As filed with the Securities and Exchange Commission on January 6, 2025.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Smithfield Foods, Inc.
(Exact name of registrant as specified in its charter)
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| Virginia | 2013 | 52-0845861 |
(State or other jurisdiction of
incorporation or organization) | (Primary Standard Industrial
Classification Code Number) | (I.R.S. Employer
Identification No.) |
200 Commerce Street
Smithfield, Virginia 23430
(757) 365-3000
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
C. Shane Smith
President and Chief Executive Officer
200 Commerce Street
Smithfield, Virginia 23430
(757) 365-3000
(Name, address, including zip code, and telephone number, including area code, of registrant’s agent for service)
With copies to:
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Colin Diamond Brandon Bortner Alex Herman Paul Hastings LLP 200 Park Avenue New York, New York 10166 (212) 318-6000 |
| Andrew J. Pitts Ryan J. Patrone Cravath, Swaine & Moore LLP Two Manhattan West 375 Ninth Avenue New York, New York, 10001 (212) 474-1000 |
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
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| Large accelerated filer | ☐ | Accelerated filer | o |
| Non-accelerated filer | ☒ | Smaller reporting company | o |
| | Emerging growth company | o |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor a solicitation of an offer to buy these securities in any jurisdiction where the offer and sale is not permitted.
Preliminary Prospectus (Subject to completion, dated January 6, 2025)
Shares
Smithfield Foods, Inc.
Common Stock
This is the initial public offering of common stock of Smithfield Foods, Inc. We are offering shares of our common stock, and SFDS UK Holdings Limited (the “selling shareholder”), an indirect wholly owned subsidiary of our parent company, WH Group Limited (“WH Group”), is offering shares of our common stock. We will not receive any proceeds from the sale of stock by our selling shareholder.
There is currently no public market for shares of our common stock. We expect that the initial public offering price of our common stock will be between $ and $ per share. We have applied to list our common stock on the Nasdaq Global Select Market, under the symbol “SFD.” We will not consummate this offering of our common stock unless our common stock is approved for listing on the Nasdaq Global Select Market.
After the completion of this offering, WH Group will beneficially own approximately % of the voting power of our common stock (or approximately % if the underwriters exercise in full their option to purchase additional shares of our common stock). As a result, we will be a “controlled company” within the meaning of the corporate governance standards of The Nasdaq Stock Market LLC, or Nasdaq, and qualify for, and intend to rely on, exemptions from certain corporate governance requirements as described herein. See “Management—Controlled Company Exemption.” There is no single shareholder or group of shareholders which owns 50% or more of the voting power of WH Group as of the date of this prospectus. As a result, WH Group would not be considered a controlled company within the meaning of the corporate governance standards of Nasdaq.
Investing in our common stock involves risks. See “Risk Factors” beginning on page 31 to read about factors you should consider before buying shares of our common stock. Neither the Securities and Exchange Commission, or the SEC, nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
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| Per Share | | Total |
| Initial public offering price | $ | | $ |
Underwriting discounts and commissions (1) | $ | | $ |
Proceeds, before expenses, to us | $ | | $ |
Proceeds, before expenses, to selling shareholder | $ | | $ |
________________
(1)See “Underwriting” for additional information regarding underwriting compensation.
At our request, the underwriters have reserved up to 2% of the shares of our common stock offered by this prospectus for sale at the initial public offering price through a directed share program to our directors, officers and certain of our employees. See “Underwriting—Directed Share Program.”
The selling shareholder has granted the underwriters a 30-day option from the date of this prospectus to purchase up to additional shares of our common stock. Such shares are offered by the selling shareholder at the initial public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions.
The underwriters expect to deliver the shares on or about , 2025 through the book-entry facilities of The Depository Trust Company.
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| Morgan Stanley | BofA Securities | Goldman Sachs & Co. LLC |
Barclays | Citigroup | UBS Investment Bank |
BNP PARIBAS | | HSBC |
The date of this prospectus , 2025.
TABLE OF CONTENTS
We, the selling shareholder and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus, any amendment or supplement to this prospectus or any free writing prospectus prepared by us or on our behalf. We, the selling shareholder and the underwriters take no responsibility for, and cannot assure you as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares of our common stock offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so.
The information contained in this prospectus is current only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of shares of our common stock. Our business, results of operations or financial condition may have changed since that date.
We, the selling shareholder and the underwriters have not done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of our common stock and the distribution of this prospectus outside the United States.
ABOUT THIS PROSPECTUS
Unless otherwise indicated or the context otherwise requires, references in this prospectus to “Smithfield,” “our company,” “we,” “us” and “our” refer to Smithfield Foods, Inc., a Virginia corporation and its consolidated subsidiaries.
Prior to August 26, 2024, we conducted business operations in the United States, Mexico and Europe. On August 26, 2024, we completed the carve out of our European operations, or the European Carve-out, pursuant to which we transferred our operations in Europe to WH Group. Following the European Carve-out, we principally engage in operations in the United States and Mexico. Unless otherwise expressly stated or the context otherwise requires, the description of our business included in this prospectus reflects our business after giving effect to the European Carve-out. The results of operations, assets and liabilities, and cash flows of the European operations as presented in our consolidated financial statements have been condensed into separate line items and presented in the consolidated statements of income, the consolidated balance sheets and the consolidated statements of cash flows, respectively, as discontinued operations, and this treatment has been applied retrospectively to all periods presented. Unless otherwise expressly stated, the financial information of our company included in this prospectus reflects the historical financial statements of Smithfield (which has been an indirect, wholly owned subsidiary of WH Group), as retroactively adjusted to remove the impact of the discontinued operations.
Industry and Market Data
Within this prospectus, we reference information and statistics regarding the market for our products. We have obtained some of this information and statistics from various independent third-party sources, including government agencies, independent industry publications, reports by market research firms and other independent sources. Some data and other information contained in this prospectus are also based on management’s estimates and calculations, which are derived from our review and interpretation of internal surveys and independent sources. Data regarding the industries in which we compete and our market position and market share within these industries are inherently imprecise and are subject to significant business, economic and competitive uncertainties beyond our control, but we believe they generally indicate size, position and market share within this industry. In addition, assumptions and estimates of our and our industries’ future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors. These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Forward-Looking Statements.”
The sources of certain statistical data, estimates and forecasts contained in this prospectus include the following independent industry publications or reports:
•Agriculture and Horticulture Development Board, “2022 pig cost of production in selected countries: Overview,” December 13, 2023;
•Business Research Insights, “Dry Sausage Market Size, Share, Growth, and Industry Analysis, By Type (Pork Dry Sausage, Beef Dry Sausage, Poultry Dry Sausage), By Application (Pizza, Ready to Eat Food, Meals), Regional Forecast to 2031,” last updated September 9, 2024;
•Circana Retail/Deli database, last accessed October 2024;
•Euromonitor International Limited, Global & U.S. Meat report;
•Euromonitor International Limited, Meat & Value-Added report;
•International Food Information Council, 2024 IFIC Food & Health Survey;
•Iowa State University forecasts – Study; Estimated Returns – Swine (Farrow to Finish) latest month data collected July 2024;
•Ipsos, “Nearly nine in ten Americans consume meat as part of their diet,” https://www.ipsos.com/en-us/news-polls/nearly-nine-ten-americans-consume-meat-part-their-diet, May 12, 2021;
•Mintel Group – Reports:
•Protein and Protein Alternatives – US – 2024 (April 24, 2024);
•The Future of Foodservice – US – 2024 (January 31, 2024);
•Bacon and Lunchmeat – US – 2023 (September 30, 2023);
•Hot Dogs and Sausages – US – 2023;
•Protein and Protein Alternatives – US – 2022; and
•Grocery Retailing – US – 2024 (June 26, 2024);
•National Hog Farmer, “NHF Snapshot - Packer Capacity,” May/June 2024 Issue;
•Organization for Economic Co-operation and Development, “Indicators – Meat Consumption, OECD-FAO Agricultural Outlook,” 2023-2032;
•Progressive Grocer, “The PG 100: The Top Food Retailers in North America,” May 20, 2024;
•U.S. Department of Agriculture, “Interagency Agricultural Projections Committee,” October 2023; and
•U.S. Department of Agriculture, “USDA Agricultural Projects to 2033,” February 2024.
Trademarks, Trade Names, Service Marks and Copyrights
We own or have rights to use various trademarks, tradenames, service marks and copyrights, which are protected under applicable intellectual property laws, including, for example: Smithfield, Eckrich, Farmland, Armour, Farmer John, Kretschmar, John Morrell, Cook’s, Gwaltney, Carando, Margherita, Curly’s and Smithfield Culinary. This prospectus also contains trademarks, tradenames, service marks and copyrights of other companies, which are, to our knowledge, the property of their respective owners. Solely for convenience, certain trademarks, tradenames, service marks and copyrights referred to in this prospectus may appear without the ©, ®, and ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, tradenames, service marks and copyrights. We do not intend our use or display of other parties’ trademarks, tradenames, service marks or copyrights to imply, and such use or display should not be construed to imply a relationship with, or endorsement or sponsorship of us by, these other parties.
Presentation of Financial Information
Our fiscal year is the 52-week or 53-week period which ends on the Sunday nearest to December 31. Unless otherwise noted, all references to “2023”, “2022” and “2021” are to the 52-week periods ended December 31, 2023, January 1, 2023 and January 2, 2022, respectively.
The consolidated financial statements in this prospectus were prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, which requires us to make estimates and use assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. It is possible that actual results could differ materially from those estimates. The information reflects all normal recurring adjustments that we believe are necessary to present fairly the financial position and results of operations for all periods included. Totals and percentages may be affected by rounding.
Non-GAAP Measures
This prospectus contains certain financial measures, including Adjusted Net Income and Adjusted Net Income Margin, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, Net Debt, Ratio of Net Debt to Adjusted EBITDA, Adjusted Segment Profit, Adjusted Segment Profit Margin and Free Cash Flow that are not required by, or prepared in accordance with, GAAP. We refer to these measures as “non-GAAP” financial measures. See
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures” for our definitions of these non-GAAP measures, information about how and why we use these non-GAAP measures and a reconciliation of each of these non-GAAP measures to its most directly comparable financial measure calculated in accordance with GAAP. You should be aware that our presentation of these and other non-GAAP financial measures in this prospectus may not be comparable to similarly titled measures used by other companies.
PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our common stock. You should read the entire prospectus carefully, including “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus, before making an investment decision.
Our Mission
Good food. Responsibly.® At Smithfield, we are helping to feed a world of nearly eight billion people. Our products are found on tables everywhere. We provide families with wholesome, safe and affordable food while finding new and innovative ways to care for our people, communities, animals and planet. It is our responsibility and our promise. We make more than good food. Good is what we do.
Our Company
Smithfield is an American food company and an industry leader in value-added packaged meats and fresh pork with over $14 billion in annual sales. We employ approximately 34,000 people in the United States and approximately 2,500 people in Mexico. We maintain high-quality standards, meeting demand through our strong relationships with thousands of U.S. family farmers and blue-chip global customers. We are a market leader due to our scale, diverse portfolio of strong brands and products and reputation as a trusted partner known for quality. We market our products under a leading portfolio of iconic brands including Smithfield, Eckrich and Nathan’s Famous, among many others.
Our ambition is to be the most trusted food and protein company in North America as we feed people in the United States and around the world, while embracing a culture of responsibility, operational excellence and innovation. We produce and distribute a wide variety of packaged meats and fresh pork products both domestically and abroad. We conduct our operations through three reportable segments: Packaged Meats, Fresh Pork and Hog Production. We are a leading provider of packaged meats in the United States, with the number two branded market position by volume across the 25 key packaged meats categories in which we compete, according to Circana. These 25 key packaged meats categories represent a total addressable market opportunity of $43 billion annually, of which we had an approximate 20% market share by volume (including our private label sales) as of September 2024. We are also the largest fresh pork processor in the United States with approximately 23% market share as of Fall 2023, according to National Hog Farmer. We sell our products across diverse channels including retail and foodservice, distributing in all 50 states in the United States, as well as export markets. We are a leading exporter of pork and pork products, with export sales representing 13% of our total sales for the nine months ended September 29, 2024.
Our Packaged Meats segment is the cornerstone of our business with a value-added product portfolio and profitability that has more than doubled since 2014. Alongside our Packaged Meats segment, our Fresh Pork and Hog Production segments remain integral parts of our business, providing significant scale and operational benefits in support of our product offerings and our ability to meet demand consistently across economic cycles. We believe our emphasis on value-added packaged meats, along with our commitment to food quality, strong financial position and steadfast devotion to our stated mission, will continue delivering value for our shareholders.
Smithfield’s supply chain includes company-owned and contract farms in the United States and Mexico, as well as long-standing relationships with more than 4,000 independent U.S. family farms who meet our animal care and quality standards. Our model offers a resilient supply chain, providing us with several competitive advantages, including an assured supply of consistent, high-quality protein, the ability to innovate and lead in areas such as group-housed pork and the ability to deliver differentiated products to meet customer specifications. We operate 39 facilities producing fresh pork and packaged meats in the United States and one fresh pork facility in Mexico, and we focus on continually optimizing our operations by identifying opportunities to reduce costs and increase flexibility to meet market demand. Additionally, we remain committed to investing in innovation across our products, packaging and manufacturing processes. We seek to be the supplier of choice to our customers and maintain our reputation for high-quality, safe and delicious products.
A New Smithfield in the Public Eye
Founded in 1936, we began as a pork processing operation named The Smithfield Packing Company. Through a series of acquisitions beginning in the 1980s, we became the largest fresh pork processor in the United States. In 2013, Smithfield was taken private and became a wholly owned subsidiary of Hong Kong-based WH Group, which is publicly traded on The Stock Exchange of Hong Kong Limited. WH Group is a limited liability company incorporated in the Cayman Islands, the shares of which have been listed on the Main Board of the Stock Exchange since August 2014. Through its subsidiaries, WH Group is principally engaged in the production and sale of packaged meats and pork.
Following the acquisition of Smithfield by WH Group, we focused on integrating our independent operating companies into a cohesive business. Our “One Smithfield” initiative unified our operations, brands and employees under one corporate umbrella, achieving synergies and enhancing profitability through disciplined cost management and balance sheet strength.
In recent years, we have transformed into a differentiated American food company with a leading position in value-added packaged meats and fresh pork, and our headquarters remains in our namesake town of Smithfield, Virginia.
In August 2024, we completed a carve-out of our European operations to focus our local management teams on the different market dynamics of North America and Europe. Pursuant to the European Carve-out, our operations in Europe were transferred to WH Group.
Led by growth in our Packaged Meats segment, our product portfolio has evolved to a higher concentration of value-added packaged meats offerings, significantly improving profitability. Additionally, we have reduced complexity and improved our cost structure in our plant operations by rationalizing our SKU count. Since 2019, we have reduced our Packaged Meats SKU count by over 40% and increased volume velocity (pounds/item) by over 60%.
The growth in our Packaged Meats segment has helped to increase our overall scale and profit margins and to stabilize our earnings and cash flows during volatile commodity cycles and economic downturns. This is the anchor of our strong financial position and fuels continued investment in our business. We have invested over $3 billion in capital expenditures since 2013, driving our organic growth strategy and improving our operations, including automating processes.
The following table sets forth certain metrics for our business for 2014 and 2023 and highlights our strategic growth and evolution led by our Packaged Meats segment.
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(1)Based on our historical financial statements for the year ended December 28, 2014, which are not included or incorporated by reference in this prospectus. We do not believe the adoption of accounting standards after that date would have a material effect on the financial measures presented. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures” for more information.
(2)Ratio of Net Debt to Adjusted EBITDA is defined as net debt divided by Adjusted EBITDA. Net debt is defined as long-term debt and finance lease obligations, including the current portion, minus cash and cash equivalents. Ratio of Net Debt to Adjusted EBITDA is a non-GAAP measure that should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with GAAP. For additional information regarding Ratio of Net Debt to Adjusted EBITDA, including a reconciliation to ratio of debt to net income, the most directly comparable GAAP measure, see “Management’s Discussion and Analysis of our Financial Condition and Results of Operations – Non-GAAP Measures.”
Packaged Meats Segment
The Packaged Meats segment produces a wide variety of value-added products and sells them primarily in the United States. For the nine months ended September 29, 2024, the segment had $5.9 billion in sales, comprising 58% of our total sales, $855 million in segment profit, comprising 109% of our total operating profit and a 15% operating profit margin. For the year ended December 31, 2023, we sold approximately 2.9 billion pounds of packaged meats products. The segment has achieved strong growth with a fiscal year 2014 to fiscal year 2023 segment profit compound annual growth rate, or CAGR, of 9.8%.
Our Packaged Meats portfolio is diversified across product categories, brands and channels and spans all meal occasions. For the nine months ended September 29, 2024, 63% of the segment sales were conducted through the retail channel, 31% through the foodservice channel and 6% through the industrial channel (i.e., other protein processors) and other.
We serve 100% of the top 10 ranked national grocery retailers, as identified by Progressive Grocer based on 2023 annual sales, including blue-chip customers, such as Walmart, Sam’s Club, Costco, Kroger and Albertsons. In the foodservice industry, we serve approximately 70% of the top 50 ranked national foodservice chains, including McDonald’s, Subway, IHOP and Jersey Mike’s, as well as all of the top foodservice distributors, including Sysco, U.S. Foods and Performance Food Group. Within the foodservice industry, we leverage our reputation for high-
quality products through our Smithfield Culinary brand, and we are the most recognized pork processor by chefs and foodservice operators, with 49% unaided awareness based on a 2024 study by Datassential.
We produce a wide variety of packaged meats products, including bacon, sausage, hot dogs, deli and lunch meats, dry sausage products (such as pepperoni and genoa), ham products, ready-to-eat products and prepared foods (such as pre-cooked entrees, bacon and sausage). We address all dayparts, with our products featured during breakfast, weekday school lunches, football weekends, holiday dinners and at snack time. While pork is our primary protein offering, approximately 17% of the volume utilized in our Packaged Meats segment for the nine months ended September 29, 2024 was non-pork products made with other proteins—primarily poultry and beef.
Our Packaged Meats segment’s branded retail offerings generated $3.2 billion, or 22% of consolidated sales, in 2023. Our products are available at most major food retailers where we continue to drive penetration and have strong on-shelf performance with attractive dollar velocities for our largest categories relative to competition.
Led by our flagship Smithfield brand, our portfolio of brands has strong consumer recognition and robust brand equity, and we target on-trend product categories for growth. We market our domestic packaged meats products under a strategic set of core brands, including national, super-regional, value and specialty brands that deliver value to our ultimate consumers across a wide range of price points.
The following table illustrates the percentage of our Packaged Meats segment’s branded sales in the retail channel in 2023 for each of our top brands, along with the relevance these brands represent across dayparts:
Additionally, private label represented 38% of our packaged meats retail channel sales volume in 2023. Our private label products make our offerings more valuable to blue-chip retail customers by providing consumers quality selections up and down the value chain. In addition, our private label business helps to optimize our manufacturing footprint and increases the efficiency and profitability of our plants.
Fresh Pork Segment
As the largest fresh pork processor in the United States, our Fresh Pork segment produces a wide variety of primal, sub-primal and offal products, such as bellies, butts, hams, loins, picnics and ribs. Our Fresh Pork segment had $5.9 billion in sales for the nine months ended September 29, 2024, comprising 58% of our total sales, $196 million in segment profit, comprising 25% our total operating profit and a 3% operating profit margin. For the year ended December 31, 2023, we processed approximately 29 million head through the Fresh Pork segment. Approximately one-third of our fresh pork products, including the majority of hams, bellies and trimmings, is transferred to our Packaged Meats segment, providing it with approximately 80% of its raw material requirements for the nine months ended September 29, 2024.
Our strategy is to drive our Fresh Pork segment’s profitability to exceed commodity meat values by maximizing the use of our raw materials. This includes offering value-added products, such as marinated fresh pork, a category in which we hold the leading position, and case-ready fresh pork. The export strategy is particularly important to our ongoing initiative to maximize hog utilization by selling byproducts to drive profitability.
Vertically Integrated Supply Chain and Hog Production Segment
Our supply chain, supported by our upstream businesses, is differentiated from our competitors’ supply chains and provides benefits that we believe are hard to replicate. Nearly all of the Hog Production segment’s sales are intercompany sales of live hogs to our Fresh Pork segment. Our Fresh Pork segment sources hogs from a mix of company-owned and contract farms, which raise company-owned hogs, comprising our Hog Production segment. Our Fresh Pork segment further supplements our supply by sourcing hogs from independent farmers with whom we partner across the United States through multi-year agreements. Contract farms and independent farms are held to the same animal care and quality standards as our company-owned farms and thereby form a key part of our integrated supply chain.
We have unmatched scale in hog production, which enables us to consistently supply high-quality raw materials for our Fresh Pork segment and, ultimately, our Packaged Meats segment. Today, we internally supply approximately 50% of the raw material needs of our Fresh Pork segment. We believe that it is important to maintain a certain level of internal production to enable supply to our Fresh Pork processing facilities, particularly to support our East Coast processing operations. Our scale has also enabled us to be an early mover in group-housing for pregnant sows on company-owned farms with the result that these farms supply the majority of our group-housed pork needs which is a differentiated product for which our customers pay a premium.
Beyond scale, our internally supplied hog production is geographically diverse, with locations in the East Coast, Midwest, Missouri and Utah, whereas our largest competitors are located predominantly in the Midwest. Our geographic diversity reduces risk by mitigating the impact of a potential disease outbreak in one part of the country. In addition, our East Coast hog production operations provide an efficient supply to two of our largest Fresh Pork and Packaged Meats processing facilities co-located in North Carolina. Our East Coast location provides us with a significant strategic advantage in our ability to export to more than 30 countries, because it gives us close proximity to East Coast ports, unlike our competitors who need to transport product from the Midwest more than 1,000 miles to either the East or West Coast ports.
In recent years, we embarked on a strategy to optimize the size of our hog production operations and procure a larger percentage of hogs from independent suppliers under long-term, market-based supply agreements. Our Hog Production segment’s transformation strategy is integral to our ongoing objective to further transition our business toward an increased mix of value-added, high-margin products. This transformation allows us to reduce our capital investment and exposure to more volatile areas of the value chain. We plan to reduce the size of the segment’s production from approximately 50% of fresh pork supply today to approximately 30% in the medium term, which is still significantly higher than our competitors. We have made material progress in executing our strategy, reducing the size of our segment’s production from a peak of 17.6 million head in 2019, and we continue to further optimize production levels. In the year ended December 31, 2023, we produced approximately 15.8 million head through the Hog Production segment. We ended 2024 at 14.6 million head, and we expect to end 2025 at approximately 11.5 million head. We believe this strategy will maintain an appropriate supply of high-quality inputs to meet business needs and improve our cost structure while achieving flexibility in our retained hog production business. See also “Risk Factors—Risks Relating to Our Business and Operations—An inability to realize savings and efficiency gains could adversely affect profitability and we may be unable to achieve any or all of our financial and operational targets.”
Our Financial Performance
We believe the rebound in our 2024 performance following a challenging year for our industry demonstrates the resilience of our business model, effectiveness of our strategy and operational discipline, while our stable cash flows and strong balance sheet allow us to invest in our continued operations and return value to shareholders.
The charts below depict our recent financial performance:
We believe maintaining a healthy financial position is critical to the execution of our strategy, efficiency of our operations and our ability to manage effectively through industry and macroeconomic headwinds. We are committed to maintaining investment-grade credit ratings and target the following metrics:
•Ratio of Net Debt to Adjusted EBITDA of 2.0x. As of , our Ratio of Net Debt to Adjusted EBITDA was x and our ratio of debt to net income from continuing operations was x. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures” for our definitions of Ratio of Net Debt to Adjusted EBITDA, information about how and why we use this non-GAAP measure and, for historical periods, a reconciliation of this non-GAAP measure to ratio of debt to net income from continuing operations, its most directly comparable financial measure calculated in accordance with GAAP.
•Minimum liquidity of $1.0 billion. As of , our liquidity was $ . We define liquidity as cash and cash equivalents plus available borrowing capacity under our credit facilities.
In addition, the charts below depict our segment profit over time:
The evolution of our business to value-added products with higher margins supports stronger cash flow generation, which is allocated toward investment in growth and shareholder return. Our capital allocation strategy is focused on:
•Driving top-line growth and achieving operational efficiencies by allocating $400 million to $500 million annually towards capital expenditures.
•Returning excess capital to shareholders in the form of a regular dividend after funding investments in our strategic priorities. We initially expect to pay annual dividends in an amount equal to 50% of our net income, subject to the discretion of the board.
•Conducting opportunistic and financially disciplined acquisitions, primarily focused on growing our Packaged Meats segment, with assets and capabilities that complement our robust manufacturing platform and strong brands and product offerings.
Our Industry
We operate in the large and growing global packaged and fresh meats market, which includes value-added fresh, refrigerated and frozen proteins. Our business operations are primarily concentrated in North America, but, as a leading exporter to major international markets, we also benefit from significant global demand for our products. According to Euromonitor, the global meat market reached $1.1 trillion in 2023 and is projected to grow at a 6.5% CAGR between 2023 and 2028. Per Euromonitor, U.S. value-added packaged meats represented a $47 billion market in 2023 and is forecasted to grow at a 3.6% CAGR between 2023 and 2028. Value-added packaged meats refers to the processed meats category as defined by Euromonitor and includes meat products that have undergone additional processing, such as adding an additional ingredient or characteristic, and are sold pre-packaged via retail and foodservice outlets.
The following table sets forth information about size of the U.S. value-added packaged meat market:
Consumer Trends in U.S. Packaged Meats and Fresh Pork
The U.S. packaged meats market is supported by long-term secular tailwinds, including consumer demand for high-protein diets, high-quality nutrition, product versatility and convenience. We expect these tailwinds to continue to drive increases in overall meat consumption. Consumers associate protein with healthiness and energy. A 2024 International Food Information Council consumer survey reported that a high-protein diet is the most popular diet type in the United States. According to market research firm Ipsos, 89% of Americans include animal protein in their diets as of 2021. Data from the Organization for Economic Co-operation and Development shows that pork represented 24% of all meat protein consumed in the United States in 2023.
According to Mintel, many packaged meats products are household staples for U.S. consumers, including bacon, lunch meat, hot dogs, fresh sausage and dry sausage. Mintel reports that, as of September 2023, U.S. bacon and lunch meat represented an estimated $27.0 billion market in 2023 that is expected to grow at a 4.2% CAGR between 2023 and 2028, and U.S. hot dogs and sausages were estimated to represent a $12.3 billion market in 2023 that is expected to grow at a 1.0% CAGR between 2023 and 2027. According to Business Research Insights, U.S. dry sausage for charcuterie, snacking, sandwiches, pizza toppings and other uses, typically higher margin products, represented a $4.7 billion market in 2023 that is expected to grow at a 3.9% CAGR between 2023 and 2030.
Mintel reports that 86% of U.S. consumers anticipate eating the same amount of pork or more pork in the coming year according to a survey conducted in February 2024, and pork consumption is distributed relatively equally across income groups. According to Mintel, packaged pork products benefit from growing demand for convenience, as consumers value marinated, ready-to-cook and ready-to-eat options. Mintel reports that pork is an affordable and convenient protein.
Pork is also a highly versatile protein, with a wide variety of cuts and flavor profiles. Use occasions for pork products benefit from strong daypart distribution, which is unique relative to all other meat proteins. Products like bacon, sausage and ham appear on tables at every meal. According to the National Pork Board, bacon is by far the most beloved packaged meats product, and pork is a highly snacked meat protein and the most popular pizza topping in the United States.
Additionally, increased U.S. demand for global cuisines supports the domestic pork market. Asian and Mexican cuisines, for which pork is a leading protein, continue to gain popularity with U.S. consumers, particularly among Generation Z (the generational cohort aged 12 to 27 years) and Millennials (the generational cohort aged 28 to 43 years). We believe that the continued growth of global cuisines in the United States introduces consumers to different pork preparations and flavor profiles and serves as an incremental long-term tailwind for pork.
According to Mintel, most U.S. consumers are concerned about the environmental impact of meat production, and health and nutrition are important factors to consumers of meat. Many cuts of pork offer lower levels of cholesterol and saturated fat relative to cuts of beef. Lean cuts of pork, including pork tenderloin, offer a superior nutritional profile to chicken breast. Additionally, relative to beef, pork production generally has a lower carbon footprint and lower rate of land usage. Nevertheless, changes in market trends and consumer preferences could adversely affect our results of operations. For more information, see “Risk Factors—Risks Relating to Our Business and Operations—Changes in consumer preferences and failure to maintain favorable consumer perception of our brands could negatively impact our business.”
Our Competitive Strengths
We attribute our track record of success to a combination of the following competitive strengths. We believe these strengths are central to our business model and position us well for long-term success.
Leader in Packaged Meats with Diverse Portfolio of Strong Brands
We have grown our Packaged Meats business to become a leading provider of value-added pork and other protein products for U.S. customers and consumers. Consumers choose our products for consistent high-quality and delicious taste, helping us achieve an 81% repeat purchase rate as of September 2024. Our Net Promoter Scores, a gauge of brand affinity, are superior to peers across key categories, including smoked ham, fresh pork, Italian specialty, hot dogs, everyday ham and bacon. We continue to see increasing loyalty and unaided awareness across our key brands and categories. Our longstanding commitment to our values and corporate heritage resonates with consumers who share our ideals, including our commitment to sustainability and American agriculture.
Our trusted brands have made us one of the country’s leading food companies. Led by our flagship Smithfield brand, we have a diverse portfolio of national, super-regional, value and specialty brands with strong customer loyalty. We complement our national brands with super-regional brands to capitalize on each brand’s history and strong consumer affinity. Our value brands offer consumers choices across price points, and our specialty brands address various on-trend categories such as dry sausage and convenient preparation items, including barbecue and meatballs.
As a branded player across the United States, we have a leading position in 15 of the 25 key categories in which we compete. We have a significant presence in 10 categories each over $1 billion in size, including the number one or two position by volume in uncooked bacon, smoked ham, deli meat, cooked dinner sausage and portable meals as shown in the table below:
We market our products to customers and consumers across multiple categories and price points. We have a balanced sales mix with approximately 64% branded and 36% private label in the retail channel as of September 2024. Our participation in both branded and private label helps us attract and retain consumers as they move across the value spectrum, enabling us to meet shifting consumer preferences during periods of economic downturn and to capture wallet share when they trade up to premium brands.
For example, in the packaged lunch meat category, almost 98% of the volume is sold on average in the $2.00-$9.00 price per pound range. Our packaged lunch meat offering exemplifies how we cover a wide range of retail price points from our best value with Gwaltney (at approximately $2.50 average retail price per pound) to our premium Smithfield Prime Fresh (at approximately $8.50 average retail price per pound) as of September 2024.
While some of our competitors may choose to focus on consumers at only the high or low end of the value spectrum, our strategy enables us to meet consumer demand across various price points, as shown in the chart below:
For information about challenges we face in the highly-competitive food market, see “Risk Factors—Risks Relating to Our Business and Operations—The food industry in which we operate is highly competitive, and our inability to compete successfully, or the effects of such competition, could adversely affect our business, financial condition and results of operations.”
Trusted and Scaled Partner Known for Quality
We have a nearly 90-year history of providing great tasting, quality products across the United States and abroad. We pride ourselves on producing safe, wholesome and high-quality protein, and we continually train our team members in the latest animal welfare and food safety and quality best practices across our supply chain. Producing Good food. Responsibly.® is at the core of our purpose-driven culture. Consumers trust our high-quality brands and products, and we are a trusted partner to customers, suppliers and farmers across the value chain.
Through years of investment and growth, we have created an asset base that we believe would be hard to replicate. Our scale and integrated operating model enable us to reliably meet demand across economic cycles and offer a differentiated value proposition to our customers and consumers. We believe that we are a preferred supplier to our partners because we consistently provide comprehensive end-to-end support and reliably deliver high-quality products on time. Our commitment and reputation for high-quality products and service is evidenced by the numerous awards received from our retail and foodservice customers, recognizing Smithfield as a supplier of choice.
Leveraging our scale and global distribution channels, we are also a leading exporter of pork and pork products, with sales to export markets representing 13% of our total sales for the nine months ended September 29, 2024. Export markets promote whole hog utilization due to differentiated demand for parts of the animal across the globe, which helps us to operate sustainably while supporting American agriculture.
Strong Financial Profile Marked by Robust Growth and Profitability Metrics
We are focused on delivering long-term sustainable results and have built our business to generate resilient growth, profitability and cash flow. Our track record of sales and earnings growth reflects strong demand for our products and successful management of commodity volatility across economic cycles. In 2024, we demonstrated a strong rebound in our results after a challenging 2023 for our industry.
The resilience of our business model is underscored by our history of maintaining a strong balance sheet and moderate leverage. Sustaining a healthy financial position creates operational flexibility and helps to insulate us from industry and macroeconomic headwinds. We are committed to a target Ratio of Net Debt to Adjusted EBITDA of < 2.0x and a target minimum liquidity of $1.0 billion, as well as maintaining investment grade ratings.
We have a strong track record of disciplined capital allocation, generating higher profitability and cash flows by executing projects that drive organic growth and unlock operational efficiencies. While organic growth has been the backbone of our growth strategy over the past decade, we will continue to supplement our organic growth with a disciplined acquisition strategy. Our acquisition strategy primarily focuses on packaged meats assets and capabilities that complement our manufacturing platform, strong brands and product offerings.
Innovative Sustainability Initiatives
Sustainability has been a key focus for our business for over twenty years. Our strategy today is built around three objectives: being good stewards of the environment and our animals; doing good work in the communities where our employees live and work; and producing good food with a commitment to food safety, quality and nutrition. We have been at the forefront of the industry in achieving sustainability milestones, including becoming the first major protein company to adopt and publicly report a comprehensive sustainability program, to achieve International Standards Organization 14001 certification globally, to develop and adopt a comprehensive animal care management program, to begin reporting antibiotics usage in 2007 and to publish an online ingredient glossary.
We leverage on-the-ground resources to strive to achieve our sustainability goals. We co-founded Align RNG, LLC, or Align, as well as Monarch Bioenergy LLC, or Monarch, to advance developments in methane capture and manure-to-energy conversion. In 2022, TPG Rise Climate invested in Monarch, helping us to further scale the business.
Our sustainability activities have been recognized externally. We were awarded the prestigious “Profit with a Purpose” award by the World Sustainability Awards, or WSA, in 2021 for our innovative renewable natural gas programs. These programs convert methane from hog manure into clean energy, creating new income opportunities for family farmers. Additionally, we received a “Highly Commendable” mention in the WSA’s External Partnership category in 2021 for our collaboration with a leading environmental organization to implement sustainable farming practices within our supply chain.
We are consistently recognized as an employer of choice for U.S. veterans. We have a long history of supporting veterans and military families through monetary and food donations, employee volunteerism and partnerships. We honor the service and sacrifice of American veterans and their families through the Helping Our Heroes program, which focuses on hiring initiatives, career development and strengthening the community and family support systems veterans rely on every day.
Proven, Execution-Oriented Management Team and Culture
We are an iconic American food company with a management team based in Smithfield, Virginia. We employ approximately 34,000 people in the United States and approximately 2,500 people in Mexico. Our energetic and highly experienced management team, whose dedication and commitment to our mission permeates throughout our business, has made us one of the world’s foremost protein companies, sets the tone for our success and drives the agility necessary to continue to transform Smithfield into a leading packaged food company. We foster a culture of responsibility, operational excellence and innovation that serves as the foundation for the transformation in our business.
C. Shane Smith, President and Chief Executive Officer since 2021, is a veteran of our company and has served in a wide range of roles during his 21-year tenure. He previously served as President of Smithfield’s European operations and as our Chief Strategy Officer, and he has held other roles in finance and our Hog Production segment. He has been instrumental in overseeing the continued execution of our “One Smithfield” vision, fortifying our position as a leading food company and improving operational efficiency to enhance market competitiveness.
Mark L. Hall, our Chief Financial Officer, has 26 years of experience in the food industry and leads our finance, accounting, treasury, tax, mergers and acquisitions, data analytics and risk management functions. Since joining Smithfield in 2014, Mark has played a crucial role in developing and executing our strategy, including during his tenure as head of finance within the Packaged Meats segment.
Our senior leadership team has extensive food industry experience. Steven France, Donovan Owens and Kraig A. Westerbeek lead our Packaged Meats, Fresh Pork and Hog Production segments, respectively, and have nearly a century of combined industry experience, including over 80 years of experience at Smithfield. Our leadership, combined with our integrated operating structure, solid financial foundation and the support of over 36,000 employees, create a cohesive and coordinated platform to further Smithfield’s growth as a leading food company creating value for a range of stakeholders.
Our Growth Strategies
Since the last time we were a public company in 2013, we have grown sales to $14.6 billion while significantly improving our profitability and leverage position. The strategic initiatives we are executing across our segments are complemented and enabled by our strong balance sheet and ongoing operational investments, positioning us for future growth.
Drive Growth of Packaged Meats
Our Packaged Meats segment is core to our growth strategy and has been a major driver in transforming our business since 2014. We have methodically shifted our business mix to focus on this higher-margin segment over time. The segment contributed 58% of our sales and 109% of our overall operating profit for the nine months ended September 29, 2024.
We plan to accelerate the growth of our Packaged Meats segment through several strategic initiatives, including:
•continuing to shift our portfolio toward a higher mix of value-added and premium products, such as:
•converting one-time seasonal commodity bone-in ham purchase occasions to increased unit sales of everyday, convenient products such as quarter-weight ham, Anytime Favorites ham and Prime Fresh sliced lunch meat, which is underscored by our ability to generate a 19% increase in ham units sold from 2019 to 2023 while volume increased only by 2% for that same period; and
•increasing penetration of higher-margin dry sausage products through expanding distribution points and manufacturing capacity, as evidenced by a 29% increase in dry sausage units sold from 2019 to 2023 and the recent acquisition of a dry sausage plant;
•harnessing our powerful brands to continue to expand product offerings and drive awareness, loyalty and increased market share;
•leveraging the breadth of our platform and national and specialty brands to further penetrate dayparts and households;
•expanding in under-indexed geographical locations and moving into new categories;
•attracting new consumers, particularly younger demographics, through product and packaging innovation and effective and appealing marketing strategies while maintaining our promise to consumers to offer high-quality products for every budget; and
•deepening our presence across our distribution channels through our integrated sales force, which leverages our scale and breadth to provide a unified, reliable and consistent customer experience.
We believe that these proven strategies will drive profitable organic growth in our Packaged Meats segment. As an example, we see significant potential for our Packaged Meats segment to generate continued growth through our distribution expansion opportunities across brands to expand unit count within our existing product portfolio.
Further Enhance Fresh Pork
We continually seek greater efficiencies as we manufacture and market fresh pork products. Our capabilities and supply chain allow us to provide differentiated products and high service levels to our customers. We deliver a high-quality, consistently available supply to our Packaged Meats segment and maximize the value of our raw materials. We will seek to enhance the profitability of our Fresh Pork segment by:
•maximizing the value of each hog and expanding use of raw materials, including unprocessed fresh and value-added pork, snacks, pharmaceuticals and pet food treats and ingredients;
•capitalizing on export markets as an outlet for increasing the value of raw materials through whole-hog utilization, and appealing to differentiated, global tastes and preferences;
•leveraging our relationship with WH Group to inform product development opportunities for the Asian market and to benefit from WH Group’s distribution network; and
•appealing to ever-changing consumer preferences and demand for flavor enhancements through ongoing product innovation.
As we seek to grow our fresh pork business profitably, we remain committed to demonstrating that profitability can go hand-in-hand with sustainable operations. We will further our mission of producing good food the right way by seeking new and unique ways to use our raw materials.
Continue Investing in Innovation
We will continue to invest in product, packaging and operational innovations in our Packaged Meats and Fresh Pork segments to drive growth, enhance our profitability and expand our total addressable market. We are focused
on strengthening relationships with customers and consumers by being first-to-market with new products and solutions.
Within our branded packaged meats portfolio, we are introducing more value-added and premium innovations. We see a significant opportunity to increase distribution of our innovative Smithfield Prime Fresh packaged lunch meat offering. Smithfield Prime Fresh embodies the quality of bulk deli meat but is displayed in the packaged lunch meat section of the retail wall. This enables our retail partners to increase average revenue per pound and reduce in-store labor costs while providing a convenient lunch meat option for consumers.
In addition, our Smithfield Double Thick/Double Smoked bacon and Smithfield Maple Thick Cut bacon demonstrate our ability to introduce premium, higher-margin offerings with new cut and flavor characteristics. These products sell at a higher velocity than the category average.
In the Fresh Pork segment, we are investing in value-added products and adding new cuts and flavors, such as Sweet & Smokey BBQ, Chipotle and Lemon & Garlic marinated fresh pork loin filet.
Innovation does not stop with our products. In our plants, we are committed to advancing automation and strategically redeploying labor. On our farms, innovative approaches to animal nutrition are increasing feed conversion and lowering our cost basis. Byproducts that were once considered waste are now used to create renewable natural gas through our biogas joint ventures and lifesaving pharmaceuticals through our bioscience business.
Our culture of responsibility, operational excellence and innovation serves as a catalyst for our ongoing business transformation. We conduct company-wide competitions and recognition events for grassroots projects that drive innovation throughout our organization. By fostering this entrepreneurial spirit, we will seek to drive growth in our top- and bottom-line results and build on Smithfield’s competitive advantage.
Optimize Our Operations and Supply Chain to Decrease Our Cost Basis
We have implemented many initiatives over the past several years to reduce costs and realize operational efficiencies. These initiatives have enabled us to offset inflation and enhance margins across our entire business.
We continue to optimize the size of our company-owned hog production operations and procure a greater mix of hogs from independent suppliers with market-based supply agreements. Additionally, we continue to implement cost-saving initiatives in our retained hog production operations to improve our cost structure.
We employ automation in all of our plants to redeploy labor to higher value tasks, improve yields and drive efficiency by reducing complexity to lower our cost basis and help offset inflationary pressures.
In our logistics and distribution network, we have reduced transportation and warehousing costs through transportation efficiencies, maximizing utilization of our storage and trucking assets, improving supply and demand
planning and optimizing inventory levels. These actions increase profitability and improve customer service levels, which we believe is essential to being a supplier of choice.
We remain committed to optimizing our operations and supply chain through a series of targeted actions, which in the past have supported meaningful margin improvement:
| | | | | | | | |
| Hog Production | Packaged Meats & Fresh Pork | Logistics |
| “Reform and Rationalize” | “Best-In-Class Lean
Manufacturing” | “Improve Service at
Optimal Cost” |
•Optimize number of company-owned hogs •Improve herd health •Transform genetics •Drive procurement and nutrition savings | •Offset inflation with cost savings programs •Employ automation •Improve yields and maximize raw material usage •Reduce complexity | •Be the supplier of choice •Maximize assets (reduce transport miles, warehouse utilization) •Improve supply and demand planning •Optimize inventory levels |
Implementation of our growth strategies requires us, in particular, to continue to grow our Packaged Meats segment and to reduce our exposure to commodity price volatility through optimization and continued reduction of the size of our company-owned hog production operations. For information about challenges that we face in implementing this strategy and our other growth strategies, please see “Risk Factors—Risks Relating to Our Business and Operations—Our results of operations are cyclical and could be adversely affected by fluctuations in the commodity prices for meat, livestock (primarily hogs) and feed ingredients,” and “—Disruption of our supply chain could adversely affect our business, financial condition and results of operations.”
Execute Synergistic M&A in North America
We intend to execute opportunistic, complementary M&A to bolster our value-added product portfolio and production capacity in North America. While acquisitions are not a primary growth driver for us, our team is experienced in identifying strategic acquisition targets and integrating them successfully into our business. We believe our integration expertise allows us to capture both cost synergies and incremental revenue opportunities. We will remain disciplined in our acquisition approach and maintaining our investment grade ratings, while pursuing opportunities that we believe will prove accretive to earnings and enhance our operational profile. For example, we recently acquired a dry sausage plant in Nashville, Tennessee from Cargill Meat Solutions Corporation, or Cargill, which is strategically located and offers important capacity for some of our fast-growing, higher margin packaged meats products. This acquisition will help serve the growing demand for high-quality pepperoni, deli, charcuterie and other dry sausage products.
Recent Developments
Murphy Family Farms Investment
On December 27, 2024, we became a member of a North Carolina-based company, Murphy Family Farms LLC, by contributing $3 million in cash in exchange for a 25% minority interest. We additionally sold approximately 150,000 sows located on company-owned and contract farms in North Carolina to Murphy Family Farms. On December 30, 2024, we sold the commercial hog inventories associated with such sows to Murphy Family Farms. Murphy Family Farms is now a hog supplier to us and will supply approximately 3.2 million hogs annually. We will supply animal feed and provide certain support services to Murphy Family Farms.
VisionAg Hog Production Investment
On December 20, 2024, we entered into an agreement to become a member of a North Carolina-based company, VisionAg Hog Production, LLC, whereby we will contribute $450,000 in cash in exchange for a 9% minority interest in VisionAg Hog Production, with the existing owner retaining a 91% interest. As part of the agreement, we will sell to VisionAg Hog Production approximately 28,000 sows and the associated commercial hog
inventories located on certain company-owned and contract farms in North Carolina. VisionAg Hog Production will become a hog supplier to us, expected to supply approximately 600,000 hogs annually. In addition, we will supply animal feed and provide certain support services to VisionAg Hog Production. The transaction is expected to close during the first quarter of 2025. Closing of the transaction is subject to satisfaction of customary closing conditions.
Sale of Utah Hog Production Assets.
On December 17, 2024, we sold our hog production assets in Utah, excluding the live animals, for $58 million. The transaction resulted in a gain of $32 million, which was recognized in operating gains in the fourth quarter of fiscal year 2024. As part of the agreement, we will lease back certain farm and feed properties, which we will continue to operate.
Sale of Missouri Hog Farms
On November 26, 2024, we sold certain hog farms in Missouri, most of which were previously inactive, for $32 million. The transaction resulted in a loss of $4 million, which was recognized in cost of sales in the fourth quarter of fiscal year 2024.
Preliminary Results for the Three Months Ended December 29, 2024
We have set forth below our preliminary estimates of selected unaudited financial information for the three months ended December 29, 2024 and actual unaudited financial results for the three months ended December 31, 2023. We have provided estimates and ranges of certain preliminary results below because our closing procedures for the three months ended December 29, 2024 are not yet complete.
Our preliminary estimates of the financial results set forth below are based solely on information available to us as of the date of this prospectus and are inherently uncertain and subject to change. Our actual results for the three months ended December 29, 2024 remain subject to the completion of management’s final review and our other closing procedures as well as the effects of potential subsequent events. Accordingly, you should not place undue reliance on these preliminary financial results set out below, which may differ from actual results. See “Forward-Looking Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
The preliminary estimated unaudited financial results included in this prospectus have been prepared by, and are the responsibility of, our management. Our independent registered public accounting firm, Ernst & Young LLP, has not audited, reviewed, compiled or performed any procedures with respect to the preliminary financial results. Accordingly, Ernst & Young LLP does not express an opinion or any other form of assurance with respect thereto.
The preliminary estimates and actual results provided below do not represent a comprehensive statement of our financial results and should not be viewed as a substitute for full quarterly financial statements prepared in accordance with GAAP. In addition, the preliminary estimates and actual results provided below are not necessarily indicative of the results to be achieved in any future period. The unaudited actual results for the three months ended December 31, 2023 have been derived from the books and records of our company. For additional information regarding the presentation of our financial information, see “Note 1: Summary of Significant Accounting Policies—Basis of Presentation,” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
Additionally, the estimates and actual results reported below include certain financial measures that are not required by, or presented in accordance with, GAAP. Management believes that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations. These non-GAAP financial measures have limitations as analytical tools, are not measurements of our performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP and should not be used by investors or other users of our financial statements in isolation for formulating decisions, as such non-GAAP measures exclude a number of important cash and non-cash charges. A reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to net income and net income margin is provided below. See also “Management’s Discussion and Analysis
of Financial Condition and Results of Operations—Non-GAAP Measures.” You should be aware that our presentation of these and other non-GAAP financial measures in this prospectus may not be comparable to similarly titled measures used by other companies.
The following table reflects certain preliminary results for the three months ended December 29, 2024 and actual results for the three months ended December 31, 2023:
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
| December 29, 2024 (estimated) | | December 31, 2023 (actual) |
Low | | High | | |
| (in millions except margin data) |
| Consolidated Statements of Income Data: | | | | | |
| Sales | $ | | | | $ | | | | $ | 3,998 | |
| Gross profit | | | | | 285 | |
| Operating profit (loss) | | | | | (116) | |
| Net income (loss) from continuing operations | $ | | | | $ | | | | (131) | |
| Net income (loss) margin from continuing operations | | % | | | % | | (3.3) | % |
| | | | | |
| Consolidated Balance Sheet Data (at end of period): | | | | | |
| Cash and cash equivalents | $ | | | | $ | | | | $ | 687 | |
Working capital (1) | | | | | 2,470 | |
| Total assets | | | | | 13,317 | |
| Current portion of long-term debt and finance lease obligations | | | | | 27 | |
| Long-term debt and finance lease obligations | | | | | 2,006 | |
| Total shareholder’s equity | | | | | 7,241 | |
| | | | | |
| Non-GAAP Financial Measures: | | | | | |
| EBITDA from continuing operations | $ | | | | $ | | | | $ | (24) | |
| Adjusted EBITDA from continuing operations | $ | | | | $ | | | | $ | 279 | |
| Adjusted EBITDA margin from continuing operations | | % | | | % | | 7.0 | % |
________________
(1)We define working capital as current assets less current liabilities.
For the three months ended December 29, 2024, we estimate that our sales will range from $ million to $ million, as compared to $3,998 million for the three months ended December 31, 2023. Such was primarily due to .
For the three months ended December 29, 2024, we estimate that our gross profit will range from $ million to $ million, as compared to a gross profit of $285 million for the three months ended December 31, 2023. Such was primarily due to .
For the three months ended December 29, 2024, we estimate that our operating profit will range from $ million to $ million, as compared to an operating loss of $116 million for the three months ended December 31, 2023. Such was primarily due to .
For the three months ended December 29, 2024, we estimate that our net income (loss) from continuing operations will range from $ million to $ million, as compared to a net loss from continuing operations of $131 million for the three months ended December 31, 2023. Such was primarily due to .
The following table reflects certain preliminary segment results for the three months ended December 29, 2024 and actual results for the three months ended December 31, 2023:
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
| December 29, 2024 (estimated) | | December 31, 2023 (actual) |
| Low | | High | | |
| (in millions except margin data) |
| Segment Sales: | | | | | |
| Packaged Meats | $ | | | | $ | | | | $ | 2,404 | |
| Fresh Pork | | | | | 1,836 | |
| Hog Production | | | | | 819 | |
Other (1) | | | | | 178 | |
| Intersegment | | | | | (1,240) | |
| Consolidated | | | | | $ | 3,998 | |
| | | | | |
| Segment Profit: | | | | | |
| Packaged Meats | $ | | | | $ | | | | $ | 306 | |
| Fresh Pork | | | | | 45 | |
| Hog Production | | | | | (127) | |
Other (1) | | | | | 13 | |
________________
(1)Consists of our Mexico and Bioscience operations.
Segment Sales
Packaged Meats sales for the three months ended December 29, 2024 by approximately $ million compared to the three months ended December 31, 2023, primarily attributable to .
Fresh Pork sales for the three months ended December 29, 2024 by approximately $ million compared to the three months ended December 31, 2023, primarily attributable to .
Hog Production sales for the three months ended December 29, 2024 by approximately $ million compared to the three months ended December 31, 2023, primarily attributable to .
Segment Profit
Packaged Meats segment profit for the three months ended December 29, 2024 by approximately $ million compared to the three months ended December 31, 2023, primarily attributable to .
Fresh Pork segment profit for the three months ended December 29, 2024 by approximately $ million compared to the three months ended December 31, 2023, primarily attributable to .
Hog Production segment profit for the three months ended December 29, 2024 by approximately $ million compared to the three months ended December 31, 2023, primarily attributable to .
Segment profit from our Other segment operations for the three months ended December 29, 2024 by approximately $ million compared to the three months ended December 31, 2023, primarily attributable to .
Non-GAAP Measures
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures that should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with
GAAP. For our definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin and information about how and why we use these non-GAAP measures, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures.”
The following table provides a preliminary reconciliation of preliminary estimated net income, the most directly comparable financial measure calculated in accordance with GAAP, to preliminary estimated EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for the three months ended December 29, 2024, and a reconciliation of actual net income and actual net income margin to actual EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin for the three months ended December 31, 2023:
| | | | | | | | | | | | | | | | | |
| Three Months Ended |
| December 29, 2024 (estimated) | | December 31, 2023 (actual) |
| Low | | High | | |
| (in millions except margin data) |
| Net income (loss) from continuing operations | $ | | | | $ | | | | $ | (131) | |
| Interest expense, net | | | | | 17 | |
| Income tax expense (benefit) | | | | | $ | (42) | |
| Depreciation and amortization | | | | | 131 | |
| EBITDA from continuing operations | $ | | | | $ | | | | $ | (24) | |
Litigation Charges (1) | | | | | 196 | |
West Coast Exit and Hog Production Reform (2) | | | | | 106 | |
| Incremental costs from destruction of property | | | | | 2 | |
| Adjusted EBITDA from continuing operations | $ | | | | $ | | | | $ | 279 | |
| | | | | |
| Net income (loss) margin from continuing operations | | % | | | % | | (3.3) | % |
| Adjusted EBITDA margin from continuing operations | | % | | | % | | 7.0 | % |
________________
(1)Consists of accruals for the antitrust price-fixing and antitrust wage-fixing litigation matters that are described in “Note 17: Regulation and Contingencies” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
(2)Consists of costs related to the closure of our Vernon, California processing facility, the sale or closure of certain farms in Arizona, California, Missouri and Utah and certain residual operating and restructuring expenses, including the termination of a number of agreements with contract farmers workforce reduction, due to discontinuation of operations in the West Coast and efforts to improve the cost structure of our Hog Production segment.
Summary of Risk Factors
Investing in our common stock involves a high degree of risk. You should carefully consider the risks described in “Risk Factors” before making a decision to invest in our common stock. If any of these risks actually occurs, our business, consolidated results of operations and consolidated financial condition, including cash flows, may be materially adversely affected. In such case, the trading price of our common stock may decline and you may lose part or all of your investment. Below is a summary of some of the principal risks we face.
•Our results of operations are cyclical and could be adversely affected by fluctuations in the commodity prices for meat, livestock (primarily hogs) and feed ingredients.
•Disruption of our supply chain could adversely affect our business, financial condition and results of operations.
•An inability to realize savings and efficiency gains could adversely affect profitability and we may be unable to achieve any or all of our financial and operational targets.
•The food industry in which we operate is highly competitive, and our inability to compete successfully, or the effects of such competition, could adversely affect our business, financial condition and results of operations.
•Changes in consumer preferences and failure to maintain favorable consumer perception of our brands and products could negatively impact our business.
•Outbreaks of disease among or attributed to livestock can significantly affect production, the supply of raw materials, demand for our products and our business.
•Our operations are subject to the general risks associated with the food industry, including perceived or real health risks related to our products or the food industry generally and risks associated with government regulations.
•If our products become contaminated, we may be subject to product liability claims and product recalls. Such product liability claims or product recalls can adversely affect our business reputation, expose us to increased scrutiny by federal and state regulators and may not be covered by insurance.
•Any disruption of operations at one or more of our production facilities, distribution centers or cold storage facilities, including as a result of natural disasters, public health crises, political crises and instability, civil unrest and other catastrophic events or events outside of our control, could adversely affect our business, financial condition and results of operations.
•Our reliance on third-party service providers can have an adverse effect on our business.
•Due to seasonality or changes in our promotional activities, our revenue and operating results may vary from quarter to quarter.
•Significant increases in the cost of distribution could adversely affect our business, financial condition and results of operations.
•We are increasingly dependent on information technology, and our business and reputation could suffer if we are unable to protect our information technology systems against, or effectively respond to, cyberattacks, other cyber-incidents or security breaches or if our information technology systems are otherwise disrupted.
•We are subject to risks associated with our international sales.
•The consolidation of customers and/or the loss of our customers could adversely impact our business.
•We face risks associated with the long-term trend toward increased activism against companies in the food products industry.
•We are subject to extensive governmental regulations, which require significant compliance expenditures.
•Governmental authorities may take further action restricting our ability to produce and/or sell livestock or adopt new regulations impacting our production or processing operations, which could adversely affect our business.
•We are, and could become, subject to legal proceedings and regulatory investigations that may result in significant expenses, fines and reputational damage.
•Government antitrust and foreign investment policies and regulations may limit our strategic growth opportunities, including certain acquisitions and joint ventures.
•Climate change, or legal, regulatory, voluntary or market measures to address climate change, may negatively affect our business, operations or reputation.
•We will be a “controlled company” within the meaning of the rules of Nasdaq and, as a result, qualify for, and intend to rely on, exemptions from certain corporate governance requirements.
•You will not have the same protections afforded to shareholders of other companies that are subject to such requirements.
Corporate History
Smithfield Foods, based in Virginia since its founding in 1936, started as a pork processing operation called The Smithfield Packing Company. Through a series of acquisitions beginning in the 1980s, we have become the largest fresh pork processor in the United States. In 2013, we were acquired by Hong Kong-based Shuanghui International Holdings Limited, which subsequently changed its name to WH Group Limited, and we are currently its indirect wholly owned subsidiary. WH Group’s shares are publicly traded on The Stock Exchange of Hong Kong Limited.
Relationship with WH Group
Upon completion of this offering, WH Group will continue to own % of the total voting power of our outstanding shares of common stock (or % if the underwriters exercise in full their option to purchase additional shares). Accordingly, WH Group will generally be able to control, whether directly or indirectly through its ability to remove and elect directors, and subject to applicable law, substantially all matters affecting us. See “Risk Factors—Risks Relating to Our Relationship with WH Group—WH Group controls us, and their interests may conflict with ours or yours in the future” for more information.
Corporate Reorganization
Prior to August 26, 2024, we conducted business operations in the United States, Mexico and Europe. On August 26, 2024, we completed the European Carve-out, pursuant to which we transferred our operations in Europe to WH Group. Following the European Carve-out, we principally engage in operations in the United States and Mexico. Unless otherwise expressly stated or the context otherwise requires, the description of our business included in this prospectus reflects our business after giving effect to the European Carve-out. The results of operations, assets and liabilities, and cash flows of the European operations as presented in our consolidated financial statements have all been condensed into separate line items and presented in the consolidated statements of income, the consolidated balance sheets and the consolidated statements of cash flows as discontinued operations, and this treatment has been applied retrospectively to all periods presented. Unless otherwise expressly stated, the financial information of our company included in this prospectus reflect the historical financial statements of Smithfield Foods, which has been an indirect, wholly owned subsidiary of WH Group, as retroactively adjusted to remove the impact of the discontinued operations.
Corporate Information
Our principal offices are located at 200 Commerce Street, Smithfield, Virginia 23430. Our telephone number is 757-365-3000, and our corporate website address is www.smithfieldfoods.com. Upon completion of this offering, we are required to file annual, quarterly and current reports, proxy statements and other information with the SEC. You may obtain any of the documents filed by us with the SEC at no cost from the SEC’s website at http://www.sec.gov. Any information contained on, or that can be accessed through, our website or the SEC’s website is not incorporated by reference into, nor is it in any way part of this prospectus and should not be relied upon in connection with making any decision with respect to an investment in our securities.
THE OFFERING
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Common stock offered by us | | shares. |
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Common stock offered by the selling shareholder | | shares (or shares if the underwriters exercise in full their option to purchase additional shares of our common stock). |
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Common stock to be held by the selling shareholder upon completion of this offering | | shares (or shares if the underwriters exercise in full their option to purchase additional shares of our common stock). |
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Option to purchase additional shares of common stock | | The selling shareholder has granted the underwriters a 30-day option from the date of this prospectus to purchase up to additional shares of our common stock. Such shares are offered by the selling shareholder at the initial public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. |
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Use of proceeds | | We estimate that the net proceeds to us from this offering will be approximately $ based on an assumed initial public offering price of $ per share of our common stock, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Certain of the shares of common stock offered by this prospectus are being sold by the selling shareholder. We will not receive any of the proceeds from the sale of shares by the selling shareholder in this offering, including any such proceeds received by the selling shareholder from any exercise by the underwriters of their option to purchase additional shares. For information about the selling shareholder, see “Principal and Selling Shareholders.” We intend to use the net proceeds to us from this offering for general corporate purposes, including capital investments in infrastructure, automation and capacity expansion. See “Use of Proceeds.” |
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Controlled company | | Upon completion of this offering, WH Group will own % of the voting power of our shares of common stock eligible to vote in the election of our directors (or % if the underwriters exercise in full their option to purchase additional shares of our common stock). As a result, we will be a “controlled company” as defined under the corporate governance rules of Nasdaq and, therefore, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements of Nasdaq. See “Management—Controlled Company Exemption.” There is no single shareholder or group of shareholders which owns 50% or more of the voting power of WH Group as of the date of this prospectus. As a result, WH Group would not be considered a controlled company within the meaning of the corporate governance standards of Nasdaq. |
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| | As long as WH Group beneficially owns a majority of the voting power of our outstanding shares of common stock, WH Group will generally be able to control the outcome of matters submitted to our shareholders for approval, including the election of directors, without the approval of our other shareholders. See “Risk Factors—Risks Relating to Our Relationship with WH Group—WH Group controls us, and their interests may conflict with ours or yours in the future.” |
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Dividend policy | | We have historically paid dividends to WH Group annually, along with special dividends in some years. We initially expect to pay annual dividends in an amount equal to 50% of our net income, subject to the discretion of the board. The payment of any dividends in the future to our shareholders, and the timing and amount thereof, will fall within the discretion of the board. The board’s decisions regarding the payment of dividends will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in the agreements governing our indebtedness, general economic business conditions, industry practice, legal requirements and other factors that the board may deem relevant. We cannot assure you that we will pay our anticipated dividend in the same amount or frequency, or at all, in the future. You should not purchase shares of our common stock with the expectation of receiving cash dividends. See “Risk Factors—Risks Relating to This Offering—We expect to continue paying regular dividends to our shareholders, but our ability to do so is subject to the discretion of our board and may be limited by our financial condition, our credit facilities, the indentures governing the notes we previously issued and applicable law” and “Dividend Policy.” |
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Directed share program | | At our request, the underwriters have reserved up to 2% of the shares of our common stock offered by this prospectus for sale, at the initial public offering price, to directors, officers and certain employees of our company. If purchased by our directors or officers, these shares will be subject to certain lock-up agreements. See “Underwriting” for a description of these lock-up agreements. The number of shares of our common stock available for sale to the general public will be reduced to the extent these individuals purchase such reserved shares. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus. Morgan Stanley will administer our directed share program. See “Underwriting—Directed Share Program.” |
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Risk factors | | Investing in shares of our common stock involves a high degree of risk. See “Risk Factors” for a discussion of factors you should carefully consider before investing in shares of our common stock. |
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Trading symbol | | We have applied to list our shares of common stock on the Nasdaq Global Select Market under the symbol “SFD”. |
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Assured entitlement distribution | | Pursuant to Practice Note 15 under The Rules Governing The Listing of Securities on The Stock Exchange of Hong Kong Limited, in connection with this offering, WH Group is required to make available to its shareholders an “assured entitlement” to a certain portion of shares of our common stock. WH Group intends to effect the “assured entitlement” by providing to its shareholders a “distribution in specie” of a certain portion of shares of our common stock held by WH Group, which we refer to as the Assured Entitlement Distribution. The distribution will be made without any consideration being paid by WH Group’s shareholders. WH Group’s shareholders who are entitled to fractional shares of our common stock who elect to receive cash in lieu of shares of our common stock, who are located in the United States or are U.S. persons, or are otherwise ineligible holders, will only receive cash in the Assured Entitlement Distribution. WH Group currently intends that the Assured Entitlement Distribution will represent approximately 0.35% to 0.45% of our outstanding shares following the completion of this offering. The Assured Entitlement Distribution will only be made if this offering is completed. The distribution in specie of shares of our common stock by WH Group is not part of this offering. |
Unless otherwise indicated or the context otherwise requires, references in this prospectus to the number and percentage of shares of our common stock to be outstanding upon completion of this offering are based on shares of
our common stock outstanding as of December 29, 2024. This amount, and, unless otherwise indicated, other information presented in this prospectus, exclude:
• shares of common stock reserved for issuance under our equity incentive plan under which no awards had been granted prior to the pricing of this offering; and
• shares of common stock reserved for issuance under our employee stock purchase plan.
In connection with the pricing of this offering, we intend to grant to certain of our employees and certain directors and employees of WH Group
•options to purchase shares with an exercise price equal to the initial public offering price; and
• restricted stock units.
Of these grants, our directors and executive officers will receive options to purchase shares and restricted stock units.
The foregoing numbers of options and restricted stock units to be granted are estimates calculated using the midpoint of the estimated public offering price range set forth on the cover of this prospectus as applied to the intended aggregate grant date value of the awards, and the final numbers to be granted will be calculated using the initial public offering price.
Unless otherwise indicated, the information presented in this prospectus:
•gives effect to a -for- stock split of our common stock effected on ;
•gives effect to the adoption of our amended and restated articles of incorporation and our amended and restated bylaws, which will be in effect prior to the completion of this offering and forms of which are filed as exhibits to the registration statement of which this prospectus is a part;
•assumes an initial public offering price of $ per share of our common stock, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus;
•assumes no purchase of shares of our common stock in this offering, including pursuant to our directed share program, by our directors, officers or existing shareholder; and
•assumes no exercise of the underwriters’ option to purchase additional shares of our common stock.
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER INFORMATION
The following tables set forth summary consolidated financial and other information as of and for the fiscal years ended December 31, 2023, January 1, 2023 and January 2, 2022. The summary consolidated financial information for the fiscal years ended December 31, 2023, January 1, 2023 and January 2, 2022, and as of December 31, 2023 and January 1, 2023 has been derived from our audited consolidated financial statements included in this prospectus. The summary consolidated unaudited financial information for the fiscal nine months ended September 29, 2024 and October 1, 2023 and the summary consolidated balance sheet data as of September 29, 2024 were derived from our unaudited financial statements included elsewhere in this prospectus.
The summary consolidated financial information below is only a summary and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included in this offering memorandum. The summary financial information set forth below does not purport to indicate our financial condition or results of operations as of any future date or for any future period. Totals may be affected by rounding.
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| Nine Months Ended (unaudited) | | Fiscal Year Ended |
| September 29, 2024 | | October 1, 2023 | | December 31,
2023 | | January 1,
2023 | | January 2, 2022 |
| (in millions except per share and share data) |
| Consolidated Statements of Income Data: | | | | | | | | | |
| Sales | $ | 10,190 | | | $ | 10,642 | | | $ | 14,640 | | | $ | 16,199 | | | $ | 15,009 | |
| Cost of sales | 8,826 | | | 10,038 | | | 13,751 | | | 14,704 | | | 13,437 | |
| Gross profit | 1,364 | | | 604 | | | 889 | | | 1,495 | | | 1,572 | |
| Selling, general and administrative expenses | 594 | | | 643 | | | 1,050 | | | 807 | | | 1,095 | |
Operating gains | (12) | | | (99) | | | (105) | | | (429) | | | (44) | |
| Operating profit (loss) | 783 | | | 60 | | | (56) | | | 1,117 | | | 521 | |
Interest expense, net | 52 | | | 59 | | | 76 | | | 87 | | | 93 | |
Non-operating (gains) losses | (13) | | | 3 | | | (3) | | | (18) | | | (30) | |
| Income (loss) from continuing operations before income taxes | 745 | | | (2) | | | (129) | | | 1,047 | | | 458 | |
| Income tax expense (benefit) | 165 | | | — | | | (41) | | | 231 | | | 97 | |
(Income) loss from equity method investments | (1) | | | — | | | 46 | | | 6 | | | (28) | |
| Net income (loss) from continuing operations | $ | 581 | | | $ | (2) | | | $ | (133) | | | $ | 811 | | | $ | 389 | |
Weighted average number of shares outstanding - basic and diluted | 1,000 | | | 1,000 | | | 1,000 | | | 1,000 | | | 1,000 | |
Net income (loss) attributable to Smithfield per common share from continuing operations | $ | 572,076 | | | $ | 815 | | | $ | (138,176) | | | $ | 799,581 | | | $ | 387,402 | |
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| As of September 29, 2024 (unaudited) | | As of Fiscal Year Ended |
| | December 31,
2023 | | January 1,
2023 |
| As Adjusted (1) | | Actual |
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| Consolidated Balance Sheet Data: | | | | | |
| Cash and cash equivalents | $ | 278 | | | $ | 687 | | | $ | 547 | |
Working capital (2) | 2,212 | | 2,470 | | 2,954 | |
| Total assets | 10,650 | | | 13,317 | | | 13,847 | |
Long-term debt and finance lease obligations | 2,005 | | | 2,006 | | | 2,029 | |
Total shareholder’s equity | 5,601 | | | 7,241 | | | 7,374 | |
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(1)As adjusted reflects the issuance and sale of shares of our common stock by us at an assumed initial public offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
(2)We define working capital as current assets less current liabilities.
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| Nine Months Ended (unaudited) | | Fiscal Year Ended |
| September 29, 2024 | | October 1, 2023 | | December 31,
2023 | | January 1,
2023 | | January 2, 2022 |
| (in millions) |
| Consolidated Cash Flows Data: | | | | | | | | | |
| Net cash flows from operating activities of continuing operations | $ | 233 | | | $ | (6) | | | $ | 688 | | | $ | 521 | | | $ | 755 | |
| Net cash flows from investing activities of continuing operations | (305) | | | (60) | | | (194) | | | 274 | | | (204) | |
| Net cash flows from financing activities of continuing operations | (290) | | | (270) | | | (353) | | | (567) | | | (434) | |
Non-GAAP Measures
The table below includes Adjusted Net Income, Adjusted Net Income Margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Net Debt, Ratio of Net Debt to Adjusted EBITDA, Adjusted Segment Profit, Adjusted Segment Profit Margin and Free Cash Flow, which are financial measures that are not required by, or prepared in accordance with, GAAP. We present Adjusted Net Income, Adjusted Net Income Margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Net Debt, Ratio of Net Debt to Adjusted EBITDA, Adjusted Segment Profit, Adjusted Segment Profit Margin and Free Cash Flow as we believe that the presentation of these non-GAAP financial measures enhances an investor’s understanding of our financial performance. We believe Adjusted Net Income is a useful measure for investors because it excludes the effects of discontinued operations, non-operating gains and losses, and other items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. We believe that Adjusted Net Income Margin is a useful measurement of operating profitability for investors for the same reasons we find Adjusted Net Income useful and also because it provides a period-to-period comparison of our after-tax operating performance. We believe EBITDA is a useful measure to our stakeholders because it excludes the effects of financing and investing activities by eliminating interest and depreciation costs to provide a comparable year-over-year analysis. We believe Adjusted EBITDA is a useful measure as it excludes the effect of discontinued operations, non-operating gains and losses, and other items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. We believe Adjusted EBITDA Margin is a useful measure as it evaluates overall operating performance, ability to pursue and service possible debt opportunities and possible future investment opportunities. We believe Net Debt is a useful measure as it helps to give investors a clear understanding of our financial position. Net Debt is also used to calculate certain leverage ratios. We believe Ratio of Net Debt to Adjusted EBITDA is a useful measure as it monitors the sustainability of our debt levels and our ability to take on additional debt against Adjusted EBITDA, which is used as an operating performance measure. We believe Adjusted Segment Profit is a useful measure because it provides a more complete understanding of underlying
operating results and trends of established, ongoing operations of our segments, excluding the impact of employee retention in tax credits, which were not applicable to periods before 2024. We believe Adjusted Segment Profit Margin is a useful measure for the same reasons we find Adjusted Segment Profit useful. We believe Free Cash Flow is a useful measure as it offers supplemental information and insight regarding the liquidity of our operations and our ability to generate sufficient cash flow to, among other things, repay debt and pursue business opportunities and investments. Although non-GAAP measures such as Adjusted Net Income, Adjusted Net Income Margin, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Net Debt, Ratio of Net Debt to Adjusted EBITDA, Adjusted Segment Profit, Adjusted Segment Profit Margin and Free Cash Flow are frequently used by investors and securities analysts in their evaluations of companies in industries similar to ours, these non-GAAP measures have limitations as analytical tools, are not measurements of our performance under GAAP and should not be considered as alternatives to operating profit, net income or operating cash flow or any other performance measures derived in accordance with GAAP and should not be used by investors or other users of our financial statements in isolation for formulating decisions, as such non-GAAP measures exclude a number of important cash and non-cash charges. A reconciliation of Adjusted Net Income, Adjusted Net Income Margin, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to net income and net income margin, Ratio of Net Debt to Adjusted EBITDA to ratio of debt to net income, Net Debt to debt, Adjusted Segment Profit and Adjusted Segment Profit Margin to segment profit and segment profit margin and Free Cash Flow to net cash flows from operating activities is provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures.” You should be aware that our presentation of these and other non-GAAP financial measures in this prospectus may not be comparable to similarly titled measures used by other companies.
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| Nine Months Ended (unaudited) | | Fiscal Year Ended |
| September 29, 2024 | | October 1, 2023 | | December 31,
2023 | | January 1,
2023 | | January 2, 2022 |
Consolidated GAAP and Non-GAAP Data: | (in millions except for percentages) |
Net income (loss) from continuing operations | $ | 581 | | | $ | (2) | | | $ | (133) | | | $ | 811 | | | $ | 389 | |
Net income (loss) margin from continuing operations | 5.7 | % | | — | % | | (0.9) | % | | 5.0 | % | | 2.6 | % |
Adjusted net income from continuing operations attributable to Smithfield | $ | 518 | | | $ | 14 | | | $ | 132 | | | $ | 591 | | | $ | 650 | |
Adjusted net income margin from continuing operations attributable to Smithfield | 5.1 | % | | 0.1 | % | | 0.9 | % | | 3.7 | % | | 4.3 | % |
| EBITDA from continuing operations | $ | 1,050 | | | $ | 353 | | | $ | 329 | | | $ | 1,569 | | | $ | 910 | |
| Adjusted EBITDA from continuing operations | $ | 976 | | | $ | 331 | | | $ | 610 | | | $ | 1,197 | | | $ | 1,257 | |
| Adjusted EBITDA margin from continuing operations | 9.6 | % | | 3.1 | % | | 4.2 | % | | 7.4 | % | | 8.4 | % |
Cash flows from operating activities from continuing operations | $ | 233 | | | $ | (6) | | | $ | 688 | | | $ | 521 | | | $ | 755 | |
| Free cash flow from continuing operations | $ | (35) | | | $ | (249) | | | $ | 334 | | | $ | 183 | | | $ | 548 | |
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| Fiscal Year Ended | | | | | | |
| December 31,
2023 | | December 28, 2014 | | | | | | |
| (in millions except for ratios) | | | | | | |
Net income (loss) from continuing operations | $ | (133) | | | $ | 437 | | | | | | | |
Debt (1) | $ | 2,033 | | | $ | 2,676 | | | | | | | |
Cash and cash equivalents | (687) | | | (378) | | | | | | | |
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Net debt | $ | 1,345 | | | $ | 2,298 | | | | | | | |
Ratio of debt to net income (loss) from continuing operations | (15.3x) | | 6.1x | | | | | | |
Ratio of net debt to Adjusted EBITDA from continuing operations | 2.2 | x | | 2.3x | | | | | | |
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| Nine Months Ended (unaudited) | | Fiscal Year Ended |
| September 29, 2024 | | October 1, 2023 | | December 31,
2023 | | January 1,
2023 | | January 2, 2022 |
Segment Results (2) | (in millions) |
| Segment Sales: | | | | | | | | | |
| Packaged Meats | $ | 5,861 | | | $ | 5,876 | | | $ | 8,280 | | | $ | 9,262 | | | $ | 8,515 | |
| Fresh Pork | 5,871 | | | 5,996 | | | 7,832 | | | 9,190 | | | 9,145 | |
| Hog Production | 2,220 | | | 2,499 | | | 3,317 | | | 4,456 | | | 3,866 | |
| Other | 350 | | | 380 | | | 559 | | | 524 | | | 247 | |
| Intersegment | (4,111) | | | (4,108) | | | (5,348) | | | (7,234) | | | (6,765) | |
| Consolidated | $ | 10,190 | | | $ | 10,642 | | | $ | 14,640 | | | $ | 16,199 | | | $ | 15,009 | |
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Segment Profit (Loss) | | | | | | | | | |
| Packaged Meats | $ | 855 | | | $ | 760 | | | $ | 1,066 | | | $ | 1,047 | | | $ | 879 | |
| Fresh Pork | 196 | | | 73 | | | 118 | | | 32 | | | (5) | |
| Hog Production | (135) | | | (627) | | | (754) | | | (133) | | | 69 | |
Other (3) | 18 | | | (17) | | | (4) | | | 53 | | | 68 | |
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Nine Months Ended September 29, 2024 (unaudited) | | Packaged Meats | | Fresh Pork | | Hog Production |
| | | | | (in millions except for percentages) |
Segment profit | | $ | 855 | | | $ | 196 | | | $ | (135) | |
Employee retention tax credits | | (38) | | | (41) | | | (8) | |
Adjusted segment profit | | $ | 816 | | | $ | 156 | | | $ | (143) | |
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Segment profit margin | | 14.6 | % | | 3.3 | % | | (6.1) | % |
Adjusted segment profit margin | | 13.9 | % | | 2.6 | % | | (6.4) | % |
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(1)Debt is defined as long-term debt and finance lease obligations, including the current portion.
(2)Additional information about our reportable segments is included in “Note 2: Reportable Segments” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
(3)Consists of our Mexico and Bioscience operations.
RISK FACTORS
Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, as well as the financial and other information set forth in this prospectus, before deciding to invest in our common stock. If any of the following risks actually occurs, our business, results of operations and financial condition may be materially adversely affected. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment. The risks described below are not the only ones facing us. Additional risks and uncertainties of which we are unaware, or that we currently deem immaterial, also may become important factors that affect us.
Risks Relating to Our Business and Operations
Our results of operations are cyclical and could be adversely affected by fluctuations in the commodity prices for meat, livestock (primarily hogs) and feed ingredients.
We are significantly impacted by the cyclical nature of commodity prices for meat, livestock (primarily hogs) and feed ingredients such as grains, as well as the selling price of our products and competing animal protein products on the market (especially beef and chicken), all of which are determined by constantly changing and volatile market forces of supply and demand. These fluctuations can be significant, as shown in recent years, with average lean hog prices published by the Chicago Mercantile Exchange, Inc., or CME, decreasing from $98 per hundredweight in 2022 to $81 per hundredweight in 2023 and then increasing to $85 per hundredweight in the first nine months of 2024. Further, hog raising costs are largely dependent on the fluctuations of commodity prices for corn, grains, soybean meal, wheat and other feed ingredients. Our Hog Production segment generally generates higher profits when hog prices are high and feed ingredient prices are low, and lower profits (or losses) when hog prices are low and feed ingredient prices are high. When hog prices are lower than our hog production costs, our non-vertically integrated competitors (i.e., those without significant hog production operations) may have a cost advantage over us.
Other factors that may impact commodity prices and our results of operations include, but are not limited to:
•competing demand for feed ingredients, such as competing demand for corn for use in the manufacture of ethanol or other alternative fuels;
•environmental regulations;
•changes in governmental agricultural programs;
•tariffs and other import and export restrictions, such as trade barriers resulting from, among other things, developments in international relations and food safety concerns;
•transportation interruptions or increases in diesel fuel costs;
•an increase in pork processing capacity, adversely impacting fresh meat values;
•adverse weather conditions, including the impact of climate change and weather on our water supply and the availability and pricing of feed ingredients;
•energy prices, including the effect of changes in energy prices on our transportation costs and the cost of feed;
•contamination with mold or bacteria;
•the impact of COVID-19 pandemic and other similar disruptions in the future; and
•labor strikes, industrial accidents, occupational health and safety issues and animal welfare or food safety issues (including the real or perceived outbreak of food-borne illnesses or outbreaks of diseases among livestock).
Profitability in our industry is materially affected by the commodity prices of animal feed ingredients, such as grain, corn and soybean meal and wheat. The production of feed ingredients is positively or negatively affected due to various factors, primarily by the global level of supply inventories and demand for feed ingredients, the agricultural policies of the United States and other countries and weather patterns and climatic conditions throughout the world. Market prices for feed ingredients remain volatile. High prices for animal feed ingredients may have a material adverse effect on our operating results. A significant decrease in pork prices for a sustained period of time could have a material adverse effect on our consolidated sales.
Given the volatility of the commodity prices, we have sought to reduce our reliance and exposure to commodity markets by entering into supply contracts that offer price and supply stability and implementing cost-saving programs to offset rising commodity costs. For example, we have been reducing the number of hogs we own and raise and increasing the number of hogs we purchase from contract farmers under market agreements. However, if we are not able to continue to execute and maintain marketing and purchasing contracts with independent growers or supply contracts with our contract farmers on attractive terms, or if our counterparties are unable to perform their obligations under such agreements, our results of operations would be negatively affected.
We attempt to manage certain of these risks through the use of our risk management and hedging programs. However, we may not be effective in doing so and, in any case, these programs may also limit our ability to realize gains from favorable commodity fluctuations. Additionally, a portion of our commodity derivative contracts are marked-to-market, such that the unrealized gains and losses are reported in earnings as incurred. This accounting treatment may cause significant volatility in our earnings. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures About Market Risk” and “Note 7: Derivative Financial Instruments” in the consolidated financial statements and accompanying notes for the year ended December 31, 2023 included elsewhere in this prospectus for the effects of derivative instruments on our consolidated statements of income.
Furthermore, we may be unable to price our products to cover increased costs. Competitive considerations and customer resistance to price increases may delay or make us unable to adjust our selling prices. To the extent we are unable to either re-engineer or otherwise offset increased costs or are unwilling or unable to build price increases into a higher quoted price or negotiating higher prices, our margins will be negatively affected. Conversely, when raw materials prices decline, we may receive customer pressure to reduce our sales prices.
Disruption of our supply chain could adversely affect our business, financial condition and results of operations.
The primary raw materials used in our business are hogs, fresh pork, raw beef, poultry and animal feed ingredients, including corn, grains, soybean meal and wheat. Disruption to our raw material supply due to adverse weather conditions, climate change, crop conditions, natural disaster, fire, terrorism, pandemic or epidemic, changes in governmental agricultural programs, strikes, import restrictions, transportation interruptions, increases in diesel fuel costs, increases in handling and storage costs, cold chain market fluctuations, contamination with mold or bacteria, the real or perceived outbreak of food-borne illnesses or outbreak of diseases among livestock, water shortage, industrial accidents and other occupational health and safety issues or other events beyond our control could impair, and in some cases have impaired, our ability to produce and sell our products.
In addition, we rely on specific suppliers for the provision of certain ingredients and materials, including sodium for our hogs and sourcing of carbon dioxide. We purchase most of the seasonings for our Packaged Meats segment from a single company, Saratoga Food Specialties, LLC, or Saratoga, with which we have entered into an exclusivity agreement regarding such seasonings. Saratoga also has a right of first refusal to supply us with any new seasoning or sauce products we need. We believe that we carry sufficient inventory of finished product and seasonings to overcome an interruption in the supply of seasonings from Saratoga; however, this may not be the case if alternate sources are unavailable or inadequate.
Any disruption in supply of ingredients or materials could affect our ongoing operations and our ability to fulfill demand. A disruption in our supply chain may require significant costs and resources to restore and may also force us to buy material at higher prices, which can substantially increase our costs. We may not be able to pass on all or part of the increased costs to customers in the form of price increases, in a timely manner or at all. Even if we are
able to increase our selling prices, sustained price increases for our products may lead to sales declines and loss of market share, particularly if our competitors do not increase their prices.
An inability to realize savings and efficiency gains could adversely affect profitability and we may be unable to achieve any or all of our financial and operational targets.
We are currently implementing multiple savings opportunities across the areas of production, procurement, commercial and logistics, which we expect will deliver productivity savings and help us effectively manage margins and profitability. In addition, we have ongoing initiatives to improve profitability and efficiency gains of the Hog Production segment, including genetic transformation, herd health improvements, procurement and nutrition savings.
However, our cost-savings expectations are based upon several assumptions and estimates that are difficult to predict, necessarily speculative in nature and subject to significant business, operational, economic and competitive uncertainties and contingencies. A variety of factors could affect the realization of some or all of the expected cost savings and efficiency gains, including, but not limited to, our anticipated business strategies, our marketing strategies, our product development and licensing strategies, our ability to anticipate and react to business trends, general economic conditions, lack of sustainability in cost savings over time, unexpected costs associated with operating our business and other developments in our industry. The actual results of implementing the various cost savings and efficiency initiatives may differ materially from our current estimates. Moreover, we may not be able to identify or implement further cost savings and efficiency initiatives in the future. In addition, our continued efforts to implement cost savings and efficiency initiatives may divert management attention from the rest of our business and may preclude us from seeking attractive new product opportunities or pursuing other initiatives, any of which may materially and adversely affect our business. We may be unable to achieve or improve all of these cost savings and efficiency gains within the expected timeframe, or at all, and we may incur additional or unexpected costs in order to realize them.
The food industry in which we operate is highly competitive, and our inability to compete successfully, or the effects of such competition, could adversely affect our business, financial condition and results of operations.
The food industry in which we operate is highly competitive. Numerous brands and products compete for shelf space and sales, with competition in our Packaged Meats and Fresh Pork segments based primarily on taste, product quality, nutritional profile and dietary attributes, product availability, convenience, price, brand recognition and loyalty and the ability to identify and satisfy emerging consumer preferences. Our ability to compete effectively depends on our capacity to execute across these criteria.
Although we regularly conduct research and development activities to develop new products that meet our standards for quality and appeal to consumer preferences, the success of our innovation and product development efforts is affected by our ability to anticipate changes in consumer preferences, the technical capability of our employees in developing and testing product prototypes, our ability to comply with applicable governmental regulations, and the success of our management, sales and marketing teams in introducing and marketing new products, including through current and new product categories.
The protein industry is highly competitive. We compete with large multi-brand packaged foods businesses, as well as fresh meat companies, private, category-focused companies and pork processing companies. Our products compete with many other protein sources, including chicken, beef and seafood, but our principal competition comes from other pork processors. Additionally, we face competition for export sales from both domestic and international suppliers.
Some of our competitors have greater scale, marketing resources, name recognition, research and development capabilities and/or other resources (financial and otherwise) than we do, and some of the companies may be more innovative and able to bring new products to market faster and more quickly exploit and serve niche markets or new or burgeoning consumer preferences than us.
There can be no assurance that we will successfully develop and market new products or successfully introduce products in new categories. The development and introduction of new products requires substantial marketing
expenditures, which we may be unable to recoup if the new products do not gain widespread market acceptance. If we introduce new or improved products that ultimately do not meet objectives for such products, it could impact our growth, sales and profitability. Any failure to successfully develop, market and launch future products or successfully enter into new product categories may lead to decreased growth, sales and profitability.
Further, our competitors could increase their promotional spending or market and sell their products more successfully than we do. Our competitors could also offer lower prices to customers, which could pressure us to lower prices to our customers and to achieve additional cost savings to offset these reductions. We may be unable to change our cost structure and pricing practices rapidly enough or sufficiently to successfully compete in such an environment.
We may be unable to compete successfully with any or all of these companies. Competitive pressures or other factors could cause us to lose sales, which may require us to lower prices, increase the use of discounting or promotional programs, or increase marketing expenditures, each of which would adversely affect our margins and could result in a decrease in our operating results and profitability.
Changes in consumer preferences and failure to maintain favorable consumer perception of our brands and products could negatively impact our business.
The food industry in general is subject to changing consumer trends, demands and preferences. Trends within the food industry change often, and failure to identify and react to changes in these trends could lead to, among other things, reduced demand and price reductions for our brands and products. We strive to respond to consumer preferences and social expectations, but we may not be successful in our efforts.
We have a number of widely recognized brands with significant value. Maintaining and continually enhancing the value of these brands is critical to the success of our business. Brand value is based in large part on consumer perceptions. Success in promoting and enhancing brand value depends in large part on our ability to provide high-quality products. Brand value could diminish significantly due to a number of factors, including consumer perception that we have acted in an irresponsible manner, adverse publicity about our products (whether or not valid), our failure to maintain the safety and quality of our food products or ingredients (or the food safety system generally), the failure of our products to deliver consistently positive consumer experiences or the products becoming unavailable to consumers.
Prolonged negative perceptions concerning the health implications of certain food products or ingredients or loss of confidence in the food safety system generally could influence consumer preferences and acceptance of our products and marketing programs. Prolonged negative perceptions and failure to satisfy consumer preferences could materially and adversely affect our business, financial condition and results of operations.
The use of social and digital media by consumers has greatly increased the speed and extent that information or misinformation can be shared. Individuals and organizations have in the past used social media platforms to publicize information and perceptions about the food production industry in general and our company in particular. Such publications could damage our reputation. A negative perception by consumers of one or more of our brands or a shift in consumer preferences away from animal-based products may result in reduced sales of our products, which could have a material adverse effect on our business, results of operations and financial condition.
Outbreaks of disease among or attributed to livestock can significantly affect production, the supply of raw materials, demand for our products and our business.
We are subject to risks relating to our ability to maintain animal health and control diseases. Real or perceived livestock health problems could adversely impact our production, our supply of raw materials and consumer confidence in all of our operating segments.
From time to time, we have experienced outbreaks of livestock diseases, and we may experience additional occurrences of livestock disease in the future. For example, there have been recent outbreaks of both high- and low-pathogenic strains of avian influenza in the United States. The outbreaks of both high- and low-pathogenic strains of avian influenza are a fairly common occurrence in Mexico. Adverse publicity concerning any disease or health
concern could also cause customers to lose confidence in the safety and quality of our food products. Outbreaks of disease, including African Swine Fever, or ASF, Bovine Spongiform Encephalopathy, Foot and Mouth Disease and Highly Pathogenic Avian Influenza, or HPAI, can have a significant impact on our financial results. In recent years, ASF has impacted hog herds in Asia (including in China), Europe and the Caribbean; and, if an outbreak of ASF were to occur in the United States, our supply of hogs and pork could be materially impacted. In 2024, HPAI was detected in the United States in dairy cattle, wild birds, mammals, and farm workers directly exposed to infected dairy or poultry. The U.S. pork market was significantly impacted by the spreading of Porcine Epidemic Diarrhea Virus in 2014 and Porcine Reproductive and Respiratory Syndrome Virus in 2015, which affected our herds in several regions. The spread of these diseases in the United States reduced hog supplies, leading to higher meat prices. In 2015, the hog herds recovered and supply increase yielded lower market prices. Neither of these diseases or the corresponding fluctuations to market prices had a material adverse impact on our financial condition or results of operations. However, we cannot guarantee that the outbreak of any such diseases would not have a material adverse impact on our financial condition or results of operations in the future.
The outbreak of such diseases could adversely affect our supply of raw materials, increase the cost of production, reduce the number of livestock offspring produced, hamper the growth of livestock to finished size, result in expensive vaccination programs and require in some cases the destruction of infected livestock, any of which could adversely affect our operating margins. Additionally, the real or perceived outbreak of disease may hinder our ability to market and sell products both domestically and internationally. Any real or perceived outbreak of disease, including contamination of other livestock of our competitors, could also reduce consumer confidence in the meat products affected by the particular disease, generate adverse publicity, depress market conditions for our hogs internationally and/or domestically and result in the imposition of import or export restrictions.
Our operations are subject to the general risks associated with the food industry, including perceived or real health risks related to our products or the food industry generally and risks associated with government regulations.
We are subject to risks affecting the food industry generally, including risks posed by the following:
•food spoilage;
•food contamination;
•food allergens;
•consumer nutritional and health-related concerns;
•consumer product liability claims;
•product tampering;
•product labeling errors;
•the expense and possible unavailability of product liability insurance; and
•the potential cost and disruption of a product recall or withdrawal.
Adverse publicity concerning any perceived or real health risk associated with our brands or our products could cause customers to lose confidence in the safety and quality of our food products, which could adversely affect our reputation, business, financial condition and results of operation, particularly as we expand our branded products business. We could also be adversely affected by perceived or real health risks associated with similar products produced by others to the extent such risks cause customers to lose confidence in the safety and quality of such products generally and, therefore, lead customers to opt for other options that are perceived as safe.
Our manufacturing facilities and products, including the processing, packaging, storage, distribution, advertising and labeling of our products, are subject to extensive federal, state and foreign laws and regulations in the food safety area, including regular government inspections and governmental food processing controls. Loss of
or failure to obtain necessary permits and registrations could delay or prevent us from meeting current product demand, introducing new products, building new facilities or acquiring new businesses and could adversely affect operating results. If we are found to be out of compliance with applicable laws and regulations, particularly if it relates to or compromises food safety or animal welfare, we could be subject to civil remedies, including fines, injunctions, recalls or asset seizures, as well as potential criminal sanctions, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. In addition, future material changes in food safety and animal welfare regulations could result in increased operating costs or could be required to be implemented on schedules that cannot be met without interruptions in our operations.
Product liability claims or product recalls can adversely affect our business reputation, expose us to increased scrutiny by federal and state regulators and may not be covered by insurance.
Pork and poultry products may be subject to contamination by foreign materials, exposure to chemicals of concern from packaging or environmental exposure, or disease-producing organisms or pathogens, such as Listeria monocytogenes, Salmonella, Campylobacter and generic E.coli, Yersinia enterocolitica and Staphylococcus aureus. Because these pathogens are generally found in the environment, there is a risk that, as a result of food processing, they could be present in our products. We cannot assure you that our food safety monitoring systems, even when working effectively, will eliminate all such risks related to food safety. These risks cannot be eliminated entirely even with adherence to good manufacturing practices and finished product testing. We license our brand abroad and have little, if any control, over the products sold under such licenses. Any quality issues with such products could cause reputational damage to us. We also have little, if any, control over proper handling once the product has been shipped. Illness and death may result if the pathogens are not eliminated at the further processing, food service or consumer level. Even an inadvertent shipment of contaminated products is a violation of law and may lead to increased risk of exposure to product liability claims, product recalls and increased scrutiny by federal and state regulatory agencies and may have a material adverse effect on our business, reputation and/or prospects. The packaging, marketing and distribution of food products entail an inherent risk of product liability and product recall and the resultant adverse publicity. We may be subject to significant liability if the consumption of any of our products causes injury, illness or death.
We could be required, and in some instances have in the past been required to, recall certain products due to such products being mislabeled, contaminated, spoiled, tampered with or damaged, whether caused by us or someone in our supply chain. A widespread product recall or market withdrawal could result in significant losses due to the cost of a recall or withdrawal, the destruction of product inventory, potential customer claims, lost sales due to the unavailability of product for a period of time. The costs associated with product recalls could be exacerbated by issues encountered in tracing affected products either within our facilities or in the hands of third parties. In addition, such a product recall or withdrawal could also result in adverse publicity, damage to our reputation and a loss of consumer confidence in our products, which could have a material adverse effect on our business results. Any product contamination or mislabeling also could subject us to, and in some instances has subjected us to, product liability claims, adverse publicity or government scrutiny, investigation or intervention, resulting in increased costs and decreased sales as customers lose confidence in the safety and quality of our food products.
