restricted Subsidiaries to comply, with all
applicable statutes, rules, regulations, orders and restrictions of the United
States of America, all states and municipalities thereof, and of any
governmental regulatory authority, in respect of the conduct of their respective
businesses and the ownership of their respective properties, except for such
noncompliances as would not in the aggregate have a material adverse effect on
the financial condition or results of operations of the Company and its
Restricted Subsidiaries, taken as a whole.
SECTION 3.21. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each Fiscal Year of the
Company an Officers'
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55
Certificate stating that in the course of the performance by the signers of
their duties as Officers of the Company they would normally have knowledge of
any Default or Event of Default and whether or not the signers know of any
Default or Event of Default that occurred during such period. If they do, the
certificate shall describe the Default or Event of Default, its status and what
action the Company is taking or proposes to take with respect thereto. The
Company also shall comply with TIA ss. 314(a)(4). The Officer's Certificate
shall also notify the Trustee should the then current Fiscal Year be changed to
end on any date other than on the date as herein defined.
SECTION 3.22. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE IV
Successor Company and Successor Guarantor
SECTION 4.1. When Company May Merge or Otherwise Dispose of
Assets. The Company will not, in a single transaction or series of related
transactions, consolidate with or merge with or into, or convey, transfer, lease
or otherwise dispose of all or substantially all its assets to, any Person nor
permit any Person to merge with or into the Company, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") will be a Person organized and existing under the
laws of the United States of America, any State thereof or the District
of Columbia and the Successor Company (if not the Company) will
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Securities and this Indenture;
(ii) immediately before and after giving effect to such
transaction (and treating any Indebtedness which becomes an obligation
of the Successor Company or any Restricted Subsidiary as a result of
such transaction as having been Incurred by the Successor Company or
such Restricted Subsidiary at the time of such transaction), no Default
or Event of Default will have occurred and be continuing;
(iii) immediately after giving effect to such transaction,
the Successor Company would be able to Incur an additional $1.00 of
Indebtedness under paragraph (a) of Section 3.3;
(iv) each Note Guarantor, if any, shall have delivered a
written instrument in form and substance satisfactory to the Trustee
confirming its Note Guarantee; and
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(v) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transactions or series of
transactions) of all or substantially all of the properties and assets of one or
more Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
The Successor Company shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Indenture, but the predecessor Company in the case of a conveyance, transfer,
lease of all or substantially all its assets will not be released from the
obligation to pay the principal of and interest on the Securities. Solely for
the purpose of computing amounts described in clause 3(A) of Section 3.5(a), the
Successor Company shall only be deemed to have succeeded and be substituted for
the Company with respect to periods subsequent to the effective time of such
merger, consolidation, combination or transfer of assets.
Notwithstanding clauses (ii) and (iii) of the first sentence
of this Section 4.1: (1) any Restricted Subsidiary may consolidate with, merge
into or transfer all or part of its properties and assets to the Company and (2)
the Company may merge with an Affiliate incorporated solely for the purpose of
reincorporating the Company in another jurisdiction to realize tax or other
benefits.
SECTION 4.2. When a Note Guarantor May Merge or Otherwise
Dispose of Assets. Subject to Section 3.12(b), the Company will not permit any
Note Guarantor, if any, to, in a single transaction or series of related
transactions, consolidate with or merge with or into, or convey, transfer or
lease or otherwise dispose of all or substantially all its assets to, any Person
nor permit any Person to merge with or into such Note Guarantor, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Guarantor") will be a Person organized and existing under
the laws of the United States of America, any State thereof or the
District of Columbia and the Successor Guarantor (if not the Note
Guarantor) will expressly assume in writing all the obligations of such
Note Guarantor under such Note Guarantor's respective Note Guarantee;
(ii) immediately before and after giving effect to such
transaction (and treating any Indebtedness which becomes an obligation
of the Successor Guarantor or any Restricted Subsidiary as a result of
such transaction as having been Incurred by the Successor Guarantor or
such Restricted Subsidiary at the time of such transaction), no Default
or Event of Default will have occurred and be continuing;
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(iii) immediately after giving effect to such transaction,
the Company would be able to Incur an additional $1.00 of Indebtedness
under paragraph (a) of Section 3.3;
(iv) each other Note Guarantor shall have delivered a
written instrument in form and substance satisfactory to the Trustee
confirming its Note Guarantee; and
(v) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such assumption of the Note
Guarantee, if applicable, comply with this Indenture.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties and assets of one or
more Subsidiaries of such Note Guarantor, the Capital Stock of which constitutes
all or substantially all of the properties and assets of such Note Guarantor,
shall be deemed to be the transfer of all or substantially all of the properties
and assets of such Note Guarantor.
The Successor Guarantor shall succeed to, and be substituted
for, and may exercise every right and power of, the Note Guarantor under this
Indenture and the relevant Note Guarantee, but the predecessor Note Guarantor in
the case of a conveyance, transfer or lease of all or substantially all its
assets will not be released from its obligations under the Note Guarantee.
Notwithstanding clauses (ii) and (iii) of the first sentence
of this Section 4.2, any Subsidiary of the Note Guarantor (which Subsidiary is a
Restricted Subsidiary) may consolidate with, merge into or transfer all or part
of its properties and assets to the Note Guarantor.
ARTICLE V
Defaults and Remedies
SECTION 5.1. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, whether or not such
payment shall be prohibited by Article IX, and such default continues
for a period of 30 days;
(2) the Company defaults in the payment of the principal of or
premium, if any, on any Security when the same becomes due and payable
at its Stated Maturity, upon required repurchase, upon declaration or
otherwise, whether or not such payment shall be prohibited by Article
IX;
(3) the Company fails to comply with Article IV;
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(4) the Company fails to comply with Section 3.2, 3.3, 3.4,
3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12 and 3.13 (in each case other
than a failure to repurchase Securities when required pursuant to
Section 3.7 or 3.9, which failure shall constitute an Event of Default
under Section 5.1(2)) and such failure continues for 30 days after the
notice specified below;
(5) the Company defaults in the performance of or a breach by
the Company of any other covenant or agreement in this Indenture or
under the Securities (other than those referred to in (1), (2), (3) or
(4) above) and such default continues for 60 days after the notice
specified below;
(6) the failure by any Note Guarantor that is a Significant
Subsidiary (if any) to comply with its obligations under any Note
Guarantee to which such Note Guarantor is a party, after any applicable
grace period;
(7) Indebtedness of the Company or any Significant Subsidiary
is not paid within any applicable grace period after final maturity or
is accelerated by the holders thereof and the total amount of such
unpaid or accelerated Indebtedness exceeds $25.0 million or its foreign
currency equivalent at the time;
(8) the Company or a Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law (as defined below):
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian (as
defined below) of it or for any substantial part of its
property; or
(D) makes a general assignment for the benefit of
its creditors; or takes any comparable action under any
foreign laws relating to insolvency;
(9) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
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or any similar relief is granted under any foreign laws and the order,
decree or relief remains unstayed and in effect for 60 days;
(10) any judgment or decree for the payment of money in excess
of $25.0 million or its foreign currency equivalent at the time in the
aggregate for all such final judgments or orders against the Company or
a Significant Subsidiary if (A) an enforcement proceeding thereon is
commenced and not discharged within ten days or (B) such judgment or
decree remains outstanding for a period of 60 days following such
judgment or decree and is not discharged, waived, stayed or bonded; or
(11) the failure of any Note Guarantee by a Note Guarantor (if
any) which is a Significant Subsidiary to be in full force and effect
(except as contemplated by the terms thereof) or the denial or
disaffirmation by any such Note Guarantor of its obligations under any
Note Guarantee if such Default continues for 30 days.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
Notwithstanding the foregoing, a Default under clause (4) or
(5) of this Section 5.1 will not constitute an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the outstanding
Securities notify the Company of the Default and the Company does not cure such
Default within the time specified in said clause (4) or (5) after receipt of
such notice. Such notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clauses (4), (5), (6), (7), (10) or (11) of this
Section 5.1.
SECTION 5.2. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 5.1(8) or (9) with respect to the
Company or a Significant Subsidiary) occurs and is continuing, the Trustee by
notice to the Company, or the Holders of at least 25% in outstanding principal
amount of the Securities by notice to the Company and the Trustee, may, and the
Trustee at the request of such Holders shall, declare the principal of, premium,
if any, and accrued but unpaid interest on all the Securities to be due and
payable. Upon such a declaration, such principal, premium and interest shall,
subject to Section 9.4, be immediately due and payable. In the event of a
declaration of acceleration because an Event of Default set forth in Section
5.1(7) above has occurred and is continuing, such declaration of acceleration
shall be automatically rescinded and annulled if the event of default or payment
default triggering such Event of Default pursuant to Section 5.1(7) shall
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be remedied or cured by the Company and/or the relevant Significant Subsidiaries
or waived by the holders of the relevant Indebtedness within 60 days after the
declaration of acceleration with respect thereto. If an Event of Default
specified in Section 5.1(8) or (9) with respect to the Company occurs, the
principal of, premium, if any, and accrued and unpaid interest on all the
Securities will become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders. The Holders
of a majority in principal amount of the Securities then outstanding by notice
to the Trustee may waive all past defaults (except with respect to nonpayment of
principal, premium or interest) and rescind an acceleration with respect to the
Securities and its consequences if (i) the rescission would not conflict with
any judgment or decree of a court of competent jurisdiction and (ii) all
existing Events of Default, other than the nonpayment of principal of, premium,
if any or interest on the Securities that has become due solely because of such
acceleration, have been cured or waived. No such rescission shall affect any
subsequent Default or Event of Default or impair any right consequent thereto.
SECTION 5.3. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 5.4. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by notice to the Trustee may
waive an existing Default or Event of Default and its consequences except (i) a
Default or Event of Default in the payment of the principal of or interest on a
Security or (ii) a Default or Event of Default in respect of a provision that
under Section 8.2 cannot be amended without the consent of each Securityholder
affected. When a Default or Event of Default is waived, it is deemed cured, but
no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any consequent right.
SECTION 5.5. Control by Majority. The Holders of a majority in
principal amount of the Securities then outstanding may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 6.1, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action under this Indenture, the Trustee shall be
entitled to indemnification satisfactory to it in its sole discretion against
all losses and expenses caused by taking or not taking such action.
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SECTION 5.6. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in outstanding principal
amount of the Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 5.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of, premium (if any) or interest on the
Securities held by such Holder, on or after the respective due dates expressed
in the Securities, or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 5.8. Collection Suit by Trustee. If an Event of
Default specified in Section 5.1(1) or (2) occurs and is continuing, the Trustee
may recover judgment in its own name and as trustee of an express trust against
the Company for the whole amount then due and owing (together with interest on
any unpaid interest to the extent lawful) and the amounts provided for in
Section 6.7.
SECTION 5.9. Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its Subsidiaries or
their respective creditors or properties and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under Section 6.7.
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SECTION 5.10. Priorities. If the Trustee collects any money
or property pursuant to this Article V, it shall pay out the money or property
in the following order:
FIRST: to the Trustee for amounts due under Section 6.7;
SECOND: to holders of Senior Indebtedness to the extent
required by Article IX;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 5.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by the Company, a suit by a Holder
pursuant to Section 5.7 or a suit by Holders of more than 10% in outstanding
principal amount of the Securities.
ARTICLE VI
Trustee
SECTION 6.1. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
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(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine such certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.5.
(d) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(e) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(f) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 6.2. Rights of Trustee. (a) The Trustee may
conclusively rely on any document believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee need not investigate any
fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
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(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection, and
the advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Securities shall be full and complete authorization and
protection from liability in respect to any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond or other
paper or document; but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(g) The Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Section 5.1(1) and 5.1(2), or (ii) any Default or Event of Default of which
the Trustee shall have received written notification or obtained "actual
knowledge." "Actual knowledge" shall mean the actual fact or statement of
knowing without independent investigation with respect thereto.
SECTION 6.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 6.10 and 6.11.
SECTION 6.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication or for the use or application of any
funds received by any Paying Agent other than the Trustee.
SECTION 6.5. Notice of Defaults. If a Default or Event of
Default occurs and is continuing and if a Trust Officer has actual knowledge
thereof, the Trustee shall mail to each Securityholder notice of the Default or
Event of Default within 90 days after it occurs. Except in the case of a Default
or Event of Default in payment of principal of, premium (if any), or interest on
any Security (including payments pursuant to the required repurchase provisions
of such Security, if any), the Trustee may withhold the notice if and so long as
its board of directors, a committee of its board of directors or a committee of
its Trust
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Officers and/or a Trust Officer of the Trustee in good faith determines that
withholding the notice is in the interests of Securityholders.
SECTION 6.6. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA ss. 313(a). The Trustee also shall comply with TIA ss. 313(b).
The Trustee shall also transmit by mail all reports required by TIA ss. 313(c).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee in writing whenever the Securities become listed on any stock exchange
and of any delisting thereof.
SECTION 6.7. Compensation and Indemnity. The Company shall pay
to the Trustee from time to time such compensation for its services as the
parties shall agree in writing from time to time. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee upon request for all reasonable
out-of-pocket expenses incurred or made by it, including, but not limited to,
costs of collection, costs of preparing and reviewing reports, certificates and
other documents, costs of preparation and mailing of notices to Securityholders
and reasonable costs of counsel retained by the Trustee in connection with the
delivery of an Opinion of Counsel or otherwise, in addition to the compensation
for its services. Such expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Trustee's agents, counsel,
accountants and experts. The Company shall indemnify the Trustee, and each of
its officers, directors, counsel and agents, against any and all loss, liability
or expense (including, but not limited to, reasonable attorneys' fees and
expenses) incurred by it in connection with the administration of this trust and
the performance of its duties hereunder, including the costs and expenses of
enforcing this Indenture (including this Section 6.7) and of defending itself
against any claims (whether asserted by any Securityholder, the Company or
otherwise). The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall not
relieve the Company of its obligations hereunder. The Company shall defend the
claim and the Trustee may have separate counsel and the Company shall pay the
fees and expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own wilful misconduct, negligence or bad faith, subject to the
exceptions contained in Section 6.1(c) hereof.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this Section 6.7 shall not be
subordinate to any other liability or indebtedness of the Company.
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The Company's payment obligations pursuant to this Section and
any lien arising hereunder shall survive the discharge of this Indenture and the
resignation or removal of the Trustee. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 5.1(8) or (9) with respect to
the Company, the expenses are intended to constitute expenses of administration
under any Bankruptcy Law.
SECTION 6.8. Replacement of Trustee. The Trustee may resign at
any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Company and
the Trustee in writing and may appoint a successor Trustee. The Company shall
remove the Trustee if:
(1) the Trustee fails to comply with Section 6.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 6.7.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section 6.8, the Company's obligations under Section 6.7 shall continue for
the benefit of the retiring Trustee.
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SECTION 6.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 6.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA ss. 310(a). The Trustee shall have
a combined capital and surplus of at least $100 million as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss. 310(b).
SECTION 6.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VII
Discharge of Indenture; Defeasance
SECTION 7.1. Discharge of Liability on Securities; Defeasance.
(a) When (i) the Company delivers to the Trustee all outstanding Securities
(other than Securities replaced pursuant to Section 2.9) for cancellation or
(ii) all outstanding Securities have become due and payable at maturity and the
Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity all outstanding Securities (other than Securities replaced pursuant to
Section 2.9), including interest thereon to maturity, and the Company pays all
other sums payable hereunder by the Company, then this Indenture shall, subject
to Section 7.1(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
(accompanied by an Officers' Certificate and an Opinion of Counsel stating that
all conditions precedent specified herein relating to the satisfaction and
discharge of this Indenture have been complied with) and at the cost and expense
of the Company.
(b) Subject to Sections 7.1(c) and 7.2, the Company at its
option and at any time may terminate (i) all the obligations of the Company and
any Note Guarantor under the Securities and this Indenture ("legal defeasance
option") or (ii) the obligations of the
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Company and any Note Guarantor under Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8,
3.9, 3.10, 3.11, 3.12, 3.13, 4.1(iii), 4.1(v), 4.2(iii) and 4.2(v) and the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant or provision,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such covenant or provision or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 5.1(3) and 5.1(4) ("covenant defeasance option"), but except as
specified above, the remainder of this Indenture and the Securities shall be
unaffected thereby. The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Sections 5.1(4),
5.1(6), 5.1(7), 5.1(8) (but only with respect to a Significant Subsidiary),
5.1(9) (but only with respect to a Significant Subsidiary), 5.1(10) and 5.1(11)
or because of the failure of the Company to comply with Sections 4.1(iii),
4.1(v), 4.2(iii) and 4.2(v).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding the provisions of Sections 7.1(a) and (b),
the Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.9, 6.7,
6.8, 7.4, 7.5 and 7.6 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 6.7, 7.4 and 7.5 shall
survive.