In addition, we purchase ingredients, commodities and other raw materials from third-party suppliers. If these materials are alleged or prove to include contaminants that affect the safety or quality of our products or are otherwise rumored to have adverse effects, we may need to find alternate materials for our products, delay production of our products, or discard or otherwise dispose of our products, which could adversely affect our results of operations. Additionally, if this occurs after the affected product has been distributed, we may need to withdraw or recall the affected product and we may experience adverse publicity or product liability claims. We cannot assure you that we will not be required to perform product recalls, or that product liability claims will not be asserted against us, in the future. Any claims that may be made may create adverse publicity that would have a material adverse effect on our ability to market our products successfully or on our business, reputation, prospects, financial condition and results of operations.
Moreover, claims or liabilities of this type might not be covered by our insurance or by any rights of indemnity or contribution that we may have against others. We do not currently maintain any product recall insurance and we
cannot be sure that we will not incur claims or liabilities for which we are not insured or that exceed the amount of our insurance coverage. A product liability judgment against us or a widespread product recall could have a material adverse effect on our business, financial condition, results of operations or liquidity. To date, product recalls have not had a material adverse impact on our financial condition or results of operations.
Any disruption of operations at one or more of our production facilities, distribution centers or cold storage facilities, including as a result of natural disasters, public health crises, political crises and instability, civil unrest and other catastrophic events or events outside of our control, could adversely affect our business, financial condition and results of operations.
Our production and distribution network consists of 39 processing plants and five distribution centers that are either company-owned or rented, and numerous third-party cold storage facilities in North America. Any disruption in, or the loss of operations at, one or more of these facilities, even on a short-term basis, could delay or postpone production or distribution of our products, which could adversely affect our business, financial condition and results of operations.
Natural disasters, such as fires, earthquakes, power shortages or outages, floods or monsoons, public health crises, such as pandemics and epidemics, political crises, such as terrorism, war, civil unrest, political instability or other conflict, or other events outside of our control have in the past, and may in the future, adversely impact our results of operations.
Such disruption could be caused by a number of different events, including:
•maintenance outages;
•regulatory actions;
•prolonged power failures;
•equipment or software failure;
•widespread contamination of our equipment;
•fires, floods, earthquakes or other natural disasters; or
•other events beyond our control.
Any material malfunction or prolonged disruption in the operations of any of our facilities, including our manufacturing facilities, farms, distribution facilities, stores of our wholesale partners or the facilities of our suppliers, distributors or any of our other third-party service providers, could prevent us from fulfilling orders to existing customers and could limit our ability to sell products to new customers. Any of these events could adversely affect our business, financial condition and results of operations.
A meaningful portion of our packaged meat and fresh pork products are distributed through our facility in Kansas and disruption to operations at this facility would require us to change our overall distribution activities which would likely have an adverse impact on our operations. We also utilize third-party warehouse and transportation providers through which a meaningful portion of our product is distributed. A disruption in storage or transportation services could be caused by a number of factors, including:
•labor issues;
•port and shipping capacity;
•failure to meet customer standards;
•acts of war;
•terrorism;
•fire, earthquakes, extreme temperatures, flooding or other natural disasters; or
•bankruptcy or other financial issues affecting the third-party providers of such services.
A disruption in storage or transportation services could result in an inability to supply materials to our facilities or finished products to our distribution centers or customers. Alternatives may not be available on short notice or could result in higher transportation costs. Any disruption in the distribution chain of our products or an increase in the cost of these services could have a material adverse effect on our business, financial condition and results of operations.
Our reliance on third-party service providers can have an adverse effect on our business.
We rely on third-party service providers for many areas of our business, including transportation and cold storage. Failure by these third parties, including independent growers, to meet their contractual, regulatory and other obligations to us, or our failure to adequately monitor their performance, have in the past resulted in and could in the future result in additional costs to remediate errors made by such service providers. Depending on the function involved, such errors have in the past led to and can in the future lead to business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, incorrect or adverse effects on financial reporting, litigation or remediation costs, damage to our reputation, all of which can adversely affect our business. For example, should the refrigeration system fail at one of our third-party cold storage facilities, we could suffer the loss of some, or all, of our inventory. Should our contract manufacturers go out of business or suffer major equipment failure, we may lose the ability to produce sufficient quantities of our products for a period of time before establishing production with a new manufacturer. Any number of similar failures suffered by our service providers could prove damaging to our ongoing operations and our ability to fulfill demand.
Due to seasonality or changes in our promotional activities, our revenue and operating results may vary from quarter to quarter.
We have experienced, and expect to continue to experience, fluctuations in our quarterly results of operations due to the seasonal nature of our business. Hog supply and consumer purchasing patterns are impacted by seasonal factors, including weather and holidays. Seasonality could cause our results of operations for an interim financial period to fluctuate and not be indicative of our full-year results. Seasonality also impacts relative net sales and profitability of each quarter of the year, both on a quarter-to-quarter and year-over-year basis. If we fail to effectively manage our inventories or fluctuations in business as a result of promotional activities or other factors, seasonality could have a material adverse effect on our business, financial condition and results of operations.
Significant increases in the cost of distribution could adversely affect our business, financial condition and results of operations.
Our distribution costs primarily include freight and cold storage. Significant increases in these distribution costs could adversely affect our business, financial condition and results of operations. We use a core group of contract carriers that have established rates based on mileage to regions or destination states. A fuel surcharge addendum is a component of all rates to offset the fluctuating price of diesel fuel, primarily to limit the contract carrier’s exposure. If these surcharges rise significantly and we do not have effective hedges in place, or if we are unable to pass increased distribution costs on to our customers in the form of higher prices for our products, our business, financial condition and operating results could be adversely affected. In addition, if we increase prices to offset higher transportation and distribution costs, we could experience lower demand for our products, decreased ability to attract new customers and lower sales volumes.
We use in-house and third-party cold storage vendors to store our finished goods. A major component of cold storage operations expense is electricity cost. Any significant increase in electricity rates for the vendor are passed along to us in the form of higher storage rates. If our storage rates or electricity rates for in-house cold storage increase significantly, we may be unable to pass these costs on to our customers, which could adversely affect our business, financial condition and results of operations.
We are increasingly dependent on information technology, and our business and reputation could suffer if we are unable to protect our information technology systems against, or effectively respond to, cyberattacks, other cyber-incidents or security breaches or if our information technology systems are otherwise disrupted.
Information technology is an important part of our business operations, and we increasingly rely on information technology systems to manage business data and increase efficiencies in our production and distribution facilities and inventory management processes. We also use information technology to process financial information and results of operations and to comply with regulatory, legal and tax requirements. In addition, we depend on information technology for digital marketing and electronic communications among our facilities, personnel, customers and suppliers. Like other companies, our information technology systems are vulnerable to a variety of disruptions, including, but not limited to, the process of upgrading or replacing software, databases or components thereof, natural disasters, terrorist attacks, telecommunications failures, computer viruses, cyberattacks, hackers, unauthorized access attempts and other security issues. Cyberattacks and other cyber-incidents are occurring more frequently, constantly evolving in nature, becoming more sophisticated and being made by groups and individuals with a wide range of motives and expertise. Our security initiatives and disaster recovery plans to mitigate our exposure to these risks may not be adequate. Any significant failure of our systems, including failures that prevent our systems from functioning as intended or our failure to timely identify or appropriately respond to cyberattacks or other cyber-incidents, could cause transaction errors, processing inefficiencies, loss of customers and sales, have negative consequences on our employees and our business partners, have a negative impact on our operations and business reputation and expose us to liability, litigation and regulatory enforcement actions.
In addition, targeted cyberattacks or those that result from a security incident directed at a third-party vendor that we rely on have in the past created and can in the future create a risk of compromise to our internal systems, products and offerings, which have in the past resulted in and could in the future result in interruptions or delays that could disrupt our business operations. If our supply chain cybersecurity is compromised as a result of third-party action, employee error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our business may be harmed and we could incur significant liabilities. For example, we were informed by the third-party provider for our previously hosted consumer facing website that a security incident occurred on the third-party website hosting provider’s IT systems in which an unauthorized party obtained certain information about certain of our customers who made purchases on its websites.
The costs to address cybersecurity risks or risks on information technology failure, both before and after an incident, have in the past been and could in the future be significant, regardless of whether incidents result or resulted from an attack on us directly, or on third-party vendors upon which we rely. If we are unable to prevent security breaches, we may suffer financial and reputational damage or penalties because of the unauthorized disclosure of confidential information belonging to us or to our business partners, customers, consumers or suppliers. Finally, the disclosure of non-public information through external media channels could lead to the loss of intellectual property or damage our reputation and brand image. Any such incidents could subject us to government investigations and regulatory enforcement actions, litigation, potential liability, and damage to our brand and reputation or otherwise harm our business and operations.
Our operations are subject to the risks associated with acquisitions, investments in joint ventures and divestitures.
From time to time, we review opportunities for strategic growth through acquisitions. We have also pursued and may in the future pursue strategic growth through investment in joint ventures. These acquisitions and investments may involve large transactions or realignment of existing investments. These transactions present financial, managerial and operational challenges, including:
•diversion of management attention from managing our existing business;
•difficulty with integrating businesses, operations, personnel and financial and other systems;
•lack of experience in operating in the geographical or product markets of the acquired business;
•new or additional regulatory requirements;
•failure to realize any or all of the anticipated benefits, including cost synergies;
•increased levels of debt potentially leading to associated reduction in ratings of our debt securities and adverse impact on our various financial ratios;
•the requirement that we periodically review the value at which we carry our investments in joint ventures and, in the event we determine that the value at which we carry a joint venture investment has been impaired, the requirement to record a non-cash impairment charge, which charge could substantially affect our reported earnings in the period of such charge, would negatively impact our financial ratios and could limit our ability to obtain financing in the future;
•potential loss of key employees and customers of the acquired business;
•assumption of and exposure to unknown or contingent liabilities of acquired businesses;
•potential disputes with the sellers; and
•for our investments, potential lack of common business goals and strategies with, and cooperation of, our joint venture partners.
Product sales and our manufacturing facilities are subject to the U.S. Department of Agriculture, or the USDA, and the U.S. Food and Drug Administration, or the FDA, regulation in the United States and comparable regulatory requirements outside the United States. Failure to satisfy such regulatory requirements may impact our ability to manufacture and sell such products or may subject us to regulatory or judicial enforcement actions that could be costly and time consuming and could divert the attention of management, as well as negatively impact our reputation and brand. We may experience financial or other setbacks if any of the businesses that we have acquired or may acquire in the future have problems of which we are not aware or liabilities that exceed expectations.
Additionally, from time to time, we may divest businesses that do not meet our strategic objectives or do not meet our growth or profitability targets. We may not be able to complete desired or proposed divestitures on terms favorable to us. Gains or losses from the sales of, or lost operating profit from, those businesses may adversely affect our profitability and margins. Moreover, we may incur asset impairment charges related to divestitures that reduce our profitability. Our divestiture activities may present financial, managerial and operational risks, and could adversely affect our business, financial condition and results of operations.
We are subject to risks associated with our international sales.
We export our products to 35 countries, and we are engaged in a joint venture in Mexico. For the nine months ended September 29, 2024, U.S. export sales accounted for 13% of our total sales. Because of the growing market share of U.S. pork products in the international markets, U.S. exporters are increasingly being affected by measures taken by importing countries to protect local producers.
Our international sales and investments operations are subject to various risks related to economic or political uncertainties, including, but not limited to, the following risks:
•general economic and political conditions;
•imposition of tariffs, quotas, trade barriers and other trade protection measures by various countries;
•import or export licensing requirements imposed by various countries;
•the closing of borders by foreign countries to the import of our products due to, among other things, animal disease or other perceived health or safety issues;
•difficulties and costs associated with complying with, and enforcing remedies under, a wide variety of complex domestic and international laws, treaties and regulations, including anti-corruption laws, export controls and sanctions laws and anti-money laundering laws;
•the risk that the parties with which we do business, including parties that may resell our products in foreign countries, may not comply with all applicable laws, treaties and regulations, including import and export licensing requirements, anti-corruption laws (including, but not limited to, the U.S. Foreign Corrupt Practices Act, due to our operations in Mexico), sanctions laws, anti-bribery laws and anti-money laundering laws, and that any such non-compliance may have direct or indirect consequences on us, such as reputational harm and subjecting us to government investigations or penalties;
•different regulatory structures and unexpected changes in regulatory environments;
•tax rates that may exceed those in the United States and earnings that may be subject to withholding requirements and incremental taxes upon repatriation;
•potentially negative consequences from changes in tax laws;
•increased distribution costs, disruptions in shipping or reduced availability of freight transportation; and
•disruptions or halts in operations at ports in the United States.
Furthermore, our foreign operations are subject to the risks described above as well as additional risks and uncertainties including:
•fluctuations in currency values, which have affected, among other things, the costs of our investments in foreign operations;
•translation of foreign currencies into U.S. dollars;
•foreign currency exchange controls; and
•unstable political environments.
Negative consequences relating to these risks and uncertainties could jeopardize or limit our ability to export our products to one or more of those markets and could adversely affect our business, financial condition and results of operations.
We depend on availability of, and satisfactory relations with, our employees.
As of December 31, 2024, we had approximately 34,000 employees in the United States and approximately 2,500 in Mexico, with approximately 46% of our total workforce covered by collective bargaining agreements or are members of labor unions. Our operations depend on the availability, retention and relative costs of labor and maintaining satisfactory relations with employees and the labor unions. Further, employee shortages can and do occur, particularly in rural areas where some of our operations are located. Labor relations issues arise from time to time, including issues in connection with union efforts to represent employees at our plants and with the negotiation of new collective bargaining agreements. If we fail to maintain satisfactory relations with our employees or with the labor unions, we may experience labor strikes, work stoppages or other labor disputes. Negotiation of collective bargaining agreements also could result in higher ongoing labor costs.
Immigration reform continues to attract significant attention in the public arena and the U.S. Congress. If new immigration legislation is enacted, such laws may contain provisions that could increase our costs in recruiting, training and retaining employees, increase our costs of complying with federal law in reviewing employees’ immigration status and create employee shortages. Furthermore, increased enforcement efforts with respect to existing immigration laws by governmental authorities may disrupt a portion of our workforce or our operations. There can be no assurance that these activities or consequences will not adversely affect our business, financial condition or results of operations in the future.
We also rely on an adequate supply of skilled employees in the farming and corporate areas. Trained and experienced personnel in our industry are in high demand, and we have experienced high turnover and difficulty retaining employees with appropriate training and skills. We cannot predict whether we will be able to attract,
motivate and maintain an adequate skilled workforce necessary to operate our existing and future facilities efficiently, or that labor expenses will not increase as a result of a shortage in the supply of skilled personnel, thereby adversely impacting our financial performance. While our industry generally operates with high employee turnover, any material increases in employee turnover rates or any widespread employee dissatisfaction could also have a material adverse effect on our business, financial condition and results of operations.
We are subject to various risks relating to worker employment and health and safety.
Given the nature of our operations, the type of work performed by our employees and the number of plants and employees that we have, we are subject to various risks relating to employment eligibility and worker safety. We cannot assure you that no accidents will occur. Workplace accidents have previously resulted in lawsuits, regulatory or administrative investigations and inquiries and fines and penalties, and we may become subject to additional such lawsuits, investigations and inquiries, and fines and penalties in the future, and our business, financial condition and results of operations may be adversely affected.
Allegations or findings that we, our suppliers, third-party staffing agencies or other business partners are not complying with applicable workplace and labor laws, including child labor laws, or regarding illegal employment of foreign workers, could negatively affect our overall reputation and brand image, which in turn could have a negative impact on our relationships with customers, consumers and our brand license partners, as well as subject us to increased regulatory and political scrutiny. In addition, the discovery by us or governmental authorities of undocumented workers could result in our having to attempt to replace those workers, which could be disruptive to our operations or may be difficult to do. Moreover, failure or perceived failure to comply with legal or regulatory requirements applicable to our business could expose us to litigation, governmental inquiries and substantial fines and penalties, as well as costs and distractions, that could adversely affect our business, results of operations, financial condition and cash flows.
Following a 2023 investigation of our plant in St. James, the Minnesota Department of Labor and Industry alleged that we had employed 11 underage employees during the two-year audit period. During the hiring process, we use the federal E-Verify system and trained human resources professionals to scrutinize identity documents for I-9 purposes carefully, but our process may be circumvented by underage individuals with fake documentation. Since this investigation, we have put in place new risk-based measures designed to recognize identity fraud, including visual inspection protocols, internal auditing and enhanced I-9 training. In November 2024, we entered into a consent order with the Minnesota Department of Labor and Industry relating to these allegations. Although we did not admit liability in connection with this consent order, we are required to pay a $2 million administrative penalty. Under the consent order, we are required to conduct industry outreach related to underage labor compliance, contractually require underage labor compliance with our labor staffing agencies and sanitation contractors, and take other steps to enhance our compliance practices.
In addition, one of our sanitation contractors, Packers Sanitation Services Inc., was featured prominently in the news in 2022 and 2023 because of a federal investigation that found underage employees in its workforce. We have sought to address the risk of our contractors utilizing underage employees by increasing our efforts to monitor compliance by these third parties; however, we cannot provide any assurance that companies that provide services to us will comply with such laws and that our monitoring efforts will timely identify non-compliance, if any occurs. In addition, we cannot give any assurance that our reputation will not be adversely affected by non-compliance, governmental investigations or other inquiries in the future.
We depend upon the continued services of certain key members of our senior management team, without whom our business operations could be significantly disrupted.
Our success depends, in part, on the continued contributions of our executive leadership team and key members of our senior management. Our management team has significant industry experience, as well as in-depth knowledge of our company, and could be difficult to replace. Any loss or extended interruption in the service of one or more of our senior officers could adversely affect our business, financial condition and results of operations. In addition, we do not have key-man insurance on the life of any of our officers. The unexpected loss of the services of our key personnel could have a detrimental effect on us. Moreover, the market for qualified individuals may be
highly competitive and we may not be able to attract and retain qualified personnel to replace or succeed members of our senior management, should the need arise. In addition, our compensation arrangements may not always be successful in attracting new employees or retaining our existing team members.
The consolidation of customers and/or the loss of our customers could adversely impact our business.
Continued consolidation within the retail industry, including among supermarkets, warehouse clubs and food distributors, has resulted in an increasingly concentrated retail base and increased our exposure to loss of certain customers. These consolidations have produced large, sophisticated customers with increased buying power who are more capable of operating with reduced inventories, opposing price increases, and demanding lower pricing, increased promotional programs and specifically tailored products. These customers also may use shelf space currently used for our products for their own private label products. Because of these trends, our volume growth could slow or we may need to lower prices or increase promotional spending for our products, any of which could adversely affect our financial results. Additionally, these large customers may demand more favorable terms that may expose us to greater risks, including uncapped indemnification and no limitation of liability provisions. Such terms may obligate us to pay significant amounts in connection with potential losses arising from claims and related legal proceedings, and any such claims could also affect our reputation and our relationship with customers.
Our ten largest customers represented approximately 37% of net sales of fiscal year 2023. We generally do not have long-term sales agreements or other contractual assurances as to future sales to our customers, including these major customers. Our business could be materially adversely affected and suffer significant decreases in sales and operating profit from the loss of one or more of our larger customers or if our larger customers’ plans, markets, and/or financial condition should change significantly. For example, if our customers cannot access sufficient funds or financing, then they may delay, decrease, or cancel purchases of our products, or delay or fail to pay us for previous purchases. The loss of a significant customer or a material reduction in sales to, or adverse change to trade terms with, a significant customer could materially and adversely affect our product sales, financial condition and results of operations.
Impairment in the carrying value of goodwill or intangible assets could negatively impact our consolidated results of operations and net worth.
As of December 31, 2023, we had $2.9 billion of goodwill and intangible assets, which represented approximately 22% of total assets. Goodwill was allocated to our reporting units as follows: Packaged Meats, $1,503 million; Mexico, $83 million; Fresh Pork, $34 million; Hog Production, $4 million; and Bioscience, $4 million. Under GAAP, goodwill and identified intangible assets with indefinite lives must be evaluated for impairment annually or more frequently if events indicate it is warranted.
Goodwill is the excess amount of purchase consideration over the fair value of net assets acquired in a business combination. In evaluating the potential for impairment of goodwill, we make assumptions regarding future operating performance, business trends, and market and economic conditions. Such analyses further require us to make judgmental assumptions about sales, operating margins, growth rates, and discount rates. There are inherent uncertainties related to these factors and to management’s judgment in applying these factors to the assessment of goodwill recoverability. Goodwill reviews are prepared using estimates of the fair value of reporting units based on market multiples of EBITDA and/or on the estimated present value of future cash flows. For indefinite life intangible assets, an impairment loss is recognized if the carrying amount of an indefinite life intangible asset exceeds the estimated fair value of that intangible asset. Identified intangible assets with definite lives are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.
Events and conditions that could result in impairment in the value of our goodwill and other intangible assets include changes in the industry in which we operate, particularly the impact of a downturn in the global economy or the economies of geographic regions or countries in which we operate, as well as competition, adverse changes in the regulatory environment, or other factors leading to reduction in expected long-term sales or profitability. We could be required to evaluate the recoverability of goodwill and indefinite life intangible assets prior to the annual
assessment if we experience disruptions to the business, unexpected significant declines in operating results, divestiture of a significant component of our business or market capitalization declines.
In addition, our equity investments in joint ventures, partnerships and other entities, both within and outside the United States, are periodically involved in modifying and amending their credit facilities and loan agreements. The ability of these entities to refinance or amend their facilities on a successful and satisfactory basis, and to comply with the covenants in their financing facilities, affects our assessment of the carrying value of any individual investment. As of December 31, 2023, none of our equity investments represented more than 5% of our total consolidated assets. If we determine in the future that an investment is impaired, we would be required to record a non-cash impairment charge, which could substantially affect our reported earnings in the period of such charge. In addition, any such impairment charge would negatively impact our financial ratios and could limit our ability to obtain financing in the future. See Note 8: “Equity Method Investments” in our annual audited consolidated financial statements, included in this prospectus, for a discussion of the accounting treatment of our equity investments.
The loss of any trademark or other intellectual property right could enable other companies to compete more effectively with us.
We utilize intellectual property in our business. Our registered and unregistered trademarks are valuable assets that reflect the goodwill of our brands and consumers’ favorable perception of our products. We have invested a significant amount of money in establishing, promoting and protecting our brands. We also rely on patented and unpatented proprietary methods, processes and techniques in our manufacturing operations and copyright protection in our sales and marketing materials to develop and maintain our competitive position. Our continued success depends, to a significant degree, upon our ability to protect and preserve our intellectual property rights. In certain jurisdictions, we receive access to third-party intellectual property. In particular, we have a license agreement with Nathan’s Famous for the exclusive right to manufacture, distribute, market and sell “Nathan’s Famous” branded hot dogs and sausages in refrigerated consumer packages to be resold through retail channels within the United States until March 2032. We cannot assure you that we will be able to maintain or renew the license agreement with Nathan’s Famous or enter into new license agreement with third-party owners of intellectual property on reasonable terms, or at all. We also license certain of our trademarks and other intellectual property for use by third parties. In an effort to preserve our trademark rights, we enter into license agreements with these third parties that govern the use of our trademarks and contain limitations on their use. We cannot assure you that our efforts to police the use of our trademarks by our licensees will be sufficient to ensure that our licensees abide by the terms of their licenses. In the event that our licensees fail to do so, our trademark rights could be diluted.
We rely primarily on confidentiality agreements and intellectual property law to protect our proprietary rights. Our confidentiality agreements with our employees and certain of our consultants, contract employees, suppliers, vendors and independent contractors, including some of our co-manufacturers who use our formulations to manufacture our products, generally require that all non-public information made known to them be kept strictly confidential. Further, some of our formulations have been developed by or with our suppliers and co-manufacturers. As a result, we may not hold exclusive rights to some formulations or be able to prevent others from using similar formulations.
We cannot be certain that the steps we have taken to protect our intellectual property rights are adequate, that our intellectual property rights can be successfully defended and asserted in the future or that third parties will not infringe upon, misappropriate or challenge any such rights. In addition, our trademark rights and related registrations may be challenged in the future and could be canceled or narrowed. Failure to protect our trademark rights could prevent us in the future from using certain brands or from challenging third parties who use names and logos similar to our trademarks, which may in turn cause consumer confusion or negatively affect consumers’ perception of our brands and products. We may not be successful in enforcing our trademarks or challenging confusingly similar trademarks used by third parties. Moreover, intellectual property disputes and proceedings and infringement claims may result in a significant distraction for management and significant expense, which may not be recoverable regardless of whether we are successful. Such proceedings may be protracted with no certainty of success, and an adverse outcome could subject us to liabilities, force us to cease use of certain trademarks or other intellectual
property, or force us to enter into licenses with others. Any one of these occurrences may have an adverse effect on our business, financial condition and results of operations.
Deterioration of economic conditions could negatively impact our business.
Our business and results of operations have in the past been and may continue in the future to be adversely affected by changes in national or global economic conditions, including inflation, interest rates, availability of and access to capital markets, volatility in financial markets, declining consumer spending rates, recessions, decreased energy availability and increased energy costs (including fuel surcharges), supply chain challenges, labor shortages, geopolitical conflicts (including the ongoing conflicts between Russia and Ukraine and Israel and Hamas), the negative impacts caused by pandemics, epidemics and public health crises and the effects of governmental initiatives to manage economic conditions.
Any such changes could adversely affect the demand for our products or the cost and availability of our needed raw materials, cooking ingredients and packaging materials, thereby negatively affecting our financial results. Disruptions and instability in credit and other financial markets and deterioration of national and global economic conditions, could, among other things:
•make it more difficult or costly for us to obtain financing for our operations or investments or to refinance our debt in the future;
•cause our lenders to depart from prior credit industry practice and make more difficult or expensive the granting of any technical or other waivers under our credit agreements to the extent we may seek them in the future;
•impair the financial condition of some of our customers, suppliers or counterparties to our derivative instruments, which could result in challenges in collecting accounts receivable or non-performance by suppliers;
•lead customers and consumers to delay or reduce purchases of our products as a result of unfavorable economic conditions;
•negatively impact global demand for our products, which could result in a reduction of sales, operating profit and cash flows;
•decrease the value of our investments in equity and debt securities, including our company-owned life insurance and pension plan assets, which could result in higher pension cost and statutorily mandated funding requirements; and
•impair the financial viability of our insurers.
Furthermore, inflation has and may continue to increase our operational costs, including labor costs and feed ingredient costs, and continued increases in interest rates in response to concerns about inflation may have the effect of further increasing economic uncertainty and heightening these risks. As a result, instability and weakness of the U.S. and global economies, and the negative effects on consumers’ spending, may materially negatively affect our business and results of operations. A prolonged period of reduced consumer spending could have an adverse effect on our business and our results of operations.
If tax laws change or we experience adverse outcomes resulting from examination of our tax returns or disagreements with taxing authorities, it could adversely affect our business, financial condition and results of operations.
We are subject to federal, state, and local tax laws and regulations in the United States. The application and interpretation of these laws in different jurisdictions affect our operations in complex ways and are subject to change, and some changes may be retroactively applied. Our future effective tax rates and the value of our deferred tax assets could be adversely affected by changes in tax laws, including impacts of the Tax Cuts and Jobs Act of Public Law No. 115-97, and the Coronavirus Aid, Relief and Economic Security Act. In addition, in August 2022,
the Inflation Reduction Act, or the IRA, was signed into law. The IRA, among other things, includes a 15% corporate minimum tax as well as a 1% excise tax on corporate stock repurchases, subject to certain exceptions. Furthermore, the European Carve-out may result in incremental tax liability to us. There have also been prior proposals in U.S. Congress to limit the recognition of losses resulting from certain transactions including, potentially, transactions such as European Carve-out. Any such proposals could, potentially, increase our tax obligations. The United States and U.S. states and localities are also actively considering changes to existing tax laws that, if enacted, could increase our tax obligations or require us to change the manner in which we operate our business.
In addition, we are subject to the examination of our income and other tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from such examinations to determine the adequacy of our provision for income taxes. Although we believe we have made appropriate provisions for taxes in the jurisdictions in which we operate, changes in the tax laws, or challenges from tax authorities under existing tax laws could adversely affect our business, financial condition and results of operations.
We face risks associated with the long-term trend toward increased activism against companies in the food products industry.
The treatment of animals and related standards of care in the food products industry have been subject to increasing focus by animal rights groups. We and many of our customers face pressure from animal rights groups to operate our respective businesses in a manner that treats animals in conformity with certain standards developed or approved by these groups. Some of our customers also require us to comply with specified animal rights standards and audits of our facilities. Animal rights groups have also engaged in legislative efforts to ban any form of gestation crates in various states. Conforming to requirements imposed on our business by animal rights groups has caused us and may in the future cause us to incur increased costs.
Animal rights groups have in the past:
•used pressure tactics in an effort to generate adverse publicity regarding our company;
•trespassed on and otherwise damaged our properties; and
•sought to disrupt our business operations or those of our suppliers and customers through protests.
These groups have, and may continue to, coordinate their actions with other groups, threaten strikes or boycotts or enlist the support of well-known persons or organizations in order to increase the pressure on us to achieve their stated aims. Future activist actions could include one or more of the following:
•property damage;
•disruptions to our business operations;
•contamination of our hogs and food supply;
•outbreak of disease;
•cyberattacks;
•legal challenges or lawsuits;
•negative publicity about our business or the food products industry in general;
•reduction in demand for our products; and
•other adverse effects on our ability to develop our properties and expand our operations.
These actions could have a material adverse effect on our reputation and, in turn, our business, results of operations, financial condition and prospects. We may need to incur significant costs associated with responding to these or other initiatives, and there is no guarantee that our responses will produce favorable outcomes.
Risks Relating to Government Regulations
We are subject to extensive governmental regulations, which require significant compliance expenditures.
We are subject to extensive federal, state and local regulations. Our food processing facilities and products are subject to frequent inspection by the USDA, the FDA and various state and local health and agricultural agencies. Applicable statutes and regulations governing food products include rules for labeling the content of specific types of foods, the nutritional value of that food and its serving size, as well as rules that protect against contamination of products by food-borne pathogens. Many jurisdictions also require that food producers adhere to good production practices (the definition of which may vary by jurisdiction) with respect to production processes. Recently, the food safety practices and procedures in the meat processing industry have been subject to more intense scrutiny and oversight by the USDA and state authorities and future outbreaks of diseases among cattle, poultry or pigs could lead to further governmental regulation. In addition, our production facilities and distribution centers are subject to various federal, state and local laws and regulations relating to workplace safety and workplace health. Our exported products are often inspected by foreign food safety authorities, and any violation discovered during these inspections may result in a partial or total return of a shipment, partial or total destruction of the shipment and costs due to delays in product deliveries to our customers.
Our Bioscience operations are also subject to regulations from various government authorities, including the FDA, USDA and EPA. Compliance with these and other agency requirements, which are subject to change, affect our operations and may impact our results at one or more of our facilities. Additionally, the loss of or failure to obtain necessary permits or registrations, or failure to comply with these regulations, at any of our facilities could result in (i) the suspension or restriction of our heparin operations, (ii) administrative penalties and injunctive relief, (iii) civil penalties such as fines, injunctions and product recalls and/or (iv) negative publicity.
We seek to comply with applicable regulations through using internationally recognized management systems to manage our regulatory and compliance programs, employing data analytics to monitor food safety indicators and taking corrective action if necessary, and working with the USDA and the FDA on projects aimed at improving food safety and increasing consumer protection. Failure by us, our contract farms or our co-manufacturers to comply with applicable laws and regulations or maintain permits, licenses or registrations relating to our or our co-manufacturers’ operations could subject us to civil remedies or penalties, including fines, injunctions, recalls or seizures, warning letters, restrictions on the marketing or manufacturing of products, or refusals to permit the import or export of products, as well as potential criminal sanctions, which could result in increased operating costs resulting in a material effect on our operating results and business.
In addition, developments or changes in the regulatory environment may have a material impact on our business. For example, President Biden issued an executive order in July 2021 that, among other things, directed federal agencies to enforce antitrust laws more vigorously than past administrations, which may, among other things, make acquisition transactions more challenging. As a subsidiary of a public company based outside of the United States, we may also face heightened scrutiny in respect of potential acquisition transactions. See the section titled “Business—Quality Assurance and Food Safety—Regulation” for further information on the regulations to which we are subject.
Governmental authorities may take further action restricting our ability to produce and/or sell livestock or adopt new regulations impacting our production or processing operations, which could adversely affect our business.
A number of states have adopted legislation that prohibits or restricts the ability of meat packers, or in some cases corporations generally, from owning livestock or engaging in farming. In addition, the U.S. Congress has in the past considered federal legislation that would ban meat packers from owning livestock. We cannot assure you that such or similar legislation affecting our operations will not be adopted at the federal or state levels in the future. Such legislation, if adopted and applicable to our current operations and not successfully challenged or settled, could have a material adverse impact on our operations and our financial statements.
Other states have adopted legislation that prohibits or limits nonresident aliens, foreign business entities, or foreign governments from acquiring or owning an interest in private agricultural land within the boundaries of their state. We cannot assure you that such or similar legislation affecting our operations will not be adopted in additional states in the future. Such legislation, if adopted and applicable to our current operations and not successfully challenged or settled, could have a material adverse impact on our operations and our financial statements.
In addition, the State of California enacted the Farm Animal Confinement Initiative, or Proposition 12, which became enforceable on July 1, 2023. Proposition 12 prohibits the sale within the state of certain uncooked pork produced from breeding sows or their offspring unless the animals have been housed in confinement systems that meet certain minimum standards and other conditions are met. Similarly, Massachusetts Question 3 prohibits the sale of certain pork products within the State of Massachusetts, as well as the shipment of certain pork products through the state, unless the products came from animals that were also housed in confinement systems that meet certain minimum standards. The volume of such pork sold into California and into or through Massachusetts accounted for approximately 1% of our sales for the year ended December 31, 2023.
In fiscal year 2008, North Carolina enacted a permanent moratorium on the construction of new hog farms that use the lagoon and sprayfield system. The moratorium limits us from expanding our North Carolina hog production operations. This permanent moratorium replaced a 10-year moratorium on the construction of hog farms with more than 250 hogs or the expansion of existing large farms. This moratorium may over time lead to increased difficulties in our ability to contract with independent growers.
We are, and could become, subject to legal proceedings and regulatory investigations that may result in significant expenses, fines and reputational damage.
We are involved on an ongoing basis in litigation arising in the ordinary course of business or otherwise. For example, we have been named as one of 16 defendants in a series of purported class actions alleging antitrust violations in the pork industry. The plaintiffs in all of these cases also challenge the defendant pork producers’ use of benchmarking reports from defendant Agri Stats, Inc., alleging that the reports allowed the pork producers to share proprietary information and monitor each producer’s compliance with the supposed agreement to reduce supply. Payments in an aggregated amount of $194 million were made by us to settle all class claims against us by the direct purchasers, commercial and institutional indirect purchasers and consumer indirect purchasers. In addition to the class actions, we have been named as a defendant in similar claims and suits brought by a number of individual purchasers who opted out of their class and three states or commonwealths. We have entered into negotiations with many of these claimants and has settled certain of the pending non-class cases and related claims. Currently, 22 opt-out cases and one case by the State of New Mexico remain pending against us.
We intend to vigorously defend against these claims, but we cannot assure you that we will be successful or that additional similar claims will not arise in the future. We established a reserve for these claims, however we cannot assure you that the reserve will not have to be increased, as applicable.
Trends in litigation may include class actions involving consumers, shareholders, employees or injured persons and claims related to commercial, labor, employment, antitrust, securities or environmental matters. Moreover, the process of litigating cases, even if we are successful, may be costly, and may approximate the cost of damages sought. These actions could also expose us to adverse publicity, which might adversely affect our brands, reputation and/or customer preference for our products and distract management from other tasks. Litigation trends and expenses and the outcome of litigation cannot be predicted with certainty and adverse litigation trends, expenses and outcomes could adversely affect our business, financial condition and results of operations. See “—Risks Relating to Government Regulations—Environmental regulation and related litigation and commitments could have a material adverse effect on us” for further information regarding ligation involving environmental matters.
Government antitrust and foreign investment policies and regulations may limit our strategic growth opportunities, including certain acquisitions and joint ventures.
The United States and many non-U.S. jurisdictions have laws designed to protect national security or to restrict foreign direct investment. In the United States, the Committee on Foreign Investment in the United States, or CFIUS, has the authority to review transactions that afford foreign investors the ability to “control” a U.S. business,
as well as certain non-controlling investments. If CFIUS identifies a national security risk arising from a particular transaction, it can impose mitigation measures and can also intervene to prohibit the transaction or order a divestment if the transaction has already closed. Many non-U.S. jurisdictions restrict foreign investment in assets important to national security by taking steps including, but not limited to, placing limitations, restrictions or conditions on foreign equity investment, implementing investment screening or approval mechanisms and restricting the employment of foreigners as key personnel. These U.S. and foreign laws could limit our ability to invest in certain businesses or joint ventures or impose burdensome notification requirements, operational restrictions or delays in pursuing and consummating transactions.
Certain of our acquisitions or investments may be subject to review and approval by CFIUS or any non-U.S. equivalents thereof based on our ownership structure and scope of operations. This may have outsized impacts on transaction certainty, timing, feasibility and cost, and could prevent us from maintaining or pursuing acquisition or investment opportunities that we otherwise would have maintained or pursued. CFIUS or any non-U.S. equivalents thereof may seek to impose limitations, conditions or restrictions on or prohibit one or more of our acquisitions or investments, which may adversely affect our flexibility in structuring or financing certain acquisition transactions. In addition, CFIUS is actively pursuing transactions that were not notified to it voluntarily and may ask questions regarding, or impose restrictions, conditions or limitations on, transactions post-closing. Although CFIUS reviews (and in some cases mitigates) foreign investment originating from various countries, it has placed significant focus on reviews involving investors either directly or indirectly controlled by individuals or entities based in the People’s Republic of China, or the PRC. As a result, acquisitions or investments undertaken by us could be subject to heightened CFIUS scrutiny compared to acquisitions or investments made by other foreign investors. These risks have increased and may continue to increase due to geopolitical, policy or regulatory developments, particularly with regard to U.S.-PRC relations.
In addition, the U.S. Department of Justice Antitrust Division and the Federal Trade Commission, the two agencies responsible for enforcing federal antitrust and competition laws, issued new Merger Guidelines in December 2023, designed to invigorate enforcement of the antitrust and competition laws. These initiatives are expected to increase scrutiny of mergers and acquisitions subject to premerger review and those already consummated. As a result, the review process from U.S. antitrust agencies and other non-U.S. antitrust authorities for mergers and acquisitions undertaken by us is expected to become more challenging, more time consuming and more expensive. We may even be required to undergo investigations concerning previously closed transactions. If certain proposed acquisitions are delayed or rejected by antitrust enforcers, or if previously closed transactions are investigated, it could have an adverse impact on our business, as well as limit our opportunities for future strategic growth through acquisitions. In addition, competition rules from other U.S. federal agencies, including the USDA, as well as state competition laws could create additional hurdles.
Furthermore, complying with these laws imposes potentially significant costs and complex additional burdens, and any failure by us to comply with them could expose us to significant penalties, sanctions, loss of future investment opportunities, additional regulatory scrutiny and reputational harm.
Environmental regulation and related litigation and commitments could have a material adverse effect on us.
Our past and present business operations and properties are subject to extensive and increasingly stringent federal, state, local and foreign laws and regulations pertaining to protection of the environment, including:
•the treatment of hazardous materials and the discharge of such materials into the environment;
•the handling and disposition of manure and liquid and solid wastes; and
•air emissions.
We have incurred and expect to continue to incur significant costs complying with environmental laws and regulations. Failure to comply with, and liabilities under, these laws and regulations in the future may result in significant additional consequences to us, including administrative, civil and criminal penalties, cleanup and other environmental damages, negative publicity and increased compliance costs. Some requirements applicable to us, including the Clean Water Act and the Clean Air Act, may also be enforced by citizen groups or other third parties.
Natural disasters, such as flooding and hurricanes, can cause the discharge of effluents or other waste into the environment, which have in the past and may in the future result in litigation and governmental enforcement actions against us or new or additional governmental regulations applicable to our operations. See “Business—Quality Assurance and Food Safety—Regulation” for further discussion of regulatory compliance as it relates to environmental risk. We have incurred, and will continue to incur, significant capital and operating expenditures to comply with these laws and regulations.
We also face the risk of lawsuits even if we are operating in compliance with applicable regulations. For example, in recent years various nuisance suits were filed against us and our subsidiary Murphy-Brown LLC, or Murphy Brown, in North Carolina. Several of these lawsuits resulted in unfavorable outcomes to us. We resolved all then-existing filed cases in July 2019 pursuant to a settlement agreement, however we have since been involved in other pending and threatened nuisance suits and claims related to both farms and other facilities. We cannot assure you that additional or similar claims relating to our farming operations (whether sounding in nuisance or other torts or causes of action) will not arise in the future.
In addition, new environmental issues could arise that would cause currently unanticipated investigations, assessments or expenditures. U.S. federal, international, state and local authorities may, from time to time, adopt revisions to environmental rules and regulations with which we must comply. New or more stringent laws or regulations that impose additional requirements on our operations or on us could increase the cost of doing business for us. For example, in January 2024, the EPA published draft revised Effluent Limitations Guidelines, or ELGs, for wastewater discharges of meat and poultry facilities. The draft proposal includes a number of options for revised ELGs that the EPA is evaluating. For existing direct dischargers of wastewater, including meat processors such as us, the EPA’s preferred option is the imposition of more stringent effluent limitations for nitrogen and ammonia and, for the first time, limitations for phosphorus. This option would also establish, for the first time, pretreatment standards for oil and grease, total suspended solids and biochemical oxygen demand for these dischargers. In addition, the EPA is proposing an amendment to add E. coli bacteria limitations for direct dischargers. Another option the EPA is considering would extend the nitrogen and phosphorus limitations to indirect dischargers, which would also cover many of our facilities.
The EPA conducted a number of public hearings on the proposed ELGs in January and March 2024. It is unclear when the EPA will issue final ELGs or to what extent they will differ from what the EPA has proposed. In addition, the new U.S. administration may elect to change, or abandon, the ELGs. Significant upgrades related to our direct and indirect wastewater discharge streams, including to treatment systems at our Sioux City and Denison, Iowa, Sioux Falls, South Dakota and Tar Heel, North Carolina centers, would be required to meet the standards as proposed, which we estimate would require material capital expenditures in the aggregate.
Additionally, increased public interest in farm animal welfare could result in additional government regulation and additional or unplanned capital expenditures. Further, the regulation or taxation of carbon or other greenhouse gas, or GHG, emissions to address climate change concerns could result in increased compliance costs and capital expenditures and may also affect the prices of commodities, energy and other inputs to our business. It is not possible at this time to predict the complete structure or outcome of any future legislative or regulatory efforts to address GHG emissions and climate change or whether costs of compliance with such efforts will have a material adverse effect on our financial position or results of operations.
Climate change, or legal, regulatory, voluntary or market measures to address climate change, may negatively affect our business, operations or reputation.
There is growing concern that carbon dioxide and other GHGs in the atmosphere have an adverse impact on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters. In the event that climate change has a negative effect on agricultural productivity, we may be subject to decreased availability or less favorable pricing for certain commodities that are necessary for our products, such as grains. We may also be subject to decreased availability or less favorable pricing for water as a result of climate change, which could impact our farming, manufacturing and distribution operations. In addition, natural disasters and extreme weather conditions may disrupt the productivity of our facilities or the operation of our supply chain.
The increasing concern over climate change also has resulted and may continue to result in more regional, federal, and/or global legal and regulatory requirements including changes to energy policies, increased mandatory climate-related disclosure, carbon pricing regulations or carbon taxes. For example, in March 2024 the SEC published its final rules to enhance and standardize climate-related disclosures, requiring covered entities, including us, to disclose certain climate-related metrics and GHG emissions data, information about climate-related targets and goals and climate-related risks and obtain attestation requirements. The rules are currently stayed pending the resolution of litigation challenging the rules. At this time, we cannot predict the costs of implementation or any potential adverse impacts resulting from the new rules, should they become effective. However, we may incur increased costs relating to the assessment and disclosure of climate-related risks and targets. We may also be subject to increased litigation risks related to disclosures made pursuant to the new rules or voluntary climate-related reporting, which could materially and adversely affect our future results of operations and financial condition.
Collecting, measuring and analyzing information relating to our GHG emissions or impacts of climate change on our business is costly, time-consuming, dependent on third-party cooperation and such information may ultimately be unreliable. Furthermore, methodologies for measuring, tracking and reporting on such matters are evolving, and may be ambiguous and subject to rapid change, which may require our processes, benchmarks, baselines and controls for such data to evolve as well. Organizational changes may result in data recalculations. Quantifying GHG emissions within the boundaries of a business is a relatively nascent exercise, and we, like other companies in our industry, have refined and updated our methodologies following prior publication of data. For example, there have been inconsistent practices across many U.S. pork/poultry and dairy producers in quantifying our GHG emissions where biogas eligible for carbon reduction credits is also produced on farms. We have revised baselines and previously reported GHG emissions for our U.S. operations, as well as our carbon reduction goals, as a result of guidance clarifying the accounting of biogas credits in this context. Our GHG footprint has also changed as a result of closure or sale of plants, acquisition of new plants and reduction of farm operations. Furthermore, like many peer companies, our data collection, analysis and reporting capabilities have developed from a starting point with very limited established guidance or methodology. See “Business—Sustainability.” We have engaged a third-party consultant to conduct a review of the GHG emissions attributable to our worldwide businesses, our energy use and our value chain, and that analysis is ongoing. We expect additional changes to the methodologies to quantify our GHG emissions and possibly our climate-related goals as a result of this work.
Like many companies, our quantification of GHG emissions attributable to our business and our carbon reduction goals have been voluntary to date. The process of quantifying our GHG emissions and setting carbon reduction goals, as well as a perceived or actual lack of progress in these endeavors, can subject companies such as ours to criticism, investigations, regulatory enforcement, litigation and other risks. In addition, failure to achieve our GHG emissions reduction goals could harm our reputation, which could have a material adverse effect on our results of operations, financial condition and liquidity. We may also face increased pressure from customers, consumers, investors, activists and other stakeholders to modify our products or operations to exclude ingredients or activities that are considered to have a greater impact on climate change.
Our ability to achieve any of our climate-related strategies, expectations, goals and targets is also subject to factors and conditions that are outside of our control. Examples of such factors include, but are not limited to, evolving regulatory and other standards, processes and assumptions, the pace of scientific and technological developments, increased costs and the availability of requisite financing, market trends that may alter business opportunities, the conduct of third-party manufacturers and suppliers, constraints or disruptions to our supply chain and changes in carbon markets or carbon taxes. We may be required to expend significant resources in the near or long-term future to achieve these strategies and expectations, which could significantly increase our operational costs and, despite such efforts, may be unable to achieve such strategies or meet customer or investor expectations.
Risks Relating to our Capital Structure
We may require additional financing to achieve our goals, and the failure to obtain this necessary capital when needed on acceptable terms, or at all, may force us to delay, limit, reduce or terminate our product manufacturing and development, and other operations.
We have funded our operations primarily through equity financing, long-term senior unsecured notes, committed revolving credit facilities, commercial paper and sales of our products. We have incurred and expect to continue to incur significant capital expenditures related to the expansion and automation of our processing capacity and maintenance of our facilities. We believe that we will continue to expend substantial resources for the foreseeable future as we consider additional markets to pursue and other growth opportunities. In addition, our operating performance and cash flow may not be sufficient to meet all our debt service requirements, return value to shareholders such as through payment of dividends or repurchase of shares of our common stock, and achieve our target Ratio of Net Debt to Adjusted EBITDA or our target minimum liquidity.
Our operating plan may change because of factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financing or other sources. We may also seek financing in connection with potential new product introductions or acquisitions or investments in businesses or technologies that we believe could offer growth opportunities. Such financing may result in dilution to shareholders, imposition of affirmative and negative covenants and debt repayment obligations, or other restrictions, any of which may adversely affect our business. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.
Our affiliation with WH Group has historically provided us with higher credit ratings. The terms of additional financing we incur in the future after this offering may not be as favorable as those previously obtained prior to this offering. Our ability to access additional capital may further be affected by adverse or uncertain economic conditions. Weakness and volatility in the capital markets and the economy in general could make it more difficult to access the capital markets and could increase our cost of borrowing.
Our level of indebtedness and the terms of our indebtedness could adversely affect our business and liquidity position.
As of December 29, 2024, after giving effect to this offering and the application of the net proceeds therefrom, we would have had, on a consolidated basis, $ million of outstanding total debt and $ million of undrawn capacity including $ million under the Senior Revolving Credit Facility (as defined herein) and $ million under the Securitization Facility (as defined herein) (after giving effect to $ million of issued but undrawn letters of credit).
Because the borrowing capacity under the Securitization Facility depends, in part, on accounts receivable levels, which fluctuate from time to time, such amounts may not reflect actual borrowing capacity. The Senior Revolving Credit Facility is a fixed commitment facility and is not dependent on a borrowing base. In addition, on or before the maturity date of the Senior Revolving Credit Facility, we have the right, but not the obligation, to request an increase in the amount of commitments under the Senior Revolving Credit Facility in an aggregate amount not to exceed $500 million under customary terms and conditions.
Our indebtedness may increase from time to time for various reasons, including fluctuations in operating results, working capital needs, capital expenditures and potential acquisitions or joint ventures. In addition, due to the volatile nature of the commodities markets, we may need to borrow significant amounts to cover any margin calls under our risk management and hedging programs. During fiscal year 2024, margin deposits posted by us ranged from $(11) million to $97 million (negative amounts representing margin deposits we have received from our brokers). The average daily amount on deposit with our brokers during fiscal year 2024 was $27 million. As of December 29, 2024, our net amount of margin held on deposit was $60 million.
Our consolidated indebtedness level could significantly affect our business and the value of our common stock because:
•it may, together with the financial and other affirmative and negative covenants in the agreements governing our indebtedness, limit or impair our ability in the future to obtain financing, refinance any of our indebtedness, sell assets or raise equity or debt on commercially reasonable terms or at all, which could cause us to default on our obligations, materially impair our liquidity or otherwise adversely affect our business and the value of our common stock;
•a downgrade in our credit rating (including the loss of our investment grade credit ratings) could restrict or impede our ability to access capital markets at attractive rates and increase the cost of future borrowings;
•it may, through event of default provisions, limit our ability to enter into change of control transactions, which may impede our ability to enter into certain transactions;
•it may reduce our flexibility to respond to changing business and economic conditions or to take advantage of business opportunities that may arise;
•it may place us at a competitive disadvantage relative to some of our competitors that have less indebtedness than we do;
•a portion of our cash flow from operations must be dedicated to interest payments on our indebtedness and is not available for other purposes, which amount could increase if prevailing interest rates rise or if we incur additional indebtedness;
•substantially all of our accounts receivable in the United States secure the Securitization Facility, all of which could limit our ability to dispose of such assets or utilize the proceeds of such dispositions and, upon an event of default under any such secured indebtedness, the lender thereunder could foreclose upon our pledged assets; and
•it could make us more vulnerable to downturns in general economic or industry conditions or in our business.
Further, our debt agreements, under certain circumstances, currently and in the future may require us to maintain investment grade credit ratings and certain financial ratio covenants, and may limit additional borrowings, investments, the payment of dividends and other restricted payments, the acquisition or disposition of assets, mergers and consolidations, transactions with affiliates, the creation of liens, entrance into swap agreements, sale/leaseback transactions and the repayment of certain debt. We cannot assure you that any of these limitations will not hinder our ability to finance operations and capital needs and our ability to pursue business opportunities and activities that may be in our interest.
In addition, should market conditions deteriorate, or should our operating results otherwise be depressed in the future, we may have to request amendments or waivers to our covenants and restrictions under our debt agreements. There can be no assurance that we will be able to obtain such relief should it be needed in the future. A breach of any of these covenants or restrictions could result in a default that would permit our senior lenders, including lenders under the Senior Revolving Credit Facility (as defined herein) and the Securitization Facility (as defined herein) and the holders of our other debt financing facilities, as the case may be, to declare all amounts outstanding under the Senior Revolving Credit Facility, the Securitization Facility and our other debt financing facilities, as applicable, to be due and payable, together with accrued and unpaid interest, and the commitments of the relevant lenders to make further extensions of credit under the Senior Revolving Credit Facility and the Securitization Facility could be terminated. If we were unable to repay our secured indebtedness to our lenders, these lenders could proceed against the collateral securing that indebtedness, which could include substantially all of our accounts receivable assets in the United States.
Our future ability to comply with financial covenants and other conditions, make scheduled payments of principal and interest, or refinance existing borrowings depends on our future business performance which is subject
to economic, financial, competitive and other factors, including the other risks set forth in this section, and may be affected by events beyond our control. Any failure to comply with the covenants of our debt agreements could have a material adverse effect on our business, financial condition, results of operations and prospects.
Additionally, the repayment obligations under our outstanding debt may have the effect of discouraging, delaying or preventing a takeover of our company.
We may not be able to generate sufficient cash to service all of our indebtedness.
Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures and other strategic investments will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may not generate sufficient cash flow from operations, and we cannot assure you that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs.
If we do not generate cash flow from operations sufficient to pay our debt service obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. Our ability to refinance our debt will depend on the condition of the capital markets and our financial condition at that time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.
In addition, we conduct our operations through our subsidiaries, certain of which are not, and in the future may not be, guarantors of our indebtedness. Accordingly, repayment of our indebtedness is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, intercompany transfer, debt repayment or otherwise. Due to the restrictive covenants under certain debt agreements, our subsidiaries may be restricted from distributing dividends to enable us to make payments in respect of our indebtedness. In addition, unless they are guarantors of our indebtedness, our subsidiaries do not have any obligation to pay amounts due on our indebtedness or to make funds available for that purpose.
If drawn upon, our current variable rate indebtedness would subject us to interest rate risk, which could cause our debt service obligations to increase.
Our undrawn revolving credit facility has, and indebtedness we incur in the future may have, variable interest rates. Market interest rates have increased over the past several years and may increase in the future as a result of action by the U.S. Federal Reserve and other factors, and as a result, variable-rate debt may create higher debt service requirements, which would adversely affect our cash flow. If we draw upon our variable rate indebtedness and interest rates increase, our debt service obligations on our variable rate indebtedness would increase even though the amount borrowed would remain the same.
In particular, our borrowings under the Senior Revolving Credit Facility (as defined herein) bear interest at the Secured Overnight Financing Rate, or SOFR, plus a margin ranging from 0.875% to 1.50% per annum, or, at our election, at a base rate plus a margin ranging from 0.00% to 0.50% per annum, in each case depending on our senior unsecured debt rating. To the extent we draw from our Senior Revolving Credit Facility, we may subject to interest rate risk which could cause our debt service obligations to increase. We may also enter into additional variable rate indebtedness in the future.
There can also be no assurance that SOFR will perform in the same way as the Senior Revolving Credit Facility’s original benchmark London interbank Offered Rates, or LIBOR, would have at any time, including as a result of changes in interest and yield rates in the market, market volatility or global or regional economic, financial, political, regulatory, judicial or other events.
Despite current indebtedness levels and restrictive covenants, we may incur additional indebtedness. This could further exacerbate the risks associated with our financial leverage.
Despite current indebtedness levels and restrictive covenants, we expect to incur additional indebtedness and may incur other indebtedness to finance our operations and other capital needs. Although the agreements governing our indebtedness contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of thresholds, qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. If additional debt is incurred, the related risks that we now face as a result of our leverage would intensify.
Risks Relating to our Relationship with WH Group
We will be a “controlled company” within the meaning of the rules of Nasdaq and, as a result, qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to shareholders of other companies that are subject to such requirements.
After the completion of this offering, WH Group will collectively beneficially own approximately % of the voting power of our common stock (or approximately % if the underwriters exercise in full their option to purchase additional shares). As a result, we will be a “controlled company” within the meaning of the corporate governance standards of Nasdaq. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including requirements that:
•a majority of our board consist of “independent directors” as defined under the rules of Nasdaq;
•our director nominees be selected, or recommended for our board’s selection, by a nominating and governance committee comprised solely of independent directors;
•the compensation of our executive officers be determined, or recommended to our board for determination, by a compensation committee comprised solely of independent directors; and
•an annual performance evaluation of the nominating and governance and compensation committees be performed.
Following this offering, we intend to utilize these exemptions. Accordingly, you will not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. These exemptions do not modify the independence requirements for our audit committee, and we expect to satisfy the member independence requirement for the audit committee prior to the end of the transition period provided under Nasdaq’s listing standards and SEC rules and regulations for companies completing their initial public offering. See the section titled “Management—Committees of the Board of Directors—Audit Committee.” There is no single shareholder or group of shareholders which owns 50% or more of the voting power of WH Group as of the date of this prospectus. As a result, WH Group would not be considered a controlled company within the meaning of the corporate governance standards of Nasdaq.
WH Group controls us, and their interests may conflict with ours or yours in the future.
We have agreed to nominate to our board individuals designated by WH Group in accordance with our shareholders agreement with WH Group. For so long as WH Group beneficially owns more than 50% of our outstanding common stock, it will be entitled to nominate for election to our board a majority of the directors on our board and control the composition of our board and the approval of actions requiring shareholder approval through its voting power. Even when WH Group ceases to own a majority of our common stock, for so long as WH Group continues to own at least 10% of our outstanding common stock, it will be entitled to nominate for election to our board a number of the total number of directors entitled to serve on the board proportionate to the percentage of our outstanding common stock beneficially owned by WH Group, rounded up to the nearest whole number. In addition, at any time that WH Group (including its permitted transferees) owns at least a majority of the combined voting
power of our then-outstanding shares of common stock entitled to vote generally in director elections, shareholders are permitted to take action by written consent.
As a result, WH Group will generally be able to control, whether directly or indirectly through its ability to remove and elect directors, and subject to applicable law, substantially all matters affecting us, including:
•any determination with respect to our business direction and policies, including the election and removal or directors and the appointment and removal of officers;
•any determinations with respect to mergers, amalgamations, business combinations or disposition of assets;
•our financing and dividend policy, and the payment of dividends on our common stock, if any;
•compensation and benefit programs and other human resources policy decisions;
•changes to any other agreements that may adversely affect us; and
•determinations with respect to our tax returns and other tax matters.
In particular, for so long as WH Group continues to own a significant percentage of our common stock, WH Group will be able to cause or prevent a change of control of our company or a change in the composition of our board, and could preclude any unsolicited acquisition of our company. The concentration of ownership could deprive you of an opportunity to receive a premium for your common stock as part of a sale of our company and ultimately might affect the market price of our common stock.
If WH Group sells a controlling interest in our company to a third party in a private transaction, you may not realize any change of control premium on shares of our common stock and we may become subject to the control of a presently unknown third party.
Following the completion of this offering, WH Group will continue to own a controlling equity interest in our company. WH Group will have the ability, should it choose to do so, to sell some or all of its shares of our common stock in a privately negotiated transaction, which, if sufficient in size, could result in a change of control of our company.
The ability of WH Group to privately sell its shares of our common stock, with no requirement for a concurrent offer to be made to acquire all of the shares of our common stock that will be publicly traded hereafter, could prevent you from realizing any change of control premium on your shares of our common stock that may otherwise accrue to WH Group on its private sale of our common stock. Additionally, if WH Group privately sells its controlling interest in our company, we may become subject to the control of a presently unknown third party. Such third party may have interests that conflict with those of other shareholders.
After this offering, certain of our directors may have actual or potential conflicts of interest because of their equity interest in WH Group. Also, certain of WH Group’s current executive officers also serve as directors of our company, which may create conflicts of interest, or the appearance of conflicts of interest.
Because of their positions with WH Group, certain of our directors own equity interests in WH Group. Continuing ownership of shares of WH Group’s common stock and equity awards could create, or appear to create, potential conflicts of interest if we and WH Group face decisions that could have implications for both WH Group and us after this offering. In addition, certain of WH Group’s current executive officers also serve as directors of our company, and this could create, or appear to create, potential conflicts of interest when we and WH Group encounter opportunities or face decisions that could have implications for both companies following this offering or in connection with the allocation of such directors’ time between WH Group and us. These potential conflicts could arise, for example, over matters such as the desirability of changes in our business and operations, funding and capital matters, regulatory matters and other agreements with WH Group relating to the commercial arrangements in the future, employee retention or recruiting or our dividend policy.
While our board believes that, given its size and structure, such actual or potential conflicts of interest can be managed adequately, including that the independent members of our board may meet in the absence of senior executive officers or non-independent directors in respect of the relevant matter, the actual or perceived conflicts of interest that may arise could cause reputational or other harm.
In addition, we have, and expect to continue to be, engaged in related party transactions with WH Group and its affiliates. In all related party transactions, there is a risk that a related party’s influence may be such that the transaction terms could be viewed as favorable to that related party, even if we strive to reach arms-length transaction terms. The appearance of conflicts of interest created by related party transactions could impair the confidence of our investors. Furthermore, WH Group has certain non-compete arrangements with Henan Shuanghui Investment & Development Co., Ltd., or Shuanghui Development, which provide that there will be no competition between Shuanghui Development on the one hand, and WH Group and entities controlled by WH Group, on the other hand, regarding the operation of meat business in the PRC. Such undertaking by WH Group may restrict us from engaging in certain activities that would compete with Shuanghui Development and may limit our ability to pursue business opportunities in the manner that we desire, which could adversely affect our business, financial condition and results of operations.
After this offering, WH Group will indemnify us for certain liabilities. However, there can be no assurance that the indemnity will be sufficient to insure us against the full amount of such liabilities, or that WH Group’s ability to satisfy its indemnification obligation will not be impaired in the future.
Pursuant to the shareholders agreement and certain other agreements with WH Group, WH Group has agreed to indemnify us for certain liabilities as discussed further in “Certain Relationships and Related Party Transactions—Relationship with WH Group”. However, third parties could also seek to hold us responsible for any of the liabilities that WH Group has agreed to retain, and there can be no assurance that the indemnity from WH Group will be sufficient to protect us against the full amount of such liabilities, or that WH Group will be able to fully satisfy its indemnification obligations. In addition, WH Group’s insurance will not necessarily be available to us for liabilities associated with occurrences of indemnified liabilities prior to this offering, and in any event WH Group’s insurers may deny coverage to us for liabilities associated with certain occurrences of indemnified liabilities prior to this offering. Moreover, even if we ultimately succeed in recovering from WH Group or such insurance providers any amounts for which we are held liable, we may be temporarily required to bear these losses. Each of these risks could negatively affect our business, financial condition or results of operations.
Changes in relations between the United States and the PRC, or in U.S. regulations concerning the PRC, may adversely impact our business, financial condition, results of operations, our ability to raise capital or the market price of our common stock.
The U.S. government, including its agencies such as the SEC, has made statements and taken certain actions that have led to, and may in the future make statements or take actions that would lead to, changes in relations between the United States and the PRC, which statements and actions could impact companies, including us, with connections to the PRC. In particular, the United States may in the future impose policies on or increase scrutiny of companies having operations in the PRC, such as WH Group, or companies in the United States with significant PRC ownership. These could restrict or negatively impact our business or our ability to access the U.S. capital markets. More broadly, changes in political conditions in the PRC and changes in the state of U.S.-PRC relations, including any tensions relating to potential military conflict between the PRC and Taiwan, are difficult to predict and could lead to policies or regulations that adversely affect our business, financial condition or results of operations on account of our controlling shareholder’s ties to the PRC. Furthermore, continued or increased tension in U.S.-PRC relations or any deterioration in political or trade relations between the United States and the PRC may lead to negative investor sentiment towards companies controlled by shareholders with significant ties to the PRC, which could make our common stock less attractive to U.S. investors and affect the market price of our common stock.
Our controlling shareholder is required by the stock exchange on which its shares are listed to disclose and obtain approval from its board of directors or shareholders for certain corporate actions that we undertake.
WH Group is listed on The Stock Exchange of Hong Kong Limited and is therefore subject to the applicable Hong Kong laws and regulations, including but not limited to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, or the HKEx Listing Rules. Under the HKEx Listing Rules, WH Group is obligated to obtain approval from its board of directors and/or shareholders for certain transactions in which we, as a subsidiary of WH Group, engage, such as the purchase or sale of assets, mergers and acquisitions, lending, leasing of assets, donation or acceptance of assets, debt restructuring, license agreements, research and development joint ventures, and transactions with connected persons (as defined under the HKEx Listing Rules) of WH Group, the value of which exceeds certain financial thresholds established by the applicable listing rules and/or otherwise not exempted under the applicable listing rules. In addition, the HKEx Listing Rules require our controlling shareholder to obtain shareholders’ approval for certain corporate actions that we undertake, including but not limited to (i) any issuance of shares by us that results in a reduction of WH Group’s equity interest in us in excess of certain dilution thresholds and (ii) the implementation of a share option and/or award scheme involving the issuance of new shares by us. This offering will constitute a “disposal” and a “deemed disposal” of the interest in a subsidiary of WH Group under the HKEx Listing Rules. Based on the proposed size of this offering, it is expected that this offering may constitute a “major transaction” of WH Group under the HKEx Listing Rules and would therefore be subject to the approval of the shareholders of WH Group under paragraph 3(e)(1) of Practice Note 15 and Chapter 14 of the HKEx Listing Rules. Accordingly, we received the requisite approval of the shareholders of WH Group for this offering prior to the date of this prospectus.
Additionally, under Practice Note 15 of the HKEx Listing Rules, this offering constitutes a “spin-off” transaction by WH Group, for which the approval of The Stock Exchange of Hong Kong Limited is required to be obtained by WH Group. On September 6, 2024, The Stock Exchange of Hong Kong Limited confirmed that WH Group may proceed with the “spin-off” transaction. The offering is not subject to the approval of any other regulatory authority on the part of WH Group.
There can be no assurance that WH Group will obtain the requisite approvals if we desire to enter into any of the transactions as required under the applicable listing rules, and a failure to do so would restrict our ability to engage in such transactions. Furthermore, regulators including The Stock Exchange of Hong Kong Limited and/or the Securities and Futures Commission of Hong Kong could impose additional restrictions or approval requirements that could impact our ability to undertake certain corporate actions. We cannot guarantee that our controlling shareholder will be able to successfully or timely obtain any of the approvals needed to permit us to undertake any of the corporate actions as required under the applicable listing rules, and the failure to do so may have a material adverse effect on our business, financial condition or results of operations.
Risks Relating to this Offering
We will incur increased costs and become subject to additional regulations and requirements as a result of becoming a public company, and our management will be required to devote substantial time to new compliance matters, which could lower our profits or make it more difficult to run our business.
As a public company, we will incur significant legal, regulatory, finance, accounting, investor relations, insurance and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements and costs of recruiting and retaining non-executive directors. We also have incurred and will incur costs associated with the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act and related rules implemented by the SEC and the relevant stock exchange. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. Our management will need to devote a substantial amount of time to related compliance requirements, diverting the attention of management away from revenue-producing activities. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the
same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action, and civil litigation.
Failure to comply with requirements to design, implement, and maintain effective internal controls could have a material adverse effect on our business and stock price.
As a privately held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-Oxley Act, or Section 404.
As a public company, we will have significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environment, and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements, and harm our results of operations. In addition, we will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in the second annual report following the completion of this offering. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. Testing and maintaining internal controls may divert our management’s attention from other matters that are important to our business.
In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, we may encounter problems or delays in completing the remediation of any deficiencies identified by us or our independent registered public accounting firm in connection with the issuance of their attestation report.
We may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404, or our independent registered public accounting firm may not issue an unqualified opinion. If either we are unable to conclude that we have effective internal control over financial reporting or our independent registered public accounting firm is unable to provide us with an unqualified report, investors could lose confidence in our reported financial information, which could have a material adverse effect on the trading price of our common stock.
In addition, the preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in our combined financial statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, net sales and expenses that are not readily apparent from other sources. If our assumptions change or if actual circumstances differ from our assumptions, our results of operations could be adversely affected.
There is currently no public market for our common stock and an active, liquid trading market for our common stock may not develop or continue following this offering.
There is currently no public market for our common stock. If an active and liquid trading market does not develop or continue, you may have difficulty selling your shares of our common stock at an attractive price or at all. The initial public offering price per share of common stock will be determined by agreement between us and the representative of the underwriters and may not be indicative of the price at which shares of our common stock will trade in the public market after this offering. An inactive market may also impair our ability to raise capital by
selling shares of our common stock and may impair our ability to acquire other companies by using our shares of common stock as consideration.
Our stock price may change significantly following this offering, and you may not be able to resell shares of our common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result.
Even if a trading market develops, the market price of our common stock may be highly volatile and could be subject to wide fluctuations. You may not be able to resell your shares at or above the initial public offering price due to a number of factors such as those listed elsewhere in this “Risk Factors” section and the following:
•results of operations that vary from the expectations of securities analysts and investors;
•results of operations that vary from those of our competitors;
•changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;
•changes in market valuations of, or earnings and other announcements by, companies in our industries;
•declines in the market prices of stocks generally, particularly those of companies in our industry;
•additions or departures of key management personnel;
•strategic actions by us or our competitors;
•announcements by us or our competitors of significant contracts, price reductions, new services, acquisitions, dispositions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;
•changes in our market share;
•an increase in our indebtedness or the interest rates applicable to our indebtedness;
•changes in general economic or market conditions or trends in our industries or the economy as a whole;
•changes in business or regulatory conditions;
•future sales of our common stock or other securities;
•actions by WH Group or other institutional shareholders;
•investor perceptions of or the investment opportunity associated with our common stock relative to other investment alternatives;
•changes in the way we are perceived in the marketplace, including due to negative publicity or campaigns on social media to boycott certain of our products, our business or our industries;
•the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;
•changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business;
•announcements relating to litigation or governmental investigations;
•guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;
•the development and sustainability of an active trading market for our common stock;
•changes in accounting principles; and
•other events or factors, including those resulting from informational technology system failures and disruptions, epidemics, pandemics, natural disasters, war, acts of terrorism, civil unrest, or responses to these events.
Further, the global equity markets in general have recently experienced extreme price and volume fluctuations, including as a result of the COVID-19 pandemic, economic uncertainty and changes or anticipated changes in interest rates, inflation, and liquidity concerns at financial institutions that may be unrelated to our operating performance. Continued market fluctuations could result in extreme volatility in the price of our common stock, which could cause a decline in the value of our common stock. In addition, price volatility may be greater if the public float and trading volume of our common stock is low.
In the past, following periods of market volatility, shareholders have instituted securities class action litigation against various issuers. If we were to become involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation, which may adversely affect the market price of our common stock.
Investors in this offering will suffer immediate and substantial dilution.
The initial public offering price per share of common stock will be substantially higher than our as adjusted net tangible book value per share immediately after this offering. As a result, you will pay a price per share of common stock that substantially exceeds the per share book value of our tangible assets after subtracting our liabilities. Upon the issuance and sale of shares of our common stock by us at an assumed initial public offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, you will incur immediate and substantial dilution in an amount of $ per share of common stock. If the underwriters exercise their option to purchase additional shares, you will experience additional dilution. See “Dilution.”
We expect to continue paying regular dividends to our shareholders, but our ability to do so is subject to the discretion of our board and may be limited by our financial condition, our credit facilities, the indentures governing the notes we previously issued and applicable law.
We have historically paid dividends to WH Group annually, along with special dividends in some years. We initially expect to pay annual dividends in an amount equal to 50% of our net income, subject to the discretion of the board. See “Dividend Policy.” However, the payment of dividends and other distributions is at the discretion of our board and our board may, in its discretion, increase, decrease or eliminate the payment of dividends. Our ability to pay dividends on our common stock depends on many factors, including our results of operations, financial condition, level of indebtedness, capital requirements, contractual restrictions, restrictions in our debt agreements and in any preferred stock, business prospects and other factors that our board may deem relevant. In particular, our ability to pay dividends on our common stock is limited by covenants in our credit facilities and the indentures governing the notes and may be further restricted by the terms of any future debt or preferred securities. Furthermore, Virginia law prohibits us from paying dividends or other distributions if, after giving effect to the dividend or other distribution, we would not be able to pay our debts as they become due in the usual course of business or our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of the dividend or other distribution, to satisfy the preferential rights of any then outstanding shares of our preferred stock. While we do not currently believe that these restrictions will impair our ability to continue to pay regular quarterly cash dividends, there can be no assurance that we will not need to reduce or eliminate the payment of dividends on our common stock in the future.
Any shareholder whose principal currency is not the U.S. dollar will be subject to exchange rate fluctuations.
Our common stock will be traded in, and any cash dividends or other distributions to be declared in respect of them, if any, will be denominated in U.S. dollars. Shareholders whose principal currency is not the U.S. dollar will
be exposed to foreign currency exchange rate risk. Any depreciation of the U.S. dollar in relation to such foreign currency would reduce the value of our common stock held by such shareholders, whereas any appreciation of the U.S. dollar would increase their value in foreign currency terms. In addition, we will not offer our shareholders the option to elect to receive dividends, if any, in any other currency. Consequently, our shareholders may be required to arrange their own foreign currency exchange, either through a brokerage house or otherwise, which could incur additional commissions or expenses.
Future sales or issuances, or the perception of future sales or issuances, by us or our existing shareholders in the public market following this offering could cause the market price for our common stock to decline.
The sale or issuance of substantial amounts of shares of our common stock or other securities convertible or exchangeable into shares of our common stock in the public market, or the perception that such sales or issuances could occur, including sales by our existing shareholders, could harm the prevailing market price of shares of our common stock. These sales or issuances, or the possibility that these sales or issuances may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
Upon completion of this offering, we will have a total of shares of our common stock outstanding, or shares if the underwriters exercise in full their option to purchase additional shares of our common stock. All of the shares of our common stock sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except that any shares held by WH Group or purchased by our directors and officers in this offering (including through our directed share program described under “Underwriting—Directed Share Program”) may be sold only in compliance with the limitations described in “Shares Eligible for Future Sale.” The shares of common stock held by WH Group after this offering, representing approximately % of the total outstanding shares of our common stock following this offering (or approximately % if the underwriters exercise in full their option to purchase additional shares), will be “restricted securities” within the meaning of Rule 144 of the Securities Act, or Rule 144, and subject to certain restrictions on resale. Restricted securities may be sold in the public market only if they are registered under the Securities Act or are sold pursuant to an exemption from registration such as Rule 144, as described in “Shares Eligible for Future Sale.”
We, our directors and our officers and WH Group will sign lock-up agreements with the underwriters that will, subject to certain customary exceptions, restrict the sale of the shares of our common stock and certain other securities held by them for 180 days following the date of this prospectus. The representative of the underwriters may, in their sole discretion and at any time without notice, release all or any portion of the shares or securities subject to any such lock-up agreements. See “Underwriting” for a description of these lock-up agreements.
Upon the expiration of the lock-up agreements described above, all of such shares will be eligible for resale in a public market pursuant to Rule 144, subject to our compliance with the public information requirement and, in the case of shares held by WH Group, subject to volume, manner of sale and other limitations under Rule 144.
In addition, pursuant to the registration rights agreement to be entered into between us and WH Group, WH Group has the right, subject to certain conditions, to require us to register the sale of their shares of our common stock under the Securities Act. See “Certain Relationships and Related Party Transactions—Registration Rights Agreement.” By exercising its registration rights and selling a large number of shares, WH Group could cause the prevailing market price of our common stock to decline. Following completion of this offering, the shares covered by registration rights would represent approximately % of our common stock outstanding (or approximately % if the underwriters exercise in full their option to purchase additional shares). Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement. See “Shares Eligible for Future Sale—Registration Rights.”
We intend to file one or more registration statements on Form S-8 under the Securities Act to register shares of our common stock or securities convertible into or exchangeable for shares of our common stock issued under the New Equity Awards, to be adopted in connection with this offering. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be
available for sale in the open market. We expect that the initial registration statement on Form S-8 will cover shares of our common stock.
In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional shares of our common stock or by offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity or shares of preferred stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may have a material adverse effect on the amount, timing or nature of our future offerings. Thus, holders of our common stock bear the risk that our future offerings may reduce the market price of our common stock and dilute their stockholdings in us.
As restrictions on resale end, or if the existing shareholders exercise their registration rights, or we register additional shares of our common stock or securities convertible into or exchangeable for shares of our common stock, or if the market anticipates any of the foregoing, the market price of our shares of common stock could drop significantly. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.
Our quarterly results of operations may fluctuate significantly and could fall below the expectations of securities analysts and investors due to seasonality and other factors, some of which are beyond our control, resulting in a decline in our stock price.
Our quarterly results of operations may fluctuate due to seasonal or other factors. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year. In addition, if we increase our marketing or promotional activity in certain periods, the seasonality of our business may be amplified. Typically, our third and fourth quarters have higher revenue due to weather and holidays. Fluctuations or changes in these seasonal patterns may adversely affect our business, financial condition and results of operations. As a result, it may be difficult to accurately forecast our results of operations and, if our forecasts are not accurate, we may fail to meet the expectations of investors and securities analysts, which could cause the trading price of our common stock to fall substantially and potentially subject us to costly lawsuits, including securities class action suits.
If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline.
The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industries, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, or if our operating results do not meet their expectations, the price of our stock could decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.
Our management may spend the proceeds to our company from this offering in ways with which you may disagree or that may not be profitable.
Although we anticipate using the net proceeds to our company from this offering as described under “Use of Proceeds,” we will have broad discretion as to the application of the net proceeds received by us and could use them for purposes other than those contemplated by this offering. You may not agree with the manner in which our management chooses to allocate and spend the net proceeds. Our management may use the net proceeds for corporate purposes that may not increase our profitability or otherwise result in the creation of shareholder value. In addition, pending our use of the net proceeds, we may invest the net proceeds primarily in instruments that do not produce significant income or that may lose value.
Anti-takeover provisions in our organizational documents and provisions in existing and future debt agreements could delay or prevent a change of control.
Certain provisions of our amended and restated articles of incorporation and our amended and restated bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a shareholder might consider to be in its best interest, including those attempts that might result in a premium over the market price for the shares held by our shareholders.
These provisions will provide for, among other things:
•a classified board of directors, as a result of which our board will be divided into three classes, with each class serving for staggered three-year terms;
•the ability of our board to issue one or more classes or series of preferred stock and to determine the preferences, rights and limitations of those shares without shareholder approval;
•advance notice requirements for nominations of directors and proposals of other business by shareholders to be considered at our annual or special meetings;
•at any time after WH Group (including its permitted transferees) ceases to own a majority of the combined voting power of our then-outstanding shares of common stock entitled to vote generally in director elections, or the WHG Trigger Event, our shareholders will not be able to act by less-than-unanimous written consent without a duly called annual or special meeting of our shareholders;
•at any time after the WHG Trigger Event, special meetings may only be called by the Chair of the board, the President or the board;
•from and after the WHG Trigger Event, our directors may only be removed for cause, by the affirmative vote of holders of a majority of the voting power of the shares of common stock outstanding and entitled to vote on the election of directors;
•restrictions on engaging in mergers, share exchanges, certain dispositions of corporate assets and other transactions with an interested shareholder (generally defined as any person, other than WH Group and its affiliates and permitted transferees, that acquires more than 10% of any class of our outstanding voting shares without the approval of a majority of our disinterested directors) unless the transaction is approved by a majority of our disinterested directors and holders of two-thirds of our voting shares (excluding shares owned by the interested shareholder); and
•that our amended and restated articles of incorporation and amended and restated bylaws may be amended by the affirmative vote of the holders of at least a majority of the total voting power of the outstanding shares of common stock entitled to vote.
These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our shareholders. These provisions also may have the effect of preventing changes in our board and may make it more difficult to accomplish transactions that shareholders may otherwise deem to be in their best interests. As a result, our shareholders may be limited in their ability to obtain a premium for their shares. See “Description of Capital Stock.”
Our board will be authorized to issue and designate shares of our preferred stock in additional classes and series without shareholder approval.
Our amended and restated articles of incorporation will authorize our board, without the approval of our shareholders, to issue up to shares of our preferred stock, subject to limitations prescribed by applicable law and the provisions of our amended and restated articles of incorporation, as shares of preferred stock in one or more classes or series, to establish from time to time the number of shares to be included in each such class or series and to fix the preferences, rights and limitations of the shares of each such class or series. The preferences, rights and
limitations of these classes or series of preferred stock may be senior to or on parity with our common stock, which may reduce the value of our common stock.
Our amended and restated bylaws designate the U.S. District Court for the Eastern District of Virginia, Richmond Division (or if it does not have jurisdiction over certain action, the Circuit Court of Henrico County, Virginia) as the sole and exclusive forum for certain litigation that may be initiated by our shareholders, which could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us.
Pursuant to our amended and restated bylaws, unless we consent in writing to the selection of an alternative forum, the U.S. District Court for the Eastern District of Virginia, Richmond Division (or, if the U.S. District Court for the Eastern District of Virginia does not have jurisdiction over certain action, the Circuit Court of Henrico County) will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of our company, (ii) any action asserting a claim of breach of a duty owed by any of our directors, officers or shareholders to us or our shareholders, (iii) any action asserting a claim arising pursuant to the Virginia Stock Corporation Act, our amended and restated articles of incorporation or our amended and restated bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine. Our amended and restated bylaws will provide that the foregoing provision will not apply to claims arising under the Securities Act or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. In addition, our amended and restated bylaws will provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. There is no guarantee that a court will enforce such provisions. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. For the avoidance of doubt, our shareholders cannot waive compliance with U.S. federal securities laws and the rules and regulations thereunder. The forum selection clause in our amended and restated bylaws may have the effect of discouraging lawsuits against us or our directors, officers or shareholders.
Any person or entity purchasing or otherwise acquiring or holding any interest in shares of our capital stock will be deemed to have notice of and consented to the forum provisions in our amended and restated bylaws, except our shareholders will not be deemed to have waived (and cannot waive) compliance with the federal securities laws and the rules and regulations thereunder. This exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our current or former directors, officers or shareholders. There is also a risk that this exclusive forum provision may result in increased costs for a shareholder to bring a claim. Alternatively, if a court were to find the exclusive forum provision contained in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition and results of operations.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this prospectus, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management, and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words, such as “may,” “might,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” “goal,” “objective,” “seeks,” “likely” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions.
Forward-looking statements contained in this prospectus include, but are not limited to, statements about:
•our ability to capture synergies between our Packaged Meats and Fresh Pork segments;
•our ability to execute on our strategy to optimize the size of our hog production operations;
•our ability to anticipate and meet consumer trends and interests through production innovation;
•the size of our addressable markets, market share and market trends, including our ability to drive organic growth in our business through our Packaged Meats and Fresh Pork segments;
•anticipated trends, developments and challenges in our industry, business and the highly competitive markets in which we operate;
•our ability to mitigate higher input costs through productivity improvements in our operations (including analytics and task automation), various procurement strategies and the use of derivative instruments;
•our dependence on third-party suppliers and our ability to mitigate any disruption or inefficiency in our supply chain and/or operations;
•our expectations regarding our hog production transformation strategy and our ability to achieve segment production targets;
•fluctuations in our quarterly results of operations due to the seasonal nature of our business;
•our ability to attract and retain a diverse and inclusive workforce and maintain our corporate culture;
•our ability to prevent cyberattacks, other cyber-incidents, security breaches or other disruptions of our information technology systems;
•our ability to defend litigation brought against us successfully and the sufficiency of our accruals for related contingent losses;
•compliance with laws and regulations, including environmental, cybersecurity and tax laws and regulations, that currently apply or may become applicable to our business both in the United States and Mexico and our expectations regarding various laws and restrictions that relate to our business;
•our ability to capitalize on export markets;
•our ability to execute on acquisitions, joint ventures and divestitures;
•legal, regulatory, or market measures to address climate change and our ability to achieve our climate-related goals and strategies;
•future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements;
•the sufficiency of our cash and cash equivalents and the availability of our committed credit facilities to meet our liquidity needs;
•our ability to achieve our financial and operational targets;
•our ability to maintain our investment grade ratings;
•our expectations regarding expenses, such as stock-based compensation expenses;
•fluctuations in the values of our open derivative contracts and pension obligations and related assets;
•impairment in the carrying value of our goodwill or intangible assets;
•our ability to achieve or maintain our targeted Ratio of Net Debt to Adjusted EBITDA and minimum liquidity levels;
•our dividend policy and our ability to pay dividends; and
•our intended use of the net proceeds from this offering.
We caution you that the foregoing list does not contain all of the forward-looking statements made in this prospectus.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this prospectus primarily on our current expectations, estimates, forecasts and projections about future events and trends that we believe may affect our business, results of operations, financial condition and prospects. Although we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors, including those described in the section titled “Risk Factors” and elsewhere in this prospectus. Moreover, we operate in a very competitive and rapidly changing environment. Additional risks and uncertainties of which we are unaware, or that we currently deem immaterial, also may become important factors that affect us. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this prospectus. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this prospectus to reflect events or circumstances after the date of this prospectus or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.
You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this prospectus by these cautionary statements.
USE OF PROCEEDS
We estimate that the net proceeds to us from this offering will be approximately $ based on an assumed initial public offering price of $ per share of our common stock, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
Certain of the shares of common stock offered by this prospectus are being sold by the selling shareholder. The selling shareholder in this offering is SFDS UK Holdings Limited, an indirect wholly owned subsidiary of WH Group that holds WH Group’s interest in us. We will not receive any of the proceeds from the sale of shares by the selling shareholder in this offering, including from any exercise by the underwriters of their option to purchase additional shares. For information about the selling shareholder, see “Principal and Selling Shareholders.”
We intend to use the net proceeds to us from this offering for general corporate purposes, including capital investments in infrastructure, automation and capacity expansion.
Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share of our common stock, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by $ , assuming the number of shares of our common stock offered in this offering by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, an increase (decrease) of one million shares in the number of shares of our common stock sold in this offering by us would increase (decrease) the net proceeds to us from this offering by $ , assuming the initial public offering price of $ per share of our common stock, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. The information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at the time of the pricing of this offering.
The foregoing represents our current intentions with respect to the use of the net proceeds of this offering based upon our present plans and business condition. We cannot predict with certainty all of the particular uses for the net proceeds of this offering or the amounts that we will actually spend on such particular uses. Accordingly, our management will have broad discretion in applying the net proceeds of this offering. A change in our present plans or the occurrence of unforeseen events or changed business conditions could result in application of the net proceeds of this offering in a manner other than as described in this prospectus.
Pending their use, we intend to invest the net proceeds of this offering in a variety of capital-preservation investments, including short- and intermediate-term investments, interest-bearing investments, investment-grade securities, government securities and money market funds.
DIVIDEND POLICY
We have historically paid dividends to WH Group annually, along with special dividends in some years. We initially expect to pay annual dividends in an amount equal to 50% of our net income, subject to the discretion of the board.
The payment of any dividends or other distributions in the future to our shareholders, and the timing and amount thereof, will fall within the discretion of the board. The board’s decisions regarding the payment of dividends will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in the agreements governing our indebtedness, general economic business conditions, industry practice, legal requirements and other factors that the board may deem relevant.
We cannot assure you that we will pay our anticipated dividend in the same amount or frequency, or at all, in the future. You should not purchase shares of our common stock with the expectation of receiving cash dividends. See “Risk Factors—Risks Relating to This Offering—We expect to continue paying regular dividends to our shareholders, but our ability to do so is subject to the discretion of our board and may be limited by our financial condition, our credit facilities, the indentures governing the notes we previously issued and applicable law.”
CAPITALIZATION
The following table sets forth our cash and cash equivalents and capitalization as of September 29, 2024:
•on an actual basis as derived from our consolidated financial statements included elsewhere in this prospectus; and
•on an as adjusted basis after giving effect to the sale by us of shares of our common stock in this offering based on an assumed initial public offering price of $ per share of our common stock, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.
The “as adjusted” information set forth below is illustrative only, and will be adjusted based on the actual initial public offering price and other terms of the offering determined at the pricing of this offering. You should read this table in conjunction with the information contained in “Summary Historical Consolidated Financial Information,” “Use of Proceeds,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as our consolidated financial statements and related notes and our unaudited condensed consolidated financial statements and related notes, each included elsewhere in this prospectus.
| | | | | | | | | | | |
| As of September 29, 2024 |
| Actual | | As Adjusted (2) |
| (In millions, except par value and share data) |
| Cash and cash equivalents | $ | 278 | | | $ |
Current portion of long-term debt and finance lease obligations (1) | 8 | | | $ |
Long-term debt and finance lease obligations (1) | 2,005 | | | $ |
Common stock, no par value, 1,000 shares authorized and 1,000 issued and outstanding, actual; shares authorized and shares issued and outstanding, as adjusted (2) | — | | |
|
| Additional paid-in capital | 2,967 | | | |
Preferred stock, no par value, no shares authorized, issued and outstanding, actual; shares authorized and shares issued and outstanding, as adjusted | — | | | |
Retained earnings | 2,997 | | | |
| Accumulated other comprehensive loss | (363) | | | |
Total shareholder’s equity | 5,601 | | | |
| Total capitalization | $ | 7,613 | | | $ |
________________
(1)For a further description of our indebtedness, including our revolving credit facility, see “Note 10: Debt” and “Note 11: Lease Obligations, Commitments, and Guarantees” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
(2)Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share of our common stock, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by $ , assuming the number of shares of our common stock offered in this offering by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, an increase (decrease) of one million shares in the number of shares of our common stock sold in this offering by us would increase (decrease) the net proceeds to us from this offering by $ , assuming the initial public offering price of $ per share of our common stock, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. The information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at the time of the pricing of this offering.
DILUTION
If you invest in our common stock in this offering, your ownership interest in us will be immediately diluted to the extent of the difference between the initial public offering price per share of our common stock and the as adjusted net tangible book value per share of our common stock after giving effect to this offering.
Our net tangible book value as of September 29, 2024 was approximately $3 billion, or $3 million per share of our common stock. We calculate net tangible book value per share by taking the amount of our total tangible assets, reduced by the amount of our total liabilities, and then dividing that amount by the total number of shares of common stock outstanding.
After giving effect to (i) the sale by us of shares of common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and (ii) our receipt of the proceeds therefrom, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, our as adjusted net tangible book value as of , would have been $ , or $ per share of our common stock. This amount represents an immediate increase in net tangible book value of $ per share of common stock to our existing shareholders and an immediate and substantial dilution in net tangible book value of $ per share of common stock to new investors purchasing shares in this offering.
The following table illustrates this dilution on a per share of common stock basis:
| | | | | | | | | | | |
| Assumed initial public offering price per share of our common stock | | | $ |
Historical net tangible book value per share of our common stock | $ | | |
Increase in net tangible book value per share of our common stock attributable to new investors purchasing shares of our common stock in this offering | | | |
Net tangible book value per share of our common stock after giving effect to this offering | | | |
Dilution in net tangible book value per share of our common stock to new investors purchasing shares of our common stock in this offering | | | $ |
Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share of our common stock, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by $ , assuming the number of shares of our common stock offered in this offering by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, an increase (decrease) of one million shares in the number of shares of our common stock sold in this offering by us would increase (decrease) the net proceeds to us from this offering by $ , assuming the initial public offering price of $ per share of our common stock, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. The information discussed above is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at the time of the pricing of this offering.
The following table summarizes, on the same as adjusted basis as of September 29, 2024, the total number of shares of common stock purchased, the total cash consideration paid to us, and the average price per share of
common stock paid by our existing shareholders and by new investors purchasing shares of common stock in this offering:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shares Purchased | | Total Consideration | | Average Price Per Share |
| Number | | Percent | | Amount | | Percent | |
| (in millions except for percentages) |
| Existing shareholders | | | % | | $ | | % | | $ |
| New investors in this offering | | | | | | | | | $ |
| Total | | | 100.0 | % | | $ | | 100.0 | % | | |
If the underwriters were to exercise in full their option to purchase additional shares of common stock in this offering, the percentage of shares of our common stock held by existing shareholders as of , 2025 would be % and the percentage of shares of our common stock held by new investors in this offering would be %.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following management’s discussion and analysis of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by reference to the consolidated financial statements of Smithfield Foods, Inc. and the related notes included within this prospectus. For the purposes of this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” references to “we,” “our,” “us,” and “Smithfield” refer to Smithfield Foods, Inc. and its consolidated subsidiaries.
This discussion and analysis contains forward-looking statements that involve risks and uncertainties which could cause our actual results to differ materially from those anticipated in such forward-looking statements, including, risks and uncertainties discussed under the heading “Forward-Looking Statements,” “Risk Factors” and elsewhere in this prospectus. Additionally, our historical results are not necessarily indicative of the results that may be expected for any period in the future.
Our fiscal year is the 52-week or 53-week period that ends on the Sunday nearest to December 31. Unless otherwise noted, all references to “2023”, “2022” and “2021” are to the 52-week periods ended December 31, 2023, January 1, 2023 and January 2, 2022, respectively.
Overview
Smithfield is an American food company and an industry leader in value-added packaged meats and fresh pork with over $14 billion in annual sales. We produce and distribute a wide variety of packaged meats and fresh pork products both domestically and abroad. We market our products under a leading portfolio of iconic brands including Smithfield, Eckrich and Nathan’s Famous, among many others.
We conduct our operations through the following reportable segments:
•Packaged Meats: The Packaged Meats segment consists of our U.S. operations that process fresh meat into a wide variety of packaged meats products, including bacon, sausage, hot dogs, deli and lunch meats, dry sausage products (such as pepperoni and genoa), ham products, ready-to-eat products and prepared foods (such as pre-cooked entrees, bacon and sausage). Approximately 80% of the Packaged Meats segment’s raw materials are sourced from our Fresh Pork segment. We market our domestic packaged meats products under a strategic set of core brands, which include: Smithfield, Eckrich, Nathan’s Famous, Farmland, Armour, Farmer John, Kretschmar, Krakus, John Morrell, Cook’s, Gwaltney, Carando, Margherita, Curly’s and Smithfield Culinary. We also sell a sizeable portion of our packaged meats products as private label products. The majority of the Packaged Meats segment’s products are sold to retail and foodservice customers in the United States.
•Fresh Pork: The Fresh Pork segment consists of our U.S. operations that process live hogs into a wide variety of primal, sub-primal and offal products, such as bellies, butts, hams, loins, picnics and ribs. The Fresh Pork segment sources approximately half of its raw materials from our Hog Production segment and half from independent farmers with whom we partner across the United States. Approximately one-third of our fresh pork products, including the majority of hams, bellies and trimmings, is transferred to our Packaged Meats segment. Externally, we sell our fresh pork products to domestic retail, foodservice and industrial customers, as well as to export markets, including, among others, China, Mexico, Japan, South Korea and Canada.
•Hog Production: The Hog Production segment consists of our hog production operations in the United States, which produce and raise our hogs on numerous company-owned farms and farms that are owned and operated by third-party contract farmers. Nearly all of the hogs produced by this segment are processed by our Fresh Pork segment. The Hog Production segment also may sell grains to external customers.
We also have other operations that do not themselves constitute reportable segments and are included in our Other segments. These include our Mexico and Bioscience operations. Our Mexico operations include the raising of hogs and production of pork products that are sold primarily to customers in Mexico. Our Bioscience operations use
raw materials from hogs that we process to manufacture heparin products, including an active pharmaceutical ingredient that mitigates the risk of blood clots.
Prior to this offering, we have been an indirect wholly owned subsidiary of Hong Kong-based WH Group. WH Group is publicly traded on The Stock Exchange of Hong Kong Limited.