SECTION 7.2. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
for the benefit of the Holders cash in U.S. dollars or U.S. Government
Obligations or a combination thereof for the payment of principal of
and interest on the Securities to maturity;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity;
(3) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event
of Default with respect to the Indenture resulting from the incurrence
of Indebtedness, all or a portion of which will be used to defease the
Securities concurrently with such incurrence);
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(4) such legal defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a Default under this
Indenture or any other material agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;
(5) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that (A) the Securities and (B) assuming no
intervening bankruptcy of the Company between the date of deposit and
the 91st day following the deposit and that no Holder of the Securities
is an insider of the Company, after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' right generally;
(6) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article IX;
(7) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(8) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States stating that (i) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling, or (ii) since
the date of this Indenture there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Securityholders
will not recognize income, gain or loss for federal income tax purposes
as a result of such legal defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such legal defeasance had not
occurred;
(9) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United
States to the effect that the Securityholders will not recognize
income, gain or loss for federal income tax purposes as a result of
such covenant defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if such covenant defeasance had not occurred; and
(10) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities and this
Indenture as contemplated by this Article VII have been complied with.
SECTION 7.3. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article VII. It shall apply the deposited money and the money from U.S.
Government Obligations through the
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Paying Agent and in accordance with this Indenture to the payment of principal
of and interest on the Securities. Money and securities so held in trust are not
subject to Article IX.
SECTION 7.4. Repayment to Company. Anything herein to the
contrary notwithstanding, the Trustee shall deliver or pay to the Company from
time to time upon Company Order any money or U.S. Government Obligations held by
it as provided in this Article VII which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect legal defeasance
or covenant defeasance, as applicable, provided that the Trustee shall not be
required to liquidate any U.S. Government Obligations in order to comply with
the provisions of this paragraph.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon written request any money
held by them for the payment of principal of or interest on the Securities that
remains unclaimed for two years, and, thereafter, Securityholders entitled to
the money must look to the Company for payment as general creditors.
SECTION 7.5. Indemnity for U.S. Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 7.6. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article VII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company under
this Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VII until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VII; provided, however, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
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ARTICLE VIII
Amendments
SECTION 8.1. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article IV in respect of the assumption by
a Successor Company of an obligation of the Company under this
Indenture;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article IX that would limit or
terminate the benefits available to any holder of Senior Indebtedness
(or Representatives therefor) under Article IX;
(5) to add Guarantees with respect to the Securities or to
secure the Securities;
(6) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA;
(8) to make any change that does not adversely affect the
rights of any Securityholder; or
(9) to provide for the issuance of the Exchange Notes, which
will have terms substantially identical in all material respects to the
Initial Notes (except that the transfer restrictions contained in the
Initial Notes will be modified or eliminated, as appropriate), and
which will be treated, together with any outstanding Initial Notes, as
a single issue of securities.
An amendment under this Section may not make any change that
adversely affects the rights under Article IX of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness (or
any group or representative thereof authorized to give a consent) consent to
such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such
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notice to all Securityholders, or any defect therein, shall not impair or affect
the validity of an amendment under this Section.
SECTION 8.2. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities then outstanding. However,
without the consent of each Securityholder affected, an amendment may not:
(1) reduce the principal amount of Securities whose Holders
must consent to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) reduce the premium payable upon the repurchase of any
Security or change the time at which any Security may or shall be
repurchased in accordance with Section 3.9;
(5) make any Security payable in money other than that stated
in the Security;
(6) impair the right of any Holder to receive payment of
principal of and interest on such Holder's Securities on or after the
due dates therefor or to institute suit for the enforcement of any
payment on or with respect to such Holder's Securities;
(7) release any Note Guarantor, if any, from any of its
obligations under its Note Guarantee or this Indenture, except in
compliance with the terms thereof; or
(8) make any change in the amendment provisions which require
each Holder's consent or in the waiver provisions.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article IX of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness (or
any group or representative thereof authorized to give a consent) consent to
such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such
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notice to all Securityholders, or any defect therein, shall not impair or affect
the validity of an amendment under this Section.
SECTION 8.3. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 8.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver made pursuant to Section 8.2 shall become effective upon
receipt by the Trustee of the requisite number of written consents.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall become
valid or effective more than 120 days after such record date.
SECTION 8.5. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 8.6. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article VIII if the amendment
does not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 6.1) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
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ARTICLE IX
Subordination
SECTION 9.1. Agreement To Subordinate. The Company agrees, and
each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by, and all other obligations in respect of, the Securities is
subordinated in right of payment, to the extent and in the manner provided in
this Article IX, to the prior payment of all Senior Indebtedness and that the
subordination is for the benefit of and enforceable by the holders of Senior
Indebtedness. The Securities shall in all respects rank pari passu with all
other Senior Subordinated Indebtedness of the Company and only Indebtedness of
the Company that is Senior Indebtedness will rank senior to the Securities in
accordance with the provisions set forth herein. All provisions of this Article
IX shall be subject to Section 9.12.
SECTION 9.2. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or its properties:
(1) holders of Senior Indebtedness shall be entitled to
receive payment in full in cash or Cash Equivalents of all Senior
Indebtedness before Securityholders shall be entitled to receive any
payment of principal of or interest on or other amounts with respect to
the Securities from the Company; and
(2) until the Senior Indebtedness is paid in full in cash or
Cash Equivalents, any payment or distribution to which Securityholders
would be entitled but for this Article IX shall be made to holders of
Senior Indebtedness, as their respective interests may appear.
SECTION 9.3. Default on Senior Indebtedness. The Company shall
not pay the principal of, premium (if any) or interest on or any other amounts
with respect to the Securities or make any deposit pursuant to Section 7.2 or
repurchase or otherwise retire any Securities (collectively, "pay the
Securities") if (i) any Senior Indebtedness is not paid when due in cash or Cash
Equivalents or (ii) any other default on Senior Indebtedness occurs and the
maturity of such Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded in writing or (y) such Senior Indebtedness has
been paid in full in cash or Cash Equivalents; provided, however, that the
Company may pay the Securities, without regard to the foregoing if the Company
and the Trustee receive written notice approving such payment from the
Representative of the Senior Indebtedness with respect to which either of the
events set forth in clause (i) or (ii) of this sentence has occurred or is
continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence) with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Securities (except in (i) Capital Stock
(other than Disqualified
<PAGE>
Stock) issued by the Company to pay interest on the Securities or issued in
exchange for the Securities, (ii) in securities substantially identical to the
Securities issued by the Company in payment of interest thereon or (iii) in
securities issued by the Company which are subordinated to Senior Indebtedness
at least to the same extent as the Securities and having an Average Life at
least equal to the remaining Average Life of the Securities) for a period (a
"Payment Blockage Period") commencing upon the receipt by the Trustee (with a
copy to the Company) of written notice (a "Blockage Notice") of such default
from the Representative(s) of the holders of such Designated Senior Indebtedness
specifying an election to effect a Payment Blockage Period and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated (i) by
written notice to the Trustee and the Company from the Person or Persons who
gave such Blockage Notice, (ii) because the default giving rise to such Blockage
Notice is no longer continuing or (iii) because such Designated Senior
Indebtedness has been repaid in full in cash or Cash Equivalents).
Notwithstanding the provisions of the immediately preceding sentence, unless the
holders of such Designated Senior Indebtedness or the Representative(s) of such
holders shall have accelerated the maturity of such Designated Senior
Indebtedness, the Company may resume payments on the Securities after the end of
such Payment Blockage Period. Not more than one Blockage Notice may be given,
and not more than one Payment Blockage may occur, in any consecutive 360-day
period, irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period.
SECTION 9.4. Acceleration of Payment of Securities. If payment
of the Securities is accelerated because of an Event of Default, the Company and
the Trustee shall promptly notify the holders of the Designated Senior
Indebtedness (or their Representatives) of the acceleration; provided, however,
that the Company and the Trustee shall be obligated to notify such a
Representative only if such Representative has delivered or caused to be
delivered to the Company and the Trustee an address for service of such a notice
(and the Company and the Trustee shall only be obligated to deliver the notice
to the address so specified). If any Designated Senior Indebtedness is
outstanding, the Company shall not pay the Securities until five Business Days
after the holders or Representative(s) of such Designated Senior Indebtedness
receives notice of such acceleration and, thereafter, may pay the Securities,
only if this Article IX otherwise permits payments at that time.
SECTION 9.5. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article IX should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness and promptly pay it
over to them as their respective interests may appear.
SECTION 9.6. Subrogation. After all Senior Indebtedness is
paid in full and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness. A distribution made under this
Article IX to holders of Senior Indebtedness which otherwise would have been
made to Securityholders is not, as between the Company and Securityholders, a
payment by the Company of Senior Indebtedness.
SECTION 9.7. Relative Rights. This Article IX defines the
relative rights of Securityholders and holders of Senior Indebtedness. Nothing
in this Indenture shall:
<PAGE>
76
(1) impair, as between the Company and Securityholders, the
obligation of the Company which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default or Event of Default, subject to
the rights of holders of Senior Indebtedness to receive distributions
otherwise payable to Securityholders.
SECTION 9.8. Subordination May Not Be Impaired by Company. No
right of any holder of Senior Indebtedness to enforce the subordination of the
Indebtedness evidenced by the Securities shall be impaired by any act or failure
to act by the Company or by the failure of any of them to comply with this
Indenture.
SECTION 9.9. Rights of Trustee and Paying Agent.
Notwithstanding Section 9.3, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice in writing satisfactory to it that
payments may not be made under this Article IX. The Company, the Registrar or
co-registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness may give the notice; provided, however, that, if an issue of Senior
Indebtedness has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article IX with respect to any Senior Indebtedness which may at any time be held
by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article VI shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article IX shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7.
SECTION 9.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness, the distribution may be made and the notice given to their
Representative (if any).
SECTION 9.11. Article IX Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment in respect of the
Securities, by reason of any provision in this Article IX shall not be construed
as preventing the occurrence of a Default or Event of Default. Nothing in this
Article IX shall have any effect on the right of the Secu- rityholders or the
Trustee to accelerate the maturity of the Securities.
SECTION 9.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VII by the Trustee
for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior
<PAGE>
77
Indebtedness or subject to the restrictions set forth in this Article IX, and
none of the Securityholders shall be obligated to pay over any such amount to
the Company, any holder of Senior Indebtedness, or any other creditor of the
Company.
SECTION 9.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article IX, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 9.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to participate
in such payment or distribution, the holders of Senior Indebtedness and other
Indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article IX. In the event that the Trustee determines, in good faith,
that evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article IX, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
held by such Person, the extent to which such Person is entitled to participate
in such payment or distribution and other facts pertinent to the rights of such
Person under this Article IX, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment. The provisions of Sections
6.1 and 6.2 shall be applicable to all actions or omissions of actions by the
Trustee pursuant to this Article IX.
SECTION 9.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness as provided in this Article IX and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 9.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the Company or any
other Person, money or assets to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article IX or otherwise.
SECTION 9.16. Reliance by Holders of Senior Indebtedness on
Indebtedness on Subordination Provisions. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Senior Indebtedness, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
<PAGE>
78
ARTICLE X
Miscellaneous
SECTION 10.1. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control.
SECTION 10.2. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
Smithfield Foods, Inc.
999 Waterside Drive
Suite 900
Norfolk, VA 23510
Attention: Aaron D. Trub
Facsimile No.: (757) 365-3017
With a copy to:
McGuire, Woods, Battle & Boothe
One James Center
901 E. Cary Street
Richmond, VA 23219-4030
Attention: Robert L. Burrus, Jr., Esq.
Facsimile No.: (804) 775-1061
if to the Trustee:
SunTrust Bank, Atlanta
58 Edgewood Avenue
Room 400-Annex
Atlanta, Georgia 30303
Attention: Corporate Trust Department
Facsimile No.: (404) 332-3966
<PAGE>
79
With a copy (which shall not constitute notice) to:
Long, Aldridge & Norman, LLP
One Peachtree Center
Suite 5300
303 Peachtree Street
Atlanta, Georgia 30308
Attention: Government Finance
Facsimile No.: (404) 527-4198
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 10.3. Communication by Holders with other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 10.4. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 10.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
<PAGE>
80
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 10.6. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 10.7. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by, or a meeting of,
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 10.8. Legal Holidays. A "Legal Holiday" is a Saturday,
a Sunday or other day on which commercial banking institutions are authorized or
required to be closed in New York City or Atlanta, Georgia. If a payment date is
a Legal Holiday, payment shall be made on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period. If a
regular record date is a Legal Holiday, the record date shall not be affected.
SECTION 10.9. Governing Law. This Indenture and the Securities
shall be governed by, and construed in accordance with, the laws of the State of
New York but without giving effect to applicable principles of conflicts of law
to the extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 10.10. No Recourse Against Others. An incorporator,
director, officer, employee, stockholder or controlling person, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
<PAGE>
81
SECTION 10.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 10.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 10.13. Variable Provisions. The Company initially
appoints the Trustee as Paying Agent and Registrar and custodian with respect to
any Global Securities.
SECTION 10.14. Qualification of Indenture. The Company shall
qualify this Indenture under the TIA in accordance with the terms and conditions
of the Registration Rights Agreement and shall pay all reasonable costs and
expenses (including attorneys' fees and expenses for the Company and the
Trustee) incurred in connection therewith, including, but not limited to, costs
and expenses of qualification of the Indenture and the Securities and printing
this Indenture and the Securities. The Trustee shall be entitled to receive from
the Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 10.15. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
SMITHFIELD FOODS, INC.
By:______________________________
Name:
Title:
SUNTRUST BANK, ATLANTA
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
<PAGE>
EXHIBIT A
<TABLE>
<S> <C>
[FORM OF FACE OF INITIAL NOTE]
[Applicable Restricted Securities Legend]
[Depository Legend, if applicable]
No. [___] Principal Amount $[______________]
CUSIP NO. ____________
SMITHFIELD FOODS, INC.
7 5/8% Senior Subordinated Note due 2008
Smithfield Foods, Inc., a Virginia corporation promises to pay
to [___________], or registered assigns, the principal sum of
[__________________] Dollars on February 15, 2008.
Interest Payment Dates: February 15 and August 15.
Record Dates: February 1 and August 1.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: SMITHFIELD FOODS, INC.
By:---------------------------------------
By:---------------------------------------
</TABLE>
<PAGE>
2
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
SUNTRUST BANK, ATLANTA
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By---------------------
Authorized Signatory February __, 1998
<PAGE>
[FORM OF REVERSE SIDE OF INITIAL NOTE]
7 5/8% Senior Subordinated Note due 2008
1. Interest
Smithfield Foods, Inc., a Virginia corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company") promises to pay interest on the
principal amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on February 15 and
August 15 of each year. Interest on the Securities will accrue from the most
recent date to which interest has been paid on the Securities or, if no interest
has been paid, from February 9, 1998. The Company shall pay interest on overdue
principal or premium, if any (plus interest on such interest to the extent
lawful), at the rate borne by the Securities to the extent lawful. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment
By at least 10:00 a.m. (New York City time) on the date on
which any principal of or interest on any Security is due and payable, the
Company shall irrevocably deposit with the Trustee or the Paying Agent money
sufficient to pay such principal, premium, if any, and/or interest. The Company
will pay interest (except Defaulted Interest) to the Persons who are registered
Holders of Securities at the close of business on the February 1 or August 1
next preceding the interest payment date even if Securities are cancelled or
repurchased after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
Initially, SunTrust Bank, Atlanta, a banking corporation duly
organized and existing under the laws of the State of Georgia ("Trustee"), will
act as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice to any Securityholder. The
Company or any of its domestically incorporated Wholly-Owned Subsidiaries may
act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of February 9, 1998 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company and the
Trustee. The terms of the Securities
<PAGE>
2
include those stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as
in effect from time to time (the "Act"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the Act for a statement of those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $200.0 million aggregate principal amount
(subject to Section 2.9 of the Indenture). This Security is one of the Initial
Notes referred to in the Indenture. The Securities include the Initial Notes and
any Exchange Notes issued in exchange for the Initial Notes pursuant to the
Indenture and the Registration Rights Agreement. The Initial Notes and the
Exchange Notes are treated as a single class of securities under the Indenture.
The Indenture imposes certain limitations on the Incurrence of Indebtedness by
the Company and its Subsidiaries, the payment of dividends and other
distributions on the Capital Stock of the Company and its Subsidiaries, the
purchase or redemption of Capital Stock of the Company and Capital Stock of such
Subsidiaries, certain purchases or redemptions of Subordinated Indebtedness, the
sale or transfer of assets and Capital Stock of Subsidiaries, the issuance or
sale of Capital Stock of Subsidiaries, the business activities and investments
of the Company and its Subsidiaries and transactions with Affiliates. In
addition, the Indenture limits the ability of the Company and its Subsidiaries
to restrict distributions and dividends from Subsidiaries.
5. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a purchase price in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of repurchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) as provided in, and
subject to the terms of, the Indenture.
6. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company agrees,
and each Securityholder by accepting a Security agrees, to the subordination
provisions contained in the Indenture and authorizes the Trustee to give them
effect and appoints the Trustee as attorney-in-fact for such purpose.
7. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register
<PAGE>
3
the transfer of or exchange any Securities for a period beginning 15 days before
an interest payment date and ending on such interest payment date.
8. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
9. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
Person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
10. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to maturity.
11. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the then outstanding
Securities and (ii) any default (other than with respect to nonpayment) or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in principal amount of the then outstanding Securities.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article IV of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
guarantees with respect to the Securities or to secure the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company, or
to comply with any request of the SEC in connection with qualifying the
Indenture under the Act, or to make any change that does not adversely affect
the rights of any Securityholder, or to provide for the issuance of Exchange
Notes.
12. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon
declaration or otherwise; (iii) failure by the Company or any Significant
Subsidiary to comply with other agreements in the Indenture or
<PAGE>
4
the Securities, in certain cases subject to notice and lapse of time; (iv)
certain accelerations (including failure to pay within any grace period after
final maturity) of other indebtedness of the Company or any Significant
Subsidiary if the amount accelerated (or so unpaid) exceeds $25.0 million; (v)
certain events of bankruptcy or insolvency with respect to the Company or any
Significant Subsidiary; and (vi) certain final, non-appealable judgments or
decrees for the payment of money in excess of $25.0 million. If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Securities then outstanding may declare all the
Securities to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Securities being due
and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default or Event of Default (except a Default or Event of Default in payment of
principal or interest) if it determines that withholding notice is in their
interest.
13. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
14. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
15. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Security.
16. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT
<PAGE>
5
TEN (=joint tenants with rights of survivorship and not as tenants in common),
CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
17. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities. No representation is made as to the accuracy of
such numbers as printed on the Securities and reliance may be placed only on the
other identification numbers placed thereon.
18. Governing Law
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of
the laws of another jurisdiction would be required thereby.
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the Indenture which
has in it the text of this Security in larger type. Requests may be made to:
Smithfield Foods, Inc.
999 Waterside Drive
Suite 900
Norfolk, VA 23510
Attention of Aaron D. Trub
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
-----------------------------------------------------
(Print or type assignee's name, address and zip code)
--------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint-----------agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Date:____________________ Your Signature:___________________
Signature Guarantee:______________________________
(Signature must be guaranteed)
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1 [] acquired for the undersigned's own account, without transfer; or
2 [] transferred to the Company; or
3 [] transferred pursuant to and in compliance with Rule
144A under the Securities Act of 1933, as amended
(the "Securities Act"); or
4 [] transferred pursuant to an effective registration statement under
the Securities Act; or
<PAGE>
2
5 [] transferred pursuant to and in compliance with Regulation S
under the Securities Act; or
6 [] transferred to an institutional "accredited investor"
(as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act), that has furnished to the
Trustee a signed letter containing certain
representations and agreements (the form of which
letter appears as Section 2.7 of the Indenture); or
7 [] transferred pursuant to another available exemption
from the registration requirements of the Securities
Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering any
such transfer of the Securities, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Company may
reasonably request to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
------------------------------
Signature
Signature Guarantee:
- ------------------------- ------------------------------
(Signature must be guaranteed) Signature
- ------------------------------------------------------------
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Note for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying
<PAGE>
3
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
----------------------------------------------
Dated: NOTICE: To be executed by an executive officer
<PAGE>
4
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<S> <C>
Amount of decrease in Amount of increase in Principal Amount of this Signature of authorized
Date of Principal Amount of this Principal Amount of this Global Security following signatory of Trustee or
Exchange Global Security Global Security such decrease or increase Securities Custodian
</TABLE>
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 3.7 or 3.9 of the Indenture, check the box:
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 3.7 or 3.9 of the Indenture, state
the amount in principal amount (must be integral multiple of $1,000): $
Date: _____________ Your Signature: _________________________
(Sign exactly as your name appears on the other side of the
Security)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE>
EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE]
[Depository Legend, if applicable]
No. [_____] Principal Amount $[____________]
CUSIP NO. _____________
SMITHFIELD FOODS, INC.
7 5/8% Senior Subordinated Notes due 2008
Smithfield Foods, Inc., a Virginia corporation, promises to
pay to [______________], or registered assigns, the principal sum of
[_______________] Dollars on February 15, 2008.
Interest Payment Dates: February 15 and August 15.
Record Dates: February 1 and August 1.
Additional provisions of this Security are set forth on the
other side of this Security.
SMITHFIELD FOODS, INC.
By:------------------------------------------------
By:------------------------------------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
SUNTRUST BANK, ATLANTA
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:---------------------------------
Authorized Signatory Date:
<PAGE>
[FORM OF REVERSE SIDE OF EXCHANGE NOTE]
7 5/8% Senior Subordinated Note due 2008
1. Interest
Smithfield Foods, Inc., a Virginia corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company") promises to pay interest on the
principal amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on February 15 and
August 15 of each year. Interest on the Securities will accrue from the most
recent date to which interest has been paid on the Securities or, if no interest
has been paid, from February 9, 1998. The Company shall pay interest on overdue
principal or premium, if any (plus interest on such interest to the extent
lawful), at the rate borne by the Securities to the extent lawful. Interest will
be computed on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment
By at least 10:00 a.m. (New York City time) on the date on
which any principal of or interest on any Security is due and payable, the
Company shall irrevocably deposit with the Trustee or the Paying Agent money
sufficient to pay such principal, premium, if any, and/or interest. The Company
will pay interest (except Defaulted Interest) to the Persons who are registered
Holders of the Securities at the close of business on the February 1 or August 1
next preceding the interest payment date even if Securities are cancelled or
repurchased after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.
3. Paying Agent and Registrar
Initially, SunTrust Bank, Atlanta, a banking corporation duly
organized and existing under the laws of the State of Georgia ("Trustee"), will
act as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice to any Securityholder. The
Company or any of its domestically incorporated Wholly-Owned Subsidiaries may
act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of February 9, 1998 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the
<PAGE>
2
Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect from
time to time (the "Act"). Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are subject
to all such terms, and Securityholders are referred to the Indenture and the Act
for a statement of those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $200.0 million aggregate principal amount
(subject to Section 2.9 of the Indenture). This Security is one of the Exchange
Notes referred to in the Indenture. The Securities include the Initial Notes and
any Exchange Notes issued in exchange for the Initial Notes pursuant to the
Indenture and the Registration Rights Agreement. The Initial Notes and the
Exchange Notes are treated as a single class of securities under the Indenture.
The Indenture imposes certain limitations on the Incurrence of Indebtedness by
the Company and its Subsidiaries, the payment of dividends and other
distributions on the Capital Stock of the Company and certain of its
Subsidiaries, the purchase or redemption of Capital Stock of the Company and
Capital Stock of such Subsidiaries, certain purchases or redemptions of
Subordinated Indebtedness, the sale or transfer of assets and Capital Stock of
Subsidiaries, the issuance or sale of Capital Stock of Subsidiaries, the
business activities and investments of the Company and its Subsidiaries and
transactions with Affiliates. In addition, the Indenture limits the ability of
the Company and its Subsidiaries to restrict distributions and dividends from
Subsidiaries.
5. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a purchase price in cash equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the date of repurchase
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date) as provided in, and
subject to the terms of, the Indenture.
6. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company agrees,
and each Securityholder by accepting a Security agrees, to the subordination
provisions contained in the Indenture and authorizes the Trustee to give them
effect and appoints the Trustee as attorney-in-fact for such purpose.
7. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register
<PAGE>
3
the transfer of or exchange any Securities for a period beginning 15 days before
an interest payment date and ending on such interest payment date.
8. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
9. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back to
the Company at its request unless an abandoned property law designates another
person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
10. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to maturity.
11. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the then outstanding
Securities and (ii) any default (other than with respect to nonpayment) or
noncompliance with any provision may be waived with the written consent of the
Holders of a majority in principal amount of the then outstanding Securities.
Subject to certain exceptions set forth in the Indenture, without the consent of
any Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article IV of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities, or to add
guarantees with respect to the Securities or to secure the Securities, or to add
additional covenants or surrender rights and powers conferred on the Company or
Communications or to comply with any request of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder, or to provide for the
issuance of Exchange Notes.
12. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon
declaration or otherwise; (iii) failure by the Company or any Significant
Subsidiary to comply with other agreements in the Indenture or
<PAGE>
4
the Securities, in certain cases subject to notice and lapse of time; (iv)
certain accelerations (including failure to pay within any grace period after
final maturity) of other Indebtedness of the Company or any Significant
Subsidiary if the amount accelerated (or so unpaid) exceeds $25.0 million; (v)
certain events of bankruptcy or insolvency with respect to the Company or any
Significant Subsidiary; and (vi) certain final, non-appealable judgments or
decrees for the payment of money in excess of $25.0 million. If an Event of
Default occurs and is continuing, the Trustee or Holders of at least 25% in
principal amount of the Securities then outstanding may declare all the
Securities to be due and payable immediately. Certain events of bankruptcy or
insolvency are Events of Default which will result in the Securities being due
and payable immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default or Event of Default (except a Default or Event of Default in payment of
principal or interest) if it determines that withholding notice is in their
interest.
13. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may become
the owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its affiliates and may otherwise deal
with the Company or its affiliates with the same rights it would have if it were
not Trustee.
14. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.
15. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Security.
16. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT
<PAGE>
5
TEN (=joint tenants with rights of survivorship and not as tenants in common),
CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
17. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities. No representation is made as to the accuracy of
such numbers as printed on the Securities and reliance may be placed only on the
other identification numbers placed thereon.
18. Governing Law
This Security shall be governed by, and construed in
accordance with, the laws of the State of New York but without giving effect to
applicable principles of conflicts of law to the extent that the application of
the laws of another jurisdiction would be required thereby.
The Company will furnish to any Securityholder upon request
and without charge to the Securityholder a copy of the Indenture which has in it
the text of this Security in larger type. Requests may be made to:
Smithfield Foods, Inc.
999 Waterside Drive
Suite 900
Norfolk, VA 23510
Attention of Aaron D. Trub
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
----------------------------------------------------
(Print or type assignee's name, address and zip code)
--------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint---------------agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: _______________ Your Signature ____________________
Signature Guarantee: ___________________________________
(Signature must be guaranteed)
Sign exactly as your name appears on the other side of this Security.
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
<PAGE>
2
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<S> <C>
Amount of decrease in Amount of increase in Principal Amount of this Signature of authorized
Date of Principal Amount of this Principal Amount of this Global Security following signatory of Trustee or
Exchange Global Security Global Security such decrease or increase Securities Custodian
</TABLE>
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 3.7 or 3.9 of the Indenture, check the box:
[]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 3.7 or 3.9 of the Indenture, state
the amount in principal amount (must be integral multiple of $1,000): $
Date: _______________ Your Signature: _________________________
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.
Exhibit 4.8(a)
EXECUTION COPY
SMITHFIELD FOODS, INC.
$200,000,000
7 5/8% Senior Subordinated Notes due 2008
PURCHASE AGREEMENT
February 4, 1998
CHASE SECURITIES INC.
270 Park Avenue
4th floor
New York, New York 10017
Ladies and Gentlemen:
Smithfield Foods, Inc., a Virginia corporation (the
"Company"), proposes to issue and sell $200,000,000 aggregate principal amount
of its 7 5/8% Senior Subordinated Notes due 2008 (the "Securities"). The
Securities will be issued pursuant to an Indenture to be dated as of February 9,
1998 (the "Indenture") between the Company and SunTrust Bank, Atlanta, as
trustee (the "Trustee"). The Company hereby confirms its agreement with Chase
Securities Inc. (the "Initial Purchaser") concerning the purchase of the
Securities from the Company by the Initial Purchaser.
The Securities will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance upon exemptions therefrom. The Company has
prepared a preliminary offering memorandum dated January 22, 1998 (including the
documents incorporated by reference therein, the "Preliminary Offering
Memorandum") and will prepare an offering memorandum dated the date hereof
(including the documents incorporated by reference therein, the "Offering
Memorandum") setting forth information concerning the Company and the
Securities. Copies of the Preliminary Offering Memorandum have been, and copies
of the Offering Memorandum will be, delivered by the Company to the Initial
Purchaser pursuant to the terms of this Agreement. Any references herein to the
Preliminary Offering Memorandum and the Offering Memorandum shall be deemed to
include all amendments and supplements thereto, unless otherwise noted. The
Company hereby confirms that it has authorized the use of the Preliminary
Offering Memorandum and the Offering Memorandum in connection with the offering
and resale of the Securities by the Initial Purchaser in accordance with Section
2.
<PAGE>
2
Holders of the Securities (including the Initial Purchaser and
its direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A (the "Registration Rights Agreement"), pursuant to which the
Company will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of senior
subordinated notes of the Company (the "Exchange Securities") which are
identical in all material respects to the Securities (except that the Exchange
Securities will not contain terms with respect to transfer restrictions) and
(ii) under certain circumstances, a shelf registration statement pursuant to
Rule 415 under the Securities Act (the "Shelf Registration Statement").
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Offering Memorandum.
1. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to, and agrees with, the Initial Purchaser
on and as of the date hereof and the Closing Date (as defined in Section 3) as
set forth below in this Section 1. Any reference to persons acting on behalf of
the Company, or on behalf of any of the Company's affiliates, does not include
the Initial Purchaser, with respect to whom the Company makes no representation.
(a) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, did not, and on the
Closing Date the Offering Memorandum will not, contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided that the Company makes no representation or
warranty as to information contained in or omitted from the Preliminary
Offering Memorandum or the Offering Memorandum in reliance upon and in
conformity with written information relating to the Initial Purchaser
furnished to the Company by or on behalf of the Initial Purchaser
specifically for use therein (the "Initial Purchaser's Information"),
as specified in Section 15 hereof.
(b) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its respective date, contains all of the
information that, if requested by a prospective purchaser of the
Securities, would be required to be provided to such prospective
purchaser pursuant to Rule 144A(d)(4) under the Securities Act.
(c) Assuming the accuracy of the representations and
warranties of the Initial Purchaser contained in Section 2 and its
compliance with the agreements set forth therein, it is not necessary,
in connection with the issuance and sale of the Securities to the
Initial Purchaser and the offer, resale and delivery of the Securities
by the Initial Purchaser in the manner contemplated by this Agreement
and the Offering Memorandum, to register the Securities under the
Securities Act or to qualify the
<PAGE>
3
Indenture under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
(d) The documents incorporated by reference in the Offering
Memorandum, when they were filed with the Commission, conformed in all
material respects to the requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act") and the rules and regulations of
the Commission thereunder, and none of such documents contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading; and any further documents so filed and
incorporated by reference in the Offering Memorandum or any further
amendment or supplement thereto, when such documents are filed with the
Commission, will conform in all material respects to the requirements
of the Exchange Act and the rules and regulations of the Commission
thereunder, and will not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Virginia, with power and authority (corporate and
other) to own its properties and conduct its business as described in
the Offering Memorandum, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and
each of its subsidiaries listed on Schedule I hereto (the
"Subsidiaries") has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, or is
subject to no material liability or disability by reason of the failure
to be so qualified in any such jurisdiction.
(f) The Company has an authorized capitalization as set forth
in the Offering Memorandum under the heading "Capitalization," and all
the issued shares of capital stock of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and
conform to the description of the capital stock in the Offering
Memorandum; and all of the issued shares of capital stock of each of
the Subsidiaries have been duly and validly authorized and issued, are
fully paid and non-assessable and other than as set forth or
contemplated in the Offering Memorandum are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims.
(g) The Company has full corporate power and authority to
execute and deliver this Agreement, the Indenture, the Registration
Rights Agreement and the Securities (collectively, the "Transaction
Documents") and to perform its obligations
<PAGE>
4
hereunder and thereunder; and all corporate action required to be taken
for the due and proper authorization, execution and delivery of each of
the Transaction Documents and the consummation of the transactions
contemplated thereby have been duly and validly taken.
(h) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
agreement of the Company enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally and to general equitable
principles (whether considered in a proceeding in equity or at law) and
considerations of public policy as they relate to the enforcement of
the indemnification provisions hereof.
(i) The Registration Rights Agreement has been duly authorized
by the Company and, when duly executed and delivered in accordance with
its terms by each of the parties thereto, will constitute a valid and
legally binding agreement of the Company enforceable against the
Company in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and
to general equitable principles (whether considered in a proceeding in
equity or at law).
(j) The Indenture has been duly authorized by the Company and,
when duly executed and delivered in accordance with its terms by each
of the parties thereto, will constitute a valid and legally binding
agreement of the Company enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally and to general equitable
principles (whether considered in a proceeding in equity or at law). On
the Closing Date, the Indenture will conform in all material respects
to the requirements of the Trust Indenture Act and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder.