On August 26, 2024, we completed a carve-out and transfer of our European operations to WH Group. Accordingly, the results of operations, assets and liabilities, and cash flows of the European operations have been condensed and reported as discontinued operations in the consolidated financial statements for all periods presented.
Key Factors Affecting Our Results of Operations
The following are key factors that have influenced our results of operations in the past and may influence our results in the future.
Sales Drivers
We are focused on driving profitable growth through our Packaged Meats segment. Within the Packaged Meats segment, the primary factors impacting sales of our brands are household penetration, consumption levels, price point and product offerings. As a result, we have pursued strategies that we believe best align our products with consumer trends and behavior. We have shifted our portfolio towards a higher mix of value-added and margin accretive products while leveraging the breadth of our offerings to further penetrate across dayparts. We look to increase brand awareness and encourage consumer adoption of our products through product and packaging innovation and effective and appealing marketing strategies while maintaining our promise to consumers to offer high-quality products for every budget. We have also expanded to new categories and grown distribution of under-indexed brands in under-penetrated locations. In addition to the prior initiatives, we also seek to increase sales in packaged meats products by driving volumes of our private label and foodservice products, by expanding our customer relationships and by offering quality selections across the value chain. We will seek to continue to increase the overall contribution to our sales from our Packaged Meats segment.
In our Fresh Pork segment, the primary drivers of external sales are the consistent level of global pork consumption, our ability to maximize the value of each hog and our ability to leverage our different end markets including retail, foodservice, industrial and export channels. Through ongoing product innovation, we seek to appeal to ever-changing consumer preferences, including demand for convenience and smaller portion sizes as well as expanded interests in new and varied flavors. We also seek to capitalize on export markets as an outlet for increasing the value of raw materials through whole-hog utilization and by appealing to differentiated, global tastes and preferences.
Cost Factors
Our cost as a percentage of sales varies based on fluctuations of raw materials prices, as well as manufacturing, distribution and marketing costs. Raw materials are the largest component of our total cost of goods sold, with feed ingredients and hogs accounting for the majority share. Approximately 80% of the raw materials used in the Packaged Meats segment is sourced internally from our Fresh Pork segment, and about half of the hogs used in the Fresh Pork segment are supplied by our Hog Production segment. In the Hog Production segment, approximately 64% of cost of goods sold is from animal feed, which is derived primarily from corn and soybean meal. The price of feed ingredients, hogs and pork fluctuates based on market dynamics which can affect our margins. We enter into hedging transactions for these commodities when we determine conditions are appropriate to mitigate the inherent price risks. While this hedging may limit our ability to participate in gains from favorable commodity fluctuations, it also reduces the risk of loss from adverse changes in raw material prices.
We continue to optimize the size of our hog production operations and procure a greater mix of hogs from independent suppliers with market-based supply agreements in order to supply our Fresh Pork segment. We have reduced the size of our internal hog production from a peak of 17.6 million head in 2019 to closing 2024 at 14.6 million head, and we continue to explore opportunities for reduced internal production. We expect to end 2025 at approximately 11.5 million head.
We are pursuing best-in-class manufacturing principles in our plants by employing automation to redeploy labor to higher value tasks, increasing yields and driving efficiency by reducing complexity. In our logistics and distribution network, we have reduced transportation and warehousing costs by improving transportation carrier mix, maximizing utilization of our cold storage and trucking assets, improving supply and demand planning and optimizing inventory levels.
Our results of operations will continue to depend on our ability to (i) manage raw material cost movements through optimizing our hog production operations, hedging, forward purchasing, strategic sourcing negotiations and passing inflationary cost increases to customers, (ii) operate our manufacturing and logistics footprint efficiently and competitively and (iii) continue to attract and retain customers and consumers through effective sales and marketing spend.
Seasonality
Our business is somewhat seasonal. Traditionally, the periods of higher sales for hams are the holiday seasons such as Easter, Thanksgiving and Christmas, and the periods of higher sales for ribs, smoked sausages and hot dogs are the summer months.
In addition, hog prices tend to rise as hog supplies decrease during the summer, and hog prices tend to decline as hog supplies increase during the fall and winter. This tendency is due to lower farrowing performance during the winter and slower animal growth rates during the summer.
Seasonality impacts relative sales and profitability of each quarter of the year, both on a quarter-to-quarter and year-over-year basis, as well as our cash generation and use. Generally, our sales and profitability are higher in the fourth quarter due to the Thanksgiving and Christmas holidays. In addition, the timing of the Easter holiday can impact the comparability of our first and second quarters with prior periods. Our cash use is highest in the first quarter due to working capital needs related to payments to certain suppliers that are typically deferred in the fourth quarter.
Impact of Material Acquisitions, Investments and Dispositions on Our Results of Operations
The following transactions occurred during the last three fiscal years and impacted our results of operations during such periods:
West Coast Exit and Hog Production Reform. We have undertaken a number of steps to reduce our activities in California where high taxes, high utility costs and a challenging regulatory environment negatively impact our ability to operate efficiently and profitably. We also undertook a number of other actions in furtherance of our efforts to optimize the size of our Hog Production segment’s operations:
•West Coast Exit. In May 2022, we announced a decision to close our Vernon, California processing facility, exit farm operations in Arizona and California, and reduce our sow herd in Utah. Additionally, in December 2023, we made a decision to terminate a number of agreements with contract farmers and closed several company-owned nursery farms in Utah as a result of the Vernon, California facility closure in early 2023.
•Hog Production Reform. In May 2023, we made a decision to cease operations on a number of sow farms in Missouri. The decision was driven by persistent livestock disease issues, underperforming operations and shifting industry supply and demand dynamics. Additionally, during 2023 we terminated certain agreements with underperforming contract farmers in the eastern United States.
As a result of these decisions, we incurred various exit costs and disposal charges. We recognized charges totaling $195 million and $151 million in cost of sales in 2023 and 2022, respectively. Additionally, certain biogas assets owned by our joint venture, Align, were impaired due to our decision in December 2023 to terminate hog grower contracts and close farms in Utah. As a result, we recognized our share of the impairment totaling $35 million in (income) loss from equity method investments in the consolidated income statement in the fourth quarter of 2023. We also incurred $14 million in costs associated with biogas assets owned by our joint venture, Monarch,
in connection with the farms in Missouri that were closed. These costs were recognized in (income) loss from equity method investments in the consolidated statement of income in the fourth quarter of fiscal year 2023.
In the second quarter of 2023, we sold our Vernon, California facility for $205 million and recognized a gain of $86 million in operating gains in the consolidated statement of income.
Saratoga. On October 31, 2022, we closed on the sale of our Saratoga operation, which produced spices, seasonings and sauces for sale primarily to the foodservice industry and for use in our internal production of various packaged meats products. Saratoga continues to be a supplier of ours subsequent to the sale. Proceeds totaled $575 million, resulting in a $417 million gain on the disposal. The gain was recognized in operating gains in the consolidated statement of income in the fourth quarter of 2022. The carrying amount of assets disposed of included $47 million of allocated goodwill. We received $568 million of proceeds at closing. The remainder was received in the first quarter of 2023. Saratoga was accounted for in the Packaged Meats segment.
Altosano. On July 7, 2021, we acquired a controlling interest in Altosano in exchange for cash valued at $108 million, increasing our total ownership and voting rights in Altosano from 50% to 66%. We paid $1 million, net of $17 million in cash acquired, of the purchase consideration to our joint venture partner upon change in control. We paid an additional $55 million and $2 million in the third quarter of 2022 and the third quarter of 2023, respectively, with smaller amounts payable annually through 2028. Altosano consists of hog production and pork processing operations in Mexico, growing approximately 1.8 million hogs and processing approximately 1.5 million hogs per year, with approximately 2,600 employees. We historically recorded our share of earnings in Altosano using the equity method of accounting. Upon acquisition of the controlling interest, the accounts of Altosano were consolidated. See also “—Other Anticipated or Potential Cash Requirements—Altosano Redeemable Noncontrolling Interest.”
Recent Developments
Murphy Family Farms Investment
On December 27, 2024, we became a member of a North Carolina-based company, Murphy Family Farms LLC, by contributing $3 million in cash in exchange for a 25% minority interest. We additionally sold approximately 150,000 sows located on company-owned and contract farms in North Carolina to Murphy Family Farms. On December 30, 2024, we sold the commercial hog inventories associated with such sows to Murphy Family Farms. Murphy Family Farms is now a hog supplier to us and will supply approximately 3.2 million hogs annually. We will supply animal feed and provide certain support services to Murphy Family Farms.
VisionAg Hog Production Investment
On December 20, 2024, we entered into an agreement to become a member of a North Carolina-based company, VisionAg Hog Production, LLC, whereby we will contribute $450,000 in cash in exchange for a 9% minority interest in VisionAg Hog Production, with the existing owner retaining a 91% interest. As part of the agreement, we will sell to VisionAg Hog Production approximately 28,000 sows and the associated commercial hog inventories located on certain company-owned and contract farms in North Carolina. VisionAg Hog Production will become a hog supplier to us, expected to supply approximately 600,000 hogs annually. In addition, we will supply animal feed and provide certain support services to VisionAg Hog Production. The transaction is expected to close during the first quarter of 2025. Closing of the transaction is subject to satisfaction of customary closing conditions.
Sale of Utah Hog Production Assets
On December 17, 2024, we sold our hog production assets in Utah, excluding the live animals, for $58 million. The transaction resulted in a gain of $32 million, which was recognized in operating gains in the fourth quarter of fiscal year 2024. As part of the agreement, we will lease back certain farm and feed properties, which we will continue to operate.
Sale of Missouri Hog Farms
On November 26, 2024, we sold certain hog farms in Missouri, most of which were previously inactive, for $32 million. The transaction resulted in a loss of $4 million, which was recognized in cost of sales in the fourth quarter of fiscal year 2024.
Components of Our Results of Operations
Sales
Our sales are derived primarily from the delivery of our packaged meats and fresh pork products to customers. Sales fluctuate as a function of changes in volume, product mix and net price.
•Sales to customers are recorded at the transaction price, which is the amount of consideration we expect to receive in exchange for providing goods to customers. The net sales price reflects adjustments for estimates of known or expected variable consideration, including consumer incentives, trade promotions and other programs.
•Walmart accounted for approximately 11.8%, 11.5% and 11.3% of our consolidated sales in 2023, 2022 and 2021, respectively. No other customer accounted for 10% or more of our consolidated sales during 2023, 2022 and 2021. Cumulatively, our top ten customers accounted for 36.9%, 36.5% and 37.3% of our consolidated sales in 2023, 2022 and 2021, respectively.
•Sales to our customers located outside of the United States, including sales to WH Group and its affiliates, accounted for 15.9%, 14.2% and 17.7% of our consolidated sales in 2023, 2022 and 2021, respectively.
•Sales to WH Group and its affiliates accounted for 3.2%, 2.7% and 5.5% of our consolidated sales in 2023, 2022 and 2021, respectively.
Cost of Sales
Cost of sales consists primarily of costs directly related to the manufacture and distribution of our products. These costs include:
•Primary raw material costs, including costs for grains, hogs, other proteins (such as beef and poultry), corn and soybean meal. Prices for these raw materials are affected by the global level of supply and demand, the agricultural policies of the United States and other countries and weather patterns and climatic conditions throughout the world and can have a material impact on cost of sales.
•Secondary raw material costs, such as packaging and ingredients, which can be affected by inflation or other factors that impact the availability of supply.
•The cost of labor and overhead required to produce our products.
•Cold storage costs and freight and distribution costs, which are both impacted by changes in fuel costs.
•Asset write-downs and losses from the disposal of assets.
Cost of sales are impacted by fluctuations in commodity prices for hogs, fresh pork, corn, soybean meal and other proteins.
•Hogs. The lean hog price index published by the CME averaged $0.81 per pound, $0.98 per pound and $0.93 per pound in 2023, 2022 and 2021, respectively.
•Fresh Pork. Fresh pork cut-out values reported by the USDA averaged $0.90 per pound, $1.04 per pound and $1.04 per pound in 2023, 2022 and 2021, respectively.
•Corn and soybean meal. Nearby futures prices for corn reported by the CME averaged $5.58 per bushel, $6.87 per bushel and $5.74 per bushel in 2023, 2022 and 2021, respectively. Nearby futures prices for soybean meal averaged $432.33 per ton, $433.89 per ton and $381.01 per ton in 2023, 2022 and 2021, respectively. The prices paid for corn and soybean meal take approximately six months to be fully reflected in our results due to the hog growth period.
Selling, General and Administrative Expenses (SG&A)
SG&A expenses relate to sales and administrative functions that support our operations and other general corporate expenses. These expenses include:
•Sales and marketing expenses, including salaries, wages and incentives for our sales and marketing personnel, broker commissions, sales-related travel and entertainment expenses and other marketing and advertising expenses, such as costs relating to the execution of in-store product demonstrations, trade shows and samples provided to prospective customers;
•General and administrative expenses, including salaries, wages and incentives for our management and general administrative personnel, professional fees for service providers, depreciation of non-production property and equipment, amortization of intangible assets, information technology licensing and maintenance costs, insurance, travel and other operating expenses; and
•Accruals for litigation and defense costs.
In the future, we expect to incur stock-based compensation expenses related to restricted stock awards granted to employees and directors under our equity incentive plan to be adopted in connection with this offering.
Operating Gains
Operating gains primarily consists of gains on the sale of businesses and other assets, and certain insurance recoveries.
Interest Expense, Net
Interest expense, net consists of interest on our debt and the amortization of finance lease costs and debt issuance costs, premiums and discounts, net of interest earned on our cash and cash equivalents.
Non-Operating Gains
Non-operating gains consist primarily of the non-operating components of net pension and postretirement benefits cost (benefit), gains and losses on non-qualified retirement plan assets, gains and losses on the sale or dilution of equity method investments, and impairments of investments. The non-operating components of net pension and postretirement benefits cost (benefit) consist of interest cost, expected return on plan assets, amortization of actuarial gains/losses and prior service costs/credits, and curtailment gains.
(Income) Loss from Equity Method Investments
We account for investments in entities that we do not control, but over which we have the ability to exercise significant influence, using the equity accounting method. Our equity method investments consist primarily of biogas joint ventures, which produce renewable natural gas from methane gas captured on our hog farms. We record our share of the income or loss from these equity method investments in (income) loss from equity method investments.
Results of Operations
The following table summarizes the results of operations for our consolidated business.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended | | Fiscal Year | | % of Sales |
| September 29, 2024 | | October 1, 2023 | | 2023 | | 2022 | | 2021 | | 2023 | | 2022 | | 2021 |
| (in millions except for percentages) |
| Sales | $ | 10,190 | | | $ | 10,642 | | | $ | 14,640 | | | $ | 16,199 | | | $ | 15,009 | | | 100.0 | % | | 100.0 | % | | 100.0 | % |
| Cost of sales | 8,826 | | | 10,038 | | | 13,751 | | | 14,704 | | | 13,437 | | | 93.9 | % | | 90.8 | % | | 89.5 | % |
| Gross profit | 1,364 | | | 604 | | | 889 | | | 1,495 | | | 1,572 | | | 6.1 | % | | 9.2 | % | | 10.5 | % |
| Selling, general and administrative expenses | 594 | | | 643 | | | 1,050 | | | 807 | | | 1,095 | | | 7.2 | % | | 5.0 | % | | 7.3 | % |
Operating gains | (12) | | | (99) | | | (105) | | | (429) | | | (44) | | | (0.7) | % | | (2.7) | % | | (0.3) | % |
| | | | | | | | | | | | | | | |
| Operating profit (loss) | 783 | | | 60 | | | (56) | | | 1,117 | | | 521 | | | (0.4) | % | | 6.9 | % | | 3.5 | % |
| Interest expense, net | 52 | | | 59 | | | 76 | | | 87 | | | 93 | | | 0.5 | % | | 0.5 | % | | 0.6 | % |
Non-operating (gains) losses | (13) | | | 3 | | | (3) | | | (18) | | | (30) | | | — | % | | (0.1) | % | | (0.2) | % |
| Income (loss) from continuing operations before income taxes | 745 | | | (2) | | | (129) | | | 1,047 | | | 458 | | | (0.9) | % | | 6.5 | % | | 3.1 | % |
| Income tax expense (benefit) | 165 | | | — | | | (41) | | | 231 | | | 97 | | | (0.3) | % | | 1.4 | % | | 0.6 | % |
(Income) loss from equity method investments | (1) | | | — | | | 46 | | | 6 | | | (28) | | | 0.3 | % | | — | % | | (0.2) | % |
| Net income (loss) from continuing operations | $ | 581 | | | $ | (2) | | | $ | (133) | | | $ | 811 | | | $ | 389 | | | (0.9) | % | | 5.0 | % | | 2.6 | % |
Nine Months Ended September 29, 2024 compared with the Nine Months Ended October 1, 2023
Consolidated Results
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended | | | | |
| September 29, 2024 | | October 1, 2023 | | $ Change | | % Change |
| (in millions except for percentages) |
| Sales | $ | 10,190 | | | $ | 10,642 | | | $ | (452) | | | (4.2) | % |
| Cost of sales | 8,826 | | | 10,038 | | | (1,212) | | | (12.1) | % |
| Gross profit | 1,364 | | | 604 | | | 760 | | | 125.9 | % |
| Selling, general and administrative expenses | 594 | | | 643 | | | (50) | | | (7.7) | % |
Operating gains | (12) | | | (99) | | | 87 | | | (87.7) | % |
| | | | | | | |
Operating profit | 783 | | | 60 | | | 723 | | | 1208.8 | % |
| Interest expense, net | 52 | | | 59 | | | (7) | | | (12.5) | % |
Non-operating (gains) losses | (13) | | | 3 | | | (16) | | | NM |
| Income (loss) from continuing operations before income taxes | 745 | | | (2) | | | 747 | | | NM |
Income tax expense | 165 | | | — | | | 165 | | | NM |
Income from equity method investments | (1) | | | — | | | (1) | | | NM |
| Net income (loss) from continuing operations | $ | 581 | | | $ | (2) | | | $ | 583 | | | NM |
Sales. Sales decreased by $452 million, or 4.2%, primarily due to the following factors:
•Lower volume in our Fresh Pork segment, which decreased sales by approximately $330 million, or 3.1%.
•Lower volume in our Packaged Meats segment primarily due to recently enacted group housing legislation in California and Massachusetts, which reduced sales by approximately $178 million, or 1.7%.
•A decrease in grain sales to external customers from our Hog Production segment, which reduced consolidated sales by $125 million, or 1.2%, year-over-year.
Higher average sales prices for fresh pork and packaged meats products partially offset the decline in sales. See “Segment Results” below for additional discussion of sales for each of our reportable segments.
Cost of sales. Cost of sales decreased by $1,212 million, or 12.1%, year-over-year primarily due to the following factors:
•A $761 million decrease in raw material costs primarily attributable to lower feed ingredient prices, fewer hogs produced in our Hog Production segment and a reduction in grain sales to external customers.
•A $285 million decrease in manufacturing costs primarily attributable to the recognition of $86 million in employee retention tax credits in the second quarter of 2024 and declines in production volume in each of our reportable segments.
•A $115 million decrease in distribution costs due in part to lower sales volumes in our Fresh Pork and Packaged Meats segments.
•An $81 million reduction in costs associated with our West Coast Exit and Hog Production Reform activities.
Selling, General and Administrative Expenses. SG&A decreased by $50 million, or 7.7%, primarily driven by cost reduction initiatives and a $17 million decrease in accruals for litigation matters described in “Note 18: Regulation and Contingencies” of the condensed consolidated interim financial statements and accompanying notes.
Operating gains. Operating gains for the first nine months of 2024 and 2023 includes a $5 million gain on the sale of a shuttered packaged meats facility located in Charlotte, North Carolina and an $86 million gain on the sale of our Vernon, California facility, respectively.
Interest expense, net. Interest expense, net decreased $7 million, or 12.5%, due to higher levels of cash and cash equivalents earning interest at higher rates for the nine months ended September 29, 2024 compared to the same period in the prior year, while interest rates on borrowings were largely fixed.
Non-operating (gains) losses. Non-operating (gains) losses consisted of the following items:
| | | | | | | | | | | |
| Nine Months Ended |
| September 29, 2024 | | October 1, 2023 |
| (in millions) |
Gain on nonqualified retirement plan assets | $ | (18) | | | $ | (6) | |
| | | |
Net pension and postretirement benefits cost | 5 | | | 8 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Other | (1) | | | 1 | |
Non operating (gains) losses | $ | (13) | | | $ | 3 | |
Income tax expense. Income tax expense increased by $165 million year-over-year primarily due to the higher amount of pre-tax income recognized in 2024.
Segment Results
The following tables present sales and profit (loss) for each of our reportable segments and other operating segments. Additional information about our reportable segments, including a reconciliation of the measure of our segments’ profit (loss) to consolidated income (loss) from continuing operations before income taxes, is included in “Note 2: Reportable Segments” in the condensed consolidated interim financial statements and accompanying notes included elsewhere in this prospectus.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended | | | | |
| Sales | | September 29, 2024 | | October 1, 2023 | | $ Change | | % Change |
| | (in millions except for percentages) |
| Packaged Meats | | $ | 5,861 | | | $ | 5,876 | | | $ | (15) | | | (0.3) | % |
| Fresh Pork | | 5,871 | | | 5,996 | | | (125) | | | (2.1) | % |
| Hog Production | | 2,220 | | | 2,499 | | | (279) | | | (11.2) | % |
Other (1) | | 350 | | | 380 | | | (30) | | | (7.9) | % |
| Intersegment | | (4,111) | | | (4,108) | | | (3) | | | 0.1 | % |
Consolidated | | $ | 10,190 | | | $ | 10,642 | | | | | |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended | | | | |
| Segment profit (loss) | | September 29,
2024 | | October 1,
2023 | | $ Change | | % Change |
| | (in millions except for percentages) |
| Packaged Meats | | $ | 855 | | | $ | 760 | | | $ | 95 | | | 12.5 | % |
| Fresh Pork | | 196 | | | 73 | | | 123 | | | 168.5 | % |
| Hog Production | | (135) | | | (627) | | | 492 | | | (78.5) | % |
Other (1) | | 18 | | | (17) | | | 35 | | | NM |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Nine Months Ended | | | | |
Adjusted segment profit (loss) (1) | | September 29,
2024 | | October 1,
2023 | | $ Change | | % Change |
| | (in millions except for percentages) |
| Packaged Meats | | $ | 816 | | | $ | 760 | | | $ | 56 | | | 7.4 | % |
| Fresh Pork | | 156 | | | 73 | | | 82 | | | 112.7 | % |
| Hog Production | | (143) | | | (627) | | | 484 | | | (77.2) | % |
Other (2) | | 18 | | | (17) | | | 35 | | | (208.0) | % |
________________
(1)The nine months ended September 29, 2024 includes adjustments for the recognition of employee retention tax credits attributable to qualifying wages paid to employees during the COVID-19 pandemic. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures” for more information.
(2)Includes our Mexico and Bioscience operations. Our Mexico operations include the raising of hogs and production of pork products that are sold primarily to customers in Mexico. Our Bioscience operations use raw materials from hogs that we harvest to manufacture heparin products, including an active pharmaceutical ingredient that mitigates the risk of blood clots.
Packaged Meats
Sales
Packaged Meats segment sales for the first nine months of 2024 were relatively consistent with prior year as lower volume was largely offset by a higher average sales price. Sales volume declined by 3.0% year-over-year primarily due to recently enacted group housing legislation in California and Massachusetts, which requires pork producers nationwide to comply with certain production standards in order to sell pork products into these states. Our average sales price increased by 2.9%, primarily driven by higher raw material costs, which translated into higher sales prices of our packaged meats products.
Segment Profit
Packaged Meats segment profit increased by $95 million, or 12.5%, year-over-year. The first nine months of 2024 included $38 million of employee retention tax credits. Excluding these tax credits, Packaged Meats segment profit increased by $56 million, or 7.4%, year-over-year primarily driven by the following factors:
•A $49 million decrease in manufacturing and distribution costs primarily due to the decline in sales volume.
•A $28 million decrease in selling, general and administrative expenses.
Fresh Pork
Sales
Fresh Pork segment sales decreased by $125 million, or 2.1%, year-over-year driven by a 5.8% decrease in volume, partially offset by a 3.9% increase in average sales price. The increase in our average sales price reflects strong demand for U.S. pork, which was supported by higher relative prices for competing proteins and strength in export markets.
Segment Profit
Fresh Pork segment profit improved by $123 million, or 168.5%, year-over-year. The first nine months of 2024 included $41 million of employee retention tax credits. Excluding these tax credits, Fresh Pork segment profit
increased by $82 million, or 112.7%, year-over-year. The improvement in results was primarily driven by the following factors, which more than offset the decrease in sales:
•A $79 million decrease in raw material costs due to the decrease in sales volume, which was partially offset by the impact of higher market prices for live hogs.
•A $124 million decrease in manufacturing and distribution costs due primarily to the decline in sales volume.
Hog Production
Sales
Hog Production segment sales decreased by $279 million, or 11.2%, year-over-year driven by an 8.3% decrease in the number of hogs sold and a $125 million reduction in grain sales to external customers, partially offset by a 6.3% increase in our average hog sales price, including the effects of hedging. The decrease in the number of hogs sold by the segment was largely attributable to Hog Production Reform activities aimed at reducing the number of hogs we produce.
Segment Loss
Hog Production segment loss improved by $492 million year-over-year. The first nine months of 2024 included $8 million of employee retention tax credits. Excluding these tax credits, Hog Production segment loss improved by $484 million, or 77.2%, year-over-year primarily driven by the following factors, which more than offset the decrease in sales:
•A $612 million decrease in raw material feed costs due to lower market prices for feed ingredients, the decrease in sales volume and a reduction in grain sales to external customers.
•A $148 million decrease in hog raising costs largely attributable to the Hog Production Reform activities.
Other
The results from our other segment operations increased to a profit of $18 million in the first nine months of 2024 from a loss of $17 million in the same period a year ago. The results of our Mexico operations improved by $27 million year-over-year primarily due to significantly lower raw material costs. Results for our Bioscience operations improved by $8 million year-over-year largely due to the impact of a $16 million charge recognized in the third quarter of 2023 to write down inventories to their estimated net realizable values.
2023 compared with 2022
Consolidated Results
| | | | | | | | | | | | | | | | | | | | | | | |
| Fiscal Year | | | | |
| 2023 | | 2022 | | $ Change | | % Change |
| (in millions except for percentages) |
| Sales | $ | 14,640 | | | $ | 16,199 | | | $ | (1,558) | | | (9.6) | % |
| Cost of sales | 13,751 | | | 14,704 | | | (953) | | | (6.5) | % |
| Gross profit | 889 | | | 1,495 | | | (606) | | | (40.5) | % |
| Selling, general and administrative expenses | 1,050 | | | 807 | | | 243 | | | 30.1 | % |
Operating gains | (105) | | | (429) | | | 325 | | | (75.6) | % |
| | | | | | | |
| Operating profit (loss) | (56) | | | 1,117 | | | (1,173) | | | (105.0) | % |
| Interest expense, net | 76 | | | 87 | | | (12) | | | (13.5) | % |
| Non-operating gains | (3) | | | (18) | | | 15 | | | (83.1) | % |
| Income (loss) from continuing operations before income taxes | (129) | | | 1,047 | | | (1,176) | | | (112.3) | % |
| Income tax expense (benefit) | (41) | | | 231 | | | (272) | | | (118.0) | % |
| Loss from equity method investments | 46 | | | 6 | | | 40 | | | 682.6 | % |
| Net income (loss) from continuing operations | $ | (133) | | | $ | 811 | | | $ | (943) | | | (116.4) | % |
Sales. Sales decreased by $1,558 million, or 9.6%, primarily due to the following factors:
•Lower volumes and average sales prices in our Packaged Meats and Fresh Pork segments attributable to softened consumer demand, which reduced sales by approximately $1,231 million, or 7.6%, year-over-year. Fresh pork cut-out values reported by the USDA, which is representative of the prices paid for individual fresh pork cuts in the market place and also impact the sales prices of our packaged meats products, decreased 13.4% year-over-year to an average of $0.90 per pound in 2023 from $1.04 per pound in 2022.
•A reduction in external grain sales from our Hog Production segment, which reduced consolidated sales by $193 million, or 1.2%, year-over-year.
•The sale of Saratoga operations in the fourth quarter of 2022 reduced sales by $167 million, or 1.0%, year-over-year.
See “Segment Results” below for additional discussion of sales for each of our reportable segments.
Cost of sales. Cost of sales decreased by $953 million, or 6.5%, primarily due to the following factors:
•A $472 million decrease in live hog raw material costs primarily attributable to lower market prices paid for hogs from outside producers, primarily driven by weakened demand and higher domestic hog supplies compared to the prior year. The lean hog price index published by the CME decreased by 17.1% year over year.
•A $478 million decrease in raw material feed costs primarily attributable to an 8.5% reduction in the number of hogs produced by our Hog Production segment, a reduction in grain sales to external customers and lower market prices for feed ingredients.
•The sale of Saratoga, which reduced cost of sales by approximately $145 million, or 1.0%, year-over-year.
Cost of sales also reflects an increase in costs associated with our West Coast Exit and other Hog Production Reform activities totaling $44 million.
Selling, General and Administrative Expenses. SG&A increased by $243 million, or 30.1%, primarily driven by an increase of $201 million in accruals for and/or settlement of litigation matters described in “Note 17: Regulation and Contingencies” of the consolidated financial statements and accompanying notes included elsewhere in this prospectus. After adjusting for the effect of these charges, SG&A increased by $41 million primarily due to the following factors:
•An increase of $12 million in employee costs.
•An increase of $12 million in professional services.
•Expenses of $12 million attributable to the discount on the sale of receivables under the Monetization Facility (as defined below in “—Liquidity and Capital Resources”).
•An increase of $7 million in government-mandated fees associated with funded status of our qualified pension plans.
Operating gains. Operating gains included an $86 million gain for the sale of our Vernon, California facility in 2023 and a $417 million gain on the sale of Saratoga in 2022.
Interest expense, net. Interest expense, net decreased $12 million, or 13.5%, due to higher levels of cash and cash equivalents earning interest at higher rates in 2023 while interest rates on borrowings were largely fixed.
Non-operating gains. Non-operating gains consisted of the following items:
| | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 |
| (in millions) |
| (Gain) loss on nonqualified retirement plan assets | $ | (15) | | | $ | 26 | |
| Gain on the sale/dilution of equity method investments | — | | | (56) | |
| Net pension and postretirement benefits cost (benefit) | 10 | | | (28) | |
| | | |
| Impairment of investment | — | | | 40 | |
| | | |
| | | |
| | | |
| | | |
| Other | 1 | | | 1 | |
Total non-operating gains | $ | (3) | | | $ | (18) | |
•Gain on the sale/dilution of equity method investments: in February 2022, our interest in Monarch was reduced from 50% to 33% upon the issuance of additional shares to a new investor, which transaction was accounted for as a partial sale of our investment resulting in a $52 million gain. Additionally, in the fourth quarter of 2022, we sold our investment in Norson Holding, S. de R.L. de C.V., or Norson, for $21 million and recognized a $4 million gain on the sale.
•Net pension and postretirement benefits cost (benefit): change from 2022 to 2023 was driven by higher interest cost and a smaller asset base at the beginning of 2023 as compared to 2022, which reduced the return on assets included in net periodic pension cost year-over-year.
•Impairment of investment: in the first quarter of 2022, we wrote down the value of our former investment in Norson, by $40 million to its estimated fair value.
Income tax expense (benefit). Income tax expense decreased from $231 million in 2022 to a benefit of $41 million in 2023 primarily due to the lower amount of pre-tax income recognized in 2023.
Loss from equity method investments. Loss from equity method investments increased $40 million primarily due to $49 million in charges and costs incurred in connection with the West Coast Exit and Hog Production Reform activities. These charges were partially offset by an increase in income generated by our equity method investments of $10 million.
Segment Results
The following tables present sales and profit (loss) for each of our reportable segments and other operating segments. Additional information about our reportable segments, including a reconciliation of the measure of our segments’ profit (loss) to consolidated income (loss) from continuing operations before income taxes, is included in “Note 2: Reportable Segments” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Year | | | | |
| Sales | | 2023 | | 2022 | | $ Change | | % Change |
| | (in millions except for percentages) |
| Packaged Meats | | $ | 8,280 | | | $ | 9,262 | | | $ | (982) | | | (10.6) | % |
| Fresh Pork | | 7,832 | | | 9,190 | | | (1,358) | | | (14.8) | % |
| Hog Production | | 3,317 | | | 4,456 | | | (1,139) | | | (25.6) | % |
Other (1) | | 559 | | | 524 | | | 35 | | | 6.6 | % |
| Intersegment | | (5,348) | | | (7,234) | | | 1,886 | | | (26.1) | % |
Consolidated | | $ | 14,640 | | | $ | 16,199 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Year | | | | |
Segment profit (loss) | | 2023 | | 2022 | | $ Change | | % Change |
| | (in millions except for percentages) |
| Packaged Meats | | $ | 1,066 | | | $ | 1,047 | | | $ | 19 | | | 1.8 | % |
| Fresh Pork | | 118 | | | 32 | | | 86 | | | 270.7 | % |
| Hog Production | | (754) | | | (133) | | | (621) | | | 468.1 | % |
Other (1) | | (4) | | | 53 | | | (58) | | | (108.1) | % |
________________
(1)Consists of our Mexico and Bioscience operations.
Packaged Meats
Sales
Packaged Meats segment sales declined by $982 million, or 10.6%, year-over-year driven by lower volume, a lower average unit selling price and the sale of Saratoga. Volume declined by 7.2% year-over-year as a result of softened consumer demand as well as a 2.7% reduction in volume due to the sale of Saratoga. Our average sales price decreased by 3.7% driven primarily by lower fresh pork market prices, which translated to lower sales prices for our packaged meats products. The sale of Saratoga reduced segment sales by $167 million, or 1.8% year-over-year.
Segment Profit
Packaged Meats segment profit increased by $19 million, or 1.8%, year-over-year driven primarily by the following factors, which offset the decline in sales:
•A $913 million decrease in raw material costs driven by lower fresh pork market prices, the decline in sales volume and the sale of Saratoga. The USDA fresh pork carcass cutout value decreased 13.4%, with components used by our Packaged Meats segment decreasing at an even higher rate. Accordingly, our average sales price decreased, but to a lesser degree, which improved profitability.
•A $92 million decrease in manufacturing and distribution costs attributable the decline in sales volume and the sale of Saratoga, partially offset by higher wage rates.
The sale of Saratoga had the effect of reducing segment profit by $24 million year-over-year.
Fresh Pork
Sales
Fresh Pork segment sales decreased by $1,358 million, or 14.8%, year-over-year primarily due to lower fresh pork market prices and sales volume. Our average sales price decreased by 10.5% due in part to softened consumer demand. Sales volume decreased by 4.8% largely due to the closure of our Vernon, California facility in early 2023.
Segment Profit
Fresh Pork segment profit improved by $86 million, or 270.7%. The improvement in results was driven primarily by a favorable spread between fresh pork market values and live hog market prices. Live hog market prices decreased by 17.1% while USDA fresh pork market values decreased 13.4% year-over-year, thereby improving fresh pork margins.
Hog Production
Sales
Hog Production segment sales decreased by $1,139 million or 25.6%, year-over-year driven by a 16.5% decrease in our average hog sales price, including the effects of hedging, and an 8.5% decrease in the number of hogs sold. The CME lean hog price index decreased by 17.1% over the same period. Additionally, lower grain sales to external customers reduced sales by $193 million, or 4.3%. The decrease in the number of hogs sold by the segment was largely attributable to the West Coast Exit and Hog Production Reform activities aimed at reducing the number of hogs we produce and improving our cost structure.
Segment Loss
Hog Production segment loss increased by $621 million year-over-year primarily due to lower market hog sales, which outweighed the benefit of lower raw material feed costs. Feed costs decreased by approximately $290 million, or 11.0%, primarily due to the decrease in the number of hogs produced and, to a lesser degree, lower feed prices.
Other
The results from our other segment operations declined to a loss of $4 million in 2023 from a profit of $53 million in 2022. The decline was largely attributable to our Bioscience operations driven by lower sales prices resulting from a global supply and demand imbalance for heparin, as well as higher raw material and manufacturing costs. We also recognized charges in the third and fourth quarters of 2023 totaling $17 million to write down inventories to their estimated net realizable values. Additionally, we experienced a $14 million decline in results from our Mexico operations largely due to higher manufacturing costs and lower selling prices.
2022 compared with 2021
Consolidated Results
| | | | | | | | | | | | | | | | | | | | | | | |
| Fiscal Year | | | | |
| 2022 | | 2021 | | $ Change | | % Change |
| (in millions except for percentages) |
| Sales | $ | 16,199 | | | $ | 15,009 | | | $ | 1,189 | | | 7.9 | % |
| Cost of sales | 14,704 | | | 13,437 | | | 1,267 | | | 9.4 | % |
| Gross profit | 1,495 | | | 1,572 | | | (77) | | | (4.9) | % |
| Selling, general and administrative expenses | 807 | | | 1,095 | | | (288) | | | (26.3) | % |
Operating gains | (429) | | | (44) | | | (386) | | | NM |
| Operating profit | 1,117 | | | 521 | | | 596 | | | 114.4 | % |
Interest expense, net | 87 | | | 93 | | | (5) | | | (5.5) | % |
| Non-operating gains | (18) | | | (30) | | | 12 | | | (39.9) | % |
| Income from continuing operations before income taxes | 1,047 | | | 458 | | | 589 | | | 128.7 | % |
| Income tax expense | 231 | | | 97 | | | 134 | | | 138.4 | % |
| (Income) loss from equity method investments | 6 | | | (28) | | | 34 | | | (121.0) | % |
| Net income from continuing operations | $ | 811 | | | $ | 389 | | | 422 | | | 108.5 | % |
________________
NM = not meaningful
Sales. Sales increased by $1,189 million, or 7.9%, primarily due to the following factors:
•Higher average sales prices in our Packaged Meats and Fresh Pork segments induced by broad-based inflationary cost pressures and a favorable shift in product mix that was supported by strong consumer demand.
•The consolidation of Altosano beginning in July 2021 after acquiring a controlling interest, which increased sales by $284 million, or 1.9%, year-over-year.
See “Segment Results” below for additional discussion of sales for each of our reportable segments.
Cost of sales. Cost of sales increased by $1,267 million, or 9.4%, primarily due to the following factors:
•A $688 million increase in raw material feed costs primarily attributable to higher market prices for feed ingredients and increased grain sales to external customers.
•A $446 million increase in manufacturing costs primarily resulting from broad-based inflation.
•The consolidation of Altosano in July 2021, which increased cost of sales year-over-year by $253 million, or 1.9%.
•Charges incurred in 2022 associated with our West Coast Exit and other Hog Production Reform activities totaling $151 million.
Selling, general and administrative expenses. SG&A decreased by $288 million, or 26.3%, primarily driven by a $341 million decrease in accruals for, and/or settlement of, litigation matters described in “Note 17: Regulation and Contingencies” of the consolidated financial statements and accompanying notes included elsewhere in this prospectus. After adjusting for the effects of these charges, SG&A increased by $53 million primarily due to the following factors:
•An increase of $33 million in employee costs, including $15 million for variable compensation programs.
•An increase of $11 million attributable to the consolidation of Altosano.
•An increase of $11 million in marketing and advertising expenses.
Operating gains. Operating gains included a $417 million gain on the sale of Saratoga in 2022 and $33 million in insurance recoveries in 2021.
Non-operating gains. Non-operating gains consist of the following items:
| | | | | | | | | | | |
| Fiscal Year |
| 2022 | | 2021 |
| (in millions) |
| Gain on the sale/dilution of equity method investments | $ | (56) | | | $ | — | |
| Net pension and postretirement benefits cost (benefit) | (28) | | | (22) | |
| Impairment of investment | 40 | | | — | |
| (Gain) loss on nonqualified retirement plan assets | 26 | | | (18) | |
| Other | 1 | | | 11 | |
Total non-operating gains | $ | (18) | | | $ | (30) | |
•Gain on the sale/dilution of equity method investments: in February 2022, our interest in Monarch was reduced from 50% to 33% upon the issuance of additional shares to a new investor, which transaction accounted for as a partial sale of our investment, which resulted in a $52 million gain. Additionally, in the fourth quarter of 2022, we sold our investment in Norson for $21 million and recognized a $4 million gain on the sale.
•Net pension and postretirement benefits cost (benefit): in the second quarter of 2021, we amended our qualified pension plans to freeze the benefit accrual for all non-union participants as of June 30, 2021. The increase in benefit year-over-year was largely driven by lower amortization of actuarial losses in 2022. For more information, see “Note 13: Pension and Other Retirement Plans” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
•Impairment of investment: in the first quarter of 2022, we wrote down the value of our former investment in Norson by $40 million to its estimated fair value.
Income tax expense. Our effective tax rate increased to 22.1% in 2022 compared to 21.2% in 2021 largely due to the impact of similar levels of tax credits in each year relative to higher pre-tax income in 2022 and the effect of certain permanent items that were favorable to the effective tax rate in 2021 and unfavorable in 2022.
(Income) loss from equity method investments. The results of our equity method investments decreased to a loss of $6 million in 2022 from income of $28 million in 2021 primarily driven by a reduction in profitability of our biogas joint ventures, losses incurred by Norson, which we sold to our joint venture partner in November 2022, and the purchase of a controlling interest in Altosano in July 2021, which resulted in the consolidation of Altosano and ceased accounting for the results of Altosano under the equity method of accounting at that point.
Segment Results
The following tables present sales and profit (loss) for each of our reportable segments and other operating segments. Additional information about our reportable segments, including a reconciliation of the measure of our segments’ profit (loss) to consolidated income (loss) from continuing operations before income taxes, is included in
“Note 2: Reportable Segments” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Year | | | | |
| Sales | | 2022 | | 2021 | | $ Change | | % Change |
| | (in millions except for percentages) |
| Packaged Meats | | $ | 9,262 | | | $ | 8,515 | | | $ | 746 | | | 8.8 | % |
| Fresh Pork | | 9,190 | | | 9,145 | | | 45 | | | 0.5 | % |
| Hog Production | | 4,456 | | | 3,866 | | | 590 | | | 15.3 | % |
Other (1) | | 524 | | | 247 | | | 277 | | | 112.3 | % |
| Intersegment | | (7,234) | | | (6,765) | | | (469) | | | 6.9 | % |
Consolidated | | $ | 16,199 | | | $ | 15,009 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fiscal Year | | | | |
Segment profit (loss) | | 2022 | | 2021 | | $ Change | | % Change |
| | (in millions except for percentages) |
| Packaged Meats | | $ | 1,047 | | | $ | 879 | | | $ | 168 | | | 19.2 | % |
| Fresh Pork | | 32 | | | (5) | | | 37 | | | NM |
| Hog Production | | (133) | | | 69 | | | (201) | | | (293.4) | % |
Other (1) | | 53 | | | 68 | | | (15) | | | (22.2) | % |
________________
(1)Consists of our Mexico and Bioscience operations.
NM = not meaningful
Packaged Meats
Sales
Packaged Meats segment sales increased by $746 million, or 8.8% year-over-year, driven by a 9.6% increase in our average unit selling price, which partially offset a 0.8% decline in volume. The increase in the average sales price was driven by higher raw material costs and other broad-based inflationary cost pressures, including wage increases for our employees, which translated to higher sales prices of our packaged meats products, as well as a favorable shift in product mix to more value-added products.
Segment Profit
Packaged Meats segment profit improved by $168 million, or 19.2%, year-over-year primarily driven by the increase in sales, partially offset by the following factors:
•A $351 million increase in raw material costs driven primarily by higher USDA market prices for hams and general inflationary conditions.
•A $186 million increase in manufacturing and distribution costs driven by broad-based inflationary cost pressures, including wage increases for our employees.
•A $40 million increase in SG&A mainly due to higher variable compensation and marketing related expenditures.
Fresh Pork
Sales
Fresh Pork segment sales were largely unchanged year-over-year as a 6.9% increase in average sales price was nearly offset by a 6.0% decrease in volume. Our average sales price improved primarily due to a favorable change in
product mix and general inflationary conditions. Sales volume decreased as we processed fewer hogs after ceasing harvest operations in our Smithfield, Virginia plant in 2021.
Segment Profit (Loss)
Fresh Pork segment profit for 2022 was $32 million compared to a loss of $5 million in 2021. The improvement in results was primarily driven by the following factors:
•The increase in sales of $45 million.
•A $58 million decrease in raw material costs primarily attributable to the decrease in sales volume, which more than offset the impact of a 5.6% increase in live hog market prices.
•A $37 million decrease in distribution costs primarily attributable to the decrease in volume.
These improvements to profitability were partially offset by the following factors:
•An $87 million increase in manufacturing costs attributable to wage increases for our employees and broad-based inflationary conditions.
•A $14 million increase in SG&A primarily attributable to higher variable compensation and other employee related expenses.
Hog Production
Sales
Hog Production segment sales increased by $590 million, or 15.3%, year-over-year, driven by an 11.2% increase in our average live hog sales price, including the effects of hedging, and an increase in grain sales to external customers of $179 million. The number of hogs produced decreased by 1.4% year-over-year.
Segment Profit (Loss)
Hog Production segment results declined to a loss of $133 million in 2022 from a profit of $69 million in 2021 driven primarily by the following factors, which more than offset the increase in sales:
•A $670 million increase in raw material costs primarily attributable to higher market prices for raw material feed ingredients, which increased by 25% year-over-year, and an increase in grain sales to external customers.
•A $104 million increase in hog raising and delivery costs primarily attributable to higher prices for transportation fuel and energy as well as other broad-based inflation.
•A $16 million decrease in income from our biogas joint ventures primarily due to the reduction of our ownership in Monarch from 50% in 2021 to 33% in 2022 and a reduction in market prices for natural gas and related environmental attribute credits.
Other
The results of our Other segment operations decreased by $15 million, or 22.2%, due to lower results from our Bioscience operations, partially offset by an increase in results from our Mexico operations. Our Bioscience results decreased due to higher raw material costs and lower sales volume, partially offset by an increase in average sales price. The results from our Mexico operations increased largely due to a full year of consolidated results of Altosano as well as a higher average sales price, which outweighed the increase in manufacturing costs. The increase in sales
of our other operating segments was also driven largely by a full year of consolidated results of Altosano and higher sales prices in our Mexico operations.
Other Transactions
We have engaged in several transactions since the beginning of 2021 that we believe are helpful to understand our historical and future financial results:
Dry Sausage Facility Acquisition. On July 30, 2024, we acquired a dry sausage production facility located in Nashville, Tennessee from Cargill for $38 million. The acquisition is part of our strategy to grow our value-added packaged meats business and serve the growing demand for high-quality pepperoni, salami, charcuterie and other dry sausage products. This business will be accounted for in the Packaged Meats segment.
Norson. In the first quarter of 2022, our then 50% owned joint venture in Mexico, Norson breached a financial covenant under its debt agreement. As a result, Norson was unable to further borrow under the existing debt agreement. We evaluated our investment in Norson for impairment. Based on our evaluation, we determined that our investment was impaired and that the impairment was other than temporary. As such, we wrote down the value of our investment in Norson by $40 million to its estimated fair value in the first quarter of 2022. This impairment was recognized in non-operating gains in the consolidated statement of income. In November 2022, we sold our shares in Norson to our joint venture partner and recognized a $4 million gain on the sale in non-operating gains in the fourth quarter of 2022.
Unaudited Quarterly Financial Information
The following table sets forth certain financial information for each of our fiscal quarters beginning with the first quarter of 2023. We have prepared the following unaudited quarterly financial information on the same basis as our audited consolidated financial statements and have included all adjustments, consisting only of normal recurring adjustments that in our opinion are necessary to fairly state the financial information set forth in those statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The results of a particular quarter or other interim period are not necessarily indicative of the results for a full fiscal year or any other
period. This information should be read in conjunction with the audited consolidated financial statements and related notes thereto included elsewhere in this prospectus.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended (unaudited) |
| September 29, 2024 | | June 30, 2024 | | March 31, 2024 | | December 31, 2023 | | October 1, 2023 | | July 2, 2023 | | April 2, 2023 |
| (in millions except for percentages) |
Sales | $ | 3,334 | | | $ | 3,412 | | | $ | 3,444 | | | $ | 3,998 | | | $ | 3,379 | | | $ | 3,490 | | | $ | 3,774 | |
Gross profit | 476 | | | 527 | | | 362 | | | 285 | | | 253 | | | 126 | | | 224 | |
Operating profit (loss) | 285 | | | 334 | | | 163 | | | (116) | | | 30 | | | 7 | | | 23 | |
Net income (loss) from continuing operations | $ | 209 | | | $ | 259 | | | $ | 112 | | | $ | (131) | | | $ | 10 | | | $ | (12) | | | $ | (1) | |
Segment Results | | | | | | | | | | | | | |
Segment Sales: | | | | | | | | | | | | | |
Packaged Meats | $ | 1,917 | | | $ | 1,945 | | | $ | 1,999 | | | $ | 2,404 | | | $ | 1,928 | | | $ | 1,872 | | | $ | 2,076 | |
Fresh Pork | 1,951 | | | 1,981 | | | 1,938 | | | 1,836 | | | 2,095 | | | 1,908 | | | 1,992 | |
Hog Production | 738 | | | 776 | | | 706 | | | 819 | | | 778 | | | 811 | | | 909 | |
Other | 117 | | | 119 | | | 114 | | | 178 | | | 127 | | | 116 | | | 137 | |
Intersegment | (1,389) | | | (1,408) | | | (1,314) | | | (1,240) | | | (1,550) | | | (1,217) | | | (1,341) | |
Consolidated | $ | 3,334 | | | $ | 3,412 | | | $ | 3,444 | | | $ | 3,998 | | | $ | 3,379 | | | $ | 3,490 | | | $ | 3,774 | |
Segment Profit (loss): | | | | | | | | | | | | | |
Packaged Meats | $ | 239 | | | $ | 330 | | | $ | 286 | | | $ | 306 | | | $ | 184 | | | $ | 276 | | | $ | 301 | |
Fresh Pork | 28 | | | 58 | | | 110 | | | 45 | | | 22 | | | (7) | | | 58 | |
Hog Production | 43 | | | (3) | | | (175) | | | (127) | | | (90) | | | (252) | | | (284) | |
Other | 20 | | | 7 | | | (8) | | | 13 | | | (10) | | | (16) | | | 9 | |
Selected GAAP and Non-GAAP Data (1) | | | | | | | | | | | | | |
Net income (loss) from continuing operations | $ | 209 | | | $ | 259 | | | $ | 112 | | | $ | (131) | | | $ | 10 | | | $ | (12) | | | $ | (1) | |
| EBITDA from continuing operations | $ | 382 | | | $ | 419 | | | $ | 249 | | | $ | (24) | | | $ | 123 | | | $ | 114 | | | $ | 117 | |
| Adjusted EBITDA from continuing operations | $ | 383 | | | $ | 333 | | | $ | 261 | | | $ | 279 | | | $ | 150 | | | $ | 43 | | | $ | 138 | |
Net income (loss) margin from continuing operations | 6.3 | % | | 7.6 | % | | 3.3 | % | | (3.3) | % | | 0.3 | % | | (0.3) | % | | — | % |
| Adjusted EBITDA margin from continuing operations | 11.5 | % | | 9.7 | % | | 7.6 | % | | 7.0 | % | | 4.4 | % | | 1.2 | % | | 3.7 | % |
__________________
(1)EBITDA from continuing operations, Adjusted EBITDA from continuing operations and Adjusted EBITDA Margin from continuing operations are non-GAAP measures that should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with GAAP. For additional information regarding these non-GAAP measures, including reconciliations of these non-GAAP measures to net income (loss) from continuing operations and net income (loss) margin from continuing operations, the respective most directly comparable GAAP measures, see “—Non-GAAP Measures.”
Liquidity and Capital Resources
Our sources of liquidity include cash and cash equivalents on hand together with availability under our committed revolving credit facilities. As of September 29, 2024, we had $2,569 million of available liquidity consisting of $278 million in cash and cash equivalents and $2,290 million of availability under our committed credit facilities. Availability under our committed credit facilities is reduced by the principal amount of our outstanding commercial paper. We believe that our current liquidity position is strong and that our cash flows from operations and availability under our credit facilities will be sufficient to meet our working capital needs and financial obligations and commitments for at least the next twelve months.
Description of Certain Indebtedness
Description of the Senior Unsecured Credit Facilities and Other Facilities
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | September 29, 2024 |
| Facility | | Capacity | | Borrowing
Base
Adjustment | | Outstanding Borrowings | | Commercial
Paper
Borrowings | | Outstanding
Letters of
Credit | | Amount
Available |
| | (in millions) |
| Senior unsecured revolving credit facility | | $ | 2,100 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2,100 | |
| Accounts receivable securitization facility | | 275 | | | (61) | | | — | | | — | | | (23) | | | 190 | |
| | | | | | | | | | | | |
| Total credit facilities | | $ | 2,375 | | | $ | (61) | | | $ | — | | | $ | — | | | $ | (23) | | | $ | 2,290 | |
Senior Unsecured Revolving Credit Facility
In May 2023, we exercised an option to extend the maturity of our $2.1 billion senior unsecured revolving credit facility pursuant to that certain Amendment No. 1 to the Second Amended and Restated Credit Agreement, or the Senior Revolving Credit Facility, dated as of May 1, 2021 as amended by Amendment No. 1 dated as of May 19, 2023 and Amendment No. 2 dated as of June 28, 2024, by and among us and certain of our subsidiaries as borrowers, Bank of America, N.A., as administrative agent, swing line lender and letter of credit lender, and various other lenders, to May 21, 2027. The Senior Revolving Credit Facility bears interest at the Secured Overnight Financing Rate, or SOFR, plus a margin ranging from 0.875% to 1.50% per annum, or, at our election, at a base rate plus a margin ranging from 0.00% to 0.50% per annum, in each case depending on our senior unsecured debt ratings. The Senior Revolving Credit Facility also contains financial maintenance covenants requiring us to maintain a maximum total consolidated leverage ratio (ratio of consolidated funded debt to consolidated capitalization, each as defined in the Senior Revolving Credit Facility) of 0.50 to 1.00 (which we may elect to increase to 0.55 to 1.00 with respect to any fiscal quarter in which a material acquisition is consummated and the immediately following three consecutive fiscal quarters, subject to certain restrictions) and a minimum interest coverage ratio (ratio of Consolidated EBITDA to Consolidated Interest Expense, each as defined in the Senior Revolving Credit Facility) of 3.50 to 1.00. As of the date hereof, there are no borrowings outstanding under the Senior Revolving Credit Facility.
Our Senior Revolving Credit Facility contains customary covenants, including, but not limited to, restrictions on our ability and that of our subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets subject to their security interest, make acquisitions, loans, advances or investments, pay dividends, sell or otherwise transfer assets, optionally prepay or modify terms of any junior indebtedness or enter into transactions with affiliates, each subject to certain exceptions as set forth therein. We are currently in compliance with the covenants under our Senior Debt Facility. We are currently in compliance with the covenants under our revolving credit facility.
We are currently evaluating the possibility of refinancing our revolving credit facility in order to extend its maturity and seek improved terms. There can be no assurance that we will enter into such a refinancing transaction.
Our commercial paper program, which is supported by the Senior Revolving Credit Facility, provides access to a low-cost source of borrowing to fund general corporate purposes, including working capital. The maximum issuance capacity under our commercial paper program is $1.75 billion. The maturity of commercial paper issued under the program varies but does not exceed 397 days from the date of issuance. Our ability to access the commercial paper market in the future is dependent on maintaining investment grade credit ratings and market conditions.
Accounts Receivable Securitization Facility
Our accounts receivable securitization facility, the Fifth Amended and Restated Credit and Security Agreement, dated as of December 22, 2022 as amended by the First Amendment dated as of November 22, 2024, by and among Smithfield Receivables Funding LLC, as borrower Smithfield, as servicer, certain lenders, letter of credit
participants and co-agents, Coöperatieve Rabobank U.A., New York Branch, as a letter of credit issuer, PNC Bank, National Association, as administrative agent and a letter of credit issuer and PNC Capital Markets LLC, as structuring agent, or the Securitization Facility, matures on November 22, 2027. As part of the Securitization Facility, certain accounts receivable of our major domestic meat processing subsidiaries are sold to a wholly owned “bankruptcy remote” special purpose vehicle, or the SPV. The SPV pledges all such accounts receivable not otherwise sold pursuant to the Monetization Facility (as defined below) as security for loans made, and letters of credit issued, by participating lenders under the Securitization Facility. The SPV is included in our consolidated financial statements and therefore the accounts receivable owned by it are included in our consolidated balance sheets. However, the accounts receivable owned by the SPV are separate and distinct from our other assets and are not available to our other creditors should we become insolvent. As of September 29, 2024, the SPV held $350 million of accounts receivable. We must maintain certain ratios related to the collection of our receivables as a condition of the Securitization Facility agreement. As of September 29, 2024, we had $23 million in letters of credit issued under the Securitization Facility. None of the letters of credit were drawn upon.
Under the Securitization Facility, we and the SPV, as applicable, are subject to certain customary covenants, including, but not limited to, restrictions on our ability to sell, assign or otherwise dispose of any collateral or assign any right to receive income with respect thereto, use proceeds for any purpose other than those set forth in the Securitization Facility, make certain payments on junior indebtedness, incur debt or merge or consolidate, subject to certain exceptions set forth therein. The SPV is also prohibited from issuing any LCR Security (as defined therein). We are currently in compliance with the covenants under our Securitization Facility.
Monetization Facility
In addition to the Securitization Facility, we maintain an uncommitted $250 million accounts receivable monetization facility, or the Monetization Facility, pursuant to the Master Receivables Purchase Agreement, dated as of December 22, 2022 as amended by the First Amendment dated as of November 22, 2024, by and among Smithfield Receivables Funding LLC, as borrower, Smithfield, as servicer, certain buyers and PNC Bank, National Association, as administrative agent. At our election and subject to the purchasing banks’ approval, certain accounts receivable may be sold by the SPV to purchasing banks, so long as the uncollected outstanding amount of accounts receivable sold pursuant to the Monetization Facility does not exceed $250 million in the aggregate at any time, among other limitations. In the event of a sale, the purchasing banks assume all credit risk related to the receivables while we maintain risk associated with customer disputes. We account for the sale of receivables to a purchasing bank by derecognizing the receivables from our consolidated balance sheet upon transfer of control to the purchasing bank, and recognizing a discount on the sale in SG&A in the consolidated statement of income. The proceeds from the sale of receivables are included in net cash flows from operating activities in the consolidated statement of cash flows. On behalf of the purchasing banks, we continue to service all receivables sold under the Monetization Facility. As of September 29, 2024, the uncollected balance of receivables that had been sold to purchasing banks was $221 million. We had no servicing asset or liability outstanding as of September 29, 2024.
In the first quarter of fiscal year 2023, we sold $227 million of accounts receivable at a discount and received proceeds totaling $225 million. Subsequently, we reinvested $3.4 billion of cash collections from customers in the revolving sale of receivables to purchasing banks through December 31, 2023. For the nine months ended September 29, 2024 and October 1, 2023, we reinvested $2.8 billion and $2.2 billion, respectively, of cash collections from customers. In the year ended December 31, 2023, we incurred charges of $12 million attributable to the discount on the sale of accounts receivable. In the nine months ended September 29, 2024 and October 1, 2023, we incurred charges totaling $10 million and $8 million, respectively, attributable to the discount on the sale of accounts receivable.
Debt Issuances and Repurchases of Senior Unsecured Notes
In February 2017, we issued $600 million aggregate principal amount of 4.250% senior unsecured notes due February 2027, or the 2027 Notes, pursuant to an indenture by and among us, certain of our subsidiaries and U.S. Bank National Association, as trustee, or the 2027 Notes Indenture. The 2027 Notes are jointly, severally, fully and unconditionally guaranteed by certain of our subsidiaries. The net proceeds from the issuance of the 2027 Notes
were used to refinance the Company’s existing senior notes. As of September 29, 2024 and December 31, 2023, we had $600 million principal amount of 2027 Notes outstanding.
In April 2019, we issued $400 million aggregate principal amount of 5.200% senior unsecured notes due April 2029, or the 2029 Notes, pursuant to an indenture by and among us, certain of our subsidiaries and U.S. Bank National Association, as trustee, or the 2029 Notes Indenture. The 2029 Notes are jointly, severally, fully and unconditionally guaranteed by certain of our subsidiaries. The net proceeds from the issuance of the 2029 Notes were used to repay outstanding borrowings under the Securitization Facility, to refinance a portion of our outstanding commercial paper and for general corporate purposes. As of September 29, 2024 and December 31, 2023, we had $400 million principal amount of 2029 Notes outstanding.
In September 2020, we issued $500 million aggregate principal amount of 3.000% senior unsecured notes due September 2030, or the 2030 Notes, pursuant to an indenture by and among us, certain of our subsidiaries and U.S. Bank National Association, as trustee, or the 2030 Notes Indenture. The 2030 Notes are jointly, severally, fully and unconditionally guaranteed by certain of our subsidiaries. The net proceeds from the issuance of the 2030 Notes were used to refinance a portion of the Company’s existing senior notes outstanding as of the date of such issuance. As of September 29, 2024 and December 31, 2023, we had $500 million principal amount of 2030 Notes outstanding.
In September 2021, we issued $500 million aggregate principal amount of 2.625% senior unsecured notes due September 2031, or the 2031 Notes, at a price equal to 98.681% of their face value pursuant to an indenture by and among us, certain of our subsidiaries and U.S. Bank National Association, as trustee, or the 2031 Notes Indenture, together with the 2027 Notes Indenture, the 2029 Notes Indenture and the 2030 Notes Indenture, the Indentures. The 2031 Notes are jointly, severally, fully and unconditionally guaranteed by certain of our subsidiaries. The net proceeds from the issuance of the 2031 Notes were used, in part, to fund an early redemption of our remaining outstanding 2.65% senior unsecured notes due October 2021 totaling $291 million and repay outstanding borrowings on our Senior Revolving Credit Facility. In October 2021, we executed an early redemption of our 3.35% senior unsecured notes due February 2022, repaying the outstanding balance of $296 million. As of September 29, 2024 and December 31, 2023, we had $500 million principal amount of 2031 Notes outstanding.
The Indentures contain customary covenants, including, but not limited to, restrictions on our ability and that of our subsidiaries to merge and consolidate with other companies, sell or otherwise transfer assets, effectuate a change of control and grant liens or security interests on assets, subject to exceptions and qualifications as set forth therein. We are currently in compliance with the covenants under our Indentures.
Cash Flows
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended | | Fiscal Year |
| September 29, 2024 | | October 1, 2023 | | 2023 | | 2022 | | 2021 |
| (in millions) |
| Cash (used in) provided by: | | | | | |
| Operating activities of continuing operations | $ | 233 | | | $ | (6) | | | $ | 688 | | | $ | 521 | | | $ | 755 | |
| Investing activities of continuing operations | (305) | | | (60) | | | (194) | | | 274 | | | (204) | |
| Financing activities of continuing operations | (290) | | | (270) | | | (353) | | | (567) | | | (434) | |
Net cash used in operating activities
Net cash flows from operating activities of continuing operations increased by $239 million from a cash outflow of $6 million for the nine months ended October 1, 2023 to a cash inflow of $233 million for the nine months ended September 29, 2024 driven primarily by an increase in net income from continuing operations, partially offset by changes in working capital. Working capital was adversely impacted by changes in accounts receivable and inventories. Accounts receivable decreased by $281 million in the prior year primarily due to the monetization of
receivables under the Monetization Facility, which was initiated in the first quarter of 2023. Inventories increased by $102 million in the nine months ended September 29, 2024 while decreasing by $115 million for the same period in the prior year primarily attributable to changes in meat values.
Net cash flows from operating activities of continuing operations increased by $167 million from $521 million in 2022 to $688 million in 2023 driven primarily by positive changes in working capital, partially offset by a decrease in net income from continuing operations. The changes in working capital were driven primarily by decreases in inventories and accounts payable of $469 million and $215 million, respectively, in 2023 as a result of lower commodity prices for feed grains and meat, as well as lower inventory volumes attributable to the West Coast Exit and Hog Production Reform activities. Conversely, inventories and accounts payable increased by $307 million and $121 million, respectively, in 2022 due to higher prices for corn, soybean meal and wheat as well as increased meat inventory volumes. Additionally, accounts receivable decreased by $157 million in 2023 primarily due to the monetization of receivables under the Monetization Facility.
Net cash flows from operating activities of continuing operations decreased by $234 million from $755 million in 2021 to $521 million in 2022 driven primarily by higher levels of working capital, partially offset by an increase in net income from continuing operations. The changes in working capital were driven primarily by a larger increase in inventories in 2022 as compared to 2021 (from $307 million to $184 million) due to higher prices for feed grains in both years and higher meat inventory volumes in 2022. Accounts receivable increased by $33 million in 2022 primarily due to higher sales. Prepaid expenses and other current assets increased by $23 million in 2022 primarily due a payment made to settle certain class claims associated with antitrust price-fixing litigation, partially offset by decreases in income tax receivables and derivative assets. Accrued expenses and other current liabilities decreased by $24 million in 2022 mainly due to the settlement of certain class claims associated with the antitrust price-fixing litigation. Accrued expenses and other current liabilities increased in 2021 primarily due to accruals for contingent losses, partially offset by decreases in accruals for variable compensation and trade promotions.
Investing Activities
Net cash used in investing activities was $305 million for the nine months ended September 29, 2024, a decrease of $245 million, compared to $60 million for the nine months ended October 1, 2023. In the second quarter of 2023, we received $205 million in proceeds for the sale of our Vernon, California facility. Capital expenditures increased by $25 million year-over-year and consisted primarily of various plant expansion, automation and improvement projects.
Net cash used in investing activities was $194 million in 2023, a decrease of $469 million, compared to net cash provided by investing activities of $274 million in 2022. Our capital expenditures did not change significantly from 2022 to 2023, and consisted primarily of various plant expansion, automation and improvement projects. We used an additional $47 million in cash for breeding stock transactions in 2023 compared to 2022. In 2023, we received $205 million in proceeds for the sale of our Vernon, California facility. In 2022, we received proceeds of $568 million, $32 million and $5 million for the sales of Saratoga, certain hog farms in California and Arizona, and our subsidiary, Smithfield Foods de Mexico, S. de R.L. de C.V., respectively. In addition, in 2022 we sold our investment in Norson for $21 million. We made capital contributions totaling $21 million and $17 million to our biogas joint ventures in 2023 and 2022, respectively.
Net cash provided by investing activities was $274 million in 2022, an increase of $478 million, compared to net cash used in investing activities of $204 million in 2021. Our capital expenditures increased by $131 million in 2022 compared to 2021, and consisted primarily of various plant expansion, automation and improvement projects. In 2022, we received proceeds of $568 million, $32 million and $5 million for the sales of Saratoga, certain hog farms in California and Arizona and our subsidiary, Smithfield Foods de Mexico, S. de R.L. de C.V., respectively. In addition, we received $21 million from the sale of our investment in Norson. In 2022, we invested $17 million in our biogas venture, Align, and $5 million in other investments.
Financing Activities
Net cash used in financing activities increased by $20 million from $270 million for the nine months ended October 1, 2023 to $290 million for the nine months ended September 29, 2024. We paid an additional $8 million in
dividends in the nine months ended September 29, 2024 compared to the same period in 2023. Our dividend payments through the first three quarters of 2023 included a $100 million special dividend from the proceeds from the sale of our Vernon, California facility.
Net cash used in financing activities decreased by $214 million from $567 million in 2022 to $353 million in 2023. We paid an additional $173 million in dividends in 2022 compared to 2023. Our dividend payment in 2022 included $263 million of special dividends from the sale of Saratoga and in 2023 included a $100 million special dividend from the proceeds from the sale of our Vernon, California facility. In 2021, we acquired a controlling interest in Altosano, increasing our total ownership from 50% to 66%. We paid $2 million and $55 million of deferred consideration for the acquisition in 2023 and 2022, respectively.
Net cash used in financing activities increased by $133 million from $434 million in 2021 to $567 million in 2022. We paid an addition $304 million in dividends in 2022 compared to 2021. Our dividend payment in 2022 included $263 million of special dividends from the sale of Saratoga. In 2021, we repaid our 2.65% senior unsecured notes due October 2021 and our 3.35% senior unsecured notes due February 2022 totaling $310 million and $308 million, respectively. In September 2021, we issued $500 million aggregate principal amount of the 2031 Notes at a price equal to 98.681% of their face value. In 2021, we paid $55 million of deferred consideration for the acquisition of an additional 16% interest in Altosano.
Contractual Obligations and Commitments
Our cash requirements for long-term contractual obligations and commitments as of September 29, 2024 are presented in the following table:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Due Date by Period |
| 2024 | | 2025 | | 2026 | | 2027 | | 2028 | | 2029 & thereafter | | Total |
| (in millions) |
Debt principal payments (1) | $ | 2 | | | $ | 5 | | | $ | 2 | | | $ | 599 | | | $ | — | | | $ | 1,383 | | | $ | 1,991 | |
| Debt interest payments | 18 | | | 75 | | | 74 | | | 51 | | | 49 | | | 68 | | | 335 | |
Guaranteed royalty payments (2) | 4 | | | 15 | | | 15 | | | 16 | | | 16 | | | 50 | | | 116 | |
Lease obligations (3) | 22 | | | 72 | | | 58 | | | 46 | | | 35 | | | 244 | | | 477 | |
Pension and other postretirement benefit obligations (4) | — | | | — | | | — | | | — | | | — | | | — | | | 287 | |
Commitments to investees (5) | — | | | — | | | — | | | — | | | — | | | — | | | 150 | |
| Purchase commitments: | | | | | | | | | | | | | |
Hog procurement (6) | 638 | | | 1,902 | | | 1,110 | | | 662 | | | 363 | | | — | | | 4,674 | |
Contract hog growers (7) | 21 | | | 87 | | | 75 | | | 66 | | | 54 | | | 144 | | | 446 | |
Grain procurement (8) | 102 | | | — | | | — | | | — | | | — | | | — | | | 102 | |
Other | 60 | | | 17 | | | 16 | | | 14 | | | 14 | | | 188 | | | 308 | |
Other long-term liabilities (9) | — | | | — | | | — | | | — | | | — | | | — | | | 209 | |
| Total | $ | 866 | | | $ | 2,172 | | | $ | 1,350 | | | $ | 1,453 | | | $ | 531 | | | $ | 2,078 | | | $ | 9,096 | |
________________
(1)In the event of default on a payment, acceleration of principal payments could occur.
(2)Represents guaranteed royalty payments to license the Nathan’s Famous brand.
(3)Amounts presented for lease obligations represent the undiscounted contractual lease payments for our operating and finance lease obligations. For more information on leases, see “Note 11: Lease Obligations, Commitments and Guarantees” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
(4)We historically provided the majority of our U.S. employees with pension benefits. In the second quarter of 2021, we amended our qualified pension plans to freeze the benefit accrual for all non-union participants. Funding requirements for our pension plans are determined based on the funded status measured at the end of each year. The values of our pension obligation and related assets may fluctuate significantly, which may in turn lead to a larger underfunded status in our pension plans and a higher funding requirement. The minimum funding requirement for 2024 was $37 million and was satisfied in September 2024. We are unable to reliably estimate the amount and timing of the remaining payments beyond 2024, therefore we have only the estimated total liability as of September 29, 2024 in the table above. For more information,
see “Note 13: Pension and Other Retirement Plans” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
(5)We have committed to contribute up to $250 million through 2028 to Align to fund various projects as they are approved by Align’s board. As of September 29, 2024, we had contributed $113 million in capital toward this commitment. Additionally, we have committed to contribute up to $25 million to the TPG Rise Climate investment fund through July 2027. As of September 29, 2024, we had contributed $12 million in capital toward this commitment. We are unable to reliably estimate the time at which either commitment will be drawn upon.
(6)Through the Fresh Pork segment, we have purchase agreements with certain independent suppliers. Some of these arrangements obligate us to purchase all of the hogs produced by these suppliers. Other arrangements obligate us to purchase a fixed amount of hogs. Due to the uncertainty of the number of hogs that we are obligated to purchase and the uncertainty of market prices at the time of hog purchases, we have estimated our obligations under these arrangements. Future payments were estimated using current live hog market prices, available futures contract prices and internal projections adjusted for historical quality premiums.
(7)Through the Hog Production segment, we use contract farmers and their facilities to raise hogs produced from our breeding stock. Under multi-year contracts, the farmers provide the initial facility investment, labor and front-line management in exchange for a performance-based service fee payable upon delivery. We are obligated to pay this service fee for all hogs delivered. We have estimated our obligation based on expected hogs delivered from these farmers.
(8)Includes fixed-price forward grain purchase contracts totaling $77 million. Also includes unpriced forward grain purchase contracts which, if valued using market prices as of September 29, 2024, would be $25 million. These forward grain contracts are accounted for as normal purchases. As a result, they are not recorded in the balance sheet.
(9)Other long-term liabilities consist of long-term casualty insurance reserves, deferred compensation, contingent liabilities, and asset retirement obligations, among others. We are unable to estimate reliably the amount and timing of the remaining payments beyond September 29, 2024. Therefore, we have only included the total liability in the table above.
Other Anticipated or Potential Cash Requirements
Capital Expenditures
We believe that annual total capital expenditures in the near term are likely to be in the range of $400 million to $500 million inclusive of both repairs and maintenance and profit improvement projects. These expenditures are expected to be funded with cash flows from operations. Capital expenditures could be more in certain years to ensure continuity of production in our older assets. For additional information on how we intend to use the proceeds of this offering, see “Use of Proceeds.”
Dividends
In 2024, we paid dividends of $288 million to our parent company. For more information on dividends, see “Dividend Policy.”
Altosano Redeemable Noncontrolling Interest
After December 31, 2024, our noncontrolling interest (NCI) holders in Altosano have the right to exercise a put option that would obligate us to redeem 40% of their interest. After December 31, 2027 the NCI holders in Altosano have the right to exercise a put option for the remainder of their interest. The redemption value for the NCI is fair value. As of December 31, 2023, the value of the NCI on our consolidated balance sheet was $246 million.
Contingent Losses
Like other participants in our industry, we are subject to various laws and regulations administered by federal, state and other government entities, including the EPA and corresponding state agencies, as well as the Grain Inspection, Packers and Stockyard Administration, the USDA, the United States Occupational Safety and Health Administration, or OSHA, the Commodity Futures Trading Commission and similar agencies in foreign countries. We, from time to time, receive notices and inquiries from regulatory authorities and others asserting that we are not in compliance with such laws and regulations. In some instances, litigation ensues. In addition, individuals may initiate litigation against us.
The consolidated financial statements reflect accruals for contingent losses associated with various claims. These matters will not affect our profits or losses in future periods unless our accruals prove to be insufficient or excessive. It is reasonably possible that a change in our estimates may occur in the near term and that our accruals
could be insufficient. We are unable to estimate the amount of possible loss in excess of our accruals, which could be material. Additionally, legal expenses incurred in our and our subsidiaries’ defense of these claims and any payments made to plaintiffs through unfavorable verdicts or otherwise could negatively impact our cash flows and our liquidity position. For more information on contingencies, refer to “Note 17: Regulation and Contingencies” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
Risk Management Activities
We are exposed to market risks primarily from changes in commodity prices, and to a lesser degree, interest rates and foreign exchange rates. To mitigate these risks, we utilize derivative instruments to hedge our exposure to changing prices and rates, as more fully described in “—Quantitative and Qualitative Disclosures About Market Risk” and “Note 7: Derivative Financial Instruments” in the consolidated financial statements and accompanying notes as of December 31, 2023 included elsewhere in this prospectus for the effects of derivative instruments on our consolidated statements of income.
Our liquidity position may be positively or negatively affected by changes in the value of our derivative portfolio. When the value of our open derivative contracts decreases, we may be required to post margin deposits with our brokers and counterparties to cover a portion of the decrease. Conversely, when the value of our open derivative contracts increases, our brokers may be required to deliver margin deposits to us for a portion of the increase. Over the past three fiscal years, the maximum amount of margin deposits held by our brokers and counterparties at any given time was $231 million.
The effects, positive or negative, on liquidity resulting from our risk management activities historically have tended to be mitigated by offsetting changes in cash prices in our core business. For example, in a period of rising grain prices, gains resulting from long grain derivative positions would generally be offset by higher cash prices paid to farmers and other suppliers in spot markets. These offsetting changes do not always occur, however, in the same amounts or in the same period, with lag times of as much as twelve months.
Guarantees
We and certain other joint venture partners in Monarch joint and severally guarantee Monarch’s debt, interest and fees. As of December 31, 2023, the maximum amount of loans that could be outstanding under Monarch’s debt agreements was $74 million and the loans mature in June 2025. Monarch’s outstanding debt was $49 million as of the end of 2023. The guarantee arrangement contains provisions that may reduce our obligations under the guarantee depending on Monarch’s debt to EBITDA ratio.
The guarantee involves elements of performance and credit risk and is not included in our consolidated balance sheets. We could become liable in connection with Monarch’s obligation depending on the ability of Monarch to perform on its obligation. If we consider it probable that we will become responsible for the obligation, we would record the liability on our consolidated balance sheet.
Non-GAAP Measures
Adjusted Net Income and Adjusted Net Income Margin
The following table provides a reconciliation of net income to Adjusted Net Income and Adjusted Net Income Margin, which relate to continuing operations attributable to Smithfield. Adjusted Net Income and Adjusted Net Income Margin are non-GAAP measures. We believe Adjusted Net Income is a useful measure for investors because it excludes the effects of discontinued operations, non-operating gains and losses and other items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. We believe that Adjusted Net Income Margin is a useful measurement of operating profitability for investors for the same reasons we find Adjusted Net Income useful and also because it provides a period-to-period comparison of our after-tax operating performance. Although we believe Adjusted Net Income and Adjusted Net Income Margin provide a better comparison of our year-over-year performance and are frequently used by investors and securities analysts in their evaluations of companies, Adjusted Net Income and Adjusted Net Income Margin have limitations as analytical tools. As such, Adjusted Net Income and Adjusted Net Income Margin are not intended to be
alternatives to net income or any other performance measures derived in accordance with GAAP and should not be used by investors or other users of our financial statements in isolation for formulating decisions as they exclude a number of important cash and non-cash charges.
In arriving at our presentation of non-GAAP financial measures, we exclude items that have an impact on our income statement that, in the judgment of our management, are items that, either as a result of their nature or size, could, were they not identified, potentially cause investors to extrapolate future performance from an improper base. While not all inclusive, examples of these items include:
•legal settlements (both gain or loss) and loss contingencies, due to the difficulty in predicting future events, their timing and size;
•transactions or events that are not part of our core business activities or are unusual in their nature (whether gains or losses); and
•the tax effects of the foregoing items.
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| Nine Months Ended | | Fiscal Year | | |
| September 29, 2024 | | October 1, 2023 | | 2023 | | 2022 | | 2021 | | Affected income statement account |
| (in millions except for percentages) | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Net income (loss) from continuing operations | $ | 581 | | | $ | (2) | | | $ | (133) | | | $ | 811 | | | $ | 389 | | | |
Litigation charges (1) | — | | | 12 | | | 208 | | | — | | | 341 | | | SG&A |
West Coast Exit and Hog Production Reform (2) | 13 | | | 95 | | | 195 | | | 151 | | | — | | | Cost of sales |
West Coast Exit and Hog Production Reform (3) | — | | | — | | | 49 | | | — | | | — | | | (Income) loss from equity method investments |
| Gain on sale of Vernon, California facility | — | | | (86) | | | (86) | | | — | | | — | | | Operating gains |
| Gain on sale of Saratoga | — | | | — | | | — | | | (417) | | | — | | | Operating gains |
| Incremental costs from destruction of property | 4 | | | 1 | | | 3 | | | — | | | 6 | | | Cost of sales |
| Insurance recoveries | (4) | | | (4) | | | (5) | | | (6) | | | — | | | Operating gains |
| Accelerated depreciation of Smithfield harvest and pet food assets | — | | | — | | | — | | | 8 | | | 6 | | | Cost of sales |
| Impairment of Norson investment, net of gain on sale | — | | | — | | | — | | | 36 | | | — | | | Non-operating gains |
| Gain on dilution of investment in Monarch | — | | | — | | | — | | | (52) | | | — | | | Non-operating gains |
Employee Retention Tax Credits | (86) | | | — | | | — | | | — | | | — | | | Cost of sales |
Employee Retention Tax Credits | (1) | | | — | | | — | | | — | | | — | | | SG&A |
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| Nine Months Ended | | Fiscal Year | | |
| September 29, 2024 | | October 1, 2023 | | 2023 | | 2022 | | 2021 | | Affected income statement account |
| (in millions except for percentages) | | |
Income tax effect of non-GAAP adjustments (4) | 19 | | | (5) | | | (94) | | | 72 | | | (91) | | | Income tax expense (benefit) |
| Adjusted net income from continuing operations | 526 | | | 11 | | | 137 | | | 602 | | | 651 | | | |
Less: Net income (loss) from continuing operations attributable to noncontrolling interests | 9 | | | (3) | | | 5 | | | 11 | | | 1 | | | |
Adjusted net income from continuing operations attributable to Smithfield | $ | 518 | | | $ | 14 | | | $ | 132 | | | $ | 591 | | | $ | 650 | | | |
| | | | | | | | | | | |
Net income (loss) margin from continuing operations | 5.7 | % | | — | % | | (0.9) | % | | 5.0 | % | | 2.6 | % | | |
Adjusted net income margin from continuing operations attributable to Smithfield | 5.1 | % | | 0.1 | % | | 0.9 | % | | 3.7 | % | | 4.3 | % | | |
________________
(1)Consists of accruals for the antitrust price-fixing and antitrust wage-fixing litigation matters that are described in “Note 17: Regulation and Contingencies” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
(2)Consists of costs related to the closure of our Vernon, California processing facility, the sale or closure of certain farms in Arizona, California, Missouri and Utah and certain residual operating and restructuring expenses, including the termination of a number of agreements with contract farmers, workforce reduction, and accelerated depreciation of machinery equipment with no future alternative use, due to discontinuation of operations in the West Coast and efforts to improve the cost structure of our Hog Production segment.
(3)Includes an impairment of certain biogas assets recognized by our joint venture, Align, and costs incurred in connection with the closure of certain farms in Missouri that impacted assets owned by our joint venture, Monarch.
(4)Represents the tax effects of the non-GAAP adjustments based on a statutory tax rate of 25.7%.
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Net Debt and Ratio of Net Debt to Adjusted EBITDA
The following table provides a reconciliation of net income to earnings before income tax, depreciation and amortization (EBITDA), Adjusted EBITDA, Adjusted EBITDA Margin, Net Debt and Ratio of Net Debt to Adjusted EBITDA. EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Net Debt and Ratio of Net Debt to Adjusted EBITDA are non-GAAP measures. We believe EBITDA is a useful measure to our stakeholders because it excludes the effects of financing and investing activities by eliminating interest and depreciation costs to provide a comparable year-over-year analysis. We believe Adjusted EBITDA is a useful measure as it excludes the effect of discontinued operations, non-operating gains and losses, and other items that are unusual in nature, infrequent in occurrence or otherwise stem from strategic decisions to restructure our operations. We believe Adjusted EBITDA Margin is a useful measure as it evaluates overall operating performance, ability to pursue and service possible debt opportunities and possible future investment opportunities. We believe Net Debt is a useful measure as it helps to give investors a clear understanding of our financial position. Net Debt is also used to calculate certain leverage ratios. We believe Ratio of Net Debt to Adjusted EBITDA is a useful measure as it monitors the sustainability of our debt levels and our ability to take on additional debt against Adjusted EBITDA, which is used as an operating performance measure. We believe these non-GAAP measures provide a more comparable year-over-year analysis.
Although EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Net Debt and Ratio of Net Debt to Adjusted EBITDA are frequently used by investors and securities analysts in their evaluations of companies, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Net Debt and Ratio of Net Debt to Adjusted EBITDA have limitations as analytical tools. As such, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Net Debt and Ratio of Net Debt to Adjusted EBITDA are not intended to be alternatives to net income, debt, ratio of debt to net income or any other performance measures derived in accordance with GAAP and should not be used by investors or other users of our financial statements in isolation for formulating decisions as they exclude a number of important cash and non-cash charges.
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| Nine Months Ended (unaudited) | | Fiscal Year | | |
| September 29, 2024 | | October 1, 2023 | | 2023 | | 2022 | | 2021 | | 2014(6) | | Affected income statement account |
| (in millions except for percentages) | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Net income (loss) from continuing operations | $ | 581 | | | $ | (2) | | | $ | (133) | | | $ | 811 | | | $ | 389 | | | $ | 437 | | | |
| Interest expense, net | 52 | | | 59 | | | 76 | | | 87 | | | 93 | | | 162 | | | |
| Income tax expense (benefit) | 165 | | | — | | | (41) | | | 231 | | | 97 | | | 219 | | | |
Depreciation and amortization | 253 | | | 296 | | | 427 | | | 440 | | | 331 | | | 199 | | | |
| EBITDA from continuing operations | $ | 1,050 | | | $ | 353 | | | $ | 329 | | | $ | 1,569 | | | $ | 910 | | | $ | 1,017 | | | |
Litigation charges (1) | — | | | 12 | | | 208 | | | — | | | 341 | | | — | | | SG&A |
West Coast Exit and Hog Production Reform (2) | 12 | | | 55 | | | 110 | | | 68 | | | — | | | — | | | Cost of sales |
| West Coast Exit and Hog Production Reform | — | | | — | | | 49 | | | — | | | — | | | — | | | (Income) loss from equity method investments |
| Gain on sale of Vernon, California facility | — | | | (86) | | | (86) | | | — | | | — | | | — | | | Operating gains |
| Gain on sale of Saratoga | — | | | — | | | — | | | (417) | | | — | | | — | | | Operating gains |
| Incremental costs from destruction of property | 4 | | | 1 | | | 3 | | | — | | | 6 | | | — | | | Cost of sales |
| Insurance recoveries | (4) | | | (4) | | | (5) | | | (6) | | | — | | | — | | | Operating gains |
| Impairment of Norson investment, net of gain on sale | — | | | — | | | — | | | 36 | | | — | | | — | | | Non-operating gains |
| Gain on dilution of investment in Monarch | — | | | — | | | — | | | (52) | | | — | | | — | | | Non-operating gains |
Employee Retention Tax Credits | (86) | | | — | | | — | | | — | | | — | | | — | | | Cost of sales |
Employee Retention Tax Credits | (1) | | | — | | | — | | | — | | | — | | | — | | | SG&A |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Adjusted EBITDA from continuing operations | $ | 976 | | | $ | 331 | | | $ | 610 | | | $ | 1,197 | | | $ | 1,257 | | | $ | 1,017 | | | |
| | | | | | | | | | | | | |
Net income (loss) margin from continuing operations | 5.7 | % | | — | % | | (0.9) | % | | 5.0 | % | | 2.6 | % | | 3.3 | % | | |
| Adjusted EBITDA margin from continuing operations | 9.6 | % | | 3.1 | % | | 4.2 | % | | 7.4 | % | | 8.4 | % | | 7.6 | % | | |
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| Fiscal Year Ended | | | | | | | | | | |
| December 31,
2023 | | December 28,
2014 | | | | | | | | | | |
| (in millions except for ratios) | | | | | | | | | | |
Net income (loss) from continuing operations | $ | (133) | | | $ | 437 | | | | | | | | | | | |
| Current portion of long-term debt and capital lease | 27 | | | 28 | | | | | | | | | | | |
Long-term debt and finance lease obligations | 2,006 | | | 2,648 | | | | | | | | | | | |
Cash and cash equivalents | (687) | | | (378) | | | | | | | | | | | |
Net debt | 1,345 | | | 2,298 | | | | | | | | | | |
Ratio of debt to net income (loss) from continuing operations | (15.3x) | | 6.1x | | | | | | | | | | |
Ratio of net debt to adjusted EBITDA from continuing operations (3) | 2.2 | x | | 2.3x | | | | | | | | | | |
_______________(1)Consists of accruals for litigation matters that are described in “Note 17: Regulation and Contingencies” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
(2)Excludes accelerated depreciation and amortization charges of $1 million, $42 million, $85 million and $83 million in the nine months ended September 29, 2024, the nine months ended 2023, fiscal year 2023 and fiscal year 2022, respectively, as the charges are included in the depreciation and amortization line.
(3)See “Prospectus Summary—A New Smithfield in the Public Eye” for more information. There were no adjustments to EBITDA made for fiscal year 2014.
Quarterly Reconciliations of EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin to Net Income and Net Income Margin
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| Three Months Ended (unaudited) |
| September 29, 2024 | | June 30, 2024 | | March 31, 2024 | | December 31, 2023 | | October 1, 2023 | | July 2, 2023 | | April 2, 2023 |
| (in millions except for percentages) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Net income (loss) from continuing operations | $ | 209 | | | $ | 259 | | | $ | 112 | | | $ | (131) | | | $ | 10 | | | $ | (12) | | | $ | (1) | |
| Interest expense, net | 17 | | | 19 | | | 16 | | | 17 | | | 18 | | | 20 | | | 22 | |
| Income tax expense (benefit) | 69 | | | 58 | | | 39 | | | (42) | | | 3 | | | (2) | | | — | |
Depreciation and amortization | 88 | | | 83 | | | 82 | | | 131 | | | 92 | | | 108 | | | 96 | |
| EBITDA from continuing operations | $ | 382 | | | $ | 419 | | | $ | 249 | | | $ | (24) | | | $ | 123 | | | $ | 114 | | | $ | 117 | |
Litigation charges (1) | — | | | — | | | — | | | 196 | | | 12 | | | — | | | — | |
West Coast Exit and Hog Production Reform (2) | 3 | | | — | | | 10 | | | 106 | | | 14 | | | 20 | | | 21 | |
| Gain on sale of Vernon, California facility | — | | | — | | | — | | | — | | | — | | | (86) | | | — | |
| Incremental costs from destruction of property | — | | | 2 | | | 3 | | | 2 | | | 1 | | | — | | | — | |
| Insurance recoveries | (3) | | | (1) | | | — | | | — | | | — | | | (4) | | | — | |
| Employee Retention Tax Credits | — | | | (87) | | | — | | | — | | | — | | | — | | | — | |
| Adjusted EBITDA from continuing operations | $ | 383 | | | $ | 333 | | | $ | 261 | | | $ | 279 | | | $ | 150 | | | $ | 43 | | | $ | 138 | |
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Net income (loss) margin from continuing operations | 6.3 | % | | 7.6 | % | | 3.3 | % | | (3.3) | % | | 0.3 | % | | (0.3) | % | | — | % |
| Adjusted EBITDA margin from continuing operations | 11.5 | % | | 9.7 | % | | 7.6 | % | | 7.0 | % | | 4.4 | % | | 1.2 | % | | 3.7 | % |
________________
(1)Consists of accruals for the antitrust price-fixing and antitrust wage-fixing litigation matters that are described in “Note 17: Regulation and Contingencies” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
(2)Consists of costs related to the closure of our Vernon, California processing facility, the sale or closure of certain farms in Arizona, California, Missouri and Utah and certain residual operating and restructuring expenses, including the termination of a number of agreements with contract farmers and workforce reduction, due to discontinuation of operations in the West Coast and efforts to improve the cost structure of our Hog Production segment.
Adjusted Segment Profit and Adjusted Segment Profit Margin
The following table provides a reconciliation of segment profit and segment profit margin to Adjusted Segment Profit and Adjusted Segment Profit Margin. Adjusted Segment Profit and Adjusted Segment Profit Margin are non-GAAP measures. We believe Adjusted Segment Profit is a useful measure because it provides a more complete understanding of underlying operating results and trends of established, ongoing operations of our segments, excluding the impact of employee retention in tax credits, which were not applicable to periods before 2024. We believe Adjusted Segment Profit Margin is a useful measure for the same reasons we find Adjusted Segment Profit useful.
Adjusted Segment Profit and Adjusted Segment Profit Margin are not intended to be alternatives to segment profit, segment profit margin or any other performance measures derived in accordance with GAAP and should not
be used by investors or other users of our financial statements in isolation for formulating decisions as they exclude a number of important cash and non-cash charges.
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Nine Months Ended September 29, 2024 (unaudited) | | Packaged Meats | | Fresh Pork | | Hog Production |
| | (in millions except for percentages) |
Segment profit | | $ | 855 | | | $ | 196 | | | $ | (135) | |
Employee retention tax credits | | (38) | | | (41) | | | (8) | |
Adjusted segment profit | | $ | 816 | | | $ | 156 | | | $ | (143) | |
| | | | | | |
Segment profit margin | | 14.6 | % | | 3.3 | % | | (6.1) | % |
Adjusted segment profit margin | | 13.9 | % | | 2.6 | % | | (6.4) | % |
Free Cash Flow
The following table provides a reconciliation of net cash flows from operating activities to Free Cash Flow. Free Cash Flow is a non-GAAP measure. We define Free Cash Flow as cash flow from operating activities less capital expenditures. We use Free Cash Flow as a measure of our liquidity. We believe Free Cash Flow is a useful measure as it offers supplemental information and insight regarding the liquidity of our operations and our ability to generate sufficient cash flow to, among other things, repay debt and pursue business opportunities and investments. Although Free Cash Flow is frequently used by investors and securities analysts in their evaluations of companies in industries similar to ours, Free Cash Flow has limitations as an analytical tool. As such, Free Cash Flow is not intended to be an alternative to operating cash flow or any other performance measures derived in accordance with GAAP and should not be used by investors or other users of our financial statements in isolation for formulating decisions as it excludes a number of important cash and non-cash charges.
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| Nine Months Ended (unaudited) | | Fiscal Year |
| September 29, 2024 | | October 1, 2023 | | 2023 | | 2022 | | 2021 |
| (in millions) |
| Net cash flows from operating activities of continuing operations | $ | 233 | | | $ | (6) | | | $ | 688 | | | $ | 521 | | | $ | 755 | |
| Less: Capital expenditures | (268) | | | (242) | | | (353) | | | (338) | | | (207) | |
| Free cash flow from continuing operations | $ | (35) | | | $ | (249) | | | $ | 334 | | | $ | 183 | | | $ | 548 | |
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks from changes in commodity prices, interest rates and foreign exchange rates, as well as risks from concentrations of credit. To mitigate these risks, we utilize derivative instruments to hedge our exposure to changing prices and rates.
We record all derivatives as either assets or liabilities at fair value on the balance sheet, with the exception of certain contracts for the purchase or sale of commodities that are expected to result in physical delivery. Accounting for changes in the fair value of a derivative depends on whether it qualifies and has been designated as part of a hedging relationship. For derivatives that qualify and have been designated as hedges for accounting purposes, changes in fair value have no impact on earnings, to the extent the derivative is perfectly effective in achieving offsetting changes in fair value or cash flows attributable to the risk being hedged, until the hedged item is recognized in earnings (commonly referred to as the “hedge accounting” method). For derivatives that do not qualify or are not designated as hedging instruments for accounting purposes, changes in fair value are recorded in current period earnings (commonly referred to as the “mark-to-market” method). We may elect either method of accounting for our derivative portfolio, assuming all the necessary requirements are met. We have in the past availed ourselves of either acceptable method and expect to do so in the future. We believe all of our derivative instruments represent economic hedges against changes in prices and rates, regardless of their designation for accounting purposes.
When available, we use quoted market prices or rates to determine the fair value of our derivative instruments. This may include prices or rates quoted on an exchange, such as the CME, quotes obtained from brokers, or independent valuations from external sources, such as banks. In some cases where market prices are not available, we make use of observable market-based inputs to calculate fair value.