(k) The Securities have been duly authorized by the Company
and, when duly executed, authenticated, issued and delivered as
provided in the Indenture and paid for as provided herein, will be duly
and validly issued and outstanding and will constitute valid and
legally binding obligations of the Company entitled to the benefits of
the Indenture and enforceable against the Company in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and to general equitable
principles (whether considered in a proceeding in equity or at law).
(l) The Exchange Securities have been duly authorized by the
Company and, when duly executed, authenticated, issued and delivered as
provided in the Indenture and the Registration Rights Agreement, will
be duly and validly issued and outstanding and will constitute valid
and legally binding obligations of the Company entitled to the benefits
of the Indenture and enforceable against the Company in
<PAGE>
5
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and to
general equitable principles (whether considered in a proceeding in
equity or at law).
(m) Each Transaction Document conforms in all material
respects to the description thereof contained in the Offering
Memorandum.
(n) The issue and sale of the Securities and the Exchange
Securities by the Company and the compliance by the Company with all of
the provisions of this Agreement and the other Transaction Documents
and the consummation of the transactions contemplated herein and
therein will not conflict with or result in a breach or violation of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its
subsidiaries is subject, except for any such conflicts, breaches,
violations or defaults that would not have a Material Adverse Effect
(as defined below), nor will such action result in any violations of
the provisions of the charter or by-laws of the Company or any statute
or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries or
any of their properties, except any such violation that would not have
a Material Adverse Effect; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company of the transactions
contemplated by this Agreement and the other Transaction Documents,
except for such consents, approvals, authorizations, registrations or
qualifications (i) which shall have been obtained or made prior to the
Closing Date and as may be required to be obtained or made under the
Securities Act and applicable state securities laws, as provided in the
Registration Rights Agreement or (ii) the failure of which to be
obtained or made would not have a Material Adverse Effect.
(o) Arthur Andersen LLP ("Arthur Andersen") are independent
certified public accountants with respect to the Company and its
subsidiaries (i) as required by the Securities Act and the rules and
regulations of the Commission thereunder and (ii) within the meaning of
Rule 101 of the Code of Professional Conduct of the American Institute
of Certified Public Accountants ("AICPA") and its interpretations and
rulings thereunder. The historical financial statements (including the
related notes) contained in the Offering Memorandum comply as to form
in all material respect with the applicable accounting requirements of
the Securities Act and the related published rules and regulations;
such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods covered thereby and fairly present the financial
position of the entities purported to be covered thereby at the
respective dates indicated and the results of their operations and
their cash flows for the respective periods indicated; and the
financial information contained in the Offering Memorandum under the
headings "Summary--Summary
<PAGE>
6
Consolidated Condensed Financial Information," "Capitalization,"
"Selected Historical Consolidated Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," and the financial information contained in the Company's
Notice of Annual Meeting of Stockholders dated July 28, 1997,
incorporated by reference in the Offering Memorandum, under the heading
"Executive Compensation" are derived from the accounting records of the
Company and its subsidiaries and fairly present the information
purported to be shown thereby. The pro forma financial information
contained in the Offering Memorandum has been prepared on a basis
consistent with the historical financial statements contained or
incorporated in the Offering Memorandum (except for the pro forma
adjustments specified therein), includes all material adjustments to
the historical financial information required by Rule 11-02 of
Regulation S-X under the Securities Act and the Exchange Act to reflect
the transactions described in such pro forma financial information,
gives effect to assumptions made on a reasonable basis and fairly
presents the transactions described therein. The other historical
financial and statistical information and data included in the Offering
Memorandum are, in all material respects, fairly presented.
(p) Other than as set forth or contemplated in the Offering
Memorandum, there are no legal or governmental proceedings pending to
which the Company or any of its Subsidiaries is a party or of which any
property of the Company or any of its Subsidiaries is the subject
which, if determined adversely to the Company or any of its
Subsidiaries, would individually or in the aggregate would have a
material adverse effect on the condition (financial or otherwise),
results of operations, business or prospects of the Company and its
subsidiaries taken as a whole ("Material Adverse Effect"); and, to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(q) No injunction, restraining order or order of any nature by
any federal or state court of competent jurisdiction has been issued
with respect to the Company or any of its Subsidiaries which would
prevent or suspend the issuance or sale of the Securities or the use of
the Preliminary Offering Memorandum or the Offering Memorandum in any
jurisdiction; no action, suit or proceeding is pending against or, to
the best knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries before any court or arbitrator or
any governmental agency, body or official, domestic or foreign, which
could reasonably be expected to interfere with or adversely affect the
issuance of the Securities or in any manner draw into question the
validity or enforceability of any of the Transaction Documents or any
action taken or to be taken pursuant thereto; and the Company has
complied with any and all known requests, or any and all requests that
should have been reasonably known, by any securities authority in any
jurisdiction for additional information to be included in the
Preliminary Offering Memorandum and the Offering Memorandum.
(r) Neither the Company nor any of its Subsidiaries is (i) in
violation of its charter or by-laws, (ii) in default, and no event has
occurred which, with notice or lapse of time or both, would constitute
such a default, in the due performance or
<PAGE>
7
observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it is a party or by which it is bound or to
which any of its property or assets is subject or (iii) in violation in
any respect of any law, ordinance, governmental rule, regulation or
court decree to which it or its property or assets may be subject,
which default under clause (ii) or violation under clause (iii) could
reasonably be expected to have a Material Adverse Effect.
(s) The Company and each of its Subsidiaries possess all
material licenses, certificates, authorizations and permits issued by,
and have made all declarations and filings with, the appropriate
federal, state or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of their respective properties
or the conduct of their respective businesses as described in the
Offering Memorandum, except where the failure to possess or make the
same would not have, singularly or in the aggregate, a Material Adverse
Effect, and neither the Company nor any of its Subsidiaries has
received notification of any revocation or modification of any such
license, certificate, authorization or permit or has any reason to
believe that any such license, certificate, authorization or permit
will not be renewed in the ordinary course.
(t) The Company and each of its Subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except such as
are described in the Offering Memorandum or such as do not materially
affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
Subsidiaries; and any real property and buildings held under lease by
the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not materially interfere with the use made and proposed
to be made of such property and buildings by the Company and its
Subsidiaries.
(u) No material labor disturbance by or dispute with the
employees of the Company or any of its Subsidiaries exists or, to the
best knowledge of the Company, is contemplated or threatened.
(v) Other than as set forth in the Offering Memorandum, there
has been no storage, generation, transportation, handling, treatment,
disposal, discharge, emission or other release of any kind of toxic or
other wastes or other hazardous substances by, due to or caused by the
Company or any of its Subsidiaries (or, to the best knowledge of the
Company, any other entity (including any predecessor) for whose acts or
omissions the Company or any of its Subsidiaries is or could reasonably
be expected to be liable) upon any of the property now or previously
owned or leased by the Company or any of its Subsidiaries, or upon any
other property (i) in violation of any statute or any ordinance, rule,
regulation, order, judgment, decree or permit or (ii) which would,
under any statute or any ordinance, rule (including rule of common
law), regulation, order, judgment, decree or permit, give rise to any
liability, except in the case of both clauses (i) and (ii), for any
violation or liability which could not
<PAGE>
8
reasonably be expected to have, singularly or in the aggregate with all
such violations and liabilities, a Material Adverse Effect; and there
has been no disposal, discharge, emission or other release of any kind
onto such property or into the environment surrounding such property of
any toxic or other wastes or other hazardous substances with respect to
which the Company has any knowledge, except for any such disposal,
discharge, emission or other release of any kind which could not
reasonably be expected to have, singularly or in the aggregate with all
such discharges and other releases, a Material Adverse Effect.
(w) None of the proceeds of the sale of the Securities will be
used, directly or indirectly, for the purpose of purchasing or carrying
any margin security, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the
Securities to be considered a "purpose credit" within the meanings of
Regulation T, U or X of the Board of Governors of the Federal Reserve
System.
(x) Other than this Agreement, neither the Company nor any of
its Subsidiaries is a party to any contract, agreement or understanding
with any person that would give rise to a valid claim against the
Company or the Initial Purchaser for a brokerage commission, finder's
fee or like payment in connection with the offering and sale of the
Securities.
(y) None of the Company, any of its affiliates or any person
acting on its or their behalf has engaged or will engage in any
directed selling efforts (as such term is defined in Rule 902(b) of
Regulation S under the Securities Act ("Regulation S")) with respect to
the Securities, and all such persons have complied and will comply with
the offering restrictions requirement of Regulation S to the extent
applicable.
(z) Neither the Company nor any of its affiliates has,
directly or through any agent, sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any security (as such
term is defined in the Securities Act), which is or will be integrated
with the sale of the Securities in a manner that would require
registration of the Securities under the Securities Act.
(aa) None of the Company or any of its affiliates or any other
person acting on its or their behalf has engaged, in connection with
the offering of the Securities, in any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the
Securities Act.
(bb) When the Securities are delivered pursuant to this
Agreement, none of the Securities will be of the same class (within the
meaning of Rule 144A under the Securities Act ("Rule 144A")) as
securities of the Company that are listed on a national securities
exchange registered under Section 6 of the Exchange Act, or quoted in a
U.S. automated inter-dealer quotation system.
<PAGE>
9
(cc) The Company has not taken and will not take, directly or
indirectly, any action prohibited by Regulation M under the Exchange
Act in connection with the offering of the Securities (other than
actions taken by the Initial Purchaser, as to which the Company makes
no representation).
(dd) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Preliminary Offering Memorandum or the Offering
Memorandum has been made or reaffirmed without a reasonable basis or
has been disclosed other than in good faith.
(ee) Since the date as of which information is given in the
Offering Memorandum, except as otherwise stated or contemplated
therein, there has been no material adverse change or any development
involving a prospective material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs,
management or business prospects of the Company, whether or not arising
in the ordinary course of business, the Company has not incurred any
material liability or obligation, direct or contingent, other than in
the ordinary course of business and there has not been any material
change in the capital stock or long-term debt of the Company, or any
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(ff) No holder of securities of the Company or any of its
Subsidiaries will be entitled to have such securities registered under
the registration statements required to be filed by the Company
pursuant to the Registration Rights Agreement, other than as expressly
permitted thereby.
2. Purchase and Resale of the Securities. (a) On the basis of
the representations, warranties and agreements contained herein, and subject to
the terms and conditions set forth herein, the Company agrees to issue and sell
to the Initial Purchaser, and the Initial Purchaser agrees to purchase from the
Company, $200,000,000 aggregate principal amount of Securities at a purchase
price equal to 97.411% of the principal amount thereof. The Company shall not be
obligated to deliver any of the Securities except upon payment for all of the
Securities to be purchased as provided herein.
(b) The Initial Purchaser has advised the Company that it
proposes to offer the Securities for resale upon the terms and subject to the
conditions set forth herein and in the Offering Memorandum. The Initial
Purchaser represents and warrants to, and agrees with, the Company that (i) it
is purchasing the Securities pursuant to a private sale exempt from registration
under the Securities Act, (ii) it has not solicited offers for, or offered or
sold, and will not solicit offers for, or offer to sell, the Securities by means
of any form of general solicitation or general advertising within the meaning of
Rule 502(c) of Regulation D under the Securities Act ("Regulation D") or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iii) it has solicited and will solicit offers for the
Securities only from, and has offered or sold and will offer, sell or deliver
the Securities, at any time prior to the completion of its distribution of the
Securities, only (A) within the United States to persons whom it reasonably
believes to be qualified institutional
<PAGE>
10
buyers ("Qualified Institutional Buyers") as defined in Rule 144A, or if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
it that each such account is a Qualified Institutional Buyer to whom notice has
been given that such sale or delivery is being made in reliance on Rule 144A and
in each case, in transactions in accordance with Rule 144A and (B) outside the
United States to persons other than U.S. persons in reliance on Regulation S.
(c) In connection with the offer and sale of Securities in
reliance on Regulation S, the Initial Purchaser represents, warrants and agrees
that:
(i) the Securities have not been registered under the
Securities Act and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons except pursuant
to an exemption from, or in transactions not subject to, the
registration requirements of the Securities Act;
(ii) the Initial Purchaser has offered and sold the
Securities, and will offer and sell the Securities, (A) as part of its
distribution at any time and (B) otherwise until 40 days after the
later of the commencement of the offering of the Securities and the
Closing Date, only in accordance with Regulation S or Rule 144A or any
other available exemption from registration under the Securities Act;
(iii) neither the Initial Purchaser nor any of its affiliates
or any other person acting on its or their behalf has engaged or will
engage in any directed selling efforts as such term is defined in
Regulation S with respect to the Securities, and all such persons have
complied and will comply with the offering restrictions requirement of
Regulation S;
(iv) at or prior to the confirmation of sale of any Securities
sold in reliance on Regulation S, it will have sent to each
distributor, dealer or other person receiving a selling concession, fee
or other remuneration that purchases Securities from it during the
restricted period a confirmation or notice to substantially the
following effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons (i) as
part of their distribution at any time or (ii) otherwise until
40 days after the later of the commencement of the offering of
the Securities and the date of original issuance of the
Securities, except in accordance with Regulation S or Rule
144A or any other available exemption from registration under
the Securities Act. Terms used above have the meanings given
to them by Regulation S."; and
(v) it has not and will not enter into any contractual
arrangement with any distributor with respect to the distribution of
the Securities, except with its affiliates or with the prior written
consent of the Company.
<PAGE>
11
Terms used in this Section 2(c) have the meanings given to them by Regulation S.
(d) The Initial Purchaser represents, warrants and agrees that
(i) it has not offered or sold and prior to the date six months after the
Closing Date will not offer or sell any Securities to persons in the United
Kingdom except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 and the Public Offers of Securities Regulations 1995 with
respect to anything done by it in relation to the Securities in, from or
otherwise involving the United Kingdom; and (iii) it has only issued or passed
on and will only issue or pass on in the United Kingdom any document received by
it in connection with the issue of the Securities to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.
(e) The Initial Purchaser agrees that, prior to or
simultaneously with the confirmation of sale by it to any purchaser of any of
the Securities purchased by the Initial Purchaser from the Company pursuant
hereto, the Initial Purchaser shall furnish to that purchaser a copy of the
Offering Memorandum (and any amendment or supplement thereto that the Company
shall have furnished to the Initial Purchaser prior to the date of such
confirmation of sale). In addition to the foregoing, the Initial Purchaser
acknowledges and agrees that the Company and, for purposes of the opinions to be
delivered to the Initial Purchaser pursuant to Sections 5(c) and (d), counsel
for the Company and for the Initial Purchaser, respectively, may rely upon the
accuracy of the representations and warranties of the Initial Purchaser and its
compliance with its agreements contained in this Section 2, and the Initial
Purchaser hereby consents to such reliance.
(f) The Company acknowledges and agrees that the Initial
Purchaser may sell Securities to any of its affiliates and that any such
affiliate may sell Securities purchased by it to the Initial Purchaser.
3. Delivery of and Payment for the Securities. (a) Delivery of
and payment for the Securities shall be made at the offices of McGuire, Woods,
Battle & Boothe LLP, Richmond, Virginia, or at such other place as shall be
agreed upon by the Initial Purchaser and the Company, at 10:00 A.M., Richmond
time, on February 9, 1998, or at such other time or date, not later than seven
full business days thereafter, as shall be agreed upon by the Initial Purchaser
and the Company (such date and time of payment and delivery being referred to
herein as the "Closing Date").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior to
the Closing Date or by such other means as the parties hereto shall agree prior
to the Closing Date against delivery to the Initial Purchaser of the
certificate(s) evidencing the Securities. Time shall be of the essence, and
<PAGE>
12
delivery by the Company at the time and place specified pursuant to this
Agreement is a further condition of the obligations of the Initial Purchaser
hereunder. Upon delivery, the Securities shall be in global form, registered in
such names and in such denominations as the Initial Purchaser shall have
requested in writing not less than two full business days prior to the Closing
Date. The Company agrees to make one or more global certificates evidencing the
Securities available for inspection by the Initial Purchaser in Richmond,
Virginia at least 24 hours prior to the Closing Date.
4. Further Agreements of the Company. The Company agrees with
the Initial Purchaser:
(a) at any time prior to the completion of the distribution by
the Initial Purchaser of the Securities, to advise the Initial
Purchaser promptly and, if requested, confirm such advice in writing,
of the happening of any event which makes any statement of a material
fact made in the Offering Memorandum untrue or which requires the
making of any additions to or changes in the Offering Memorandum (as
amended or supplemented from time to time) in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; to advise the Initial Purchaser promptly of
any order preventing or suspending the use of the Preliminary Offering
Memorandum or the Offering Memorandum, of any suspension of the
qualification of the Securities for offering or sale in any
jurisdiction and of the initiation or threatening of any proceeding for
any such purpose; and to use its best efforts to prevent the issuance
of any such order preventing or suspending the use of the Preliminary
Offering Memorandum or the Offering Memorandum or suspending any such
qualification and, if any such suspension is issued, to obtain the
lifting thereof at the earliest possible time;
(b) at any time prior to the completion of the distribution by
the Initial Purchaser of the Securities, to furnish promptly to the
Initial Purchaser and counsel for the Initial Purchaser, without
charge, as many copies of the Preliminary Offering Memorandum and the
Offering Memorandum (and any amendments or supplements thereto) as may
be reasonably requested;
(c) prior to making any amendment or supplement to the
Offering Memorandum, to furnish a copy thereof to the Initial Purchaser
and counsel for the Initial Purchaser and not to effect any such
amendment or supplement to which the Initial Purchaser shall reasonably
object by notice to the Company after a reasonable period to review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchaser, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of counsel
for the Initial Purchaser or counsel for the Company, to amend or
supplement the Offering Memorandum in order that the Offering
Memorandum will not include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is
delivered to a purchaser, not misleading,
<PAGE>
13
or if it is necessary to amend or supplement the Offering Memorandum to
comply with applicable law, to promptly prepare such amendment or
supplement as may be necessary to correct such untrue statement or
omission or so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law;
(e) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon request
of such holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to and in compliance
with Section 13 or 15(d) of the Exchange Act (the foregoing agreement
being for the benefit of the holders from time to time of the
Securities and prospective purchasers of the Securities designated by
such holders);
(f) for so long as the Securities are outstanding, to furnish
to the Initial Purchaser copies of any annual reports, quarterly
reports and current reports filed by the Company with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to the Trustee or to
the holders of the Securities pursuant to the Indenture or the Exchange
Act or any rule or regulation of the Commission thereunder;
(g) to promptly take from time to time such actions as the
Initial Purchaser may reasonably request to qualify the Securities for
offering and sale by the Initial Purchaser under the securities or Blue
Sky laws of such jurisdictions as the Initial Purchaser may designate
and to continue such qualifications in effect for so long as required
for the resale of the Securities; and to arrange for the determination
of the eligibility for investment of the Securities under the laws of
such jurisdictions as the Initial Purchaser may reasonably request;
provided that neither the Company nor any of its subsidiaries shall be
obligated to qualify as a foreign corporation in any jurisdiction in
which it is not so qualified or to file a general consent to service of
process in any jurisdiction or subject itself to taxation in excess of
a nominal dollar amount in any such jurisdiction where it is not then
so subject;
(h) to assist the Initial Purchaser in arranging for the
Securities to be designated Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") Market securities in accordance
with the rules and regulations adopted by the National Association of
Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL
Market and for the Securities to be eligible for clearance and
settlement through The Depository Trust Company ("DTC");
(i) not to, and to cause its affiliates not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of
any security (as such term is defined in the Securities Act) which
could be integrated with the sale of the Securities in a manner which
would require registration of the Securities under the Securities Act;
<PAGE>
14
(j) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause its affiliates not to, and not to
authorize or knowingly permit any person acting on their behalf to,
solicit any offer to buy or offer to sell the Securities by means of
any form of general solicitation or general advertising within the
meaning of Regulation D or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act; and not to
offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, any securities under circumstances where such offer, sale,
contract or disposition would cause the exemption afforded by Section
4(2) of the Securities Act to cease to be applicable to the offering
and sale of the Securities as contemplated by this Agreement and the
Offering Memorandum;
(k) for a period of 45 days from the date of the Offering
Memorandum, not to offer for sale, sell, contract to sell or otherwise
dispose of, directly or indirectly, or file a registration statement
for, or announce any offer, sale, contract for sale of or other
disposition of any debt securities with a maturity greater than one
year issued or guaranteed by the Company or any of its Subsidiaries
(other than the Securities, the Exchange Securities or under the
Revolving Credit Facilities (as defined in the Offering Memorandum))
without the prior written consent of the Initial Purchaser;
(l) during the period from the Closing Date until two years
after the Closing Date, without the prior written consent of the
Initial Purchaser, not to, and not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the
Securities that have been reacquired by them, except for Securities
purchased by the Company or any of its affiliates and resold in a
transaction registered under the Securities Act;
(m) not to, for so long as the Securities are outstanding, be
or become, or be or become owned by, an open-end investment Company,
unit investment trust or face- amount certificate Company that is or is
required to be registered under Section 8 of the Investment Company
Act, and not to be or become, or be or become owned by, a closed-end
investment Company required to be registered, but not registered
thereunder;
(n) in connection with the offering of the Securities, until
the Initial Purchaser shall have notified the Company of the completion
of the resale of the Securities, not to, and to cause its affiliated
purchasers (as defined in Regulation M under the Exchange Act) not to,
either alone or with one or more other persons, bid for or purchase,
for any account in which it or any of its affiliated purchasers has a
beneficial interest, any Securities, or attempt to induce any person to
purchase any Securities; and not to, and to cause its affiliated
purchasers not to, make bids or purchase for the purpose of creating
actual, or apparent active trading in or of raising the price of the
Securities;
<PAGE>
15
(o) in connection with the offering of the Securities, to make
its officers, employees, independent accountants and legal counsel
reasonably available upon request by the Initial Purchaser;
(p) to do and perform all things required to be done and
performed by it under this Agreement that are within its control prior
to or after the Closing Date, and to use its reasonable best efforts to
satisfy all conditions precedent on its part to the delivery of the
Securities;
(q) to not take any action prior to the execution and delivery
of the Indenture which, if taken after such execution and delivery,
would have violated any of the covenants contained in the Indenture;
(r) to not take any action prior to the Closing Date which
would in the Company's reasonable judgment require the Offering
Memorandum to be amended or supplemented pursuant to Section 4(d);
(s) prior to the Closing Date, not to issue any press release
or other public communication directly or indirectly or hold any press
conference with respect to the Company, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except
for routine oral marketing communications in the ordinary course of
business and consistent with the past practices of the Company and of
which the Initial Purchaser is notified), without the prior written
consent of the Initial Purchaser, which consent may not be unreasonably
withheld, unless in the judgment of the Company and its counsel, and
after notification to the Initial Purchaser, such press release or
communication is required by law; and
(t) to apply the net proceeds from the sale of the Securities
as set forth in the Offering Memorandum under the heading "Use of
Proceeds".
5. Conditions of Initial Purchaser's Obligations. The
obligations of the Initial Purchaser hereunder are subject to the accuracy, on
and as of the date hereof and the Closing Date, of the representations and
warranties of the Company contained herein, to the accuracy of the statements of
the Company and its officers made in any certificates delivered pursuant hereto,
to the performance by the Company of its obligations hereunder, and to each of
the following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchaser as promptly as practicable on or following the date of this
Agreement or at such other date and time as to which the Initial
Purchaser may agree; and no stop order suspending the sale of the
Securities in any jurisdiction shall have been issued and no
proceedings for that purpose shall have been commenced or shall be
pending or threatened.
<PAGE>
16
(b) All requisite corporate proceedings and other legal
matters incident to the authorization, form and validity of each of the
Transaction Documents and the Offering Memorandum, and all other legal
matters relating to the Transaction Documents and the transactions
contemplated thereby, shall be satisfactory in all material respects to
the Initial Purchaser, and the Company shall have furnished to the
Initial Purchaser all documents and information that it or its counsel
may reasonably request to enable them to pass upon such matters.
(c) McGuire, Woods, Battle & Boothe LLP shall have furnished
to the Initial Purchaser their written opinion, as counsel to the
Company, addressed to the Initial Purchaser and dated the Closing Date,
in form and substance reasonably satisfactory to the Initial Purchaser,
substantially to the effect set forth in Annex B hereto.
(d) The Initial Purchaser shall have received from Simpson
Thacher & Bartlett, counsel for the Initial Purchaser, such opinion or
opinions, dated the Closing Date, with respect to such matters as the
Initial Purchaser may reasonably require, and the Company shall have
furnished to such counsel such documents and information as they
reasonably request for the purpose of enabling them to pass upon such
matters.
(e) The Company shall have furnished to the Initial Purchaser
a letter (the "Initial Letter") of Arthur Andersen, addressed to the
Initial Purchaser and dated the date hereof, in form and substance
reasonably satisfactory in all material respects to the Initial
Purchaser and counsel for the Initial Purchaser.
(f) The Company shall have furnished to the Initial Purchaser
a letter (the "Bring-Down Letter") of Arthur Andersen, addressed to the
Initial Purchaser and dated the Closing Date (i) confirming that they
are independent public accountants with respect to the Company and its
subsidiaries within the meaning of Rule 101 of the Code of Professional
Conduct of the AICPA and its interpretations and rulings thereunder,
(ii) stating, as of the date of the Bring-Down Letter (or, with respect
to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Offering
Memorandum, as of a date not more than three business days prior to the
date of the Bring-Down Letter), that the conclusions and findings of
such accountants with respect to the financial information and other
matters covered by the Initial Letter are accurate and (iii) confirming
in all material respects the conclusions and findings set forth in the
Initial Letter.
(g) The Company shall have furnished to the Initial Purchaser
a certificate, dated the Closing Date, of its Vice President, Secretary
and Treasurer, and its Vice President and Controller stating that (A)
such officers have carefully examined the Offering Memorandum, (B) in
their opinion, the Offering Memorandum, as of its date, did not include
any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and since the date of the
Offering Memorandum, no event has occurred which should
<PAGE>
17
have been set forth in a supplement or amendment to the Offering
Memorandum so that the Offering Memorandum (as so amended or
supplemented) would not include any untrue statement of a material fact
and would not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading
and (C) as of the Closing Date, the representations and warranties of
the Company in this Agreement are true and correct in all material
respects, the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder on or
prior to the Closing Date, and subsequent to the date of the most
recent financial statements contained in the Offering Memorandum, there
has been no material adverse change in the financial position or
results of operation of the Company or any of its subsidiaries, or any
change, or any development including a prospective change, in or
affecting the condition (financial or otherwise), results of
operations, business or prospects of the Company and its subsidiaries
taken as a whole, except as set forth in the Offering Memorandum.
(h) The Initial Purchaser shall have received a counterpart of
the Registration Rights Agreement which shall have been executed and
delivered by a duly authorized officer of the Company.
(i) The Indenture shall have been duly executed and delivered
by the Company and the Trustee, and the Securities shall have been duly
executed and delivered by the Company and duly authenticated by the
Trustee.
(j) The Securities shall have been approved by the NASD for
trading in the PORTAL Market.
(k) If any event shall have occurred that requires the Company
under Section 4(d) to prepare an amendment or supplement to the
Offering Memorandum, such amendment or supplement shall have been
prepared, the Initial Purchaser shall have been given a reasonable
opportunity to comment thereon, and copies thereof shall have been
delivered to the Initial Purchaser reasonably in advance of the Closing
Date.
(l) There shall not have occurred any invalidation of Rule
144A or Regulation S under the Securities Act by any court or any
withdrawal or proposed withdrawal of any rule or regulation under the
Securities Act or the Exchange Act by the Commission or any amendment
or proposed amendment thereof by the Commission which in the reasonable
judgment of the Initial Purchaser would materially impair the ability
of the Initial Purchaser to purchase, hold or effect resales of the
Securities contemplated hereby.
(m) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the
Offering Memorandum (exclusive of any amendment or supplement thereto),
there shall not have been any change in the capital stock or long-term
debt or any change, or any development involving a prospective change,
in or affecting the condition (financial or otherwise),
<PAGE>
18
results of operations, business or prospects of the Company and its
subsidiaries taken as a whole, the effect of which, in any such case
described above, is, in the reasonable judgment of the Initial
Purchaser, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Securities on
the terms and in the manner contemplated by this Agreement and the
Offering Memorandum (exclusive of any amendment or supplement thereto).
(n) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Securities; and no injunction,
restraining order or order of any other nature by any federal or state
court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance or sale of the
Securities.
(o) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the
Securities or any of the Company's other debt securities or preferred
stock by any "nationally recognized statistical rating organization",
as such term is defined by the Commission for purposes of Rule
436(g)(2) of the rules and regulations of the Commission under the
Securities Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its
rating of the Securities or any of the Company's other debt securities
or preferred stock.
(p) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange or the over-the-counter market shall have been suspended or
limited, or minimum prices shall have been established on any such
exchange or market by the Commission, by any such exchange or by any
other regulatory body or governmental authority having jurisdiction, or
trading in any securities of the Company on any exchange or in the
over-the-counter market shall have been suspended or (ii) any
moratorium on commercial banking activities shall have been declared by
federal or New York state authorities or (iii) an outbreak or
escalation of hostilities or a declaration by the United States of a
national emergency or war or (iv) a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) the effect of which, in the case of this clause (iv),
is, in the reasonable judgment of the Initial Purchaser, so material
and adverse as to make it impracticable or inadvisable to proceed with
the sale or the delivery of the Securities on the terms and in the
manner contemplated by this Agreement and in the Offering Memorandum
(exclusive of any amendment or supplement thereto).
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to Simpson Thacher & Bartlett.
<PAGE>
19
6. Termination. The obligations of the Initial Purchaser
hereunder may be terminated by the Initial Purchaser, in its sole absolute
discretion, by notice given to and received by the Company prior to delivery of
and payment for the Securities if, prior to that time, any of the events
described in Section 5(l), (m), (n), (o) or (p) shall have occurred and be
continuing.
7. Reimbursement of Initial Purchaser's Expenses. If (a) this
Agreement shall have been terminated pursuant to Section 6, (b) the Company
shall fail to tender the Securities for delivery to the Initial Purchaser for
any reason other than by reason of a default by the Initial Purchaser or (c) the
Initial Purchaser shall decline to purchase the Securities for any reason
permitted under this Agreement, the Company shall reimburse the Initial
Purchaser for such out-of-pocket expenses (including reasonable fees and
disbursements of counsel) as shall have been reasonably incurred by the Initial
Purchaser in connection with this Agreement and the proposed purchase and resale
of the Securities.
8. Indemnification. (a) The Company shall indemnify and hold
harmless the Initial Purchaser, its affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any, who
controls the Initial Purchaser within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section 8(a) and
Section 9 as an Initial Purchaser), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
without limitation, any loss, claim, damage, liability or action relating to
purchases and sales of the Securities), to which the Initial Purchaser may
become subject, whether commenced or threatened, under the Securities Act, the
Exchange Act, any other federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum or
the Offering Memorandum or in any amendment or supplement thereto or in any
information provided by the Company pursuant to Section 4(e) or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, and shall
reimburse the Initial Purchaser promptly upon demand for any legal or other
expenses reasonably incurred by it in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with any Initial Purchaser's Information; and
provided, further, that with respect to any such untrue statement in or omission
from the Preliminary Offering Memorandum, the indemnity agreement contained in
this Section 8(a) shall not inure to the benefit of the Initial Purchaser to the
extent that the sale to the person asserting any such loss, claim, damage,
liability or action was an initial resale by the Initial Purchaser and any such
loss, claim, damage, liability or action of or with respect to it results from
the fact that both (A) a copy of the Offering Memorandum was not sent or given
to such person at or prior to the written confirmation of the sale of such
Securities to such person and (B) the untrue statement in or omission from
<PAGE>
20
the Preliminary Offering Memorandum was corrected in the Offering Memorandum
unless, in either case, such failure to deliver the Offering Memorandum was a
result of non-compliance by the Company with Section 4(b).
(b) The Initial Purchaser shall indemnify and hold harmless
the Company, its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 8(b) and Section 9 as the Company),
from and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Company may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Preliminary Offering Memorandum or the Offering Memorandum
or in any amendment or supplement thereto or (ii) the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with any Initial
Purchaser's Information, and shall reimburse the Company promptly upon demand
for any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 8(a) or 8(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 8 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 8. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
<PAGE>
21
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to no more than one local counsel in any jurisdiction) at any one time
for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 8(a) and 8(b), shall
use all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld), effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceedings.
The obligations of the Company and the Initial Purchaser in
this Section 8 and in Section 9 are in addition to any other liability that the
Company or the Initial Purchaser, as the case may be, may otherwise have,
including in respect of any breaches of representations, warranties and
agreements made herein by any such party.