The size and mix of our derivative portfolio vary from time to time based on our analysis of current and future market conditions. The following table presents the fair values of our open derivative financial instruments in the consolidated balance sheets:
| | | | | | | | | | | | | | | | | |
| September 29, 2024 | | December 31,
2023 | | January 1,
2023 |
| (in millions) |
| Livestock | 15 | | | 27 | | | 3 | |
| Grains | 5 | | | 1 | | | 2 | |
Energy (1) | (9) | | | (21) | | | 24 | |
________________
(1)Negative amount represents net liabilities.
See “Note 7: Derivative Financial Instruments” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus for the effects of derivative instruments on our consolidated statements of income.
Commodities Risk
Our meat processing and hog production operations use various raw materials, primarily live hogs, corn, soybean meal and wheat, which are actively traded on commodity exchanges. These commodities are subject to significant price fluctuations. We enter into hedging transactions for these commodities when we determine conditions are appropriate to mitigate the inherent price risks. While this hedging may limit our ability to participate in gains from favorable commodity fluctuations, it also reduces the risk of loss from adverse changes in raw material prices.
We attempt to closely match the hedging instrument terms with the hedged item’s terms. Gains and losses resulting from our commodity derivative contracts are recorded in cost of sales except for lean hog contracts that are designated in cash flow hedging relationships, which are recorded in sales, and are generally offset by increases and decreases in cash prices for the underlying commodity (with such increases and decreases reflected in the same income statement line items). For example, in a period of rising grain prices, gains resulting from long grain derivative positions would generally be offset by higher cash prices paid to farmers and other suppliers in spot markets. However, under the “mark-to-market” method described above, these offsetting changes do not always occur in the same period, which could result in volatility in our results of operations.
The following table presents the sensitivity of the fair value of our open commodity derivative contracts to a hypothetical 10% change in market prices, as of September 29, 2024, December 31, 2023 and January 1, 2023:
| | | | | | | | | | | | | | | | | |
| September 29,
2024 | | December 31,
2023 | | January 1,
2023 |
| (in millions) |
| Grains | 8 | | | 3 | | | 12 | |
| Livestock | 50 | | | 28 | | | 26 | |
| Energy | 3 | | | 5 | | | 12 | |
Interest Rate Risk
The following table presents the fair values and carrying values of our fixed-rate debt as of September 29, 2024, December 31, 2023 and January 1, 2023:
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| September 29, 2024 | | December 31, 2023 | | January 1, 2023 |
| Fair Value | | Carrying Value | | Fair Value | | Carrying Value | | Fair Value | | Carrying Value |
| (in millions) |
| Debt | $ | 1,867 | | | $ | 1,982 | | | $ | 1,758 | | | $ | 1,979 | | | $ | 1,657 | | | $ | 1,976 | |
We determine the fair value of fixed-rate debt using Level 2 inputs based on quoted market prices. The carrying amount of all other debt approximates fair value as those instruments are based on variable interest rates.
Changes in interest rates impact the fair value of our fixed-rate debt. A hypothetical 10% change in interest rates would impact the fair value of our fixed-rate debt by $40 million, $53 million and $64 million as of September 29, 2024, December 31, 2023 and January 1, 2023, respectively.
We periodically enter into interest rate swaps to hedge our exposure to changes in interest rates on certain financial instruments and to manage the overall mix of fixed rate and floating rate debt instruments. The fair values of interest rate swaps as of September 29, 2024, December 31, 2023 and January 1, 2023 were not material.
Foreign Currency Exchange Risk
Our revenues are primarily generated from transactions denominated in U.S. dollars. However, we also generate revenues from transactions denominated in Japanese yen, Canadian dollars and Australian dollars, among others. We employ foreign currency exchange forward contracts to manage the exposure to foreign currency exchange risk. The fair values of foreign currency exchange forward contracts as of September 29, 2024, December 31, 2023 and January 1, 2023 was not material.
Concentration of Credit Risk
Our financial instruments are exposed to concentrations of credit risk primarily through our cash and cash equivalents, accounts receivable and derivatives. From time to time, we may have bank deposits in excess of insurance limits of the Federal Deposit Insurance Corporation, or the FDIC. We have not experienced any losses in such accounts and believes it is not exposed to any significant credit risk related to its cash and cash equivalents.
Concentrations of credit risk with respect to accounts receivable are limited due to our large number of customers. As of September 29, 2024, December 31, 2023 and January 1, 2023, 13.1%, 12.5% and 9.9%, respectively, of our accounts receivable balance was due from Walmart. No other single customer or customer group represented 10% or greater of our accounts receivable.
With regards to derivatives used to hedge commodities, foreign exchange and interest rates, we bear risk of nonperformance by counterparties. Our trading relationships are governed by international swaps and derivatives agreements and we mitigate risk by diversifying counterparties and monitoring credit ratings.
An estimate of expected credit losses is recognized as a valuation allowance and adjusted each reporting period. The estimate is based on the current expected credit loss model and is determined based on the age of receivable balances, the financial health of the customer, historical experience, current economic conditions and expectations about future performance. The valuation allowance as of September 29, 2024, December 31, 2023 and January 1, 2023 was not material.
Critical Accounting Estimates
The preparation of consolidated financial statements requires us to make estimates and assumptions. These estimates and assumptions are based on our judgment, experience and our understanding of the current facts and circumstances. Actual results could differ from those estimates. Certain of our accounting estimates are considered critical as they are both important to the representation of our financial condition and results of operations and
require significant or complex judgment on the part of management. The following is a summary of certain accounting policies and estimates that we consider to be critical. Our accounting policies are more fully discussed in “Note 1: Summary of Significant Accounting Policies” in the consolidated financial statements and accompanying notes for the year ended December 31, 2023 included elsewhere in this prospectus.
Revenue Recognition
Our revenue (sales) is primarily derived from contracts with customers for the purchase of our products. Revenue is recognized at a point in time when our performance obligation has been satisfied and control of the promised goods is transferred to the customer, which generally occurs upon shipment or delivery to a customer based on the terms of the sale. The primary performance obligation in our contracts with customers is to provide meat products. Shipping and handling activities are considered part of the fulfillment of our promise to provide meat products and not a separate performance obligation. Shipping and handling costs are reported as a component of cost of sales.
Revenue is recorded at the amount of consideration we expect to receive in exchange for providing goods to customers. The transaction price may include estimates of variable consideration, including a variety of customer sales incentive programs, such as rebates, product returns and coupons redeemed by consumers. Our estimates of variable consideration are based on a number of factors including history with the respective customer, current performance and future projections. We sufficiently constrain estimates of variable consideration based on the likelihood and magnitude of a potential revenue reversal when the uncertainties associated with the variable consideration are subsequently resolved.
We review and update estimates of variable consideration regularly. We have not experienced any material reversals of revenue recognized in the past three fiscal years resulting from overestimation of variable consideration nor do we expect there will be a material change in our estimates of variable consideration that would result in a material reversal of revenue recognized in the consolidated statements of income. The effect of any reversal of revenue would be recognized in the period in which an adjustment to our estimate is identified.
Contingent Liabilities
We are subject to lawsuits, investigations and other claims related to the operation of our farms and facilities, labor, livestock procurement, securities, the environment, our products, taxes and other matters, and are required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of loss. A determination of the amount of accruals and disclosures required, if any, are made after considerable analysis of each individual issue or claim.
We accrue for contingent liabilities, including future defense costs, when an assessment of the risk of loss is probable and can be reasonably estimated. We disclose contingent liabilities when the risk of loss is reasonably possible or probable.
Our contingent liabilities contain uncertainties because the eventual outcome will result from future events. Our determination of accruals requires estimates and judgments related to the possible outcomes, differing interpretations of the law, assessments of the amounts of potential damages, settlements or defense costs, and the effectiveness of strategies or other factors beyond our control.
The consolidated financial statements reflect accruals for estimated contingent losses associated with various claims. These matters will not affect our profits or losses in future periods unless our accruals prove to be insufficient or excessive. However, legal expenses incurred in our defense of legal matters and any payments made to plaintiffs through unfavorable verdicts or otherwise will negatively impact our cash flows and our liquidity position.
If actual results are not consistent with the estimates or assumptions used to develop our accruals for contingent losses, we may be exposed to gains or losses that could have a material effect on our future results of operations and cash flows.
Impairment of Goodwill and Indefinite-Lived Intangible Assets
Goodwill and non-amortizable intangible assets are tested for impairment annually in the fourth quarter, or sooner if impairment indicators arise. In the evaluation of goodwill for impairment, we may perform a qualitative assessment to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is not, no further analysis is required. If it is, a quantitative goodwill impairment test is performed to measure the amount of goodwill impairment loss to be recognized for that reporting unit, if any.
To identify if an impairment exists, we compare the fair value of a reporting unit with its carrying amount, including goodwill. The fair value of a reporting unit is estimated by applying valuation multiples of earnings and/or estimating future discounted cash flows. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not impaired. However, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
For our other non-amortizable intangible assets, if the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
The selection of earnings multiples is dependent upon assumptions regarding future levels of operating performance as well as business trends and prospects, and industry, market and economic conditions. A discounted cash flow analysis requires us to make various judgmental assumptions about sales, operating margins, growth rates and discount rates. When estimating future discounted cash flows, we consider the assumptions that hypothetical marketplace participants would use in estimating future cash flows. In addition, where applicable, an appropriate discount rate is used, based on an industry-wide average cost of capital or location-specific economic factors. We consider all these factors to be level 3 inputs, as defined in “Note 15: Fair Value Measurements” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
The fair values of our trademarks have been estimated using a royalty rate method. Assumptions about royalty rates are based on the rates at which similar brands and trademarks are licensed in the marketplace.
Our impairment analysis contains uncertainties due to uncontrollable events that could positively or negatively impact the anticipated future economic and operating conditions.
As of December 31, 2023, we had $1,627 million of goodwill and $1,274 million of non-amortizable intangible assets, consisting mainly of trademarks. Our goodwill is included in the following reporting units:
•Packaged Meats: $1,503 million;
•Mexico: $83 million;
•Fresh Pork: $34 million;
•Hog Production: $4 million; and
•Bioscience: $4 million.
We have not recognized an impairment of goodwill or other intangible assets in the past three fiscal years. A hypothetical 10% decrease in the estimated fair value of any of our reporting units would not result in an impairment. A hypothetical 10% decrease in the estimated fair value of our intangible assets also would not result in an impairment.
Income Taxes
We estimate total income tax expense based on statutory tax rates and tax planning opportunities available to us in various jurisdictions in which we earn income.
Federal income taxes include an estimate for taxes on earnings of foreign subsidiaries expected to be remitted to the United States and be taxable, but not for earnings considered indefinitely invested in the foreign subsidiary. We
account for the global intangible low-taxed income (GILTI) inclusion from foreign subsidiaries in the period in which it is incurred.
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date.
We record liabilities for uncertain tax positions based on our analysis of whether, and the extent to which, additional taxes will be due. We record these liabilities using a two-step process in which (1) we evaluate whether we believe it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the tax authority.
The determination of our provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items. Changes in current tax laws and rates could affect recorded tax assets and liabilities in the future. In addition, changes in projected future earnings could affect the recorded valuation allowances in the future.
Our analysis of uncertain tax positions requires considerable judgment about the likelihood and amount of benefit that would be sustained upon examination by tax authorities.
Due to the complexity and inherent uncertainties surrounding income tax positions, the ultimate resolution may result in a payment that is materially different from the current estimate of the tax liabilities. To the extent we prevail in matters for which liabilities have been established, or are required to pay amounts in excess of our recorded liabilities, our effective tax rate in a given financial statement period could be materially affected. An unfavorable tax settlement would require use of cash and result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement would be recognized as a reduction in our effective tax rate in the period of resolution.
Over the past three fiscal years, we have recognized $17 million of income tax expense subsequent to the initial recognition and measurement of an uncertain tax position and there have been no payments to tax authorities upon the ultimate resolution of uncertain tax positions.
See “Note 12: Income Taxes” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus.
Pension Accounting
We historically provided the majority of our U.S. employees with pension benefits. In the second quarter of 2021, we amended our qualified pension plans to freeze the benefit accrual for all non-union participants as of June 30, 2021.
We recognize the funded status of our pension plans in our consolidated balance sheets and recognize, as a component of other comprehensive income (loss), the gains or losses and prior service costs or credits that arise during the period but are not recognized in net periodic benefit cost.
We use an independent third-party actuary to assist in the determination of our pension obligation and related costs. The measurement of our pension obligations and related costs is dependent on the use of assumptions and estimates. These assumptions include discount rates, expected returns on plan assets, salary growth rates and mortality rates. Changes in assumptions and future investment returns could potentially have a material impact on our expenses and related funding requirements.
The following weighted average assumptions were used to determine our benefit obligation and net benefit cost for 2023:
•5.58% – Discount rate to determine net benefit cost;
•5.57% – Discount rate to determine pension benefit obligation; and
•7.25% – Expected return on plan assets.
If actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could be material. The effects of actual results differing from these assumptions are accumulated and amortized over future periods and, therefore, generally affect our recognized expense in such future periods.
An additional 0.50% decrease in the discount rate used to measure our projected benefit obligation would have further reduced the funded status by $105 million as of December 31, 2023, and would have resulted in an additional $3 million in net pension cost for the twelve months ended December 31, 2023.
A 0.50% decrease in expected return on plan assets would have resulted in an additional $8 million in net pension cost for the twelve months ended December 31, 2023.
In addition to higher net pension cost, a significant decrease in the funded status of our pension plans caused by either a devaluation of plan assets or a decline in the discount rate would result in higher pension funding requirements.
See “Note 13: Pension and Other Retirement Plans” in the consolidated financial statements and accompanying notes included elsewhere in this prospectus for further information about our accounting for pension and retirement plans.
Derivative Accounting
We are exposed to market risks primarily from changes in commodity prices. To mitigate these risks, we utilize derivative instruments to hedge our exposure to changing prices. Our objective is to reduce the volatility of earnings and cash flows associated with fluctuations in commodity prices.
We record all derivatives as either assets or liabilities at fair value on the balance sheet, with the exception of contracts that qualify for the normal purchase and normal sale scope exception, which are expected to result in physical delivery. Accounting for changes in the fair value of a derivative depends on whether it qualifies and has been designated as part of a hedging relationship. For derivatives that qualify and have been designated as hedging instruments for accounting purposes, changes in fair value have no net impact on earnings, to the extent the derivative is considered perfectly effective in achieving offsetting changes in fair value attributable to the risk being hedged, until the hedged item is recognized in earnings (commonly referred to as the “hedge accounting” method). For derivatives that do not qualify or are not designated as hedging instruments for accounting purposes, changes in fair value are recorded in current period earnings (commonly referred to as the “mark-to-market” method).
We apply hedge accounting when the change in the market value of derivative contracts has historically been, and is expected to continue to be, highly effective at offsetting changes in price movements of the hedged item. If it is determined that the derivative instruments are no longer effective at offsetting changes in the price of the hedged items, then the mark-to-market method must be applied to account for the derivative instruments prospectively, which could increase volatility in our results of operations. We recognized $16 million, $(15) million and $(9) million in gains (losses) on derivatives accounted for under the mark-to-market method in 2023, 2022 and 2021, respectively.
For additional information on derivatives, refer to “Note 1: Summary of Significant Accounting Policies” and “Note 7: Derivative Financial Instruments” in the consolidated financial statements and accompanying notes for the year ended December 31, 2023 included elsewhere in this prospectus, which includes detailed discussions of our accounting for and use of derivative instruments.
Recently Issued Accounting Pronouncements
There have been no recently issued accounting pronouncements that have had, or are expected to have, a material impact on our results of operations, financial position and/or cash flows.
BUSINESS
Our Mission
Good food. Responsibly.® At Smithfield, we are helping to feed a world of nearly eight billion people. Our products are found on tables everywhere. We provide families with wholesome, safe and affordable food while finding new and innovative ways to care for our people, communities, animals and planet. It is our responsibility and our promise. We make more than good food. Good is what we do.
Our Company
Smithfield is an American food company and an industry leader in value-added packaged meats and fresh pork with over $14 billion in annual sales. We employ approximately 34,000 people in the United States and approximately 2,500 people in Mexico. We maintain high-quality standards, meeting demand through our strong relationships with thousands of U.S. family farmers and blue-chip global customers. We are a market leader due to our scale, diverse portfolio of strong brands and products and reputation as a trusted partner known for quality. We market our products under a leading portfolio of iconic brands including Smithfield, Eckrich and Nathan’s Famous, among many others.
Our ambition is to be the most trusted food and protein company in North America as we feed people in the United States and around the world, while embracing a culture of responsibility, operational excellence and innovation. We produce and distribute a wide variety of packaged meats and fresh pork products both domestically and abroad. We conduct our operations through three reportable segments: Packaged Meats, Fresh Pork and Hog Production. We are a leading provider of packaged meats in the United States, with the number two branded market position by volume across the 25 key packaged meats categories in which we compete, according to Circana. These 25 key packaged meats categories represent a total addressable market opportunity of $43 billion annually, of which we had an approximate 20% market share by volume (including our private label sales) as of September 2024. We are also the largest fresh pork processor in the United States with approximately 23% market share as of Fall 2023, according to National Hog Farmer. We sell our products across diverse channels including retail and foodservice, distributing in all 50 states in the United States, as well as export markets. We are a leading exporter of pork and pork products, with export sales representing 13% of our total sales for the nine months ended September 29, 2024.
Our Packaged Meats segment is the cornerstone of our business with a value-added product portfolio and profitability that has more than doubled since 2014. Alongside our Packaged Meats segment, our Fresh Pork and Hog Production segments remain integral parts of our business, providing significant scale and operational benefits in support of our product offerings and our ability to meet demand consistently across economic cycles. We believe our emphasis on value-added packaged meats, along with our commitment to food quality, strong financial position and steadfast devotion to our stated mission, will continue delivering value for our shareholders.
Smithfield’s supply chain includes company-owned and contract farms in the United States and Mexico, as well as long-standing relationships with more than 4,000 independent U.S. family farms who meet our animal care and quality standards. Our model offers a resilient supply chain, providing us with several competitive advantages, including an assured supply of consistent, high-quality protein, the ability to innovate and lead in areas such as group-housed pork and the ability to deliver differentiated products to meet customer specifications. We operate 39 facilities producing fresh pork and packaged meats in the United States and one fresh pork facility in Mexico, and we focus on continually optimizing our operations by identifying opportunities to reduce costs and increase flexibility to meet market demand. Additionally, we remain committed to investing in innovation across our products, packaging and manufacturing processes. We seek to be the supplier of choice to our customers and maintain our reputation for high-quality, safe and delicious products.
A New Smithfield in the Public Eye
Founded in 1936, we began as a pork processing operation named The Smithfield Packing Company. Through a series of acquisitions beginning in the 1980s, we became the largest fresh pork processor in the United States. In 2013, Smithfield was taken private and became a wholly owned subsidiary of Hong Kong-based WH Group, which is publicly traded on The Stock Exchange of Hong Kong Limited. WH Group is a limited liability company
incorporated in the Cayman Islands, the shares of which have been listed on the Main Board of the Stock Exchange since August 2014. Through its subsidiaries, WH Group is principally engaged in the production and sale of packaged meats and pork.
Following the acquisition of Smithfield by WH Group, we focused on integrating our independent operating companies into a cohesive business. Our “One Smithfield” initiative unified our operations, brands and employees under one corporate umbrella, achieving synergies and enhancing profitability through disciplined cost management and balance sheet strength.
In recent years, we have transformed into a differentiated American food company with a leading position in value-added packaged meats and fresh pork, and our headquarters remains in our namesake town of Smithfield, Virginia.
In August 2024, we completed a carve-out of our European operations to focus our local management teams on the different market dynamics of North America and Europe. Pursuant to the European Carve-out, our operations in Europe were transferred to WH Group.
Led by growth in our Packaged Meats segment, our product portfolio has evolved to a higher concentration of value-added packaged meats offerings, significantly improving profitability. Additionally, we have reduced complexity and improved our cost structure in our plant operations by rationalizing our SKU count. Since 2019, we have reduced our Packaged Meats SKU count by over 40% and increased volume velocity (pounds/item) by over 60%.
The growth in our Packaged Meats segment has helped to increase our overall scale and profit margins and to stabilize our earnings and cash flows during volatile commodity cycles and economic downturns. This is the anchor of our strong financial position and fuels continued investment in our business. We have invested over $3 billion in capital expenditures since 2013, driving our organic growth strategy and improving our operations, including automating processes.
The following table sets forth certain metrics for our business for 2014 and 2023 and highlights our strategic growth and evolution led by our Packaged Meats segment.
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(1)Based on our historical financial statements for the year ended December 28, 2014, which are not included or incorporated by reference in this prospectus. We do not believe the adoption of accounting standards after that date would have a material effect on the financial measures presented. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures” for more information.
(2)Ratio of Net Debt to Adjusted EBITDA is defined as net debt divided by Adjusted EBITDA. Net debt is defined as long-term debt and finance lease obligations, including the current portion, minus cash and cash equivalents. Ratio of Net Debt to Adjusted EBITDA is a non-GAAP measure that should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with GAAP. For additional information regarding Ratio of Net Debt to Adjusted EBITDA, including a reconciliation to ratio of debt to net income, the most directly comparable GAAP measure, see “Management’s Discussion and Analysis of our Financial Condition and Results of Operations – Non-GAAP Measures.”
Our Industry
We operate in the large and growing global packaged and fresh meats market, which includes value-added fresh, refrigerated and frozen proteins. Our business operations are primarily concentrated in North America, but, as a leading exporter to major international markets, we also benefit from significant global demand for our products. According to Euromonitor, the global meat market reached $1.1 trillion in 2023 and is projected to grow at a 6.5% CAGR between 2023 and 2028. Per Euromonitor, U.S. value-added packaged meats represented a $47 billion market in 2023 and is forecasted to grow at a 3.6% CAGR between 2023 and 2028. Value-added packaged meats refers to the processed meats category as defined by Euromonitor and includes meat products that have undergone additional processing, such as adding an additional ingredient or characteristic, and are sold pre-packaged via retail and foodservice outlets.
The following table sets forth information about size of the U.S. value-added packaged meat market:
Consumer Trends in U.S. Packaged Meats and Fresh Pork
The U.S. packaged meats market is supported by long-term secular tailwinds, including consumer demand for high-protein diets, high-quality nutrition, product versatility and convenience. We expect these tailwinds to continue to drive increases in overall meat consumption. Consumers associate protein with healthiness and energy. A 2024 International Food Information Council consumer survey reported that a high-protein diet is the most popular diet type in the United States. According to market research firm Ipsos, 89% of Americans include animal protein in their diets as of 2021. Data from the Organization for Economic Co-operation and Development shows that pork represented 24% of all meat protein consumed in the United States in 2023.
According to Mintel, many packaged meats products are household staples for U.S. consumers, including bacon, lunch meat, hot dogs, fresh sausage and dry sausage. Mintel reports that, as of September 2023, U.S. bacon and lunch meat represented an estimated $27.0 billion market in 2023 that is expected to grow at a 4.2% CAGR between 2023 and 2028, and U.S. hot dogs and sausages were estimated to represent a $12.3 billion market in 2023 that is expected to grow at a 1.0% CAGR between 2023 and 2027. According to Business Research Insights, U.S. dry sausage for charcuterie, snacking, sandwiches, pizza toppings and other uses, typically higher margin products, represented a $4.7 billion market in 2023 that is expected to grow at a 3.9% CAGR between 2023 and 2030.
Mintel reports that 86% of U.S. consumers anticipate eating the same amount of pork or more pork in the coming year according to a survey conducted in February 2024, and pork consumption is distributed relatively equally across income groups. According to Mintel, packaged pork products benefit from growing demand for convenience, as consumers value marinated, ready-to-cook and ready-to-eat options. Mintel reports that pork is an affordable and convenient protein.
Pork is also a highly versatile protein, with a wide variety of cuts and flavor profiles. Use occasions for pork products benefit from strong daypart distribution, which is unique relative to all other meat proteins. Products like bacon, sausage and ham appear on tables at every meal. According to the National Pork Board, bacon is by far the most beloved packaged meats product, and pork is a highly snacked meat protein and the most popular pizza topping in the United States.
Additionally, increased U.S. demand for global cuisines supports the domestic pork market. Asian and Mexican cuisines, for which pork is a leading protein, continue to gain popularity with U.S. consumers, particularly among Generation Z (the generational cohort aged 12 to 27 years) and Millennials (the generational cohort aged 28 to 43 years). We believe that the continued growth of global cuisines in the United States introduces consumers to different pork preparations and flavor profiles and serves as an incremental long-term tailwind for pork.
According to Mintel, most U.S. consumers are concerned about the environmental impact of meat production, and health and nutrition are important factors to consumers of meat. Many cuts of pork offer lower levels of cholesterol and saturated fat relative to cuts of beef. Lean cuts of pork, including pork tenderloin, offer a superior nutritional profile to chicken breast. Additionally, relative to beef, pork production generally has a lower carbon footprint and lower rate of land usage. Nevertheless, changes in market trends and consumer preferences could adversely affect our results of operations. For more information, see “Risk Factors—Risks Relating to Our Business and Operations—Changes in consumer preferences and failure to maintain favorable consumer perception of our brands could negatively impact our business.”
The U.S. Pork Industry
The United States is a leading global producer and consumer of pork and pork products. According to the USDA, as of the end of 2023, the United States is the world’s third-largest producer of pork, behind China and the collective countries of the European Union. Pork is a growing industry in the United States. In 2023, the industry produced 27.3 billion pounds of pork. The USDA projects that total 2024 commercial pork production will be approximately 28 billion pounds, 3% higher than 2023, and will steadily increase year-over-year through 2033. The National Pork Producers Council, or NPPC, reported that the pork industry supported an estimated 573,000 U.S. jobs and was responsible for an estimated $63 billion of gross domestic product in 2023.
Pork processors sell fresh pork, value-added fresh pork and further processed or packaged pork to end markets such as food retailers and foodservice providers. Fresh pork includes cuts of fresh meat sold as commodity products and value-added products such as marinated or otherwise seasoned fresh pork. Value-added fresh pork is sold as both private label and branded products. Further processed or packaged pork includes value-added products across temperature classes, such as bacon, marinated ribs, dry sausage and smoked cuts, pre-cooked products, and also includes branded products.
According to Mintel, the U.S. foodservice channel represented an estimated $956 billion market in 2023 and is projected to grow at a 5.6% CAGR between 2023 and 2028. Private label remains important to the sector, representing 46% of total protein sales at U.S. food retailers as of February 2024, according to Mintel. Additionally, the U.S. grocery retail channel represented an estimated $873 billion market in 2023 and is projected to grow at a 2.4% CAGR at current prices, according to Mintel.
Growing U.S. Fresh Pork Export Market
Global demand for pork and pork products supports strong U.S. pork exports. According to the USDA, the U.S. share of the global pork export market increased to 26% in 2022 from 2% in 1990. While the European Union is currently the world’s largest pork exporter, the United States, at number two, is emerging as a more cost-effective alternative due to lower feed and labor costs, according to the Agriculture and Horticulture Development Board. The USDA projects that the United States will surpass the European Union as the world’s leading pork exporter in 2025 and forecasts that U.S. pork will exceed U.S. poultry broiler exports in the coming years for the first time since 1976. According to the USDA, the total value of U.S. pork product export volume was 3.1 million tons in 2023, and the market is expected to grow at a 3.3% CAGR between 2023 and 2033.
The following tables set forth information about U.S. pork production:
U.S. Hog Production Industry
The U.S. hog production industry is large and growing, representing a significant value-added activity in the agricultural economy. Like many agricultural sectors, the hog industry is cyclical in nature. The hog production process spans approximately ten months from insemination to harvest, creating peaks and troughs in hog inventories over time that result in a discrepancy between hog production costs and pricing. According to Iowa State University forecasts, 2023 represented the bottom of the trough in the current cycle due to low hog prices and high feed costs. According to the USDA, the U.S. pork sector continues to stabilize relative to 2023 due to consistent consumer demand for pork and lower feed prices.
Our Competitive Strengths
We attribute our track record of success to a combination of the following competitive strengths. We believe these strengths are central to our business model and position us well for long-term success.
Leader in Packaged Meats with Diverse Portfolio of Strong Brands
We have grown our Packaged Meats business to become a leading provider of value-added pork and other protein products for U.S. customers and consumers. Consumers choose our products for consistent high-quality and delicious taste, helping us achieve an 81% repeat purchase rate as of September 2024. Our Net Promoter Scores, a gauge of brand affinity, are superior to peers across key categories, including smoked ham, fresh pork, Italian specialty, hot dogs, everyday ham and bacon. We continue to see increasing loyalty and unaided awareness across our key brands and categories. Our longstanding commitment to our values and corporate heritage resonates with consumers who share our ideals, including our commitment to sustainability and American agriculture.
Our trusted brands have made us one of the country’s leading food companies. Led by our flagship Smithfield brand, we have a diverse portfolio of national, super-regional, value and specialty brands with strong customer loyalty. We complement our national brands with super-regional brands to capitalize on each brand’s history and strong consumer affinity. Our value brands offer consumers choices across price points, and our specialty brands
address various on-trend categories such as dry sausage and convenient preparation items, including barbecue and meatballs.
As a branded player across the United States, we have a leading position in 15 of the 25 key categories in which we compete. We have a significant presence in 10 categories each over $1 billion in size, including the number one or two position by volume in uncooked bacon, smoked ham, deli meat, cooked dinner sausage and portable meals as shown in the table below:
We market our products to customers and consumers across multiple categories and price points. We have a balanced sales mix with approximately 64% branded and 36% private label in the retail channel as of September 2024. Our participation in both branded and private label helps us attract and retain consumers as they move across
the value spectrum, enabling us to meet shifting consumer preferences during periods of economic downturn and to capture wallet share when they trade up to premium brands.
For example, in the packaged lunch meat category, almost 98% of the volume is sold on average in the $2.00-$9.00 price per pound range. Our packaged lunch meat offering exemplifies how we cover a wide range of retail price points from our best value with Gwaltney (at approximately $2.50 average retail price per pound) to our premium Smithfield Prime Fresh (at approximately $8.50 average retail price per pound) as of September 2024.
While some of our competitors may choose to focus on consumers at only the high or low end of the value spectrum, our strategy enables us to meet consumer demand across various price points, as shown in the chart below:
For information about challenges we face in the highly-competitive food market, see “Risk Factors—Risks Relating to Our Business and Operations—The food industry in which we operate is highly competitive, and our inability to compete successfully, or the effects of such competition, could adversely affect our business, financial condition and results of operations.”
Trusted and Scaled Partner Known for Quality
We have a nearly 90-year history of providing great tasting, quality products across the United States and abroad. We pride ourselves on producing safe, wholesome and high-quality protein, and we continually train our team members in the latest animal welfare and food safety and quality best practices across our supply chain. Producing Good food. Responsibly.® is at the core of our purpose-driven culture. Consumers trust our high-quality brands and products, and we are a trusted partner to customers, suppliers and farmers across the value chain.
Through years of investment and growth, we have created an asset base that we believe would be hard to replicate. Our scale and integrated operating model enable us to reliably meet demand across economic cycles and offer a differentiated value proposition to our customers and consumers. We believe that we are a preferred supplier to our partners because we consistently provide comprehensive end-to-end support and reliably deliver high-quality products on time. Our commitment and reputation for high-quality products and service is evidenced by the numerous awards received from our retail and foodservice customers, recognizing Smithfield as a supplier of choice.
Leveraging our scale and global distribution channels, we are also a leading exporter of pork and pork products, with sales to export markets representing 13% of our total sales for the nine months ended September 29, 2024. Export markets promote whole hog utilization due to differentiated demand for parts of the animal across the globe, which helps us to operate sustainably while supporting American agriculture.
Strong Financial Profile Marked by Robust Growth and Profitability Metrics
We are focused on delivering long-term sustainable results and have built our business to generate resilient growth, profitability and cash flow. Our track record of sales and earnings growth reflects strong demand for our products and successful management of commodity volatility across economic cycles. In 2024, we demonstrated a strong rebound in our results after a challenging 2023 for our industry.
The resilience of our business model is underscored by our history of maintaining a strong balance sheet and moderate leverage. Sustaining a healthy financial position creates operational flexibility and helps to insulate us from industry and macroeconomic headwinds. We are committed to a target Ratio of Net Debt to Adjusted EBITDA of <2.0x and a target minimum liquidity of $1.0 billion, as well as maintaining investment grade ratings.
We have a strong track record of disciplined capital allocation, generating higher profitability and cash flows by executing projects that drive organic growth and unlock operational efficiencies. While organic growth has been the backbone of our growth strategy over the past decade, we will continue to supplement our organic growth with a disciplined acquisition strategy. Our acquisition strategy primarily focuses on packaged meats assets and capabilities that complement our manufacturing platform, strong brands and product offerings.
Innovative Sustainability Initiatives
Sustainability has been a key focus for our business for over twenty years. Our strategy today is built around three objectives: being good stewards of the environment and our animals; doing good work in the communities where our employees live and work; and producing good food with a commitment to food safety, quality and nutrition. We have been at the forefront of the industry in achieving sustainability milestones, including becoming the first major protein company to adopt and publicly report a comprehensive sustainability program, to achieve International Standards Organization 14001 certification globally, to develop and adopt a comprehensive animal care management program, to begin reporting antibiotics usage in 2007 and to publish an online ingredient glossary.
We leverage on-the-ground resources to strive to achieve our sustainability goals. We co-founded Align as well as Monarch to advance developments in methane capture and manure-to-energy conversion. In 2022, TPG Rise Climate invested in Monarch, helping us to further scale the business.
Our sustainability activities have been recognized externally. We were awarded the prestigious “Profit with a Purpose” award by WSA in 2021 for our innovative renewable natural gas programs. These programs convert methane from hog manure into clean energy, creating new income opportunities for family farmers. Additionally, we received a “Highly Commendable” mention in the WSA’s External Partnership category in 2021 for our collaboration with a leading environmental organization to implement sustainable farming practices within our supply chain.
We are consistently recognized as an employer of choice for U.S. veterans. We have a long history of supporting veterans and military families through monetary and food donations, employee volunteerism and partnerships. We honor the service and sacrifice of American veterans and their families through the Helping Our Heroes program, which focuses on hiring initiatives, career development and strengthening the community and family support systems veterans rely on every day.
Proven, Execution-Oriented Management Team and Culture
We are an iconic American food company with a management team based in Smithfield, Virginia. We employ approximately 34,000 people in the United States and approximately 2,500 people in Mexico. Our energetic and highly experienced management team, whose dedication and commitment to our mission permeates throughout our business, has made us one of the world’s foremost protein companies, sets the tone for our success and drives the agility necessary to continue to transform Smithfield into a leading packaged food company. We foster a culture of responsibility, operational excellence and innovation that serves as the foundation for the transformation in our business.
C. Shane Smith, President and Chief Executive Officer since 2021, is a veteran of our company and has served in a wide range of roles during his 21-year tenure. He previously served as President of Smithfield’s European operations and as our Chief Strategy Officer, and he has held other roles in finance and our Hog Production segment. He has been instrumental in overseeing the continued execution of our “One Smithfield” vision, fortifying our position as a leading food company and improving operational efficiency to enhance market competitiveness.
Mark L. Hall, our Chief Financial Officer, has 26 years of experience in the food industry and leads our finance, accounting, treasury, tax, mergers and acquisitions, data analytics and risk management functions. Since joining Smithfield in 2014, Mark has played a crucial role in developing and executing our strategy, including during his tenure as head of finance within the Packaged Meats segment.
Our senior leadership team has extensive food industry experience. Steven France, Donovan Owens and Kraig A. Westerbeek lead our Packaged Meats, Fresh Pork and Hog Production segments, respectively, and have nearly a century of combined industry experience, including over 80 years of experience at Smithfield. Our leadership, combined with our integrated operating structure, solid financial foundation and the support of over 36,000 employees, create a cohesive and coordinated platform to further Smithfield’s growth as a leading food company creating value for a range of stakeholders.
Our Growth Strategies
Since the last time we were a public company in 2013, we have grown sales to $14.6 billion while significantly improving our profitability and leverage position. The strategic initiatives we are executing across our segments are complemented and enabled by our strong balance sheet and ongoing operational investments, positioning us for future growth.
Drive Growth of Packaged Meats
Our Packaged Meats segment is core to our growth strategy and has been a major driver in transforming our business since 2014. We have methodically shifted our business mix to focus on this higher-margin segment over time. The segment contributed 58% of our sales and 109% of our overall operating profit for the nine months ended September 29, 2024.
We plan to accelerate the growth of our Packaged Meats segment through several strategic initiatives, including:
•continuing to shift our portfolio toward a higher mix of value-added and premium products, such as:
•converting one-time seasonal commodity bone-in ham purchase occasions to increased unit sales of everyday, convenient products such as quarter-weight ham, Anytime Favorites ham and Prime Fresh sliced lunch meat, which is underscored by our ability to generate a 19% increase in ham units sold from 2019 to 2023 while volume increased only by 2% for that same period; and
•increasing penetration of higher-margin dry sausage products through expanding distribution points and manufacturing capacity, as evidenced by a 29% increase in dry sausage units sold from 2019 to 2023 and the recent acquisition of a dry sausage plant;
•harnessing our powerful brands to continue to expand product offerings and drive awareness, loyalty and increased market share;
•leveraging the breadth of our platform and national and specialty brands to further penetrate dayparts and households;
•expanding in under-indexed geographical locations and moving into new categories;
•attracting new consumers, particularly younger demographics, through product and packaging innovation and effective and appealing marketing strategies while maintaining our promise to consumers to offer high-quality products for every budget; and
•deepening our presence across our distribution channels through our integrated sales force, which leverages our scale and breadth to provide a unified, reliable and consistent customer experience.
We believe that these proven strategies will drive profitable organic growth in our Packaged Meats segment. As an example, we see significant potential for our Packaged Meats segment to generate continued growth through our distribution expansion opportunities across brands to expand unit count within our existing product portfolio.
Further Enhance Fresh Pork
We continually seek greater efficiencies as we manufacture and market fresh pork products. Our capabilities and supply chain allow us to provide differentiated products and high service levels to our customers. We deliver a high-quality, consistently available supply to our Packaged Meats segment and maximize the value of our raw materials. We will seek to enhance the profitability of our Fresh Pork segment by:
•maximizing the value of each hog and expanding use of raw materials, including unprocessed fresh and value-added pork, snacks, pharmaceuticals and pet food treats and ingredients;
•capitalizing on export markets as an outlet for increasing the value of raw materials through whole-hog utilization, and appealing to differentiated, global tastes and preferences;
•leveraging our relationship with WH Group to inform product development opportunities for the Asian market and to benefit from WH Group’s distribution network; and
•appealing to ever-changing consumer preferences and demand for flavor enhancements through ongoing product innovation.
As we seek to grow our fresh pork business profitably, we remain committed to demonstrating that profitability can go hand-in-hand with sustainable operations. We will further our mission of producing good food the right way by seeking new and unique ways to use our raw materials.
Continue Investing in Innovation
We will continue to invest in product, packaging and operational innovations in our Packaged Meats and Fresh Pork segments to drive growth, enhance our profitability and expand our total addressable market. We are focused
on strengthening relationships with customers and consumers by being first-to-market with new products and solutions.
Within our branded packaged meats portfolio, we are introducing more value-added and premium innovations. We see a significant opportunity to increase distribution of our innovative Smithfield Prime Fresh packaged lunch meat offering. Smithfield Prime Fresh embodies the quality of bulk deli meat but is displayed in the packaged lunch meat section of the retail wall. This enables our retail partners to increase average revenue per pound and reduce in-store labor costs while providing a convenient lunch meat option for consumers.
In addition, our Smithfield Double Thick/Double Smoked bacon and Smithfield Maple Thick Cut bacon demonstrate our ability to introduce premium, higher-margin offerings with new cut and flavor characteristics. These products sell at a higher velocity than the category average.
In the Fresh Pork segment, we are investing in value-added products and adding new cuts and flavors, such as Sweet & Smokey BBQ, Chipotle and Lemon & Garlic marinated fresh pork loin filet.
Innovation does not stop with our products. In our plants, we are committed to advancing automation and strategically redeploying labor. On our farms, innovative approaches to animal nutrition are increasing feed conversion and lowering our cost basis. Byproducts that were once considered waste are now used to create renewable natural gas through our biogas joint ventures and lifesaving pharmaceuticals through our bioscience business.
Our culture of responsibility, operational excellence and innovation serves as a catalyst for our ongoing business transformation. We conduct company-wide competitions and recognition events for grassroots projects that drive innovation throughout our organization. By fostering this entrepreneurial spirit, we will seek to drive growth in our top- and bottom-line results and build on Smithfield’s competitive advantage.
Optimize Our Operations and Supply Chain to Decrease Our Cost Basis
We have implemented many initiatives over the past several years to reduce costs and realize operational efficiencies. These initiatives have enabled us to offset inflation and enhance margins across our entire business.
We continue to optimize the size of our company-owned hog production operations and procure a greater mix of hogs from independent suppliers with market-based supply agreements. Additionally, we continue to implement cost-saving initiatives in our retained hog production operations to improve our cost structure.
We employ automation in all of our plants to redeploy labor to higher value tasks, improve yields and drive efficiency by reducing complexity to lower our cost basis and help offset inflationary pressures.
In our logistics and distribution network, we have reduced transportation and warehousing costs through transportation efficiencies, maximizing utilization of our storage and trucking assets, improving supply and demand
planning and optimizing inventory levels. These actions increase profitability and improve customer service levels, which we believe is essential to being a supplier of choice.
We remain committed to optimizing our operations and supply chain through a series of targeted actions, which in the past have supported meaningful margin improvement:
| | | | | | | | |
| Hog Production | Packaged Meats & Fresh Pork | Logistics |
| | |
“Reform and Rationalize” | “Best-In-Class Lean Manufacturing” | “Improve Service at Optimal Cost” |
•Optimize number of company-owned hogs •Improve herd health •Transform genetics •Drive procurement and nutrition savings | •Offset inflation with cost savings programs •Employ automation •Improve yields and maximize raw material usage •Reduce complexity | •Be the supplier of choice •Maximize assets (reduce transport miles, warehouse utilization) •Improve supply and demand planning •Optimize inventory levels |
Implementation of our growth strategies requires us, in particular, to continue to grow our Packaged Meats segment and to reduce our exposure to commodity price volatility through optimization and continued reduction of the size of our company-owned hog production operations. For information about challenges that we face in implementing this strategy and our other growth strategies, please see “Risk Factors—Risks Relating to Our Business and Operations—Our results of operations are cyclical and could be adversely affected by fluctuations in the commodity prices for meat, livestock (primarily hogs) and feed ingredients,” and “—Disruption of our supply chain could adversely affect our business, financial condition and results of operations.”
Execute Synergistic M&A in North America
We intend to execute opportunistic, complementary M&A to bolster our value-added product portfolio and production capacity in North America. While acquisitions are not a primary growth driver for us, our team is experienced in identifying strategic acquisition targets and integrating them successfully into our business. We believe our integration expertise allows us to capture both cost synergies and incremental revenue opportunities. We will remain disciplined in our acquisition approach and maintaining our investment grade ratings, while pursuing opportunities that we believe will prove accretive to earnings and enhance our operational profile. For example, we recently acquired a dry sausage plant in Nashville, Tennessee from Cargill, which is strategically located and offers important capacity for some of our fast-growing, higher margin packaged meats products. This acquisition will help serve the growing demand for high-quality pepperoni, deli, charcuterie and other dry sausage products.
Our Operations
Our “One Smithfield” initiative unifies the operations of our segments under a single corporate umbrella that enables us to realize synergies and create a consistent, go-to-market approach for customers and ultimate consumers of our products. In particular, we have leveraged the natural synergies across our Packaged Meats and Fresh Pork segments, focusing on cross-selling among our existing customer base and utilizing shared facilities. We intend to continue to capture synergies in manufacturing, distribution, product development, supply chain management and logistics, giving us two strong platforms for further expansion of our customer base.
Packaged Meats Segment
The Packaged Meats segment produces a wide variety of value-added products and sells them primarily in the United States. For the nine months ended September 29, 2024, the segment had $5.9 billion in sales, comprising 58% of our total sales, $855 million in segment profit, comprising 109% of our total operating profit and a 14.6% operating profit margin. For the year ended December 31, 2023, we sold approximately 2.9 billion pounds of packaged meats products. The segment has achieved strong growth with a fiscal year 2014 to fiscal year 2023 segment profit CAGR of 9.8%.
Our Packaged Meats portfolio is diversified across product categories, brands and channels and spans all meal occasions. For the nine months ended September 29, 2024, 63% of the segment sales were conducted through the retail channel, 31% through the foodservice channel and 6% through the industrial channel (i.e., other protein processors) and other.
We serve 100% of the top 10 ranked national grocery retailers, as identified by Progressive Grocer based on 2023 annual sales, including blue-chip customers, such as Walmart, Sam’s Club, Costco, Kroger and Albertsons. In the foodservice industry, we serve approximately 70% of the top 50 ranked national foodservice chains, including McDonald’s, Subway, IHOP and Jersey Mike’s, as well as all of the top foodservice distributors, including Sysco, U.S. Foods and Performance Food Group. Within the foodservice industry, we leverage our reputation for high-quality products through our Smithfield Culinary brand, and we are the most recognized pork processor by chefs and foodservice operators, with 49% unaided awareness based on a 2024 study by Datassential.
We produce a wide variety of packaged meats products, including bacon, sausage, hot dogs, deli and lunch meats, dry sausage products (such as pepperoni and genoa), ham products, ready-to-eat products and prepared foods (such as pre-cooked entrees, bacon and sausage). We address all dayparts, with our products featured during breakfast, weekday school lunches, football weekends, holiday dinners and at snack time. While pork is our primary protein offering, approximately 17% of the volume utilized in our Packaged Meats segment for the nine months ended September 29, 2024 was non-pork products made with other proteins—primarily, poultry and beef.
Our Packaged Meats segment’s branded retail offerings generated $3.2 billion, or 22% of consolidated sales, in 2023. Our products are available at most major food retailers, where we continue to drive penetration and have strong on-shelf performance with attractive dollar velocities for our largest categories relative to competition.
Led by our flagship Smithfield brand, our portfolio of brands has strong consumer recognition and robust brand equity, and we target on-trend product categories for growth. We market our domestic packaged meats products under a strategic set of core brands, including national, super-regional, value and specialty brands that deliver value to our ultimate consumers across a wide range of price points.
The following table illustrates the percentage of our Packaged Meats segment’s branded sales in the retail channel in 2023 for each of our top brands, along with the relevance these brands represent across dayparts:
Additionally, private label represented 38% of our packaged meats retail channel sales volume in 2023. Our private label products make our offerings more valuable to blue-chip retail customers by providing consumers quality selections up and down the value chain. In addition, our private label business helps to optimize our manufacturing footprint and increases the efficiency and profitability of our plants.
Fresh Pork Segment
As the largest fresh pork processor in the United States, our Fresh Pork segment produces a wide variety of primal, sub-primal and offal products, such as bellies, butts, hams, loins, picnics and ribs. Our Fresh Pork segment had $5.9 billion in sales for the nine months ended September 29, 2024, comprising 58% of our total sales, $196 million in segment profit, comprising 25% our total operating profit and a 3% operating profit margin. For the year ended December 31, 2023, we processed approximately 29 million head through the Fresh Pork segment. Approximately one-third of our fresh pork products, including the majority of hams, bellies and trimmings, is transferred to our Packaged Meats segment, providing it with approximately 80% of its raw material requirements for the nine months ended September 29, 2024.
Our strategy is to drive our Fresh Pork segment’s profitability to exceed commodity meat values by maximizing the use of our raw materials. This includes offering value-added products, such as marinated fresh pork, a category in which we hold the leading position, and case-ready fresh pork. The export strategy is particularly important to our ongoing initiative to maximize hog utilization by selling byproducts to drive profitability.
Vertically Integrated Supply Chain and Hog Production Segment
Our supply chain, supported by our upstream businesses, is differentiated from our competitors’ supply chains and provides benefits that we believe are hard to replicate. Nearly all of the Hog Production segment’s sales are intercompany sales of live hogs to our Fresh Pork segment. Our Fresh Pork segment sources hogs from a mix of company-owned and contract farms, which raise company-owned hogs, comprising our Hog Production segment. Our Fresh Pork segment further supplements our supply by sourcing hogs from independent farmers with whom we partner across the United States through multi-year agreements. Contract farms and independent farms are held to the same animal care and quality standards as our company-owned farms and thereby form a key part of our integrated supply chain.
We have unmatched scale in hog production, which enables us to consistently supply high-quality raw materials for our Fresh Pork segment and, ultimately, our Packaged Meats segment. Today, we internally supply approximately 50% of the raw material needs of our Fresh Pork segment. We believe that it is important to maintain a certain level of internal production to enable supply to our Fresh Pork processing facilities, particularly to support our East Coast processing operations. Our scale has also enabled us to be an early mover in group-housing for pregnant sows on company-owned farms with the result that these farms supply the majority of our group-housed pork needs which is a differentiated product for which our customers pay a premium.
Beyond scale, our internally supplied hog production is geographically diverse, with locations in the East Coast, Midwest, Missouri and Utah, whereas our largest competitors are located predominantly in the Midwest. Our geographic diversity reduces risk by mitigating the impact of a potential disease outbreak in one part of the country. In addition, our East Coast hog production operations provide an efficient supply to two of our largest Fresh Pork and Packaged Meats processing facilities co-located in North Carolina. Our East Coast location provides us with a significant strategic advantage in our ability to export to more than 30 countries, because it gives us close proximity to East Coast ports, unlike our competitors who need to transport product from the Midwest more than 1,000 miles to either the East or West Coast ports.
In recent years, we embarked on a strategy to optimize the size of our hog production operations and procure a larger percentage of hogs from independent suppliers under long-term, market-based supply agreements. Our Hog Production segment’s transformation strategy is integral to our ongoing objective to further transition our business toward an increased mix of value-added, high-margin products. This transformation allows us to reduce our capital investment and exposure to more volatile areas of the value chain. We plan to reduce the size of the segment’s production from approximately 50% of fresh pork supply today to approximately 30% in the medium term, which is still significantly higher than our competitors. We have made material progress in executing our strategy, reducing the size of our segment’s production from a peak of 17.6 million head in 2019, and we continue to further optimize production levels. In the year ended December 31, 2023, we produced approximately 15.8 million head through the Hog Production segment. We ended 2024 at 14.6 million head, and we expect to end 2025 at approximately 11.5 million head. We believe this strategy will maintain an appropriate supply of high-quality inputs to meet business
needs and improve our cost structure while achieving flexibility in our retained hog production business. See also “Risk Factors—Risks Relating to Our Business and Operations—An inability to realize savings and efficiency gains could adversely affect profitability and we may be unable to achieve any or all of our financial and operational targets.”
Sales and Marketing
Our goal is to provide quality and value to the ultimate consumers of our packaged meats and fresh pork products. We sell our branded and private label packaged meats and fresh pork products through a variety of channels, including:
•national and regional retailers (primarily grocery supermarket chains, independent grocers and club stores);
•the foodservice industry, including foodservice distributors, fast food and other restaurants, hotel chains and other institutional customers;
•industrial customers who use our products as raw materials in their finished goods production, including prepared meals, byproducts for pharmaceutical production and pet food treats and ingredients; and
•export sales to international retailers and wholesale distributors, primarily in North American, Asian, Latin American and other emerging markets.
In the United States, our ultimate consumers span all age groups. Our three largest generational cohorts are Millennials, Generation X (the generational cohort aged 44 to 59) and Boomers (the generational cohort aged 60 to 78). While Boomers are our largest cohort, Generation Z is our fastest growing cohort. We address consumer trends and interests and seek to appeal to younger demographics through product innovation, including enhanced flavors and ready-to-eat and smaller package sizes, as well as charcuterie and snacking items.
We have implemented a strategy in our Fresh Pork segment to improve profitability by exporting certain parts of the hog, primarily offals, that are in higher demand and generate higher sales values in international markets. In 2023, export sales comprised 23% of the Fresh Pork segment’s volumes and 22% of the segment’s sales.
We use a variety of consumer advertising and trade promotion programs designed to build awareness and increase sales distribution and penetration. We also provide sales incentives to certain of our customers through rebates, such as those based on achievement of specified volume and/or growth in volume levels. We primarily use company-employed salespersons to sell our products, and we also engage independent brokers who work on a commission basis.
Customers
In 2023, we sold our products to more than 5,700 customers. Walmart is a customer of our Packaged Meats and Fresh Pork segments and accounted for approximately 12%, 12% and 11% of our consolidated sales in 2023, 2022 and 2021, respectively. Walmart has been our customer for multiple decades. No other customer accounted for 10% or more of our consolidated sales during 2023, 2022 and 2021. Cumulatively, our top ten customers accounted for 37%, 36% and 37% of our consolidated sales in 2023, 2022 and 2021. Sales to our customers located outside of the United States accounted for 16%, 14% and 18% of our consolidated sales in 2023, 2022 and 2021, respectively.
Manufacturing Facilities
We manufacture packaged meats, fresh pork and value-added items at 39 processing plants across 19 different states:
•Packaged meats. We produce packaged meats products across 31 processing plants in 18 states.
•Fresh pork. We process hogs at eight processing plants in six states, with the aggregate processing capacity of our collective processing plants of approximately 108,000 hogs per day.
•Value-added items. We operate six additional processing plants that use our fresh pork products to produce value-added items, such as case-ready products, process pork skins for snacking and pet food and treats.
Our processing plants are strategically located to access raw materials in a cost-effective manner and to service our diverse customer base. Six fresh pork facilities include our packaged meats operations, which improves our overall cost structure by reducing the cost of transporting fresh raw materials and leveraging shared fixed overheads.
We continue to optimize our operations by reconfiguring our manufacturing footprint, closing high-cost operating lines and creating greater agility across our facilities. Our facilities utilize modern, highly automated equipment to process and package our packaged meats and fresh pork products, aiding us in redeploying our team members to higher-value tasks. We believe that these expenditures have enhanced product quality, improved customer satisfaction and increased sales potential. Our economies of scale and network afford us significant supply chain transparency and substantial availability of high-quality raw material supply to our growing Packaged Meats segment. Our portfolio of production facilities requires routine capital investment for repairs and maintenance. We believe that annual total capital expenditures in the near term are likely to be in the range of $400 million to $500 million inclusive of both repairs and maintenance and profit improvement projects. Capital expenditures could be more in certain years to ensure continuity of production in our older assets. For additional information on how we intend to use the proceeds of this offering, see “Use of Proceeds.”
Our facilities are also designed to promote regulatory compliance and worker safety, as well as reduced waste and emissions, while seeking to comply with applicable environmental standards.
Our “Other” operating segment includes pharmaceutical operations, known as Smithfield Bioscience, and our Mexican operations. For Smithfield Bioscience, we have a manufacturing location in Ohio that processes raw materials from hogs that we process to manufacture heparin products, including Heparin Sodium, an active pharmaceutical ingredient, which mitigates the risk of blood clots. These intermediate products are sold to the healthcare industry for use in pharmaceutical drugs and medical devices. In Mexico, we own a 66% interest in Granjas Carroll de Mexico, S. de R.L. de C.V., or GCM or Altosano. Altosano produces 1.8 million hogs annually at 115 company-owned farms and processes 1.5 million hogs at one manufacturing plant, primarily for consumption in the local Mexican market. GCM sells branded products in Mexico under the Altosano brand.
Distribution and Transportation
We have integrated, centralized teams that coordinate supply and demand planning, customer service and logistics to service our packaged meats and fresh pork customer base. We use a combination of third-party shipping companies and our leased and owned fleet of tractor trailers to distribute meat products to our customers, as well as to move products between facilities. In the United States, we distribute products directly from some of our plants and from owned and leased distribution centers in Indiana, Kansas, Maryland, Nebraska and North Carolina. We use these distribution centers to consolidate products that are manufactured at different plants across our network to fulfill our customer orders efficiently. One of these distribution centers is operated by third-party logistics providers.
Due in part to the different demands of distribution for frozen and refrigerated products, as well as the seasonality of certain of our products, we use a network of over 45 third-party cold storage locations for storage, handling and other value-added services. These arrangements are generally contracted on an annual basis with either fixed or variable usage requirements. Access to these locations provides capacity to sell frozen and chilled product offerings to our export customer base. For export sales to overseas geographies, we contract with third-party international container shipping carriers to ship our products cost effectively to the destination ports of our customers.
Our distribution network enables us to enhance our customer reach and sell our products efficiently and cost effectively throughout the United States and the world. We continue to seek innovative solutions to accomplish this mission. We use automation in our distribution centers to pick and fulfill orders and thereby reduce labor costs. We coordinate deliveries and use backhauling to reduce overall transportation costs.
Raw Materials
Feed for Internally Sourced Hogs
The primary raw materials for hog production are corn, soybean meal and wheat. Hogs consume grain during the grow-out period from wean to finish, which takes six months on average. In 2023, feed costs accounted for approximately 64% of our production cost of hogs. We have over 50 locations used for feed production and feed storage in the United States, which are located near our farms, where we convert purchased grain into feed for our animals.
The profitability of hog production is related to the market price of hogs, the cost of feed grains and the efficiency of our farm operations. Hog production generally generates higher profits when hog prices are high and feed grain prices are low, and lower profits (or losses) when hog prices are low and feed grain prices are high. We seek to mitigate higher input costs through productivity initiatives to improve feed conversion, procurement initiatives and the use of derivative instruments to hedge a portion of forecasted future consumption economically. We seek to stabilize pricing generally by purchasing grains through forward purchase contracts.
Feed grains are readily available from numerous sources at competitive prices, and we believe such raw materials to be in adequate supply. We take an active role in the physical markets for grain and other feed ingredients throughout the world. These efforts range from buying lower-cost corn from local farmers near our feed mills to importing grain or soybean meal from South America from time to time.
Raw Materials for Fresh Pork Segment
Internally Sourced Hogs
We source approximately half of the hogs processed in our Fresh Pork segment’s facilities through our Hog Production segment, which includes more than 400 company-owned farms and more than 1,900 contract farms in the United States that raise our hogs for processing. Contract farmers provide the initial facility investment, labor and front-line management through a pre-determined economic and commercial arrangement, and we provide the animals and the feed. In the nine months ended September 29, 2024, we produced 10.8 million hogs from approximately 750,000 sows; and, in the year ended December 31, 2023, we produced 15.8 million hogs from approximately 770,000 sows. Nearly all of the Hog Production segment’s sales are intercompany sales to the Fresh Pork segment.
We develop breeding stock, optimize diets for our hogs at each stage of the growth process, feed our hogs and design hog containment facilities. From the process’s origin at the grain farms to the ultimate step of delivering hogs to our processing plants, we monitor the vertically integrated process at every juncture to ensure a premium level of product, assurance of supply and control of input costs. Whether our animals are raised on company-owned or contract farms, we seek to have a supply chain that meets our standards for quality and animal welfare practices.
At our company-owned and contract farms, we have ongoing initiatives to improve profitability, including genetic transformation, herd health improvements and procurement and nutrition savings. These ongoing initiatives are intended to improve the livability of our animals while reducing costs. We utilize our fleet of leased and owned tractor trailers to transport hogs between farm and production facilities.
Externally Sourced Hogs
We currently procure approximately half of the hogs that we process in our Fresh Pork segment through multi-year, market-based supply agreements with independent suppliers, which provide us with a stable supply of high-quality hogs at market-indexed prices. The loss of any one supplier would not materially impact our business or operations. We seek to stabilize pricing generally by purchasing hogs through forward purchase contracts.
Raw Materials for Packaged Meats Segment
We source approximately 80% of the raw materials used in our Packaged Meats segment from our Fresh Pork segment. We purchase beef and poultry from other meat processors to supplement our processing requirements. Our
third-party pork and beef purchases are made on a spot basis, while our third-party poultry purchases are booked through annual volume commitments.
Although the price of our raw materials fluctuates due to market dynamics, we believe that our supply of raw materials is adequate and generally available from numerous sources. We seek to mitigate higher input costs through productivity improvements in our operations, various procurement strategies and the use of derivative instruments to economically hedge a portion of forecasted future consumption.
Packaging Materials and Ingredients for Fresh Pork and Packaged Meats Segments
We have a centralized procurement function responsible for competitively sourcing packaging and ingredient raw materials from third-party suppliers. We purchase raw materials, including seasonings, sweeteners, cheese and antimicrobials from ingredient suppliers, commodity processors and other food companies located primarily in the United States. We also purchase packaging materials, including flexible resin-based packaging, corrugated boxes and folding cartons, foam trays and pads, labels and casings, from packaging manufacturers located primarily in the United States. We purchase the majority of our packaging materials under contracts with pricing formulas based on published raw material indices for the primary components of our packaging, which are typically resin and paperboard.
We purchase most of the seasonings for our Packaged Meats segment from Saratoga. We owned Saratoga until October 2022 when we sold it to Solina Group Holding. Shortly thereafter, we entered into a strategic sourcing purchase agreement with Saratoga pursuant to which we agreed to purchase certain seasonings exclusively from Saratoga. The sourcing agreement expires on October 31, 2025 but automatically renews for successive one-year terms unless terminated by either party with a 90-day notice. The prices at which we purchase seasonings are adjusted annually by agreement between us and Saratoga based on market information and operations data. Saratoga has a right of first refusal to supply us with any new seasoning or sauce products we need. We may terminate the exclusivity arrangement or terminate the sourcing agreement entirely if Saratoga does not satisfy certain key performance indicators. We believe that we carry sufficient inventory of finished product and seasonings to overcome an interruption in the supply of seasonings from Saratoga.
Seasonality
Our business is somewhat seasonal in that, traditionally, the periods of higher sales for hams are the holiday seasons such as Easter, Thanksgiving and Christmas, and the periods of higher sales for ribs, smoked sausages and hot dogs are the summer months. We typically build inventories of certain products in anticipation of seasonal demand fluctuations.
In addition, hog prices tend to rise as hog supplies decrease during the summer, and hog prices tend to decline as hog supplies increase during the fall and winter. This tendency is due to lower farrowing performance during the winter and slower animal growth rates during the summer.
Competition
In our business, we participate across the value chain — from farm to finished products. We believe our diverse branded and private label product offerings allow us to compete effectively across channels and customer price points.
In general, the primary competitive factors in our Packaged Meats and Fresh Pork segments are:
•taste;
•product quality;
•nutritional profile and dietary attributes;
•product availability;
•convenience;
•price;
•brand recognition and loyalty; and
•the ability to identify and satisfy emerging consumer preferences.
Our ability to compete effectively depends on our capacity to execute across these criteria. Competitive factors may vary by channel. In the U.S. retail channel, we believe that product quality, brand awareness, effective consumer advertising and promotional activities, relationships with key stakeholders for shelf space and customer service are the primary bases of competition. In the U.S. foodservice channel, we believe that competition is based on consistent quality, product development, service and price. As our hog production operation is mainly comprised of intracompany sales, our customers and ultimate consumers primarily interact with our Packaged Meats and Fresh Pork segments.
The protein industry is highly competitive. We compete with large multi-brand packaged foods businesses, as well as fresh meat companies, private, category-focused companies and pork processing companies. Competing large, multi-brand consumer packaged food companies include Tyson Foods, Hormel Foods, Kraft Heinz, Pilgrims Pride, Maple Leaf Foods, Premium Brands and Conagra. These competitors are scaled, multinational corporations with substantial financial, marketing, research and development and other resources. Private, category-focused companies that we compete with include Boar’s Head and Johnsonville. These private competitors may be more innovative and able to bring new products to market faster and more quickly exploit and serve niche markets or new or burgeoning consumer preferences. Pork processing companies with which we compete include Tyson Foods, Triumph Foods, JBS USA, Prestage Farms and Seaboard. Although pork is relatively inexpensive in comparison to other protein sources, we also compete indirectly with the producers of chicken, beef, seafood and meat alternatives since changes in the relative prices of these proteins may alter consumer buying patterns. Additionally, we face competition for export sales from both domestic and international suppliers.
As a leading food company, we believe that we effectively compete through our high-quality products, leading brands, expansive channel reach, scaled distribution network, our significant focus on controlling our input costs (including through internally sourced hogs) and our strong financial profile. Based on the strength of our longstanding relationships and proven, execution-oriented management team, we believe that we are a trusted partner to farmers, suppliers, customers and ultimate consumers across the value chain.
Our Properties
The table below summarizes information about our owned and leased properties:
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| | Number of Facilities | | | | | | |
| Segment/Type of Facilities | | Owned | | Leased | | Total | | State (5) | | Capacity (in thousand) | | Unit of
Measurement |
Packaged Meats (1) | | | | | | | | | | | | |
| Production | | 29 | | 2 | | 31 | | Georgia (1), Iowa (5), Illinois (2), Indiana (1), Kansas (2), Kentucky (2), Massachusetts (1), Minnesota (1), Missouri (2), North Carolina (3), Nebraska (3), New Jersey (1), Ohio (2), Pennsylvania (1) , South Dakota (1), Tennessee (1), Virginia (1), Wisconsin (1) | 13,100 | Daily production lbs. |
Fresh Pork (1) | | | | | | | | | | |
| Processing | | 8 | | — | | 8 | | Iowa (2), Illinois (1), Missouri (1), Nebraska (1), North Carolina (2), South Dakota (1) | 107.9 | Head of hogs daily |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number of Facilities | | | | | | |
| Segment/Type of Facilities | | Owned | | Leased | | Total | | State (5) | | Capacity (in thousand) | | Unit of
Measurement |
| Other | | 5 | | 1 | | 6 | | Iowa (2), North Carolina (2), Utah (1), Virginia (1) | 2,500 | Daily production lbs. |
| Hog Production | | | | | | | | | | |
Farms (3) | | 269 | | 1,430 | (2) | 1,699 | | Colorado (26), Iowa (410), Illinois (15), Missouri (204), North Carolina (930), Oklahoma (11), South Carolina (28), South Dakota (9), Utah (23), Virginia (43) | 11,562 | Hogs annually |
| Feed facilities | | 27 | | 24 | | 51 | | Colorado (1), Iowa (3), Indiana (1), Kansas (1), Missouri (9), North Carolina (26), Ohio (2), South Carolina (5), Utah (1), Virginia (2) | 708.4/32.9 | Capacity in tons of feed storage / daily feed production |
| Distribution Network | | | | | | | | | | |
Distribution Centers (4) | | 2 | | 3 | | 5 | | Indiana (1), Kansas (1), Maryland (1), Nebraska (1), North Carolina (1) | 201.0 | Pallet capacity |
| Direct-to-Store Delivery Facilities | | 6 | | 7 | | 13 | | Indiana (3), Kentucky (1), Michigan (2), Ohio (3), Pennsylvania (1), Texas (3) | 152.1 | Square feet |
| Other | | | | | | | | | | |
| Mexico | | | | | | | | | | |
| Fresh Pork | | 1 | | — | | 1 | | Puebla, MX | 5.0 | Head of hogs daily |
| Hog Production | | 115 | | 6 | (2) | 121 | | Puebla (79), Veracruz (42), MX | 1,800 | Hogs annually |
| Corporate | | | | | | 1 | | Puebla, MX | 13.3 | Square feet |
| Bioscience | | 1 | | — | | 1 | | Ohio | 34.5 | Square feet |
| U.S. Administrative | | | | | | | | | | |
| Headquarters | | 1 | | — | | 1 | | Virginia | 132.3 | Square feet |
| Satellite offices | | 1 | | 3 | | 4 | | Illinois (1), Missouri (1), North Carolina (1), Virginia (1) | 135.2 | Square feet |
| Sales offices | | — | | 5 | | 0 | | Idaho (1), Ohio (1), Michigan (1) California (1), Arkansas (1) | 32.0 | Square feet |
________________
(1)Certain of our fresh pork facilities are co-located with packaged meats production facilities. They are counted separately under each segment heading. We operate a total of 39 facilities that process fresh pork and packaged meats in the United States.
(2)Consists of contract farms.
(3)Does not include a limited number of inactive farms.
(4)Distribution centers serve both our Packaged Meats and Fresh Pork segments. We also have access to over 45 cold storage locations via contractual arrangements with third parties. Our contracts are either pay-for-use or commit us to a specific annual amount irrespective of usage.
(5)Numbers in parentheses represent total number of facilities for each jurisdiction.
The map below shows the expansive footprint of our facilities and properties:
Research and Development
We conduct research and development activities to develop new and improved products for our customers, incorporate innovative ingredients, develop advanced pork processing equipment and methods and enhance the survival, health, growth and well-being of our animals.
Our in-house food science research and development team consists of approximately 35 professionals focused on developing new and improved products and enhancing plant productivity. In 2011, we opened Smithfield’s Innovation Center near our headquarters in Smithfield, Virginia. This technologically advanced facility is dedicated to developing new products, enhancing food safety and quality, exploring consumer insights and preferences and evaluating both our products and those of our competitors.
Our animal scientists conduct research at farms across the country to improve the performance and well-being of our animals. In addition, we conduct genetic and genomic research to advance the proprietary genetics of our animals and foster specific traits that improve their overall performance.
We incurred expenses for research and development activities of $175 million, $157 million and $157 million in 2023, 2022 and 2021, respectively.
Employees
As of December 31, 2024, we had approximately 34,000 employees in the United States and approximately 2,500 in Mexico.
| | | | | | | | | | | | | | | | | |
| As of January 1, 2023 (1) | | As of December 31, 2023 (1) | | As of December 31, 2024 (1) |
| Corporate | 2,533 | | | 2,406 | | | 2,149 | |
| Facilities | 31,988 | | | 30,066 | | | 29,450 | |
| Farms | 5,336 | | | 4,945 | | | 4,790 | |
| Total | 39,857 | | | 37,417 | | | 36,389 | |
________________
(1)Includes employees that are members of labor unions.
We have both unionized and nonunionized facilities in the United States. Approximately 46% of our employees are covered by collective bargaining agreements or are members of labor unions, and 8,359 of our employees are covered by collective bargaining agreements that will expire in 2025. Collective bargaining agreements covering our other employees expire over periods throughout the next several years. We believe that our relationship with our employees is satisfactory.
Workplace Safety
We require strict adherence to our rigorous health and safety policies from every team member and visitor at our facilities. We practice a “stop work authority” policy, which empowers all our team members to halt production, without fear of retribution, if they believe something is unsafe.
We have implemented our Smithfield Injury Prevention System, or SIPS, a comprehensive management system that outlines our safety and health policy requirements and includes rigorous validation of the management process. This validation process promotes compliance with SIPS, safeguarding team members and visitors at our facilities.
Adherence to local, state and federal regulatory compliance is critical for protecting our team, visitors and assets. SIPS is designed to provide the guidance needed to comply with regulatory standards, prevent injuries, manage risks and promote continuous improvement throughout our business. Performance is measured through various metrics, including internal improvement goals and external benchmarks, such as the annual U.S. Bureau of Labor Statistics Report. During 2023, we achieved safety incident rates below industry averages, with a Total Recordable Cases Rate of 2.42, a Total Days Away from Work, with Job Restrictions or Transfer rate of 1.68, and a Days Away from Work (With or Without Job Restriction or Transfer) rate of 0.43, each of which was more than 50% better than the meatpacking industry average.
Culture and Diversity
We are committed to attracting, training and retaining a diverse workforce that is reflective of the marketplace. We strive to implement a company culture that is inclusive, positive and performance oriented.
Our Equal Employment Opportunity Policy affirms our commitment to employing and supporting employees of all races, religions, colors, national origins, genders, sexual orientations, gender identities, ages and other characteristics. We continuously assess our progress in our efforts to promote a diverse and inclusive workforce. Our chief human resource officer is charged with creating and executing a comprehensive talent strategy that aligns Smithfield's business plan with our human resources function and leads our recruiting, retention, training and development and diversity, culture and engagement programs. We value and strive to promote diverse and inclusive representation at all levels across our business. We also continue to take steps to model our leadership team to reflect the diversity within our company and our supply chain.
Insurance
We maintain insurance policies for workers’ compensation and employers’ liability, property, directors and officers and vehicle and general liability on terms that we believe are customary for companies similarly situated. In addition, we maintain excess liability insurance where we reasonably believe it to be cost effective to do so. We are self-insured for certain levels of product recall insurance and employee medical and dental benefits. We believe that our insurance policies provide suitable coverage for the risks inherent to our operations, both in terms of the type of coverage and of the insured amounts.
Information Systems
We use a mix of proprietary and third-party SaaS applications to meet the specialized requirements of our business. These systems are designed to be scalable, enabling the seamless integration of newly acquired entities into our existing operations.
In 2021, we launched a digital strategy to enhance our technology infrastructure, focusing on IT security, cybersecurity, recoverability and scalability. A key investment was the modernization of our data management platform. This new technology has provided us with advanced analytics, offering improved business insights. Recent investments in our supply, demand and production planning systems have enabled us to further enhance our customer experience via improved forecasting accuracy and fulfillment efficiency. We have been continuously advancing our digital strategy by streamlining our applications footprint for greater efficiency and investing in technology improvements to refine our analytics and expand task automation.
We operate a single enterprise resource planning, or ERP, system covering the majority of our Fresh Pork and Packaged Meats segments’ facilities for operations, procurement, receiving, warehousing, inventory management and order processing. We also have an integrated suite of supporting financial, demand planning and material requirements planning software modules that are effectively integrated into our core ERP platform.
Cybersecurity
Cybersecurity and the protection of our information and the information of our customers is a top priority for us. Safeguarding the information of our employees, customers, and partners is critical to our operations, and we are committed to utilizing leading-edge technology to support our mission of producing good food the right way.
Through regular investment in state-of-the art tools and advanced analytics, our global cybersecurity team strives to:
•identify potential vulnerabilities and service disruptions proactively;
•monitor, test and secure key networks and services;
•enable prompt recovery of operations following cyber disruptions; and
•provide guidance and oversight for cyber resilience in critical business areas.
Our policies and procedures continue to evolve to promote compliance with the rapidly developing laws and regulations governing the privacy and protection of personal and corporate information. We are committed to expanding our cyber behavior management and training initiatives, which is a comprehensive program designed to enhance cyber awareness and equip our staff to become cyber-proficient digital citizens. These investments in cybersecurity have led to more comprehensive threat analysis, faster incident response and proactive risk mitigation.
Intellectual Property
We rely on a combination of intellectual property laws, internal procedures and policies and contractual provisions to protect our intellectual property and proprietary rights. We own and use numerous retail and foodservice brands, which are registered trademarks or are otherwise protected under applicable intellectual property laws, including, for example: Smithfield, Eckrich, Farmland, Armour, Farmer John, Kretschmar, John Morrell,
Cook’s, Gwaltney, Carando, Margherita, Curly’s and Smithfield Culinary. We pursue the registration of certain of our trademarks in the United States and in certain locations outside the United States to protect our brand names, products, and services around the world. Trademark registrations can generally be renewed as long as the trademarks are in use.
In December 2012, we entered into a license agreement with Nathan’s Famous. The agreement expires in March 2032. Pursuant to the agreement, we have the exclusive right and obligation within the United States, Canada and Sam’s Clubs in Mexico (i) to manufacture, distribute, market and sell “Nathan’s Famous” branded hot dogs, sausages and corned beef and certain other ancillary products through retail channel, and (ii) to manufacture and distribute “Nathan’s Famous” branded hot dog and sausage products in bulk for use in the food service industry. The agreement also grants us the non-exclusive right and obligation to supply “Nathan’s Famous” natural casing and skinless hot dogs in bulk for use in the “Nathan’s Famous” restaurant system within the United States and to supply to Nathan’s licensees in foreign territories, where importation is permitted. We pay an agreed royalty rate based on a percentage of net sales, subject to a minimum annual guaranteed royalties in the case of subparagraph (i) above. We do not have any patents, licenses, or franchises, other than the license agreement with Nathan’s Famous, that are material individually or in the aggregate to our business.
We believe that registered and licensed trademarks have been important to the success of our branded fresh pork and packaged meats products. We consider these marks and the accompanying goodwill and customer recognition valuable and material to our business. Our brands are among the leaders across several of the largest packaged meats product categories in the United States.
For information regarding additional trademark license agreements, see “Certain Relationships and Related Party Transactions—Historical Agreements with WH Group—European Carve-out—Trademark License Agreements and Related Agreements.”
In our hog production operations, we use genetic lines of breeding stock that we own, which are considered trade secrets, as well as genetic lines that we license from third parties. We also sublicense rights to some of our strategic hog production partners.
Sustainability
We maintain a strong commitment to sustainability, pursuing rigorous voluntary goals and setting long-term targets across a sustainability platform encompassing seven core pillars: animal care; diversity, equity and inclusion; environmental stewardship; food safety and quality; health and wellness; helping local communities and worker health and safety. We are working to meet the rising environmental and social challenges the protein sector faces. At the heart of our business is a goal to provide protein to a growing world population while maintaining responsible stewardship of the planet’s finite resources. Our culture of “Good Food. Responsibly.” pushes us to partner with many stakeholders to innovate and address these issues.
Respect for our animals, people, the environment and communities is at the core of how we operate. Since our inception, we have been committed to providing good food and dedicated to animal care, community support, employee safety, environmental stewardship and food safety and quality programs. More than 20 years ago, we started to develop a comprehensive animal care management system on our farms. We were also an early industry mover in group housing for pregnant sows on company-owned farms. To reduce our impact on the environment, we have invested in biogas joint ventures that capture and utilize methane produced on certain company-owned and contract farms as a renewable source of energy. We hold a one-third interest in Monarch, a joint venture that currently operates renewable natural gas, or RNG, projects at nine of our company-owned farms in Missouri. In 2022, TPG Rise Climate invested in Monarch, helping us to further scale the business. We also hold a 50% interest in Align, a joint venture that is developing RNG projects on at a total of six of our company-owned farms and contract farms in North Carolina and Virginia.
We continuously strive for transparency in our sustainability reporting and report in accordance with the Global Reporting Initiative and in consideration of the International Financial Reporting Standards Foundation SASB Standards.
The development and support of the communities where our employees live and work is a core value and component of our sustainability program. Over the last ten years, we have contributed more than $320 million in cash and in-kind donations to fight hunger, advance education and support the vitality of our local communities.
Quality Assurance and Food Safety
Producing safe, wholesome products for our customers and ultimate consumers is our focus, and we operate under programs and policies that promote regulatory compliance and food safety and quality at every step of our value chain.
Regulation
We are subject to extensive food safety regulation, including the Federal Meat Inspection Act of 1906, the U.S. Packers and Stockyards Act of 1921, the Food, Drug and Cosmetic Act of 1938, the Nutrition Labeling and Education Act of 1990, the USDA Pathogen Reduction: Hazard Analysis and Critical Control Point Systems Rule of 1996, the Public Health Security and Bioterrorism Preparedness & Response Act of 2002, the Food Safety Modernization Act of 2011 and other rules and regulations promulgated by the FDA, the USDA and the sub-branches of these regulatory bodies relating to the production and introduction of human foods to commerce. These comprehensive and evolving regulatory programs govern, among other things, the manufacturing, composition, ingredients, labeling, packaging and safety of food, including compliance with specific current good manufacturing practice regulations.
Our processing plants are subject to on-site examination, inspection and regulation by the USDA. The FDA inspects various of our processing plants that produce snacking foods, heparin products, and pet food and treats in the United States, as well as the production of our feed mills. We are subject to recalls of our meat products in the event of suspected contamination or adulteration that could constitute a food safety hazard. We maintain a rigorous program of interventions, inspections and testing to reduce the likelihood of food safety hazards.
Compliance with federal, state and local regulation is costly and time-consuming but remains one of our top priorities. Regulatory enforcement actions for violations of federal, state and local regulations may include seizure and condemnation of products, product recalls, cease and desist orders, injunctions and monetary, civil or criminal penalties.
Policies and Procedures
Our plants, as well as those of our hog suppliers, have all developed quality programs following the standards set in the USDA’s Process Verified Program, or PVP. Our PVP programs monitor aspects of traceability, country of origin and Transport Quality Assurance status of drivers. In addition, all of our applicable U.S. facilities are certified to a Global Food Safety Initiative, or GFSI benchmarked standard, and all of our food safety plans and policies meet the requirements of a GFSI benchmarked standard. We also require our ingredient suppliers to undergo annual food safety audits, the majority of which, to our knowledge, meet the requirements of a GFSI benchmarked standard.
To drive adherence to these programs and policies, we employ data analytics to monitor food safety indicators and take corrective action if necessary. As part of our quality and food safety program, our professionals continuously work with the applicable regulatory agencies, including the USDA’s Food Safety and Inspection Service, the FDA and industry associations on projects aimed at improving food safety and increasing consumer protection to stay informed of emerging issues and improve our quality and food safety program.
Animal Care
We are committed to proper animal care and have a moral and ethical obligation to the humane treatment of animals. We believe our hogs can and should be raised, transported and processed using procedures that are safe and free from cruelty and neglect.
Regulation
We are subject to regulations relating to animal treatment, including the Humane Methods of Slaughter Act of 1978 governing our processing plants. Our processing facilities are subject to regular on-site examination, inspection and regulation by the USDA, and regular internal and third-party audits are conducted throughout the year. We are also subject to state laws governing the care of livestock that is used in certain meat products sold within those states, including California Proposition 12 and Massachusetts Question 3.
We believe that we are in substantial compliance with all applicable laws and regulations relating to the operations of our facilities. In addition to complying with federal laws and regulations pertaining to hog production, we are also required to comply with local municipality (city and county), as well as state regulations, including the registration and licensing of our facilities, enforcement by state health agencies of various state standards and inspection of our facilities.
Policies and Procedures
Our comprehensive, systematic animal care management program to monitor and measure the well-being of our hogs on company-owned and contract farms was developed in consultation with experts in animal behavior and handling. The program guides the proper and humane care of our animals at every stage of their lives, from gestation to transport to our processing plants. All farm employees and contract farmers are required to employ the methods and techniques of the management system and verify their compliance.
Our Animal Care Policy underscores our commitments to provide:
•shelter that is designed, maintained and operated to meet the animals’ needs;
•access to adequate water and high-quality feed to meet nutritional requirements;
•humane treatment of animals that enhances their well-being and complies with all applicable laws and regulations;
•identification and appropriate treatment of animals in need of health care; and
•use of humane methods to euthanize sick or injured animals not responding to care and treatment.
Biosecurity, or procedures to prevent the spread of disease to our farms, is a critical element of our program to safeguard the health and well-being of our animals. Our standard operating procedure covers the animal production process at individual farms, as well as the movement of vehicles, animals, personnel and equipment between farms. For example, employees and visitors must “shower in” and change into clean clothing before entering all sow farms and must also “shower out” prior to leaving. In addition, equipment and supplies delivered to sow farms, as well as vehicles, must be disinfected prior to being allowed inside the farm complex.
Since 2009, all company-owned and contract farms have been certified by the National Pork Board’s Pork Quality Assurance Plus (PQA Plus®) program that are conducted every three years. Our company-owned and contract farms undergo on-farm site assessments every other year and are subject to random third-party audits.
In January 2014, we announced the recommendation that all our contract sow growers join with us in converting their facilities to group housing systems for pregnant sows. In December 2017, we completed a 10-year program to phase out individual gestation stalls at our company-owned sow farms and replace the gestation stalls with group pens for all pregnant sows at our U.S. company-owned farms. Altosano has also completed its conversion to group housing facilities for our Mexican hog production operations. We asked contract sow growers to convert by 2022 and offered a sliding scale of incentives to accelerate that timetable. Growers who commit to convert to group housing will receive contract extensions upon completion of the conversion.
Other Regulation
In addition to the various laws and regulations described above related to quality and food safety and animal care, we are subject to various laws and regulations administered by federal, state and other government entities in the United States and internationally, governing, among other things, environmental protection, worker safety, storage and transportation of our products, including governmental regulations issued by the EPA, OSHA, the Center for Disease Control and the state and local regulatory authorities relating to handling and discharge of waste water, storm water, air emissions, treatment, storage and disposal of agricultural and food processing wastes, handling of hazardous substances, remediation of contaminated soil, surface water and groundwater and the use and maintenance of refrigeration systems, including ammonia-based chillers, noise, odor and dust management, the operation of mechanized processing equipment and other operations.
We follow a number of other policies and protocols to reduce the impact of our hog production operations on the environment, including:
•the employment of environmental management systems;
•ongoing employee training regarding environmental controls;
•walk-around inspections at all sites by trained personnel;
•formal emergency response plans that are regularly updated; and
•collaboration with manufacturers regarding testing and developing new equipment.
Hog production facilities generate significant quantities of manure, which must be managed properly to protect public health and the environment. We track the best technologies available and economically feasible for the management of swine manure, which require permits under state law and, in some instances, federal law. These permits impose standards and conditions on the design and operation of the systems to protect public health and the environment and can also impose nutrient management planning requirements depending on the type of system utilized. In addition, our hog production facilities have been designed to meet or exceed all applicable zoning and other government regulations. These regulations require, among other things, maintenance of separation distances between farms and nearby residences, schools, churches, public use areas, businesses, rivers, streams and wells and adherence to required construction standards.
New or more stringent environmental laws or regulations that impose additional requirements on our operations or on us could increase the cost of doing business for us. For example, in January 2024, the EPA published draft revised Effluent Limitations Guidelines, or ELGs, for wastewater discharges of meat and poultry facilities. The draft proposal includes a number of options for revised ELGs that the EPA is evaluating. For existing direct dischargers of wastewater, including meat processors such as us, the EPA’s preferred option is the imposition of more stringent effluent limitations for nitrogen and ammonia and, for the first time, limitations for phosphorus. This option would also establish, for the first time, pretreatment standards for oil and grease, total suspended solids and biochemical oxygen demand for these dischargers. In addition, the EPA is proposing an amendment to add E. coli bacteria limitations for direct dischargers. Another option the EPA is considering would extend the nitrogen and phosphorus limitations to indirect dischargers, which would also cover many of our facilities.
It is unclear when the EPA will issue final ELGs or to what extent they will differ from what the EPA has proposed. Significant upgrades related to our direct and indirect wastewater discharge streams, including to treatment systems at our Sioux City and Denison, Iowa, Sioux Falls, South Dakota and Tar Heel, North Carolina centers, would be required to meet the standards as proposed, which we estimate would require material capital expenditures in the aggregate.
For more information regarding environmental regulation of our operations, see “Risk Factors—Risks Relating to Government Regulations—Governmental authorities may take further action restricting our ability to produce and/or sell livestock or adopt new regulations impacting our production or processing operations, which could adversely affect our business.”
Our Mexican operations also are subject to regulation by Mexican environmental authorities. The Mexican federal, state and local authorities may, from time to time, adopt revisions to environmental rules and regulations, and/or changes in the terms and conditions of our environmental permits, with which we must comply. Our Mexican processing plants are also subject to on-site examination, inspection and regulation by Mexican governmental agencies that perform functions similar to those performed by the USDA and the FDA. We believe that we are in substantial compliance with all applicable laws and regulations relating to the operations of our facilities.
It is our policy to comply with all applicable law in the jurisdictions in which we do business. We believe that we are in substantial compliance with applicable laws and regulations. We use internationally recognized management systems to manage many of our regulatory and compliance programs including, but not limited to, the International Organization for Standardization, or ISO, 14001:2004 standard to manage and optimize environmental performance. We were the first U.S. livestock and major international meat processor in industry to achieve ISO 14001:2004 certification for our hog production and processing facilities.
Legal and Regulatory Proceedings
From time to time, we are involved in various legal and/or administrative proceedings and subject to claims that arise in the ordinary course of business. We do not believe the ultimate liability, if any, for outstanding proceedings or claims, individually or in the aggregate, in excess of amounts already provided in our consolidated financial statements, will have a material adverse effect on our business, financial condition or results of operations. It is reasonably possible that an adverse determination might have an impact on a particular period. Regardless of the outcome, litigation has the potential to have an adverse impact on us because of defense and settlement costs, diversion of management resources, adverse reputational impact, and other factors. See “Risk Factors—Risks Relating to Government Regulations—We are, and could become, subject to legal proceedings and regulatory investigations that may result in significant expenses, fines and reputational damage.” and “Risk Factors—Risks Relating to Our Business and Operations—We are subject to various risks relating to worker employment and health and safety.”
Antitrust Price-Fixing Litigation
The company has been named as one of 16 defendants in a series of class actions filed in 2018 in the United States District Court for the District of Minnesota alleging antitrust violations in the pork industry. The class cases were filed by three different groups of plaintiffs. In all of these cases, the plaintiffs alleged that starting in 2009 and continuing through at least June of 2018, the defendant pork producers agreed to reduce the supply of hogs in the United States in order to raise the price of hogs and all pork products. The plaintiffs in all of these cases also challenged the defendant pork producers’ use of benchmarking reports from defendant Agri Stats, Inc., alleging that the reports allowed the pork producers to share proprietary information and monitor each producer’s compliance with the supposed agreement to reduce supply. Payments in the aggregate amount of $194 million were made by us to settle all class claims.
In addition to the class actions, the company has been named as a defendant in similar antitrust lawsuits and related claims brought by a number of individual parties who opted out of the classes. The plaintiffs in the non-class cases assert the same or similar antitrust claims as the plaintiffs in the class actions. The company has entered into negotiations with many of these claimants and has settled certain of these cases. Currently, 22 of these cases are pending against the company.
The Attorneys General for the states of New Mexico and Alaska and the Commonwealth of Puerto Rico have filed similar complaints on behalf of their respective states, territories, agencies and citizens. The company has settled with Puerto Rico and Alaska. The company intends to vigorously defend against the remaining claims.
Antitrust Wage-Fixing Litigation
On November 11, 2022, our company and our wholly owned subsidiary, Smithfield Packaged Meats Corp., were named as two of the numerous defendants in a purported class action complaint filed in the United States District Court for the District of Colorado alleging wage-fixing violations in the red meat industry. The plaintiffs allege that the defendants, most of whom operate beef or pork processing plants, conspired to suppress wages paid to
plant workers in the United States in violation of the antitrust laws. The plaintiffs sought damages on behalf of all employees of defendants and their subsidiaries from January 1, 2014, to the present. The plaintiffs also sought treble damages and attorneys’ fees. The defendants filed motions to dismiss the complaint, which were largely denied by the court on September 27, 2023. The plaintiffs subsequently amended their complaint adding additional defendants, including our wholly owned subsidiary, Murphy-Brown of Missouri, LLC (which has been dismissed voluntarily), and expanding the class period back to 2000.
Since the case was filed, several defendants have settled. On April 5, 2024, the remaining defendants moved to dismiss the amended complaint. We intend to vigorously defend against these claims.
Maxwell Foods Litigation
On August 13, 2020, Maxwell Foods, LLC, or Maxwell, filed a complaint against our company in the General Court of Justice, Superior Court Division for Wayne County, North Carolina. The complaint alleged that Smithfield breached the Production Sales Agreement, or the PSA, between the parties (as well as the duty of good faith and fair dealing): (i) by failing to provide Maxwell with the same pricing as other major hog suppliers in violation of a purported “Most-Favored-Nation Provision” found in a December 6, 1994 letter to Maxwell, (ii) by failing to comply with an implicit duty to negotiate the PSA to provide alternative pricing to Maxwell when the Iowa-Southern Minnesota market allegedly ceased to be viable; and (iii) by failing to purchase Maxwell’s entire output of hogs since April 2020.
We filed a notice of removal to the United States District Court of the Eastern District of North Carolina. We also filed a motion to dismiss several of Maxwell’s claims. On February 22, 2021, the U.S. District Court granted Maxwell’s motion to remand the case to the Superior Court of Wayne County and left Smithfield’s partial motion to dismiss the complaint for consideration by the state court in Wayne County.
On March 1, 2021, Maxwell filed an amended complaint, which added a claim under the North Carolina Unfair and Deceptive Trade Practices Act, or the UDTPA. We filed a notice of designation seeking assignment of the case to the North Carolina Business Court. Maxwell objected to such designation, and on April 13, 2021 the Business Court overruled Maxwell’s objection.
The Business Court also dismissed two of Maxwell’s claims: the implied duty to negotiate claim and the UDTPA claim. Maxwell subsequently filed another amended complaint adding a fraudulent concealment claim and a new breach of contract claim, as well as a request for punitive damages. The court dismissed the fraudulent concealment claim and the request for punitive damages. The three remaining claims, all for breach of contract, are: (1) the claim under the “Most-Favored-Nation Provision,” (2) the claim that we failed to purchase Maxwell’s entire output of hogs since April 2020, and (3) the claim that from time to time, we would calculate Maxwell’s payment for a delivery of hogs using an average of the preceding week’s weight rather than the actual weights of the hogs being delivered.
The parties filed cross-motions for summary judgment, and on December 30, 2024, the Business Court issued decisions on these motions. The rulings on the summary judgment motions remain under seal. We intend to vigorously defend against the remaining claims and do not believe that this matter will have a material adverse effect on our results of operations or financial condition.
Murphy-Brown Consent Decree
In March 2006, we entered into a consent decree that settled two citizen lawsuits alleging, among other things, violations of certain environmental laws relating to wastewater management practices. The consent decree provides, among other requirements, that our subsidiary, Murphy-Brown LLC, must undertake a series of measures designed to enhance the performance of the swine waste management systems on approximately 244 company-owned farms in North Carolina and thereby reduce the potential for surface water or groundwater contamination from these farms. We believe that Murphy-Brown has successfully completed a number of the measures required by the consent decree; Murphy-Brown expects to fulfill its remaining consent decree obligations, at which time it will move for termination of the decree.
Premium Standard Farms Consent Judgment and Decree
Prior to our acquisition of Premium Standard Farms, or PSF, PSF entered into a consent judgment with the State of Missouri and a consent decree with the federal government and a citizen group. The judgment and decree generally required that PSF pay penalties to settle past alleged regulatory violations, utilize new technologies to reduce nitrogen in the material that it applies to farm fields and research, develop and implement “Next Generation Technology” for environmental controls at certain of its Missouri farm operations. We successfully completed the measures called for in the state judgment and the state court terminated the judgment in the fall of 2012. We have also completed all but one of the measures called for in the federal consent decree, which we expect to complete by the end of 2024, but we are unable to predict at this time when the consent decree will be terminated.
North Carolina Voluntary Settlement
In July 2000, we voluntarily entered into an agreement with the Attorney General of North Carolina, or the NC AG Agreement, designed to enhance water quality in the State of North Carolina through a series of initiatives while protecting access to swine operations in North Carolina. One of the features of the NC AG Agreement required us to contribute a total of $50 million to the Attorney General of North Carolina who administers a program with our input and recommendations to allocate those funds to enhance the environment of the state, including eastern North Carolina, to obtain environmental easements, and to construct or maintain wetlands and such other environmental purposes. We began annual contributions of $2 million in 2001, deferred annual payments in 2011 and 2012 and re-started our annual $2 million payment in 2013. The final payment under the NC AG Agreement is scheduled to occur in 2026.
MANAGEMENT
Executive Officers
The following table sets forth the name, age and position of the individuals who are expected to continue to serve as our executive officers upon completion of this offering, followed by a biography of each executive officer.
| | | | | | | | | | | | | | |
| Name | | Age | | Position |
| C. Shane Smith | | 51 | | President, Chief Executive Officer and Director |
Mark L. Hall | | 55 | | Chief Financial Officer |
Keller D. Watts | | 53 | | Chief Business Officer |
| Doug Sutton | | 54 | | Chief Manufacturing Officer |
Steven France | | 58 | | President, Packaged Meats |
| Donovan Owens | | 53 | | President, U.S. Fresh Pork |
Kraig A. Westerbeek | | 53 | | President, Hog Production |
I. Jay Bennett | | 55 | | Chief Human Resources Officer |
Tennille J. Checkovich | | 48 | | Chief Legal Officer |
C. Shane Smith has served as President and Chief Executive Officer of Smithfield and as a member of the board of directors of WH Group and as a member of the board of directors of our company since July 2021. He joined our company in 2003 and has served in a variety of leadership roles for our U.S. and international operations since then. Mr. Smith has also served as an executive director at WH Group since August 2021. He served as our Chief Strategy Officer from January 2021 to July 2021. In that role, Mr. Smith was also responsible for our hog production operations, Smithfield Renewables and our European and Mexican operations. Prior to that, Mr. Smith served as Executive Vice President of our European operations from April 2019 to January 2021, President of our Romanian operations from November 2017 to April 2019 and Chief Financial Officer of our European operations from September 2012 to April 2019. Mr. Smith holds a Bachelor of Science in Accounting from Mount Olive College and a Master of Business Administration (MBA) from the College of William and Mary in Virginia.
Mark L. Hall has served as our Chief Financial Officer since January 2023. Mr. Hall joined our company in 2014 as the Vice President, Finance for the John Morrell Food Group. He served as Executive Vice President of Finance from December 2020 to January 2023, overseeing financial planning and analysis, mergers and acquisitions, operations, logistics, trade spend finance, data analytics and project and capital management in support of the U.S. business. He served as Senior Vice President, Finance, from 2019 to late 2020, where he oversaw financial operations for our fresh pork and packaged meats businesses. He served as the Vice President, Finance for our combined packaged meats businesses from 2015 to 2019. Mr. Hall has over 25 years of industry experience, serving in roles of increasing responsibility at The Quaker Oats Company and McCain Foods USA prior to joining our company in 2014. He began his career in public accounting at Arthur Andersen LLP and worked in Equity Research for Legg Mason Wood Walker, Inc. Mr. Hall holds a Bachelor of Business Administration from the University of Iowa and a Master of Business Administration (MBA) from the University of Maryland. Mr. Hall is a certified public accountant registered in the State of Illinois.
Keller D. Watts has served as our Chief Business Officer since January 2023. He has been with our company since 1994. He served as Smithfield Foods Executive Vice President, Packaged Business Management and Supply Planning from August 2021 to January 2023, Senior Vice President of Business Management Retail from May 2016 to August 2021, Senior Vice President, Packaged Business Development for Smithfield Farmland subsidiary from September 2014 to May 2016, Senior Vice President, Packaged Business Development for Smithfield Farmland from December 2008 to September 2014, Vice President, Packaged Meats from June 2006 to December 2008 and Vice President, Product Management for subsidiary Smithfield Packing from May 2001 to December 2008. Over the course of his career, Mr. Watts has held roles in sales, marketing, revenue management, supply chain, strategic sourcing, and R&D. Mr. Watts holds a Bachelor of Science in Marketing Management from Virginia Polytechnic Institute and State University and a Master of Business Administration (MBA) from Western Governors University.
Doug Sutton, Ph.D. has served as our Chief Manufacturing Officer since January 2023. He joined our company in 2001. He served as Executive Vice President, Manufacturing from August 2021 to January 2023, Vice President, Research and Development from January 2012 to August 2021 and Director, Research Development from January 2001 to January 2012. Dr. Sutton holds a Bachelor of Animal Science and a Master of Animal Science, each from Oklahoma State University, and a Ph.D. in Animal Science from University of Illinois Urbana-Champaign.
Steven France has served as our President of Packaged Meats since January 2023. Mr. France joined our company in 2002. He has experience spanning manufacturing, business management, transportation and warehousing, sales and marketing and customer service. He served as Executive Vice President, Packaged Meats from December 2020 to January 2023, Senior Vice President of Sales, Packaged Meats from December 2018 to December 2020 and Vice President, Deli Sales from February 2018 to December 2018. Mr. France began his career at Conagra Brands, Inc. and spent several years in various management roles at Michael Foods, Inc. Mr. France holds a Bachelor of Science from The Ohio State University.
Donovan Owens has served as our President of Fresh Pork since May 2023. He joined our company in 1993. He has experience in industrial engineering, fresh pork business management and fresh pork operations. Mr. Owens served as Executive Director of Support Operations for Smithfield Hog Production from May 2022 to April 2023. He led our Tar Heel, North Carolina facility for 12 years initially as Director of Operations from July 2010 to December 2017 and then as Complex Plant Manager from December 2017 to June 2022. He served in various other roles at our company between 1993 and 2010. Mr. Owens holds a Bachelor of Business Administration in Finance from Virginia Polytechnic Institute and State University.
Kraig A. Westerbeek has served as the President of Hog Production since February 2024. He joined our company in 1993. In July 2022, Mr. Westerbeek was named as the Chief Development Officer of Monarch. He served as Vice President, Smithfield Renewables and Hog Production Environmental Compliance from July 2017 to June 2022 and Vice President, Environment and Support Operations from June 2014 to June 2017. Mr. Westerbeek is a past member of the board of directors of the North Carolina Pork Council and NPPC and is a current member of NPPC’s environmental committee, which he previously chaired. Mr. Westerbeek holds a Bachelor of Science in Biological and Agricultural Engineering, Agriculture Systems from North Carolina State University.
I. Jay Bennett has served as our Chief Human Resources Officer since March 2023. Mr. Bennett was previously at Lockheed Martin Corporation where he served as Vice President, Human Resources RMS Lines of Business from February 2022 to March 2023. Prior to that, he was at Sikorsky Aircraft (acquired by Lockheed Martin in 2015) where he served as Vice President, Human Resources from October 2017 to February 2022 and Vice President Human Resources, Operations from July 2014 to October 2017. Prior to that, Mr. Bennett served in various managerial human resources roles at Rolls Royce plc from April 2009 to July 2014. Mr. Bennett previously served in various human resources roles at United Technologies Corporation and General Motors Company. Mr. Bennett holds a Bachelor of Arts in Political Science from DePauw University and a Juris Doctor (JD) from Indiana University Robert H. McKinney School of Law.
Tennille J. Checkovich has served as our Chief Legal Officer since December 2024. She joined our company in 2020 and served as General Counsel from March 2023 to December 2024 and Deputy General Counsel from October 2020 to March 2023. Prior to joining Smithfield, from September 2004 to October 2020, Ms. Checkovich worked at McGuireWoods LLP, where she was a partner in the business and securities litigation department, served on the firm’s Finance Committee and advised corporate clients, including our company, on a range of matters. She previously worked as an associate at Cravath, Swaine & Moore LLP. Early in her career, Ms. Checkovich was a law clerk to the Honorable Barbara S. Jones of the United States District Court for the Southern District of New York. She is the Vice Chair of the Board of the Alliance for the Chesapeake Bay, where she has served on the Governance Committee. Ms. Checkovich holds a Bachelor of Arts in economics from the University of Virginia and a Juris Doctor from Yale Law School.
Directors
The following table sets forth the name, age and position of our current directors and the individuals who are expected to serve as our directors upon completion of this offering, followed by a biography of each director.
| | | | | | | | | | | | | | |
| Name | | Age | | Position |
Long Wan(3)(4)(5) | | 84 | | Chairman |
C. Shane Smith(5) | | 51 | | Chief Executive Officer and Director |
Hank Shenghua He(3)(4)(5) | | 56 | | Director |
Lijun Guo(3)(5) | | 53 | | Director |
Hongwei Wan | | 50 | | Director Nominee |
Xiaoming Zhou(3)(4)(5) | | 38 | | Director Nominee |
Marie T. Gallagher(1)(2) | | 65 | | Director Nominee |
Raymond A. Starling(1)(2)(4) | | 48 | | Director Nominee |
John A. Quelch(1)(2)(3) | | 73 | | Director Nominee |
________________
(1)Independent director under the rules of Nasdaq.
(2)Proposed member of our Audit Committee.
(3)Proposed member of our Compensation Committee.
(4)Proposed member of our Nominating and Governance Committee.
(5)Proposed member of our Executive Committee.
The biography of C. Shane Smith is set forth above in “—Executive Officers.”
Long Wan has served as a member of our board of directors since September 2013. Mr. Wan has served as a director of WH Group since October 2007, as the Chairman of the board of directors since November 2010 and as an Executive Director since December 2013. Mr. Wan has also served as a director of Shuanghui Development since August 2012. Mr. Wan also holds directorships in various subsidiaries of WH Group. He served as the Chief Executive Officer of WH Group from October 2013 to August 2021. He served as the Chairman of the board of directors of Shuanghui Development from August 2012 to August 2024. Mr. Wan has over 50 years of experience in the meat processing industry, and under his leadership, the business under WH Group has grown from a local state-owned enterprise in Henan Province, China into an international company with operations spanning various continents. He was appointed as an Executive Director of the China Meat Association from December 2006 to December 2011 and a senior consultant of the China Meat Association in 2001. Mr. Wan received his professional certificate in Business Management from the Henan University of Animal Husbandry and Economy (previously named the Henan Business College) and was awarded the senior economist professional qualification issued by the Henan Province Advanced Professional Titles Adjudication Committee (Economic Disciplines).
We believe Mr. Wan is qualified to serve as our director because of his extensive experience in the meat processing industry, outstanding accomplishments in the meat industry and his in-depth knowledge of our Company. Mr. Wan is the father of Mr. Hongwei Wan.
Hank Shenghua He has served as a member of our board of directors since January 2016. He has served as our Vice President and Chief Operation Coordinating Officer, among other roles, since January 2014. Mr. He has extensive experience in mechanical engineering and food industry operations. After our Company was acquired by WH Group in 2013, Mr. He played an important role in the post-acquisition transition. Prior to joining our Company, Mr. He served in various positions with Shuanghui Development for more than a decade, including as the assistant to the Chairman of Shuanghui Development from September 2012 to January 2014 and as the Vice President from June 2005 to August 2012. He also served as the manager of Shuanghui Group’s Commerce and Logistic Division from August 2008 to June 2011. Mr. He obtained his Bachelor’s Degree in Engineering from University of Chongqing in China.
We believe Mr. He is qualified to serve as our director because of his exceptional expertise in corporate strategy, communication and leadership.
Lijun Guo has served as a member of our board of directors since May 2015. Mr. Guo has served as an Executive Director of WH Group since December 2013 and as the Chief Executive Officer of WH Group since August 2021. Mr. Guo has also served as a director of Shuanghui Development since August 2021. He also holds directorships in various subsidiaries of WH Group. He also served as an Executive Vice President and the Chief Financial Officer of WH Group from April 2016 to August 2021. Prior to this, Mr. Guo was WH Group’s Vice President and Chief Financial Officer from January 2014 to March 2016 and served as the Deputy Chief Executive Officer from October 2013 to January 2014. Mr. Guo was the Executive Vice President of Shuanghui Development from August 2012 to October 2013. Prior to that, he held various positions in Shuanghui Group, including serving as deputy director, director of the finance department and Chief Financial Officer. Mr. Guo has over 30 years of experience overseeing the financial operations of various companies.
Mr. Guo obtained his adult higher education diploma in financial accounting from Henan Radio and Television University in July 1994 and obtained the completion certificate for the master of business administration program of the Graduate School of Renmin University of China in December 2004. Mr. Guo received his assistant accountant certificate awarded by the Ministry of Personnel of the People’s Republic of China in October 1994.
We believe Mr. Guo is qualified to serve as our director because of his substantial experience in accounting and financial operations and comprehensive knowledge of the industry.
Hongwei Wan will serve as a member of our board of directors upon the pricing of this offering. Mr. Wan Hongwei has served as an Executive Director and the Deputy Chairman of the board of directors of WH Group since August 2021. He has also served as a director of Shuanghui Development since August 2018 and the Chairman of the board of directors of Shuanghui Development since August 2024. He also holds directorships in various subsidiaries of the Group. Mr. Wan Hongwei served as an assistant to the Chief Executive Officer of WH Group from January 2014 to August 2021 and was in charge of WH Group’s public relations department. He served as the Vice Chairman of the board of directors of Shuanghui Development from August 2018 to August 2024. Prior to that, he served as the secretary to the Chairman of Shuanghui Group. Mr. Wan Hongwei holds a Bachelor of Arts from York University in Toronto, Ontario.
We believe Mr. Wan is qualified to serve as our director because of his exceptional expertise in the industry we operate in and comprehensive understanding of our company. Mr. Wan is the son of Mr. Long Wan.
Xiaoming Zhou will serve as a member of our board of directors upon the pricing of this offering. Mr. Zhou has served as the Vice President of WH Group since May 2023, responsible for investment management of WH Group. Mr. Zhou has more than 15 years of experience in investment banking and corporate finance. Prior to joining WH Group, Mr. Zhou worked in BofA Securities, Inc. from May 2015 to May 2023 and most recently served as Managing Director of Global Investment Banking, advising corporate clients on capital raising and merger and acquisition transactions. Prior to that, he served as Vice President of Morgan Stanley’s investment banking division. Mr. Zhou holds a Bachelor in Economics (major in finance) and Bachelor of Science (major in statistics), both from Peking University.
We believe Mr. Zhou is qualified to serve as our director because of his significant knowledge in corporate finance and capital raising, combined with his broad experience in investments in the industry in which we operate.
Marie T. Gallagher will serve as a director upon the pricing of this offering. Ms. Gallagher has spent nearly two decades at PepsiCo, Inc., where she has served as Senior Vice President and Controller since May 2011 after serving in various other roles at PepsiCo since 2005. As PepsiCo’s Chief Accounting Officer, Ms. Gallagher is responsible for PepsiCo’s global financial reporting and Sarbanes-Oxley processes and provides guidance on accounting and business issues, including strategic M&A activity in emerging markets and cybersecurity matters. Prior to joining PepsiCo, Ms. Gallagher served in various control roles of increasing responsibility at Altria Corporate Services, Inc. from 1992 to 2005, ending as Assistant Controller. Ms. Gallagher served as a director of Glatfelter Corporation (NYSE: GLT) from February 2020 to November 2024 where she served as a member of the Audit Committee from February 2020 to February 2021 and the Audit Committee chair and a member of the Nominating and Governance Committee from February 2021 to November 2024. She currently serves on the boards of various not-for-profit
companies. Ms. Gallagher is a Certified Public Accountant and holds a Bachelor’s Degree in Business Administration in Accounting from Pace University.
We believe Ms. Gallagher is qualified to serve as our director because of her significant knowledge in corporate finance, financial reporting and accounting, as well as her broad experience in the food and beverage industry.
Raymond A. Starling will serve as a director upon the pricing of this offering. Mr. Starling has served as General Counsel to the North Carolina Chamber of Commerce and President of the North Carolina Chamber Legal Institute since July 2019. He has also served as Executive Advisor for Aimpoint Research since July 2022. Prior to these roles, Mr. Starling served as Chief of Staff to the U.S. Secretary of Agriculture from June 2018 to June 2019. Mr. Starling also previously served as a principal agriculture advisor to the President of the United States at the White House from February 2017 to June 2018. Mr. Starling served in various roles for North Carolina Speaker of the House and later U.S. Senator Thom Tillis from November 2012 to February 2017, and Mr. Starling served as General Counsel for the North Carolina Department of Agriculture & Consumer Services from February 2007 to November 2012. Prior to his career in public service, Mr. Starling worked as an Associate for Hunton & Williams LLP from August 2003 to February 2007. Mr. Starling has taught several agricultural and food law courses at the University of North Carolina at Chapel Hill and Campbell University, taught a public lawyering course at Regent University and is currently a member of the extended faculty of High Point University School of Law. Mr. Starling holds a Bachelor of Science in Agricultural and Extension Education from North Carolina State University and a Juris Doctor (JD) from the University of North Carolina School of Law.
We believe Mr. Starling is qualified to serve as our director due to his substantial knowledge of the agriculture industry, as well as his broad government and private sector experience.
John A. Quelch will serve as a director effective upon the pricing of this offering. Mr. Quelch has served as the Executive Vice Chancellor of Duke Kunshan University since January 2024. Mr. Quelch has also held professorship positions at Duke Kunshnan University and Duke University Fuqua School of Business since January 2024. He also has served as Chairman of the consulting firm Globalpraxis since January 2023. Mr. Quelch served as Dean and Vice Provost for Executive Education and the Leonard M. Miller University Chair at the University of Miami from July 2017 to December 2023. Between 2013 and 2017, he served as a professor at both Harvard Business School and Harvard T.H. Chan School of Public Health. Mr. Quelch was a Harvard Business School professor between 1979 and 2013, except for serving as Dean, Vice President and Distinguished Professor of International Management of the China Europe International Business School from 2011 to 2013 and Dean of the London Business School from 1998 to 2001. Mr. Quelch has served as an independent director of several publicly traded and private companies in the United States and the United Kingdom, as well as in nonprofit and public agency boards, including as chairman of the Massachusetts Port Authority. Mr. Quelch holds a Bachelor of Arts in Modern History and a Master of Arts from Exeter College, Oxford University and a Master of Business Administration from the Wharton School of Business at the University of Pennsylvania. He also holds a Master of Science in Nutrition Science from T.H. Chan School of Public Health at Harvard University and a Doctor of Business Administration from Harvard Business School.
We believe Mr. Quelch is qualified to serve as our director due to his extensive experience as a director of various public reporting companies, as well as his academic and management expertise.
Composition of the Board of Directors
Our business and affairs are managed under the direction of our board. Upon completion of this offering, the board will consist of nine directors.
In accordance with our amended and restated articles of incorporation, which will become effective immediately prior to the completion of this offering, our board will be divided into three classes of directors, with staggered three-year terms, denominated as class I, class II and class III. As a result, approximately one-third of the board will be elected each year. The class I directors, whose terms will expire at the first annual meeting of our shareholders following the completion of this offering, will be Mr. Smith, Mr. Zhou and Mr. Quelch. The class II directors, whose terms will expire at the second annual meeting of our shareholders following the completion of this offering, will be Mr. Long Wan, Mr. He and Mr. Starling. The class III directors, whose terms will expire at the third
annual meeting of our shareholders following the completion of this offering, will be Mr. Guo, Mr. Hongwei Wan and Ms. Gallagher.
We expect that any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our board into three classes with staggered three-year terms may delay or prevent a change of our management or a change of control. See “Description of Capital Stock—Election and Removal of Directors; Vacancies.”
We also have entered into a shareholders agreement with WH Group, which grants WH Group certain rights with respect to the composition of our board. For so long as WH Group beneficially owns more than 50% of our outstanding common stock, it will be entitled to nominate for election to our board a majority of the directors on our board and control the composition of our board and the approval of actions requiring shareholder approval through their voting power. If WH Group ceases to own a majority of our common stock, for so long as WH Group continues to own at least 10% of our outstanding common stock, it will be entitled to nominate for election to our board a number of the total number of directors entitled to serve on the board proportionate to the percentage of our outstanding common stock beneficially owned by WH Group, rounded up to the nearest whole number. Thereafter, WH Group will no longer have any right to nominate for election to our board directors to serve on the board under the shareholders agreement. See “Certain Relationships and Related Party Transactions—Relationship with WH Group Following this Offering.”
Controlled Company Exemption
Upon completion of this offering, WH Group will own % of the voting power of our shares of common stock eligible to vote in the election of our directors (or % if the underwriters exercise in full their option to purchase additional shares of our common stock). As a result, we will be a “controlled company” as defined under the corporate governance rules of Nasdaq and, therefore, will qualify for exemptions from certain corporate governance requirements of Nasdaq. Accordingly, we have elected not to comply with the requirements that:
•a majority of our board consists of independent directors;
•we have a nominating and corporate governance committee that is composed entirely of independent directors;
•we have a compensation committee that is composed entirely of independent directors; and
•we conduct an annual performance evaluation of the Nominating and Governance and Compensation committees.
The “controlled company” exemption does not modify the independence requirements for the Audit Committee, and we intend to comply with the applicable requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and the corporate governance requirements of Nasdaq within the applicable transition periods. As a result, we expect that the Audit Committee will be composed of (1) at least one independent director upon the listing of our common stock, (2) a majority of independent directors within 90 days of listing and (3) exclusively independent directors within one year of listing. Upon the completion of this offering, we expect the Audit Committee will be composed exclusively of independent directors. See “—Committees of the Board of Directors—Audit Committee.”
In the event that we cease to be a “controlled company,” we will be required to fully implement the corporate governance requirements of Nasdaq within the applicable transition periods specified in the rules of Nasdaq. There is no single shareholder or group of shareholders which owns 50% or more of the voting power of WH Group as of the date of this prospectus. As a result, WH Group would not be considered a controlled company within the meaning of the corporate governance standards of Nasdaq.
Director Independence
The board has undertaken a review of the independence of each of our directors. Based on information provided by our directors concerning their background, employment and affiliations, the board has determined that Ms. Gallagher, Mr. Starling and Mr. Quelch qualify as “independent” under the rules of Nasdaq. In assessing the independence of each of our directors, the board considered the relationships that each director has with us and with WH Group as well as all other facts and circumstances that the board deemed relevant to assess the independence of each of our directors.
The board will assess, at least annually, the independence of each of our directors and make a determination as to which of our directors are independent. To assist the board in making this determination, we have adopted Standards of Independence as part of our Corporate Governance Guidelines. The Standards of Independence conform to, or are stricter than, the independence standards of Nasdaq and identify, among other things, material business, charitable and other relationships that could interfere with a director’s ability to exercise independent judgment.
Committees of the Board of Directors
Effective immediately prior to the listing of our shares on the Nasdaq Global Select Market, the board will have the following standing committees: (1) the Audit Committee, (2) the Compensation Committee, (3) the Nominating and Governance Committee and (4) the Executive Committee. The board will adopt a written charter for each committee and these charters will be available on our website at www.smithfieldfoods.com. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus, and you should not rely on any such information in making an investment decision to purchase shares of our common stock.
Audit Committee
The initial members of the Audit Committee will be Ms. Gallagher, Mr. Starling and Mr. Quelch, and Ms. Gallagher will serve as Chair of the Audit Committee. The board has determined that each of the members of the Audit Committee is independent under the rules of Nasdaq and under Rule 10A-3 under the Exchange Act and that Ms. Gallagher is an “audit committee financial expert” as defined under the rules of the SEC. The responsibilities of the Audit Committee will include:
•reviewing the audit plans and findings of our independent registered public accounting firm and our internal audit and risk review staff, as well as the results of regulatory examinations, and tracking management’s corrective action plans where necessary;
•reviewing our combined financial statements, including any significant financial items and/or changes in accounting policies, with our senior management and independent registered public accounting firm;
•reviewing our financial risk and control procedures, compliance programs and significant tax, legal and regulatory matters;
•exercising the sole discretion to appoint annually our independent registered public accounting firm, evaluate its independence and performance and setting clear hiring policies for employees or former employees of the independent registered public accounting firm; and
•reviewing and approving in advance any proposed related person transactions.
Compensation Committee
The initial members of the Compensation Committee will be Mr. Long Wan, Mr. Guo, Mr. He, Mr. Zhou and Mr. Quelch, and Mr. Long Wan will serve as Chair of the Compensation Committee. The responsibilities of the Compensation Committee will include:
•establishing our executive compensation philosophy and principles;
•reviewing and approving the compensation for our executive officers;
•administering our equity incentive plans;
•overseeing the design and management of the various pension, long-term incentive, savings, health and benefit plans that cover our employees; and
•reviewing the compensation for our non-employee directors and recommending compensation for approval by the full board.
Nominating and Governance Committee
The initial members of the Nominating and Governance Committee will be Mr. Long Wan, Mr. He, Mr. Zhou and Mr. Starling, and Mr. Long Wan will serve as Chair of the Nominating and Governance Committee. The responsibilities of the Nominating and Governance Committee will include:
•identifying, evaluating, and recommending to our board individuals qualified to become new directors, consistent with criteria approved by our board;
•reviewing the qualifications of incumbent directors to determine whether to recommend them for reelection at our next annual meeting of the shareholders;
•identifying, evaluating, and recommending to our board to appoint those directors that are qualified to serve on any committee of our board;
•reviewing and recommending to our board corporate governance principles applicable to us; and
•overseeing the evaluation of our board.
Executive Committee
The initial members of the Executive Committee will be Mr. Long Wan, Mr. Guo, Mr. He, Mr. Smith and Mr. Zhou, and Mr. Guo will serve as Chair of the Executive Committee. The Executive Committee will be empowered to exercise the authority of the board between meetings in accordance with and subject to the limitations set forth in its written charter.
Compensation Committee Interlocks and Insider Participation
During 2024, we were not a standalone company, and we did not have a compensation committee or any other committee serving a similar function. Decisions with respect to the compensation for that fiscal year of the individuals who will serve as our executive officers upon completion of this offering were made by WH Group, as described in “Executive Compensation.”
Corporate Governance Guidelines
Effective immediately prior to the listing of our shares on the Nasdaq Global Select Market, the board will adopt Corporate Governance Guidelines to assist it in guiding our governance practices. Our Corporate Governance Guidelines are required to be reviewed annually by the Nominating and Governance Committee and may be amended by the board from time to time. Our Corporate Governance Guidelines will address a number of topics, including responsibilities of the board, director qualifications, rights of the board, rights of our shareholders, election of directors, board committees, board and board committee performance evaluations, director orientation, executive performance evaluations, succession planning and stock ownership guidelines. Our Corporate Governance Guidelines will be available on our website at www.smithfieldfoods.com. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus, and you should not rely on any such information in making an investment decision to purchase shares of our common stock.
Board of Directors Oversight of Risk Management
The board will be responsible for overseeing senior management’s execution of its risk management duties and for assessing its approach to risk management. The board’s oversight of risk is an integral element of its oversight responsibilities and seeks to ensure that senior management has processes in place to appropriately identify and manage risk. We expect that the board will actively engage with senior management to understand and oversee our most significant risks, including in the following ways:
•The board will review and discuss strategic, operational, financial and reporting risks as well as non-financial risks including strategic, operational, compliance, environmental, social, human capital management and cybersecurity risks.
•The board and its applicable committees will receive regular updates from management regarding various enterprise risk-management issues and risks related to our business segments, including risks related to litigation, product quality and safety, cybersecurity, reputation, human capital, diversity, equity and inclusion and environmental sustainability.
•Independent directors will hold regular executive sessions without any non-independent directors or members of management present to discuss risks facing us and our risk-management practices and, with respect to certain board committees, independent directors will also meet in private session with management and compliance leaders.
•The board will consult with external advisors, including outside counsel, consultants, auditors and industry experts, to ensure that it is well informed about the risks and opportunities facing us.
•The board will review feedback provided by shareholders to ensure that it understands shareholder perspectives and concerns.
Code of Ethics and Business Conduct
Effective immediately prior to the listing of our shares on the Nasdaq Global Select Market, we will adopt an amended Code of Ethics and Business Conduct that applies to all of our directors, officers and employees, including our chief executive officer, chief financial officer and chief accounting officer. Our Code of Ethics and Business Conduct is a “code of ethics,” as defined in Item 406(b) of Regulation S-K. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our website.
Our amended Code of Ethics and Business Conduct will be available on our website at www.smithfieldfoods.com. The information contained on, or that can be accessed through, our website is not part of, and is not incorporated into, this prospectus, and you should not rely on any such information in making an investment decision to purchase shares of our common stock.
EXECUTIVE AND DIRECTOR COMPENSATION
Compensation Discussion and Analysis
Executive Summary
As a wholly owned subsidiary of WH Group, we have historically not had an independent board or compensation committee to determine the compensation of our named executive officers, or NEOs. Such determinations have historically been made by the board of directors of WH Group, based on recommendations from the Remuneration Committee of the board of directors of WH Group, or, if the executive served as a director or an executive officer of WH Group, the WH Group Remuneration Committee. The board of directors of WH Group has also historically approved the mix of compensation and performance metrics that determine the compensation of our senior management. After the completion of this offering, our executive compensation programs, policies, and practices for our executive officers will be subject to the review and approval of our board or the Compensation Committee. Our Compensation Committee will review our compensation philosophy and programs following the completion of this offering to ensure that they are appropriate for our status as a newly public company. Accordingly, our executive compensation programs, policies, and practices following the completion of this offering may not be the same as those discussed below.
For purposes of this Compensation Discussion and Analysis, or the CD&A, and the following executive compensation tables, our NEOs are:
•C. Shane Smith, Chief Executive Officer
•Mark Hall, Chief Financial Officer
•Steven J. France, President, Packaged Meats
•Keller Watts, Chief Business Officer
•Doug Sutton, Chief Manufacturing Officer
Prior to the completion of this offering, Mr. Smith and Mr. Hall each served as a director and an executive officer, respectively, of WH Group. The following sections of this CD&A describe our historical executive compensation philosophy and executive compensation plans, policies, and practices as part of WH Group, as well as certain aspects of our anticipated compensation structure following the completion of this offering.
Compensation Philosophy and Objectives
The compensation philosophy and objectives of WH Group pursuant to which our NEOs’ compensation has historically been determined prior to this offering have focused on aligning employee rewards with the goals, objectives, and financial performance of WH Group and motivating employees to continually improve operating performance. Our historical incentive programs have been structured as opportunities to earn compensation, and not as guarantees; they are designed to pay out when performance is strong and not to pay out when performance is weak.
The primary goal of WH Group’s executive compensation program is the same as its primary goal for operating our company—to maximize short-term and long-term corporate performance. To facilitate WH Group’s efforts to achieve this goal, our historical executive compensation program has been based on the following principles:
•Paying for performance. A significant portion of our executives’ compensation is subject to corporate, operating segment, and/or business-unit performance measures, and all of our NEOs have a portion of their compensation tied to our net income. Performance-based compensation has varied from year to year depending on our performance, which is impacted by, among other things, the volatile nature of our agricultural commodity-based industry and governmental food and energy policy. In recent years, average payouts of performance-based cash compensation ranged from 61% to 80% of our executives’ total cash
compensation. In fiscal year 2024, target performance-based cash compensation constituted on average approximately 80% of total target cash compensation of our NEOs.
•Alignment with the interests of shareholders. Many of our cash awards are tied to key financial performance measures that are expected to correlate with the creation of shareholder value.
•Attracting and retaining top talent. The compensation of our executives is designed to be competitive with the organizations with which we compete for talent so that we can attract and retain talented and experienced executives. Our NEOs have, on average, approximately 21 years of experience with Smithfield and its predecessors.
Each element of our compensation program is designed to further one or more of these principles. The structure of a particular executive’s compensation varies depending on the scope and level of that executive’s responsibilities. For an executive with corporate-level responsibilities, performance-based cash compensation is generally based on Smithfield’s net income. For an executive responsible for a business segment, performance-based cash compensation is also based on the performance of that segment. For example, performance-based cash compensation for an executive responsible for the Fresh Pork segment or an individual business unit within that group is generally based on the operating results of the Fresh Pork segment in addition to Smithfield’s net income, thus encouraging coordination of efforts among the individual business units within each operating segment in order to maximize the financial performance of the entire operating segment. An executive responsible for an individual business unit might occasionally receive performance-based cash compensation based on the operating results or other performance measures of that business unit, particularly if that unit operates more-or-less independently of other business units.
Compensation Process
Prior to the completion of this offering, the WH Group Remuneration Committee and senior management of WH Group were responsible for developing and administering the compensation program for our executive officers, including our NEOs, and other key employees.
In connection with this offering, we intend to establish, through our Compensation Committee, our own compensation strategy and philosophy that will inform the initial compensation determinations for our executive officers that will take effect following this offering. We have engaged Willis Towers Watson, a compensation consultant, to provide advice on executive compensation matters. Following the completion of this offering, the Compensation Committee will assume responsibility for determining our compensation philosophy, structuring our compensation and benefits programs, and determining appropriate payments and awards to our executive officers, including our NEOs.
Components of Executive Compensation
The components of executive compensation for our NEOs in fiscal year 2024, as described in more detail below, include (i) base salary, (ii) cash incentive awards, and (iii) benefits and perquisites.
Base Salary
Base salaries are intended to provide a level of compensation sufficient to attract and retain an effective management team when considered in combination with the performance-based and other components of our executive compensation program. The base salary levels for executive officers are designed to reflect each executive officer’s scope of responsibility and accountability within our company. Base salaries are reviewed annually to determine if they are equitably aligned within our company and are at sufficient levels to attract and retain top talent. Consistent with our greater emphasis on performance-based pay, base salaries for executives are not changed frequently.
Our NEOs’ base salaries for fiscal year 2024 were as follows:
| | | | | | | | |
| NEO | | Salary |
C. Shane Smith | | $ | 1,500,000 | |
Mark Hall | | $ | 1,000,000 | |
Steven J. France | | $ | 1,000,000 | |
Keller Watts | | $ | 1,000,000 | |
Doug Sutton | | $ | 1,000,000 | |
Annual Incentive Program
We have historically provided performance-based annual cash incentive opportunities to certain of our executives, including our NEOs. The performance criteria applied to such awards are designed to tie executives’ performance directly to the amount of incentive compensation earned, and to encourage executives to coordinate their management efforts among business units within the same operating segment, in addition to the company as a whole. Awards generally use formulas based on our net income or pre-tax profits—either company-wide or for a particular operating segment depending on the executive’s scope of responsibility. An executive who is responsible for an individual business unit may occasionally receive a cash incentive award that is based on the operating results or other performance measures of that business unit, particularly if that business unit operates to a significant degree independently of other business units. At the beginning of the year, the WH Group Remuneration Committee recommends the performance criteria and cash incentive award formulas for the year to the board of directors of WH Group. In making these recommendations, the WH Group Remuneration Committee considers the performance of our company and the respective segments and business units in recent years. The WH Group Remuneration Committee has the discretion to take into account additional criteria when evaluating bonus outcomes and award cash bonuses if targets are not met and additional cash bonuses if the executives out-perform their target criteria, or to reduce cash bonuses that would otherwise be earned even if targets are met.
Individual Target Annual Cash Incentive Opportunities
Each NEO’s annual incentive target, as a percentage of base salary, for fiscal year 2024 was as follows:
| | | | | | | | |
| NEO | | Incentive Target |
C. Shane Smith | | 667 | % |
Mark Hall | | 400 | % |
Steven J. France | | 400 | % |
Keller Watts | | 400 | % |
Doug Sutton | | 300 | % |
Annual Cash Incentive Program Design for Fiscal Year 2024
For fiscal year 2024, the performance of C. Shane Smith, Mark Hall, Keller Watts, and Doug Sutton was measured against Net Income attributable to Smithfield, and the performance of Steven France was measured against Packaged Meats Segment Profit, Net Income attributable to Smithfield, and Packaged Meats Volume. For Mr. France, Packaged Meats Segment Profit made up 60% of his target opportunity, Net Income attributable to Smithfield made up 20% of his target opportunity, and Packaged Meats Volume made up 20% of his target opportunity.
For our NEOs, annual cash incentive payout opportunities were based on attaining a certain target (to receive a payout at target) or a stretch target (to receive a payout above target, with no maximum payout cap) for the relevant financial metrics pre-established by the WH Group Remuneration Committee at the beginning of the fiscal year. For our NEOs with respect to fiscal year 2024, the threshold, target and stretch performance and corresponding payout opportunities relating to Net Income attributable to Smithfield were as follows, with non-linear interpolation for performance between threshold and target payout levels:
| | | | | | | | | | | |
| Net Income attributable to Smithfield (in $ millions) (1) | | Payout |
| Below Threshold | <600 | | 0 | % |
| Threshold | 600 | | | 36 | % |
| Target | 1,000 | | | 100 | % |
Stretch | >1,000 | | >100%(2) |
________________
(1)After the completion of this offering, it is expected that this financial target will be changed to North America Net Income, which will be equivalent to Net Income attributable to Smithfield excluding Net Income from Europe.
(2)For performance above target, our NEOs receive a percentage of the amount in excess of the target of $1 billion as follows:
| | | | | | | | |
| NEO | | Payout for Amount in Excess of Target |
C. Shane Smith | | 1.0 | % |
Mark Hall | | 0.4 | % |
Steven J. France | | 0.4 | % |
Keller Watts | | 0.4 | % |
Doug Sutton | | 0.3 | % |
For Packaged Meats Segment Profit, threshold begins at 76% achievement of plan with an approximately 4% target payout; 100% payout when plan is achieved at target; and for every 1.5% increase above the target, Mr. France will receive an additional 0.012% of the Packaged Meats Segment Profit result, with no maximum payout cap. For Packaged Meats Volume, threshold begins at approximately 91% achievement of plan with a 2.5% target payout; 100% payout when plan is achieved at target, and for every approximately 0.4% increase above the target, Mr. France will receive an additional $20,000, with no maximum payout cap. Award payouts are interpolated between the discrete percentages if performance is between the above stated levels.
SEC rules provide that we do not have to disclose confidential financial information if doing so would result in competitive harm to us. Packaged Meats Segment Profit targets and Packaged Meats Volume targets and Packaged Meats Volume results are competitively sensitive information that we maintain as confidential and proprietary information and do not publicly disclose (with respect to Packaged Meats Volume, we have not disclosed these results after fiscal year 2023). We believe disclosure of such information would result in competitive harm to us.
The target-level goals can be characterized as “strong performance,” meaning that based on historical performance, although attainment of this performance level is uncertain, it can be reasonably anticipated that target performance may be achieved, while the threshold goals are more likely to be achieved and the stretch targets represent more aggressive levels of performance.
The board of directors of WH Group, at the recommendation of the WH Group Remuneration Committee, and senior management of WH Group retain the ability to reduce or eliminate payouts for individual executives, including our NEOs, even if financial metrics are met, as well as to increase payouts based on individual performance or to award bonuses even if financial metrics are not met. In making these decisions, the board of directors of WH Group and senior management of WH Group may consider factors such as the performance of the individual executive against his or her individual objectives in support of strategic priorities or additional financial metrics applicable to the business or functional area for which the executive is responsible. In addition, when comparing results to the performance targets, the board of directors of WH Group also has the discretion to make adjustments to our results for unbudgeted items that are not considered part of our ordinary operations and other events that impacted performance. This ensures that our executives are not unfairly rewarded for or penalized by these types of events.
Our full-year financial and strategic results for fiscal year 2024, including the financial metrics discussed above, are not available as of the time of this filing, and accordingly, the bonus payouts for our NEOs for fiscal year 2024 cannot yet be determined. Our board of directors or Compensation Committee will certify the total payout based on achievement against the established financial targets for all NEOs in March 2025. Following this certification, the
financial targets and the actual achievement against these goals for fiscal year 2024, as well as the corresponding bonus payouts for our NEOs, will be disclosed by us in a Current Report on Form 8-K.
Other Compensation Elements
Retirement Plans. Our executive officers participate in the same tax-qualified retirement plans on the same terms as provided to most of our salaried employees. These plans consist of an employee-funded 401(k) savings plan (with employer match) and a company-funded pension plan, the Smithfield Foods Salaried Pension Plan, or the Salaried Pension Plan. We also maintain the Smithfield Foods Supplemental Pension Plan, or the Supplemental Plan, which is a non-qualified supplemental pension plan available to certain executives, including our NEOs. As of June 30, 2021, our company-funded tax-qualified pension plans were frozen for all non-union employees who were eligible for such plans, both for new participants and for future benefit accruals of existing participants. Any non-union employee hired after that date does not participate in such plans, and non-union employees hired before that date participate in those plans but are no longer accruing new benefits.
Our retirement plans are intended to provide an appropriate level of replacement income upon retirement. The Supplemental Plan allows us to provide pension benefits comparable to those that would be available under the Salaried Pension Plan if the federal income tax laws did not include limits on covered compensation and benefits. The Supplemental Plan uses the same benefit formulas as the Salaried Pension Plan and uses the same types of compensation to determine benefit amounts. Therefore, the Supplemental Plan allows eligible employees to receive a pension benefit that is approximately the same percentage of their earnings, except that the amount of compensation in any year that can be used in calculating benefits is capped at $5 million. For more information about our pension plans, please refer to the Pension Benefits table and related discussion below.
Participation in the 401(k) savings plan is voluntary. The amount of compensation deferred and the amount of our match therefore varies among employees, including the executives. However, the same formulas are used to determine benefits for all participants in this plan. Furthermore, the plan does not involve any above-market returns, as returns depend on actual investment results based on individual participant investment elections.
Perquisites and Other Benefits. We provide a limited number of perquisites to our executive officers. The Summary Compensation Table below contains an itemized disclosure of all perquisites to NEOs. We believe that these perquisites are reasonable and consistent with those paid to other executives in our industry. Providing these perquisites helps to keep our base compensation packages competitive.
We also provide certain benefits to substantially all salaried employees that are not included as perquisites in the Summary Compensation Table for the NEOs because they are broadly available. These include health and welfare benefits, disability and life insurance, education and tuition reimbursement, an employee assistance program, and a charitable gift matching program.
In addition, we sponsor a non-qualified deferred compensation plan, which we refer to as the Smithfield Foods, Inc. Executive Nonqualified Excess Plan, or the Deferred Compensation Plan, for eligible employees, including our NEOs, and we maintain an additional non-qualified deferred compensation plan, the John Morrell & Company Amended & Restated Deferred Compensation Plan, or the JM Deferred Compensation Plan, that has been frozen since 2016. For a description of the Deferred Compensation Plan and the JM Deferred Compensation Plan, see “—Non-Qualified Deferred Compensation—Discussion of Non-Qualified Deferred Compensation” below.
Employment Agreements
None of our NEOs is currently party to an employment agreement with us. However, we plan to adopt an Executive Severance Plan, or the Severance Plan, effective upon the completion of this offering, pursuant to which certain senior executive employees will be entitled to severance benefits in certain situations. See “—Future Compensation Programs—Executive Severance Plan” for a description of the Severance Plan.
Other Compensation Governance Practices
Following the completion of this offering, we intend to implement anti-pledging and anti-hedging policies for our senior executives and our non-employee directors. We also intend to implement a compensation recoupment policy that will apply to our executive officers.
Risk Assessment of Compensation Programs
We believe that our compensation arrangements, including financial performance measures used to determine incentive payout amounts, do not provide our executives with an incentive to engage in business activities or other behavior that would expose us or our shareholders to excessive risks that are reasonably likely to have a material adverse effect.
Tax and Accounting Implications
Tax Considerations of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code, generally prohibits public companies from claiming a tax deduction for more than $1 million of annual compensation per person paid to certain current and former executive officers. Although the Compensation Committee will be mindful of the benefits of tax deductibility when determining executive compensation, it may approve compensation that will not be fully deductible in order to ensure competitive levels of total compensation for our executive officers.
Accounting for Stock-Based Compensation
Following the completion of this offering, we will account for stock-based payments in accordance with the requirements of FASB ASC Topic 718.
Summary Compensation Table for Fiscal Year 2024
The following table sets forth the compensation awarded to or paid to our NEOs for services rendered in all capacities during fiscal year 2024.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Year | | Salary ($) | | Bonus ($) (1) | | Non- Equity Incentive Plan Compensation ($) (1) | | All Other Compensation ($) (2) | | Total ($) |
C. Shane Smith Chief Executive Officer | | 2024 | | 1,500,000 | | | — | | — | | 43,612 | | 1,543,612 |
Mark Hall Chief Financial Officer | | 2024 | | 1,000,000 | | | — | | — | | 40,647 | | 1,040,647 |
Steven J. France President, Packaged Meats | | 2024 | | 1,000,000 | | | — | | — | | 33,447 | | 1,033,447 |
Keller Watts Chief Business Officer | | 2024 | | 1,000,000 | | | — | | — | | 34,612 | | 1,034,612 |
Doug Sutton Chief Manufacturing Officer | | 2024 | | 1,000,000 | | | — | | — | | 28,843 | | 1,028,843 |
________________
(1)Our full-year financial and strategic results for fiscal year 2024, including the financial metrics discussed above, are not available as of the time of this filing, and accordingly, the bonus payouts for our NEOs for fiscal year 2024 cannot yet be determined. Our board of directors or Compensation Committee will certify the total payout based on our achievement against the established financial targets for all NEOs in March 2025. Following this certification, the financial targets and the actual achievement against these goals for fiscal year 2024, as well as the corresponding bonus payouts for our NEOs, will be disclosed by us in a Current Report on Form 8-K.
(2)The amounts shown in this column consist of the components set forth in the table below, which include the contributions made with respect to each NEO under our 401(k) plan and the Deferred Compensation Plan and perquisites provided to each NEO.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Year | | 401(k) and non-qualified plan contributions ($) | | Leased
vehicle
($) | | Life
insurance
premiums
($) |
C. Shane Smith | | 2024 | | 23,000 | | 19,800 | | 812 |
Mark Hall | | 2024 | | 21,835 | | 18,000 | | 812 |
Steven J. France | | 2024 | | 21,835 | | 10,800 | | 812 |
Keller Watts | | 2024 | | 23,000 | | 10,800 | | 812 |
Doug Sutton | | 2024 | | 17,231 | | 10,800 | | 812 |
Grants of Plan-Based Awards
The following table provides information on the annual incentive awards granted to our NEOs in respect of fiscal year 2024. There were no grants of equity awards to our NEOs in fiscal year 2024.
| | | | | | | | | | | | | | | | | | | | |
| | Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards |
| Name | | Threshold
($) | | Target
($) | | Maximum ($)(1) |
| C. Shane Smith | | 3,600,000 | | 10,000,000 | | — |
| Mark Hall | | 1,440,000 | | 4,000,000 | | — |
| Steven J. France | | 1,270,000 | | 4,000,000 | | — |
| Keller Watts | | 1,440,000 | | 4,000,000 | | — |
| Doug Sutton | | 1,080,000 | | 3,000,000 | | — |
________________
(1)Our NEOs are not subject to a maximum cap with respect to their possible payouts. See “—Components of Executive
Compensation—Annual Incentive Program—Annual Cash Incentive Program Design for Fiscal Year 2024” above.
Outstanding Equity Awards at Fiscal Year-End
There were no outstanding equity awards held by our NEOs as of December 31, 2024.
Option Exercises and Stock Vested
We had no outstanding option awards or stock awards during fiscal year 2024. Accordingly, no option awards were exercised by, and no stock awards vested for, our NEOs in fiscal year 2024.
Pension Benefits
The following table shows the present value of accumulated benefits that our NEOs are entitled to under the Salaried Pension Plan and the Supplemental Plan.
| | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Plan Name | | Number of Years Credited Service (#) | | Present Value of Accumulated Benefit
($) | |
| C. Shane Smith | | Salaried Pension Plan | | 18 | | 337,148 | |
| Supplemental Plan | | 21 | | 11,220,836 | |
| Mark Hall | | Salaried Pension Plan | | 8 | | 193,093 | |
| Supplemental Plan | | 11 | | 3,029,835 | |
| Steven J. France | | Salaried Pension Plan | | 15.24 | | 456,040 | |
| Supplemental Plan | | 18.24 | | 6,325,958 | |
| Keller Watts | | Salaried Pension Plan | | 28 | | 608,284 | |
| Supplemental Plan | | 31 | | 7,057,993 | |
| Doug Sutton | | Salaried Pension Plan | | 21 | | 473,842 | |
| Supplemental Plan | | 24 | | 4,668,487 | |
Discussion of Pension Plans
We sponsor the Salaried Pension Plan, a tax-qualified pension plan covering substantially all of our salaried employees. Each of the NEOs participates in the Salaried Pension Plan and our non-qualified pension plan, the Supplemental Plan.
The Salaried Pension Plan provides for retirement benefits that generally are a function of the participant’s average compensation during the five consecutive calendar years during the last ten years of employment in which the participant’s compensation was the highest, or Final Average Earnings, and aggregate years of service. The Supplemental Plan provides a retirement benefit, which is the benefit calculated under the Salaried Pension Plan without application of compensation and benefit limits under federal tax laws, reduced by the benefit payable from the Salaried Pension Plan. The Supplemental Plan is maintained so that we can provide a retirement benefit for certain salaried employees that is approximately the same percentage of their earnings from the company.
The retirement benefit under the Salaried Pension Plan is a lifetime benefit payable at age 65 equal to the sum of (i) 0.8% of Final Average Earnings and (ii) 0.9% of Final Average Earnings in excess of Social Security Covered Compensation, with that sum multiplied by the years of service with the company. Social Security Covered Compensation is determined annually by the Internal Revenue Service and represents an average of the amount of wages subject to Social Security taxes over a period of years. Compensation for purposes of Final Average Earnings is the total compensation shown on the participant’s W-2 reduced by any income from the exercise of stock options. Total compensation includes salary, bonus, non-equity incentive plan payments, stock awards when vested, and taxable perquisites from the company. For NEOs, such compensation includes salary, bonus, and non-equity incentive plan compensation, each as shown in the Summary Compensation Table. For the Salaried Pension Plan, compensation for purposes of calculating accruals is limited to $345,000 for calendar year 2024 as set by the Internal Revenue Service. The Supplemental Plan limits yearly earnings for purposes of calculating accruals to $5,000,000.
If a participant does not commence receiving benefits by age 65, the participant is entitled to a late retirement benefit, which is the greater of the benefit calculated at the participant’s normal retirement date actuarially increased to the actual retirement date and the benefit calculated at actual retirement date. A participant is eligible for early retirement after age 55 with five years of vesting service (age 60 for the Supplemental Plan). The early retirement benefit payable is the accrued benefit payable at age 65 reduced by 0.5% for each month that the early retirement date precedes the normal retirement date.
The normal form of benefit for the Salaried Pension Plan and the Supplemental Plan is a single life annuity with monthly payments paid over the life of the participant. Married participants receive a joint and 50% survivor annuity with actuarially reduced monthly payments paid until the death of the participant and his or her spouse. The other optional forms of retirement benefit in the Salaried Pension Plan include joint and 66.67%, 75%, or 100% annuities, and a ten-year certain and continuous annuity with payments guaranteed for ten years even if the participant dies. The Supplemental Plan also includes a five-year installment payment option in which the lump-sum value of the single life annuity is calculated based on factors specified in the Supplemental Plan and mandated by the Internal Revenue Service and then paid in five annual principal installments with interest credited on the unpaid installments at the same interest rate that is used to calculate the lump-sum value (currently segmented rates of 5.50% for the first 5 years, 5.76% for the next 15 years, and 5.83% for 20 or more years).
As of June 30, 2021, our company-funded tax-qualified pension plans were frozen for all non-union employees who were eligible for such plans, both for new participants and for future benefit accruals of existing participants. Any non-union employee hired after that date does not participate in such plans, and non-union employees hired before that date participate in those plans but are no longer accruing new benefits.
In accordance with SEC rules, the present value of each NEO’s accumulated benefits under the pension plans, as shown in the table above, has been calculated in accordance with the benefit formulas described above and using the same assumptions as are used by us for financial reporting purposes under generally accepted accounting principles (except that retirement age is assumed to be the normal retirement age of 65). Those assumptions are incorporated herein by reference to Note 13, “Pension and Other Retirement Plans,” of the audited financial statements included as part of this Registration Statement.
Non-Qualified Deferred Compensation
The table below provides information on benefits available to the NEOs for fiscal year 2024 under the Deferred Compensation Plan and the JM Deferred Compensation Plan, as applicable.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Plan | | Executive Contributions in Last Fiscal Year ($) (1) | | Company Contributions in Last Fiscal Year ($) | | Aggregate Earnings in Last Fiscal Year ($) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at Last Fiscal Year-End ($) |
| C. Shane Smith | | N/A | | — | | — | | — | | — | | — |
| Mark Hall | | JM Deferred Compensation Plan | | — | | — | | 3,881 | | — | | 29,482 |
| Steven J. France | | Deferred Compensation Plan | | — | | — | | 192,710 | | — | | 1,011,005 |
| Keller Watts | | Deferred Compensation Plan | | 150,000 | | — | | 170,585 | | — | | 1,213,215 |
| Doug Sutton | | N/A | | — | | — | | — | | — | | — |
________________
(1)Amounts in this column are included in the “Salary” and/or “Non-Equity Incentive Plan Compensation” columns of the “Summary Compensation Table for Fiscal Year 2024” above.
Discussion of Non-Qualified Deferred Compensation
Deferred Compensation Plan
Pursuant to the Deferred Compensation Plan, eligible employees, including our NEOs, are entitled to defer up to 80% of their annual base salary and earned cash bonuses. We may also make discretionary contributions to participants’ deferral accounts under the Deferred Compensation Plan from time to time. The portion of a participant’s deferral account that is attributable to employer contributions vests generally based on the participant’s years of service with the company—with 20% vesting credit applied per year of service—and will vest earlier upon the first to occur of a change in control of the company and the participant’s 65th birthday, death, or disability. Each participant may choose to have his deferral account notionally invested in one or more investment options that we
make available from time to time, and deferral account values will track the investment performance of those deemed investment options selected by the participant.
The vested portion of a participant’s account under the Deferred Compensation Plan will be distributed to the participant upon a separation from service with the company, or if earlier and elected by the participant in connection with making a deferral election under the plan, upon the participant’s disability, a change in control of the company, or a fixed in-service date elected by the participant. Distributions will be made in a lump sum or, for distributions upon a separation from service and if elected by the participant in connection with making a deferral election under the plan, in up to ten annual installments. A participant may elect that in-service distributions be made in a lump sum or in up to four annual installments.
JM Deferred Compensation Plan
Pursuant to the JM Deferred Compensation Plan, which has been frozen to new contributions since 2016, eligible employees were entitled to defer up to 80% of their annual base salary and earned cash bonuses. Despite the JM Deferred Compensation Plan being frozen to new contributions, there is still opportunity for earnings on contributions made prior to the plan being frozen. Each participant may choose to have his deferral account notionally invested in one or more investment options that we make available from time to time, and deferral account values track the investment performance of those deemed investment options selected by the participant. Distributions from the participant’s account under the JM Deferred Compensation Plan will commence as of the first day of the month coinciding with or next following the date which is six months after such participant’s separation from service with the company, or if earlier upon the participant’s death or certain emergencies. Distributions will be made in a lump sum or, if elected by the participant in writing in connection with making a deferral election under the plan, in no less than 24 and no more than 120 monthly installments.
Our Chief Financial Officer, Mark Hall, had elected to defer a portion of his pay prior to the plan being frozen, and there have been earnings on the account in fiscal year 2024, as shown in the above table.
Potential Payments Upon Termination or Change in Control
There are currently no plans or arrangements between WH Group or our company and our NEOs that provide for any payment or benefit to our NEOs in connection with a change in control of our company or a termination of the NEO’s employment from our company, other than potential accelerated vesting of the employer-contribution portion of any deferral accounts under the Deferred Compensation Plan. All our NEOs are currently fully vested in their Deferred Compensation Plan accounts and, as a result, none of them is entitled to any vesting acceleration in connection with a change in control of our company.
We plan to adopt the Severance Plan effective upon the completion of this offering, pursuant to which certain senior executive employees will be entitled to severance benefits in certain situations. See “—Future Compensation Programs—Executive Severance Plan” for a description of the Severance Plan.
Future Compensation Program
Overview
We expect our Compensation Committee to establish a specific set of objectives and principles for our compensation programs following the completion of this offering, as described below. We believe that this offering will enable us to offer our key employees equity compensation directly linked to the performance of our business, which we expect will enhance our ability to attract, retain and motivate qualified personnel and serve the interests of our shareholders.
Post-Offering Compensation Philosophy and Objectives
We are committed to providing a fair and competitive executive compensation and benefits package that will attract, retain, and reward all members of our high-performing executive team. We are also committed to providing a total compensation package that ties personal earnings to the attainment of company milestones and the long-term achievement of our financial and operational goals. Consistent with such compensation philosophy, we plan to
recognize and reward both corporate and individual performance and recognize both short-term and long-term contributions to our company with a particular focus on sharing in annual company financial improvement and long-term company value gains. Our Compensation Committee will structure our compensation and benefits programs to be transparent, flexible, externally competitive, internally competitive and aligned with corporate and individual performance. Overall, we will aim to provide total annual cash compensation opportunities above the market median for similar positions based on industry benchmarks to be determined by our Compensation Committee, while targeting total target direct compensation in line with market.
Executive Severance Plan
We plan to adopt the Severance Plan effective upon the completion of this offering. Pursuant to the Severance Plan, certain senior executive employees will be entitled to severance benefits, or the Severance Benefits, upon a termination of employment by us without “cause” or a voluntary resignation for “good reason,” as such terms are defined in the Severance Plan, or a Qualifying Termination. Severance Benefits are contingent upon the executive’s (i) compliance with all restrictive covenants to which the executive is then subject and (ii) timely execution and delivery of an irrevocable general release of claims against our company and related parties. Participation in the Severance Plan is conditioned upon the executive’s agreeing to customary restrictive covenants in favor of our company and our affiliates, including covenants of non-disclosure, non-competition, non-solicitation, and non-disparagement (subject to any limitations under applicable local law). We may amend or terminate the Severance Plan at any time; however, no such action will become effective for 180 days, or if a change in control of our company has occurred prior to the effectiveness of such amendment or termination, until the 24-month anniversary of such change in control.
The Severance Benefits will consist of (i) base salary continuation for 18 months (or for the Chief Executive Officer, two years), (ii) a prorated bonus for the year of termination based on actual company performance through the separation date, and (iii) a company subsidy of COBRA insurance premiums under our health plans to provide the executive participation at the active-employee rate for the duration of COBRA coverage (up to 18 months). If the Qualifying Termination occurs within two months prior to a change in control of Smithfield, or within two years following a change in control, the prorated bonus will be based on the executive’s target bonus for the year of termination.
Smithfield Omnibus Incentive Plan
We plan to adopt an equity incentive plan, which we refer to as the Smithfield Foods, Inc. Omnibus Incentive Plan, or the 2025 Incentive Plan, which will permit us to grant cash and equity-based incentive awards to our NEOs and our other employees and service providers including our non-employee directors. The 2025 Incentive Plan is expected to become effective immediately prior to the pricing of this offering. The following summary describes the expected material terms of the 2025 Incentive Plan and is qualified in its entirety by reference to the 2025 Incentive Plan, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part.
Purpose. The purpose of the 2025 Incentive Plan is to promote the success of our business for the benefit of our shareholders by aligning employee and shareholder interests through the grant of cash and equity-based incentive awards to eligible individuals in order to attract, retain, and reward such individuals and strengthen the alignment of interests between such individuals and our shareholders.
The 2025 Incentive Plan provides for the grant of non-statutory stock options, or NSOs, stock appreciation rights, restricted stock awards, restricted stock unit awards, dividend equivalent rights, and other forms of awards to our employees, directors, and consultants who have been designated eligible by our board of directors and those of our affiliates. The 2025 Incentive Plan also provides for the grant of incentive stock options, or ISOs, within the meaning of Section 422 of the Code, to our employees and the employees of our parent and subsidiary corporations.
Authorized shares. Initially, the maximum aggregate number of shares of our common stock that may be issued under the 2025 Incentive Plan will not exceed shares, representing % of our shares outstanding immediately following this offering. The aggregate number of shares of our common stock that may be issued with respect to any ISO will not exceed shares.
The following shares of our common stock will not reduce the number of shares available for issuance under the 2025 Incentive Plan: (i) shares that are not issued pursuant to a stock-settled award because the award expires or is canceled, forfeited, or terminated, and (ii) shares withheld pursuant to an award to satisfy the exercise, strike, or purchase price of an award or to satisfy a tax withholding obligation. Further, if in connection with a future merger, consolidation, or acquisition, we grant awards pursuant to the 2025 Incentive Plan in substitution for canceled awards granted by the predecessor or acquired company, or the Substitute Awards, the shares underlying such Substitute Awards will not count against the shares available for issuance under the 2025 Incentive Plan; however, shares acquired by exercise of substitute ISOs will count against the maximum number of shares that may be issued pursuant to the exercise of ISOs under the 2025 Incentive Plan.
Plan administration. Our board of directors, or a duly authorized committee of our board of directors, which we refer to as the Incentive Plan Committee, will administer the 2025 Incentive Plan and may delegate its authority to one or more subcommittees of directors or to any of our officers, subject to certain limitations set forth in the 2025 Incentive Plan. We anticipate that our Compensation Committee will serve as the Incentive Plan Committee. Administrative authority under the 2025 Incentive Plan includes the authority to determine award recipients, how and when each award will be granted, the types of awards to be granted, grant dates, the number of shares subject to each award, the fair market value of our common stock, and the other terms and conditions of each award, including the period of exercisability and the vesting schedule applicable to an award. Under the 2025 Incentive Plan, our board of directors may not, without shareholder approval, reduce the exercise or strike price of an option or stock appreciation right (other than equitable adjustments relating to certain capitalization events or corporate transactions).
Stock options and stock appreciation rights. ISOs, NSOs, and stock appreciation rights will be granted under award agreements adopted by the Incentive Plan Committee. The Incentive Plan Committee will determine the exercise price for stock options and stock appreciation rights, which may not be less than 100% (or 110% in the case of ISOs granted to a person who owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any of our parent or subsidiary corporations, or a 10% shareholder) of the fair market value of our common stock on the date of grant (other than in the case of Substitute Awards). Options and stock appreciation rights granted under the 2025 Incentive Plan will vest at the rate, and subject to the conditions, specified in the applicable award agreement. The terms and conditions of separate options and stock appreciation rights need not be identical.
No option or stock appreciation right will be exercisable after the expiration of 10 years (or five years in the case of ISOs granted to a 10% shareholder) or such shorter period specified in the applicable award agreement. Unless the terms of the award specify otherwise, if a participant’s service relationship with us or any of our affiliates ceases for any reason other than disability, death, cause, or voluntary resignation, the participant may generally exercise any vested options and stock appreciation rights for a period of 90 days following the cessation of service. This period may be extended if exercise of the option is prohibited by applicable securities laws. Unless the terms of the award specify otherwise, if a participant’s service relationship with us or any of our affiliates ceases due to death or disability, the participant or a beneficiary may generally exercise any vested options and stock appreciation rights for a period of one year following such termination. Unless the terms of the award specify otherwise, if a participant’s service relationship with us or any of our affiliates ceases due to disability and the participant subsequently dies while the options or stock appreciation rights remain outstanding, the participant’s designated beneficiary may generally exercise such options and stock appreciation rights for a period of one year following his death. Upon a termination for cause, options and stock appreciation rights generally terminate immediately, whether or not vested. A participant may not exercise an option or stock appreciation right at any time that the issuance of shares upon such exercise would violate applicable law.
Acceptable consideration for the purchase of common stock issued upon the exercise of a stock option or a stock appreciation right will be determined by the Incentive Plan Committee and set forth in the applicable award agreement. Upon the exercise of a stock appreciation right the participant will be entitled to receive, for each stock appreciation right exercised, up to, but no more than, an amount in cash and/or shares (as chosen by the Incentive Plan Committee in its sole discretion) equal in value to the excess of the fair market value of one share on the date of exercise over the fair market value of one share on the grant date.
Tax limitations on ISOs. The aggregate fair market value, determined at the time of grant, of our common stock with respect to ISOs that are exercisable for the first time by any participant during any calendar year under all of our stock plans or plans of our affiliates may not exceed $100,000. Options or portions thereof that exceed such limit will generally be treated as NSOs.
Restricted stock unit awards. Subject to the terms of the 2025 Incentive Plan, each restricted stock unit award will have such terms and conditions as determined by the Incentive Plan Committee. A restricted stock unit award represents a participant’s right to be issued on a future date the number of shares that is equal to the number of restricted stock units subject to the award. Restricted stock unit awards granted under the 2025 Incentive Plan will vest at the rate, and subject to the conditions, specified in the applicable award agreement. The terms and conditions of separate restricted stock unit awards need not be identical. A participant will not have voting or any other rights as a shareholder with respect to any restricted stock unit award unless and until shares are actually issued in settlement of a vested restricted stock unit award. A restricted stock unit award will generally be granted in consideration for a participant’s services to us or an affiliate, such that the participant will not be required to make any payment to us with respect to the grant or vesting of the restricted stock unit award or the issuance of any shares pursuant to the restricted stock unit award. A restricted stock unit award may be settled by cash, delivery of shares (or any combination of our common stock and cash), or in any other form of consideration determined by the Incentive Plan Committee, as set forth in the applicable award agreement. At the time of grant, the Incentive Plan Committee may impose such restrictions or conditions on the award of restricted stock units that delay delivery to a date following the vesting of the award in a manner intended to comply with Section 409A of the Code, as applicable. Additionally, dividends or dividend equivalents may be paid or credited in respect of shares covered by a restricted stock unit award, subject to the same restrictions on transferability and forfeitability as the underlying award with respect to which such dividends or dividend equivalents are granted and subject to such other terms and conditions as determined by the Incentive Plan Committee and specified in the applicable award agreement. Except as otherwise provided in the applicable award agreement, restricted stock unit awards that have not vested will be forfeited once the participant’s continuous service ends for any reason.
Restricted stock awards. Restricted stock awards will be granted under award agreements adopted by the Incentive Plan Committee. A restricted stock award may be awarded in consideration for cash, past or future services to us or any of our affiliates, or any other form of legal consideration that may be acceptable to the Incentive Plan Committee. Restricted stock awards granted under the 2025 Incentive Plan will vest at the rate, and subject to the conditions, specified in the applicable award agreement. The terms and conditions of separate restricted stock awards need not be identical. Dividends or dividend equivalents may be paid or credited with respect to shares subject to a restricted stock award, subject to the same restrictions on transferability and forfeitability as the underlying award with respect to which such dividends or dividend equivalents are granted and subject to such other terms and conditions as determined by the Incentive Plan Committee and specified in the applicable award agreement. If the award-holder’s service relationship with us ends for any reason, we may receive any or all of the unvested shares then-held by the award-holder through a forfeiture condition or a repurchase right.
Other stock awards. The Incentive Plan Committee will be permitted to grant other awards, based in whole or in part by reference to, or otherwise based on, our common stock, either alone or in addition to other awards. Such awards may include fully vested shares awarded as a bonus, shares in payment of the amounts due under an incentive or performance plan sponsored by us, standalone dividend equivalent rights, and awards valued by reference to the book value of shares of our common stock.
Cash awards. The Incentive Plan Committee will also be permitted to grant cash awards. Cash awards may be granted subject to the satisfaction of vesting conditions or may be awarded as a bonus and not subject to any restrictions or conditions.
Non-employee director compensation limit. The aggregate value of all compensation granted or paid following the effective date of the 2025 Incentive Plan to any individual for service as a non-employee director with respect to any calendar year, including awards granted under the 2025 Incentive Plan (valued based on the grant date fair value for financial reporting purposes) and cash fees paid by us to such non-employee director, but not including the equity awards granted in connection with the consummation of this offering, will not exceed $750,000 in total value, except such amount may increase for (i) newly elected directors in their first year of service, (ii) special committee
appointments, (iii) any director serving as lead director or non-executive chair, and (iv) any director who does not participate in the decision to award such additional compensation or in other contemporaneous decisions involving compensation for non-employee directors.
Changes to capital structure. In connection with certain corporate transactions or changes to our capital structure, such as a stock split, reverse stock split, or recapitalization, the Incentive Plan Committee will adjust as it deems necessary, as applicable, (i) the class and maximum number of shares subject to the 2025 Incentive Plan and the awards thereunder and (ii) the class and number of shares and exercise price, strike price, or purchase price, if applicable, of all outstanding awards granted under the 2025 Incentive Plan. The 2025 Incentive Plan Committee may adjust the vesting terms applicable to any awards to reflect any unusual or non-recurring events and other extraordinary items, impact of charges for restructurings, discontinued operations, and the cumulative effects of accounting or tax changes, each as defined by generally accepted accounting principles or as identified in our financial statements, notes to the financial statements, management’s discussion and analysis, or other public filing.
Change in control provisions. In the event of a change in control (as defined below), awards outstanding under the 2025 Incentive Plan may be assumed, continued, or substituted for, in whole or in part, by any surviving or acquiring corporation (or its parent company), or settled for a cash amount based on the highest price per share of common stock paid in any transaction related to such change in control. The Incentive Plan Committee may terminate all awards subject to exercise by delivering at least 20 days’ advance notice to the award-holders to permit exercise in advance of, and contingent upon, such change in control. The Incentive Plan Committee may elect to accelerate the vesting of awards in connection with a change in control.
Under the 2025 Incentive Plan, a “change in control” means (i) the acquisition by any person or entity of 50% or more of the combined voting power of our then-outstanding voting securities, (ii) a merger, reorganization, or consolidation other than such a transaction after which our voting securities immediately before the transaction continue to represent more than 50% of the combined voting power of the surviving entity (or the parent of the surviving entity) and are held in substantially the same proportion by the holders of such voting securities immediately before the transaction, (iii) a complete dissolution or liquidation, (iv) a sale or disposition of all or substantially all of our assets other than to a person or persons who beneficially own more than 50% of the combined voting power of our outstanding voting securities immediately prior to such transaction, or (v) when, during any two-year period, a majority of our board of directors ceases to consist of individuals who were serving on our board of directors at the beginning of such period and individuals whose election or nomination to our board of directors was approved by a vote of at least two thirds of the directors then in office who were either directors on our board of directors at the beginning of such period or whose election or nomination was so approved. The 2025 Incentive Plan provides that a “change in control” will not be deemed to occur solely by virtue of a “spin-off” or distribution of shares owned by WH Group to its shareholders for no consideration in substantially the same proportions as their ownership of WH Group.
Transferability. Awards granted under the 2025 Incentive Plan are generally not transferrable or assignable by a participant. After the vested shares subject to an award have been issued, or in the case of a restricted stock award and similar awards, after the issued shares have vested, the holder of such shares is generally free to assign, hypothecate, donate, encumber, or otherwise dispose of any interest in such shares provided that any such actions are in compliance with the terms of our trading policy, any minimum ownership requirements that we may effect from time to time, and applicable law.
Clawback/Recovery. All awards granted under the 2025 Incentive Plan will be subject to recoupment in accordance with any clawback policy that we may adopt and maintain from time to time, to the extent applicable and permissible under applicable law. In addition, the Incentive Plan Committee may impose such other clawback, recovery or recoupment provisions in an award agreement as the Incentive Plan Committee may deem necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired shares or other cash or property upon the occurrence of cause. Acceptance of an award constitutes the participant’s acknowledgement of and consent to any applicable clawback policy in effect at the time of such clawback.
Amendment or termination. The Incentive Plan Committee may accelerate the time at which an award granted under the 2025 Incentive Plan may first be exercised or the time during which an award granted under the 2025
Incentive Plan or any part thereof will vest. The Incentive Plan Committee will have the authority to amend, suspend, or terminate the 2025 Incentive Plan at any time, provided that such action does not materially impair the existing rights of any participant without such participant’s consent. Certain material amendments will also require the approval of our shareholders. No award may be granted on or after the 10th anniversary of the date our board of directors adopts the 2025 Incentive Plan. No awards may be granted under the 2025 Incentive Plan while it is suspended or after it is terminated.
Smithfield Employee Stock Purchase Plan
We plan to adopt an employee stock purchase plan, which we refer to as the Smithfield Foods, Inc. Employee Stock Purchase Plan, or the 2025 ESPP. The following summary describes the expected material terms of the 2025 Employee Stock Purchase Plan and is qualified in its entirety by reference to the 2025 Employee Stock Purchase Plan, the form of which is filed as an exhibit to the registration statement of which this prospectus forms a part.
Purpose. The purpose of the 2025 ESPP is to provide an opportunity to our employees and employees of certain of our related companies to acquire a stock ownership interest in our company. The 2025 ESPP is designed to allow eligible employees to purchase our common stock in a manner that is intended to qualify for favorable tax treatment under Section 423 of the Code and will be construed in a manner that is consistent with the requirements of Section 423 of the Code. We intend (but make no undertaking or representation to maintain) for the 2025 ESPP to qualify as an employee stock purchase plan as defined in Section 423(b) of the Code.
Share reserve. The maximum number of shares of our common stock that may be issued under the 2025 ESPP will not exceed shares, representing 0.5% of our shares outstanding immediately following this offering. If any purchase right granted under the 2025 ESPP terminates without having been exercised in full, the shares not purchased under such purchase right will again become available for issuance under the 2025 ESPP.
Administration. Our board of directors, or a duly authorized committee of our board of directors, which we refer to as the ESPP Committee, will administer the 2025 ESPP and may delegate its authority to one or more subcommittees of directors or to any of our officers, subject to certain limitations set forth in the 2025 ESPP. We anticipate that our Compensation Committee will serve as the ESPP Committee. Administrative authority under the 2025 ESPP includes the authority to determine how and when purchase rights are granted and the provisions of each offering, to designate, from time to time, which of our related corporations will be eligible to participate in the ESPP, or which related corporations will be eligible to participate in each separate offering, to impose holding periods on participants, to construe and interpret the 2025 ESPP and purchase rights thereunder, and to establish, amend and revoke rules and regulations for the 2025 ESPP’s administration, to settle all controversies regarding the 2025 ESPP and purchase rights granted thereunder, to exercise such powers and to perform such acts as it deems necessary or expedient to promote the best interests of us and our related corporations and to carry out the intent of the 2025 ESPP to be treated as an employee stock purchase plan, and to adopt such rules, procedures, and sub-plans as are necessary or appropriate to permit or facilitate participation in the 2025 ESPP by employees who are foreign nationals or employed or located outside the United States. All determinations, interpretations, and constructions made by the ESPP Committee in good faith will not be subject to review by any person and will be final, binding, and conclusive on all persons.
Offerings. The ESPP Committee may grant, or provide for the grant of, purchase rights to eligible employees under an offering (consisting of one or more purchase periods) during an offering period that it selects. Each offering will be in the offering document and will contain those terms and conditions as the ESPP Committee deems appropriate, subject to the requirements of Section 423(b)(5) of the Code. The provisions of separate offering documents do not need to be identical, but each offering document will include an offering period during which the offering will be effective, which period will not exceed 27 months beginning with the offering date, and the substance of the applicable provisions contained in the 2025 ESPP.
Eligibility. Generally, purchase rights may be granted only to employees, including executive officers, employed by us (or by any of our affiliates or related corporations as designated by the ESPP Committee) on the first day of an offering period if such employee has been employed by us or by one of our designated affiliates or related corporations for such continuous period preceding such date as the ESPP Committee may require, but in no
event will the required period of continuous employment exceed two years. The ESPP Committee may (unless prohibited by applicable law) require that employees have to satisfy one or both of the following service requirements: (i) being customarily employed by us, or any of our related corporations or affiliates, for more than 20 hours per week and more than five months per calendar year and (ii) such other criteria as our board of directors may determine consistent with Section 423 of the Code. No employee will be eligible for the grant of any purchase rights under the 2025 ESPP if immediately after such rights are granted, such employee owns stock possessing five percent or more of the total combined voting power or value of all classes of our outstanding capital stock (or the stock of any related corporation) determined in accordance with the rules of Section 424(d) of the Code. An employee may be granted purchase rights only if such purchase rights, together with any other rights granted under all employee stock purchase plans of ours or any of our related corporations, do not permit such employee’s rights to purchase our stock or the stock of any of our related corporations to accrue at a rate that, when aggregated, exceeds $25,000 (based on the fair market value per share on the date on which the purchase right is granted) for each calendar year in which such purchase rights are outstanding at any time. The ESPP Committee may also exclude highly compensated employees, within the meaning of Section 423(b)(4)(D) of the Code, from participation in any offering period.
Purchase Rights; Purchase Price. On the first day of each offering period, each eligible employee, pursuant to the applicable offering document and the terms of the 2025 ESPP, will be granted a purchase right to purchase up to that number of shares purchasable with a percentage, as designated by the ESPP Committee in the subscription agreement for the offering period, which will not exceed 15% of such employee’s earnings. During each offering period that begins on the first day of the offering period (or such later date as the ESPP Committee determines for a particular offering) and ends on the date stated in the offering document, which date will be no later than the end of the offering period, an employee may decrease (but not increase) such percentage of earnings as designated in the offering document. The ESPP Committee will establish one or more purchase dates during an offering period on which purchase rights granted for that offering period will be exercised and shares will be purchased in accordance with the offering document. Each eligible employee may purchase up to shares in an offering period (or such lesser number of shares determined by the ESPP Committee prior to the start of the offering period).
The purchase price of shares acquired pursuant to purchase rights will not be less than 85% of the lesser of (i) the fair market value of a share on the first day of an offering period and (ii) the fair market value of a share on the date of purchase.
Participation; withdrawal; termination. An eligible employee may elect to participate in an offering and authorize payroll deductions as the means of making contributions by completing and delivering to us or our designee, within the time specified in the offering document, a subscription agreement in an enrollment form provided by us or our designee. The enrollment form will specify the amount of contributions not to exceed the maximum amount specified by the ESPP Committee. Each participant’s contributions will be credited to an account for the participant under the 2025 ESPP and will be maintained with our general funds except where applicable law requires that contributions be deposited with a third party. If permitted in the offering document, a participant may begin such contributions with the first payroll occurring on the first trading day of the applicable offering period (or, in the case of a payroll date that occurs after the end of the prior offering period but before the first day of the next new offering period, contributions from such payroll will be included in the new offering period). If permitted in the offering document, a participant may thereafter reduce (including to zero) his contributions. If required under applicable law or if specifically provided in the offering document, in addition to or instead of making contributions by payroll deductions, a participant may make contributions through payment by cash, check, or wire transfer prior to a purchase date.
During an offering period, a participant may cease making contributions and withdraw from the offering by delivering to us or our designee a written notice. We may impose a deadline before a purchase date for withdrawing. Upon such withdrawal, such participant’s purchase right in that offering period will immediately terminate, and we will distribute as soon as practicable to such participant all of his accumulated but unused contributions. A participant’s withdrawal from that offering period will have no effect upon his eligibility to participate in any other offering periods under the 2025 ESPP, but such participant will be required to deliver a new subscription agreement in an enrollment form to participate in subsequent offering periods.
Unless otherwise required by applicable law, purchase rights granted pursuant to any offering under the 2025 ESPP will terminate immediately if the participant is no longer an employee for any reason or for no reason (subject to any post-employment participation period required by applicable law) or is otherwise no longer eligible to participate. Upon termination from the 2025 ESPP, we will distribute to the individual his accumulated but unused contributions as soon as practicable.
Unless otherwise determined by the ESPP Committee, a participant whose employment transfers or whose employment terminates with an immediate rehire (with no break in service) by or between us and one of our subsidiaries designated to participate in an offering period (or between such designated subsidiaries) will not be treated as having terminated employment for purposes of participating in the 2025 ESPP or an offering period. The ESPP Committee may establish different and additional rules governing transfers between separate offerings. Unless specified otherwise in the offering document or as required by applicable law, we will have no obligation to pay interest on contributions.
Purchase of shares. On each purchase date, each participant’s accumulated contributions will be applied to the purchase of whole shares, up to the maximum number of shares permitted by the 2025 ESPP and the applicable offering document, at the purchase price specified in the offering document. Unless otherwise provided in the offering document, if any amount of accumulated contributions remains in a participant’s account after the purchase of shares on the final purchase date of an offering period, then such remaining amount will roll over to the next offering period, unless the participant elects not to participate in such subsequent offering period or withdraws from the 2025 ESPP. If the ESPP Committee determines that, on a given purchase date, the number of shares with respect to which rights are to be exercised may exceed either the number of shares available for issuance under the 2025 ESPP on the enrollment date of the offering period or the number of shares available for issuance under the 2025 ESPP on the purchase date, the ESPP Committee may in its sole discretion provide that we make a pro rata allocation of the shares available for purchase on such enrollment date or purchase date, as applicable, in as uniform a manner as practicable and as it determines in its sole discretion.
A participant will not be deemed to be the holder of, or to have any of the rights of a holder with respect to, shares subject to purchase rights unless and until the participant’s shares acquired upon exercise of purchase rights are recorded in our books (or the books of our transfer agent) or issued in certificated form.
Changes to capital structure and other adjustments. If the ESPP Committee determines that any dividend or other distribution (whether in the form of cash, common stock, other securities, or other property), change in control, reorganization, merger, amalgamation, consolidation, combination, repurchase, recapitalization, liquidation, dissolution, or sale, transfer, exchange, or other disposition of all or substantially all of the assets of our company, or sale or exchange of common stock or other securities of our company, issuance of warrants or other rights to purchase common stock or other securities of our company, or other similar corporate transaction or event affects the common stock such that an adjustment would be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended by our company to be made available under the 2025 ESPP or with respect to any outstanding purchase rights under the 2025 ESPP, the ESPP Committee must make equitable adjustments, if any, to reflect such change with respect to the aggregate number, type, and class of shares (or other securities or property) that may be issued under the 2025 ESPP and the purchase price with respect to any outstanding rights.
If the ESPP Committee determines that any of the foregoing has occurred, or that any unusual or nonrecurring transactions or events affecting us, any affiliate of us, or the financial statements of us or any affiliate, or that changes in applicable law or accounting principles have occurred, then the ESPP Committee may take any one or more of the following actions whenever the ESPP Committee determines that such action is appropriate in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the 2025 ESPP or with respect to any right under the 2025 ESPP, to facilitate such transactions or events or to give effect to such changes in laws, regulations, or principles: (i) terminating outstanding purchase rights in exchange for a cash payment, a replacement right, or property, (ii) providing for the assumption of, or substitution for, outstanding rights by a successor, (iii) adjusting the number and type of shares subject to, or the terms and conditions of, outstanding rights, (iv) shortening the then-outstanding offering periods, and (v) terminating outstanding rights without being exercised.
Transferability. During a participant’s lifetime, purchase rights will be exercisable only by a participant. Purchase rights are not transferable by a participant, except by will, by the laws of descent and distribution, or if permitted by us, by a beneficiary designation.
Tax withholding. Each participant must make arrangements satisfactory to us and any applicable related corporation to enable us or our related corporation to fulfill any withholding obligation for taxes arising out of or in relation to a participant’s participation in the 2025 ESPP.
Amendment, suspension, and termination. The ESPP Committee will have the authority to amend, suspend, or terminate the 2025 ESPP. Shareholder approval is required for any amendment to the 2025 ESPP if such approval is required by applicable law or listing requirements. Shareholder approval is required to amend the 2025 ESPP to increase the aggregate number, or change the type, of shares that may be sold pursuant to rights granted under the 2025 ESPP (other than permitted adjustments described above) or to change the 2025 ESPP in any manner that would be considered the adoption of a new plan within the meaning of Treasury Regulation Section 1.423-2(c)(4). No purchase rights may be granted under the 2025 ESPP while it is suspended or after it is terminated.
IPO Equity Awards
In connection with the pricing of this offering, we intend to grant equity awards to certain of our employees and certain directors and employees of WH Group who are expected to contribute significantly to the success of this offering and our business following the completion of this offering, including each of our NEOs. Each such award will be granted 50% in restricted stock units and 50% in stock options. Such restricted stock units and stock options will vest in equal annual installments over five years from the grant date.
Pursuant to such awards, we intend to grant options to purchase shares with an exercise price equal to the initial public offering price and restricted stock units. Of these grants, our NEOs will receive options to purchase shares and restricted stock units.
The foregoing numbers of options and restricted stock units to be granted are estimates calculated using the midpoint of the estimated public offering price range set forth on the cover of this prospectus as applied to the intended aggregate grant date value of the awards, and the final numbers to be granted will be calculated using the initial public offering price.
Director Compensation
We have not paid any director compensation for service on the board prior to this offering. In connection with the completion of this offering, we intend to adopt a director compensation program consisting of:
•an annual cash retainer of $110,000;
•an annual grant of restricted stock units with a grant value of $180,000; and
•an additional annual cash retainer for the chair of the Audit Committee of $25,000 and for the members of the Audit Committee of $10,000.
Cash retainers will be paid quarterly in arrears. Restricted stock units will generally be granted on the date that we hold our annual shareholder meeting, and will vest on the earlier of the subsequent annual shareholder meeting or one year after the grant date, except with respect to the initial grant. At the closing of this offering, our non-employee directors will receive their initial annual grant of restricted stock units, which will vest at our annual shareholder meeting in 2026.
Non-employee directors who join our board of directors between annual meetings will have their annual retainers for the term prorated. Directors who are also employees of the company or any of our affiliates will not receive any additional compensation for their service as directors.
Restricted stock units will be administered under the 2025 Incentive Plan. The preceding summary is qualified in its entirety by reference to the full text of the 2025 Incentive Plan.
In addition, we paid each of our independent directors approximately $25,000 in consulting fees related to advisory services provided to us in the month preceding the pricing of this offering.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In addition to the director, director nominee and executive officer compensation arrangements discussed above in the section entitled “Executive Compensation,” this section describes transactions, or series of related transactions, during our last three fiscal years or as currently proposed, to which we were a party or will be a party, in which:
•the amount involved exceeded or will exceed $120,000; and
•any of our directors, director nominees, executive officers or beneficial owners of more than 5% of any class of our capital stock, or any members of the immediate family of and any entity affiliated with any such person, had or will have a direct or indirect material interest.
Relationship with WH Group
We are a wholly owned subsidiary of WH Group. Following this offering, WH Group will continue to hold a majority of our outstanding common stock. We expect that WH Group will continue to consolidate our financial results in its consolidated financial statements at least until such time as WH Group ceases to own a majority of the combined voting power of our then-outstanding shares of common stock.
Historical Agreements with WH Group
Prior to this offering, we have operated as part of WH Group’s corporate organization rather than as a stand-alone public company. The previous transactions and arrangements we had with WH Group and/or other related persons are described below.
Transactions with WH Group
The table below sets forth our sales to and purchases from WH Group for the periods indicated:
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| (in millions) |
Sales to WH Group (1) | $ | 463 | | | $ | 442 | | | $ | 824 | |
Purchases from WH Group (2) | 33 | | | 62 | | | 59 | |
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(1)Sales to WH Group reflects our sale of pork products to subsidiaries of WH Group (other than our company and our company’s subsidiaries). Amounts for the periods presented exclude pre-European Carve-out sales by our European operations to subsidiaries of WH Group in the amount of $24 million, $29 million and $35 million during fiscal years 2023, 2022 and 2021, respectively. These amounts have been excluded because, as a result of the European Carve-out, our results of operations will not reflect such sales subsequent to August 26, 2024.
(2)As a result of the European Carve-out, our results of operations will not reflect transactions by our pre-European Carve-out European operations subsequent to August 26, 2024. However, we expect to continue to purchase Krakus-branded ham and deli meat products from the European operations of WH Group. As a result, Purchases from WH Group reflects purchases by us from our European operations prior to the European Carve-out, but excludes purchases by our European operations from subsidiaries of WH Group (other than our company and our company’s subsidiaries) prior to the European Carve-out in the amount of $5 million and $1 million during fiscal years 2023 and 2022, respectively. We have included purchases by us from our European operations prior to the European Carve-out because, subsequent to August 26, 2024, our results of operations will reflect purchases by us from our pre-European Carve-out European operations that are now the European operations of WH Group. We have excluded purchases by our pre-European Carve-out European operations from subsidiaries of WH Group (other than our company and our company’s subsidiaries) because, subsequent to August 26, 2024, our results of operations will not reflect such transactions.
We have entered into commercial arrangements with WH Group intended to formalize our historical sale to and purchases from WH Group detailed in the table above.
On August 15, 2024, we entered into a long-term distribution framework agreement, or the Distribution Agreement, with WH Group in relation to the exclusive rights for us to distribute Krakus-branded ham and deli meat
products in North America and South America. Pursuant to the terms of the distribution agreement, WH Group is required to make available and sell products to us in accordance with specified non-binding annual amounts mutually agreed upon. We are not restricted from selling similar or competing products. The pricing terms are set on an arm’s length basis based on a formula price that takes into account an index price for cooked ham and the prevailing exchange rates between the United States and Poland. Any price increases requested by WH Group must be validated by market information provided to us by WH Group. We expect the pricing under the Distribution Agreement to result in prices comparable to prevailing market prices for Polish ham sold by other manufacturers. We are required to purchase a minimum quantity of products annually to retain our exclusive distributor status. In addition, we are granted a non-transferable and non-exclusive license to use the trademark of “Krakus” and associated trade dress and logos. The distribution agreement will terminate on August 31, 2034 and will thereafter renew automatically for additional successive three-year terms unless either party provides a timely notice of its intent not to renew.
On January 1, 2024, Smithfield Fresh Meats Sales Corp, our wholly owned U.S. subsidiary, and Rotary Vortex Limited, or Vortex, a wholly owned Hong Kong subsidiary of WH Group, entered into a master sale and purchase agreement, or the Vortex Master Sale and Purchase Agreement, in relation to the sale by us of pork products to WH Group for a term of one year. Under the Vortex Master Sale and Purchase Agreement, WH Group is not required to procure, and we are not obliged to sell, any specific quantity of products at any specified price levels to one another, and WH Group could source from other suppliers and we could sell to other customers in China, at comparable prices. The relevant transaction prices for the pork products sold by us to WH Group are set on an arm’s length basis with reference to market prices including the pork cut-out values published by the USDA.
We may also periodically procure raw materials, such as bellies, ribs and other items from the European operations of WH Group to supplement the raw material supply for our downstream operations as and when needed. In addition, we also anticipate that the China operations of WH Group will purchase hog casing raw materials from us from time to time.
European Carve-out
We transferred our operations in Europe to WH Group on August 26, 2024.
Transitional Services Agreement
Pursuant to a transitional services agreement entered into at the time of the European Carve-out, we continue to provide the Europe Business of WH Group, on a cost plus basis, certain administrative services, including IT support services through December 2024, financial reporting services through March 2025 and tax advisory services through August 2025. The transitional services are intended to facilitate the organized transition of WH Group’s Europe Business to WH Group following the European Carve-out.
Trademark License Agreements and Related Agreements
On July 10, 2014, SF Investments, Inc., or SFII, a wholly owned U.S. subsidiary of our company, and Vortex entered into a trademark license agreement, or the 2014 Vortex Trademark License Agreement, pursuant to which SFII granted Vortex a perpetual, non-exclusive, royalty bearing right and license, in China, Hong Kong and Macau, to use Smithfield trademarks to import, manufacture, promote, distribute and sell meats, including pork and poultry. Pursuant to the terms of the 2014 Vortex Trademark License Agreement, Vortex (as the licensee) has the right to sublicense the foregoing rights solely to Shuanghui Development, a non-wholly owned subsidiary of WH Group, for a term beginning in July 2014 and ending until the 2014 Vortex Trademark License Agreement is terminated in accordance with the terms and conditions therein. On September 4, 2023, SFII and Vortex entered into a trademark license agreement, as amended on January 1, 2024, which we refer to as the 2023 Vortex Trademark License Agreement and, together with the 2014 Vortex Trademark License Agreement, the China Trademark License Agreements, in relation to the license of Smithfield trademarks, for an initial term from September 4, 2023 to December 31, 2028.
Pursuant to the terms of the China Trademark License Agreements, Vortex sublicensed the use of Smithfield trademarks to Shuanghui Development, which allows Shuanghui Development the use of Smithfield trademarks for
the production and sales of Smithfield brand products in China. Shuanghui Development would pay royalty fees to Vortex in return.
Relationship with WH Group Following this Offering
We have entered into a shareholders agreement and a registration rights agreement with the selling shareholder, establishing a framework for our relationship with WH Group after this offering. See “Principal and Selling Shareholders” for more information on WH Group.
Shareholders Agreement
The shareholders agreement governs certain aspects of the relationship between WH Group and us following this offering as set forth below.
WH Group Rights with Respect to Board and Committee Representation
The shareholders agreement entitles WH Group to have our board include in the candidates for director elections a specified number of directors nominated by WH Group based on its beneficial ownership of our common stock, as follows:
•until WH Group ceases to beneficially own more than 50% of our outstanding common stock, WH Group will be entitled to nominate for election to our board a majority of the directors on the board;
•thereafter, and until WH Group ceases to beneficially own at least 10% of our outstanding common stock, WH Group will be entitled to nominate for election to our board a number of the total number of directors entitled to serve on the board proportionate to the percentage of our outstanding common stock beneficially owned by WH Group, rounded up to the nearest whole number; and
•thereafter, WH Group will no longer have any right to nominate for election to our board directors to serve on the board under the shareholders agreement.
In connection with the foregoing, WH Group shall take the necessary actions to ensure that the composition of our board complies with the rules of Nasdaq with respect to the number of independent directors serving.
The shareholders agreement provides that, until WH Group ceases to beneficially own more than 50% of our outstanding common stock, (i) the Chairperson of the board will be a director designated by WH Group and (ii) WH Group’s consent will be required for (A) the election, appointment, designation or removal (other than for cause) of the Chairperson of the board and (B) any change to the number of directors on the board.
The shareholders agreement also provides that:
•at any time during which the board includes a director designated by WH Group who is also an independent director, at least one member of the audit committee of the board will be a director designated by WH Group, so long as the director meets certain standards for membership on the committee;
•until WH Group ceases to beneficially own at least 25% of our outstanding common stock, if the board has a compensation committee, WH Group will be entitled to designate a number of the total number of directors entitled to serve on the compensation committee proportionate to the percentage of our outstanding common stock beneficially owned by WH Group, rounded up to the nearest whole number, provided that following the date on which WH Group ceases to beneficially own more than 50% of our outstanding common stock, such directors must be independent directors;
•until WH Group ceases to beneficially own at least 25% of our outstanding common stock, if the board has a nominating and governance committee, WH Group will be entitled to designate a number of the total number of directors entitled to serve on the nominating and governance committee proportionate to the percentage of our outstanding common stock beneficially owned by WH Group, rounded up to the nearest
whole number, provided that following the date on which WH Group ceases to beneficially own more than 50% of our outstanding common stock, such directors must be independent directors; and
•until WH Group ceases to beneficially own more than 50% of our outstanding common stock, subject to certain exceptions, the compensation committee and the nominating and governance committee will only act with the consent of a majority of the members of the committee, which majority must include a director designated by WH Group.
Information Rights; Accounting and Financial Disclosure Matters
In addition, pursuant to the shareholders agreement, following the completion of this offering, we will comply with certain covenants relating to our financial reporting to account for WH Group’s investment in us under the principles of consolidation and the equity method of accounting, as applicable, or to complete a financial statement audit for any such period. These include covenants regarding:
•delivery or supply of monthly, quarterly and annual financial information, as applicable, and periodic budgets and financial projections to WH Group;
•provision to WH Group of reasonable access to our auditors and other professional advisors retained by us as well as certain books and records related to internal accounting controls or our company’s operations; and
•cooperation with WH Group to the extent reasonably requested by WH Group in the preparation of its public filings, tax filings and press releases.
The shareholders agreement also requires that we and WH Group provide each other with information reasonably necessary to comply with our respective reporting, disclosure, filing, notification or other requirements of any national securities exchange or governmental authority, for use in judicial, regulatory, administrative and other proceedings or to satisfy audit, accounting, regulatory, litigation and other similar requirements.
Releases; Indemnification
We and WH Group each agree to release the other party and its affiliates, successors and assigns and all persons that, at or prior to the completion of this offering, have been the other party’s shareholders, directors, officers, agents or employees, and their respective heirs, executors, administrators, successors and assigns, from any and all claims against any of them that arise out of or relate to events, circumstances or actions occurring or failing to occur or any conditions existing at or prior to the completion of this offering. These releases are subject to certain exceptions, including for any right to enforce the shareholders agreement or certain other agreements between the parties, in each case in accordance with their terms.
The shareholders agreement also provides for cross-indemnities that, except as otherwise provided in the shareholders agreement, are principally designed to place financial responsibility for the obligations and liabilities allocated to us under the shareholders agreement with us and financial responsibility for the obligations and liabilities allocated to WH Group under the shareholders agreement with WH Group. Specifically, each party will indemnify, defend and hold harmless the other party, its affiliates and subsidiaries and each of its officers, directors, employees and agents for any losses arising out of or due to:
•the liabilities or alleged liabilities for the operation of the indemnifying party’s business; or
•any untrue statement or alleged untrue statement of a material fact contained in any document filed with the SEC, or any omission or alleged omission to state a material fact required to be stated in any document filed with the SEC after this offering and to the extent such statement or omission was made based on information provided by the indemnifying party.