9. Contribution. If the indemnification provided for in
Section 8 is unavailable or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Initial Purchaser on the other from the offering of the Securities or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Initial Purchaser on the other with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits
<PAGE>
22
received by the Company on the one hand and the Initial Purchaser on the other
with respect to such offering shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Securities purchased under this
Agreement (before deducting expenses) received by or on behalf of the Company,
on the one hand, and the total discounts and commissions received by the Initial
Purchaser with respect to the Securities purchased under this Agreement, on the
other, bear to the total gross proceeds from the sale of the Securities under
this Agreement, in each case as set forth in the table on the cover page of the
Offering Memorandum. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to the
Company or information supplied by the Company on the one hand or to any Initial
Purchaser's Information on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omissions. The Company and the Initial Purchaser agree
that it would not be just and equitable if contributions pursuant to this
Section 9 were to be determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section 9 shall be deemed to include, for purposes of this Section
9, any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending or preparing to defend any such
action or claim. Notwithstanding the provisions of this Section 9, the Initial
Purchaser shall not be required to contribute any amount in excess of the amount
by which the total discounts and commissions received by the Initial Purchaser
with respect to the Securities purchased by it under this Agreement exceeds the
amount of any damages which it has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
10. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchaser, the
Company and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except as
provided in Sections 8 and 9 with respect to affiliates, officers, directors,
employees, representatives, agents and controlling persons of the Company and
the Initial Purchaser and in Section 4(e) with respect to holders and
prospective purchasers of the Securities. Nothing in this Agreement is intended
or shall be construed to give any person, other than the persons referred to in
this Section 10, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.
11. Expenses. The Company agrees with the Initial Purchaser to
pay (a) the costs incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that connection; (b) the
costs incident to the preparation, printing and distribution of the Preliminary
Offering Memorandum, the Offering Memorandum and any amendments or supplements
thereto; (c) the costs of reproducing and distributing each of the Transaction
Documents; (d) the costs incident to the preparation, printing and delivery of
the certificates evidencing the Securities, including stamp duties and
<PAGE>
23
transfer taxes, if any, payable upon issuance of the Securities; (e) the fees
and expenses of the Company's counsel and independent accountants; (f) the
reasonable fees and expenses of qualifying the Securities under the securities
laws of the several jurisdictions as provided in Section 4(g) and of preparing,
printing and distributing Blue Sky Memoranda (including related fees and
expenses of counsel for the Initial Purchaser); (g) any fees charged by rating
agencies for rating the Securities; (h) the fees and expenses of the Trustee and
any paying agent (including related fees and expenses of any counsel to such
parties); (i) all expenses and application fees incurred in connection with the
application for the inclusion of the Securities on the PORTAL Market and the
approval of the Securities for book-entry transfer by DTC; and (j) all other
costs and expenses incident to the performance of the obligations of the Company
under this Agreement which are not otherwise specifically provided for in this
Section 11; provided, however, that except as provided in this Section 11 and
Section 7, the Initial Purchaser shall pay its own costs and expenses, including
the fees, disbursements and expenses of its counsel, its road-show costs and any
transfer taxes on the Securities that it may sell.
12. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company and the
Initial Purchaser contained in this Agreement or made by or on behalf of the
Company or the Initial Purchaser pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment for the
Securities and shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement or any investigation made by or on
behalf of any of them or any of their respective affiliates, officers,
directors, employees, representatives, agents or controlling persons.
13. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchaser, shall be delivered or sent by
mail or telecopy transmission to Chase Securities Inc., 270 Park
Avenue, New York, New York 10017, Attention: Mr. Gerry Murray
(telecopier no.: (212) 270-0994); or
(b) if to the Company, shall be delivered or sent by mail or
telecopy transmission to the address of the Company set forth in the
Offering Memorandum, Attention: Mr. Aaron D. Trub, Vice President,
Secretary and Treasurer (telecopier no.: (757) 365-3017), with a copy
to Robert L. Burrus, Jr., Esq., McGuire, Woods, Battle & Boothe LLP
(telecopier no.: (804) 775-1061);
provided that any notice to the Initial Purchaser pursuant to Section 8(c) shall
also be delivered or sent by mail to the Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made by the Initial Purchaser.
14. Definition of Terms. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange, Inc.
and commercial
<PAGE>
24
banks in New York, New York and Richmond, Virginia are open for trading, (b) the
term "subsidiary" has the meaning set forth in Rule 405 under the Securities Act
and (c) except where otherwise expressly provided, the term "affiliate" has the
meaning set forth in Rule 405 under the Securities Act.
15. Initial Purchaser's Information. The parties hereto
acknowledge and agree that, for all purposes of this Agreement, the Initial
Purchaser's Information consists solely of the following information in the
Preliminary Offering Memorandum and the Offering Memorandum: (i) the last
paragraph on the front cover page concerning the terms of the offering by the
Initial Purchaser; (ii) the legend on page 3 concerning over-allotment and
trading activities by the Initial Purchaser; and (iii) the statements concerning
the Initial Purchaser contained in the third, fifth, seventh, ninth, twelfth and
thirteenth paragraphs, and the second sentence of the fourth paragraph under the
heading "Plan of Distribution".
16. Governing Law. This Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New York.
17. Counterparts. This Agreement may be executed in one or
more counterparts (which may include counterparts delivered by telecopier) and,
if executed in more than one counterpart, the executed agreement, counterparts
shall each be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
18. Amendments. No amendment or waiver of any provision of
this Agreement, nor any consent or approval to any departure therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto (it being understood that the successful delivery of and payment
for the Securities shall constitute an effective waiver of any outstanding
pre-closing condition contained in Section 5 hereof, known to the Initial
Purchaser on the Closing Date).
19. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the Initial
Purchaser in accordance with its terms.
Very truly yours,
SMITHFIELD FOODS, INC.
By /s/ C. Larry Pope
------------------------
Name: C. Larry Pope
Title: Vice President &
Controller
Accepted:
CHASE SECURITIES INC.
By /s/ Gerard J. Murray
---------------------------
Authorized Signatory
Address for notices pursuant to Section 8(c):
1 Chase Plaza, 25th floor
New York, New York 10081
Attention: Legal Department
<PAGE>
SCHEDULE I
SUBSIDIARIES OF THE COMPANY
The Smithfield Packing Company, Incorporated
John Morrell & Co.
Gwaltney of Smithfield, Ltd.
Patrick Cudahy Incorporated
Lykes Meat Group, Inc.
Brown's of Carolina, Inc.
<PAGE>
ANNEX A
[Form of Exchange and Registration Rights Agreement]
<PAGE>
ANNEX B
[Form of Opinion of Counsel for the Company]
McGuire, Woods, Battle & Boothe LLP shall have furnished to
the Initial Purchaser their written opinion, as counsel to the Company,
addressed to the Initial Purchaser and dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchaser, substantially to the
effect set forth below:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
Commonwealth of Virginia, is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction in which
its ownership or lease of property or the conduct of its business
requires such qualification except to the extent that the failure so to
qualify or be in good standing would not have a material adverse effect
on the Company and its subsidiaries taken as a whole, and has all
corporate power and authority necessary to own or hold its properties
and to conduct its businesses substantially as described in the
Offering Memorandum;
(ii) the Company has an authorized capitalization as set
forth in the Offering Memorandum, and all of the outstanding shares of
capital stock of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable; the capital stock of the
Company conforms in all material respects to the description thereof
contained in the Offering Memorandum and the shareholders of the
Company have no preemptive rights;
(iii) each of the Subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation; has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, except to the extent that the failure so to qualify or
be in good standing would not have a material adverse effect on the
Company and its subsidiaries taken as a whole; and all of the
outstanding shares of capital stock of each of the Subsidiaries have
been duly and validly authorized and issued, are fully paid and
non-assessable, and (except for the shares owned by Ronald G. Brown and
comprising 14% of the oustanding common stock of Brown's of Carolina,
Inc.) are owned directly or indirectly by the Company, free and clear
of all perfected liens, encumbrances, equities or claims and to such
counsel's knowledge any other liens, encumbrances, equities or claims;
(iv) the Purchase Agreement has been duly authorized,
executed and delivered by the Company;
(v) the Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and constitutes a
valid and legally binding agreement of the Company enforceable against
the Company in accordance with its terms, subject
<PAGE>
2
to bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and to general equitable principles (whether
considered in a proceeding in equity or at law); provided, however,
that such counsel does not opine as to the enforceability against the
Company of any rights to indemnification or contribution provided for
therein;
(vi) the Indenture has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery thereof by the Trustee, constitutes a valid and legally
binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and to
general equitable principles (whether considered in a proceeding in
equity or at law);
(vii) the Securities have been duly authorized, executed and
issued by the Company and, assuming due authentication thereof by the
Trustee and upon payment and delivery in accordance with the Purchase
Agreement, will constitute valid and legally binding obligations of the
Company entitled to the benefits of the Indenture and enforceable
against the Company in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and to general equitable principles (whether
considered in a proceeding in equity or at law);
(viii) the Exchange Securities have been duly authorized by
the Company and, when duly executed, authenticated, issued and
delivered as provided in the Indenture and contemplated by the
Registration Rights Agreement, will constitute valid and legally
binding obligations of the Company entitled to the benefits of the
Indenture and enforceable against the Company in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and to general equitable
principles (whether considered in a proceeding in equity or at law);
(ix) each Transaction Document conforms in all material
respects to the respective descriptions thereof contained in the
Offering Memorandum;
(x) the execution, delivery and performance by the Company
of its obligations under each of the Transaction Documents, the
issuance, authentication, sale and delivery of the Securities and
compliance by the Company with the terms thereof and the consummation
of the transactions contemplated by the Transaction Documents will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other material agreement or
instrument, in each case, known to such counsel, to which the Company
or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, which breach,
violation or default could reasonably be expected to have a material
adverse effect on the Company and
<PAGE>
3
its subsidiaries taken as a whole, nor will such actions result in any
violation of the provisions of the charter or by-laws of the Company or
any statute, judgment, order, decree, rule or regulation known to such
counsel of any court or arbitrator or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any
of their properties or assets (other than the securities and Blue Sky
laws of the various states, as to which such counsel expresses no
opinion); and no consent, approval, authorization, order, registration
or qualification of or with, any such court or governmental agency or
body is required for the execution, delivery and performance by the
Company of each of the Transaction Documents, the issuance,
authentication, sale and delivery of the Securities and compliance by
the Company with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents, except for such
consents, approvals, authorizations, registrations or qualifications
(i) which have been obtained or made prior to the Closing Date, (ii) as
may be required under state securities and Blue Sky laws and (iii) as
may be required to be obtained or made under the Securities Act and
applicable state securities laws as contemplated by the Registration
Rights Agreement;
(xi) other than as set forth in the Offering Memorandum,
nothing has come to such counsel's attention that would lead them to
believe that there are any legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the subject,
which (A) singularly or in the aggregate, if determined adversely to
the Company or any of its subsidiaries, could reasonably be expected to
have a material adverse effect on the Company and its subsidiaries
taken as a whole or (B) questions the validity or enforceability of any
of the Transaction Documents or any action taken or to be taken
pursuant thereto; and nothing has come to their attention that would
lead them to believe that any such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(xii) to our knowledge neither the Company nor any of its
Subsidiaries is (A) in violation of its charter or by-laws, (B) in
default, and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which it is a party or by which it is bound or to
which any of its property or assets is subject or (C) in violation of
any law, ordinance, governmental rule, regulation or court decree to
which it or its property or assets may be subject, which default under
clause (B) or violation under clause (C) could reasonably be expected
to have a material adverse effect on the Company and its subsidiaries
taken as a whole;
(xiii) assuming that the Securities are offered and sold in
the manner contemplated by, and in accordance with, this Agreement and
the Offering Memorandum, no registration of the Securities under the
Securities Act or qualification of the Indenture under the Trust
Indenture Act is required in connection with the issuance and sale of
the Securities by the Company and the offer, resale and delivery of the
Securities by the Initial Purchaser; and
<PAGE>
4
(xiv) the documents incorporated by reference or deemed to
be incorporated by reference in the Offering Memorandum (collectively,
the "Exchange Act Documents") complied as to form when filed in all
material respects with the requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder, except
that in each case such counsel need express no opinion with the respect
to the financial statements or other financial data contained in or
incorporated by reference in or omitted from the Exchange Act
Documents.
Such counsel shall also state that they have participated in
conferences with officers and other representatives of the Company,
representatives of Arthur Andersen LLP, independent auditors for the Company,
the Initial Purchaser and counsel for the Initial Purchaser, at which the
contents of the Preliminary Offering Memorandum and the Offering Memorandum and
any amendment thereof or supplement thereto and related matters were discussed,
and, although they have not undertaken to investigate or verify independently,
and do not assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Preliminary Offering Memorandum and the
Offering Memorandum or any amendment thereof or supplement thereto (except as
expressly stated in paragraph (ix) above), no facts have come to such counsel's
attention which would lead them to believe that the Offering Memorandum and any
amendment thereof or supplement thereto as of its date (other than the
historical, pro forma or other financial statements, financial information and
financial data and statistical information and statistical data included or
incorporated by reference therein, in each case as to which no opinion need be
given) contained any untrue statement of material fact or omitted to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or that the Offering
Memorandum and any amendment thereof or supplement thereto at the date of such
opinion (other than the historical, pro forma or other financial statements,
financial information and financial data, and statistical information and
statistical data included or incorporated by reference therein, in each case as
to which no opinion need be given) includes any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may (A) rely in
respect of matters of fact upon certificates of the Company and of executive
officers of the Company and its subsidiaries and upon information obtained from
public officials and other sources believed by such counsel to be responsible,
(B) state that their opinion is limited to the laws of the Commonwealth of
Virginia, the General Corporation Law of the State of Delaware and the federal
laws of the United States, (C) rely, insofar as laws other than the laws of the
Commonwealth of Virginia, the General Corporation Law of the State of Delaware
and the federal laws of the United States are concerned, solely on the opinions
of local counsel (provided that such counsel shall state that they believe that
both the Initial Purchaser and they are justified in relying upon such opinions)
and may state that their opinion is subject to the same qualifications and
limitations expressed in such opinions, (D) rely in respect of the opinions
expressed in clause (iii) upon reports of the Uniform Commercial Code search
services and (E) make other customary and reasonable assumptions.
<PAGE>
5
Such opinion shall also state that the opinion is being
rendered to the Initial Purchaser pursuant to Section 5(c) of this Agreement and
that such opinion may not be relied upon by the Initial Purchaser for any other
purpose, or relied upon by, or furnished to, any other person, firm or
corporation without such counsel's prior consent, except that the law firm of
Simpson Thacher & Bartlett may rely upon such opinion with respect to matters of
the laws of the Commonwealth of Virginia in connection with the delivery of its
opinions pursuant to Section 5(d) of this Agreement and the Indenture.
EXHIBIT 4.8(b)
EXECUTION COPY
SMITHFIELD FOODS, INC.
$200,000,000
7 5/8% Senior Subordinated Notes due 2008
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
February 9, 1998
CHASE SECURITIES INC.
270 Park Avenue, 4th floor
New York, New York 10017
Ladies and Gentlemen:
Smithfield Foods, Inc., a Virginia corporation (the
"Company"), proposes to issue and sell to Chase Securities Inc. (the "Initial
Purchaser"), upon the terms and subject to the conditions set forth in a
purchase agreement dated February 4, 1998 (the "Purchase Agreement"),
$200,000,000 aggregate principal amount of its 7 5/8% Senior Subordinated Notes
due 2008 (the "Securities"). Capitalized terms used but not defined herein shall
have the meanings given to such terms in the Purchase Agreement.
In satisfaction of a condition to the obligations of the
Initial Purchaser to purchase the Securities under the Purchase Agreement, the
Company agrees with the Initial Purchaser, for the benefit of the holders
(including the Initial Purchaser) of the Transfer Restricted Securities (as
defined below) and the Exchange Securities (as defined herein) (collectively,
the "Holders"), as follows:
1. Registered Exchange Offer. The Company shall (i)
prepare and, not later than 60 days following the date of original issuance of
the Securities (the "Issue Date"), file with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Exchange Offer
Registration Statement") on an appropriate form under the Securities Act of
1933, as amended (the "Securities Act") with respect to a proposed offer to the
Holders of the Transfer Restricted Securities (the "Registered Exchange Offer")
to issue and deliver to such Holders, in exchange for the Transfer Restricted
Securities, a like aggregate principal amount of debt securities of the Company
(the "Exchange Securities") that are identical in all material respects to the
Transfer Restricted Securities, except for the transfer restrictions relating to
the Securities, (ii) use its reasonable best efforts to cause the Exchange Offer
Registration Statement to become effective under the Securities Act no later
than 120 days after the Issue Date and the Registered Exchange Offer to be
consummated no later than 150 days after the Issue Date and (iii) keep the
Exchange Offer Registration Statement effective for not less than 30 days (or
longer, if required by applicable law) after the date on which notice of the
Registered Exchange Offer is first mailed to the Holders (such period being
called the "Exchange Offer Registration Period"). The Exchange Securities and
<PAGE>
the Private Exchange Securities (as defined below, if any) will be issued under
the Indenture or an indenture (the "Exchange Securities Indenture") between the
Company and the Trustee or such other bank or trust company that is reasonably
satisfactory to the Initial Purchaser, as trustee (the "Exchange Securities
Trustee"), such indenture to be identical in all material respects to the
Indenture, except for the transfer restrictions relating to the Transfer
Restricted Securities.
Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Transfer Restricted Securities for Exchange Securities
(assuming that such Holder (a) is not an affiliate of the Company or an
Exchanging Dealer (as defined herein) not complying with the requirements of the
next sentence, (b) is not an Initial Purchaser with Securities that have the
status of an unsold allotment in an initial distribution, (c) acquires the
Exchange Securities in the ordinary course of such Holder's business and (d) has
no arrangements or understandings with any person to participate in the
distribution of the Exchange Securities) and to trade such Exchange Securities
from and after their receipt without any limitations or restrictions under the
Securities Act and without material restrictions under the securities laws of
the several states of the United States. The Company, the Initial Purchaser and
each Exchanging Dealer acknowledge that, pursuant to current interpretations by
the Commission's staff of Section 5 of the Securities Act, (i) each Holder that
is a broker-dealer electing to exchange Securities, acquired for its own account
as a result of market-making activities or other trading activities, for
Exchange Securities (an "Exchanging Dealer"), is required to deliver a
prospectus containing substantially the information set forth in Annex A hereto
on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and
the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan
of Distribution" section of such prospectus in connection with a sale of any
such Exchange Securities received by such Exchanging Dealer pursuant to the
Registered Exchange Offer and (ii) if any Initial Purchaser elects to sell
Private Exchange Securities acquired in exchange for Securities constituting any
portion of an unsold allotment, it is required to deliver a prospectus
containing the information required by Items 507 or 508 of Regulation S-K under
the Securities Act and the Exchange Act ("Regulation S-K").
If, prior to the consummation of the Registered Exchange
Offer, any Holder holds any Securities acquired by it that have, or that are
reasonably likely to be determined to have, the status of an unsold allotment in
the initial distribution of the Securities, or any Holder is not entitled to
participate in the Registered Exchange Offer, the Company shall, upon the
request of any such Holder, simultaneously with the delivery of the Exchange
Securities in the Registered Exchange Offer, issue and deliver to any such
Holder, in exchange for the Securities held by such Holder (the "Private
Exchange"), a like aggregate principal amount of debt securities of the Company
(the "Private Exchange Securities") that are identical in all material respects
to the Exchange Securities, except for the transfer restrictions relating to
such Private Exchange Securities. The Private Exchange Securities will be issued
under the same indenture as the Exchange Securities, and the Company shall use
its reasonable best efforts to cause the Private Exchange Securities to bear the
same CUSIP number as the Exchange Securities.
<PAGE>
In connection with the Registered Exchange Offer, the Company
shall:
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than
30 days (or longer, if required by applicable law) after the date on
which notice of the Registered Exchange Offer is first mailed to the
Holders;
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of
New York;
(d) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York City time, on the last
business day on which the Registered Exchange Offer shall remain open;
and
(e) otherwise comply in all respects with all laws that are
applicable to the Registered Exchange Offer.
As soon as practicable after the close of the Registered
Exchange Offer and any Private Exchange, as the case may be, the Company shall:
(a) accept for exchange all Securities tendered and not
validly withdrawn pursuant to the Registered Exchange Offer and the
Private Exchange;
(b) deliver to the Trustee for cancellation all
Securities so accepted for exchange; and
(c) cause the Trustee or the Exchange Securities Trustee, as
the case may be, promptly to authenticate and deliver to each Holder,
Exchange Securities or Private Exchange Securities, as the case may be,
equal in principal amount to the Securities of such Holder so accepted
for exchange.
The Company shall use its reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
prospectus contained therein in order to permit such prospectus to be used by
all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; provided that the Company shall make
such prospectus and any amendment or supplement thereto available to any
broker-dealer for use in connection with any resale of any Exchange Securities
for a period of not less than 90 days after the consummation of the Registered
Exchange Offer.
The Indenture or the Exchange Securities Indenture, as the
case may be, shall provide that the Transfer Restricted Securities and the
Exchange Securities shall vote and consent together on all matters as one class
and that none of the Transfer Restricted Securities
<PAGE>
or the Exchange Securities will have the right to vote or consent as a separate
class on any matter.
Interest on each Exchange Security and Private Exchange
Security issued pursuant to the Registered Exchange Offer and in the Private
Exchange will accrue from the last interest payment date on which interest was
paid on the Securities surrendered in exchange therefor or, if no interest has
been paid on the Securities, from the Issue Date.
Each Holder participating in the Registered Exchange Offer
shall be required to represent to the Company that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities to be
received pursuant to the Registered Exchange Offer are being acquired in the
ordinary course of the business of the person receiving such Exchange
Securities, whether or not such person is the Holder, (ii) neither the Holder
nor any such other person has any arrangement or understanding with any person
to participate in the distribution of the Securities or the Exchange Securities
within the meaning of the Securities Act, (iii) neither the Holder nor any such
other person is an affiliate of the Company or, if it is such an affiliate, such
Holder or such other person will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable, (iv) if
the Holder is not a broker-dealer, it is not engaged in, and does not intend to
engage in, the distribution of the Exchange Securities and (v) if such person is
an Exchanging Dealer, such person shall comply with the prospectus delivery
requirements of the Securities Act.
Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder, (ii) any Exchange Offer Registration
Statement and any amendment thereto does not, when it becomes effective, contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any prospectus forming part of any Exchange Offer Registration
Statement, and any supplement to such prospectus, does not, as of the
consummation of the Registered Exchange Offer, include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
2. Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff the Company is not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, or (ii) any Securities validly tendered pursuant to the Registered
Exchange Offer are not exchanged for Exchange Securities within 150 days after
the Issue Date, or (iii) the Initial Purchaser so requests with respect to
Securities or Private Exchange Securities not eligible to be exchanged for
Exchange Securities in the Registered Exchange Offer and held by it following
the consummation of the Registered Exchange Offer, or (iv) any applicable law or
interpretations do not permit any Holder to participate in the Registered
Exchange Offer, or (v) any Holder that participates in the Registered Exchange
Offer does not receive freely transferable Exchange Securities in exchange for
tendered Securities (the obligation to comply with a prospectus delivery
<PAGE>
requirement being understood not to constitute a restriction on
transferability), then the following provisions shall apply:
(a) The Company shall use its reasonable best efforts to file
as promptly as practicable (but in no event more than 60 days after so required
or requested pursuant to this Section 2) with the Commission, and thereafter
shall use its reasonable best efforts to cause to be declared effective, a shelf
registration statement on an appropriate form under the Securities Act relating
to the offer and sale of the Transfer Restricted Securities by the Holders
thereof from time to time in accordance with the methods of distribution set
forth in such registration statement (hereafter, a "Shelf Registration
Statement" and, together with any Exchange Offer Registration Statement, a
"Registration Statement"); provided, however, that no Holder of Transfer
Restricted Securities (other than the Initial Purchaser) shall be entitled to
have Transfer Restricted Securities held by it covered by such Shelf
Registration Statement unless such Holder agrees in writing to be bound by all
the provisions of this Agreement applicable to such Holder.
(b) The Company shall use its reasonable best efforts to keep
the Shelf Registration Statement continuously effective in order to permit the
prospectus forming part thereof to be used by Holders of Transfer Restricted
Securities for a period ending on the earlier of (i) two years from the Issue
Date or such shorter period that will terminate when all the Transfer Restricted
Securities covered by the Shelf Registration Statement have been sold pursuant
thereto and (ii) the date all of the Transfer Restricted Securities become
eligible for resale without volume restrictions pursuant to Rule 144 under the
Securities Act (in any such case, such period being called the "Shelf
Registration Period"). The Company shall be deemed not to have used its
reasonable best efforts to keep the Shelf Registration Statement effective
during the requisite period if it voluntarily takes any action that would result
in Holders of Transfer Restricted Securities covered thereby not being able to
offer and sell such Transfer Restricted Securities during that period, unless
such action is required by applicable law; provided however, that the foregoing
shall not apply to actions taken by the Company in good faith and for valid
business reasons (not including avoidance of their obligations hereunder),
including, without limitation, the acquisition or divestiture of assets, so long
as the Company within 30 days thereafter complies with the requirements of
Section 4(j) hereof. Any such period during which the Company fails to keep the
Shelf Registration Statement effective and usable for offers and sales of
Transfer Restricted Securities is referred to as a "Suspension Period." A
Suspension Period shall commence on and include the date that the Company gives
notice that the Shelf Registration Statement is no longer effective or the
prospectus included therein is no longer usable for offers and sales of Transfer
Restricted Securities and shall end on the date when each Holder of Transfer
Restricted Securities covered by such registration statement either receives the
copies of the supplemented or amended prospectus contemplated by Section 4(j)
hereof or is advised in writing by the company that use of the prospectus may be
resumed. If one or more Suspension Periods occur, the two-year time period
referenced above shall be extended by the aggregate of the number of days
included in each such Suspension Period.
(c) Notwithstanding any other provisions hereof, the Company
will ensure that (i) any Shelf Registration Statement and any amendment thereto
and any prospectus
<PAGE>
forming part thereof and any supplement thereto complies in all material
respects with the Securities Act and the rules and regulations of the Commission
thereunder, (ii) any Shelf Registration Statement and any amendment thereto (in
either case, other than with respect to information included therein in reliance
upon or in conformity with written information furnished to the Company by or on
behalf of any Holder specifically for use therein (the "Holders' Information"))
does not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Shelf
Registration Statement, and any supplement to such prospectus (in either case,
other than with respect to Holders' Information), does not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
3. Liquidated Damages. (a) The parties hereto agree that the
Holders of Transfer Restricted Securities will suffer damages if the Company
fails to fulfill its obligations under Section 1 or Section 2, as applicable,
and that it would not be feasible to ascertain the extent of such damages.
Accordingly, if (i) the applicable Registration Statement is not filed with the
Commission on or prior to 60 days after the Issue Date, (ii) the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case may be,
is not declared effective within 120 days after the Issue Date (or in the case
of a Shelf Registration Statement required to be filed in response to a change
in law or the applicable interpretations of Commission's staff, if later, within
45 days after publication of the change in law or interpretation), (iii) the
Registered Exchange Offer is not consummated on or prior to 150 days after the
Issue Date, or (iv) the Shelf Registration Statement is filed and declared
effective within 120 days after the Issue Date (or in the case of a Shelf
Registration Statement required to be filed in response to a change in law or
the applicable interpretations of Commission's staff, if later, within 45 days
after publication of the change in law or interpretation) but shall thereafter
cease to be effective (at any time that the Company is obligated to maintain the
effectiveness thereof) without being succeeded within 60 days by an additional
Registration Statement filed and declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the Company will be
obligated to pay liquidated damages to each Holder of Transfer Restricted
Securities, during the period of one or more such Registration Defaults, in an
amount equal to $0.192 per week per $1,000 principal amount of Transfer
Restricted Securities held by such Holder until (i) the applicable Registration
Statement is filed, (ii) the Exchange Offer Registration Statement is declared
effective and the Registered Exchange Offer is consummated, (iii) the Shelf
Registration Statement is declared effective or (iv) the Shelf Registration
Statement again becomes effective, as the case may be. Following the cure of all
Registration Defaults, the accrual of liquidated damages will cease. As used
herein, the term "Transfer Restricted Securities" means (i) each Security until
the date on which such Security has been exchanged for a freely transferable
Exchange Security (the obligation to comply with a prospectus delivery
requirement being understood not to constitute a restriction on transferability)
in the Registered Exchange Offer, (ii) each Security or Private Exchange
Security until the date on which it has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (iii) each Security or Private Exchange Security until the date on
which it is distributed to the public pursuant to Rule 144 under the
<PAGE>
Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act.
Notwithstanding anything to the contrary in this Section 3(a), the Company shall
not be required to pay liquidated damages to a Holder of Transfer Restricted
Securities if such Holder failed to comply with its obligations to make the
representations set forth in the second to last paragraph of Section 1 or failed
to provide the information required to be provided by it, if any, pursuant to
Section 4(n).
(b) The Company shall notify the Trustee and the Paying Agent
under the Indenture immediately upon the happening of each and every
Registration Default. The Company shall pay the liquidated damages due on the
Transfer Restricted Securities by depositing with the Paying Agent (which may
not be the Company for these purposes), in trust, for the benefit of the Holders
thereof, prior to 10:00 a.m., New York City time, on the next interest payment
date specified by the Indenture and the Securities, sums sufficient to pay the
liquidated damages then due. The liquidated damages due shall be payable on each
interest payment date specified by the Indenture and the Securities to the
record holder of the Transfer Restricted Securities entitled to receive the
interest payment to be made on such date. Each obligation to pay liquidated
damages shall be deemed to accrue from and including the date of the applicable
Registration Default.
(c) The parties hereto agree that the liquidated damages
provided for in this Section 3 constitute a reasonable estimate of and are
intended to constitute the sole damages that will be suffered by Holders of
Transfer Restricted Securities by reason of the failure of (i) the Shelf
Registration Statement or the Exchange Offer Registration Statement to be filed,
(ii) the Shelf Registration Statement to remain effective or (iii) the Exchange
Offer Registration Statement to be declared effective and the Registered
Exchange Offer to be consummated, in each case, to the extent required by this
Agreement.
4. Registration Procedures. In connection with any
Registration Statement, the following provisions shall apply:
(a) The Company shall (i) furnish to the Initial Purchaser,
prior to the filing thereof with the Commission, a copy of the Registration
Statement and each amendment thereof and each supplement, if any, to the
prospectus included therein and shall use its reasonable best efforts to reflect
in each such document, when so filed with the Commission, such comments as the
Initial Purchaser may reasonably propose; (ii) include the information set forth
in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" section and the "Purpose of the Exchange Offer" section and in Annex
C hereto in the "Plan of Distribution" section of the prospectus forming a part
of the Exchange Offer Registration Statement, and include the information set
forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the
Registered Exchange Offer; and (iii) if requested by the Initial Purchaser,
include the information required by Items 507 or 508 of Regulation S-K, as
applicable, in the prospectus forming a part of the Exchange Offer Registration
Statement.
(b) The Company shall advise the Initial Purchaser, each
Exchanging Dealer and the Holders (if applicable) and, if requested by any such
person, confirm such
<PAGE>
advice in writing (which advice pursuant to clauses (ii)-(v) hereof shall be
accompanied by an instruction to suspend the use of the prospectus until the
requisite changes have been made):
(i) when any Registration Statement and any amendment thereto
has been filed with the Commission and when such Registration Statement
or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to any Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of any Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities or the
Exchange Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(v) of the happening of any event that requires the making of
any changes in any Registration Statement or the prospectus included
therein in order that the statements therein (in light of the
circumstances in which made, in the case of the prospectus) are not
misleading and do not omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(c) The Company will make every reasonable effort to obtain
the withdrawal at the earliest possible time of any order suspending the
effectiveness of any Registration Statement.
(d) The Company will furnish to each Holder of Transfer
Restricted Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one conformed copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules and, if any such Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).
(e) The Company will, during the Shelf Registration Period,
promptly deliver to each Holder of Transfer Restricted Securities included
within the coverage of any Shelf Registration Statement, without charge, as many
copies of the prospectus (including each preliminary prospectus) included in
such Shelf Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Company consents to the use of such
prospectus or any amendment or supplement thereto by each of the selling Holders
of Transfer Restricted Securities in connection with the offer and sale of the
Transfer Restricted Securities covered by such prospectus or any amendment or
supplement thereto.
<PAGE>
(f) The Company will furnish to the Initial Purchaser and each
Exchanging Dealer, and to any other Holder who so requests, without charge, at
least one conformed copy of the Exchange Offer Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
and, if the Initial Purchaser or Exchanging Dealer or any such Holder so
requests in writing, all exhibits thereto (including those, if any, incorporated
by reference).
(g) The Company will, during the Exchange Offer Registration
Period or the Shelf Registration Period, as applicable, promptly deliver to the
Initial Purchaser, each Exchanging Dealer and any such other persons that are
required to deliver a prospectus following the Registered Exchange Offer,
without charge, as many copies of the final prospectus included in the Exchange
Offer Registration Statement or the Shelf Registration Statement and any
amendment or supplement thereto as the Initial Purchaser, Exchanging Dealer or
other persons may reasonably request; and the Company consents to the use of
such prospectus or any amendment or supplement thereto by the Initial Purchaser,
Exchanging Dealer or other persons, as applicable, as aforesaid.
(h) Prior to the effective date of any Registration Statement,
the Company will use its reasonable best efforts to register or qualify, or
cooperate with the Holders of Securities, Exchange Securities or Private
Exchange Securities included therein and their respective counsel in connection
with the registration or qualification of, such Securities, Exchange Securities
or Private Exchange Securities for offer and sale under the securities or blue
sky laws of such jurisdictions as any such Holder reasonably requests in writing
and do any and all other acts or things necessary or advisable to enable the
offer and sale in such jurisdictions of the Securities, Exchange Securities or
Private Exchange Securities covered by such Registration Statement; provided
that the Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process or to taxation in any such jurisdiction
where it is not then so subject.