Each party’s aforementioned indemnification obligations are subject to reduction by any insurance proceeds (net of premium increases) received by the party being indemnified. The shareholders agreement also specifies procedures with respect to claims subject to indemnification and related matters. Generally speaking, except as
otherwise set forth in any other transaction agreement, absent fraud or willful misconduct by an indemnifying party, these indemnification provisions are the sole and exclusive remedy of an indemnitee for any monetary or compensatory damages or losses resulting from any breach of the shareholders agreement or any transaction agreement.
Dispute Resolution
The shareholders agreement contains provisions that govern the resolution of disputes or claims arising out of, relating to or in connection with the shareholders agreement. These provisions contemplate that if a dispute or claim cannot be resolved by senior officers of the parties, either party may submit the dispute or claim to non-binding mediation or, at any time before, during or following such non-binding mediation, binding arbitration, subject to the provisions of the shareholders agreement.
Registration Rights Agreement
We have entered into a registration rights agreement with the selling shareholder. Pursuant to that agreement, we have agreed to effect the registration under applicable federal securities laws of shares of our common stock held by WH Group following this offering.
Demand Registration
Pursuant to the registration rights agreement, WH Group and its permitted transferees may request that we register their shares and effect underwritten offerings following the completion of this offering. Such registrations may be effected pursuant to a shelf registration statement on Form S-3 once we are permitted to file such a registration statement, which will be no earlier than 12 full calendar months after the pricing of this offering. The registration rights agreement sets forth customary registration procedures, including an agreement by us to make our management reasonably available to participate in customary road show presentations in connection with any underwritten offerings.
Piggyback Registration
WH Group and its permitted transferees also have “piggyback” registration rights, such that WH Group and its permitted transferees may include their respective shares in any future registrations of our equity securities, whether or not that registration relates to a primary offering by us or a secondary offering by or on behalf of any of our shareholders.
Registration Expenses
We are responsible for all expenses incurred in connection with the performance of our obligations under the registration rights provisions under the registration rights agreement, as well as the fees and expenses of one counsel to the selling shareholder. The selling shareholder will be responsible for other expenses that it incurs and for any applicable underwriting discounts or commissions and any stock transfer taxes.
Indemnification
We will also agree to indemnify WH Group and its permitted transferees with respect to liabilities resulting from untrue statements or omissions in any registration statement used in any such registration, including in connection with this offering, other than untrue statements or omissions resulting from information furnished to us for use in a registration statement by WH Group or its permitted transferee.
Hong Kong Stock Exchange Matters of WH Group
Pursuant to Practice Note 15 of The Rules Governing the Listing of Securities of The Stock Exchange of Hong Kong Limited, this offering is deemed a “spin-off” transaction by WH Group for which WH Group requires approval by The Stock Exchange of Hong Kong Limited. On September 6, 2024, The Stock Exchange of Hong Kong Limited confirmed that WH Group may proceed with the “spin-off” transaction. Pursuant to Practice Note 15, WH Group is required to provide to its shareholders an “assured entitlement” to a certain portion of our shares.
WH Group intends to effect the Assured Entitlement Distribution by providing to its shareholders a “distribution in specie” of a certain portion of our common stock held by WH Group. The distribution will be made without any consideration being paid by WH Group’s shareholders. WH Group’s shareholders who are entitled to fractional shares of our common stock, who elect to receive cash in lieu of shares of our common stock, who are located in the United States or are U.S. persons, or are otherwise ineligible holders, will only receive cash in the Assured Entitlement Distribution.
WH Group currently intends that the Assured Entitlement Distribution will represent approximately 0.35% to 0.45% of our outstanding shares following the completion of this offering. The Assured Entitlement Distribution will only be made if this offering is completed. The distribution in specie of shares of our common stock by WH Group is not part of this offering.
Policies and Procedures for Related Person Transactions
Prior to the completion of this offering, our board will approve a written related person transaction policy that will set forth policies and procedures with respect to our review and approval of certain transactions between us and a “related person,” or a “related person transaction.” Pursuant to the terms of our related person transaction policy, our board, acting through our audit committee, will review and decide whether to approve or ratify any related person transaction. Any related person transaction is required to be reported to our legal department, which will then determine whether it should be submitted to our audit committee for consideration. Our audit committee must then review and decide whether to approve any related person transaction.
For the purposes of our related person transaction policy, a “related person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we were, are or will be a participant and the amount involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect interest.
A “related person,” as defined in our related person transaction policy, means any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer of our company or a nominee to become a director of our company; any person who is known to be the beneficial owner of more than five percent of our common stock; any immediate family member of any of the foregoing persons, including any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of the director, executive officer, nominee or more than five percent beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than five percent beneficial owner; and any firm, corporation or other entity in which any of the foregoing persons is a general partner or, for other ownership interests, a limited partner or other owner in which such person has a beneficial ownership interest of 10% or more.
Director Nominee Related Person Transactions
We purchase grain at spot market prices from each of the father and brother of our director nominee, Raymond Starling. In 2022, we purchased approximately $150,000 of grain from Mr. Starling’s father. Our purchases of grain from each of Mr. Starling’s father and brother did not otherwise exceed $120,000 in any other fiscal year during the last three fiscal years.
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth the number and percentage of shares of our common stock beneficially owned (1) immediately prior to the completion of this offering and (2) upon completion of this offering, by:
•each person known to us to beneficially own more than 5% of our shares of common stock (including the selling shareholder);
•each of our named executive officers and each person whom we anticipate will serve on the board upon completion of this offering; and
•all persons whom we anticipate will serve as our executive officers or on our board upon completion of this offering, collectively as a group.
Percentage of beneficial ownership in the following table is based on shares of our common stock outstanding immediately prior to the completion of this offering and shares of our common stock outstanding upon completion of this offering. In addition, the following table does not reflect any shares of our common stock that may be purchased in this offering, including through our directed share program described under “Underwriting—Directed Share Program.”
Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. A security holder is also deemed to be, as of any date, the beneficial owner of all securities that such security holder has the right to acquire within 60 days after such date through (1) the exercise of any option or warrant, (2) the conversion of a security, (3) the power to revoke a trust, discretionary account or similar arrangement or (4) the automatic termination of a trust, discretionary account or similar arrangement. Shares issuable pursuant to options are deemed to be outstanding for computing the beneficial ownership percentage of the person holding those options but are not deemed to be outstanding for computing the beneficial ownership percentage of any other person.
Unless otherwise indicated in the footnotes to the following table, to our knowledge all persons listed below have sole voting and investment power with respect to the shares of our common stock beneficially owned by them, subject to applicable community property laws. Unless otherwise indicated in the footnotes to the following table, the address for each shareholder listed below is c/o Smithfield Foods, Inc., 200 Commerce Street, Smithfield, Virginia 23430.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common stock beneficially owned prior to this offering | | Common stock to be sold in this offering | | Common stock beneficially owned after this offering (assuming the underwriters do not exercise their option to purchase additional shares) | | Common stock beneficially owned after this offering (assuming the underwriters exercise in full their option to purchase additional shares) |
| Name of Beneficial Owner | Shares | | % | | Shares | | Shares | | % | | Shares | | % |
| 5% or Greater Shareholder: | | | | | | | | | | | | | |
SFDS UK Holdings Limited (1) | | | 100 | | | | | | | | | | | |
| Named Executive Officers: | | | | | | | | | | | | | |
| C. Shane Smith | | | — | | | | | | | | | | | |
| Mark L. Hall | | | — | | | | | | | | | | | |
| Steven France | | | — | | | | | | | | | | | |
| Keller D. Watts | | | — | | | | | | | | | | | |
| Doug Sutton | | | — | | | | | | | | | | | |
| Directors: | | | — | | | | | | | | | | | |
| Long Wan | | | — | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Lijun Guo | | | — | | | | | | | | | | | |
| Hongwei Wan | | | — | | | | | | | | | | | |
| Hank Shenghua He | | | — | | | | | | | | | | | |
| Xiaoming Zhou | | | — | | | | | | | | | | | |
Executive officers and directors as a group ( persons) | | | — | | | | | | | | | | | |
________________
*Represents beneficial ownership or outstanding total voting power, as applicable of less than 1 percent.
(1)The address of SFDS UK Holdings Limited is 1 Chamberlain Square Cs, Birmingham, United Kingdom, B3 3AX.
DESCRIPTION OF CAPITAL STOCK
In connection with this offering, we will amend and restate our articles of incorporation and our bylaws. The following description summarizes the material terms of our amended and restated articles of incorporation and our amended and restated bylaws, which will be in effect prior to the completion of this offering, as well as the relevant sections of the Virginia Stock Corporation Act, or the VSCA. The following description is not complete and is qualified in its entirety by reference to the full text of our amended and restated articles of incorporation and our amended and restated bylaws, the forms of which are filed as exhibits to the registration statement of which this prospectus is a part, and to the VSCA.
General
Upon completion of this offering, our authorized capital stock will consist of shares of common stock, par value $ per share, and shares of preferred stock, par value $ per share. Upon completion of this offering, there will be shares of our common stock outstanding, and no shares of our preferred stock outstanding. As of December 29, 2024, all shares of our common stock outstanding are held by one shareholder: SFDS UK Holdings Limited.
Common Stock
Holders of shares of our common stock will be entitled to the rights set forth below.
Voting Rights
Each holder of shares of our common stock will be entitled to one vote per share of our common stock on all matters which may be submitted to the holders of shares of our common stock. At any meeting of our shareholders, the holders of a majority in voting power of the outstanding shares entitled to vote at such meeting must be present in person or represented by proxy in order to constitute a quorum.
At any meeting of our shareholders, action on a matter, except as otherwise expressly provided by statute, our amended and restated articles of incorporation or our amended and restated bylaws, will be determined by a majority of the votes properly cast for and against such matter. Except as otherwise required by law, a nominee for election as a director will be elected to the board by a plurality of the votes cast with respect to that director’s election.
Dividend Rights
Subject to any preferential rights of any outstanding shares of our preferred stock, each holder of shares of our common stock will be entitled to receive ratably dividends or other distributions, if any, as may be declared and paid or set apart for payment from time to time by our board out of any assets legally available for the payment of the dividends or other distributions, but only when and as declared by our board or any authorized committee thereof.
Liquidation, Dissolution and Winding-Up Rights
In the event of a liquidation, dissolution or winding-up of our company, each holder of shares of our common stock will be entitled to ratable distribution of our net assets that remain after the payment in full of all liabilities and the liquidation preferences of any outstanding shares of our preferred stock.
Other Rights
Holders of shares of our common stock will have no preemptive rights or conversion rights to purchase, subscribe for or otherwise acquire any shares of our common stock or preferred stock or any other securities. There are no redemption or sinking fund provisions applicable to the shares of our common stock. All of the outstanding shares of our common stock are, and the shares of our common stock to be issued pursuant to this offering will be, fully paid and non-assessable.
Preferred Stock
We do not currently have any preferred stock outstanding. However, our amended and restated articles of incorporation will authorize our board to classify or reclassify one or more classes, or series within a class of preferred stock (including convertible preferred stock), without shareholder action. Our board will be able to determine, with respect to any class or series of preferred stock, the number of shares and the terms, including the preferences, rights and limitations, of that class or series, including, without limitation, voting rights, preferences and the relative, participating, optional or other special rights of the shares of any such class or series and any qualifications, limitations and restrictions thereof.
We will be able to issue a class or series of preferred stock that could, depending on the terms of the class or series, impede or discourage an acquisition attempt or other transaction that some, or a majority, of the holders of our common stock might believe to be in their best interests or in which the holders of our common stock might receive a premium for their common stock over the market price of our common stock. In addition, the issuance of preferred stock may adversely affect the holders of our common stock by restricting the payment of dividends or other distributions on our common stock, diluting the voting power of our common stock or subordinating the rights of our common stock to any payment upon a liquidation, dissolution or winding up of our company or other event. The issuance of preferred stock could have the effect of delaying, deferring, impeding or preventing a change of control or other corporate action. As a result of these or other factors, the issuance of shares of one or more classes or series of our preferred stock may have an adverse impact on the market price of our common stock.
Election and Removal of Directors; Vacancies
Our amended and restated articles of incorporation will provide that our board will be divided into three classes of directors, with staggered three-year terms. As a result, approximately one-third of our board will be elected each year. Our amended and restated articles of incorporation will provide that any director may be removed for cause or without cause by the affirmative vote of holders of a majority of the voting power of the shares of common stock outstanding and entitled to vote on the election of directors. However, from and after such time when WH Group (including its permitted transferees) ceases to own a majority of the combined voting power of our then-outstanding shares of common stock entitled to vote generally in director elections, our directors may only be removed for cause, by the affirmative vote of holders of a majority of the voting power of the shares of common stock outstanding and entitled to vote on the election of directors.
Our amended and restated articles of incorporation will provide that any vacancies in our board, however created, will be filled by appointment made solely and exclusively by the affirmative vote of a majority of the directors remaining in office, even if less than a quorum of our board, and not by the shareholders. In addition, our amended and restated articles of incorporation will provide that any directorship to be filled by reason of an increase in the number of directors on our board may be filled by election by a majority of the directors then in office. Pursuant to the VSCA, any director appointed by our board to fill a vacancy must stand for election at the next meeting of our shareholders at which directors are elected.
Special Shareholder Meetings
Our amended and restated articles of incorporation will provide that a special meeting of our shareholders may be called at any time by (1) the Chair of our board, (2) the President, (3) our board acting pursuant to a resolution approved by the affirmative vote of a majority of the directors then in office or (4) WH Group, up to and until such time when WH Group (including its permitted transferees) ceases to own a majority of the combined voting power of our then-outstanding shares of common stock entitled to vote generally in director elections. Our amended and restated articles of incorporation will provide that our shareholders will otherwise not have the ability to call a special meeting.
Shareholder Action by Written Consent
Our amended and restated articles of incorporation will provide that (1) up to and until such time when WH Group (including its permitted transferees) ceases to own a majority of the combined voting power of our then-outstanding shares of common stock entitled to vote generally in director elections, any action required or permitted
to be taken at any annual or special meeting of our shareholders may be taken by written consent by holders of the requisite number of voting shares without a duly called annual or special meeting of our shareholders and (2) from and after such time when WH Group (including its permitted transferees) ceases to own a majority of the combined voting power of our then-outstanding shares of common stock entitled to vote generally in director elections, holders of shares of our common stock will not be able to act by less-than-unanimous written consent without a duly called annual or special meeting of our shareholders.
Requirements for Advance Notification of Shareholder Proposals
Our amended and restated bylaws will establish advance notice procedures for business (including any nominations for director) to be properly brought by a shareholder before an annual or special meeting of our shareholders. In general, any such notice must be received by us not less than 90 days nor more than 120 days prior to the first anniversary of the date of the preceding year’s annual meeting, or in the event that no annual meeting was held in the previous year, or the date of the annual meeting has been changed by more than 30 days from the first anniversary of the preceding year’s annual meeting, notice by the proposing shareholder to be timely must be received not later than the 10th day following the day on which public announcement of such meeting is first made.
In addition, our amended and restated bylaws will require that, in order to submit a nomination for director, a shareholder must also submit all information relating to such person that is required to be disclosed in solicitations of proxies, as well as comply with requirements regarding the form and content of a shareholder’s notice and provide other information that we require in connection with shareholder proposals, director nominations and solicitations of proxies.
No Cumulative Voting
The VSCA provides that shareholders of a company do not have the right to cumulate votes in the election of directors unless the articles of incorporation of the company provide otherwise. Our amended and restated articles of incorporation will not provide for cumulative voting.
Anti-Takeover Provisions
Our amended and restated articles of incorporation, our amended and restated bylaws and the VSCA contain provisions that may have the effect of impeding the acquisition of control of us by means of a tender offer, a proxy contest, open market purchases or otherwise in a transaction not approved by our board. These provisions may reduce, or have the effect of reducing, our vulnerability to coercive takeover practices and inadequate takeover bids.
The existence of these provisions could limit the price that investors might otherwise pay in the future for shares of common stock. In addition, these provisions may make it more difficult for our shareholders to remove our board or management, should they choose to do so.
Undesignated Preferred Stock
The authority that our board will possess to issue preferred stock, as described under “—Preferred Stock,” could potentially be used to discourage attempts by third parties to obtain control of us through a merger, tender offer or proxy contest or otherwise by making such attempts more difficult or more costly. Our board may be able to issue preferred stock with voting rights or conversion rights that, if exercised, could adversely affect the voting power of the holders of shares of our common stock.
Virginia Anti-takeover Statutes
Affiliated Transactions Statute
The VSCA contains provisions governing affiliated transactions. An affiliated transaction generally is defined as any of the following transactions:
•a merger, a share exchange, certain dispositions of corporate assets not in the ordinary course of business to or with an interested shareholder (defined as any holder of more than 10% of any class of outstanding voting shares), or any material guarantee of any indebtedness of any interested shareholder;
•certain sales or other dispositions of the corporation’s voting shares or any of the corporation’s subsidiaries having an aggregate fair market value greater than 5% of the aggregate fair market value of all outstanding voting shares;
•any dissolution, domestication or conversion of the corporation proposed by or on behalf of an interested shareholder; or
•any reclassification, including reverse stock splits, recapitalization, merger of the corporation with any of its subsidiaries, distribution or other transaction that increases the percentage of outstanding voting shares owned beneficially by any interested shareholder by more than 5%.
In general, these provisions prohibit a Virginia corporation from engaging in affiliated transactions with an interested shareholder for a period of three years following the date that such person became an interested shareholder unless:
•a majority of (but not fewer than two) disinterested directors of the corporation and the holders of two thirds of the voting shares, other than the shares beneficially owned by the interested shareholder, approve the affiliated transaction; or
•before the date the person became an interested shareholder, a majority of disinterested directors approved the transaction that resulted in the shareholder becoming an interested shareholder.
After three years, any such transaction must be at a “fair price,” as statutorily defined, or must be approved by the holders of two thirds of the voting shares, other than the shares beneficially owned by the interested shareholder or approved by a majority of the disinterested directors. For purposes of the affiliated transactions provisions, a “disinterested director” means (i) any member of the board who was a director before the applicable person became an interested shareholder and (ii) any member of the board who was recommended for election, or who was elected to fill a vacancy, by a majority of the disinterested directors then on the board.
The shareholders of a Virginia corporation may include a provision in the corporation’s articles of incorporation or bylaws opting out of the affiliated transactions provisions. Our amended and restated articles of incorporation will contain a provision opting out of the affiliated transactions provisions; however, our amended and restated articles of incorporation will also include a provision containing substantially similar restrictions as the affiliated transactions provisions, except that (i) WH Group (including its permitted transferees), (ii) its affiliates and successors and (iii) any “group,” and any member of any such group, to which any such persons described in clauses (i) or (ii) are a party under Rule 13d-5 of the Exchange Act will not be “interested shareholders.”
Control Share Acquisitions Statute
The VSCA also contains provisions relating to control share acquisitions, which are transactions causing the voting power of any person acquiring beneficial ownership of shares of a Virginia public corporation to meet or exceed certain threshold percentages (20 percent, 33 1/3 percent or more than 50 percent) of the total votes entitled to be cast for the election of directors. Shares acquired in a control share acquisition have no voting rights unless:
•the voting rights are granted by a majority of all the votes which could be cast on the election of directors, other than those held by the acquiring person or any officer or employee director of the corporation; or
•the articles of incorporation or bylaws of the corporation provide that these Virginia law provisions do not apply to acquisitions of its shares.
If requested by the acquiring person, the corporation shall call a special meeting of the shareholders to be held within 50 days of the corporation’s receipt of the acquiring person’s request to consider the grant of voting rights to the shares acquired in the control share acquisition. If authorized by the corporation’s articles of incorporation or bylaws and voting rights are not granted, the acquiring person’s shares may be repurchased by the corporation, at its option, at a price per share equal to the acquiring person’s cost. The VSCA law grants dissenters’ rights to any shareholder who objects to a control share acquisition that is approved by a vote of disinterested shareholders and that gives the acquiring person control of a majority of the corporation’s voting shares.
Our amended and restated articles of incorporation will contain a provision opting out of the control share acquisition provisions.
Classified Board
Under the classified board provisions, it would take at least two elections of directors for any individual or group to gain control of our board. Accordingly, these provisions could discourage a third party from initiating a proxy contest, making a tender offer or otherwise attempting to gain control of our company.
Amendment of the Articles of Incorporation
Our amended and restated articles of incorporation will provide that, subject to the rights of any preferred shares then outstanding or as otherwise required by applicable law, the affirmative vote of the holders of a majority of the total voting power of the outstanding shares of common stock of our company entitled to vote thereon shall be required to amend or alter our amended and restated articles of incorporation.
Amendment of Bylaws
Our amended and restated articles of incorporation will provide that our amended and restated bylaws may be amended or repealed by (1) the affirmative vote of a majority of our board, subject to certain limits set forth in the VSCA, or (2) the affirmative vote of the holders of a majority of the outstanding shares of capital stock.
Conflicts of Interest; Business Opportunities
In order to address potential conflicts of interest between us and WH Group, our amended and restated articles of incorporation will include provisions eliminating, to the fullest extent permitted by Virginia law, any duty of WH Group or its affiliates or any of our directors, officers and employees who are also directors, officers or employees of WH Group or its affiliates to offer us the right to have or participate in any business opportunities before they may pursue or take such business opportunity, in each case so long as such business opportunity was not expressly offered to such person solely in his or her capacity as our director, officer or employee. These provisions generally recognize that we and WH Group may engage in the same or similar business activities and lines of business or have an interest in the same areas of business opportunities and that we and WH Group will continue to have contractual and business relations with each other.
Limitation of Liability, Indemnification of Directors and Officers and Insurance
The VSCA authorizes corporations to include provisions in the articles of incorporation or a shareholder-approved bylaw that limit or eliminate the personal liability of directors or officers to corporations and their shareholders for monetary damages except for liability resulting from willful misconduct or a knowing violation of the criminal law or federal or state securities law. Our amended and restated articles of incorporation will eliminate director and officer liability to the fullest extent permitted by Virginia law. Our amended and restated articles of incorporation will include provisions that require us to indemnify our directors and officers who are or become a party to any threatened, pending or completed proceeding (including a derivative proceeding by or in the right of the company) due to their status as a director or officer of our company, or for serving at our request as a director or officer or another position at another corporation or enterprise, as the case may be, except to the extent they engaged in willful misconduct or a knowing violation of the criminal law. Our amended and restated articles of incorporation
will also provide that we must advance reasonable expenses to our directors and officers in connection with any threatened or pending proceeding, subject to certain exceptions and subject to our receipt of an undertaking from the indemnified party as may be required under the VSCA. Our amended and restated articles of incorporation will expressly authorize us to carry directors’ and officers’ insurance to protect us and our directors, officers and certain employees against some liabilities.
The limitation of liability, indemnification and expense advancement provisions that will be in our amended and restated articles of incorporation may discourage shareholders from bringing lawsuits against our directors and officers. These provisions may also have the effect of discouraging or reducing the likelihood of a derivative proceeding against our directors and officers, even though such a proceeding, if successful, might otherwise benefit us and our shareholders. However, the limitation of liability provisions will not limit or eliminate our rights, or those of any shareholder, to seek non-monetary relief such as injunction or rescission. The limitation of liability, indemnification and expense advancement provisions that will be in our amended and restated articles of incorporation will not alter the liability of directors and officers under the federal securities laws. In addition, your investment may be adversely affected to the extent that, in any lawsuit, we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. We intend to enter into separate indemnification agreements with each of our directors and executive officers pursuant to which we will agree to indemnify them to the fullest extent permitted by Virginia law.
There is currently no pending material litigation or proceeding against us or any of our directors, officers or employees for which indemnification is sought.
Exclusive Forum
Our amended and restated bylaws will provide, in all cases to the fullest extent permitted by law, that, unless we consent in writing to the selection of an alternative forum, the United States District Court for the Eastern District of Virginia, Richmond Division, will be the sole and exclusive forum for:
•any derivative action or proceeding brought on our behalf;
•any action asserting a claim of breach of a duty owed by any of our directors, officers or shareholders to us or our shareholders;
•any action asserting a claim arising pursuant to the VSCA, our amended and restated articles of incorporation or our amended and restated bylaws; or
•any action asserting a claim governed by the internal affairs doctrine.
However, if the United States District Court for the Eastern District of Virginia, Richmond Division, does not have jurisdiction over any such action, the action shall be brought instead in the Circuit Court of Henrico County, Virginia.
In addition, our amended and restated bylaws will provide that the foregoing provision will not apply to claims arising under the Securities Act or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Our amended and restated bylaws will provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will be the sole and exclusive forum for the resolution of any action asserting a claim arising under the Securities Act. There is uncertainty as to whether a court will enforce such provisions. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all claims brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Our shareholders cannot waive compliance with U.S. federal securities laws and the rules and regulations thereunder as a result of these exclusive forum provisions.
These exclusive forum provisions may impose additional costs on shareholders in pursuing any such claims, particularly if the shareholders do not reside in or near the Commonwealth of Virginia, or limit a shareholder’s ability to bring a claim in a judicial forum that such shareholder finds favorable for disputes with us or our current or
former directors, officers or shareholders, which in each case may discourage such lawsuits with respect to such claims.
Listing
We have applied to list our shares of common stock on the Nasdaq Global Select Market under the symbol “SFD.” We believe that upon the completion of this offering, we will meet the standards for listing on the Nasdaq Global Select Market, and the closing of this offering is contingent upon such listing.
Transfer Agent and Registrar
Upon the completion of this offering, the transfer agent and registrar for our common stock will be Computershare Trust Company, N.A. The transfer agent and registrar’s address is 150 Royall Street, Canton, Massachusetts 02021.
SHARES ELIGIBLE FOR FUTURE SALE
There is currently no public market for shares of our common stock, and we cannot predict with certainty the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of shares of our common stock prevailing from time to time. The sale or other availability of substantial amounts of shares of our common stock (including shares issued on the exercise of options, warrants or convertible securities, if any) in the public market, or the perception that such sales could occur, could adversely affect the prevailing market price of shares of our common stock and our ability to raise additional capital through a future sale of securities.
Upon completion of this offering, we will have shares of common stock outstanding. This includes shares of common stock (or shares if the underwriters exercise in full their option to purchase additional shares of our common stock) that we and the selling shareholder are offering to be sold in this offering, which shares will be freely tradable without restriction or further registration under the Securities Act, subject to the provisions of Rule 144 described below under “—Rule 144” and any contractual restrictions, including under the lock-up agreements described below under “—Lock-Up Agreements.”
The remaining shares of common stock not sold in this offering will be “restricted securities,” as that term is defined in Rule 144 under the Securities Act. These restricted securities are eligible for public sale only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rule 144 or Rule 701 under the Securities Act, each of which is summarized below. We expect that substantially all of these shares will be subject to the 180-day lock-up period under the lock-up agreements described below.
Sale of Restricted Shares
Subject to any contractual restrictions, including under the lock-up agreements described below under “—Lock-Up Agreements,” all of the shares of our common stock to be sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except that any shares purchased by or owned by our “affiliates,” as that term is defined in Rule 144 under the Securities Act, may generally only be sold publicly in compliance with the limitations of Rule 144 described below under “—Rule 144.” As defined in Rule 144, an affiliate of an issuer is a person that directly or indirectly, through one or more intermediaries, controls, or is controlled by or is under common control with, such issuer.
Upon completion of this offering, WH Group will own % of our outstanding shares of common stock (or % if the underwriters exercise in full their option to purchase additional shares of our common stock). These shares will be “restricted securities” as that term is defined in Rule 144. Subject to any contractual restrictions, including under the lock-up agreements described below under “—Lock-Up Agreements,” WH Group will be entitled to sell these shares in the public market only if the sale of such shares is registered with the SEC or if the sale of such shares qualifies for an exemption from registration under Rule 144 or any other applicable exemption under the Securities Act.
In addition, upon completion of this offering, WH Group will, subject to certain conditions, have registration rights with respect to all of the shares of our common stock that WH Group will own following the completion of this offering. See “—Registration Rights.” At such time as these restricted shares become unrestricted and available for sale, the sale of these restricted shares, whether pursuant to Rule 144 or otherwise, may have a negative effect on the prevailing market price of shares of our common stock.
Rule 144
In general, under Rule 144 as currently in effect, beginning 90 days after the date of the registration statement of which this prospectus is a part, a person who is not one of our affiliates and has not been one of our affiliates at any time during the preceding three months will be entitled to sell any shares of our common stock that such person has beneficially owned for at least six months, including the holding period of any prior owner other than one of our affiliates, without regard to volume limitations. Sales of shares of our common stock by any such person would be subject to the availability of current public information about us if the shares to be sold were beneficially owned by such person for less than one year. Beginning 90 days after the date of this prospectus, our affiliates who have
beneficially owned shares of our common stock for at least six months, including the holding period of any prior owner other than one of our affiliates, would be entitled to sell, within any three-month period, a number of shares of our common stock that does not exceed the greater of:
•1% of the number of shares of our common stock then outstanding; and
•the average weekly trading volume of shares of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale;
provided, in each case, that we are subject to the periodic reporting requirements of the Exchange Act for at least 90 days before the sale. Sales under Rule 144 by our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.
Registration Statements on Form S-8
In connection with this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register an aggregate of shares of our common stock that we expect to reserve for issuance under our proposed equity incentive plan. The registration statement will become effective automatically upon filing with the SEC, and shares of our common stock covered by the registration statement will be eligible for resale in the public market immediately after the effective date of the registration statement, subject to the lock-up agreements described below under “—Lock-Up Agreements.”
Lock-Up Agreements
We, our officers, directors and our selling shareholder, have agreed with the underwriters that for a period of 180 days, after the date of this prospectus, among other things and subject to certain exceptions, we or they will not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise dispose of or transfer, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock, request or demand that we file a registration statement related to our common stock or enter into any swap or other agreement that transfers to another, in whole or in part, directly or indirectly, the economic consequences of ownership of the common stock, or publicly declare an intention to do any of the foregoing. Upon expiration of the lock-up period, certain of our shareholders will have the right to require us to register their shares under the Securities Act. See the subsection titled “—Registration Rights” below and the section titled “Certain Relationships and Related Party Transactions—Registration Rights Agreement.”
Morgan Stanley & Co. LLC, BofA Securities, Inc. and Goldman Sachs & Co. LLC may, in their sole discretion and at any time or from time to time before the termination of the lock-up period, in certain cases without public notice, release all or any portion of the securities subject to lock-up agreements. See “Underwriting.” There are no existing agreements between the underwriters and any of our shareholders who will execute a lock-up agreement providing consent to the sale of shares prior to the expiration of the lock-up period.
Upon the expiration of the lock-up period, substantially all of the shares subject to such lock-up restrictions will become eligible for sale, subject to the limitations discussed above.
Rule 10b5-1 Trading Plans
Following the closing of this offering, certain of our officers, directors and significant shareholders may adopt written plans, known as Rule 10b5-1 trading plans, in which they will contract with a broker to buy or sell shares of our common stock on a periodic basis to diversify their assets and investments. Under these 10b5-1 trading plans, a broker may execute trades pursuant to parameters established by the officer, director or shareholder when entering into the plan, without further direction from such officer, director or shareholder. Such sales would not commence until the expiration of the applicable lock-up agreements entered into by such officer, director or shareholder in connection with this offering.
Registration Rights
Pursuant to a registration rights agreement that we will enter into with WH Group, WH Group will be able to require us to effect the registration under the Securities Act of shares of our common stock that WH Group will own following the completion of this offering. If the offer and sale of these shares is registered, these shares will become freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by our affiliates. See “Certain Relationships and Related Party Transactions—Registration Rights Agreement.”
Rule 701
In general, under Rule 701 as currently in effect, any of our employees, directors, officers, consultants or advisors who received shares of our common stock from us in connection with a compensatory stock or option plan or other written agreement before the effective date of this offering are entitled to resell such shares 90 days after the effective date of this offering in reliance on Rule 144, in the case of affiliates, without having to comply with the holding period requirements of Rule 144 and, in the case of non-affiliates, without having to comply with the public information, holding period, volume limitation, or notice filing requirements of Rule 144.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following is a summary of material U.S. federal income tax consequences to a non-U.S. holder (as defined below) of the ownership and disposition of our common stock as of the date hereof. This summary deals only with common stock that is held as a capital asset.
A “non-U.S. holder” means a beneficial owner of our common stock (other than an entity or arrangement treated as a partnership for U.S. federal income tax purposes) that is not, for U.S. federal income tax purposes, any of the following:
•an individual who is a citizen or resident of the United States;
•a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
•an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
•a trust if it (1) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
This summary is based upon provisions of the Internal Revenue Code of 1986, as amended, or the Code, and the Treasury regulations promulgated thereunder, rulings, and judicial decisions as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in U.S. federal income tax consequences different from those summarized below. This summary does not address all of the U.S. federal income tax consequences that may be relevant to you in light of your particular circumstances, nor does it address the Medicare tax on net investment income, United States federal estate and gift taxes, or the effects of any state, local or non-U.S. tax laws. In addition, it does not represent a detailed description of the U.S. federal income tax consequences applicable to you if you are subject to special treatment under the U.S. federal income tax laws (including if you are a U.S. expatriate, foreign pension fund, “controlled foreign corporation,” “passive foreign investment company,” or a partnership or other pass-through entity for U.S. federal income tax purposes). We cannot assure you that such a change in law will not alter significantly the tax considerations that we describe in this summary.
If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. If you are a partnership or a partner of a partnership considering an investment in our common stock, you should consult your tax advisors.
If you are considering the purchase of our common stock, you should consult your own tax advisors concerning the particular U.S. federal income tax consequences to you of the ownership and disposition of our common stock, as well as the consequences to you arising under other U.S. federal tax laws and the laws of any other taxing jurisdiction.
Dividends
As discussed above under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in 2024, we paid dividends of $288 million to our parent company. If we make distributions of cash or other property (other than certain pro rata distributions of our stock) in respect of our common stock, the distribution generally will be treated as a dividend for U.S. federal income tax purposes to the extent it is paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Any portion of a distribution that exceeds our current and accumulated earnings and profits generally will be treated first as a tax-free return of capital, causing a reduction in the adjusted tax basis of a non-U.S. holder’s common stock, and to the extent the amount of the distribution exceeds a non-U.S. holder’s adjusted tax basis in our common stock, the excess will be treated as gain from the disposition of our common stock (the tax treatment of which is described below under described below under “—Gain on Disposition of Common Stock”).
Dividends paid to a non-U.S. holder of our common stock generally will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. However, dividends that are effectively connected with the conduct of a trade or business by the non-U.S. holder within the United States (and, if required by an applicable income tax treaty, are attributable to a U.S. permanent establishment of the non-U.S. holder) are not subject to such withholding tax, provided certain certification and disclosure requirements are satisfied. Instead, such dividends are subject to U.S. federal income tax on a net income basis generally in the same manner as if the non-U.S. holder were a U.S. person as defined under the Code. Any such effectively connected dividends received by a foreign corporation may be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.
A non-U.S. holder of our common stock who wishes to claim the benefit of an applicable treaty rate and avoid backup withholding, as discussed below, for dividends will be required (a) to provide the applicable withholding agent with a properly executed Internal Revenue Service Form W-8BEN or Form W-8BEN-E (or other applicable form) certifying under penalty of perjury that such holder is not a U.S. person as defined under the Code and is eligible for treaty benefits or (b) if our common stock is held through certain foreign intermediaries, to satisfy the relevant certification requirements of applicable U.S. Treasury regulations. Special certification and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals.
A non-U.S. holder of our common stock eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the Internal Revenue Service.
Gain on Disposition of Common Stock
Subject to the discussion of backup withholding below, any gain realized by a non-U.S. holder on the sale or other taxable disposition of our common stock generally will not be subject to U.S. federal income tax unless:
•the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment of the non-U.S. holder);
•the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition, and certain other conditions are met; or
•we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes and certain other conditions are met.
A non-U.S. holder described in the first bullet point immediately above will be subject to tax on the gain derived from the sale or other disposition in the same manner as if the non-U.S. holder were a U.S. person as defined under the Code. In addition, if any non-U.S. holder described in the first bullet point immediately above is a foreign corporation, the gain realized by such non-U.S. holder may be subject to an additional “branch profits tax” at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty). An individual non-U.S. holder described in the second bullet point immediately above will be subject to a tax equal to 30% (or such lower rate as may be specified by an applicable income tax treaty) on the gain derived from the sale or other disposition, which gain may be offset by U.S. source capital losses, even though the individual is not considered a resident of the United States, provided that the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses.
Generally, a corporation is a “United States real property holding corporation” if the fair market value of its United States real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business (all as determined for U.S. federal income tax purposes). We believe we are not and do not anticipate becoming a “United States real property holding corporation” for U.S. federal income tax purposes.
Information Reporting and Backup Withholding
Distributions paid to a non-U.S. holder and the amount of any tax withheld with respect to such distributions generally will be reported to the Internal Revenue Service. Copies of the information returns reporting such distributions and any withholding may also be made available to the tax authorities in the country in which the non-U.S. holder resides under the provisions of an applicable income tax treaty or agreement for the exchange of information.
A non-U.S. holder will not be subject to backup withholding on distributions received if such holder certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that such holder is a U.S. person as defined under the Code), or such holder otherwise establishes an exemption.
Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale or other disposition of our common stock made within the United States or conducted through certain U.S.- related financial intermediaries, unless the beneficial owner certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a U.S. person as defined under the Code), or such owner otherwise establishes an exemption.
Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income tax liability, provided the required information is timely furnished to the Internal Revenue Service.
Additional Withholding Requirements
Under Sections 1471 through 1474 of the Code (such Sections commonly referred to as “FATCA”), a 30% U.S. federal withholding tax may apply to any dividends paid on our common stock to (i) a “foreign financial institution” (as specifically defined in the Code, regardless of whether such foreign financial institution is the beneficial owner or an intermediary) which does not provide sufficient documentation, typically on IRS Form W-8BEN-E, evidencing either (x) an exemption from FATCA, or (y) its compliance (or deemed compliance) with FATCA (which may alternatively be in the form of compliance with an intergovernmental agreement with the United States) in a manner which avoids withholding, or (ii) a “non-financial foreign entity” (as specifically defined in the Code, regardless of whether such non-financial foreign entity is the beneficial owner or an intermediary) which does not provide sufficient documentation, typically on IRS Form W-8BEN-E, evidencing either (x) an exemption from FATCA, or (y) adequate information regarding certain substantial U.S. beneficial owners of such entity (if any). If a dividend payment is both subject to withholding under FATCA and subject to the withholding tax discussed above under “—Dividends,” an applicable withholding agent may credit the withholding under FATCA against, and therefore reduce, such other withholding tax. While withholding under FATCA would also have applied to payments of gross proceeds from the sale or other taxable disposition of our common stock, proposed U.S. Treasury regulations (upon which taxpayers may rely until final regulations are issued) eliminate FATCA withholding on payments of gross proceeds entirely. You should consult your own tax advisors regarding these requirements and whether they may be relevant to your ownership and disposition of our common stock. We will not pay additional amounts to a holder in circumstances in which FATCA withholding has applied.
UNDERWRITING
Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC, BofA Securities, Inc. and Goldman Sachs & Co. LLC are acting as representatives, have severally agreed to purchase, and we and the selling shareholder have agreed to sell to them, severally, the number of shares of common stock indicated below:
| | | | | | | | |
| Name | | Number of Shares |
| Morgan Stanley & Co. LLC | | |
| BofA Securities, Inc. | | |
| Goldman Sachs & Co. LLC | | |
Barclays Capital Inc. | | |
Citigroup Global Markets Inc. | | |
UBS Securities LLC | | |
BNP Paribas Securities Corp. | | |
HSBC Securities (USA) Inc. | | |
| Total: | | |
The underwriters and the representatives are collectively referred to as the “underwriters” and the “representatives,” respectively. The underwriters are offering the shares of common stock subject to their acceptance of the shares from us and the selling shareholder and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ over-allotment option described below. The underwriters may offer and sell the shares of common stock through certain of their respective affiliates or other registered broker-dealers or selling agents.
The underwriters initially propose to offer part of the shares of common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $ per share under the public offering price. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representatives.
The selling shareholder has granted the underwriters a 30-day option from the date of this prospectus, to purchase up to additional shares of our common stock at the initial public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of common stock as the number listed next to the underwriter’s name in the preceding table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table.
The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us and the selling shareholder. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional shares of common stock.
| | | | | | | | | | | | | | | | | |
| | | Total |
| Per Share | | No Exercise | | Full Exercise |
| Public offering price | $ | | $ | | $ |
| Underwriting discounts and commissions to be paid by: | | | | | |
| Us | $ | | $ | | $ |
The selling shareholder | $ | | $ | | $ |
| Proceeds, before expenses, to us | $ | | $ | | $ |
Proceeds, before expenses, to the selling shareholder | $ | | $ | | $ |
The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $ . We have agreed to reimburse the underwriters for expenses relating to clearance of this offering with the Financial Industry Regulatory Authority, or FINRA, in an amount up to $ .
The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of common stock offered by them.
We have applied to list our shares of common stock on the Nasdaq Global Select Market under the symbol “SFD”.
We and all of our directors and officers and our selling shareholder, have agreed that, without the prior written consent of Morgan Stanley & Co. LLC, BofA Securities, Inc. and Goldman Sachs & Co. LLC, on behalf of the underwriters, we and they will not, and will not publicly disclose an intention to, during the period ending 180 days after the date of this prospectus, or the restricted period:
1.offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock;
2.enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock;
whether any such transaction described in clauses (1) or (2) above is to be settled by delivery of our common stock or such other securities, in cash or otherwise;
3.in the case of us, file any registration statement with the SEC relating to the offering of any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock; or
4.in the case of our directors and officers and our selling shareholder, make any demand for, or exercise any right with respect to, the registration of any shares of our common stock or any security convertible into or exercisable or exchangeable for our common stock.
With respect to us the restrictions described in the immediately preceding paragraph to do not apply to:
1.the sale of our common stock to the underwriters pursuant to the underwriting agreement;
2.the issuance by our company of shares of our common stock upon the exercise of an option or a warrant or the conversion of a security outstanding on the date of this prospectus as described in this prospectus;
3.the grant of stock options, stock awards, restricted stock, restricted stock units or other equity awards and the issuance of securities to employees, officers, directors, advisors or consultants of our company pursuant to the terms of an equity compensation plan in effect as of the completion of this offering and described in this prospectus, provided that it is a condition of any such grant that any such grantee executes a lock-up
agreement substantially in the form required by the underwriting agreement with respect to the remaining portion of the restricted period before receiving any shares of our common stock;
4.the sale or issuance of or entry into an agreement to sell or issue our common stock or any securities convertible into or exercisable or exchangeable for our common stock in connection with one or more mergers, acquisitions of securities, businesses, property or other assets, products or technologies, joint ventures, commercial relationships or other strategic corporate transactions or alliances; provided, that the aggregate amounts of our common stock or any securities convertible into or exercisable or exchangeable for our common stock (on an as-converted, as-exercised or as-exchanged basis) that we may sell or issue or agree to sell or issue pursuant to this clause (4) does not exceed 5% of the total number of shares of our common stock issued and outstanding immediately following the completion of this offering determined on a fully-diluted basis and all recipients of any such securities execute a lock-up agreement substantially in the form required by the underwriting agreement with respect to the remaining portion of the restricted period;
5.the filing of any registration statement on Form S-8 (including any resale registration statement on Form S-8) relating to securities granted, issued or to be granted or issued pursuant to any plan in effect as of the completion of this offering and described in this prospectus; or
6.the confidential submission to the SEC or FINRA of any registration statement under the Securities Act, provided, however, that such confidential submission may only be made seven days or more following written notice to Morgan Stanley & Co. LLC, BofA Securities, Inc. and Goldman Sachs & Co. LLC of the intention to make such submission.
With respect to our directors, our officers and our selling shareholder, the restrictions described above do not apply to:
1.the sale of our common stock by the selling shareholder to the underwriters pursuant to the underwriting agreement;
2.transactions relating to shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock acquired in open market transactions after the completion of this offering; provided that no filing under Section 16(a) of the Exchange Act is required or voluntarily made during the restricted period in connection with subsequent sales of our common stock or any securities convertible into or exercisable or exchangeable for our common stock acquired in such open market transactions;
3.transfers of shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock (i) as a bona fide gift or charitable contribution, or for bona fide estate planning purposes, (ii) upon death or by will, other testamentary document or intestate succession, (iii) to an immediate family member of the holder or to any trust for the direct or indirect benefit of the holder or the holder’s immediate family (“immediate family” means any spouse or domestic partner and relationship by blood, current or former marriage or adoption, not more remote than first cousin), (iv) if the holder is a trust, to a trustee or any beneficiary of the holder or the estate of any such beneficiary, (v) to a partnership, limited liability company, corporation or other entity of which the holder and the immediate family of the holder are the legal and beneficial owner of all of the outstanding equity securities or similar interests or (vi) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (i) through (v) above;
4.in the case of a corporation, partnership, limited liability company, trust, or other business entity, distributions, transfers or dispositions of shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock (i) to another corporation, partnership, limited liability company, trust or other business entity that is an affiliate of the holder, or to any investment fund or other entity controlled or managed by the undersigned or affiliates of the undersigned, (ii) to any investment fund or other entity controlling, controlled by, managing or managed by or under common control with the holder or its affiliates, (iii) as part of a distribution, transfer or disposition without consideration by the holder to its stockholders, current or former partners (general or limited), members, beneficiaries or other equity holders,
or to the estates of any such stockholders, partners, beneficiaries or other equity holders, (iv) to any wholly owned subsidiary of the holder or (v) any director or indirect partner, member, stockholder or equityholder of a holder referenced in clauses (i) to (iv) that is not a natural person;
5.(i) the receipt by the holder from our company of our common stock or any securities convertible into or exercisable or exchangeable for our common stock upon the exercise of options, settlement of restricted stock units or other equity awards or the exercise of warrants which are outstanding as of the date of this prospectus and are disclosed in this prospectus, or (ii) the transfer of shares of our common stock or any securities convertible into our common stock upon a vesting or settlement event of our restricted stock units, deferred stock units, restricted stock, or performance shares, or in connection with the “cashless” or “net exercise” of options or warrants or settlement of restricted stock units, deferred stock units, restricted stock, performance shares, or warrants to cover tax withholding to the extent permitted by the applicable instrument; provided (x) our common stock received upon such exercise or settlement is subject to the restrictions described herein, and (y) any public announcement or filing under Section 16(a) of the Exchange Act or any other public filing or disclosure clearly indicates that (A) the filing relates to the circumstances described in (i) or (ii), as the case may be, (B) no shares were sold by the reporting person and (C) our common stock or any securities convertible into or exercisable or exchangeable for our common stock retained by the holder after such “cashless” or “net exercise” are subject to a lock-up agreement with the underwriters;
6.the transfer of our common stock or any securities convertible into or exercisable or exchangeable for our common stock that occurs by operation of law pursuant to a qualified domestic order in connection with a divorce settlement, divorce decree, separation agreement or other order of a court or regulatory agency, provided that such transfer does not involve a disposition for value and that such transferee execute a lock-up agreement substantially in the form required by the underwriting agreement;
7.the transfer of our common stock or any securities convertible into or exercisable or exchangeable for our common stock in connection with a bona fide third-party tender offer, merger, consolidation or other similar transaction, that is approved by our board of directors, provided that if such transaction is not completed, all such securities would remain subject to the restrictions described herein;
8.the transfer of our common stock or any securities convertible into or exercisable or exchangeable for our common stock pursuant to arrangements under which we have the option to repurchase such securities or a right of first refusal with respect to such securities; or
9.in the case of the selling shareholder, the distribution by the selling shareholder or one of its affiliates of approximately 0.35% to 0.45% of our outstanding shares following the completion of this offering as part of the Assured Entitlement Distribution;
provided that, in the case of any transfer pursuant to clauses (3) or (4), such transfer does not involve a disposition for value, and (A) each transferee, donee or distributee signs and delivers a lock-up agreement to the underwriters substantially in the form of the lock-up signed and delivered by the donor or distributor and (B) any public announcement or filing under Section 16(a) of the Exchange Act, or any other public filing or disclosure reporting a reduction in beneficial ownership of shares of our common stock, clearly indicates that the shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock retained by the transferee, donee or distributee are subject to a lock-up agreement with the underwriters; provided further, in the case of any transfer pursuant to clauses (6) or (8), that no public announcement of filing under Section 16(a) of the Exchange Act, or any other public filing or disclosure is made during the restricted period, unless such filing is required and clearly indicates that the transfer is by operation of law, court order, or in connection with a divorce settlement, or a repurchase by our company, as the case may be.
Morgan Stanley & Co. LLC, BofA Securities, Inc. and Goldman Sachs & Co. LLC, in their sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time.
In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than
they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize the price of our common stock. These activities may raise or maintain the market price of our common stock above independent market levels or prevent or retard a decline in the market price of our common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.
We, the selling shareholder and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act, or to contribute to payments we, the selling shareholder or the underwriters may be required to make in respect of those liabilities.
A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.
Other Relationships
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us and the selling shareholder, for which they received or will receive customary fees and expenses.
In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of ours, our affiliates or the selling shareholder. The underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments.
Certain affiliates of Morgan Stanley & Co. LLC, BofA Securities, Inc., Goldman Sachs & Co. LLC, Barclays Capital Inc., Citigroup Global Markets Inc. and HSBC Securities (USA) Inc. have preexisting lending relationships with us, including as agents, arrangers, bookrunners and/or lenders under our Senior Revolving Credit Facility.
Pricing of the Offering
There is currently no public market for shares of our common stock. The initial public offering price will be determined by negotiations among us, the selling shareholder and the representatives. Among the factors considered in determining the initial public offering price are our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the earnings multiples, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours.
Directed Share Program
At our request, the underwriters have reserved up to 2% of the shares of our common stock offered by this prospectus for sale, at the initial public offering price, to directors, officers and certain employees of our company. If purchased by our directors or officers, these shares will be subject to the lock-up agreement described above. The number of shares of our common stock available for sale to the general public will be reduced to the extent these individuals purchase such reserved shares. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus. Other than the underwriting discount described on the front cover of this prospectus, the underwriters will not be entitled to any commission with respect to shares of our common stock sold pursuant to the directed share program. Morgan Stanley will administer our directed share program. We will agree to indemnify Morgan Stanley and its affiliates against certain liabilities and expenses, including liabilities under the Securities Act, in connection with sales of the shares reserved for the directed share program.
Selling Restrictions
European Economic Area
In relation to each Member State of the European Economic Area (each, a “Relevant State”), no shares of our common stock have been offered or will be offered pursuant to the offering to the public in that Relevant State prior to the publication of a prospectus in relation to our common stock which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation, except that offers of our common stock may be made to the public in that Relevant State at any time under the following exemptions under the Prospectus Regulation:
(a)to any legal entity which is a qualified investor as defined under Article 2 of the Prospectus Regulation;
(b)to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the Prospectus Regulation), subject to obtaining the prior consent of the representatives for any such offer; or
(c)in any other circumstances falling within Article 1(4) of the Prospectus Regulation;
provided that no such offer of our common stock shall require us or any of the representatives to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation, and each person who initially acquires any shares of our common stock or to whom any offer is made will be deemed to have represented, acknowledged and agreed to and with each of the representatives and us that it is a “qualified investor” within the meaning of Article 2(e) in the Prospectus Regulation.
In the case of any shares being offered to a financial intermediary, as that term is used in Article 5 of the Prospectus Regulation, each such financial intermediary will be deemed to have represented, acknowledged, and agreed that the shares of our common stock acquired by it in the offer have not been acquired on a nondiscretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any shares of our common stock to the public other than their offer or resale in a Relevant State to qualified investors as so defined or in circumstances in which the prior consent of the representatives has been obtained to each such proposed offer or resale.
For the purposes of this provision, the expression an “offer to the public” in relation to any shares in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares of our common stock to be offered so as to enable an investor to decide to purchase or subscribe for any shares of our common stock, and the expression “Prospectus Regulation” means Regulation (EU) 2017/1129 (as amended).
United Kingdom
No shares of our common stock have been offered or will be offered pursuant to the offering to the public in the United Kingdom, or the UK, prior to the publication of a prospectus in relation to the shares of common stock which
(i) has been approved by the Financial Conduct Authority or (ii) is to be treated as if it had been approved by the Financial Conduct Authority in accordance with the transitional provisions in Article 74 (transitional provisions) of the Prospectus Amendment etc. (EU Exit) Regulations 2019/1234, except that shares of our common stock may be offered to the public in the UK at any time under the following exemptions under the UK Prospectus Regulation:
(a)to any legal entity which is a qualified investor as defined under Article 2 of the UK Prospectus Regulation;
(b)to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the UK Prospectus Regulation), subject to obtaining the prior consent of the underwriters for any such offer; or
(c)in any other circumstances falling within Section 86 of the Financial Services and Markets Act 2000, or FSMA,
provided that no such offer of shares of our common stock shall require us or any underwriter to publish a prospectus pursuant to Section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.
For the purposes of this provision, the expression an “offer to the public” in relation to the shares of our common stock in the UK means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase or subscribe for any shares of our common stock, and the expression “UK Prospectus Regulation” means Regulation (EU) 2017/1129 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended by the European Union, or Withdrawal Agreement, Act 2020.
In addition, in the UK, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are “qualified investors” (as defined in the Prospectus Regulation) (i) who have professional experience in matters relating to investments falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005, as amended, or the Order, and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”) or otherwise in circumstances which have not resulted and will not result in an offer to the public of the shares of our common stock in the UK within the meaning of the FSMA.
Any person in the UK that is not a relevant person should not act or rely on the information included in this document or use it as a basis for taking any action. In the UK, any investment or investment activity that this document relates to may be made or taken exclusively by relevant persons.
Japan
No registration pursuant to Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended), or the FIEL, has been made or will be made with respect to the solicitation of the application for the acquisition of the shares of common stock.
Accordingly, the shares of common stock have not been, directly or indirectly, offered or sold and will not be, directly or indirectly, offered or sold in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan) or to others for re-offering or re-sale, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan except pursuant to an exemption from the registration requirements, and otherwise in compliance with, the FIEL and the other applicable laws and regulations of Japan.
For Qualified Institutional Investors, or QII
Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of common stock constitutes either a “QII only private placement” or a “QII only secondary distribution” (each as described in Paragraph 1, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of common stock. The shares of common stock may only be transferred to QIIs.
For Non-QII Investors
Please note that the solicitation for newly-issued or secondary securities (each as described in Paragraph 2, Article 4 of the FIEL) in relation to the shares of common stock constitutes either a “small number private placement” or a “small number private secondary distribution” (each as is described in Paragraph 4, Article 23-13 of the FIEL). Disclosure regarding any such solicitation, as is otherwise prescribed in Paragraph 1, Article 4 of the FIEL, has not been made in relation to the shares of common stock. The shares of common stock may only be transferred en bloc without subdivision to a single investor.
Notice to Prospective Investors in Canada
The shares of common stock may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the shares of common stock must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.
Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor.
Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts, or NI 33-105, the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.
Notice to Prospective Investors in Switzerland
The shares of common stock may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document does not constitute a prospectus within the meaning of, and has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares of common stock, or the offering may be publicly distributed or otherwise made publicly available in Switzerland.
Neither this document nor any other offering or marketing material relating to the offering, our company or the shares of common stock have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares of common stock will not be supervised by, the Swiss Financial Market Supervisory Authority, or FINMA, and the offer of shares of common stock has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares of common stock.
Notice to Prospective Investors in Australia
This prospectus:
(a)does not constitute a disclosure document or a prospectus under Chapter 6D.2 of the Corporations Act 2001 (Cth), or the Corporations Act;
(b)has not been, and will not be, lodged with the Australian Securities and Investments Commission, or ASIC, as a disclosure document for the purposes of the Corporations Act and does not purport to include the information required of a disclosure document for the purposes of the Corporations Act; and
(c)may only be provided in Australia to select investors who are able to demonstrate that they fall within one or more of the categories of investors, available under section 708 of the Corporations Act, or the Exempt Investors.
The shares of common stock may not be directly or indirectly offered for subscription or purchased or sold, and no invitations to subscribe for or buy the shares of common stock may be issued, and no draft or definitive offering memorandum, advertisement or other offering material relating to any shares of common stock may be distributed in Australia, except where disclosure to investors is not required under Chapter 6D of the Corporations Act or is otherwise in compliance with all applicable Australian laws and regulations. By submitting an application for the shares of common stock, you represent and warrant to us that you are an Exempt Investor.
As any offer of shares of common stock under this document will be made without disclosure in Australia under Chapter 6D.2 of the Corporations Act, the offer of those securities for resale in Australia within 12 months may, under section 707 of the Corporations Act, require disclosure to investors under Chapter 6D.2 if none of the exemptions in section 708 applies to that resale. By applying for the shares of common stock you undertake to us that you will not, for a period of 12 months from the date of issue of the shares of common stock, offer, transfer, assign or otherwise alienate those shares of common stock to investors in Australia except in circumstances where disclosure to investors is not required under Chapter 6D.2 of the Corporations Act or where a compliant disclosure document is prepared and lodged with ASIC.
Notice to Prospective Investors in Hong Kong
The shares of common stock have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong), or SFO, of Hong Kong and any rules made thereunder; or (b) in other circumstances which do not result in the document being a “prospectus” as defined in the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong), or CO, or which do not constitute an offer to the public within the meaning of the CO. No advertisement, invitation or document relating to the shares of common stock has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares of common stock which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” as defined in the SFO and any rules made thereunder.
Notice to Prospective Investors in Singapore
Each joint book-running manager has acknowledged that this prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, each joint book-running manager has represented and agreed that it has not offered or sold any shares of common stock or caused the shares of common stock to be made the subject of an invitation for subscription or purchase and will not offer or sell any shares of common stock or cause the shares of common stock to be made the subject of an invitation for subscription or purchase, and has not circulated or distributed, nor will it circulate or distribute, this prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares of common stock, whether directly or indirectly, to any person in Singapore other than:
(a)to an institutional investor, (as defined in Section 4A of the Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time, or the SFA) pursuant to Section 274 of the SFA;
(b)to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA; or
(c)otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
Where the shares of common stock are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
(a)a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or
(b)a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares of common stock pursuant to an offer made under Section 275 of the SFA except:
(i)to an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
(ii)where no consideration is or will be given for the transfer;
(iii)where the transfer is by operation of law;
(iv)as specified in Section 276(7) of the SFA; or
(v)as specified in Regulation 37A of the Securities and Futures (Offers of Investments) (Securities and Securities-based Derivatives Contracts) Regulations 2018.
Singapore SFA Products Classification—In connection with Section 309B of the SFA and the CMP Regulations 2018, unless otherwise specified before an offer of shares of common stock, we have determined, and hereby notify all relevant persons (as defined in Section 309A(1) of the SFA), that the shares of common stock are ‘‘prescribed capital markets products’’ (as defined in the CMP Regulations 2018) and Excluded Investment Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations on Investment Products).
Notice to Prospective Investors in the United Arab Emirates
The shares of common stock have not been, and are not being, publicly offered, sold, promoted or advertised in the United Arab Emirates (including the Dubai International Financial Centre) other than in compliance with the laws of the United Arab Emirates (and the Dubai International Financial Centre) governing the issue, offering and sale of securities. Further, this prospectus does not constitute a public offer of securities in the United Arab Emirates (including the Dubai International Financial Centre) and is not intended to be a public offer. This prospectus has not been approved by or filed with the Central Bank of the United Arab Emirates, the Securities and Commodities Authority or the Dubai Financial Services Authority.
Notice to Prospective Investors in China
This prospectus will not be circulated or distributed in the PRC and the shares of common stock will not be offered or sold, and will not be offered or sold to any person for re-offering or resale directly or indirectly to any residents of the PRC except pursuant to any applicable laws and regulations of the PRC. Neither this prospectus nor any advertisement or other offering material may be distributed or published in the PRC, except under circumstances that will result in compliance with applicable laws and regulations.
Notice to Prospective Investors in Korea
The shares of common stock have not been and will not be registered under the Financial Investments Services and Capital Markets Act of Korea and the decrees and regulations thereunder, or the FSCMA, and the shares of
common stock have been and will be offered in Korea as a private placement under the FSCMA. None of the shares of common stock may be offered, sold or delivered directly or indirectly, or offered or sold to any person for re-offering or resale, directly or indirectly, in Korea or to any resident of Korea except pursuant to the applicable laws and regulations of Korea, including the FSCMA and the Foreign Exchange Transaction Law of Korea and the decrees and regulations thereunder, or the FETL. Furthermore, the purchaser of the shares of common stock shall comply with all applicable regulatory requirements (including but not limited to requirements under the FETL) in connection with the purchase of the shares of common stock. By the purchase of the shares of common stock, the relevant holder thereof will be deemed to represent and warrant that if it is in Korea or is a resident of Korea, it purchased the shares of common stock pursuant to the applicable laws and regulations of Korea.
Notice to Prospective Investors in Saudi Arabia
This document may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations as issued by the board of the Saudi Arabian Capital Market Authority, or the CMA, pursuant to resolution number 2-11-2004 dated 4 October 2004 as amended by resolution number 1-28-2008, as amended, or the CMA Regulations. The CMA does not make any representation as to the accuracy or completeness of this document and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this document. Prospective purchasers of the shares of common stock offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If you do not understand the contents of this document, you should consult an authorized financial adviser.
Notice to Prospective Investors in the Dubai International Financial Centre, or the DIFC
This document relates to an Exempt Offer in accordance with the Markets Rules 2012 of the Dubai Financial Services Authority, or the DFSA. This document is intended for distribution only to persons of a type specified in the Markets Rules 2012 of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for this document. The shares of common stock to which this document relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares of common stock offered should conduct their own due diligence on the securities. If you do not understand the contents of this document, you should consult an authorized financial advisor.
In relation to its use in the DIFC, this document is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. The interests in the securities may not be offered or sold directly or indirectly to the public in the DIFC.
Notice to Prospective Investors in Bermuda
Shares of common stock may be offered or sold in Bermuda only in compliance with the provisions of the Investment Business Act of 2003 of Bermuda which regulates the sale of securities in Bermuda. Additionally, non-Bermudian persons (including companies) may not carry on or engage in any trade or business in Bermuda unless such persons are permitted to do so under applicable Bermuda legislation.
Notice to Prospective Investors in the British Virgin Islands
The shares of common stock are not being and may not be offered to the public or to any person in the British Virgin Islands for purchase or subscription by or on behalf of us. The shares of common stock may be offered to companies incorporated under the BVI Business Companies Act, 2004 (British Virgin Islands) (BVI Companies), but only where the offer will be made to, and received by, the relevant BVI Company entirely outside of the British Virgin Islands.
Notice to Prospective Investors in Taiwan
The shares of common stock have not been and will not be registered with the Financial Supervisory Commission of Taiwan pursuant to relevant securities laws and regulations and may not be sold, issued or offered within Taiwan through a public offering or in circumstances which constitutes an offer within the meaning of the Securities and Exchange Act of Taiwan that requires a registration or approval of the Financial Supervisory Commission of Taiwan. No person or entity in Taiwan has been authorized to offer, sell, give advice regarding or otherwise intermediate the offering and sale of the shares of common stock in Taiwan.
Notice to Prospective Investors in South Africa
Due to restrictions under the securities laws of South Africa, no “offer to the public” (as such term is defined in the South African Companies Act, No. 71 of 2008 (as amended or re-enacted) (the South African Companies Act), is being made in connection with the issue of the shares of common stock in South Africa. Accordingly, this document does not, nor is it intended to, constitute a “registered prospectus” (as that term is defined in the South African Companies Act) prepared and registered under the South African Companies Act and has not been approved by, and/or filed with, the South African Companies and Intellectual Property Commission or any other regulatory authority in South Africa. The shares of common stock are not offered, and the offer shall not be transferred, sold, renounced or delivered, in South Africa or to a person with an address in South Africa, unless one or other of the following exemptions stipulated in section 96 (1) applies:
Section 96(1)(a) the offer, transfer, sale renunciation or delivery is to:
(i)persons whose ordinary business, or part of whose ordinary business, is to deal in securities, as principal or agent;
(ii)the South African Public Investment Corporation;
(iii)persons or entities regulated by the Reserve Bank of South Africa;
(iv)authorized financial service providers under South African law;
(v)financial institutions recognized as such under South African law;
(vi)a wholly owned subsidiary of any person or entity contemplated in (iii), (iv) or (v), acting as agent in the capacity of an authorized portfolio manager for a pension fund, or as manager for a collective investment scheme (in each case duly registered as such under South African law); or
(vii)any combination of the person in (i) to (vi); or
Section 96(1)(b) the total contemplated acquisition cost of the shares of common stock, for any single addressee acting as principal is equal to or greater than ZAR1,000,000 or such higher amount as may be promulgated by notice in the Government Gazette of South Africa pursuant to section 96(2)(a) of the South African Companies Act.
Information made available in this prospectus should not be considered as “advice” as defined in the South African Financial Advisory and Intermediary Services Act, 2002.
Notice to Prospective Investors in Malaysia
No prospectus or other offering material or document in connection with the offer and sale of the shares of common stock has been or will be registered with the Securities Commission of Malaysia, or the Commission, for the Commission’s approval pursuant to the Capital Markets and Services Act 2007. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares of common stock may not be circulated or distributed, nor may the shares of common stock be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Malaysia other than (i) a closed end fund approved by the Commission; (ii) a holder of a Capital Markets Services License; (iii) a person who acquires the shares of common stock, as principal, if the offer is on terms that the shares of common
stock may only be acquired at a consideration of not less than RM250,000 (or its equivalent in foreign currencies) for each transaction; (iv) an individual whose total net personal assets or total net joint assets with his or her spouse exceeds RM3 million (or its equivalent in foreign currencies), excluding the value of the primary residence of the individual; (v) an individual who has a gross annual income exceeding RM300,000 (or its equivalent in foreign currencies) per annum in the preceding twelve months; (vi) an individual who, jointly with his or her spouse, has a gross annual income of RM400,000 (or its equivalent in foreign currencies), per annum in the preceding twelve months; (vii) a corporation with total net assets exceeding RM10 million (or its equivalent in a foreign currencies) based on the last audited accounts; (viii) a partnership with total net assets exceeding RM10 million (or its equivalent in foreign currencies); (ix) a bank licensee or insurance licensee as defined in the Labuan Financial Services and Securities Act 2010; (x) an Islamic bank licensee or takaful licensee as defined in the Labuan Financial Services and Securities Act 2010; and (xi) any other person as may be specified by the Commission; provided that, in the each of the preceding categories (i) to (xi), the distribution of the shares of common stock is made by a holder of a Capital Markets Services License who carries on the business of dealing in securities. The distribution in Malaysia of this prospectus is subject to Malaysian laws. This prospectus does not constitute and may not be used for the purpose of public offering or an issue, offer for subscription or purchase, invitation to subscribe for or purchase any securities requiring the registration of a prospectus with the Commission under the Capital Markets and Services Act 2007.
Notice to Prospective Investors in Qatar
The shares of common stock described in this prospectus have not been, and will not be, offered, sold or delivered, at any time, directly or indirectly in the State of Qatar in a manner that would constitute a public offering. This prospectus has not been, and will not be, registered with or approved by the Qatar Financial Markets Authority or Qatar Central Bank and may not be publicly distributed. This prospectus is intended for the original recipient only and must not be provided to any other person. It is not for general circulation in the State of Qatar and may not be reproduced or used for any other purpose.
Notice to Prospective Investors in Israel
In the State of Israel this prospectus shall not be regarded as an offer to the public to purchase shares of common stock under the Israeli Securities Law, 5728—1968, which requires a prospectus to be published and authorized by the Israel Securities Authority, if it complies with certain provisions of Section 15 of the Israeli Securities Law, 5728–1968, including, inter alia, if: (i) the offer is made, distributed or directed to not more than 35 investors, subject to certain conditions, or the Addressed Investors; or (ii) the offer is made, distributed or directed to certain qualified investors defined in the First Addendum of the Israeli Securities Law, 5728—1968, subject to certain conditions, or the “Qualified Investors.” The Qualified Investors shall not be taken into account in the count of the Addressed Investors and may be offered to purchase securities in addition to the 35 Addressed Investors. We have not and will not take any action that would require us to publish a prospectus in accordance with and subject to the Israeli Securities Law, 5728—1968. We have not and will not distribute this prospectus or make, distribute or direct an offer to subscribe for our shares of common stock to any person within the State of Israel, other than to Qualified Investors and up to 35 Addressed Investors.
Qualified Investors may have to submit written evidence that they meet the definitions set out in the First Addendum to the Israeli Securities Law, 5728—1968. In particular, we may request, as a condition to be offered shares of common stock, that Qualified Investors will each represent, warrant and certify to us and/or to anyone acting on our behalf: (i) that it is an investor falling within one of the categories listed in the First Addendum to the Israeli Securities Law, 5728—1968; (ii) which of the categories listed in the First Addendum to the Israeli Securities Law, 5728—1968 regarding Qualified Investors is applicable to it; (iii) that it will abide by all provisions set forth in the Israeli Securities Law, 5728—1968 and the regulations promulgated thereunder in connection with the offer to be issued shares of common stock; (iv) that the shares of common stock that it will be issued are, subject to exemptions available under the Israeli Securities Law, 5728—1968 (A) for its own account, (B) for investment purposes only, and (C) not issued with a view to resale within the State of Israel, other than in accordance with the provisions of the Israeli Securities Law, 5728—1968; and (v) that it is willing to provide further evidence of its Qualified Investor status. Addressed Investors may have to submit written evidence in respect of their identity and may have to sign and submit a declaration containing, inter alia, the Addressed Investor’s name, address and passport number or Israeli identification number.
Notice to Prospective Investors in Brazil
The offer and sale of the shares of common stock have not been and will not be registered with the Brazilian Securities Commission (Comissão de Valores Mobiliários, or CVM) and, therefore, will not be carried out by any means that would constitute a public offering in Brazil under CVM resolution No. 160, dated 13 July 2022, as amended, or the CVM Resolution 160, or unauthorized distribution under Brazilian laws and regulations. The shares of common stock may only be offered to Brazilian professional investors (as defined by applicable CVM regulation), who may only acquire the shares of common stock through a non-Brazilian account, with settlement outside Brazil in non-Brazilian currency. The trading of these shares of common stock on regulated securities markets in Brazil is prohibited.
LEGAL MATTERS
The validity of the shares of common stock offered by this prospectus will be passed upon for us by Hunton Andrews Kurth LLP, Richmond, Virginia. The underwriters have been represented by Cravath, Swaine & Moore LLP, New York, New York.
EXPERTS
The consolidated financial statements of Smithfield Foods, Inc. at December 31, 2023 and January 1, 2023, and for each of the three years in the period ended December 31, 2023, appearing in this prospectus and registration statement have been audited by Ernst & Young LLP, an independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
Following Smithfield Foods, Inc.’s acquisition of Argal Alimentacion, S.A., or Argal, on March 28, 2024, a member firm of Ernst & Young Global Limited in Spain, or EY Spain, continued to provide ongoing tax credit advisory services under a contingent fee arrangement to Argal and its wholly owned subsidiary related to the years ended December 31, 2023 and 2022. A related contingent-based fee of approximately $8,500 was collected by EY Spain in June 2024. While the service was permissible under the independence rules of the SEC and PCAOB (United States), the provision of such service under a contingent fee arrangement and collection of the contingent-based fee after Argal became an affiliate of Smithfield Foods, Inc. is inconsistent with the aforementioned independence rules. The contingent fee arrangement, which was not material to the respective parties, was terminated on August 1, 2024.
After careful consideration of the facts and circumstances and the applicable independence rules, EY, management and the board have concluded that (i) the aforementioned matter does not impair EY’s ability to exercise objective and impartial judgment in connection with EY’s audits of Smithfield Foods, Inc.’s consolidated financial statements and (ii) a reasonable investor with knowledge of all relevant facts and circumstances would reach the same conclusion.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1, of which this prospectus is a part, with respect to the shares of our common stock offered hereby. This prospectus, which constitutes part of the registration statement, does not contain all of the information included in the registration statement and the exhibits thereto. References in this prospectus to any of our contracts or other documents are not necessarily complete, and each such reference is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement. For additional information about us and the shares of our common stock offered hereby, you should refer to the registration statement and the exhibits thereto, which are available on the internet website maintained by the SEC at www.sec.gov.
Upon completion of this offering, we will become subject to the reporting and information requirements of the Exchange Act and, in accordance with the Exchange Act, we will file periodic and current reports, proxy statements and other information with the SEC. We expect to make these reports and other information filed with or furnished to the SEC available, free of charge, through our website at www.smithfieldfoods.com as soon as reasonably practicable after the reports and other information are filed with or furnished to the SEC. Additionally, the SEC maintains an internet website that contains such reports and other information filed electronically with the SEC.
The information contained on, or that can be accessed through, the websites referenced in this prospectus is not part of, and is not incorporated into, this prospectus, and you should not rely on any such information in making an investment decision to purchase shares of our common stock. We have included the website addresses referenced in this prospectus only as inactive textual references and do not intend them to be active links to such website addresses.
INDEX TO FINANCIAL STATEMENTS
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholder and the Board of Directors of Smithfield Foods, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Smithfield Foods, Inc. and subsidiaries (the Company) as of December 31, 2023 and January 1, 2023, the related consolidated statements of income, comprehensive income, shareholder’s equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and January 1, 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| | | | | | | | |
| | Pension Accounting |
| | |
Description of the Matter | | At December 31, 2023, the Company’s defined benefit pension obligation was $1.83 billion, offset by the fair value of plan assets totaling $1.55 billion. As discussed in Notes 1 and 13 of the consolidated financial statements, the Company, with the assistance of a third-party actuary, measures the defined benefit pension obligation at December 31, or upon a remeasurement event, using actuarial assumptions including discount rates. Auditing the defined benefit pension obligation was complex due to the significant estimation uncertainty in evaluating the discount rate used in the Company’s measurement process. |
| | |
How We Addressed the Matter in Our Audit | | To test the Company's accounting for the defined benefit pension obligation, we performed audit procedures that included, among others, evaluating the discount rate assumption with the assistance of our actuarial specialists. For example, we compared the discount rate used by management to historical trends, independently calculated an expected range for the discount rate based on the maturity and duration of the projected benefit payments, and compared the projected benefit payments to the historical benefits paid. |
| | | | | | | | |
| | Contingent Liabilities |
| | |
| Description of the Matter | | As described in Note 17 of the consolidated financial statements, the Company is involved in antitrust price-fixing litigation with a number of individual parties. The Company recognizes a contingent liability, including future defense costs, when an assessment of the risk of loss is probable and can be reasonably estimated. For the antitrust price-fixing litigation, where a settlement agreement has not yet been reached with the claimant, judgment is required to determine the probability and estimate of the loss. Auditing management’s measurement and disclosure of the amount of contingent liabilities for antitrust price-fixing litigation was subjective and required more complex auditor judgment. For instance, auditing management's judgments related to the outcome of litigation with claimants where the matter has not yet been tried in court or where the Company has not otherwise agreed to a settlement with claimants was more complex due to the judgment applied in evaluating the likelihood of the outcomes. |
| | |
| How We Addressed the Matter in Our Audit | | To test the Company's accounting for and disclosure of ongoing antitrust price-fixing litigation, our audit procedures included, among others, reviewing the initial complaint, testing the Company's evaluation of the probability of outcome through inspection of responses to inquiry letters to both internal and external counsel, evaluating relevant events up to the audit report date, and by obtaining written representations from executives of the Company. When applicable, we also compared the Company's evaluation of these matters with its relevant history for similar legal contingencies that have been settled or otherwise resolved by obtaining and evaluating settlement agreements. In addition, we evaluated the adequacy of the Company’s financial statement disclosures. |
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2017.
Richmond, VA
November 18, 2024
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in millions, except for share and per share data)
| | | | | | | | | | | | | | | | | |
| Twelve Months Ended |
| December 31,
2023 | | January 1,
2023 | | January 2,
2022 |
| Sales | $ | 14,640 | | | $ | 16,199 | | | $ | 15,009 | |
| Cost of sales | 13,751 | | | 14,704 | | | 13,437 | |
| Gross profit | 889 | | | 1,495 | | | 1,572 | |
| Selling, general and administrative expenses | 1,050 | | | 807 | | | 1,095 | |
Operating gains | (105) | | | (429) | | | (44) | |
| | | | | |
Operating profit (loss) | (56) | | | 1,117 | | | 521 | |
Interest expense, net | 76 | | | 87 | | | 93 | |
| Non-operating gains | (3) | | | (18) | | | (30) | |
| Income (loss) from continuing operations before income taxes | (129) | | | 1,047 | | | 458 | |
| Income tax expense (benefit) | (41) | | | 231 | | | 97 | |
| (Income) loss from equity method investments | 46 | | | 6 | | | (28) | |
| Net income (loss) from continuing operations | (133) | | | 811 | | | 389 | |
| | | | | |
| Income from discontinued operations before income taxes | 185 | | | 97 | | | 115 | |
Income tax expense from discontinued operations | 30 | | | 27 | | | 30 | |
| Net income from discontinued operations | 155 | | | 70 | | | 85 | |
| | | | | |
| Net income | 23 | | | 881 | | | 474 | |
Net income from continuing operations attributable to noncontrolling interests | 5 | | | 11 | | | 1 | |
Net income from discontinued operations attributable to noncontrolling interests | — | | | — | | | — | |
| Net income attributable to Smithfield | $ | 17 | | | $ | 870 | | | $ | 472 | |
| | | | | |
Net income (loss) per common share attributable to Smithfield: | | | | | |
| Basic and diluted | | | | | |
| Continuing operations | $ | (138,176) | | | $ | 799,581 | | | $ | 387,402 | |
| Discontinued operations | 155,467 | | | 70,065 | | | 85,016 | |
| Total | $ | 17,291 | | | $ | 869,646 | | | $ | 472,417 | |
| | | | | |
| Weighted average shares outstanding | | | | | |
| Basic | 1,000 | | | 1,000 | | | 1,000 | |
| Diluted | 1,000 | | | 1,000 | | | 1,000 | |
See Notes to Consolidated Financial Statements
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
| | | | | | | | | | | | | | | | | |
| Twelve Months Ended |
| December 31,
2023 | | January 1,
2023 | | January 2,
2022 |
| Net income | $ | 23 | | | $ | 881 | | | $ | 474 | |
| | | | | |
Other comprehensive income (loss), net of tax: | | | | | |
| Foreign currency translation | 219 | | | (59) | | | (101) | |
| | | | | |
| | | | | |
| | | | | |
| Pension accounting | 16 | | | 44 | | | 136 | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Hedge accounting | (1) | | | (27) | | | (29) | |
| | | | | |
| | | | | |
| | | | | |
Total other comprehensive income (loss) | 234 | | | (41) | | | 6 | |
| | | | | |
| Comprehensive income | 256 | | | 839 | | | 480 | |
| Comprehensive income (loss) attributable to noncontrolling interest | 31 | | | 22 | | | (3) | |
| Comprehensive income attributable to Smithfield | $ | 226 | | | $ | 818 | | | $ | 483 | |
See Notes to Consolidated Financial Statements
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
| | | | | | | | | | | |
| December 31,
2023 | | January 1,
2023 |
| ASSETS |
| Current assets: | | | |
| Cash and cash equivalents | $ | 687 | | | $ | 547 | |
| Accounts receivable, net | 577 | | | 756 | |
| | | |
Inventories, net | 2,536 | | | 2,934 | |
| Current assets of discontinued operations | 958 | | | 969 | |
| Prepaid expenses and other current assets | 163 | | | 337 | |
| Total current assets | 4,921 | | | 5,543 | |
| | | |
| Property, plant and equipment, net | 3,347 | | | 3,367 | |
| Goodwill | 1,627 | | | 1,617 | |
| Long-term assets of discontinued operations | 1,347 | | | 1,181 | |
| Intangible assets, net | 1,274 | | | 1,282 | |
Operating lease assets | 381 | | | 418 | |
| Equity method investments | 191 | | | 224 | |
| | | |
| Other assets | 230 | | | 216 | |
| Total assets | $ | 13,317 | | | $ | 13,847 | |
| | | |
| LIABILITIES AND EQUITY |
| Current liabilities: | | | |
| Accounts payable | 789 | | | 1,015 | |
| Current portion of long-term debt and finance lease obligations | 27 | | | 9 | |
| Current portion of operating lease obligations | 63 | | | 72 | |
| Current liabilities of discontinued operations | 406 | | | 408 | |
| Accrued expenses and other current liabilities | 1,166 | | | 1,085 | |
| Total current liabilities | 2,450 | | | 2,589 | |
| | | |
| Long-term debt and finance lease obligations | 2,006 | | | 2,029 | |
| Long-term operating lease obligations | 325 | | | 359 | |
| Deferred income taxes, net | 474 | | | 588 | |
| Net long-term pension obligation | 255 | | | 276 | |
| Long-term liabilities of discontinued operations | 86 | | | 238 | |
| Other liabilities | 235 | | | 197 | |
| | | |
| Redeemable noncontrolling interests | 246 | | | 197 | |
| | | |
Commitments and contingencies (Note 17) | | | |
| | | |
| Equity: | | | |
| Shareholder’s equity: | | | |
| Common stock, no par value, 1,000 shares authorized; 1,000 issued and outstanding | — | | | — | |
| | | | | | | | | | | |
| Additional paid-in capital | 4,152 | | | 4,188 | |
| Retained earnings | 3,588 | | | 3,894 | |
| Accumulated other comprehensive loss | (500) | | | (708) | |
| Total shareholder’s equity | 7,241 | | | 7,374 | |
| Noncontrolling interests | — | | | — | |
| Total equity | 7,241 | | | 7,374 | |
| Total liabilities and equity | $ | 13,317 | | | $ | 13,847 | |
See Notes to Consolidated Financial Statements
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
| | | | | | | | | | | | | | | | | |
| Twelve Months Ended |
| December 31,
2023 | | January 1,
2023 | | January 2,
2022 |
| Cash flows from operating activities: | | | | | |
| Net income | $ | 23 | | | $ | 881 | | | $ | 474 | |
| Less: Net income from discontinued operations | (155) | | | (70) | | | (85) | |
| Net income (loss) from continuing operations | $ | (133) | | | $ | 811 | | | $ | 389 | |
| Adjustments to reconcile net income from continuing operations to net cash flows from operating activities of continuing operations: | | | | | |
| Depreciation and amortization | 427 | | | 440 | | | 331 | |
| Impairment of assets | 1 | | | 40 | | | 1 | |
| (Income) loss from equity method investments | 46 | | | 6 | | | (28) | |
| | | | | |
| Deferred income taxes | (130) | | | 2 | | | 32 | |
| | | | | |
| | | | | |
| | | | | |
| Gain on sale/dilution of equity method investments | — | | | (56) | | | — | |
| Gain on sale of businesses and other assets | (74) | | | (414) | | | — | |
| | | | | |
| | | | | |
| Accounts receivable | 157 | | | (33) | | | (2) | |
| Inventories | 469 | | | (307) | | | (184) | |
| Prepaid expenses and other current assets | 57 | | | (23) | | | 13 | |
| Accounts payable | (215) | | | 121 | | | 188 | |
| Accrued expenses and other current liabilities | 80 | | | (24) | | | 70 | |
| Other | 3 | | | (41) | | | (55) | |
| Net cash flows from operating activities of continuing operations | 688 | | | 521 | | | 755 | |
| | | | | |
| | | | | |
| Cash flows from investing activities: | | | | | |
| Capital expenditures | (353) | | | (338) | | | (207) | |
| Net expenditures from breeding stock transactions | (48) | | | (1) | | | (6) | |
| Proceeds from the sale of investments | (27) | | | (22) | | | — | |
| Business acquisitions, net of cash acquired | — | | | — | | | (1) | |
| Investments in partnerships and other assets | — | | | 21 | | | — | |
| Business dispositions | 13 | | | 606 | | | — | |
| | | | | |
| | | | | |
| Proceeds from sale of property, plant and equipment and other assets | 219 | | | 8 | | | 6 | |
| Other | 3 | | | 1 | | | 4 | |
| Net cash flows from investing activities of continuing operations | (194) | | | 274 | | | (204) | |
| | | | | |
| | | | | |
| Cash flows from financing activities: | | | | | |
| Payment of dividends | (323) | | | (496) | | | (192) | |
| Repayments of Securitization Facility | (226) | | | (785) | | | (430) | |
| Proceeds from Securitization Facility | 226 | | | 785 | | | 430 | |
| Purchase of redeemable noncontrolling interest | (15) | | | — | | | — | |
| Net proceeds from (repayments of) revolving credit facilities | (7) | | | (13) | | | (70) | |
| | | | | | | | | | | | | | | | | |
| Principal payments on long-term debt and finance lease obligations | (4) | | | (3) | | | (653) | |
Payment of deferred purchase consideration for acquisition | (2) | | | (55) | | | — | |
| Proceeds from the issuance of debt | — | | | — | | | 493 | |
| | | | | |
| | | | | |
| | | | | |
| Other | (2) | | | — | | | (12) | |
| Net cash flows from financing activities of continuing operations | (353) | | | (567) | | | (434) | |
| | | | | |
| | | | | |
| Effect of foreign exchange rate changes on cash from continuing operations | 3 | | | 8 | | | 1 | |
| | | | | |
| Cash flows from discontinued operations | | | | | |
| Net cash flows from operating activities of discontinued operations | 346 | | | (4) | | | 31 | |
| Net cash flows from investing activities of discontinued operations | (128) | | | (81) | | | (126) | |
| Net cash flows from financing activities of discontinued operations | (180) | | | 90 | | | 97 | |
| Effect of foreign exchange rate changes on cash from discontinued operations | — | | | 4 | | | (4) | |
| Net change in cash and cash equivalents of discontinued operations | 38 | | | 8 | | | (1) | |
| | | | | |
| Net change in cash, cash equivalents and restricted cash | 181 | | | 245 | | | 117 | |
| | | | | |
| Cash, cash equivalents and restricted cash at beginning of period | 570 | | | 325 | | | 208 | |
| Cash, cash equivalents and restricted cash at end of period | 751 | | | 570 | | | 325 | |
Less: Cash, cash equivalents and restricted cash for discontinued operations at end of period | (64) | | | (23) | | | (14) | |
| Cash, cash equivalents and restricted cash at end of period | $ | 687 | | | $ | 547 | | | $ | 311 | |
See Notes to Consolidated Financial Statements
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY
(in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Shareholder’s Equity | | Noncontrolling Interests | | Total Equity |
| Balance, January 3, 2021 | $ | 4,190 | | | $ | 3,122 | | | $ | (667) | | | $ | 6,644 | | | $ | 1 | | | $ | 6,645 | |
| Dividends | — | | | (73) | | | — | | | (73) | | | — | | | (73) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Comprehensive income: | | | | | | | | | | | |
| Net income | — | | | 472 | | | — | | | 472 | | | — | | | 472 | |
| Other comprehensive income, net of tax | — | | | — | | | 10 | | | 10 | | | — | | | 10 | |
| Effect of change in accounting principle | — | | | (1) | | | 1 | | | — | | | — | | | — | |
| Balance, January 2, 2022 | 4,190 | | | 3,521 | | | (656) | | | 7,054 | | | — | | | 7,054 | |
| Dividends | — | | | (496) | | | — | | | (496) | | | — | | | (496) | |
| Adjustment to redeemable noncontrolling interests | (2) | | | — | | | — | | | (2) | | | — | | | (2) | |
| | | | | | | | | | | |
| Comprehensive income: | | | | | | | | | | | |
| Net income | — | | | 870 | | | — | | | 870 | | | — | | | 870 | |
| Other comprehensive loss, net of tax | — | | | — | | | (52) | | | (52) | | | — | | | (52) | |
| | | | | | | | | | | |
| Balance, January 1, 2023 | 4,188 | | | 3,894 | | | (708) | | | 7,374 | | | — | | | 7,374 | |
| Dividends | — | | | (323) | | | — | | | (323) | | | — | | | (323) | |
| Adjustment to redeemable noncontrolling interests | (36) | | | — | | | — | | | (36) | | | — | | | (36) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Comprehensive income: | | | | | | | | | | | |
| Net income | — | | | 17 | | | — | | | 17 | | | — | | | 17 | |
| Other comprehensive income, net of tax | — | | | — | | | 208 | | | 208 | | | — | | | 208 | |
| | | | | | | | | | | |
| Balance, December 31, 2023 | $ | 4,152 | | | $ | 3,588 | | | $ | (500) | | | $ | 7,241 | | | $ | — | | | $ | 7,241 | |
See Notes to Consolidated Financial Statements
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Smithfield Foods, Inc., together with its subsidiaries (“Smithfield,” “the Company,” “we,” “us” or “our”) produces a wide variety of fresh pork and packaged meats products primarily in the United States and markets them both domestically and internationally. We operate in a cyclical industry and our results are significantly affected by fluctuations in commodity prices for meat, livestock (primarily hogs) and grains. Smithfield is an indirect, wholly owned subsidiary of Hong Kong-based WH Group Limited (“WH Group”).
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), which require us to make estimates and use assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. It is possible that actual results could differ materially from those estimates. The information reflects all normal recurring adjustments which we believe are necessary to present fairly the financial position and results of operations for all periods included. Totals and percentages may be affected by rounding.
Our elected fiscal year is the 52-week or 53-week period which ends on the Sunday nearest to December 31. Fiscal years 2023, 2022 and 2021 each consisted of 52-weeks.
Principles of Consolidation
The consolidated financial statements include the accounts of all wholly owned subsidiaries, as well as all majority-owned subsidiaries and other entities for which we have a controlling financial interest. We evaluate contractual, equity and other variable interests in entities that may be deemed variable interest entities (“VIE”). We consolidate a VIE if we determine that we are the VIE’s primary beneficiary. A VIE’s primary beneficiary has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (2) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. All intercompany transactions and accounts have been eliminated.
The functional currency of our 66% owned subsidiary, Granjas Carroll de Mexico, S. de R.L. de C.V., (“Altosano”) is the Mexican Peso. The assets and liabilities of Altosano are translated into U.S. dollars using the exchange rates in effect at the balance sheet dates. The income and cash flows of Altosano are translated into U.S. dollars using the average exchange rates over the course of the year. The net effect of translating the accounts of Altosano into U.S. dollars is included as a component of shareholder’s equity in accumulated other comprehensive loss.
Gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are recognized in earnings as incurred and included in selling, general and administrative expenses (“SG&A”) for operating transactions or non-operating gains for non-operating transactions.
Cash and Cash Equivalents
We consider all highly liquid investments with original maturities of 90 days or less to be cash equivalents. The majority of our cash is concentrated in demand deposit accounts or money market funds. The carrying value of cash and cash equivalents approximates fair value.
Accounts Receivable, Net
Accounts receivable, net is comprised of both receivables from contracts with customers and other receivables. We monitor the credit risk associated with our accounts receivable and establish an allowance for credit losses
expected to be incurred over the life of the receivable, which is recorded net of this allowance. We calculate this allowance based on our history of write-offs, future economic conditions, level of past due accounts, the financial health of our customers and historical experience. Our allowance for credit losses was not material for the periods presented.
Inventories, Net
Inventories, net consist of the following:
| | | | | | | | | | | |
| December 31,
2023 | | January 1,
2023 |
| (in millions) |
| Livestock | $ | 1,036 | | | $ | 1,233 | |
| Fresh and packaged meats | 943 | | | 1,117 | |
| Grains | 307 | | | 350 | |
| Manufacturing supplies | 123 | | | 124 | |
| Other | 127 | | | 110 | |
Inventories, net | $ | 2,536 | | | $ | 2,934 | |
Inventories are generally valued at the lower of historical average cost or net realizable value. The cost of livestock includes feed, medications, contract grower fees and other production expenses. Fresh pork in the United States is valued based on U.S. Department of Agriculture (“USDA”) published market prices and adjusted for the cost of further processing. Costs for fresh and packaged meats include meat, labor, supplies and overhead. Manufacturing supplies principally consist of ingredients and packaging materials. Other consists primarily of maintenance parts. We primarily use batch-specific costing to record the cost of inventories sold, which approximates the first-in, first-out (“FIFO”) method.
Derivative Financial Instruments and Hedging Activities
We record all derivatives as either assets or liabilities at fair value on the balance sheet, with the exception of contracts that qualify for the normal purchase and normal sale scope exception, which are expected to result in physical delivery. Accounting for changes in the fair value of a derivative depends on whether it qualifies and has been designated as part of a hedging relationship. For derivatives that qualify and have been designated as hedging instruments for accounting purposes, changes in fair value have no net impact on earnings, to the extent the derivative is considered perfectly effective in achieving offsetting changes in fair value attributable to the risk being hedged, until the hedged item is recognized in earnings (commonly referred to as the “hedge accounting” method). For derivatives that do not qualify or are not designated as hedging instruments for accounting purposes, changes in fair value are recorded in current period earnings (commonly referred to as the “mark-to-market” method). We may elect either method of accounting for our derivative portfolio, assuming all the necessary requirements are met. We have, in the past, availed ourselves of either acceptable method and expect to do so in the future. We believe all of our derivative instruments represent economic hedges against changes in prices and rates, regardless of their designation for accounting purposes.
When cash flow hedge accounting is applied, derivative gains or losses are recognized as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. The initial fair value of hedge components excluded from the assessment of effectiveness is recognized in earnings on a straight-line basis over the life of the hedging instrument and is presented in the same income statement line item as the hedged item. Any difference between the change in fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings is recorded as a component of other comprehensive income (loss).
When fair value hedge accounting is applied, derivative gains and losses are recognized in earnings concurrently with the change in fair value of the hedged item attributable to the risk being hedged.
A portion of our derivatives are exchange traded futures contracts held with brokers, subject to netting arrangements that are enforceable during the ordinary course of business. Additionally, we have a portfolio of over-the-counter derivatives that are held by counterparties under netting arrangements found in typical master netting agreements. These agreements legally allow for net settlement in the event of bankruptcy. We offset the fair values of derivative assets and liabilities, along with the related cash collateral, that are executed with the same counterparty under these arrangements in the consolidated balance sheets.
The cash flows associated with derivative instruments are reported in net cash flows from operating activities in the consolidated statements of cash flows.
Property, Plant and Equipment, Net
Property, plant and equipment, net, (“PP&E”) consists of the following:
| | | | | | | | | | | | | | | | | |
| Useful Life | | December 31,
2023 | | January 1,
2023 |
| (in Years) | | (in millions) |
| Machinery and equipment | 5-20 | | $ | 2,735 | | | $ | 2,526 | |
| Buildings and improvements | 15-40 | | 1,561 | | | 1,441 | |
| Land and improvements | 3+ | | 686 | | | 660 | |
| Computer hardware and software | 3-15 | | 229 | | | 240 | |
| Breeding stock | 2 | | 207 | | | 221 | |
| Vehicles | 2-7 | | 110 | | | 94 | |
| Construction in progress | | | 225 | | | 290 | |
| Property, plant and equipment, gross | | | 5,753 | | | 5,472 | |
| Accumulated depreciation | | | (2,431) | | | (2,151) | |
| | | | | |
| Finance leases | | | 25 | | | 47 | |
Property, plant and equipment, net | | | $ | 3,347 | | | $ | 3,367 | |
PP&E is generally stated at historical cost and depreciated on a straight-line basis over the estimated useful lives of the assets. Assets held under finance leases are classified in property, plant and equipment, net and depreciated over the lease term or, in the instance where title transfers to us at the end of the lease term, the estimated useful lives of the assets. The depreciation of assets held under finance leases is included in depreciation expense. Depreciation expense is included in either cost of sales or SG&A, as applicable. Accelerated depreciation of assets resulting from decisions to dispose of assets prior to the end of their previously estimated useful lives is included in cost of sales. Depreciation expense totaled $395 million, $421 million and $320 million in fiscal years 2023, 2022 and 2021, respectively.
During the construction period of significant assets, the associated interest costs are capitalized. Capitalized interest was not material for any of the fiscal years presented.
Goodwill
Goodwill represents the excess of the purchase price of a business over the fair value of identifiable net assets. The changes in goodwill allocated to each of our reportable segments (1) for fiscal years 2023 and 2022 is presented in the following table.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fresh Pork | | Hog Production | | Packaged Meats | | Other (2) | | Consolidated |
| (in millions) |
| Balance, January 2, 2022 | $ | 34 | | | $ | 4 | | | $ | 1,549 | | | $ | 80 | | | $ | 1,667 | |
| Dispositions | — | | | — | | | (47) | | | $ | — | | | (47) | |
| | | | | | | | | |
| Measurement period adjustments | — | | | — | | | — | | | $ | (8) | | | (8) | |
| Foreign currency translation | — | | | — | | | — | | | $ | 4 | | | 4 | |
| Balance, January 1, 2023 | 34 | | | 4 | | | 1,503 | | | 77 | | | 1,617 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Foreign currency translation | — | | | — | | | — | | | 10 | | | 10 | |
| Balance, December 31, 2023 | 34 | | | 4 | | | 1,503 | | | 87 | | | 1,627 | |
__________________
(1)See “Note 2: Reportable Segments” for further information about our reportable segments.
(2)Includes our Mexico and Bioscience operations.
Goodwill for each reporting unit is tested for impairment annually in the fourth quarter, or sooner if impairment indicators arise. Goodwill is considered to be impaired if the carrying amount of a reporting unit exceeds its fair value, in which case an impairment loss would be recognized in an amount equal to that excess. We may perform a qualitative assessment to determine if it is more likely than not that the carrying amount of a reporting unit exceeds its fair value. If it is not, no further analysis is required. If it is, a quantitative goodwill impairment test is performed to estimate the fair value of the reporting unit and measure the amount of goodwill impairment loss to be recognized, if any.
The fair value of a reporting unit is estimated by applying valuation multiples and/or estimating future discounted cash flows. The selection of multiples is dependent upon assumptions regarding future operating performance as well as business trends and prospects, and industry, market and economic conditions. When estimating future discounted cash flows, we consider the assumptions that hypothetical marketplace participants would use in estimating future cash flows. In addition, where applicable, an appropriate discount rate is used, based on an industry-wide average cost of capital or location-specific economic factors. We consider all these factors to be level 3 inputs, as defined in “Note 15: Fair Value Measurements.”
Based on the results of our annual goodwill impairment tests, as of our testing date, we have determined that no impairments existed for any of the fiscal years presented.
Intangible Assets, Net
Intangible assets, net consists of the following:
| | | | | | | | | | | | | | | | | |
| Useful Life | | December 31,
2023 | | January 1,
2023 |
| (in Years) | | (in millions) |
| Amortized intangible assets: | | | | | |
| Customer relationships | 14-20 | | $ | 82 | | | $ | 82 | |
| Contractual relationships | 17-22 | | 40 | | | 40 | |
| Rights and customer lists | 5-25 | | 5 | | | 5 | |
| Amortized intangible assets, gross | | | 127 | | | 127 | |
| Accumulated amortization | | | (70) | | | (62) | |
| Amortized intangible assets, net | | | 58 | | | 66 | |
| Non-amortized intangible assets: | | | | | |
| Trademarks | Indefinite | | 1,216 | | | 1,216 | |
| Intangible assets, net | | | $ | 1,274 | | | $ | 1,282 | |
Intangible assets with finite lives are amortized over their estimated useful lives and tested for recoverability when indicators of impairment are present using estimated future undiscounted cash flows related to those assets. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to future cash flows. Amortization expense for intangible assets was $8 million in each of fiscal years 2023, 2022 and 2021. The estimated amortization expense associated with our intangible assets for each of the next five years is as follows:
| | | | | | | | |
| Year | | (in millions) |
| 2024 | | $ | 8 | |
| 2025 | | 7 | |
| 2026 | | 7 | |
| 2027 | | 7 | |
| 2028 | | 4 | |
Indefinite-lived trademarks are tested for impairment annually in the fourth quarter, or sooner if impairment indicators arise. If the carrying amount of our trademarks exceed their estimated fair value, an impairment loss is recognized in an amount equal to that excess. The fair values of trademarks are calculated using a royalty rate method. Assumptions about royalty rates are based on the rates at which similar brands and trademarks are licensed in the marketplace.
We have determined that no impairments of our intangible assets existed for any of the fiscal years presented.
Investments
We account for investments in entities that we do not control, but over which we have the ability to exercise significant influence, using the equity accounting method. These investments are recorded in equity method investments on the consolidated balance sheet. We record our share of earnings and losses from our equity method investments in (income) loss from equity method investments in the consolidated statements of income. The majority of our equity method investments are reported on a one-month lag, which does not materially impact our consolidated financial statements.
We account for investments in entities that we do not control and do not have the ability to exercise significant influence at fair value if fair value is readily determinable. For investments that do not have readily determinable fair values, we account for the investment at cost minus impairment, if any, plus or minus changes resulting from orderly
transactions for the identical or a similar investment of the same issuer. These investments are recorded in other assets on the consolidated balance sheets.
We consider whether the fair value of an investment has declined below its carrying amount whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable. If we consider any such decline to be other than temporary (based on various factors, including historical financial results, product development activities and the overall health of the affiliate’s industry), then a write-down of the investment would be recorded to its estimated fair value.
Leases
At inception, we determine whether a contract is or contains a lease based on whether we have the right to control the use of an identified asset for a period of time, which includes the right to (1) obtain substantially all of the economic benefits from the use of the identified asset and (2) direct the use of the identified asset. Our lease assets and obligations are initially measured at the present value of the future lease payments over the term of the lease, adjusted for any prepayments. The lease term consists of the noncancellable period of the lease, plus any period covered by an option to extend the lease that is either controlled by the lessor or is reasonably certain to be exercised by the Company. The value of the future lease payments is discounted at the interest rate implicit in our lease contracts, if readily determinable. Otherwise, we utilize the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term and economic environment to that of the lease. Our lease assets and obligations do not contain any leases with a term of 12 months or less.
Our lease agreements contain both lease and non-lease components. We allocate the consideration in our lease agreements to each component based on the standalone values of each component. The non-lease components are excluded from the measurement of our lease assets and obligations.
Operating lease cost is recognized on a straight-line basis in earnings over the term of the lease. Finance lease cost is amortized into earnings using the effective interest method over the lease term or, in the instance where title transfers to us at the end of the lease term, the estimated useful lives of the assets. The interest component of finance lease cost is included in interest expense.
Debt Issuance Costs, Premiums and Discounts
Debt issuance costs, premiums and discounts are amortized into interest expense over the terms of the related loan agreements using the effective interest method. Debt issuance costs are generally recorded as a reduction of the associated debt instrument and classified in long-term debt and finance lease obligations in the consolidated balance sheets. Costs to enter into and/or refinance credit facilities are classified in other assets on the consolidated balance sheets and reclassified to current assets as the credit facilities approach expiration.
Income Taxes
Smithfield is included in its parent’s (United Global Foods Holdings, Inc.) consolidated federal income tax group and consolidated income tax return. The members of the consolidated group have elected to allocate income taxes among the members of the group by the separate return method, under which the parent company credits the subsidiary for income tax reductions resulting from the subsidiary’ inclusion in the consolidated return, or the parent charges the subsidiary for its allocated share of the consolidated income tax liability.
We estimate total income tax expense, including interest and penalties, based on statutory tax rates and tax planning opportunities available to us in various jurisdictions in which we earn income. Federal income taxes include an estimate for taxes on earnings of foreign subsidiaries expected to be remitted to the United States and be taxable, but not for earnings considered indefinitely invested in the foreign subsidiary.
We account for the global intangible low-taxed income (“GILTI”) inclusion from foreign subsidiaries in the period in which it is incurred.
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in earnings in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to amounts more likely than not to be realized.
The determination of our provision for income taxes requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. Significant judgment is required in assessing the timing and amounts of deductible and taxable items.
We record liabilities for uncertain tax positions based on our analysis of whether, and the extent to which, additional taxes will be due. We record these liabilities using a two-step process in which (1) we evaluate whether we believe it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the tax authority. We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.
Pension Accounting
We recognize the funded status of our defined benefit pension plans in the consolidated balance sheets. We measure our pension and other postretirement benefit plan obligations and related plan assets as of December 31. The measurement of our pension obligations and related costs is dependent on the use of assumptions and estimates. These assumptions include discount rates, salary growth, mortality rates and expected returns on plan assets. Changes in assumptions and future investment returns could potentially have a material impact on our expenses and related funding requirements.
We recognize in other comprehensive income (loss), the gains or losses and prior service costs or credits that arise during the period. Prior to the freeze of our qualified pension plans for all non-union participants in the second quarter of 2021, these amounts were amortized into net periodic benefit cost over the average remaining service period of active plan participants. Subsequent to the plan freeze, these amounts are amortized over the average remaining life expectancy of the plan participants.
Self-Insurance Programs
We are self-insured for certain levels of workers’ compensation claims, health care coverage, product recall, vehicle, property, and general liability. The cost of these self-insurance programs is accrued based upon estimated settlements for known and anticipated claims. Any resulting adjustments to previously recorded reserves are reflected in current period earnings.
Asset Retirement Obligations
We record an asset retirement obligation (“ARO”) related to PP&E when a legal obligation is incurred and the fair value of the obligation can be estimated. AROs are initially recorded as a liability at fair value and capitalized in property, plant and equipment, net on the consolidated balance sheet. We estimate the fair value of AROs based on the projected discounted future cash outflows required to settle the liability. Such an estimate requires assumptions and judgments regarding the amount and timing of cash outflows required to settle the liability, which are level 3 inputs, as defined in “Note 15: Fair Value Measurements.” If the fair value of the recorded ARO changes, a revision is recorded to both the ARO and the related asset. The cost of the ARO is depreciated into earnings on a straight-line basis over the remaining useful life of the related asset. Accretion of the liability due to the passage of time is recognized as an expense in current period earnings. As of December 31, 2023 and January 1, 2023, the balance of our AROs was $29 million, and $20 million, respectively.
Contingent Liabilities
We are subject to lawsuits, investigations and other claims related to the operation of our farms and facilities, labor, livestock procurement, securities, environmental, our products, taxes and other matters, and are required to assess the likelihood of any adverse judgments or outcomes to these matters, as well as potential ranges of loss. A
determination of the amount of accruals and disclosures required, if any, for these contingencies is made after considerable analysis of each individual issue.
We accrue for contingent liabilities, including future defense costs, when an assessment of the risk of loss is probable and can be reasonably estimated. We disclose contingent liabilities when the risk of material loss is at least reasonably possible. We reevaluate our accruals when facts and circumstances change, which could warrant an adjustment to the amount that is recorded.
Our contingent liabilities contain uncertainties because the eventual outcome will result from future events. Our determination of accruals and any reasonably possible losses in excess of those accruals require estimates and judgments related to the possible outcomes, differing interpretations of the law, assessments of the amount of potential damages, settlements or defense costs, and the effectiveness of strategies or other factors beyond our control. If actual results are not consistent with our estimates or assumptions, we may be exposed to gains or losses that could have a material effect on our future results of operations and cash flows.
Redeemable Noncontrolling Interests
Certain noncontrolling interest holders have the right to exercise a put option that would obligate us to redeem a portion or all of their interest. These noncontrolling interests are classified as redeemable noncontrolling interests outside of equity in our consolidated balance sheets. At the end of each period we adjust the value of redeemable noncontrolling interests, if necessary, to the redemption value (as defined in the subsidiary’s operating agreement) through additional paid-in capital. See “Note 15: Fair Value Measurements” for a discussion of the assessment of redemption value. The following table presents the changes in redeemable noncontrolling interests for the periods presented:
| | | | | | | | | | | | | | | | | | | | | |
| Twelve Months Ended | | | | |
| December 31,
2023 | | January 1,
2023 | | January 2,
2022 | | | | |
| (in millions) | | | | |
| Beginning balance | $ | 197 | | | $ | 174 | | | $ | 11 | | | | | |
| Attribution of net income | 5 | | | 11 | | | 1 | | | | | |
| Attribution of comprehensive income (loss) | 25 | | | 11 | | | (5) | | | | | |
| Dividends | (2) | | | (1) | | | (2) | | | | | |
| Acquisition | — | | | — | | | 169 | | | | | |
| Redemption | (15) | | | — | | | — | | | | | |
Adjustment to redemption value | 36 | | | 2 | | | — | | | | | |
| Ending balance | $ | 246 | | | $ | 197 | | | $ | 174 | | | | | |
Revenue Recognition
Our revenue (sales) is primarily derived from contracts with customers for the purchase of our products. Revenue is recognized at a point in time when our performance obligation has been satisfied and control of the promised goods is transferred to the customer, which generally occurs upon shipment or delivery to a customer based on terms of the sale. The primary performance obligation in our contracts with customers is to provide meat products. Shipping and handling activities are considered part of the fulfillment of our promise to provide meat products and not a separate performance obligation. Shipping and handling costs are reported as a component of cost of sales.
Revenue is recorded at the transaction price, which is the amount of consideration we expect to receive in exchange for providing goods to customers. The transaction price may be adjusted for estimates of known or expected variable consideration, including consumer incentives, trade promotions and other programs. Our estimates of variable consideration are based on a number of factors including history with the respective customer, current performance, and future projections. Additionally, in determining whether an estimate of variable consideration is
constrained, we consider the likelihood and magnitude of a potential revenue reversal. We review and update these estimates regularly until the incentives or product returns are realized. The impact of any adjustment is recognized in the period in which the adjustment is identified. Payment terms vary per contract. However, payment is typically received within a few weeks of the invoice date.
The balances for receivables from contracts with customers and deferred revenue are presented in the following table:
| | | | | | | | | | | | | | | | | |
| December 31,
2023 | | January 1,
2023 | | January 2,
2022 |
| (in millions) |
| Receivables from contracts with customers | $ | 475 | | | $ | 700 | | | $ | 703 | |
| Deferred revenue | 9 | | | 13 | | | 23 | |
Advertising and Promotional Expenses
Advertising and promotional expenses are recognized as incurred except for certain production expenses, which are expensed upon the first airing of the advertisement. Promotional sponsorship expenses are recognized as the promotional events occur. Advertising expenses totaled $123 million, $127 million and $116 million in fiscal years 2023, 2022 and 2021, respectively, and are included in SG&A in the consolidated statements of income.
Research and Development Expenses
Research and development expenses are recognized as incurred. Research and development expenses totaled $175 million, $157 million and $157 million in fiscal years 2023, 2022 and 2021, respectively, and are included in cost of sales in the consolidated statements of income.
Government Assistance
We may receive government assistance (government grants) from time to time, primarily in the form of refundable tax credits. Government grants typically specify conditions that must be met in order for the government grants to be earned. Our policy is to recognize government grants when they are reasonably assured of receipt. We did not recognize any government grants during any of the fiscal years presented.
Recently Issued Accounting Pronouncements
There have been no recently issued accounting pronouncements that have had, or are expected to have, a material impact on our consolidated financial statements.
NOTE 2: REPORTABLE SEGMENTS
Our reportable segments are determined on the basis of our organizational structure and information that is regularly reviewed by our Chief Operating Decision Maker (“CODM”) for the purpose of making operating and resource allocation decisions and assessing the performance of the operating segments of our business. Our CODM is our Chief Executive Officer.
Following the carve-out and distribution of our European operations, we conduct our operations through three reportable segments: Packaged Meats, Fresh Pork and Hog Production.
Packaged Meats
The Packaged Meats segment consists of our U.S. operations that process fresh meat into a wide variety of packaged meats products, including bacon, sausage, hot dogs, deli and lunch meats, dry sausage products (such as pepperoni and genoa), ham products, ready-to-eat products and prepared foods (such as pre-cooked entrees, bacon and sausage). Approximately 80% of the Packaged Meats segment’s raw materials are sourced from our Fresh Pork segment. We market our domestic packaged meats products under a strategic set of core brands, which include: Smithfield, Eckrich, Nathan’s Famous, Farmland, Armour, Farmer John, Kretschmar, Krakus, John Morrell, Cook’s,
Gwaltney, Carando, Margherita, Curly’s and Smithfield Culinary. We also sell a sizeable portion of our packaged meats products as private label products. The majority of the Packaged Meats segment’s products are sold to retail and foodservice customers in the United States.
Fresh Pork
The Fresh Pork segment consists of our U.S. operations that process live hogs into a wide variety of primal, sub-primal and offal products, such as bellies, butts, hams, loins, picnics and ribs. The Fresh Pork segment sources approximately half of its raw materials from our Hog Production segment and half from independent farmers with whom we partner across the United States. Approximately one-third of our fresh pork products, including the majority of hams, bellies and trimmings, is transferred to our Packaged Meats segment. Externally, we sell our fresh pork products to domestic retail, foodservice and industrial customers, as well as to export markets, including, among others, China, Mexico, Japan, South Korea and Canada.
Hog Production
The Hog Production segment consists of our hog production operations in the United States, which produce and raise our hogs on numerous company-owned farms and farms that are owned and operated by third-party contract farmers. Nearly all of the hogs produced by this segment are processed by our Fresh Pork segment. The Hog Production segment also may sell grains to external customers.
Our CODM reviews assets at a consolidated level; not by reportable segment. Therefore, we do not disclose assets by reportable segment.
The following table provides certain financial information by reportable segment for the fiscal years presented with a reconciliation to consolidated totals.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Packaged Meats | | Fresh Pork | | Hog Production | | Other (1) | | Unallocated | | Intersegment | | Consolidated |
| (in millions) |
| 2023 | | | | | | | | | | | | | |
| Sales | 8,280 | | | 7,832 | | | 3,317 | | | 559 | | | — | | | (5,348) | | | $ | 14,640 | |
| Depreciation and amortization | 124 | | | 121 | | | 144 | | | 38 | | | — | | | — | | | 427 | |
| (Income) loss from equity method investments | — | | | (1) | | | (2) | | | — | | | 49 | | | — | | | 46 | |
Capital expenditures | 154 | | | 123 | | | 40 | | | 36 | | | — | | | — | | | 353 | |
| | | | | | | | | | | | | |
| Reconciliation of segment profit to loss from continuing operations before income taxes: |
| Segment profit | 1,066 | | | 118 | | | (754) | | | (4) | | | — | | | — | | | 426 | |
Unallocated expenses (2) | — | | | — | | | — | | | — | | | (371) | | | — | | | (371) | |
Corporate expenses (3) | — | | | — | | | — | | | — | | | (107) | | | — | | | (107) | |
| Interest expense | — | | | — | | | — | | | — | | | (76) | | | — | | | (76) | |
| Non-operating gains | — | | | — | | | — | | | — | | | 3 | | | — | | | 3 | |
Allocated income from equity method investments | — | | | (1) | | | (2) | | | — | | | — | | | — | | | (4) | |
| Loss from continuing operations before income taxes | | | | | | | | | | | | | (129) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Packaged Meats | | Fresh Pork | | Hog Production | | Other (1) | | Unallocated | | Intersegment | | Consolidated |
| | | | | | | | | | | | | |
| 2022 | | | | | | | | | | | | | |
Sales | $ | 9,262 | | | $ | 9,190 | | | $ | 4,456 | | | $ | 524 | | | — | | | $ | (7,234) | | | $ | 16,199 | |
Depreciation and amortization | 138 | | | 139 | | | 130 | | | 33 | | | — | | | — | | | 440 | |
(Income) loss from equity method investments | — | | | (1) | | | (1) | | | 8 | | | — | | | — | | | 6 | |
Capital expenditures | 99 | | | 148 | | | 79 | | | 13 | | | — | | | — | | | 338 | |
| | | | | | | | | | | | | |
Reconciliation of segment profit to income from continuing operations before income taxes: |
Segment profit | 1,047 | | | 32 | | | (133) | | | 53 | | | — | | | — | | | 999 | |
Unallocated gains (2) | | | | | | | | | 229 | | | | | 229 | |
Corporate expenses (3) | — | | | — | | | — | | | — | | | (118) | | | — | | | (118) | |
Interest expense | — | | | — | | | — | | | — | | | (87) | | | — | | | (87) | |
Non-operating gains | — | | | — | | | — | | | — | | | 18 | | | — | | | 18 | |
| (Income) loss from equity method investments | — | | | (1) | | | (1) | | | 8 | | | — | | | — | | | 6 | |
Income from continuing operations before income taxes | | | | | | | | | | | | | 1,047 | |
| | | | | | | | | | | | | |
| 2021 | | | | | | | | | | | | | |
Sales | $ | 8,515 | | | $ | 9,145 | | | $ | 3,866 | | | $ | 247 | | | — | | | $ | (6,765) | | | $ | 15,009 | |
Depreciation and amortization | 125 | | | 122 | | | 71 | | | 13 | | | — | | | — | | | 331 | |
Income from equity method investments | — | | | (4) | | | (17) | | | (7) | | | — | | | — | | | (28) | |
Capital expenditures | 75 | | | 88 | | | 44 | | | 1 | | | — | | | — | | | 207 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Reconciliation of segment profit to income from continuing operations before income taxes: |
Segment profit | 879 | | | (5) | | | 69 | | | 68 | | | — | | | — | | | 1,011 | |
Unallocated expenses (2) | | | | | | | | | (343) | | | | | (343) | |
Corporate expenses (3) | — | | | — | | | — | | | — | | | (119) | | | — | | | (119) | |
Interest expense | — | | | — | | | — | | | — | | | (93) | | | — | | | (93) | |
Non-operating gains | — | | | — | | | — | | | — | | | 30 | | | — | | | 30 | |
| Income from equity method investments | — | | | (4) | | | (17) | | | (7) | | | — | | | — | | | (28) | |
Income from continuing operations before income taxes | | | | | | | | | | | | | 458 | |
________________
(1)Includes our Mexico and Bioscience operations. Our Mexico operations include the raising of hogs and production of pork products that are sold primarily to customers in Mexico. Our Bioscience operations use raw materials from hogs that we harvest to manufacture heparin products, including an active pharmaceutical ingredient that mitigates the risk of blood clots.
(2)Includes certain costs of sales, SG&A and operating gains that we do not allocate to our segments.
(3)Represents general corporate expenses for management and administration of the business.
The following table disaggregates our sales by reportable segment to customers by major distribution channel:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Retail (1) | | Foodservice (2) | | Exports (3) | | Industrial (4) | | Other / Unallocated (5) | | Total External Sales (6) | | Intersegment | | Consolidated (7) |
| (in millions) |
| 2023 | | | | | | | | | | | | | | | |
| Packaged Meats | $ | 5,265 | | | $ | 2,420 | | | $ | 126 | | | $ | 449 | | | $ | 20 | | | $ | 8,280 | | | $ | — | | | $ | 8,280 | |
| Fresh Pork | 2,007 | | | 246 | | | 1,731 | | | 1,142 | | | 12 | | | 5,138 | | | 2,694 | | | 7,832 | |
| Hog Production | — | | | — | | | — | | | — | | | 671 | | | 671 | | | 2,646 | | | 3,317 | |
Other (8) | — | | | — | | | — | | | — | | | 552 | | | 552 | | | 7 | | | 559 | |
| Intersegment | — | | | — | | | — | | | — | | | — | | | — | | | (5,348) | | | (5,348) | |
| Total | $ | 7,272 | | | $ | 2,667 | | | $ | 1,857 | | | $ | 1,591 | | | $ | 1,254 | | | $ | 14,640 | | | $ | — | | | $ | 14,640 | |
| | | | | | | | | | | | | | | |
| 2022 | | | | | | | | | | | | | | | |
| Packaged Meats | $ | 5,624 | | | $ | 2,749 | | | $ | 194 | | | $ | 516 | | | $ | 178 | | | $ | 9,261 | | | $ | — | | | $ | 9,262 | |
| Fresh Pork | 2,233 | | | 322 | | | 1,683 | | | 1,303 | | | 14 | | | 5,555 | | | 3,635 | | | 9,190 | |
| Hog Production | — | | | — | | | — | | | — | | | 862 | | | 862 | | | 3,594 | | | 4,456 | |
Other (8) | — | | | — | | | — | | | — | | | 520 | | | 520 | | | 4 | | | 524 | |
| Intersegment | — | | | — | | | — | | | — | | | — | | | — | | | (7,234) | | | (7,234) | |
| Total | $ | 7,857 | | | $ | 3,071 | | | $ | 1,877 | | | $ | 1,819 | | | $ | 1,575 | | | $ | 16,199 | | | $ | — | | | $ | 16,199 | |
| | | | | | | | | | | | | | | |
| 2021 | | | | | | | | | | | | | | | |
| Packaged Meats | $ | 5,161 | | | $ | 2,507 | | | $ | 203 | | | $ | 473 | | | $ | 171 | | | $ | 8,515 | | | $ | — | | | $ | 8,515 | |
| Fresh Pork | 2,007 | | | 312 | | | 2,291 | | | 1,070 | | | 63 | | | 5,744 | | | 3,401 | | | 9,145 | |
| Hog Production | — | | | — | | | — | | | — | | | 503 | | | 503 | | | 3,363 | | | 3,866 | |
Other (8) | — | | | — | | | — | | | — | | | 247 | | | 247 | | | — | | | 247 | |
| Intersegment | — | | | — | | | — | | | — | | | — | | | — | | | (6,765) | | | (6,765) | |
| Total | $ | 7,169 | | | $ | 2,819 | | | $ | 2,494 | | | $ | 1,543 | | | $ | 985 | | | $ | 15,009 | | | $ | — | | | $ | 15,009 | |
________________
(1)Includes national and regional retailers in the United States such as grocery supermarket chains, independent grocers and club stores.
(2)Includes foodservice distributors, fast food and other restaurant operators, hotel chains and other institutional customers in the United States.
(3)Includes exports from the United States to international retailers and wholesale distributors primarily in North America, Asia, Latin America and other emerging markets.
(4)Includes sales to industrial customers who use our raw materials in their finished goods production, including prepared meals, pharmaceutical production and pet food.
(5)Includes sales of grain, oilseeds, breeding stock and market hogs, among others, in addition to external sales from our Mexico and Bioscience operations.
(6)Includes external sales from our Mexico operations of $515 million, $444 million, and $160 million in fiscal years 2023, 2022 and 2021, respectively. All other external sales are sourced from our U.S. operations.
(7)Our largest customer, Walmart Inc., (Walmart) accounted for 12%, 12% and 11% of consolidated sales in fiscal years 2023, 2022 and 2021, respectively. Sales to Walmart were included in our Packaged Meats and Fresh Pork segments. Any extended discontinuance of sales to this customer could, if not replaced, have a material impact on our results of operations.
(8)Includes our Mexico and Bioscience operations.
NOTE 3: DISCONTINUED OPERATIONS
On August 26, 2024, we completed a carve-out and distribution of our European operations to WH Group. The European carve-out represents a strategic shift in our geographical footprint. Accordingly, the results of operations, assets and liabilities, and cash flows of the European operations have been condensed into separate line items and presented in the consolidated statements of income, the consolidated balance sheets and the consolidated statements of cash flows as discontinued operations and this treatment has been applied retrospectively to all periods presented.
The following table presents the major components of net income from discontinued operations included in the consolidated statements of income.
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| (in millions) |
| Sales | $ | 3,337 | | | $ | 2,872 | | | $ | 2,628 | |
| Cost of sales | 2,980 | | | 2,623 | | | 2,383 | |
| Gross profit | 357 | | | 250 | | | 244 | |
| Selling, general and administrative expenses | 164 | | | 144 | | | 129 | |
Operating gains | (7) | | | (2) | | | (2) | |
| Operating profit | 199 | | | 108 | | | 117 | |
| Interest expense | 11 | | | 9 | | | (1) | |
| Non-operating losses | 3 | | | 2 | | | 2 | |
| Income from discontinued operations before income taxes | 185 | | | 97 | | | 115 | |
| Income tax on discontinued operations | 30 | | | 27 | | | 30 | |
| Net income from discontinued operations | 155 | | | 70 | | | 85 | |
The following tables present the carrying amounts of the major classes of assets and liabilities of the discontinued operations included in the consolidated balance sheets.
Assets
| | | | | | | | | | | |
| December 31,
2023 | | January 1,
2023 |
| (in millions) |
| Current assets: | | | |
| Cash and cash equivalents | $ | 61 | | | $ | 21 | |
| Accounts receivable, net | 412 | | | 430 | |
Inventories, net | 460 | | | 492 | |
| Prepaid expenses and other current assets | 25 | | | 26 | |
| Total current assets | 958 | | | 969 | |
| | | |
| Property, plant and equipment, net | 911 | | | 771 | |
| Goodwill | 253 | | | 205 | |
| Intangible assets, net | 114 | | | 105 | |
| Other assets | 69 | | | 99 | |
| Total long-term assets | 1,347 | | | 1,181 | |
Liabilities
| | | | | | | | | | | |
| December 31,
2023 | | January 1,
2023 |
| (in millions) |
| Current liabilities: | | | |
| Accounts payable | $ | 182 | | | $ | 193 | |
| Current portion of long-term debt and finance lease obligations | 68 | | | 88 | |
| Accrued expenses and other current liabilities | 156 | | | 127 | |
| Total current liabilities | 406 | | | 408 | |
| | | |
| Deferred income taxes, net | 30 | | | 20 | |
| Long-term debt and finance lease obligations | 8 | | | 148 | |
| Other liabilities | 48 | | | 70 | |
| Total long-term liabilities | 86 | | | 238 | |
Acquisitions within our Discontinued Operations
Prior to the carve-out and distribution of our European operations, we completed several acquisitions, which are included in discontinued operations.
Mecom
On June 17, 2021, we acquired Mecom Group s.r.o., Schneider Food, s.r.o., and Kaiser Food kft. (collectively referred to as “Mecom”) for €48 million ($57 million). Mecom has two meat processing plants in Slovakia and two in Hungary which produce salami and other packaged meats products. Mecom employs more than 1,400 people.
Goodies
On February 28, 2023, we purchased Goodies Meat Production S.R.L. (“Goodies”), a Romanian producer of private label packaged meats products, for consideration valued at €29 million ($31 million). We paid €24 million ($26 million) including post-closing adjustments. The consideration includes contingent payments of €5 million, which are payable upon the achievement of certain earnings targets over a two-year period. Goodies operates a production facility in Ceptura de Jos, Romania and employs 320 people. Their portfolio of products includes salami, ham, bacon, bologna and other meat specialties. The acquisition of Goodies strengthens and expands the packaged meats business in Europe.
DeVeris
On May 31, 2023, we acquired an 80% interest in DeVeris Polska Sp. z o.o. (“DeVeris”), a Polish processor of poultry by-products, for 48 million zł ($11 million). DeVeris operates a production facility in Turek, Poland. The acquisition of DeVeris expanded the vertically integrated business in Poland by enabling further processing of both pork and poultry by-products.
Continuing Involvement
In connection with the carve out of our European operations (“Morliny Foods”), we entered into a transition services agreement that governs certain services Smithfield will provide to Morliny Foods for up to a year subsequent to the carve out. These services include information technology support, including access and license fees, tax advisory services and financial reporting services, none of which are material to Smithfield. In addition, Smithfield will continue to purchase certain products from Morliny Foods for distribution in the U.S. market. Purchases of these products from Morliny Foods were $33 million, $62 million and $59 million in fiscal years 2023, 2022 and 2021, respectively.
NOTE 4: ACQUISITIONS AND DISPOSITIONS
Acquisitions
Altosano
On July 7, 2021, we acquired a controlling interest in Altosano in exchange for cash valued at $108 million, increasing our total ownership and voting rights in Altosano from 50% to 66%. We paid $1 million, net of $17 million in cash acquired, of the purchase consideration to our joint venture partner upon change in control. We paid an additional $55 million and $2 million in the third quarter of fiscal year 2022 and the third quarter of fiscal year 2023, respectively, with smaller amounts payable annually through 2028. Altosano consists of hog production and pork processing operations in Mexico, growing approximately 1.8 million hogs and processing approximately 1.5 million hogs per year, with approximately 2,600 employees. We historically recorded our share of earnings in Altosano using the equity method of accounting. Upon acquisition of the controlling interest, the accounts of Altosano were consolidated.
American Skin
On December 28, 2023, we acquired the remaining 15% interest in American Skin Food Group, LLC for $15 million.
Dispositions
Saratoga
On October 31, 2022 we closed on the sale of our Saratoga Specialty Foods operation (“Saratoga”), which produced spices, seasonings and sauces for sale primarily to the foodservice industry and for use in our internal production of various packaged meats products. Saratoga continues to be a supplier of ours subsequent to the sale. Proceeds totaled $575 million, resulting in a $417 million gain on the disposal. The gain was recognized in operating gains in the consolidated statement of income in the fourth quarter of 2022. The carrying amount of assets disposed of included $47 million of allocated goodwill. We received $568 million of proceeds at closing. The remainder was received in the first quarter of fiscal year 2023. Saratoga was accounted for in the Packaged Meats segment.
NOTE 5: OPERATING GAINS AND NON-OPERATING GAINS
The following table provides details of operating gains and non-operating gains.
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| (in millions) |
Operating gains: | | | | | |
Gain on disposal of assets (1) | $ | (88) | | | $ | — | | | $ | — | |
Insurance recoveries | (5) | | | (6) | | | (33) | |
| | | | | |
Gain on sale of businesses (2) | (1) | | | (417) | | | — | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Other | (11) | | | (6) | | | (11) | |
Total operating gains | $ | (105) | | | $ | (429) | | | $ | (44) | |
| | | | | |
Non-operating gains: | | | | | |
| (Gain) loss on nonqualified retirement plan assets | $ | (15) | | | $ | 26 | | | $ | (18) | |
Gain on the sale/dilution of equity method investments (3) | — | | | (56) | | | — | |
| | | | | |
Impairment of investment (4) | — | | | 40 | | | — | |
| | | | | |
Net pension and postretirement benefits cost (benefit) (5) | 10 | | | (28) | | | (22) | |
| | | | | |
| | | | | |
| | | | | |
| Other | 1 | | | 1 | | | 11 | |
Total non-operating gains | $ | (3) | | | $ | (18) | | | $ | (30) | |
________________
(1)Includes an $86 million gain on the sale of our Vernon, California plant. See “Note 6: Restructuring” for further information.
(2)Fiscal year 2022 includes the $417 million gain on the sale of Saratoga.
(3)In February 2022, our interest in Monarch Bioenergy LLC (“Monarch”), was reduced from 50% to 33% upon the issuance of additional shares to a new investor. The transaction was accounted for as a partial sale of our investment, which resulted in a $52 million gain. In addition, in November 2022, we sold our shares in Norson Holding, S. de R.L. de C.V. (“Norson”) to our joint venture partner and recognized a $4 million gain on the sale in non-operating gains in the fourth quarter of 2022.
(4)In the first quarter of fiscal year 2022, we wrote down the value of our former investment in Norson by $40 million to its estimated fair value.
(5)Includes the components of net pension and postretirement benefits cost other than service cost, which is included in operating profit. These components consist of interest cost, expected return on plan assets, amortization of actuarial gains/losses and prior service costs/credits, and curtailment gains.
NOTE 6: RESTRUCTURING
In May 2022, we announced a decision to close our Vernon, California processing facility, exit farm operations in Arizona and California and reduce our sow herd in Utah. The decision to permanently close our Vernon facility was based on increasingly difficult business conditions in California, where high taxes, high utility costs and a challenging regulatory environment negatively impact our ability to operate efficiently and profitably.
In May 2023, we made a decision to cease operations on a number of sow farms in Missouri. The decision was driven by persistent livestock disease issues, underperforming operations and shifting industry supply and demand dynamics.
In December 2023, we made a decision to terminate a number of third-party hog grower contracts and close several company-owned nursery farms in Utah as a result of the Vernon facility closure in early 2023.
As a result of these decisions, we incurred various exit costs and disposal charges, which have been, or will be, recorded in cost of sales in our consolidated statements of income. The following table details the charges by major type of cost.
| | | | | | | | | | | | | | | | | | | | | | | |
| Fiscal Year | | Cumulative | | Estimated remaining charges expected to be incurred |
| 2023 | | 2022 | | |
| (in millions) |
Accelerated depreciation (1) | $ | 85 | | | $ | 83 | | | $ | 168 | | | $ | — | |
| Contract termination costs | 42 | | | 6 | | | 47 | | | 15 | |
| Employee termination benefits | 3 | | | 28 | | | 31 | | | 1 | |
Loss on asset disposals | 2 | | | 3 | | | 5 | | | — | |
| Other exit costs | 64 | | | 31 | | | 95 | | | 1 | |
| Total | $ | 195 | | | $ | 151 | | | $ | 346 | | | $ | 18 | |
________________
(1)Accelerated depreciation includes $11 million and $20 million for AROs in fiscal years 2023 and 2022, respectively, which were recorded in connection with the decisions to close certain Company-owned farms in accordance with our general permit for concentrated animal feeding operations in the State of Utah.
We also incurred $14 million in costs associated with biogas assets owned by our joint venture, Monarch, in connection with the farms in Missouri that were closed. These costs were recognized in (income) loss from equity method investments in the consolidated statement of income in the fourth quarter of fiscal year 2023.
Additionally, certain biogas assets owned by our joint venture, Align RNG, LLC (“Align”), were impaired as a result of our decision in December 2023 to terminate hog grower contracts and close farms in Utah. As a result, we recognized our share of the impairment totaling $35 million in (income) loss from equity method investments in the consolidated income statement in the fourth quarter of fiscal year 2023.
In the second quarter of fiscal year 2023, we sold our Vernon, California facility for $205 million and recognized a gain of $86 million in operating gains in other operating gains in the consolidated statement of income.
The following table reconciles the beginning and ending liability balances associated with these restructuring activities.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, January 2, 2022 | | Additions | | Payments | | Balance, January 1, 2023 | | Additions | | Payments | | Balance, December 31, 2023 |
| (in millions) |
| Contract termination costs | $ | — | | | $ | 6 | | | $ | — | | | $ | 5 | | | $ | 42 | | | $ | (5) | | | $ | 42 | |
| Employee termination benefits | — | | | 28 | | | (1) | | | 27 | | | 3 | | | (28) | | | 2 | |
| Other exit costs | — | | | — | | | — | | | — | | | 64 | | | (56) | | | 8 | |
| Total | $ | — | | | $ | 34 | | | $ | (1) | | | $ | 33 | | | $ | 108 | | | $ | (89) | | | $ | 52 | |
NOTE 7: DERIVATIVE FINANCIAL INSTRUMENTS
Our pork production operations use various raw materials, primarily live hogs, corn, soybean meal and wheat, which are actively traded on commodity exchanges. We also use fuel and other energy commodities in our operations. We hedge these commodities when we determine conditions are appropriate to mitigate price risk. While this hedging may limit our ability to participate in gains from favorable commodity fluctuations, it also reduces the risk of loss from adverse changes in raw material prices. We attempt to closely match the commodity contract terms with the hedged item. We also periodically enter into interest rate swaps to hedge exposure to changes in interest rates on certain financial instruments and foreign exchange forward contracts to hedge certain exposures to fluctuating foreign currency rates.
Changes in commodity prices could have a significant impact on cash deposit requirements under our broker and counterparty agreements. Additionally, certain of our derivative contracts contain credit risk-related contingent features, which would require us to post additional cash collateral to cover net losses on open derivative instruments if our credit rating were sufficiently downgraded. As of December 31, 2023, the net liability position of our open derivative instruments that are subject to credit risk-related contingent features was not material.
Although our counterparties primarily consist of financial institutions that are investment grade, we would be exposed to losses in the event of nonperformance or nonpayment by our counterparties. However, a portion of our financial instruments are exchange traded derivative contracts held with brokers and counterparties with whom we maintain margin accounts that are settled on a daily basis, thereby limiting our credit exposure to non-exchange traded derivatives. Determination of the credit quality of our counterparties is based upon a number of factors, including credit ratings and our evaluation of their financial condition. As of December 31, 2023, we had gross credit exposure of $16 million on non-exchange traded derivative contracts. After taking into account the effect of netting arrangements, we had no credit exposure on non-exchange traded derivative contracts.
The size and mix of our derivative portfolio vary from time to time based upon our analysis of current and future market conditions. The following table presents the fair values of our open derivative financial instruments on a gross basis.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Assets | | Liabilities |
| | December 31,
2023 | | January 1,
2023 | | December 31,
2023 | | January 1,
2023 |
| | (in millions) | | (in millions) |
Derivatives using the “hedge accounting” method: | | | | | | | | |
| Commodity contracts | | $ | 37 | | | $ | 21 | | | $ | 29 | | | $ | 13 | |
| | | | | | | | |
Foreign exchange contracts (1) | | 1 | | | 1 | | | — | | | — | |
| Total | | 38 | | | 23 | | | 29 | | | 13 | |
Derivatives using the “mark-to-market” method: | | | | | | | | |
| Commodity contracts | | 13 | | | 31 | | | 13 | | | 12 | |
| | | | | | | | |
| | | | | | | | |
| Total fair value of derivative instruments | | $ | 51 | | | $ | 54 | | | $ | 42 | | | $ | 25 | |
________________
(1)Amounts relate to our discontinued operations. See “Note 3: Discontinued Operations” for further information about our discontinued operations.
The following tables reconcile the gross amounts of derivative assets and liabilities to the net amounts presented in our consolidated balance sheets and the related effects of cash collateral under netting arrangements that provide a legal right of offset of assets and liabilities.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 |
| Gross Amount of Derivative Assets/ Liabilities | | Netting of Derivative Assets/ Liabilities | | Net Derivative Assets/Liabilities | | Netting of Derivative and Cash Collateral | | Net Amount Presented in the Consolidated Balance Sheet (1) |
| (in millions) |
| Assets: | | | | | | | | | |
| Commodities | $ | 50 | | | $ | (25) | | | $ | 25 | | | $ | (1) | | | $ | 24 | |
| | | | | | | | | |
Foreign exchange contracts (2) | 1 | | | — | | | 1 | | | — | | | 1 | |
| Total | $ | 51 | | | $ | (25) | | | $ | 26 | | | $ | (1) | | | $ | 26 | |
| Liabilities: | | | | | | | | | |
| Commodities | 42 | | | (25) | | | 18 | | | 1 | | | 19 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
________________
(1)$25 million of net assets are included in prepaid expenses and other current assets with the remaining $1 million in current assets of discontinued operations. $14 million of the net liabilities are included in accrued expenses and other current liabilities with the remaining $5 million in other liabilities.
(2)Amounts relate to our discontinued operations.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| January 1, 2023 |
| Gross Amount of Derivative Assets/ Liabilities | | Netting of Derivative Assets/ Liabilities | | Net Derivative Assets/Liabilities | | Netting of Derivative and Cash Collateral | | Net Amount Presented in the Consolidated Balance Sheet (1) |
| (in millions) |
| Assets: | | | | | | | | | |
| Commodities | $ | 53 | | | $ | (18) | | | $ | 35 | | | $ | 25 | | | $ | 61 | |
| | | | | | | | | |
Foreign exchange contracts (2) | 1 | | | — | | | 1 | | | — | | | 1 | |
| Total | $ | 54 | | | $ | (18) | | | $ | 36 | | | $ | 25 | | | $ | 62 | |
| Liabilities: | | | | | | | | | |
| Commodities | 24 | | | (18) | | | 7 | | | (3) | | | 4 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
________________
(1)We recorded $59 million of the net assets in prepaid expenses and other current assets, $2 million in other assets and the remaining $1 million in current liabilities of discontinued operations. We recorded $3 million of the net liabilities in accrued expenses and other current liabilities with the remaining $1 million in other liabilities.
(2)Amounts relate to our discontinued operations.
See “Note 15: Fair Value Measurements” for additional information about the fair value of our derivatives.
Hedge Accounting Method
Cash Flow Hedges
We enter into derivative instruments, such as futures, swaps and options contracts, to manage our exposure to the variability in expected future cash flows attributable to commodity price risk associated with the forecasted sale of fresh pork and the forecasted purchase of grains, hogs, and energy. In addition, we enter into interest rate swaps to manage our exposure to changes in interest rates associated with our variable interest rate debt and the forecasted issuance of fixed rate debt. Lastly, we enter into foreign exchange contracts to manage our exposure to the variability in expected future cash flows attributable to changes in foreign exchange rates associated with the forecasted purchase or sale of assets denominated in foreign currencies. As of December 31, 2023, substantially all of our commodity-related cash flow hedges were for transactions forecasted through December 2024.
As of December 31, 2023, the notional volumes associated with open derivative instruments designated in cash flow hedging relationships were as follows:
| | | | | | | | | | | |
| Volume | | Metric |
| Commodities: | | | |
| Lean hogs | 712,467,000 | | | Pounds |
| Corn | 22,907,000 | | | Bushels |
| Soybean meal | 59,000 | | | Tons |
Natural Gas | 12,940,000 | | | Million BTU |
| | | |
Foreign currency (1) | 19,452,483 | | | U.S. Dollars |
________________
(1)Amounts relate to our discontinued operations and represent the U.S. Dollar equivalent of various foreign currency contracts.
The following table presents the effects on our consolidated financial statements of pre-tax gains and losses on derivative instruments designated in cash flow hedging relationships for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Derivative | | Gains (Losses) Reclassified from Accumulated Other Comprehensive Loss into Earnings | | |
| Fiscal Year | | Fiscal Year | | |
| 2023 | | 2022 | | 2021 | | 2023 | | 2022 | | 2021 | | | | | | |
| (in millions) | | (in millions) | | |
| | | | | | | | | | | | | | | | | |
| Commodity contracts | $ | 10 | | | $ | 58 | | | $ | (49) | | | 13 | | | 97 | | | (7) | | | | | | | |
| Interest rate swaps | — | | | — | | | 2 | | | (2) | | | (1) | | | (1) | | | | | | | |
Foreign exchange contracts (1) | 2 | | | — | | | (1) | | | 1 | | | (1) | | | (1) | | | | | | | |
| Total | $ | 11 | | | $ | 58 | | | $ | (48) | | | $ | 13 | | | $ | 94 | | | $ | (9) | | | | | | | |
________________
(1)Amounts relate to our discontinued operations.
In fiscal year 2023, we recognized a total of $53 million in expenses for option premiums, which are excluded from the assessment of hedge effectiveness. As of December 31, 2023, accumulated other comprehensive income included $29 million of net gains associated with options for which the underlying hedged transactions had not yet impacted earnings. This amount represents the difference between the change in the fair value of the options and the amount of option premiums amortized through earnings. The amounts associated with option contracts as of and for the years ended December 31, 2023 and January 1, 2023 were not material.
We expect to reclassify $9 million ($7 million net of tax) of deferred gains on closed commodity and interest rate contracts into earnings within the next twelve months. We are unable to estimate the amount of unrealized gains or losses to be reclassified into earnings within the next twelve months related to open contracts as their values are subject to change.
Fair Value Hedges
We enter into derivative instruments (primarily futures contracts) that are designed to hedge changes in the fair value of firm commitments to buy grains and hogs. As of December 31, 2023, the notional volumes associated with open derivative instruments designated in fair value hedging relationships were as follows:
| | | | | | | | | | | |
| Volume | | Metric |
| | | |
| Lean hogs | 4,080,000 | | | Pounds |
| Corn | 1,440,000 | | | Bushels |
| Soybeans | 45,000 | | | Bushels |
| | | |
The following amounts were recorded in the consolidated balance sheets related to fair value hedges:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance Sheet Classification | | Carrying Amount of Hedged Assets | | Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Assets | | | | | |
| | December 31,
2023 | | January 1,
2023 | | December 31,
2023 | | January 1,
2023 | | | | | |
| | (in millions) | | (in millions) | | | | | |
Prepaid expenses and other current assets (1) | | $ | — | | | $ | 1 | | | $ | — | | | $ | 1 | | | | | | |
| Accrued expenses and other current liabilities | | 1 | | | — | | | 1 | | | — | | | | | | |
| Total | | $ | 1 | | | $ | 1 | | | $ | 1 | | | $ | 1 | | | | | | |
________________
(1)Changes in the fair value of firm commitments to buy grains and hogs that are designated in fair value hedge relationships are recorded in the consolidated balance sheets in prepaid expenses and other current assets. When the underlying grains or hogs are acquired, the hedge relationship is discontinued and the fair value hedge adjustment is reclassified to inventories.
The fair value hedge adjustment remaining in inventories for which hedge accounting has been discontinued was a gain of $7 million and a loss of $4 million as of December 31, 2023 and January 1, 2023, respectively.
Mark-to-Market Method
As of December 31, 2023, the notional volumes associated with open derivative instruments using the “mark-to-market” method, including delta-adjusted options, were as follows:
| | | | | | | | | | | |
| Volume | | Metric |
| Commodities: | | | |
| Lean hogs | 107,015,000 | | | Pounds |
| Corn | 19,757,000 | | | Bushels |
| Soybean meal | 39,000 | | | Tons |
| Soybeans | 452,000 | | | Bushels |
| Wheat | 45,000 | | | Bushels |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Natural gas | 2,420,000 | | | Million BTU |
| | | |
| | | |
| Crude oil | 9,000 | | | Barrels |
| | | |
| | | |
| Foreign currency | 13,567,973 | | | U.S. Dollars |
Derivative Impact on the Consolidated Statements of Income
The following table presents the effect of derivatives on the consolidated statements of income for the periods indicated:
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| (in millions) |
| Sales | | | | | |
| Cash flow hedging - commodity contracts | $ | 12 | | | $ | (30) | | | $ | (177) | |
| Mark to market - commodity contracts | 30 | | | (35) | | | — | |
| Total derivative gain (loss) recognized sales | 42 | | | (65) | | | (177) | |
| | | | | |
| Cost of Sales | | | | | |
| Cash flow hedging - commodity contracts | — | | | 127 | | | 170 | |
| | | | | |
| Fair value hedging - commodity contracts | | | | | |
| Change in fair value of open derivatives | 17 | | | (24) | | | (27) | |
| Change in fair value of related hedged items | (17) | | | 24 | | | 27 | |
Gain (loss) on closed derivatives (1) | 5 | | | (28) | | | (30) | |
| | | | | |
| Mark to market - commodity contracts | (14) | | | 20 | | | (9) | |
| Total derivative gain (loss) recognized in cost of sales | (9) | | | 119 | | | 131 | |
| | | | | |
| Selling, general and administrative expenses | | | | | |
Mark to market - foreign exchange contracts | — | | | 1 | | | 1 | |
| | | | | |
| Interest expense | | | | | |
| Cash flow hedging - interest rate contracts | (2) | | | (1) | | | (1) | |
| | | | | |
| | | | | |
Discontinued operations | | | | | |
Cash flow hedging - foreign exchange contracts | 1 | | | (1) | | | (1) | |
Mark to market - foreign exchange contracts | 2 | | | 4 | | | (2) | |
Total derivative gain (loss) recognized in discontinued operations | 3 | | | 3 | | | (3) | |
| | | | | |
| Total derivative gain (loss) | $ | 36 | | | $ | 56 | | | $ | (50) | |
________________
(1)Represents the amount of fair value hedge adjustment applied to the carrying amount of hedged assets that is recognized in cost of sales as the underlying hedged assets are relieved from inventories and charged to cost of sales.
NOTE 8: EQUITY METHOD INVESTMENTS
Equity method investments consist of the following:
| | | | | | | | | | | | | | | | | | | | |
| Equity Investments | | % Owned | | December 31,
2023 | | January 1,
2023 |
| | | | (in millions) |
| Align | | 50% | | $ | 75 | | | $ | 99 | |
| Monarch | | 33% | | 93 | | | 90 | |
| Viceroy | | 50% | | 6 | | | 18 | |
| All other equity method investments | | 50% | | 18 | | | 17 | |
| Total investments | | | | $ | 191 | | | $ | 224 | |
Align, Monarch and Viceroy Bio Energy, LLC (“Viceroy”) operate renewable natural gas facilities and are included in our Hog Production segment. These facilities refine methane gas that is captured from our Company-owned and contract grower hog farms into renewable natural gas. All significant operating decisions are made jointly between us and our investment partners, and therefore, we do not consolidate these entities.
NOTE 9: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following:
| | | | | | | | | | | |
| December 31, 2023 | | January 1, 2023 |
| (in millions) |
| Payroll and related benefits | $ | 361 | | | $ | 391 | |
| Litigation contingencies | 315 | | | 244 | |
| Accrued customer incentives and marketing | 136 | | | 142 | |
| Accrued exit and disposal costs | 49 | | | 6 | |
| Amounts owed to purchasing banks pursuant to the Monetization Facility | 42 | | | — | |
| Accrued contract grower services | 36 | | | 40 | |
| Accrued self-insurance | 30 | | | 33 | |
| Accrued interest | 23 | | | 23 | |
| Accrued pension and other post-employment benefits | 23 | | | 24 | |
Payables to related parties (1) | 16 | | | 27 | |
| Derivative instruments and broker deposits | 13 | | | 3 | |
| Other | 123 | | | 151 | |
| Total accrued expenses and other current liabilities | $ | 1,166 | | | $ | 1,085 | |
________________
(1)See “Note 16: Related Party Transactions” for related party transactions.
NOTE 10: DEBT
Long-term debt consists of the following:
| | | | | | | | | | | |
| December 31,
2023 | | January 1,
2023 |
| (in millions) |
| 4.25% senior unsecured notes, due February 2027, net of unamortized debt issuance costs and discounts totaling $2 million and $3 million as of December 31, 2023 and January 1, 2023, respectively | $ | 598 | | | $ | 597 | |
| 2.625% senior unsecured notes, due September 2031, net of unamortized debt issuance costs and discounts totaling $8 million and $9 million as of December 31, 2023 and January 1, 2023, respectively | 492 | | | 491 | |
| 3.00% senior unsecured notes, due October 2030, net of unamortized debt issuance costs and discounts totaling $8 million and $9 million as of December 31, 2023 and January 1, 2023, respectively | 492 | | | 491 | |
| 5.20% senior unsecured notes, due April 2029, net of unamortized debt issuance costs and discounts totaling $3 million and $4 million as of December 31, 2023 and January 1, 2023, respectively | 397 | | | 396 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Bank borrowings at 6.43% due March 2026. | 12 | | | 17 | |
| Total debt | 1,991 | | | 1,992 | |
| Current portion | (5) | | | (5) | |
| Total long-term debt | $ | 1,986 | | | $ | 1,988 | |
Scheduled principal payments on debt for the next five years are as follows:
| | | | | | | | |
| Year | | (in millions) |
| 2024 | | $ | 5 | |
| 2025 | | 5 | |
| 2026 | | 2 | |
| 2027 | | 600 | |
| 2028 | | — | |
Credit Facilities
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 31, 2023 |
| Facility | | Capacity | | Borrowing Base Adjustment | | Outstanding Borrowings | | Commercial Paper Borrowings | | Outstanding Letters of Credit | | Amount Available |
| | (in millions) |
| Senior unsecured revolving credit facility | | $ | 2,100 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2,100 | |
| Accounts receivable securitization facility | | 275 | | | — | | | — | | | — | | | (23) | | | 252 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Total credit facilities | | $ | 2,375 | | | $ | — | | | $ | — | | | $ | — | | | $ | (23) | | | $ | 2,352 | |
Senior Unsecured Revolving Credit Facility
In May 2023, we exercised an option to extend the maturity of our $2.1 billion senior unsecured revolving credit facility pursuant to that certain Amendment No. 1 to the Second Amended and Restated Credit Agreement, dated as of May 1, 2021, by and among us and certain of our subsidiaries as borrowers, Bank of America, N.A., as administrative agent, swing line lender and letter of credit lender, and various other lenders (“Senior Revolving Credit Facility”) to May 21, 2027. The Senior Revolving Credit Facility bears interest at the Secured Overnight Financing Rate (“SOFR”) plus a margin ranging from 0.875% to 1.50% per annum, or, at our election, at a base rate
plus a margin ranging from 0.00% to 0.50% per annum, in each case depending on our senior unsecured debt ratings. The Senior Revolving Credit Facility also contains financial maintenance covenants requiring us to maintain a maximum total consolidated leverage ratio (ratio of consolidated funded debt to consolidated capitalization, each as defined in the Senior Revolving Credit Facility) of 0.50 to 1.00 (which we may elect to increase to 0.55 to 1.00 with respect to any fiscal quarter in which a material acquisition is consummated and the immediately following three consecutive fiscal quarters, subject to certain restrictions) and a minimum interest coverage ratio (“ratio of Consolidated EBITDA to Consolidated Interest Expense, each as defined in the Senior Revolving Credit Facility”) of 3.50 to 1.00.
Our Senior Revolving Credit Facility contains customary covenants, including, but not limited to, restrictions on our ability and that of our subsidiaries to merge and consolidate with other companies, incur indebtedness, grant liens or security interests on assets subject to their security interest, make acquisitions, loans, advances or investments, pay dividends, sell or otherwise transfer assets, optionally prepay or modify terms of any junior indebtedness or enter into transactions with affiliates, each subject to certain exceptions as set forth therein. We are currently in compliance with the covenants under our Senior Debt Facility. We are currently in compliance with the covenants under our revolving credit facilities.
Our commercial paper program, which is supported by the Senior Revolving Credit Facility, provides access to a low-cost source of borrowing to fund general corporate purposes, including working capital. The maximum issuance capacity under our commercial paper program is $1.75 billion. The maturity of commercial paper issued under the program varies but does not exceed 397 days from the date of issuance. Our ability to access the commercial paper market in the future is dependent on maintaining investment grade credit ratings and market conditions.
Accounts Receivable Securitization Facility
Our accounts receivable securitization facility the Fifth Amended and Restated Credit and Security Agreement, dated as of December 22, 2022, by and among Smithfield Receivables Funding LLC, as borrower Smithfield, as servicer, certain lenders, letter of credit participants and co-agents, Coöperatieve Rabobank U.A., New York Branch, as a letter of credit issuer, PNC Bank, National Association, as administrative agent and a letter of credit issuer and PNC Capital Markets LLC, as structuring agent (“Securitization Facility”) matures on December 22, 2025. As part of the Securitization Facility, certain accounts receivable of our major domestic meat processing subsidiaries are sold to a wholly owned “bankruptcy remote” special purpose vehicle (“SPV”). The SPV pledges all such accounts receivable not otherwise sold pursuant to the Monetization Facility (as defined below) as security for loans made, and letters of credit issued, by participating lenders under the Securitization Facility. The SPV is included in our consolidated financial statements and therefore the accounts receivable owned by it are included in our consolidated balance sheets. However, the accounts receivable owned by the SPV are separate and distinct from our other assets and are not available to our other creditors should we become insolvent. As of December 31, 2023, the SPV held $370 million of accounts receivable. We must maintain certain ratios related to the collection of our receivables as a condition of the Securitization Facility agreement. As of December 31, 2023, we had $23 million in letters of credit issued under the Securitization Facility. None of the letters of credit were drawn upon.
Under the Securitization Facility, we and the SPV, as applicable, are subject to certain customary covenants, including, but not limited to, restrictions on our ability to sell, assign or otherwise dispose of any collateral or assign any right to receive income with respect thereto, use proceeds for any purpose other than those set forth in the Securitization Facility, make certain payments on junior indebtedness, incur debt or merge or consolidate, subject to certain exceptions set forth therein. The SPV is also prohibited from issuing any LCR Security (as defined therein). We are currently in compliance with the covenants under our Securitization Facility.
Monetization Facility
In addition to the Securitization Facility, we maintain an uncommitted $250 million accounts receivable monetization facility (“Monetization Facility”) pursuant to the Master Receivables Purchase Agreement, dated as of December 22, 2022, by and among SPV, as borrower, Smithfield, as servicer, certain buyers and PNC Bank, National Association, as administrative agent. At Smithfield’s election and subject to the purchasing banks’
approval, certain accounts receivable may be sold by the SPV to purchasing banks, so long as the uncollected outstanding amount of accounts receivable sold pursuant to the Monetization Facility does not exceed $250 million in the aggregate at any time, among other limitations. In the event of a sale, the purchasing banks assume all credit risk related to the receivables while we maintain risk associated with customer disputes. We account for the sale of receivables to a purchasing bank by derecognizing the receivables from our consolidated balance sheet upon transfer of control to the purchasing bank, and recognizing a discount on the sale in SG&A in the consolidated statement of income. The proceeds from the sale of receivables are included in net cash flows from operating activities in the consolidated statement of cash flows. On behalf of the purchasing banks, we continue to service all receivables sold under the Monetization Facility. As of December 31, 2023, the uncollected balance of receivables that had been sold to purchasing banks was $201 million. We had no servicing asset or liability outstanding as of December 31, 2023.
In the first quarter of fiscal year 2023, we sold $227 million of accounts receivable at a discount and received proceeds totaling $225 million. Subsequently, we reinvested $3.4 billion of cash collections from customers in the revolving sale of accounts receivable to purchasing banks through December 31, 2023. We recognized charges totaling $12 million attributable to the discount on the sale of accounts receivable in SG&A in the consolidated statement of income in fiscal year 2023.
NOTE 11: LEASE OBLIGATIONS, COMMITMENTS, AND GUARANTEES
Lease Obligations
We lease real estate, vehicles, machinery and other equipment. Additionally, we have contracts with independent farmers to raise our hogs that include a lease component for the use of the farmers’ facilities. Our leases may include options to extend or terminate the lease, variable lease payments based on usage of the underlying assets and residual value guarantees.
The following table presents the maturities of our lease obligations as of December 31, 2023:
| | | | | | | | | | | | | | | | | |
| Operating Leases | | Finance Leases | | Total |
| (in millions) |
| 2024 | $ | 79 | | | $ | 22 | | | $ | 102 | |
| 2025 | 65 | | | 3 | | | 67 | |
| 2026 | 51 | | | 3 | | | 53 | |
| 2027 | 40 | | | 2 | | | 42 | |
| 2028 | 32 | | | 1 | | | 34 | |
| After 2028 | 233 | | | 10 | | | 244 | |
| Total lease payments | $ | 500 | | | $ | 42 | | | $ | 542 | |
| Present value discount | (112) | | | — | | | (113) | |
| Present value of lease obligations | $ | 388 | | | $ | 41 | | | $ | 429 | |
The following table presents the weighted-average lease term and discount rate for our finance and operating leases:
| | | | | | | | | | | |
| December 31,
2023 | | January 1,
2023 |
| Weighted-average remaining lease term (years): | | | |
| Finance leases | 10 | | | 13 | |
| Operating leases | 11 | | | 11 | |
| Weighted-average discount rate: | | | |
| Finance leases | 2.7 | % | | 3.0 | % |
| Operating leases | 4.7 | % | | 4.4 | % |
The components of total lease cost included in the consolidated statements of income are presented in the following table:
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| (in millions) |
| Operating lease cost | $ | 90 | | | $ | 123 | | | $ | 128 | |
| | | | | |
| Finance lease cost: | | | | | |
| Amortization of leased assets | 23 | | | 3 | | | 2 | |
| Interest on lease obligations | 1 | | | — | | | — | |
| | | | | |
Short-term lease cost (1) | 96 | | 71 | | | 59 | |
Variable lease cost (2) | 23 | | 21 | | | 16 | |
| Total lease cost | $ | 234 | | | $ | 218 | | | $ | 205 | |
| | | | | |
| | | | | |
________________
(1)Represents the expense for leases with terms of one year or less, which are not included in the lease obligation
(2)Represents the expense associated with lease payments that vary based on usage or changes in other circumstances, which are not included in the lease obligation.
The following table presents the classification of lease payments associated with our lease obligations in the statements of cash flows, as well as new, or modifications to existing, lease obligations entered into during the periods presented:
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| (in millions) |
| Classification of lease payments: | | | | | |
Operating cash flows - finance leases (1) | $ | 1 | | | $ | — | | | $ | — | |
| Operating cash flows - operating leases | 97 | | | 120 | | | 130 | |
| Financing cash flows - finance leases | 4 | | | 3 | | | 3 | |
| New, or modifications to existing, finance lease obligations | 1 | | | 25 | | | 3 | |
| New, or modifications to existing, operating lease obligations | 42 | | | 159 | | | 83 | |
________________
(1)Represents the interest component of our payments on finance leases.
Commitments
We have purchase commitments with certain livestock producers that obligate us to purchase all the livestock that these producers deliver. Other arrangements obligate us to purchase a fixed amount of livestock. We have purchase commitments under forward grain contracts that obligate us to purchase a fixed amount of grain. We also have contractual commitments to independent farmers who raise our hogs in exchange for a performance-based service fee payable upon delivery. We estimate the future obligations under these commitments based on the amounts that are fixed and determinable in the related contracts. There are additional variable components of these
contracts not included in our estimates that are based on quantities delivered and performance. Our estimated future obligations under these and other commitments are as follows:
| | | | | | | | |
| Year | | (in millions) |
| 2024 | | $ | 2,298 | |
| 2025 | | 1,326 | |
| 2026 | | 603 | |
| 2027 | | 117 | |
| 2028 | | 69 | |
All minimum purchase commitments under these contracts were fulfilled in each of fiscal years 2023, 2022 and 2021.
We have committed to contribute up to $250 million through 2028 to Align to fund various projects as they are approved by Align’s board. As of December 31, 2023, we had contributed $109 million in capital toward this commitment.
We have committed to contribute up to $25 million to the TPG Rise Climate investment fund through July 2027. As of December 31, 2023, we had contributed $12 million in capital toward this commitment.
We had $91 million of committed funds related to approved capital expenditure projects as of December 31, 2023. These projects are expected to be funded with cash flows from operations and/or borrowings under credit facilities.
Guarantees
Smithfield and certain other joint venture partners in Monarch joint and severally guarantee Monarch’s debt, interest and fees. As of December 31, 2023, the maximum amount of loans that could be outstanding under Monarch’s debt agreements was $74 million and the loans mature in June 2025. Monarch’s outstanding debt was $49 million as of the end of fiscal year 2023. The guarantee arrangement contains provisions that may reduce our obligations under the guarantee depending on Monarch’s debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio.
The guarantee involves elements of performance and credit risk and is not included in the consolidated balance sheets. We could become liable in connection with Monarch’s obligation depending on the ability of Monarch to perform on its obligation. If we consider it probable that we will become responsible for the obligation, we would record the liability on our consolidated balance sheet.
NOTE 12: INCOME TAXES
Income (loss) from continuing operations before income taxes consists of the following:
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| (in millions) |
United States | (134) | | | 1,059 | | | 453 | |
| Foreign | 5 | | | (12) | | | 5 | |
Total income (loss) from continuing operations before income taxes | (129) | | | 1,047 | | | 458 | |
Income Tax Expense
Income tax expense (benefit) from continuing operations consists of the following:
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| (in millions) |
| Current income tax expense: | | | | | |
| Federal | 55 | | | 206 | | | 57 | |
| State | 33 | | | 23 | | | 8 | |
| Foreign | — | | | — | | | — | |
| 89 | | | 229 | | | 65 | |
| Deferred income tax expense (benefit): | | | | | |
| Federal | (120) | | | (6) | | | 24 | |
| State | (6) | | | 4 | | | 7 | |
| Foreign | (4) | | | 4 | | | 1 | |
| (130) | | | 2 | | | 32 | |
| Total income tax expense (benefit) | $ | (41) | | | $ | 231 | | | $ | 97 | |
Effective Tax Rate Reconciliation
The following table reconciles the federal statutory income tax rate to our effective tax rate:
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| Federal income taxes at statutory rate | 21.0 | % | | 21.0 | % | | 21.0 | % |
Tax credits (1) | 13.0 | | | (1.3) | | | (2.5) | |
Equity method investments (2) | 7.4 | | | (0.1) | | | 1.3 | |
| Foreign income taxes | 4.3 | | | — | | | 0.2 | |
Officers’ life insurance | 2.9 | | | 0.5 | | | (0.8) | |
| | | | | |
| Impact of foreign operations | 0.1 | | | (1.0) | | | (0.6) | |
| State income taxes, net of federal tax benefit | (16.5) | | | 2.6 | | | 3.0 | |
| Other | — | | | 0.4 | | | (0.4) | |
| Effective tax rate | 32.2 | % | | 22.1 | % | | 21.2 | % |
________________
(1)We recognized federal tax credits of $17 million, $13 million and $12 million in 2023, 2022 and 2021, respectively.
(2)The results of our equity method investments are excluded from income (loss) from continuing operations before income taxes. However, the income taxes on our equity method investments are included in income tax expense (benefit), which can have significant impact on our computed effective tax rate.
The impact of the reconciling items between the federal statutory rate and our effective tax rate were magnified in fiscal year 2023 largely due to the pre-tax loss and decrease in earnings in fiscal year 2023 compared to pre-tax income in fiscal year 2022.
Income Taxes Receivable and Payable
We classified current income taxes receivable of $27 million and $2 million as of December 31, 2023 and January 1, 2023, respectively, in prepaid expenses and other current assets, long-term income taxes receivable of $13 million and $12 million as of December 31, 2023 and January 1, 2023, respectively, in other assets, and current taxes payable of $30 million as of January 1, 2023 in other current liabilities on our consolidated balance sheets. The current taxes payable amount does not include amounts payable to our immediate parent for income taxes.
Deferred Tax Assets and Liabilities
The tax effects of temporary differences between the tax basis and book basis of our assets and liabilities are presented in the table below:
| | | | | | | | | | | |
| December 31,
2023 | | January 1,
2023 |
| (in millions) |
| Deferred tax assets: | | | |
| Accrued expenses and other current liabilities | $ | 101 | | | $ | 86 | |
| Research and development expenses | 98 | | | 70 | |
| Operating lease obligations | 92 | | | 106 | |
| Pension and other retirement liabilities | 67 | | | 72 | |
Tax credits, carryforwards and net operating losses (1) | 38 | | | 36 | |
| Deferred payroll taxes | 24 | | | 24 | |
| Employee benefits | 18 | | | 17 | |
| Other | 21 | | | 9 | |
| | 458 | | | 418 | |
Valuation allowance (2) | (12) | | | (7) | |
| Total deferred tax asset | $ | 446 | | | $ | 411 | |
| | | |
| Deferred tax liabilities: | | | |
| Property, plant and equipment | 425 | | | 483 | |
| Intangible assets | 309 | | | 305 | |
| Operating lease assets | 90 | | | 103 | |
| Inventory | 56 | | | 52 | |
| Investments | 25 | | | 38 | |
| Other | 15 | | | 18 | |
| Total deferred tax liability | $ | 920 | | | $ | 999 | |
| | | |
Net deferred tax liability | $ | 474 | | | $ | 588 | |
________________
(1)We have $28 million of gross foreign net operating losses that will expire between 2030 and 2032. We have $728 million of gross state net operating losses, $93 million of which have no expiration, and $635 million that will expire between 2024 and 2043. We have $3 million of state tax credits that will expire between 2024 and 2037.
(2)Valuation allowances are established if the Company’s deferred tax assets are not more likely than not to be realized. The valuation allowance primarily relates to state credits and state net operating loss carryforwards.
Unrecognized Tax Benefits
A reconciliation of the beginning and ending liability for unrecognized tax benefits is as follows:
| | | | | |
| (in millions) |
| Balance, January 3, 2021 | $ | 15 | |
| Additions for tax positions taken in fiscal 2021 | 7 | |
| |
| |
| Lapse of statute of limitations | (1) | |
| |
| Balance, January 2, 2022 | 21 | |
| Additions for tax positions taken in fiscal 2022 | 11 | |
| |
| |
| Lapse of statute of limitations | (3) | |
| |
| Balance, January 1, 2023 | 28 | |
| Additions for tax positions taken in fiscal 2023 | 1 | |
| Additions for tax positions taken in prior years | 17 | |
| Lapse of statute of limitations | (1) | |
| |
| |
| Balance, December 31, 2023 | $ | 45 | |
During fiscal years 2023, 2022 and 2021, we recognized interest and penalties of $4 million, $(2) million, and $1 million, respectively, within income tax expense (benefit). The unrecognized tax benefits, if recognized, would affect income tax expense by $39 million, $25 million, and $19 million in fiscal years 2023, 2022 and 2021, respectively. We do not expect any significant changes to unrecognized tax benefits within the next 12 months of the reporting date.
We operate in multiple taxing jurisdictions, both within the United States and outside of the United States, and are subject to examination from various tax authorities. The liability for unrecognized tax benefits included $9 million and $4 million of accrued interest as of December 31, 2023 and January 1, 2023, respectively.
We are currently being audited in several tax jurisdictions and remain subject to examination until the statute of limitations expires for the respective tax jurisdiction. Within the United States and Mexico, we may be subject to audit by various tax authorities, and our subsidiaries operating within each country may be subject to different statute of limitations expiration dates. We have concluded all U.S. federal income tax matters through the tax year ended January 1, 2017. We are currently under U.S federal examination for all subsequent tax years through December 31, 2023. We are also subject to examination from tax authorities in Mexico and certain U.S. states for the tax years ended December 29, 2019 through December 31, 2023.
We consider the earnings of our foreign subsidiaries to be indefinitely reinvested as we intend to use these earnings in our foreign operations. The amount of foreign subsidiary net earnings that was considered indefinitely reinvested was $141 million and $150 million as of December 31, 2023 and January 1, 2023, respectively, which is considered previously taxed income. The determination of any unrecorded deferred tax asset or liability on the remaining excess carrying amount of our investments over their respective tax bases is not practicable due to the uncertainty of how these investments would be recovered and such differences are not expected to be recognized in the foreseeable future.
NOTE 13: PENSION AND OTHER RETIREMENT PLANS
Company Sponsored Defined Benefit Pension Plans
We have historically provided the majority of our U.S. employees with pension benefits. In the second quarter of fiscal year 2021, we amended our qualified pension plans to freeze the benefit accrual for all non-union participants as of June 30, 2021. As a result of this amendment, we performed an interim remeasurement of our plan
obligations and assets in the second quarter of fiscal year 2021. The remeasurement resulted in a curtailment gain of $110 million, of which $105 million was recognized in other comprehensive income (loss), and the remainder in non-operating gains.
The following table presents a reconciliation of the pension benefit obligation, plan assets and the funded status of our pension plans:
| | | | | | | | | | | |
| | December 31,
2023 | | January 1,
2023 |
| | (in millions) |
| Change in benefit obligation: | | | |
| Benefit obligation at beginning of year | $ | 1,815 | | | $ | 2,574 | |
| Service cost | 13 | | | 23 | |
| Interest cost | 98 | | | 77 | |
| | | |
| | | |
| Benefits paid | (118) | | | (123) | |
| Actuarial (gain) loss | 21 | | | (736) | |
| | | |
| Benefit obligation at end of year | 1,829 | | | 1,815 | |
| | | |
Change in plan assets: (1) | | | |
| Fair value of plan assets at beginning of year | 1,518 | | | 2,194 | |
| Actual return on plan assets | 129 | | | (574) | |
| Employer contributions | 22 | | | 21 | |
| | | |
| Benefits paid | (118) | | | (123) | |
| | | |
| Fair value of plan assets at end of year | 1,551 | | | 1,518 | |
| Funded status | $ | 278 | | | $ | 297 | |
| | | |
| Amounts recognized in the consolidated balance sheets: | | | |
| Net long-term pension liability | 255 | | | 276 | |
| Accrued expenses and other current liabilities | 22 | | | 22 | |
| | | |
| Net amount recognized at end of year | $ | 278 | | | $ | 297 | |
________________
(1)Excludes the assets and related activity of our non-qualified defined benefit pension plans. The fair value of assets related to our non-qualified plans was $128 million and $119 million as of December 31, 2023 and January 1, 2023, respectively. These assets are recorded in prepaid expenses and other current assets, and other assets within the consolidated balance sheets.
The accumulated benefit obligation for all defined benefit pension plans was $1,807 million as of December 31, 2023 and January 1, 2023. The accumulated benefit obligation exceeded plan assets for all defined benefit plans as of December 31, 2023 and January 1, 2023, respectively.
The following table presents the pre-tax unrecognized items included as components of accumulated other comprehensive loss related to our defined benefit pension plans as of the dates indicated:
| | | | | | | | | | | |
| December 31,
2023 | | January 1,
2023 |
| (in millions) |
| Unrecognized actuarial loss | $ | (489) | | | $ | (508) | |
| Unrecognized prior service cost | (3) | | | (4) | |
The following table presents the components of the net periodic pension cost (benefit) for the periods indicated:
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| (in millions) |
| Service cost | $ | 13 | | | $ | 23 | | | $ | 53 | |
| Interest cost | 98 | | | 77 | | | 76 | |
| Expected return on plan assets | (107) | | | (128) | | | (128) | |
| Net amortization | 18 | | | 22 | | | 34 | |
| Curtailment gain | — | | | — | | | (4) | |
| Net periodic pension cost (benefit) | $ | 22 | | | $ | (7) | | | $ | 30 | |
The following table shows our weighted average assumptions for the periods indicated:
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| Discount rate to determine net periodic pension cost (benefit) | 5.58 | % | | 3.07 | % | | 3.16 | % |
| Discount rate to determine benefit obligation | 5.57 | | | 5.57 | | | 3.06 | |
| Expected long-term rate of return on plan assets | 7.25 | | | 6.00 | | | 6.25 | |
| Rate of compensation increase | 4.00 | | | 4.00 | | | 4.00 | |
We use an independent third-party actuary to assist in the determination of assumptions used and the measurement of our pension obligation and related costs. We review and select the discount rate to be used in connection with our pension obligation annually. In determining the discount rate, a hypothetical bond portfolio is constructed based on bonds (with an AA rating or better) whose cash flows from coupons and maturities match the year-by-year projected benefit payments from defined benefit pension plans. We use the resulting yield of this portfolio to determine the discount rate applicable to our obligation. A similar methodology is used to develop the discount rate applicable to service cost.
To determine the expected long-term return on plan assets, we consider the current and anticipated asset allocations, as well as historical and estimated returns on various categories of plan assets. Long-term trends are evaluated relative to market factors such as inflation, interest rates and fiscal and monetary policies in order to assess the capital market assumptions. Actual results that differ from our assumptions are recorded in accumulated other comprehensive loss and amortized over future periods and, therefore, affect expense in future periods.
Pension plan assets may be invested in cash and cash equivalents, equities, commingled funds, debt securities and alternative investments. Our investment policy for the pension plans is to balance risk and return through a diversified portfolio of high-quality equity and fixed income securities. Maturity for fixed income securities is managed such that sufficient liquidity exists to meet near-term benefit payment obligations. The plans retain outside investment advisors to manage plan investments within parameters established by our plan trustees.
The following table presents the fair value of our qualified pension plan assets by major asset category. The allocation of our pension plan assets is based on the target range presented in the following table.
| | | | | | | | | | | | | | | | | | | | |
| Asset category: | | December 31,
2023 | | January 1,
2023 | | Target Range |
| | (in millions) | |
| Cash and cash equivalents, net of unsettled transactions | | $ | 159 | | | $ | 157 | | | 0-10% |
| Equity securities | | 508 | | | 539 | | | 30-50% |
| Debt securities | | 582 | | | 521 | | | 35-55% |
| Alternative assets | | 302 | | | 301 | | | 2-25% |
| Total plan assets | | $ | 1,551 | | | $ | 1,518 | | | |
See “Note 15: Fair Value Measurements” for additional information about the fair value of our pension assets.
The minimum funding requirement for our qualified pension plans in fiscal year 2024 is $37 million.
Expected future benefit payments for our defined benefit pension plans are as follows:
| | | | | | | | |
| Fiscal Year | | (in millions) |
| 2024 | | $ | 118 | |
| 2025 | | 123 | |
| 2026 | | 120 | |
| 2027 | | 123 | |
| 2028 | | 125 | |
| 2029 - 2033 | | 640 | |
Multiemployer Defined Benefit Pension Plans
In addition to our Company sponsored defined benefit pension plans, we contribute to several multiemployer defined benefit pension plans under collective bargaining agreements that cover certain of our union-represented employees. The risks of participating in such plans are different from the risks of single-employer plans, in the following respects:
•Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.
•If a participating employer ceases to contribute to a multiemployer plan, the unfunded obligation of the plan may be borne by the remaining participating employers.
•If we were to withdraw from a multiemployer plan, we may be required to pay the plan an amount based on the underfunded status of the plan and on the history of our participation in the plan prior to withdrawal. This is referred to as a withdrawal liability.
Each multiemployer plan in which we participate has a certified zone status as currently defined by the Pension Protection Act of 2006. The zone status is based on information provided by each plan and is certified by the plan's actuary. The following are descriptions of the zone status types based on criteria established under the Internal Revenue Code (“IRC”):
•“Red” Zone—Plan has been determined to be in “critical status” and is generally less than 65% funded. A rehabilitation plan, as required under the IRC, must be adopted by plans in the “red” zone. Plan participants may be responsible for the payment of surcharges, in addition to the contribution rate specified in the applicable collective bargaining agreement, for a plan in “critical status,” in accordance with the requirements of the IRC.
•“Yellow” Zone—Plan has been determined to be in “endangered status” and is generally less than 80% funded. A funding improvement plan, as required under the IRC, must be adopted.
•“Green” Zone—Plan has been determined to be neither in “critical status” nor in “endangered status,” and is generally at least 80% funded.
The IAM National Pension Fund National Pension Plan was in the “red” zone, and all other plans in which we participate were in the “green” zone for the two most recent benefit plan years that have been certified.
The following table summarizes information about the multiemployer plans in which we participate, including our contributions to the plans (1).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Fiscal Years | | |
| Plan | | EIN / PN (2) | | 2023 | | 2022 | | 2021 | | Expiration Dates of Collective Bargaining Agreements |
| | | | (in millions) | | |
| United Food and Commercial Workers International Union Industry Pension Fund | | 51-6055922 / 001 | | $ | 1 | | | $ | 1 | | | $ | 1 | | | Multiple (3) |
| Central Pension Fund of the International Union of Operating Engineers and Participating Employers | | 36-6052390 / 001 | | — | | | — | | | — | | | October 2028 |
| IAM National Pension Fund National Pension Plan | | 51-6031295 / 002 | | — | | | — | | | — | | | February 2026 |
| | | | | | | | | | |
| Total contributions to multiemployer plans | | | | $ | 2 | | | $ | 2 | | | $ | 2 | | | |
________________
(1)Contributions represent the amounts we contributed to the plans. Our contributions to the Central Pension Fund of the International Union of Operating Engineers and Participating Employers exceeded 5% of total plan contributions for the plan years ended January 31, 2023 and January 31, 2022. Our contributions to each other plan did not exceed 5% of total plan contributions for any plan year presented.
(2)Represents the Employer Identification Number and the three-digit plan number assigned to a plan by the Internal Revenue Service.
(3)We have multiple collective bargaining agreements associated with the United Food and Commercial Workers International Union Industry Pension Fund. These agreements are currently scheduled to expire between September 2024 and May 2028.
Other Post-Employment Benefit Plans
We sponsor defined contribution plans (401(k) plans) covering substantially all U.S. employees. Our contributions vary depending on the plan but are based primarily on each participant’s level of contribution and cannot exceed the maximum allowable for tax purposes. Coinciding with the freeze of our pension plans in 2021, we increased the rate of employer contributions to our 401(k) plans for affected employees from a 50% match on up to 4% of employee earnings to a 100% match on up to 7% of employee earnings. Total Company contributions were $67 million, $68 million, and $47 million, in fiscal years 2023, 2022 and 2021, respectively.
We also provide health care and life insurance benefits for certain retired employees. These plans are unfunded and generally pay covered costs reduced by retiree premium contributions, co-payments and deductibles. We retain the right to modify or eliminate these benefits. We consider disclosures related to these plans immaterial to the consolidated financial statements and related notes.
NOTE 14: EQUITY
Common Stock
The Company has 1,000 shares of no par value common stock authorized and outstanding. All shares are owned by a wholly owned subsidiary of WH Group. There are no other outstanding shares of stock in the Company.
Stock-Based Compensation
During 2014, WH Group adopted a share incentive plan to provide incentives to various executives and management of WH Group and its subsidiaries, including Smithfield (the WH Group Incentive Plan). Stock options granted under the WH Group Incentive Plan were subject to graded vesting over five years and valued in five separate tranches, according to the expected life of each tranche. All options granted under the WH Group Incentive Plan were fully vested in 2019. No stock compensation expense was recognized in any period presented.
The following table summarizes stock option activity for Smithfield employees under the WH Group Incentive Plan as of December 31, 2023, and changes during the year then ended:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Number of Shares | | Weighted Average Exercise Price (HKD) | | Weighted Average Exercise Price (USD) | | Weighted Average Remaining Contractual Term (Years) | | Aggregate Intrinsic Value
(HKD) | | Aggregate Intrinsic Value
(USD) |
| | | | | | | | | (in millions) |
| Outstanding as of January 1, 2023 | 90,041,929 | | | $ | 6.20 | | | $ | 0.80 | | | | | | | |
| | | | | | | | | | | |
| Forfeited | (2,384,000) | | | $ | 6.20 | | | $ | 0.80 | | | | | | | |
| Outstanding as of December 31, 2023 | 87,657,929 | | | $ | 6.20 | | | $ | 0.80 | | | 0.6 | | | $ | — | | | $ | — | |
| Exercisable as of December 31, 2023 | 87,657,929 | | | $ | 6.20 | | | $ | 0.80 | | | 0.6 | | | $ | — | | | $ | — | |
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists of the following (net of tax):
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| (in millions) |
| Foreign currency translation | $ | (134) | | | $ | (327) | | | $ | (258) | |
| Pension accounting | (373) | | | (389) | | | (434) | |
| Hedge accounting | 8 | | | 8 | | | 35 | |
| Accumulated other comprehensive loss | $ | (500) | | | $ | (708) | | | $ | (656) | |
Other Comprehensive Income (Loss)
The following table presents changes in the balances for each component of accumulated other comprehensive loss and the related effects on net income of amounts reclassified therefrom.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Fiscal Year | |
| 2023 | | 2022 | | 2021 | |
| Before Tax | | Tax | | After Tax | | Before Tax | | Tax | | After Tax | | Before Tax | | Tax | | After Tax | |
| (in millions) | |
Continuing operations: | | | | | | | | | | | | | | | | | | |
| Foreign currency translation: | | | | | | | | | | | | | | | | | | |
Translation gains (losses) (1) | $ | 75 | | | $ | — | | | $ | 75 | | | $ | 33 | | | $ | — | | | $ | 33 | | | $ | (16) | | | $ | 1 | | | $ | (15) | | |
Translation losses reclassified to non-operating gains | — | | | — | | | — | | | 16 | | | — | | | 16 | | | 35 | | | — | | | 35 | | |
| Retirement benefits: | | | | | | | | | | | | | | | | | | |
Actuarial gains | 2 | | | — | | | 1 | | | 36 | | | (8) | | | 27 | | | 68 | | | (22) | | | 47 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Curtailment gain arising during the period | — | | | — | | | — | | | — | | | — | | | — | | | 105 | | | (33) | | | 72 | | |
| Prior service cost | — | | | — | | | — | | | — | | | — | | | — | | | (5) | | | 2 | | | (3) | | |
Amortization of actuarial losses, prior service credits and curtailment gains reclassified to non-operating gains | 18 | | | (4) | | | 14 | | | 23 | | | (6) | | | 18 | | | 31 | | | (10) | | | 21 | | |
| | | | | | | | | | | | | | | | | | |
| Derivatives: | | | | | | | | | | | | | | | | | | |
| Gains (losses) arising during the period | 10 | | | (2) | | | 7 | | | 58 | | | (15) | | | 43 | | | (48) | | | 12 | | | (36) | | |
| (Gains) losses reclassified to sales | (12) | | | 3 | | | (9) | | | 30 | | | (8) | | | 23 | | | 177 | | | (46) | | | 131 | | |
Gains reclassified to cost of sales | — | | | — | | | — | | | (127) | | | 33 | | | (95) | | | (170) | | | 44 | | | (126) | | |
| | | | | | | | | | | | | | | | | | |
| Losses reclassified to interest expense | 2 | | | — | | | 1 | | | 1 | | | — | | | 1 | | | 1 | | | — | | | 1 | | |
| Effect of change in accounting principle | — | | | — | | | — | | | — | | | — | | | — | | | 1 | | | — | | | 1 | | |
Total other comprehensive income from continuing operations | $ | 93 | | | $ | (4) | | | $ | 88 | | | $ | 70 | | | $ | (4) | | | $ | 66 | | | $ | 179 | | | $ | (52) | | | $ | 127 | | |
| | | | | | | | | | | | | | | | | | |
Discontinued operations: | | | | | | | | | | | | | | | | | | |
| Foreign currency translation: | | | | | | | | | | | | | | | | | | |
Translation gains (losses) (1) | 144 | | | — | | | 144 | | | (107) | | | (1) | | | (108) | | | (122) | | | 2 | | | (121) | | |
| Retirement benefits: | | | | | | | | | | | | | | | | | | |
Amortization of actuarial losses, prior service credits and curtailment gains reclassified to non-operating gains | 1 | | | — | | | 1 | | | (1) | | | — | | | (1) | | | (1) | | | — | | | — | | |
| Derivatives: | | | | | | | | | | | | | | | | | | |
| Derivative gains (losses) arising during the period | 2 | | | — | | | 2 | | | — | | | — | | | — | | | (1) | | | — | | | (1) | | |
| Derivative (gains) losses reclassified to sales | (1) | | | — | | | (1) | | | 1 | | | — | | | 1 | | | 1 | | | — | | | 1 | | |
Total other comprehensive income from discontinued operations | $ | 145 | | | $ | — | | | $ | 145 | | | $ | (106) | | | $ | (1) | | | $ | (107) | | | $ | (123) | | | $ | 2 | | | $ | (121) | | |
| | | | | | | | | | | | | | | | | | |
Total other comprehensive income (loss) | $ | 238 | | | $ | (5) | | | $ | 234 | | | $ | (37) | | | $ | (5) | | | $ | (41) | | | $ | 56 | | | $ | (50) | | | $ | 6 | | |
Other comprehensive income attributable to noncontrolling interest | 25 | | | — | | | 25 | | | 11 | | | — | | | 11 | | | — | | | — | | | — | | |
| Other comprehensive income (loss) attributable to Smithfield | $ | 213 | | | $ | (5) | | | $ | 208 | | | $ | (47) | | | $ | (5) | | | $ | (52) | | | $ | 56 | | | $ | (50) | | | $ | 6 | | |
________________
(1)We consider the earnings in our non-U.S. subsidiaries, including the subsidiaries within our discontinued operations, to be indefinitely reinvested, and accordingly, record no deferred income taxes on such amounts.
NOTE 15: FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We are required to consider and reflect the assumptions of market participants in fair value calculations. These factors include nonperformance risk (the risk
that an obligation will not be fulfilled) and credit risk, both of the reporting entity (for liabilities) and of the counterparty (for assets).
We use, as appropriate, a market approach (generally, data from market transactions), an income approach (generally, present value techniques), and/or a cost approach (generally, replacement cost) to measure the fair value of an asset or liability. These valuation approaches incorporate inputs, such as observable, independent market data, that we believe are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk.
The Financial Accounting Standards Board (“FASB”) has established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value hierarchy gives the highest priority to quoted market prices (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of inputs used to measure fair value are as follows:
•Level 1—Quoted prices in active markets for identical assets or liabilities accessible by the reporting entity.
•Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•Level 3—Unobservable for an asset or liability. Unobservable inputs should only be used to the extent observable inputs are not available.
We have classified assets and liabilities measured at fair value based on the lowest level of input that is significant to the fair value measurement. For the periods presented, we had no transfers of assets or liabilities between levels within the fair value hierarchy. The timing of any such transfers would be determined at the end of each reporting period.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables set forth, by level within the fair value hierarchy, our financial assets and liabilities, including assets held in a rabbi trust used to fund our non-qualified defined benefit plan, that were measured at fair value on a recurring basis:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 | | January 1, 2023 |
| | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (in millions) |
| Assets | | | | | | | | | | | | | | | | |
| Derivatives: | | | | | | | | | | | | | | | | |
| Commodity contracts | | $ | 34 | | | $ | 16 | | | $ | — | | | $ | 50 | | | $ | 20 | | | $ | 12 | | | $ | 21 | | | $ | 53 | |
Foreign exchange contracts (1) | | — | | | 1 | | | — | | | 1 | | | — | | | 1 | | | — | | | 1 | |
Mutual funds (2) | | 33 | | | — | | | — | | | 44 | | | 38 | | | — | | | — | | | 50 | |
| Insurance contracts | | — | | | 129 | | | — | | | 129 | | | — | | | 112 | | | — | | | 112 | |
| Total | | $ | 67 | | | $ | 146 | | | $ | — | | | $ | 224 | | | $ | 57 | | | $ | 125 | | | $ | 21 | | | $ | 216 | |
| | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | |
| Derivatives: | | | | | | | | | | | | | | | | |
| Commodity contracts | | 17 | | | 26 | | | — | | | 42 | | | 12 | | | 12 | | | — | | | 24 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Total | | $ | 17 | | | $ | 26 | | | $ | — | | | $ | 42 | | | $ | 12 | | | $ | 13 | | | $ | — | | | $ | 25 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
__________________
(1)Amounts relate to our discontinued operations. See “Note 3: Discontinued Operations” for further information about our discontinued operations.
(2)Institutional funds that are not publicly traded are estimated at fair value using the net asset value (“NAV”) per share of the investment as a practical expedient and are not categorized in the fair value hierarchy. Therefore, the sum of the values categorized in the fair value hierarchy above do not agree to the total.
The following are descriptions of the valuation methodologies and key inputs used to measure financial assets and liabilities recorded at fair value on a recurring basis:
•Derivatives—Derivatives classified within Level 1 are valued using quoted market prices. In some cases where quoted market prices are not available, we value the derivatives using market-based pricing models that utilize the net present value of estimated future cash flows to calculate fair value, in which case the measurements are classified within Level 2. These valuation models make use of market-based observable inputs, including exchange traded prices and rates, yield curves, credit curves and measures of volatility. Level 3 derivatives are valued based on diesel fuel prices and use both observable and unobservable inputs. There is a lack of price transparency with respect to forward prices for diesel fuel. Such unobservable inputs are significant to the diesel fuel derivative contract valuation methodology.
•Mutual funds—Mutual funds consist of publicly traded funds and other institutional funds that are not publicly traded. Publicly traded mutual funds are measured at fair value using quoted market prices and are categorized in Level 1 within the fair value hierarchy.
•Insurance contracts—Insurance contracts are valued at their cash surrender value using the daily asset unit value which is based on the quoted market price of the underlying securities and classified within Level 2.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment. As of December 31, 2023, we had no significant assets or liabilities that were measured and recorded at fair value on a nonrecurring basis after initial recognition.
We recorded charges of $1 million, $40 million and $1 million in fiscal years 2023, 2022 and 2021, respectively, to write down certain assets to their estimated fair values. Fair value was estimated using a variety of fair value techniques, including an income approach and a market approach based on the relevant information available, which consisted of level 3 inputs. The charges for fiscal year 2023 and fiscal year 2021 were recorded in cost of sales in the consolidated statements of income. The charge for fiscal year 2022 was recorded in non-operating gains and represents the impairment of our investment in Norson. The fair value of these assets at the time of remeasurement was not material.