(i) The Company will cooperate with the Holders of Securities,
Exchange Securities or Private Exchange Securities to facilitate the timely
preparation and delivery of appropriate certificates representing Securities,
Exchange Securities or Private Exchange Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such authorized
denominations and registered in such names as the Holders thereof may request in
writing prior to sales of Securities, Exchange Securities or Private Exchange
Securities pursuant to such Registration Statement.
(j) If (i) any event contemplated by Section 4(b)(ii) through
(v) occurs during the period for which the Company is required to maintain an
effective Registration Statement or (ii) any Suspension Period remains in effect
more than 30 days after the occurrence thereof, the Company will promptly
prepare and file with the Commission a post-effective amendment to the
Registration Statement or a supplement to the related prospectus or file any
other required document so that, as thereafter delivered to purchasers of the
Securities, Exchange Securities or Private Exchange Securities from a Holder,
the prospectus will not include an untrue statement of a material fact or omit
to state a material
<PAGE>
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the
Securities, Exchange Securities and Private Exchange Securities, as the case may
be, and provide the applicable trustee with certificates for the Securities,
Exchange Securities or Private Exchange Securities, as the case may be, in a
form eligible for deposit with The Depository Trust Company.
(l) The Company will comply with all applicable rules and
regulations of the Commission and will make generally available to its security
holders as soon as practicable after the effective date of the applicable
Registration Statement an earning statement satisfying the provisions of Section
11(a) of the Securities Act; provided that in no event shall such earning
statement be made generally available to its security holders later than 45 days
after the end of a 12-month period (or 90 days, if such period is a fiscal year)
beginning with the first month of the Company's first fiscal quarter commencing
after the effective date of the applicable Registration Statement, which
statement shall cover such 12- month period.
(m) The Company will cause the Indenture or the Exchange
Securities Indenture, as the case may be, to be qualified under the Trust
Indenture Act as required by applicable law in a timely manner.
(n) The Company may require each Holder of Transfer Restricted
Securities to be registered pursuant to any Shelf Registration Statement to
furnish to the Company such information concerning the Holder and the
distribution of such Transfer Restricted Securities as the Company may from time
to time reasonably require for inclusion in such Shelf Registration Statement,
and the Company may exclude from such registration the Transfer Restricted
Securities of any Holder that fails to furnish such information within a
reasonable time after receiving such request.
(o) In the case of a Shelf Registration Statement, each Holder
of Transfer Restricted Securities to be registered pursuant thereto agrees by
acquisition of such Transfer Restricted Securities that, upon receipt of any
notice from the Company pursuant to Section 4(b)(ii) through (v), such Holder
will discontinue disposition of such Transfer Restricted Securities until such
Holder's receipt of copies of the supplemental or amended prospectus
contemplated by Section 4(j) or until advised in writing (the "Advice") by the
Company that the use of the applicable prospectus may be resumed. If the Company
shall give any notice under Section 4(b)(ii) through (v) during the period that
the Company is required to maintain an effective Registration Statement (the
"Effectiveness Period"), such Effectiveness Period shall be extended by the
number of days during such period from and including the date of the giving of
such notice to and including the date when each seller of Transfer Restricted
Securities covered by such Registration Statement shall have received (x) the
copies of the supplemental or amended prospectus contemplated by Section 4(j)
(if an amended or supplemental prospectus is required) or (y) the Advice (if no
amended or supplemental prospectus is required).
<PAGE>
(p) In the case of a Shelf Registration Statement, the Company
shall enter into such customary agreements (including, if requested, an
underwriting agreement in customary form) and take all such other action, if
any, as Holders of a majority in aggregate principal amount of the Securities,
Exchange Securities and Private Exchange Securities being sold or the managing
underwriters (if any) shall reasonably request in order to facilitate any
disposition of such Securities, Exchange Securities or Private Exchange
Securities pursuant to such Shelf Registration Statement.
(q) In the case of a Shelf Registration Statement, the Company
shall (i) make reasonably available for inspection by a representative of, and
Special Counsel (as defined herein) acting for, Holders of a majority in
aggregate principal amount of the Securities, Exchange Securities and Private
Exchange Securities being sold and any underwriter participating in any
disposition of Securities, Exchange Securities or Private Exchange Securities
pursuant to such Shelf Registration Statement, at the offices where normally
kept, during reasonable business hours, all relevant financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries and (ii) use its reasonable best efforts to have its officers,
directors, employees, accountants and counsel supply all relevant information
reasonably requested by such representative, Special Counsel or any such
underwriter in connection with such Shelf Registration Statement; provided,
however, that such persons shall first agree in writing with the Company that
any information that is in good faith designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to federal
securities laws in connection with the filing of such Shelf Registration
Statement or the use of any Prospectus), (iii) such information becomes
generally available to the public other than as a result of a disclosure or
failure to safeguard such information by such person or (iv) such information
becomes available to such person from a source other than the Company and its
subsidiaries and such source is not bound by a confidentiality agreement; and
provided further each such person will also be required to further agree in
writing that (i) it will, upon learning that disclosure of such information is
sought in a court of competent jurisdiction, if legally permitted, give notice
to the Company and allow the Company at its expense to undertake appropriate
action to prevent disclosure of such information deemed confidential and (ii) it
will not use such information in violation of any securities laws.
(r) In the case of a Shelf Registration Statement, the Company
shall, if requested by Holders of a majority in aggregate principal amount of
the Securities, Exchange Securities and Private Exchange Securities being sold,
their Special Counsel or the managing underwriters (if any) in connection with
such Shelf Registration Statement, use its reasonable best efforts to cause (i)
its counsel to deliver an opinion relating to the Shelf Registration Statement
and the Securities or Exchange Securities, as applicable, in customary form,
(ii) its officers to execute and deliver all customary documents and
certificates requested by such Holders of a majority in aggregate principal
amount of the Securities, Exchange Securities and Private Exchange Securities
being sold, their Special Counsel or the managing underwriters (if any) and
(iii) its independent public accountants to provide a comfort letter or
<PAGE>
letters in customary form, subject to receipt of appropriate documentation as
contemplated, and only if permitted, by Statement of Auditing Standards No. 72.
5. Registration Expenses. The Company will bear all expenses
incurred in connection with the performance of its obligations under Sections 1,
2, 3 and 4 and the Company will reimburse the Initial Purchaser and the Holders
for the reasonable fees and disbursements of one firm of attorneys or counsel,
reasonably satisfactory to the Company (in addition to not more than one local
counsel) chosen by the Holders of a majority in aggregate principal amount of
the Securities and the Exchange Securities to be sold pursuant to each
Registration Statement (the "Special Counsel") acting for the Initial Purchaser
or Holders in connection therewith.
6. Indemnification. (a) In the event of a Shelf Registration
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by the Initial Purchaser or an Exchanging Dealer,
as applicable, the Company shall indemnify and hold harmless each Holder
(including, without limitation, the Initial Purchaser or any such Exchanging
Dealer), its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls such Holder
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively referred to for purposes of this Section 6 and
Section 7 as a Holder) from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases
and sales of Securities, Exchange Securities or Private Exchange Securities), to
which that Holder may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and shall reimburse each Holder promptly upon demand for
any legal or other expenses reasonably incurred by that Holder in connection
with investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue statement
or alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any Holders' Information; and
provided, further, that with respect to any such untrue statement in or omission
from any related preliminary prospectus, the indemnity agreement contained in
this Section 6(a) shall not inure to the benefit of any Holder from whom the
person asserting any such loss, claim, damage, liability or action received
Securities, Exchange Securities or Private Exchange Securities to the extent
that such loss, claim, damage, liability or action of or with respect to such
Holder results from the fact that both (A) a copy of the final prospectus was
not sent or given to such person at or prior to the written confirmation of the
sale of such Securities, Exchange Securities or Private Exchange Securities to
such person and
<PAGE>
(B) the untrue statement in or omission from the related preliminary prospectus
was corrected in the final prospectus unless, in either case, such failure to
deliver the final prospectus was a result of non-compliance by the Company with
Section 4(d), 4(e), 4(f) or 4(g).
(b) In the event of a Shelf Registration Statement, each
Holder, severally and not jointly, shall indemnify and hold harmless the
Company, its affiliates, their respective officers, directors, employees,
representatives and agents, and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively referred to for purposes of this Section 6(b) and
Section 7 as the Company), from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law or
regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any such Registration
Statement or any prospectus forming part thereof or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, but in each case, only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with any Holders' Information, and shall
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that no such Holder shall be liable for any indemnity claims hereunder
in excess of the amount of net proceeds received by such Holder from the sale of
Securities, Exchange Securities or Private Exchange Securities pursuant to such
Shelf Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party pursuant to Section 6(a) or 6(b), notify the indemnifying
party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have under this Section 6 except to the extent
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 6. If any
such claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
that an indemnified party shall have the right to
<PAGE>
employ its own counsel in any such action, but the fees, expenses and other
charges of such counsel for the indemnified party will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based upon advice of counsel to the indemnified
party) that there may be legal defenses to it or to other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (3) a conflict or potential conflict exists (based upon advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (4) the
indemnifying party has not in fact employed counsel reasonably satisfactory to
the indemnified party to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 6(a) and 6(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement (i) does not contain an admission of
fault or wrongdoing and (ii) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
7. Contribution. If the indemnification provided for in
Section 6 is unavailable or insufficient to hold harmless an indemnified party
under Section 6(a) or 6(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company from the offering and sale
of the Securities, on the one hand, and a Holder with respect to the sale by
such Holder of Securities, Exchange Securities or Private Exchange Securities,
on the other, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and such Holder on the other with respect
to the statements or omissions that resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and a Holder on the other with respect to
<PAGE>
such offering and such sale shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Securities (before deducting
expenses) received by or on behalf of the Company as set forth in the table on
the cover of the Offering Memorandum, on the one hand, bear to the total
proceeds received by such Holder with respect to its sale of Securities,
Exchange Securities or Private Exchange Securities, on the other. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to the Company or information supplied
by the Company on the one hand or to any Holders' Information on the other, the
intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this Section 7 were to be determined by pro rata allocation (even if the
Holders were treated as one entity for such purpose) or by any other method of
allocation that does not take into account the equitable considerations referred
to herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section 7 shall be deemed to include, for purposes of this Section
7, any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, an indemnifying party that is
a Holder of Securities, Exchange Securities or Private Exchange Securities shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Securities, Exchange Securities or Private Exchange
Securities sold by such indemnifying party to any purchaser exceeds the amount
of any damages which such indemnifying party has otherwise paid or become liable
to pay by reason of any untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute as provided in this
Section 7 are several in proportion to their respective obligations and not
joint.
8. Rules 144 and 144A. The Company shall use its reasonable
best efforts to file the reports required to be filed by it under the Securities
Act and the Exchange Act in a timely manner and, if at any time the Company is
not required to file such reports, it will, upon the written request of any
Holder of Transfer Restricted Securities, make publicly available other
information so long as necessary to permit sales of such Holder's securities
pursuant to Rules 144 and 144A. The Company covenants that it will take such
further action as any Holder of Transfer Restricted Securities may reasonably
request, all to the extent required from time to time to enable such Holder to
sell Transfer Restricted Securities without registration under the Securities
Act within the limitation of the exemptions provided by Rules 144 and 144A
(including, without limitation, the requirements of Rule 144A(d)(4)). Upon the
written request of any Holder of Transfer Restricted Securities, the Company
shall deliver to such Holder a written statement as to whether it has complied
with such requirements. Notwithstanding the foregoing, nothing in this Section 8
shall be deemed to require the Company to register any of its securities
pursuant to the Exchange Act.
9. Underwritten Registrations. If any of the Transfer
Restricted Securities covered by any Shelf Registration Statement are to be sold
in an underwritten offering, the
<PAGE>
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of such Transfer Restricted Securities included in
such offering, subject to the consent of the Company (which shall not be
unreasonably withheld or delayed), and such Holders shall be responsible for all
underwriting commissions and discounts in connection therewith.
No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
10. Miscellaneous. (a) Amendments and Waivers. The provisions
of this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
Company has obtained the written consent of Holders of a majority in aggregate
principal amount of the Securities, Exchange Securities and Private Exchange
Securities, taken as a single class. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Securities, Exchange
Securities or Private Exchange Securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in aggregate
principal amount of the Securities, Exchange Securities and the Private Exchange
Securities being sold by such Holders pursuant to such Registration Statement.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telecopier or air courier guaranteeing next-day delivery:
(1) if to a Holder, at the most current address given by such
Holder to the Company in accordance with the provisions of this Section
10(b), which address initially is, with respect to each Holder, the
address of such Holder maintained by the Registrar under the Indenture,
with a copy in like manner to Chase Securities Inc.;
(2) if to the Initial Purchaser, initially at its address
set forth in the Purchase Agreement; and
(3) if to the Company, initially at the address of the Company
set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; one business
day after being delivered to a next-day air courier; five business days after
being deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.
<PAGE>
The Initial Purchaser and the Company, by notice to the other,
may designate additional or different addresses or telecopy numbers for
subsequent notices or communications.
(c) Successors And Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders of Securities, Exchange Securities or
Private Exchange Securities.
(d) Counterparts. This Agreement may be executed in any number
of counterparts (which may be delivered in original form or by telecopier) and
by the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(e) Definition of Terms. For purposes of this Agreement, (a)
the term "business day" means any day on which the New York Stock Exchange, Inc.
is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule
405 under the Securities Act and (c) except where otherwise expressly provided,
the term "affiliate" has the meaning set forth in Rule 405 under the Securities
Act.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
(h) Remedies. In the event of a breach by the Company or by
any Holder of Transfer Restricted Securities of any of their obligations under
this Agreement, each Holder of Transfer Restricted Securities or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law, including recovery of damages (other than the recovery of damages for a
breach by the Company of its obligations under Sections 1 or 2 hereof for which
liquidated damages have been paid pursuant to Section 3 hereof), will be
entitled to specific performance of its rights under this Agreement. The Company
and each Holder agree that monetary damages would not be adequate compensation
for any loss incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agree that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
<PAGE>
(i) No Inconsistent Agreements. The Company represents,
warrants and agrees that (i) it has not entered into, shall not, on or after the
date of this Agreement, enter into any agreement that is inconsistent with the
rights granted to the Holders of Transfer Restricted Securities in this
Agreement or otherwise conflicts with the provisions hereof, (ii) it has not
previously entered into any agreement which remains in effect granting any
registration rights with respect to any of its debt securities to any person and
(iii) without limiting the generality of the foregoing, without the written
consent of the Holders of a majority in aggregate principal amount of the then
outstanding Transfer Restricted Securities, it shall not grant to any person the
right to request the Company to register any debt securities of the Company
under the Securities Act unless the rights so granted are not in conflict or
inconsistent with the provisions of this Agreement.
(j) No Piggyback on Registrations. Neither the Company nor any
of its security holders (other than the Holders of Transfer Restricted
Securities in such capacity) shall have the right to include any securities of
the Company in any Shelf Registration or Registered Exchange Offer other than
Transfer Restricted Securities.
(k) Severability. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable best efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement between the Company and the Initial Purchaser.
Very truly yours,
SMITHFIELD FOODS, INC.
By /s/ Aaron D. Trub
-----------------------
Name:
Title:
Accepted:
CHASE SECURITIES INC.
By /s/ Gerard J. Murray
-------------------------------
Authorized Signatory
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities pursuant to the Registered Exchange
Offer, where such Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Securities received in
exchange for Securities where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 90 days after the
Expiration Date (as defined herein), it will make this prospectus available to
any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities, where such Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities pursuant to the Registered Exchange
Offer, where such Securities were acquired by such broker-dealer as a result of
market making activities other trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 90 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until _______________,
1998, all dealers effecting transactions in the Exchange Securities may be
required to deliver a prospectus.*
The Company will not receive any proceeds from any sale of
Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Registered Exchange Offer
may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Securities or a combination of such methods of resale,
at market prices prevailing at the time of resale, at prices related to such
prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received by it for its
own account pursuant to the Registered Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Securities may be deemed to
be an "underwriter" within the meaning of the Securities Act and any profit on
any such resale of Exchange Securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
For a period of 90 days after the Expiration Date the Company
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
- --------
* In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Registered Exchange Offer
prospectus.
<PAGE>
ANNEX D
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO
RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:---------------------------------------------------------
Address:------------------------------------------------------
--------------------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account, in exchange for Securities that it represents
and warrants were acquired as a result of market-making activities or other
trading activities, and it acknowledges that it will deliver a prospectus in
connection with any resale of such Exchange Securities; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
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<S> <C>
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<FISCAL-YEAR-END> MAY-03-1998
<PERIOD-END> FEB-01-1998
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0
0
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