Redeemable Noncontrolling Interest
The redemption value for the noncontrolling interest in Granjas Carroll de Mexico, S. de R.L. de C.V. (“Altosano”) is fair value. We estimate the redemption value of Altosano using an income and a market approach. Under the income approach, fair value is determined by using the projected discounted cash flows. Under the market approach, the fair value is determined by reference to guideline companies that are reasonably comparable; the fair value is estimated based on the valuation multiples of EBITDA. The significant unobservable inputs used in the determination of the fair value have an inherent measurement uncertainty that if changed could result in higher or lower fair value measurements as of the reporting date. The following table provides the significant unobservable level 3 inputs used in the valuation:
| | | | | | | | | | | | | | |
| Unobservable Inputs | | December 31, 2023 | | January 1,
2023 |
| Weighted average cost of capital | | 11 | % | | 10 | % |
| Growth rate | | 3 | % | | 3 | % |
| EBITDA Multiple | | 12x | | 8x |
| Control premium | | 25 | % | | 25 | % |
Pension Plan Assets
The following table summarizes our qualified pension plan assets measured at fair value on a recurring basis (at least annually):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 | | January 1, 2023 |
| | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | Level 3 | | Total |
| | (in millions) |
| Cash and cash equivalents | $ | 176 | | | $ | — | | | $ | — | | | $ | 176 | | | $ | 113 | | | $ | — | | | $ | — | | | $ | 113 | |
| | | | | | | | | | | | | | | |
| Equity securities: | | | | | | | | | | | | | | | |
| U.S. common stock: | | | | | | | | | | | | | | | |
| Health care | 3 | | | — | | | — | | | 3 | | | 5 | | | — | | | — | | | 5 | |
| Financial services | 9 | | | 1 | | | — | | | 10 | | | 17 | | | (1) | | | — | | | 16 | |
| Retail and consumer products | 6 | | | — | | | — | | | 6 | | | 9 | | | — | | | — | | | 9 | |
| Energy | 1 | | | — | | | — | | | 1 | | | 4 | | | — | | | — | | | 4 | |
| Information technology | 16 | | | — | | | — | | | 16 | | | 12 | | | — | | | — | | | 12 | |
| Manufacturing and industrials | 8 | | | — | | | — | | | 8 | | | 12 | | | — | | | — | | | 12 | |
| Telecommunications | 1 | | | — | | | — | | | 1 | | | 1 | | | — | | | — | | | 1 | |
| International common stock | 14 | | | — | | | — | | | 14 | | | 23 | | | — | | | — | | | 23 | |
| | | | | | | | | | | | | | | |
Commingled funds: (1) | | | | | | | | | | | | | | | |
| Global equity | — | | | — | | | — | | | 449 | | | — | | | — | | | — | | | 457 | |
| Corporate debt securities | — | | | — | | | — | | | 157 | | | — | | | — | | | — | | | 155 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Fixed income: | | | | | | | | | | | | | | | |
| Corporate debt securities | 252 | | | 2 | | | — | | | 253 | | | 239 | | | 1 | | | — | | | 240 | |
| Government debt securities | 125 | | | 46 | | | — | | | 171 | | | 140 | | | (14) | | | — | | | 126 | |
| | | | | | | | | | | | | | | |
| Alternative investments: | | | | | | | | | | | | | | | |
Diversified investment funds (1) | — | | | — | | | — | | | 4 | | | — | | | — | | | — | | | 5 | |
| | | | | | | | | | | | | | | |
Limited partnerships (1) | — | | | — | | | — | | | 298 | | | — | | | — | | | — | | | 296 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Total fair value | $ | 611 | | | $ | 49 | | | $ | — | | | 1,568 | | | $ | 574 | | | $ | (14) | | | $ | — | | | 1,473 | |
| Unsettled transactions, net | | | | | | | (17) | | | | | | | | | 45 | |
| Total plan assets | | | | | | | $ | 1,551 | | | | | | | | | $ | 1,518 | |
__________________
(1)Assets that are measured at fair value using NAV per share as a practical expedient have not been categorized in the fair value hierarchy.
The following are descriptions of the valuation methodologies and key inputs used to measure pension plan assets recorded at fair value:
•Cash and cash equivalents—Cash equivalents include highly liquid investments with original maturities of three months or less. Due to their short-term nature, the carrying amount of these instruments approximates the estimated fair value. Actively traded money market funds are classified as Level 1 and included in cash and cash equivalents.
•Equity securities—The fair value of equity securities is based on quoted prices in active markets and classified as Level 1. Level 1 financial instruments include highly liquid instruments with quoted prices, such as equities and mutual funds traded in active markets.
•Commingled funds—The fair value of commingled funds is measured using the NAV per share practical expedient and have not been categorized in the fair value hierarchy. The NAV per share is based on the fair value of the underlying assets owned by the funds, minus its liabilities then divided by the total number of shares outstanding. Underlying assets of commingled funds primarily consist of liquid equity and fixed income securities with quoted prices in active markets.
•Fixed income—When available, the fair value of fixed income securities is based on quoted prices in active markets and classified as Level 1. Level 1 financial instruments include highly liquid instruments with quoted prices, such as equities and mutual funds traded in active markets.
If quoted prices are not available, fair values of fixed income instruments are obtained from pricing services, broker quotes or other model-based valuation techniques with observable inputs and classified as Level 2. The nature of these fixed income instruments include instruments for which quoted prices are available but traded less frequently, instruments whose fair value has been derived using a model where inputs to the model are directly observable in the market, or can be derived principally from or corroborated by observable market data and securities that are valued using other financial instruments, the parameters of which can be directly observed. Level 2 fixed income instruments include corporate debt securities.
•Alternative investments—The fair value of alternative investments is measured using the net asset value per share practical expedient and have not been categorized in the fair value hierarchy. The net asset value per share is based on the fair value of the underlying assets owned by the alternative investment funds, minus its liabilities then divided by the total number of shares outstanding.
•Limited partnerships—The fair value of limited partnerships is measured using the NAV practical expedient and has not been categorized in the fair value hierarchy. The NAV is based on the fair value of the underlying assets owned by the partnership, minus its liabilities then multiplied by the ownership percentage of the pension plans.
Other Financial Instruments
We determine the fair value of fixed-rate debt using Level 2 inputs based on quoted market prices. The carrying amount of all other debt approximates fair value as those instruments are based on variable interest rates. The following table presents the fair value and carrying value of total debt as of December 31, 2023 and January 1, 2023:
| | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 | | January 1, 2023 |
| Fair Value | | Carrying Value | | Fair Value | | Carrying Value |
| (in millions) |
| Debt | $ | 1,770 | | | $ | 1,991 | | | $ | 1,673 | | | $ | 1,992 | |
The carrying amounts of cash and cash equivalents, accounts receivable, notes payable and accounts payable approximate their fair values because of the relatively short-term maturity of these instruments.
NOTE 16: RELATED PARTY TRANSACTIONS
The following tables present amounts of related party transactions and balances owed from and to related parties:
| | | | | | | | | | | |
| December 31,
2023 | | January 1,
2023 |
| (in millions) |
Receivables from related parties (1) | $ | 35 | | | $ | 29 | |
Payables to and other current liabilities with related parties (2) | 31 | | | 42 | |
________________
(1)Includes receivables from WH Group and its subsidiaries of $34 million and $27 million as of December 31, 2023 and January 1, 2023, respectively. These balances are recorded in accounts receivable, net and prepaid expenses and other current assets on the consolidated balance sheets.
(2)Includes amounts due to our immediate parent company of $16 million and $27 million as of December 31, 2023 and January 1, 2023, which includes $8 million and $20 million related to income taxes, respectively. These amounts are recorded in accrued expenses and other current liabilities on the consolidated balance sheets. The remaining balances are recorded in accounts payable.
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| (in millions) |
Sales to related parties (1) | $ | 501 | | | $ | 492 | | | $ | 887 | |
Payments to related parties (2) | 540 | | | 732 | | | 405 | |
________________
(1)Sales to related parties includes $487 million, $471 million and $860 million in sales to subsidiaries of WH Group, and $4 million, $20 million and $27 million in sales to certain equity method investees in fiscal years 2023, 2022 and 2021, respectively.
(2)Payments to related parties includes $350 million, $520 million and $221 million in payments to our immediate parent company in fiscal years 2023, 2022 and 2021, respectively, which primarily consist of dividends. Payments also include $183 million, $209 million and $180 million to certain equity method investees in fiscal years 2023, 2022 and 2021, respectively, primarily for raw materials used in our hog production operations and cold storage fees.
NOTE 17: REGULATION AND CONTINGENCIES
Like other participants in our industry, we are subject to various laws and regulations administered by federal, state and other government entities, including the United States Environmental Protection Agency and corresponding state agencies, as well as the United States Department of Agriculture, the Grain Inspection, Packers and Stockyard Administration, the United States Food and Drug Administration, the United States Occupational Safety and Health Administration, the Commodity and Futures Trading Commission and similar agencies in foreign countries.
We, from time-to-time, receive notices and inquiries from regulatory authorities and others asserting that we are not in compliance with such laws and regulations. In some instances, litigation ensues. In addition, individuals may initiate litigation against us.
Our policy for establishing accruals and disclosures for contingent liabilities is contained in “Note 1: Summary of Significant Accounting Policies.” As of December 31, 2023 and January 1, 2023, we had recorded $315 million and $244 million in accrued expenses and other current liabilities on the consolidated balance sheets, respectively, related to litigation matters, including those described below. We recorded charges of $213 million, $12 million and $353 million in 2023, 2022 and 2021, respectively, for litigation matters, including those described below, in SG&A in the consolidated statements of income. These matters will not affect our profits or losses in future periods unless our accruals prove to be insufficient or excessive. It is reasonably possible that a change in our estimates may occur in the near term and that our accruals could be insufficient. We are unable to estimate the amount of possible loss in excess of our accruals, which could be material. Additionally, legal expenses incurred in our and our subsidiaries’ defense of these claims and any payments made to plaintiffs through unfavorable verdicts or otherwise could negatively impact our cash flows and our liquidity position.
Antitrust Price-Fixing Litigation
The Company has been named as one of 16 defendants in a series of class actions filed in 2018 in the United States District Court for the District of Minnesota alleging antitrust violations in the pork industry. The class cases were filed by three different groups of plaintiffs. In all of these cases, the plaintiffs alleged that starting in 2009 and continuing through at least June of 2018, the defendant pork producers agreed to reduce the supply of hogs in the United States in order to raise the price of hogs and all pork products. The plaintiffs in all of these cases also challenged the defendant pork producers’ use of benchmarking reports from defendant Agri Stats, Inc., alleging that
the reports allowed the pork producers to share proprietary information and monitor each producer’s compliance with the supposed agreement to reduce supply. Payments in the aggregate amount of $194 million were made by us to settle all class claims.
In addition to the class actions, the Company has been named as a defendant in similar antitrust lawsuits and related claims brought by a number of individual parties who opted out of the classes. The plaintiffs in the non-class cases assert the same or similar antitrust claims as the plaintiffs in the class actions. The Company has entered into negotiations with many of these claimants and has settled certain of these cases. Currently, 29 of these cases are pending against the Company.
The Attorneys General for the states of New Mexico and Alaska and the Commonwealth of Puerto Rico have filed similar complaints on behalf of their respective states, territories, agencies and citizens. The Company has settled with Puerto Rico and Alaska. The Company intends to vigorously defend against the remaining claims.
Antitrust Wage-Fixing Litigation
On November 11, 2022, Smithfield Foods, Inc. and our wholly owned subsidiary, Smithfield Packaged Meats Corp., were named as two of the numerous defendants in a purported class action complaint filed in the United States District Court for the District of Colorado alleging wage-fixing violations in the red meat industry. The plaintiffs allege that the defendants, most of whom operate beef or pork processing plants, conspired to suppress wages paid to plant workers in the United States in violation of the antitrust laws. The plaintiffs sought damages on behalf of all employees of defendants and their subsidiaries from January 1, 2014, to the present. The plaintiffs also sought treble damages and attorneys’ fees. The defendants filed motions to dismiss the complaint, which were largely denied by the court on September 27, 2023. The plaintiffs subsequently amended their complaint adding additional defendants, including our wholly owned subsidiary, Murphy-Brown of Missouri, LLC (which has been dismissed voluntarily), and expanding the class period back to 2000.
Since the case was filed, several defendants have settled. On April 5, 2024, the remaining defendants moved to dismiss the amended complaint. We intend to vigorously defend against these claims.
Maxwell Foods Litigation
On August 13, 2020, Maxwell Foods, LLC (“Maxwell”) filed a complaint against Smithfield Foods, Inc. in the General Court of Justice, Superior Court Division for Wayne County, North Carolina. The complaint alleged that Smithfield breached the Production Sales Agreement (“PSA”) between the parties (as well as the duty of good faith and fair dealing): (i) by failing to provide Maxwell with the same pricing as other major hog suppliers in violation of a purported “Most-Favored-Nation Provision” found in a December 6, 1994 letter to Maxwell, (ii) by failing to comply with an implicit duty to negotiate the PSA to provide alternative pricing to Maxwell when the Iowa-Southern Minnesota market allegedly ceased to be viable; and (iii) by failing to purchase Maxwell’s entire output of hogs since April 2020.
Smithfield filed a notice of removal to the United States District Court of the Eastern District of North Carolina. Smithfield also filed a motion to dismiss several of Maxwell’s claims. On February 22, 2021, the U.S. District Court granted Maxwell’s motion to remand the case to the Superior Court of Wayne County and left Smithfield’s partial motion to dismiss the complaint for consideration by the state court in Wayne County.
On March 1, 2021, Maxwell filed an amended complaint, which added a claim under the North Carolina Unfair and Deceptive Trade Practices Act (“UDTPA”). Smithfield filed a notice of designation seeking assignment of the case to the North Carolina Business Court. Maxwell objected to such designation, and on April 13, 2021 the Business Court overruled Maxwell’s objection.
The Business Court also dismissed two of Maxwell’s claims: the implied duty to negotiate claim and the UDTPA claim. Maxwell subsequently filed another amended complaint adding a fraudulent concealment claim and a new breach of contract claim, as well as a request for punitive damages. The court dismissed the fraudulent concealment claim and the request for punitive damages. The three remaining claims, all for breach of contract, are: (1) the claim under the “Most-Favored-Nation Provision,” (2) the claim that Smithfield failed to purchase Maxwell’s
entire output of hogs since April 2020, and (3) the claim that from time to time, Smithfield would calculate Maxwell’s payment for a delivery of hogs using an average of the preceding week’s weight rather than the actual weights of the hogs being delivered.
The parties filed cross-motions for summary judgment and related motions to exclude expert testimony, which were fully briefed on November 17, 2023. The Company intends to vigorously defend against the remaining claims.
Insurance Claims
A fire at one of our pork processing facilities in North Carolina in 2021 damaged or destroyed assets and disrupted our business. Additionally, we have claims against certain of our insurance carriers for losses we incurred in connection with nuisance litigation in the State of North Carolina. We maintain comprehensive general liability and property insurance, including business interruption insurance, with loss limits that we believe will provide substantial and broad coverage for the losses arising from these events.
In connection with our claims associated with these matters, we received insurance proceeds totaling $3 million, $6 million and $30 million in fiscal years 2023, 2022 and 2021, respectively. We recognized $2 million of the proceeds in each of fiscal years 2023 and 2022 in investing activities in the consolidated statements of cash flows. All other proceeds were recognized in operating activities in the consolidated statements of cash flows. The insurance recoveries were recognized in operating gains in the consolidated statements of income.
Any additional insurance recoveries from these claims will be recognized if and when the claims are settled.
NOTE 18: SUPPLEMENTAL CASH FLOW INFORMATION
| | | | | | | | | | | | | | | | | |
| Fiscal Year |
| 2023 | | 2022 | | 2021 |
| Supplemental disclosures of cash flow information: | (in millions) |
Interest paid | 81 | | | 84 | | | 90 | |
Income taxes paid (1) | 108 | | | 152 | | | (3) | |
_______________
(1)Does not include amounts paid to our immediate parent company for income taxes.
NOTE 19: SUBSEQUENT EVENTS
We evaluated subsequent events from January 1, 2024 through November 18, 2024, the date these consolidated financial statements were available to be issued.
Sale of Utah Hog Production Assets
On September 26, 2024, we entered into an agreement for the sale of our hog production assets in Utah, excluding the live animals. As part of the agreement, we will lease back certain farm and feed properties, which we will continue to operate. The transaction is expected to close in the fourth quarter of fiscal year 2024, subject to the resolution of certain closing conditions.
Dry Sausage Facility Acquisition
On July 30, 2024, we acquired a dry sausage production facility located in Nashville, Tennessee from Cargill Meat Solutions Corporation for $38 million. The acquisition is part of our strategy to grow our value-added packaged meats business and serve the growing demand for high-quality pepperoni, deli, charcuterie and other dry sausage products.
Altoona, Iowa Facility Closure
On August 30, 2024, we closed our Altoona, Iowa ham boning facility and consolidated production volume into other locations to improve manufacturing efficiencies. Costs associated with closing the plant primarily include
operating lease assets and equipment that we disposed of prior to the expiration of the lease term or end of the asset’s useful life. The charges associated with the closing were not material.
Antitrust Price-Fixing Litigation
Additional information regarding the antitrust price-fixing litigation matter described in “Note 17: Regulations and Contingencies” arose subsequent to the end of fiscal year 2023 and warranted an increase to our accrual. The increase in accrual was recognized in the fiscal year 2023 financial statements.
Except for these events, there were no subsequent events that would require recognition or disclosure in the consolidated financial statements.
Discontinued Operations
On March 28, 2024, we purchased a 50.1% stake in Argal Alimentacíon, S.A. (“Argal”), a Spanish producer of packaged meats products with approximately 1,480 employees, for €91 million ($98 million), subject to post-closing adjustments. We paid €82 million ($88 million) at closing with the remaining balance due upon finalization of the purchase price. In August 2024, we paid an additional €8 million ($9 million), which resulted in a final purchase price of €90 million ($97 million). Argal is included in our discontinued European operations.
On August 26, 2024, we completed a carve-out and distribution of our European operations to WH Group, which is further described in “Note 3: Discontinued Operations.”
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except for share and per share data)
| | | | | | | | | | | | | | | | | |
| | | Nine Months Ended |
| | | | | September 29,
2024 | | October 1,
2023 |
| Sales | | | | | $ | 10,190 | | | $ | 10,642 | |
| Cost of sales | | | | | 8,826 | | | 10,038 | |
| Gross profit | | | | | 1,364 | | | 604 | |
| Selling, general and administrative expenses | | | | | 594 | | | 643 | |
Operating gains | | | | | (12) | | | (99) | |
| | | | | | | |
| Operating profit | | | | | 783 | | | 60 | |
Interest expense, net | | | | | 52 | | | 59 | |
| Non-operating (gains) losses | | | | | (13) | | | 3 | |
| Income (loss) from continuing operations before income taxes | | | | | 745 | | | (2) | |
| Income tax expense | | | | | 165 | | | — | |
| Income from equity method investments | | | | | (1) | | | — | |
| Net income (loss) from continuing operations | | | | | 581 | | | (2) | |
| | | | | | | |
| Income from discontinued operations before income taxes | | | | | 187 | | | 132 | |
Income tax expense from discontinued operations | | | | | 8 | | | 20 | |
| Net income from discontinued operations | | | | | 179 | | | 112 | |
| | | | | | | |
| Net income | | | | | 760 | | | 110 | |
| Net income (loss) from continuing operations attributable to noncontrolling interests | | | | | 9 | | | (3) | |
| Net income from discontinued operations attributable to noncontrolling interests | | | | | 2 | | | — | |
| Net income attributable to Smithfield | | | | | $ | 749 | | | $ | 113 | |
| | | | | | | |
| Net income attributable to Smithfield per common share: | | | | | | | |
| Basic and diluted | | | | | | | |
| Continuing operations | | | | | $ | 572,076 | | | $ | 815 | |
| Discontinued operations | | | | | 176,449 | | | 112,017 | |
| Total | | | | | $ | 748,524 | | | $ | 112,832 | |
| | | | | | | |
| Weighted average shares outstanding | | | | | | | |
| Basic | | | | | 1,000 | | | 1,000 | |
| Diluted | | | | | 1,000 | | | 1,000 | |
See Notes to Condensed Consolidated Financial Statements
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
| | | | | | | | | | | | | | | | | |
| | | Nine Months Ended |
| | | | | September 29,
2024 | | October 1,
2023 |
| Net income | | | | | $ | 760 | | | $ | 110 | |
| | | | | | | |
Other comprehensive income (loss), net of tax: | | | | | | | |
| Foreign currency translation | | | | | (35) | | | 77 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Pension accounting | | | | | 10 | | | 11 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Hedge accounting | | | | | (10) | | | 6 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Total other comprehensive income (loss) | | | | | (36) | | | 94 | |
| | | | | | | |
| Comprehensive income | | | | | 724 | | | 203 | |
Comprehensive income (loss) attributable to noncontrolling interests | | | | | (18) | | | 25 | |
| Comprehensive income attributable to Smithfield | | | | | $ | 742 | | | $ | 179 | |
See Notes to Condensed Consolidated Financial Statements
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
| | | | | | | | | | | |
| September 29,
2024 | | December 31,
2023 |
| ASSETS |
| Current assets: | | | |
| Cash and cash equivalents | $ | 278 | | | $ | 687 | |
| Accounts receivable, net | 540 | | | 577 | |
| | | |
Inventories, net | 2,655 | | | 2,536 | |
| Current assets of discontinued operations | — | | | 958 | |
| Prepaid expenses and other current assets | 250 | | | 163 | |
| Total current assets | 3,724 | | | 4,921 | |
| | | |
| Property, plant and equipment, net | 3,248 | | | 3,347 | |
| Goodwill | 1,616 | | | 1,627 | |
| Long-term assets of discontinued operations | — | | | 1,347 | |
| Intangible assets, net | 1,268 | | | 1,274 | |
Operating lease assets | 346 | | | 381 | |
| Equity method investments | 192 | | | 191 | |
| | | |
| Other assets | 257 | | | 230 | |
| Total assets | $ | 10,650 | | | $ | 13,317 | |
| | | |
| LIABILITIES AND EQUITY |
| Current liabilities: | | | |
| Accounts payable | 566 | | | 789 | |
| Current portion of long-term debt and finance lease obligations | 8 | | | 27 | |
| Current portion of operating lease obligations | 58 | | | 63 | |
| Current liabilities of discontinued operations | — | | | 406 | |
| Accrued expenses and other current liabilities | 881 | | | 1,166 | |
| Total current liabilities | 1,512 | | | 2,450 | |
| | | |
| Long-term debt and finance lease obligations | 2,005 | | | 2,006 | |
| Long-term operating lease obligations | 295 | | | 325 | |
| Deferred income taxes, net | 533 | | | 474 | |
| | | |
| Long-term liabilities of discontinued operations | — | | | 86 | |
| Other liabilities | 422 | | | 490 | |
| | | |
| Redeemable noncontrolling interests | 282 | | | 246 | |
| | | |
Commitments and contingencies (Note 18) | | | |
| | | |
| Equity: | | | |
| Shareholder’s equity: | | | |
| | | | | | | | | | | |
| Common stock, no par value, 1,000 shares authorized; 1,000 issued and outstanding | — | | | — | |
| Additional paid-in capital | 2,967 | | | 4,152 | |
| Retained earnings | 2,997 | | | 3,588 | |
| Accumulated other comprehensive loss | (363) | | | (500) | |
| Total shareholder’s equity | 5,601 | | | 7,241 | |
| Noncontrolling interests | — | | | — | |
| Total equity | 5,601 | | | 7,241 | |
| Total liabilities and equity | $ | 10,650 | | | $ | 13,317 | |
See Notes to Condensed Consolidated Financial Statements
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
| | | | | | | | | | | | |
| Nine Months Ended |
| September 29,
2024 | | | October 1,
2023 |
| Cash flows from operating activities: | | | | |
| Net income | $ | 760 | | | | $ | 110 | |
| Less: Net income from discontinued operations | (179) | | | | (112) | |
| Net income (loss) from continuing operations | $ | 581 | | | | $ | (2) | |
| Adjustments to reconcile net income from continuing operations to net cash flows from operating activities of continuing operations: | | | | |
| Depreciation and amortization | 253 | | | | 296 | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
(Gain) loss on sale of assets | 6 | | | | (79) | |
| | | | |
| Changes in operating and other assets and liabilities, net | (615) | | | | (198) | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Other, net | 8 | | | | (23) | |
| | | | |
| Net cash flows from operating activities | 233 | | | | (6) | |
| | | | |
| Cash flows from investing activities: | | | | |
| Capital expenditures | (268) | | | | (242) | |
| Net expenditures from breeding stock transactions | (42) | | | | (35) | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Investment in partnerships and other assets | (5) | | | | (9) | |
| Proceeds from sale of property, plant and equipment and other assets | 8 | | | | 216 | |
| Other | 2 | | | | 10 | |
| | | | |
| Net cash flows from investing activities | (305) | | | | (60) | |
| | | | |
| Cash flows from financing activities: | | | | |
| Payment of dividends | (270) | | | | (262) | |
| Principal payments on long-term debt and finance lease obligations | (20) | | | | (2) | |
| Repayments of Securitization Facility | (14) | | | | (226) | |
| Proceeds from Securitization Facility | 14 | | | | 226 | |
| | | | |
| Net repayments of revolving credit facilities | (1) | | | | (4) | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Other | 1 | | | | (2) | |
| | | | |
| Net cash flows from financing activities | (290) | | | | (270) | |
| | | | |
| Effect of foreign exchange rate changes on cash from continuing operations | (12) | | | | 10 | |
| | | | |
| Cash flows from discontinued operations | | | | |
| Net cash flows from operating activities of discontinued operations | 221 | | | | 194 | |
| Net cash flows from investing activities of discontinued operations | (171) | | | | (99) | |
| Net cash flows from financing activities of discontinued operations | (143) | | | | (198) | |
| Effect of foreign exchange rate changes on cash from discontinued operations | (5) | | | | (13) | |
| Net change in cash and cash equivalents of discontinued operations | (98) | | | | (117) | |
| | | | |
| | | | | | | | | | | | |
| Net change in cash, cash equivalents and restricted cash | (472) | | | | (443) | |
| | | | |
| Cash, cash equivalents and restricted cash at beginning of period | 751 | | | | 570 | |
| Cash, cash equivalents and restricted cash at end of period | 278 | | | | 126 | |
| Less: cash, cash equivalents and restricted cash of discontinued operations | — | | | | 33 | |
| Cash, cash equivalents and restricted cash at end of period | $ | 278 | | | | $ | 94 | |
| | | | |
| | | | |
See Notes to Condensed Consolidated Financial Statements
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY
(in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 29, 2024 |
| Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Shareholder’s Equity | | Noncontrolling Interests | | Total Equity |
| Balance, December 31, 2023 | $ | 4,152 | | | $ | 3,588 | | | $ | (500) | | | $ | 7,241 | | | $ | — | | | $ | 7,241 | |
| Dividends | — | | | (269) | | | — | | | (269) | | | — | | | (269) | |
| European operations carve-out | (1,125) | | | (1,071) | | | 143 | | | (2,054) | | | — | | | (2,054) | |
| Adjustment to redeemable noncontrolling interests | (58) | | | — | | | — | | | (58) | | | — | | | (58) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Other | (1) | | | — | | | — | | | (1) | | | — | | | (1) | |
| Comprehensive income: | | | | | | | | | | | |
| Net income | — | | | 749 | | | — | | | 749 | | | — | | | 749 | |
| Other comprehensive loss, net of tax | — | | | — | | | (6) | | | (6) | | | — | | | (6) | |
| | | | | | | | | | | |
| Balance, September 29, 2024 | $ | 2,967 | | | $ | 2,997 | | | $ | (363) | | | $ | 5,601 | | | $ | — | | | $ | 5,601 | |
| | | | | | | | | | | |
| Nine Months Ended October 1, 2023 |
| Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Loss | | Total Shareholder’s Equity | | Noncontrolling Interests | | Total Equity |
| | | | | | | | | | | |
| Balance, January 1, 2023 | $ | 4,188 | | | $ | 3,894 | | | $ | (708) | | | $ | 7,374 | | | $ | — | | | $ | 7,374 | |
| Dividends | — | | | (262) | | | — | | | (262) | | | — | | | (262) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Comprehensive income: | | | | | | | | | | | |
| Net income | — | | | 113 | | | — | | | 113 | | | — | | | 113 | |
| Other comprehensive income, net of tax | — | | | — | | | 66 | | | 66 | | | — | | | 66 | |
| Balance, October 1, 2023 | $ | 4,188 | | | $ | 3,744 | | | $ | (642) | | | $ | 7,290 | | | $ | — | | | $ | 7,290 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
See Notes to Condensed Consolidated Financial Statements
SMITHFIELD FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Smithfield Foods, Inc., together with its subsidiaries (“Smithfield,” “the Company,” “we,” “us” or “our”) produces a wide variety of fresh pork and packaged meats products primarily in the United States and markets them both domestically and internationally. We operate in a cyclical industry and our results are significantly affected by fluctuations in commodity prices for meat, livestock (primarily hogs) and grains. Smithfield is an indirect, wholly owned subsidiary of Hong Kong-based WH Group Limited (“WH Group”).
Sales and profitability as well as cash flow generation and use are impacted on a quarterly basis by the seasonal nature of our business. Generally, our sales and profitability are higher in the fourth quarter due to the Thanksgiving and Christmas holidays. In addition, the timing of the Easter holiday can impact the comparability of our first and second quarters both on a quarter-to-quarter and year-over-year basis. Our cash use is highest in the first quarter due to working capital needs related to payments to certain suppliers that are typically deferred in the fourth quarter.
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), which require us to make estimates and use assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. It is possible that actual results could differ materially from those estimates. The information reflects all normal recurring adjustments which we believe are necessary to present fairly the financial position and results of operations for all periods included. Totals and percentages may be affected by rounding.
These statements and notes should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2023, which include a comprehensive description of our significant accounting policies and other information that is not required to be disclosed in our interim condensed consolidated financial statements.
Our elected fiscal year is the 52-week or 53-week period which ends on the Sunday nearest to December 31. Unless otherwise noted, all references to the nine months ended September 29, 2024 and October 1, 2023 are to the 39-week periods ended September 29, 2024 and October 1, 2023, respectively.
Recently Issued Accounting Pronouncements
There have been no recently issued accounting pronouncements that have had, or are expected to have, a material impact on our condensed consolidated financial statements.
NOTE 2: REPORTABLE SEGMENTS
Our reportable segments are determined on the basis of our organizational structure and information that is regularly reviewed by our Chief Operating Decision Maker (“CODM”) for the purpose of making operating and resource allocation decisions and assessing the performance of the operating segments of our business. Our CODM is our Chief Executive Officer.
Following the carve-out and distribution of our European operations, we conduct our operations through three reportable segments: Packaged Meats, Fresh Pork and Hog Production.
Packaged Meats
The Packaged Meats segment consists of our U.S. operations that process fresh meat into a wide variety of packaged meats products, including bacon, sausage, hot dogs, deli and lunch meats, dry sausage products (such as pepperoni and genoa), ham products, ready-to-eat products and prepared foods (such as pre-cooked entrees, bacon and sausage). Approximately 80% of the Packaged Meats segment’s raw materials are sourced from our Fresh Pork segment. We market our domestic packaged meats products under a strategic set of core brands, which include: Smithfield, Eckrich, Nathan’s Famous, Farmland, Armour, Farmer John, Kretschmar, Krakus, John Morrell, Cook’s, Gwaltney, Carando, Margherita, Curly’s and Smithfield Culinary. We also sell a sizeable portion of our packaged meats products as private label products. The majority of the Packaged Meats segment’s products are sold to retail and foodservice customers in the United States.
Fresh Pork
The Fresh Pork segment consists of our U.S. operations that process live hogs into a wide variety of primal, sub-primal and offal products, such as bellies, butts, hams, loins, picnics and ribs. The Fresh Pork segment sources approximately half of its raw materials from our Hog Production segment and half from independent farmers with whom we partner across the United States. Approximately one-third of our fresh pork products, including the majority of hams, bellies and trimmings, is transferred to our Packaged Meats segment. Externally, we sell our fresh pork products to domestic retail, foodservice and industrial customers, as well as to export markets, including, among others, China, Mexico, Japan, South Korea and Canada.
Hog Production
The Hog Production segment consists of our hog production operations in the United States, which produce and raise our hogs on numerous company-owned farms and farms that are owned and operated by third-party contract farmers. Nearly all of the hogs produced by this segment are processed by our Fresh Pork segment. The Hog Production segment also may sell grains to external customers.
Our CODM reviews assets at a consolidated level; not by reportable segment. Therefore, we do not disclose assets by reportable segment.
The following table provides certain financial information by reportable segment for the fiscal years presented with a reconciliation to consolidated totals.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 29, 2024 |
| Packaged Meats | | Fresh Pork | | Hog Production | | Other (1) | | Unallocated | | Intersegment | | Consolidated |
| (in millions) |
| Sales | $ | 5,861 | | | $ | 5,871 | | | $ | 2,220 | | | $ | 350 | | | $ | — | | | $ | (4,111) | | | $ | 10,190 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Reconciliation of segment profit to loss from continuing operations before income taxes: |
| Segment profit | 855 | | | 196 | | | (135) | | | 18 | | | — | | | — | | | 935 | |
Unallocated expenses (2) | — | | | — | | | — | | | — | | | (59) | | | — | | | (59) | |
Corporate expenses (3) | — | | | — | | | — | | | — | | | (92) | | | — | | | (92) | |
| | | | | | | | | | | | | |
| Interest expense | — | | | — | | | — | | | — | | | (52) | | | — | | | (52) | |
| Non-operating gains | — | | | — | | | — | | | — | | | 13 | | | — | | | 13 | |
Income from equity method investments | — | | | (1) | | | (1) | | | — | | | — | | | — | | | $ | (1) | |
| Income from continuing operations before income taxes | | | | | | | | | | | | | $ | 745 | |
| | | | | | | | | | | | | |
| Nine Months Ended October 1, 2023 |
| Packaged Meats | | Fresh Pork | | Hog Production | | Other (1) | | Unallocated | | Intersegment | | Consolidated |
| (in millions) |
| Sales | $ | 5,876 | | | $ | 5,996 | | | $ | 2,499 | | | $ | 380 | | | $ | — | | | $ | (4,108) | | | $ | 10,642 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Reconciliation of segment profit to income from continuing operations before income taxes: |
Segment profit | 760 | | | 73 | | | (627) | | | (17) | | | — | | | — | | | 190 | |
Unallocated expenses (2) | | | | | | | | | (47) | | | — | | | (47) | |
Corporate expenses (3) | — | | | — | | | — | | | — | | | (82) | | | — | | | (82) | |
Interest expense | — | | | — | | | — | | | — | | | (59) | | | — | | | (59) | |
Non-operating losses | — | | | — | | | — | | | — | | | (3) | | | — | | | (3) | |
(Income) loss from equity method investments | — | | | (1) | | | 1 | | | — | | | — | | | — | | | — | |
Loss from continuing operations before income taxes | | | | | | | | | | | | | $ | (2) | |
| | | | | | | | | | | | | |
_____________(1)Includes our Mexico and Bioscience operations. Our Mexico operations include the raising of hogs and production of pork products that are sold primarily to customers in Mexico. Our Bioscience operations use raw materials from hogs that we harvest to manufacture heparin products, including an active pharmaceutical ingredient that mitigates the risk of blood clots.
(2)Includes certain costs of sales, SG&A and operating gains that we do not allocate to our segments.
(3)Represents general corporate expenses for management and administration of the business.
The following table disaggregates our sales by reportable segment to customers by major distribution channel:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 29, 2024 |
| Retail (1) | | Foodservice (2) | | Exports (3) | | Industrial (4) | | Other / Unallocated (5) | | Total External Sales | | Intersegment | | Consolidated |
| (in millions) |
| Packaged Meats | $ | 3,681 | | | $ | 1,804 | | | $ | 65 | | | $ | 300 | | | $ | 11 | | | $ | 5,861 | | | $ | — | | | $ | 5,861 | |
| Fresh Pork | 1,464 | | | 173 | | | 1,224 | | | 774 | | | — | | | 3,635 | | | 2,236 | | | 5,871 | |
| Hog Production | — | | | — | | | — | | | — | | | 345 | | | 345 | | | 1,874 | | | 2,220 | |
Other (6) | — | | | — | | | — | | | — | | | 349 | | | 349 | | | 1 | | | 350 | |
| Intersegment | — | | | — | | | — | | | — | | | — | | | — | | | (4,111) | | | (4,111) | |
| Total | $ | 5,145 | | | $ | 1,977 | | | $ | 1,289 | | | $ | 1,074 | | | $ | 705 | | | $ | 10,190 | | | $ | — | | | $ | 10,190 | |
| | | | | | | | | | | | | | | |
| Nine Months Ended October 1, 2023 |
| Retail (1) | | Foodservice (2) | | Exports (3) | | Industrial (4) | | Other / Unallocated (5) | | Total External Sales | | Intersegment | | Consolidated |
| (in millions) |
| Packaged Meats | $ | 3,648 | | | $ | 1,838 | | | $ | 87 | | | $ | 291 | | | $ | 12 | | | $ | 5,876 | | | $ | — | | | $ | 5,876 | |
| Fresh Pork | 1,535 | | | 195 | | | 1,298 | | | 880 | | | 10 | | | 3,918 | | | 2,078 | | | 5,996 | |
| Hog Production | — | | | — | | | — | | | — | | | 473 | | | 473 | | | 2,025 | | | 2,499 | |
Other (6) | — | | | — | | | — | | | — | | | 375 | | | 375 | | | 5 | | | 380 | |
| Intersegment | — | | | — | | | — | | | — | | | — | | | — | | | (4,108) | | | (4,108) | |
| Total | $ | 5,182 | | | $ | 2,032 | | | $ | 1,385 | | | $ | 1,171 | | | $ | 871 | | | $ | 10,642 | | | $ | — | | | $ | 10,642 | |
________________(1)Includes national and regional retailers in the United States such as grocery supermarket chains, independent grocers and club stores.
(2)Includes foodservice distributors, fast food and other restaurant operators, hotel chains and other institutional customers in the United States.
(3)Includes exports from the United States to international retailers and wholesale distributors primarily in North America, Asia, Latin America and other emerging markets.
(4)Includes sales to industrial customers who use our raw materials in their finished goods production, including prepared meals, pharmaceutical production and pet food.
(5)Includes sales of grain, oilseeds, breeding stock and market hogs, among others, in addition to external sales from our Mexico and Bioscience operations.
(6)Includes our Mexico and Bioscience operations.
NOTE 3: DISCONTINUED OPERATIONS
On August 26, 2024, we completed a carve-out and distribution of our European operations to WH Group. The European carve-out represents a strategic shift in our geographical footprint. Accordingly, the historical results of operations, assets and liabilities, and cash flows of the European operations have been condensed into separate line items and presented in the condensed consolidated statements of income, the condensed consolidated balance sheets and the condensed consolidated statements of cash flows as discontinued operations.
The following table presents the major components of net income from discontinued operations included in the condensed consolidated statements of income.
| | | | | | | | | | | | | | |
| | Nine Months Ended |
| | | | September 29,
2024 | | October 1,
2023 |
| | | | (in millions) | | |
| Sales | | | | $ | 2,362 | | | $ | 2,495 | |
| Cost of sales | | | | 2,037 | | | 2,245 | |
| Gross profit | | | | 325 | | | 250 | |
| Selling, general and administrative expenses | | | | 149 | | | 112 | |
Operating gains | | | | (15) | | | (5) | |
| Operating profit | | | | 190 | | | 142 | |
Interest expense | | | | 4 | | | 10 | |
| | | | | | |
| Income from discontinued operations before income taxes | | | | 187 | | | 132 | |
Income tax expense from discontinued operations (1) | | | | 8 | | | 20 | |
| Net income from discontinued operations | | | | $ | 179 | | | $ | 112 | |
________________
(1)Income tax expense (benefit) from discontinued operations for 2024 includes a $27 million income tax benefit recognized as a result of the carve-out of our European operations.
The following tables present the carrying amounts of the major classes of assets and liabilities of the discontinued operations included in the condensed consolidated balance sheets.
Assets
| | | | | | |
| | December 31,
2023 |
| | (in millions) |
| Current assets: | | |
| Cash and cash equivalents | | $ | 61 | |
| Accounts receivable, net | | 412 | |
Inventories, net | | 460 | |
| Prepaid expenses and other current assets | | 25 | |
| Total current assets | | 958 | |
| | |
| Property, plant and equipment, net | | 911 | |
| Goodwill | | 253 | |
| Intangible assets, net | | 114 | |
| Other assets | | 69 | |
| Total long-term assets | | 1,347 | |
Liabilities
| | | | | | |
| | December 31,
2023 |
| | (in millions) |
| Current liabilities: | | |
| Accounts payable | | $ | 182 | |
| Current portion of long-term debt and finance lease obligations | | 68 | |
| Accrued expenses and other current liabilities | | 156 | |
| Total current liabilities | | 406 | |
| | |
| Deferred income taxes, net | | 30 | |
| Long-term debt and finance lease obligations | | 8 | |
| Other liabilities | | 48 | |
| Total long-term liabilities | | 86 | |
Argal Acquisition
On March 28, 2024, our former European operation purchased a 50.1% stake in Argal Alimentacíon, S.A. (“Argal”), a Spanish producer of packaged meats products with approximately 1,480 employees, for €91 million ($98 million), subject to post-closing adjustments. The Company paid €82 million ($88 million) at closing with the remaining balance due upon finalization of the purchase price. In August 2024, the Company paid an additional €8 million ($9 million), which resulted in a final purchase price of €90 million ($97 million). Argal is included in our discontinued European operations.
Continuing Involvement
In connection with the carve out of our European operations (“Morliny Foods”), we entered into a transition services agreement that governs certain services Smithfield will provide to Morliny Foods for up to a year subsequent to the carve out. These services include information technology support, including access and license fees, tax advisory services and financial reporting services, none of which are material to Smithfield. In addition, Smithfield will continue to purchase certain products from Morliny Foods for distribution in the U.S. market. Purchases of these products from Morliny Foods were $32 million for the nine months ended September 29, 2024. Subsequent to the carve-out transaction, Morliny Foods became, and WH Group remains, a related party.
NOTE 4: ACQUISITION AND DISPOSITIONS
Acquisition
Dry Sausage Facility
On July 30, 2024, we acquired a dry sausage production facility located in Nashville, Tennessee from Cargill Meat Solutions Corporation for $38 million. The acquisition is part of our strategy to grow our value-added packaged meats business and serve the growing demand for high-quality pepperoni, deli, charcuterie and other dry sausage products. The total cost of the asset acquisition was allocated based on the relative fair value of the assets acquired. The allocated fair values of the assets acquired are as follows: equipment valued at $17 million, building valued at $11 million, inventory valued at $5 million and land valued at $5 million.
Dispositions
Altoona, Iowa Facility Closure
On August 30, 2024, we closed our Altoona, Iowa ham boning facility and consolidated production volume into other locations to improve manufacturing efficiencies. Costs associated with closing the plant primarily include
operating lease assets and equipment that we disposed of prior to the expiration of the lease term or end of the asset’s useful life. The charges associated with the closing were not material.
NOTE 5: OPERATING GAINS AND NON-OPERATING (GAINS) LOSSES
The following table provides details of operating gains and non-operating (gains) losses.
| | | | | | | | | | | | | | |
| | Nine Months Ended |
| | | | September 29,
2024 | | October 1,
2023 |
| | | | (in millions) |
Operating gains: | | | | | | |
Gain on disposal of assets (1) | | | | $ | (5) | | | $ | (88) | |
| Insurance recoveries | | | | (4) | | | (4) | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Other | | | | (3) | | | (7) | |
Total operating gains | | | | $ | (12) | | | $ | (99) | |
| | | | | | |
Non-operating (gains) losses: | | | | | | |
| Gain on nonqualified retirement plan assets | | | | $ | (18) | | | $ | (6) | |
Net pension and postretirement benefits cost (2) | | | | 5 | | | 8 | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Other | | | | (1) | | | 1 | |
Total non-operating (gains) losses | | | | $ | (13) | | | $ | 3 | |
________________
(1)Includes an $86 million gain on the sale of our Vernon, California plant. See “Note 6: Restructuring” for further information.
(2)Includes the components of net pension and postretirement benefits cost other than service cost, which is included in operating profit. These components consist of interest cost, expected return on plan assets, amortization of actuarial gains/losses and prior service costs/credits, and curtailment gains.
NOTE 6: RESTRUCTURING
In May 2022, we announced a decision to close our Vernon, California processing facility, exit farm operations in Arizona and California and reduce our sow herd in Utah. The decision to permanently close our Vernon facility was based on increasingly difficult business conditions in California, where high taxes, high utility costs and a challenging regulatory environment negatively impact our ability to operate efficiently and profitably.
In May 2023, we made a decision to cease operations on a number of sow farms in Missouri. The decision was driven by persistent livestock disease issues, underperforming operations and shifting industry supply and demand dynamics.
In December 2023, we made a decision to terminate a number of third-party hog grower contracts and close several company-owned nursery farms in Utah as a result of the Vernon facility closure in early 2023.
As a result of these decisions, we incurred various exit costs and disposal charges, which have been, or will be, recorded in cost of sales in our condensed consolidated statements of income. The following table details the charges by major type of cost.
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Nine Months Ended | | Cumulative | | |
| | | | | September 29,
2024 | | October 1,
2023 | | |
| | | | | (in millions) |
| Accelerated depreciation | | | | | $ | — | | | $ | 42 | | | $ | 168 | | | |
| Contract termination costs | | | | | 8 | | | — | | | 56 | | | |
| Employee termination benefits | | | | | 2 | | | 1 | | | 33 | | | |
Loss on asset disposals | | | | | — | | | 2 | | | 5 | | | |
| Other exit costs | | | | | 4 | | | 49 | | | 99 | | | |
| Total | | | | | $ | 13 | | | $ | 94 | | | $ | 359 | | | |
In the second quarter of fiscal year 2023, we sold our Vernon, California facility for $205 million and recognized a gain of $86 million in operating gains in the condensed consolidated statement of income.
The following table reconciles the beginning and ending liability balances associated with these restructuring activities.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Balance, December 31, 2023 | | Additions | | Payments | | | | | | | | Balance, September 29, 2024 |
| (in millions) |
| Contract termination costs | $ | 42 | | | $ | 8 | | | $ | (50) | | | | | | | | | $ | — | |
| Employee termination benefits | 2 | | | 2 | | | (3) | | | | | | | | | 1 | |
| Other exit costs | 8 | | | 4 | | | (6) | | | | | | | | | 5 | |
| Total | $ | 51 | | | $ | 13 | | | $ | (58) | | | | | | | | | $ | 6 | |
On September 26, 2024, we entered into an agreement for the sale of our hog production assets in Utah, excluding the live animals. As part of the agreement, we will lease back certain farm and feed properties, which we will continue to operate. The transaction is expected to close in the fourth quarter of fiscal year 2024, subject to the resolution of certain closing conditions. We reclassified $52 million of property, plant and equipment and $24 million of asset retirement obligations to prepaids and other current assets and accrued expenses and other current liabilities, respectively, in our condensed consolidated balance sheet as of September 29, 2024.
NOTE 7: EMPLOYEE RETENTION TAX CREDITS
In 2020, the World Health Organization publicly characterized COVID-19 as a pandemic. The Company recognized a substantial amount of incremental costs during the pandemic, including costs to compensate employees who were not able to work due to facility closures, reduced work schedules or health related reasons.
The Coronavirus Aid, Relief, and Economic Security Act was signed into law in March 2020, which provided, among other things, an employee retention credit to eligible employers who paid qualified wages to employees during the pandemic. The employee retention credit represents a government grant. Our policy is to recognize government grants when they are reasonably assured of receipt. In the second quarter of 2024, we concluded the recognition threshold had been met and therefore, recognized $86 million and $1 million of employee retention credits in cost of sales and SG&A, respectively, in the condensed consolidated statement of income.
NOTE 8: ACCOUNTS RECEIVABLE
Accounts receivable, net is comprised of both receivables from contracts with customers and other receivables. Our receivables from contracts with customers were $454 million and $475 million as of September 29, 2024 and December 31, 2023, respectively.
We monitor the credit risk associated with our accounts receivable and establish an allowance for credit losses expected to be incurred over the life of the receivable, which is recorded net of this allowance. We calculate this allowance based on our history of write-offs, future economic conditions, level of past due accounts, the financial health of our customers and historical experience. Our allowance for credit losses was not material for the periods presented.
NOTE 9: INVENTORIES
Inventories, net consist of the following:
| | | | | | | | | | | |
| September 29,
2024 | | December 31,
2023 |
| (in millions) |
| Fresh and packaged meats | $ | 1,321 | | | $ | 943 | |
| Livestock | 953 | | | 1,036 | |
| Grains | 135 | | | 307 | |
| Manufacturing supplies | 114 | | | 123 | |
| Other | 132 | | | 127 | |
Inventories, net | $ | 2,655 | | | $ | 2,536 | |
NOTE 10: DERIVATIVE FINANCIAL INSTRUMENTS
Our pork production operations use various raw materials, primarily live hogs, corn, soybean meal and wheat, which are actively traded on commodity exchanges. We also use fuel and other energy commodities in our operations. We hedge these commodities when we determine conditions are appropriate to mitigate price risk. While this hedging may limit our ability to participate in gains from favorable commodity fluctuations, it also reduces the risk of loss from adverse changes in raw material prices. We attempt to closely match the commodity contract terms with the hedged item. We also periodically enter into interest rate swaps to hedge exposure to changes in interest rates on certain financial instruments and foreign exchange forward contracts to hedge certain exposures to fluctuating foreign currency rates.
We record all derivatives as either assets or liabilities at fair value on the condensed consolidated balance sheet, with the exception of contracts that qualify for the normal purchase and normal sale scope exception, which are expected to result in physical delivery. Accounting for changes in the fair value of a derivative depends on whether it qualifies and has been designated as part of a hedging relationship. For derivatives that qualify and have been designated as hedging instruments for accounting purposes, changes in fair value have no net impact on earnings, to the extent the derivative is considered perfectly effective in achieving offsetting changes in fair value attributable to the risk being hedged, until the hedged item is recognized in earnings (commonly referred to as the “hedge accounting” method). For derivatives that do not qualify or are not designated as hedging instruments for accounting purposes, changes in fair value are recorded in current period earnings (commonly referred to as the “mark-to-market” method). We may elect either method of accounting for our derivative portfolio, assuming all the necessary requirements are met. We have, in the past, availed ourselves of either acceptable method and expect to do so in the future. We believe all of our derivative instruments represent economic hedges against changes in prices and rates, regardless of their designation for accounting purposes.
When cash flow hedge accounting is applied, derivative gains or losses are recognized as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. The initial fair value of hedge components excluded from the assessment of effectiveness is recognized in earnings on a straight-line basis over the life of the hedging instrument and is
presented in the same income statement line item as the hedged item. Any difference between the change in fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings is recorded as a component of other comprehensive income (loss).
When fair value hedge accounting is applied, derivative gains and losses are recognized in earnings concurrently with the change in fair value of the hedged item attributable to the risk being hedged.
Changes in commodity prices could have a significant impact on cash deposit requirements under our broker and counterparty agreements. Additionally, certain of our derivative contracts contain credit risk-related contingent features, which would require us to post additional cash collateral to cover net losses on open derivative instruments if our credit rating were sufficiently downgraded. As of September 29, 2024, the net liability position of our open derivative instruments that are subject to credit risk-related contingent features was not material.
Although our counterparties primarily consist of financial institutions that are investment grade, we would be exposed to losses in the event of nonperformance or nonpayment by our counterparties. However, a portion of our financial instruments are exchange traded derivative contracts held with brokers and counterparties with whom we maintain margin accounts that are settled on a daily basis, thereby limiting our credit exposure to non-exchange traded derivatives. Additionally, we have a portfolio of over-the-counter derivatives that are held by counterparties under netting arrangements found in typical master netting agreements. These agreements legally allow for net settlement in the event of bankruptcy. We offset the fair values of derivative assets and liabilities, along with the related cash collateral, that are executed with the same counterparty under these arrangements in the condensed consolidated balance sheets. Determination of the credit quality of our counterparties is based upon a number of factors, including credit ratings and our evaluation of their financial condition. As of September 29, 2024, we had gross credit exposure of $10 million on non-exchange traded derivative contracts. After taking into account the effect of netting arrangements, we had no credit exposure on non-exchange traded derivative contracts.
The size and mix of our derivative portfolio vary from time to time based upon our analysis of current and future market conditions. The following table presents the fair values of our open derivative financial instruments on a gross basis.
| | | | | | | | | | | | | | | | | | | | | | | |
| Assets | | Liabilities |
| September 29,
2024 | | December 31,
2023 | | September 29,
2024 | | December 31,
2023 |
| (in millions) | | (in millions) |
Derivatives using the “hedge accounting” method: | | | | | | | |
| Commodity contracts | $ | 35 | | | $ | 37 | | | $ | 18 | | | $ | 29 | |
| | | | | | | |
| Foreign exchange contracts | — | | | 1 | | | — | | | — | |
| Total | 35 | | | 38 | | | 18 | | | 29 | |
Derivatives using the “mark-to-market” method: | | | | | | | |
| Commodity contracts | 5 | | | 13 | | | 11 | | | 13 | |
| | | | | | | |
| | | | | | | |
| Total fair value of derivative instruments | $ | 39 | | | $ | 51 | | | $ | 28 | | | $ | 42 | |
The following tables reconcile the gross amounts of derivative assets and liabilities to the net amounts presented in our condensed consolidated balance sheets and the related effects of cash collateral under netting arrangements that provide a legal right of offset of assets and liabilities.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 29, 2024 |
| Gross Amount of Derivative Assets/ Liabilities | | Netting of Derivative Assets/ Liabilities | | Net Derivative Assets/Liabilities | | Netting of Derivative and Cash Collateral | | Net Amount Presented in the Condensed Consolidated Balance Sheet (1) |
| (in millions) |
| Assets: | | | | | | | | | |
| Commodities | $ | 39 | | | $ | (22) | | | $ | 18 | | | $ | 13 | | | $ | 31 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Liabilities: | | | | | | | | | |
| Commodities | 28 | | | (22) | | | 6 | | | — | | | 6 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
________________
(1)Net derivative assets are recorded in prepaid expenses and other current assets. Net derivative liabilities are recorded in accrued expenses and other current liabilities. Cash collateral balances were not material.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2023 |
| Gross Amount of Derivative Assets/ Liabilities | | Netting of Derivative Assets/ Liabilities | | Net Derivative Assets/Liabilities | | Netting of Derivative and Cash Collateral | | Net Amount Presented in the Condensed Consolidated Balance Sheet (1) |
| (in millions) |
| Assets: | | | | | | | | | |
| Commodities | $ | 50 | | | $ | (25) | | | $ | 25 | | | $ | (1) | | | $ | 24 | |
| | | | | | | | | |
| Foreign exchange contracts | 1 | | | — | | | 1 | | | — | | | 1 | |
| Total | $ | 51 | | | $ | (25) | | | $ | 26 | | | $ | (1) | | | $ | 26 | |
| Liabilities: | | | | | | | | | |
| Commodities | 42 | | | (25) | | | 18 | | | 1 | | | 19 | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
________________
(1)We recorded $25 million of the net assets in prepaid expenses and other current assets with the remaining $1 million in current assets of discontinued operations. We recorded $14 million of the net liabilities in accrued expenses and other current liabilities with the remaining $5 million in other liabilities.
See “Note 16: Fair Value Measurements” for additional information about the fair value of our derivatives.
Hedge Accounting Method
Cash Flow Hedges
We enter into derivative instruments, such as futures, swaps and options contracts, to manage our exposure to the variability in expected future cash flows attributable to commodity price risk associated with the forecasted sale of fresh pork and the forecasted purchase of grains, hogs, and energy. In addition, we enter into interest rate swaps to manage our exposure to changes in interest rates associated with our variable interest rate debt and the forecasted issuance of fixed rate debt. Lastly, we enter into foreign exchange contracts to manage our exposure to the variability in expected future cash flows attributable to changes in foreign exchange rates associated with the forecasted purchase or sale of assets denominated in foreign currencies. As of September 29, 2024, substantially all of our commodity-related cash flow hedges were for transactions forecasted through April 2025.
As of September 29, 2024, the notional volumes associated with open derivative instruments designated in cash flow hedging relationships were as follows:
| | | | | | | | | | | |
| Volume | | Metric |
| Commodities: | | | |
| Lean hogs | 663,565,000 | | | Pounds |
| Corn | 44,195,000 | | | Bushels |
| Soybean meal | 321,000 | | | Tons |
Natural Gas | 7,900,000 | | | Million BTU |
| Diesel | 1,050,000 | | | Gallons |
| | | |
| | | |
The following table presents the effects on our condensed consolidated financial statements of pre-tax gains and losses on derivative instruments designated in cash flow hedging relationships for the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Gains (Losses) Recognized in Other Comprehensive Income (Loss) on Derivative | | Gains (Losses) Reclassified from Accumulated Other Comprehensive Loss into Earnings | | | | | | |
| Nine Months Ended | | Nine Months Ended | | | | | | |
| September 29,
2024 | | October 1,
2023 | | September 29,
2024 | | October 1,
2023 | | | | | | | | |
| (in millions) | | (in millions) | | | | | | | | |
| Commodity contracts | $ | (3) | | | $ | 6 | | | $ | 11 | | | $ | (2) | | | | | | | | | |
| Interest rate swaps | — | | | — | | | (1) | | | (1) | | | | | | | | | |
| Foreign exchange contracts | 1 | | | — | | | 1 | | | 1 | | | | | | | | | |
| Total | $ | (2) | | | $ | 6 | | | $ | 11 | | | $ | (2) | | | | | | | | | |
We recognized $48 million in expenses for option premiums, which are excluded from the assessment of hedge effectiveness, in the nine months ended September 29, 2024 and $34 million in the nine months ended October 1, 2023. Accumulated other comprehensive income included $4 million of net gains associated with options for which the underlying hedged transactions had not yet impacted earnings as of September 29, 2024. This amount represents the difference between the change in the fair value of the options and the amount of option premiums amortized through earnings.
We expect to reclassify $14 million ($10 million net of tax) of deferred gains on closed commodity and interest rate contracts into earnings within the next twelve months. We are unable to estimate the amount of unrealized gains or losses to be reclassified into earnings within the next twelve months related to open contracts as their values are subject to change.
Fair Value Hedges
We enter into derivative instruments (primarily futures contracts) that are designed to hedge changes in the fair value of firm commitments to buy grains and hogs. As of September 29, 2024, the notional volumes associated with open derivative instruments designated in fair value hedging relationships were as follows:
| | | | | | | | | | | |
| Volume | | Metric |
| | | |
| Lean hogs | 3,880,000 | | | Pounds |
| Corn | 2,610,000 | | | Bushels |
| Soybeans | 205,000 | | | Bushels |
| | | |
The carrying values of hedged firm commitments designated in fair value hedge relationships as of September 29, 2024 and December 31, 2023 were not material. When the underlying inventories are acquired, the hedge relationship is discontinued and the fair value hedge adjustments is reclassified to inventories. The amount of fair
value hedge gains remaining in inventories for which hedge accounting has been discontinued was $4 million and $7 million as of September 29, 2024 and December 31, 2023, respectively.
Mark-to-Market Method
As of September 29, 2024, the notional volumes associated with open derivative instruments using the “mark-to-market” method, including delta-adjusted options, were as follows:
| | | | | | | | | | | |
| Volume | | Metric |
| Commodities: | | | |
| Lean hogs | 139,556,000 | | | Pounds |
| Corn | 23,865,000 | | | Bushels |
| Soybean meal | 106,000 | | | Tons |
| Soybeans | 845,000 | | | Bushels |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Natural gas | 370,000 | | | Million BTU |
| | | |
| | | |
| | | |
| | | |
| | | |
| Foreign currency | 15,178,000 | | | U.S. Dollars |
Derivative Impact on the Condensed Consolidated Statements of Income
The following table presents the effect of derivatives on the condensed consolidated statements of income for the periods indicated:
| | | | | | | | | | | | | | | |
| | | Nine Months Ended |
| | | | | September 29,
2024 | | October 1,
2023 |
| | | | | (in millions) |
| Sales | | | | | | | |
| Cash flow hedging - commodity contracts | | | | | $ | 34 | | | $ | (4) | |
| Mark to market - commodity contracts | | | | | (7) | | | 10 | |
| Total derivative gain (loss) recognized sales | | | | | 27 | | | 6 | |
| | | | | | | |
| Cost of Sales | | | | | | | |
| Cash flow hedging - commodity contracts | | | | | (23) | | | 2 | |
| | | | | | | |
| Fair value hedging - commodity contracts | | | | | | | |
| Change in fair value of open derivatives | | | | | 5 | | | 17 | |
| Change in fair value of related hedged items | | | | | (5) | | | (17) | |
Gain (loss) on closed derivatives (1) | | | | | 8 | | | — | |
| | | | | | | |
| Mark to market - commodity contracts | | | | | (8) | | | (11) | |
| Total derivative gain (loss) recognized in cost of sales | | | | | (23) | | | (8) | |
| | | | | | | |
| Selling, general and administrative expenses | | | | | | | |
Mark to market - foreign exchange contracts | | | | | 1 | | | 1 | |
| | | | | | | |
| Interest expense | | | | | | | |
| Cash flow hedging - interest rate contracts | | | | | (1) | | | (1) | |
| | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | |
Discontinued operations | | | | | | | |
Cash flow hedging - foreign exchange contracts | | | | | 1 | | | 1 | |
Mark to market - foreign exchange contracts | | | | | 3 | | | — | |
Total derivative gain (loss) recognized in discontinued operations | | | | | 4 | | | 1 | |
| | | | | | | |
| Total derivative gain (loss) | | | | | $ | 9 | | | $ | (2) | |
________________
(1)Represents the amount of fair value hedge adjustment applied to the carrying amount of hedged assets that is recognized in cost of sales as the underlying hedged assets are relieved from inventories and charged to cost of sales.
NOTE 11: ACCOUNTS RECEIVABLE SECURITIZATION
We maintain a $275 million accounts receivable securitization facility (“Securitization Facility”), which matures on December 22, 2025. As part of the Securitization Facility, certain accounts receivable of our major domestic meat processing subsidiaries are sold to a wholly owned “bankruptcy remote” special purpose vehicle (“SPV”). The SPV pledges all such accounts receivable not otherwise sold pursuant to the Monetization Facility (as defined below) as security for loans made, and letters of credit issued, by participating lenders under the Securitization Facility. The SPV is included in our condensed consolidated financial statements and therefore the accounts receivable owned by it are included in our condensed consolidated balance sheets. However, the accounts receivable owned by the SPV are separate and distinct from our other assets and are not available to our other creditors should we become insolvent. As of September 29, 2024, the SPV held $350 million of accounts receivable. We must maintain certain ratios related to the collection of our receivables as a condition of the Securitization Facility agreement. As of September 29, 2024, we had $23 million in letters of credit issued under the Securitization Facility. None of the letters of credit were drawn upon.
In addition to the Securitization Facility, we maintain an uncommitted $250 million accounts receivable monetization facility (“Monetization Facility”) pursuant to the Master Receivables Purchase Agreement, dated as of December 22, 2022, by and among SPV, as borrower, Smithfield, as servicer, certain buyers and PNC Bank, National Association, as administrative agent. At Smithfield’s election and subject to the purchasing banks’ approval, certain accounts receivable may be sold by the SPV to purchasing banks, so long as the uncollected outstanding amount of accounts receivable sold pursuant to the Monetization Facility does not exceed $250 million in the aggregate at any time, among other limitations. In the event of a sale, the purchasing banks assume all credit risk related to the receivables while we maintain risk associated with customer disputes. We account for the sale of receivables to a purchasing bank by derecognizing the receivables from our condensed consolidated balance sheet upon transfer of control to the purchasing bank, and recognizing a discount on the sale in selling, general and administrative expenses in the condensed consolidated statement of income. The proceeds from the sale of receivables are included in net cash flows from operating activities in the condensed consolidated statement of cash flows. On behalf of the purchasing banks, we continue to service all receivables sold under the Monetization Facility. As of September 29, 2024, the uncollected balance of receivables that had been sold to purchasing banks was $221 million. We had no servicing asset or liability outstanding as of September 29, 2024.
In the first quarter of 2023, we sold $227 million of accounts receivable at a discount and received proceeds totaling $225 million. We reinvested $2,836 million and $2,201 million in the nine months ended September 29, 2024 and October 1, 2023, respectively. We recognized charges totaling $10 million and $8 million in the nine months ended September 29, 2024 and October 1, 2023, respectively, attributable to the discount on the sale of accounts receivable in SG&A in the condensed consolidated statements of income.
NOTE 12: INCOME TAXES
The Company’s effective tax rate attributable to continuing operations for the nine months ended September 29, 2024 was 22.2%, compared to 14.8%, for the corresponding periods a year ago. The change in the effective tax rate is attributable to the mix between foreign and domestic earnings. The Company benefited from tax credits in both of these periods.
NOTE 13: PENSION AND OTHER RETIREMENT PLANS
The following table presents the components of the net periodic pension cost for the periods indicated:
| | | | | | | | | | | | | | | |
| | | Nine Months Ended |
| | | | | September 29,
2024 | | October 1,
2023 |
| | | | | (in millions) |
| Service cost | | | | | $ | 9 | | | $ | 9 | |
| Interest cost | | | | | 74 | | | 73 | |
| Expected return on plan assets | | | | | (83) | | | (80) | |
| Net amortization | | | | | 14 | | | 14 | |
| | | | | | | |
Net periodic pension cost (1) | | | | | $ | 14 | | | $ | 17 | |
________________(1)The components of net periodic pension cost other than service cost, which is included in operating profit, are included in non operating (gains) losses in the condensed consolidated statements of income.
NOTE 14: REDEEMABLE NONCONTROLLING INTERESTS
Certain noncontrolling interest holders have the right to exercise a put option that would obligate us to redeem a portion or all of their interest. These noncontrolling interests are classified as redeemable noncontrolling interests outside of equity in our condensed consolidated balance sheets. At the end of each period we adjust the value of redeemable noncontrolling interests, if necessary, to the redemption value (as defined in the subsidiary’s operating agreement) through additional paid-in capital. See “Note 16: Fair Value Measurements” for a discussion of the assessment of redemption value. The following table presents the changes in redeemable noncontrolling interests for the periods presented:
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| |
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| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Nine months ended |
| September 29,
2024 | | October 1,
2023 |
| (in millions) |
| Beginning balance | $ | 246 | | | $ | 197 | |
Attribution of net income (loss) | 9 | | | (3) | |
Attribution of comprehensive income (loss) | (29) | | | 28 | |
| Dividends | (1) | | | (2) | |
| Adjustment to redemption value | 58 | | | — | |
| Ending balance | $ | 282 | | | $ | 220 | |
NOTE 15: EQUITY
Accumulated Other Comprehensive Loss
The following table presents the charges in each component of accumulated other comprehensive loss for the nine months ended and September 29, 2024 and October 1, 2023 , respectively.
| | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended September 29, 2024 |
| Foreign Currency Translation | | Pension Accounting | | Hedge Accounting | | Accumulated Other Comprehensive Loss |
| (in millions) |
| Balance, December 31, 2023 | $ | (134) | | | $ | (373) | | | $ | 8 | | | $ | (500) | |
| Other comprehensive loss, net of tax | (6) | | | 10 | | | (10) | | | (6) | |
European operations carve-out (1) | 143 | | | — | | | (1) | | | 143 | |
| Balance, September 29, 2024 | $ | 3 | | | $ | (363) | | | $ | (3) | | | $ | (363) | |
| | | | | | | |
| Nine Months Ended October 1, 2023 |
| (in millions) |
| Balance, January 1, 2023 | $ | (327) | | | $ | (389) | | | $ | 8 | | | $ | (708) | |
| Other comprehensive income, net of tax | 49 | | | 11 | | | 6 | | | 66 | |
| Balance, October 1, 2023 | $ | (278) | | | $ | (379) | | | $ | 15 | | | $ | (642) | |
| | | | | | | |
________________(1)The tax effects were not material.
Other Comprehensive Income (Loss)
The following table presents the details of other comprehensive income (loss).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended |
| September 29, 2024 | | October 1, 2023 |
| Before Tax | | Tax | | After Tax | | Before Tax | | Tax | | After Tax |
| (in millions) |
Continuing operations: | | | | | | | | | | | |
| Foreign currency translation: | | | | | | | | | | | |
Translation gains (losses) (1) | $ | (113) | | | $ | — | | | $ | (113) | | | $ | 82 | | | $ | — | | | $ | 82 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Retirement benefits: | | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Amortization of actuarial losses, prior service credits and curtailment gains reclassified to non-operating (gains) losses | 13 | | | (3) | | | 10 | | | 13 | | | (3) | | | 10 | |
| | | | | | | | | | | |
| Derivatives: | | | | | | | | | | | |
| Gains (losses) arising during the period | (3) | | | 1 | | | (2) | | | 6 | | | (2) | | | 5 | |
| (Gains) losses reclassified to sales | (34) | | | 9 | | | (25) | | | 4 | | | (1) | | | 3 | |
| (Gains) losses reclassified to cost of sales | 23 | | | (6) | | | 17 | | | (2) | | | 1 | | | (1) | |
| | | | | | | | | | | |
| Losses reclassified to interest expense | 1 | | | — | | | 1 | | | 1 | | | — | | | 1 | |
| | | | | | | | | | | |
| Total other comprehensive income (loss) from continuing operations | $ | (112) | | | $ | — | | | $ | (112) | | | $ | 104 | | | $ | (6) | | | $ | 99 | |
| | | | | | | | | | | |
Discontinued operations: | | | | | | | | | | | |
| Foreign currency translation: | | | | | | | | | | | |
Translation gains (losses) (1) | 77 | | | — | | | 77 | | | (5) | | | — | | | (5) | |
| | | | | | | | | | | |
| Retirement benefits: | | | | | | | | | | | |
Amortization of actuarial losses, prior service credits and curtailment gains reclassified to non-operating (gains) losses | — | | | — | | | — | | | 1 | | | — | | | 1 | |
| Derivatives: | | | | | | | | | | | |
| Derivative gains arising during the period | 1 | | | — | | | 1 | | | — | | | — | | | — | |
| Derivative gains reclassified to sales | (1) | | | — | | | (1) | | | (1) | | | — | | | (1) | |
| | | | | | | | | | | |
| Total other comprehensive income (loss) from discontinued operations | $ | 76 | | | $ | — | | | $ | 76 | | | $ | (5) | | | $ | — | | | $ | (5) | |
| | | | | | | | | | | |
| Total other comprehensive income (loss) | $ | (36) | | | $ | — | | | $ | (36) | | | $ | 99 | | | $ | (6) | | | $ | 94 | |
| Other comprehensive income (loss) attributable to noncontrolling interest | (29) | | | — | | | (29) | | | 28 | | | — | | | 28 | |
| Other comprehensive income (loss) attributable to Smithfield | $ | (6) | | | $ | — | | | $ | (6) | | | $ | 72 | | | $ | (6) | | | $ | 66 | |
________________(1)We consider the earnings in our non-U.S. subsidiaries, including our former European operations, to be indefinitely reinvested, and accordingly, record no deferred income taxes on such amounts.
NOTE 16: FAIR VALUE MEASUREMENTS
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We are required to consider and reflect the assumptions of market participants in fair value calculations. These factors include nonperformance risk (the risk that an obligation will not be fulfilled) and credit risk, both of the reporting entity (for liabilities) and of the counterparty (for assets).
We use, as appropriate, a market approach (generally, data from market transactions), an income approach (generally, present value techniques), and/or a cost approach (generally, replacement cost) to measure the fair value of an asset or liability. These valuation approaches incorporate inputs, such as observable, independent market data, that we believe are predicated on the assumptions market participants would use to price an asset or liability. These inputs may incorporate, as applicable, certain risks such as nonperformance risk, which includes credit risk.
The Financial Accounting Standards Board (“FASB”) has established a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value hierarchy gives the highest priority to quoted market prices (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of inputs used to measure fair value are as follows:
•Level 1—Quoted prices in active markets for identical assets or liabilities accessible by the reporting entity.
•Level 2—Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•Level 3—Unobservable for an asset or liability. Unobservable inputs should only be used to the extent observable inputs are not available.
We have classified assets and liabilities measured at fair value based on the lowest level of input that is significant to the fair value measurement. For the periods presented, we had no transfers of assets or liabilities between levels within the fair value hierarchy. The timing of any such transfers would be determined at the end of each reporting period.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables set forth, by level within the fair value hierarchy, our financial assets and liabilities, including assets held in a rabbi trust used to fund our non-qualified defined benefit plan, that were measured at fair value on a recurring basis:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| September 29, 2024 | | December 31, 2023 |
| | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 | | Total |
| | (in millions) |
| Assets | | | | | | | | | | | | | | | | |
| Derivatives: | | | | | | | | | | | | | | | | |
| Commodity contracts | | $ | 28 | | | $ | 11 | | | $ | — | | | $ | 39 | | | $ | 34 | | | $ | 16 | | | $ | — | | | $ | 50 | |
| Foreign exchange contracts | | — | | | — | | | — | | | — | | | — | | | 1 | | | — | | | 1 | |
Mutual funds (1) | | 76 | | | — | | | — | | | 87 | | | 33 | | | — | | | — | | | 44 | |
| Insurance contracts | | — | | | 105 | | | — | | | 105 | | | — | | | 129 | | | — | | | 129 | |
| Total | | $ | 105 | | | $ | 116 | | | $ | — | | | $ | 231 | | | $ | 67 | | | $ | 146 | | | $ | — | | | $ | 224 | |
| | | | | | | | | | | | | | | | |
| Liabilities | | | | | | | | | | | | | | | | |
| Derivatives: | | | | | | | | | | | | | | | | |
| Commodity contracts | | 15 | | | 13 | | | 1 | | | 28 | | | 17 | | | 26 | | | — | | | 42 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Total | | $ | 15 | | | $ | 13 | | | $ | 1 | | | $ | 28 | | | $ | 17 | | | $ | 26 | | | $ | — | | | $ | 42 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
__________________
(1)Institutional funds that are not publicly traded are estimated at fair value using the net asset value (“NAV”) per share of the investment as a practical expedient and are not categorized in the fair value hierarchy. Therefore, the sum of the values categorized in the fair value hierarchy above do not agree to the total.
The following are descriptions of the valuation methodologies and key inputs used to measure financial assets and liabilities recorded at fair value on a recurring basis:
•Derivatives—Derivatives classified within Level 1 are valued using quoted market prices. In some cases where quoted market prices are not available, we value the derivatives using market-based pricing models that utilize the net present value of estimated future cash flows to calculate fair value, in which case the measurements are classified within Level 2. These valuation models make use of market-based observable inputs, including exchange traded prices and rates, yield curves, credit curves and measures of volatility. Level 3 derivatives are valued based on diesel fuel prices and use both observable and unobservable inputs. There is a lack of price transparency with respect to forward prices for diesel fuel. Such unobservable inputs are significant to the diesel fuel derivative contract valuation methodology.
•Mutual funds—Mutual funds consist of publicly traded funds and other institutional funds that are not publicly traded. Publicly traded mutual funds are measured at fair value using quoted market prices and are categorized in Level 1 within the fair value hierarchy.
•Insurance contracts—Insurance contracts are valued at their cash surrender value using the daily asset unit value which is based on the quoted market price of the underlying securities and classified within Level 2.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, for example, when there is evidence of impairment. For the nine months ended September 29, 2024 and October 1, 2023, we had no significant assets or liabilities that were measured and recorded at fair value on a nonrecurring basis after initial recognition.
Redeemable Noncontrolling Interest
The redemption value for the noncontrolling interest in Granjas Carroll de Mexico, S. de R.L. de C.V. (“Altosano”) is fair value. We estimate the redemption value of Altosano using an income and a market approach. Under the income approach, fair value is determined by using the projected discounted cash flows. Under the market approach, the fair value is determined by reference to guideline public companies that are reasonably comparable; the fair value is estimated based on the valuation multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”). The significant unobservable inputs used in the determination of the fair value have an inherent measurement uncertainty that if changed could result in higher or lower fair value measurements as of the reporting date. The following table provides the significant unobservable level 3 inputs used in the valuation:
| | | | | | | | | | | | | | |
| Unobservable Inputs | | September 29,
2024 | | December 31,
2023 |
| Weighted average cost of capital | | 10 | % | | 11 | % |
| Growth rate | | 3 | % | | 3 | % |
EBITDA Multiple | | 11x | | 12x |
| Control premium | | 25 | % | | 25 | % |
Other Financial Instruments
We determine the fair value of fixed-rate debt using Level 2 inputs based on quoted market prices. The carrying amount of all other debt approximates fair value as those instruments are based on variable interest rates. The following table presents the fair value and carrying value of total debt as of September 29, 2024 and December 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | |
| September 29, 2024 | | December 31, 2023 |
| Fair Value | | Carrying Value | | Fair Value | | Carrying Value |
| (in millions) |
| Debt | $ | 1,876 | | | $ | 1,991 | | | $ | 1,770 | | | $ | 1,991 | |
The carrying amounts of cash and cash equivalents, accounts receivable, notes payable and accounts payable approximate their fair values because of the relatively short-term maturity of these instruments.
NOTE 17: GUARANTEES
Smithfield and certain other joint venture partners in Monarch joint and severally guarantee Monarch’s debt, interest and fees. As of September 29, 2024, the maximum amount of loans that could be outstanding under Monarch’s debt agreements was $61 million and the loans mature in June 2025. Monarch’s outstanding debt was $43 million as of September 29, 2024. The guarantee arrangement contains provisions that may reduce our obligations under the guarantee depending on Monarch’s debt to EBITDA ratio.
The guarantee involves elements of performance and credit risk and is not included in the condensed consolidated balance sheets. We could become liable in connection with Monarch’s obligation depending on the ability of Monarch to perform on its obligation. If we consider it probable that we will become responsible for the obligation, we would record the liability on our condensed consolidated balance sheet.
NOTE 18: REGULATION AND CONTINGENCIES
Like other participants in our industry, we are subject to various laws and regulations administered by federal, state and other government entities, including the United States Environmental Protection Agency and corresponding state agencies, as well as the United States Department of Agriculture, the Grain Inspection, Packers and Stockyard Administration, the United States Food and Drug Administration, the United States Occupational Safety and Health Administration, the Commodity and Futures Trading Commission and similar agencies in foreign countries.
We, from time-to-time, receive notices and inquiries from regulatory authorities and others asserting that we are not in compliance with such laws and regulations. In some instances, litigation ensues. In addition, individuals may initiate litigation against us.
We accrue for contingent liabilities, including future defense costs, when an assessment of the risk of loss is probable and can be reasonably estimated. We evaluate our accruals when facts and circumstances change regarding the litigation which could warrant an adjustment to the amount that is recorded. As of September 29, 2024 and December 31, 2023, we had recorded $172 million and $315 million in accrued expenses and other current liabilities on the condensed consolidated balance sheets, respectively, related to litigation matters, including those described below. We recorded charges of $17 million in the nine months ended October 1, 2023, for litigation matters, including those described below, in SG&A in the condensed consolidated statements of income. Charges recorded for litigation matters in the nine months ended September 29, 2024 were not material. These matters will not affect our profits or losses in future periods unless our accruals prove to be insufficient or excessive. It is reasonably possible that a change in our estimates may occur in the near term and that our accruals could be insufficient. We are unable to estimate the amount of possible loss in excess of our accruals, which could be material. Additionally, legal expenses incurred in our and our subsidiaries’ defense of these claims and any payments made to plaintiffs through unfavorable verdicts or otherwise could negatively impact our cash flows and our liquidity position.
Antitrust Price-Fixing Litigation
The Company has been named as one of 16 defendants in a series of class actions filed in 2018 in the United States District Court for the District of Minnesota alleging antitrust violations in the pork industry. The class cases were filed by three different groups of plaintiffs. In all of these cases, the plaintiffs alleged that starting in 2009 and continuing through at least June of 2018, the defendant pork producers agreed to reduce the supply of hogs in the United States in order to raise the price of hogs and all pork products. The plaintiffs in all of these cases also challenged the defendant pork producers’ use of benchmarking reports from defendant Agri Stats, Inc., alleging that the reports allowed the pork producers to share proprietary information and monitor each producer’s compliance with the supposed agreement to reduce supply. Payments in the aggregate amount of $194 million were made by us to settle all class claims.
In addition to the class actions, the Company has been named as a defendant in similar antitrust lawsuits and related claims brought by a number of individual parties who opted out of the classes. The plaintiffs in the non-class cases assert the same or similar antitrust claims as the plaintiffs in the class actions. The Company has entered into negotiations with many of these claimants and has settled certain of these cases. Currently, 29 of these cases are pending against the Company.
The Attorneys General for the states of New Mexico and Alaska and the Commonwealth of Puerto Rico have filed similar complaints on behalf of their respective states, territories, agencies and citizens. The Company has settled with Puerto Rico and Alaska. The Company intends to vigorously defend against the remaining claims.
Antitrust Wage-Fixing Litigation
On November 11, 2022, Smithfield Foods, Inc. and our wholly owned subsidiary, Smithfield Packaged Meats Corp., were named as two of the numerous defendants in a purported class action complaint filed in the United States District Court for the District of Colorado alleging wage-fixing violations in the red meat industry. The plaintiffs allege that the defendants, most of whom operate beef or pork processing plants, conspired to suppress wages paid to plant workers in the United States in violation of the antitrust laws. The plaintiffs sought damages on behalf of all employees of defendants and their subsidiaries from January 1, 2014, to the present. The plaintiffs also sought treble damages and attorneys’ fees. The defendants filed motions to dismiss the complaint, which were largely denied by the court on September 27, 2023. The plaintiffs subsequently amended their complaint adding additional defendants, including our wholly owned subsidiary, Murphy-Brown of Missouri, LLC (which has been dismissed voluntarily), and expanding the class period back to 2000.
Since the case was filed, several defendants have settled. On April 5, 2024, the remaining defendants moved to dismiss the amended complaint. We intend to vigorously defend against these claims.
Maxwell Foods Litigation
On August 13, 2020, Maxwell Foods, LLC (“Maxwell”) filed a complaint against Smithfield Foods, Inc. in the General Court of Justice, Superior Court Division for Wayne County, North Carolina. The complaint alleged that Smithfield breached the Production Sales Agreement (“PSA”) between the parties (as well as the duty of good faith and fair dealing): (i) by failing to provide Maxwell with the same pricing as other major hog suppliers in violation of a purported “Most-Favored-Nation Provision” found in a December 6, 1994 letter to Maxwell, (ii) by failing to comply with an implicit duty to negotiate the PSA to provide alternative pricing to Maxwell when the Iowa-Southern Minnesota market allegedly ceased to be viable; and (iii) by failing to purchase Maxwell’s entire output of hogs since April 2020.
Smithfield filed a notice of removal to the United States District Court of the Eastern District of North Carolina. Smithfield also filed a motion to dismiss several of Maxwell’s claims. On February 22, 2021, the U.S. District Court granted Maxwell’s motion to remand the case to the Superior Court of Wayne County and left Smithfield’s partial motion to dismiss the complaint for consideration by the state court in Wayne County.
On March 1, 2021, Maxwell filed an amended complaint, which added a claim under the North Carolina Unfair and Deceptive Trade Practices Act (“UDTPA”). Smithfield filed a notice of designation seeking assignment of the case to the North Carolina Business Court. Maxwell objected to such designation, and on April 13, 2021 the Business Court overruled Maxwell’s objection.
The Business Court also dismissed two of Maxwell’s claims: the implied duty to negotiate claim and the UDTPA claim. Maxwell subsequently filed another amended complaint adding a fraudulent concealment claim and a new breach of contract claim, as well as a request for punitive damages. The court dismissed the fraudulent concealment claim and the request for punitive damages. The three remaining claims, all for breach of contract, are: (1) the claim under the “Most-Favored-Nation Provision,” (2) the claim that Smithfield failed to purchase Maxwell’s entire output of hogs since April 2020, and (3) the claim that from time to time, Smithfield would calculate Maxwell’s payment for a delivery of hogs using an average of the preceding week’s weight rather than the actual weights of the hogs being delivered.
The parties filed cross-motions for summary judgment and related motions to exclude expert testimony, which were fully briefed on November 17, 2023. The Company intends to vigorously defend against the remaining claims.
NOTE 19: SUBSEQUENT EVENTS
We evaluated subsequent events from September 30, 2024 through November 18, 2024, the date these condensed consolidated financial statements were available to be issued. There were no subsequent events that would require recognition or disclosure in the condensed consolidated financial statements.
Shares
Smithfield Foods, Inc.
Common Stock
PROSPECTUS
| | | | | | | | |
| Morgan Stanley | BofA Securities | Goldman Sachs & Co. LLC |
Barclays | Citigroup | UBS Investment Bank |
BNP PARIBAS | | HSBC |
, 2025
Through and including , 2025 (25 days after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses, other than the underwriting discounts and commissions, payable by us in connection with the sale of our common stock being registered hereby. All amounts shown are estimates except the SEC registration fee, the FINRA filing fee and the exchange listing fee.
| | | | | | | | |
| ($ in thousands) | | |
SEC registration fee | $ | * |
| FINRA filing fee | | * |
Nasdaq listing fee | | * |
| Printing fees and expenses | | * |
| Legal fees and expenses | | * |
| Accounting fees and expenses | | * |
| Transfer agent and registrar fees and expenses | | * |
| Miscellaneous | | * |
| Total | $ | * |
________________
*To be completed by amendment.
Item 14. Indemnification of Directors and Officers
We expect to adopt amended and restated articles of incorporation, which will become effective immediately prior to the completion of the offering and will contain provisions authorized by the VSCA. The VSCA permits indemnification of a corporation’s directors and officers in a variety of circumstances, which may include indemnification for liabilities under the Securities Act. Sections 13.1-696 through 13.1-704 of the VSCA generally authorize a Virginia corporation to indemnify its directors and officers in civil, criminal, administrative and investigative actions if they acted in good faith and believed their conduct to be in the best interests of the corporation if acting in their official capacity with the corporation or, in all other cases, at least not opposed to its best interests, and, in the case of any criminal action, had no reasonable cause to believe that the conduct was unlawful. Additionally, Section 13.1-704 of the VSCA provides that a Virginia corporation has the power to make any further indemnity to any director or officer, including in a proceeding brought by or in the right of the corporation, if authorized by its articles of incorporation or any bylaw or resolution adopted by the shareholders, except an indemnity against their willful misconduct or a knowing violation of the criminal law. Our amended and restated articles of incorporation will require us to indemnify our directors and officers to the full extent permitted by the VSCA.
Our amended and restated articles of incorporation will also provide that, to the full extent that the VSCA permits the limitation or elimination of the liability of directors and officers, no director or officer of our company shall be liable in any proceeding brought by or in the right of our company or by or on behalf of our shareholders for monetary damages arising out of any transaction, occurrence or course of conduct. Section 13.1-692.1 of the VSCA permits the elimination of liability of directors and officers in any proceeding brought by or in the right of a corporation or brought by or on behalf of shareholders of a corporation, except for liability resulting from such persons having engaged in willful misconduct or a knowing violation of the criminal law or any federal or state securities law, including, without limitation, any unlawful insider trading or manipulation of the market for any security.
We have or will enter into indemnification agreements with each of our directors and executive officers pursuant to which we agree to indemnify, including advancing expenses to, each of them against any liabilities that they may incur as a result of their service as a director or executive officer of our company to the fullest extent permitted by Virginia law and our amended and restated articles of incorporation.
We will carry insurance on behalf of our directors, officers, employees or agents that may cover liabilities under the Securities Act.
The form of underwriting agreement, the form of which will be filed as an exhibit to this registration statement, will provide for indemnification by the underwriters named in this registration statement of our executive officers, directors and us, and by us of the underwriters named in the registration statement, for certain liabilities, including liabilities arising under the Securities Act, in connection with matters specifically provided in writing for inclusion in this registration statement. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Item 15. Recent Sales of Unregistered Securities
We have not sold any securities, registered or otherwise, within the past three years.
Item 16. Exhibits and Financial Statement Schedules
(a)Exhibits. See the Exhibit Index immediately preceding the signature page hereto, which is incorporated by reference as if fully set forth herein.
(b)Financial Statement Schedules. Schedules are omitted because they are not required or because the information is provided elsewhere in the financial statements included in this registration statement.
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(A)For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(B)For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
EXHIBIT INDEX
In reviewing the agreements included as exhibits to this registration statement, please remember that they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about our company, subsidiaries or affiliates or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and (i) should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate; (ii) have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement; (iii) may apply standards of materiality in a way that is different from what may be viewed as material to investors; and (iv) were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments. Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about our company, subsidiaries and affiliates may be found elsewhere in this registration statement.
| | | | | | | | |
| Exhibit Number | | Description of Exhibit |
| | |
| 1.1* | | Form of Underwriting Agreement. |
| 3.1* | | Form of Amended and Restated Articles of Incorporation of the Registrant. |
| 3.2* | | Form of Amended and Restated Bylaws of the Registrant. |
4.1 | | |
4.2 | | |
4.3 | | |
4.4 | | |
4.5* | | Registration Rights Agreement, by and between the Registrant and SFDS UK Holdings Limited. |
4.6* | | Shareholders Agreement, by and between the Registrant and WH Group Limited. |
4.7* | | Specimen Common Stock Certificate of the Registrant. |
| 5.1* | | Opinion of Hunton Andrews Kurth LLP. |
10.1 | | |
10.2 | | |
10.3 | | |
10.4 | | Fifth Amended and Restated Credit and Security Agreement, dated as of December 22, 2022, among Smithfield Receivables Funding LLC, the Registrant, certain lender parties thereto, Coöperatieve Rabobank U.A., New York Branch, PNC Bank, National Association, and PNC Capital Markets LLC. |
10.5 | | Omnibus Amendment to the Fifth Amended and Restated Credit and Security Agreement, the Fifth Amended and Restated Receivables Sale Agreement and the Master Receivables Purchase Agreement, dated as of November 22, 2024, among the Registrant, Smithfield Receivables Funding LLC, certain lender parties thereto, Coöperatieve Rabobank U.A., New York Branch, PNC Bank, National Association, and PNC Capital Markets LLC, SFFC, Inc., Smithfield Support Services Corp., Smithfield Fresh Meats Sales Corp., Smithfield Fresh Meats Corp., Smithfield Direct, LLC, Smithfield Bioscience, Inc., Smithfield Packaged Meats Sales Corp., certain buyers from time to time party thereto and PNC Bank, National Association. |
| | | | | | | | |
| Exhibit Number | | Description of Exhibit |
| | |
10.6 | | Fifth Amended and Restated Receivables Sale Agreement, dated as of December 22, 2022, among the Registrant, SFFC, Inc., Smithfield Support Services Corp., Smithfield Fresh Meats Sales Corp., Smithfield Fresh Meats Corp., Smithfield Direct, LLC, Smithfield Bioscience, Inc., Smithfield Packaged Meats Sales Corp. and Smithfield Receivables Funding LLC. |
10.7 | | |
10.8* | | Form of Indemnification Agreement among the Registrant and its directors and executive officers. |
10.9*† | | Form of Smithfield Foods, Inc. Omnibus Incentive Plan. |
10.10*† | | Form of Smithfield Foods, Inc. Employee Stock Purchase Plan. |
10.11*† | | Form of Option Award Agreement. |
10.12*† | | Form of Restricted Stock Unit Award Agreement. |
10.13*† | | Smithfield Foods, Inc. Executive Nonqualified Excess Plan. |
10.14*† | | John Morrell & Company Amended & Restated Deferred Compensation Plan. |
10.15*† | | Smithfield Foods, Inc. Executive Severance Plan. |
21.1 | | |
23.1 | | |
| 23.2* | | Consent of Hunton Andrews Kurth LLP (included as part of Exhibit 5.1). |
24.1 | | |
99.1 | | |
99.2 | | |
99.3 | | |
99.4 | | |
99.5 | | |
107 | | |
________________
*To be filed by amendment.
†Compensatory arrangements for director(s) and/or executive officer(s).
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Smithfield, Virginia, on January 6, 2025.
| | | | | | | | |
| | Smithfield Foods, Inc. |
| By: | /s/ C. Shane Smith |
| | Name: C. Shane Smith |
| | Title: President and Chief Executive Officer |
POWER OF ATTORNEY
Each of the undersigned officers and directors of Smithfield Foods, Inc. hereby severally constitutes and appoints and C. Shane Smith, Mark L. Hall and Tennille J. Checkovich, and each of them acting alone, as such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for such person and in such person’s name, place and stead, and in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and any subsequent registration statement filed pursuant to Rule 462 under the Securities Act, and to file the same, with all exhibits thereto and other documents in connection therewith, with the SEC and any applicable securities exchange or securities self-regulatory body, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them individually, or their or such person’s substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| | | | | | | | | | | | | | |
| Signature | | Title | | Date |
| | | | |
/s/ C. Shane Smith | | C. Shane Smith (Principal Executive Officer and Director) | | January 6, 2025 |
| C. Shane Smith | | |
| | | | |
/s/ Mark L. Hall | | Mark L. Hall (Principal Financial Officer) | | January 6, 2025 |
| Mark L. Hall | | |
| | | | |
/s/ R. Allen Brobst, Jr. | | R. Allen Brobst, Jr. (Principal Accounting Officer) | | January 6, 2025 |
| R. Allen Brobst, Jr. | | |
/s/ Long Wan | | Long Wan (Chairman) | | January 6, 2025 |
Long Wan | | |
/s/ Hank Shenghua He | | Hank Shenghua He (Director) | | January 6, 2025 |
Hank Shenghua He | | |
/s/ Lijun Guo | | Lijun Guo (Director) | | January 6, 2025 |
Lijun Guo | | |
Exhibit 4.1
EXECUTION VERSION
SMITHFIELD FOODS, INC.,
as Issuer,
the Subsidiary Guarantors listed on the signature pages hereto,
$600,000,000
4.250% Senior Notes due 2027
INDENTURE
Dated as of February 1, 2017
U.S. Bank National Association,
as Trustee
Table of Contents
| | | | | | | | |
| | Page |
| | |
| ARTICLE I |
| | |
| DEFINITIONS AND RULES OF CONSTRUCTION |
| | |
| SECTION 1.01. | Definitions | 1 |
| SECTION 1.02. | Other Definitions | 13 |
| SECTION 1.03. | Rules of Construction | 14 |
| SECTION 1.04. | Acts of Holders | 14 |
| | |
| ARTICLE II |
| | |
| THE NOTES |
| | |
| SECTION 2.01. | Form and Dating; Terms | 16 |
| SECTION 2.02. | Execution and Authentication | 18 |
| SECTION 2.03. | Registrar and Paying Agent | 18 |
| SECTION 2.04. | Paying Agent to Hold Money in Trust | 19 |
| SECTION 2.05. | Holder Lists | 19 |
| SECTION 2.06. | Transfer and Exchange | 20 |
| SECTION 2.07. | Replacement Notes | 32 |
| SECTION 2.08. | Outstanding Notes | 32 |
| SECTION 2.09. | Treasury Notes | 32 |
| SECTION 2.10. | Temporary Notes | 33 |
| SECTION 2.11. | Cancellation | 33 |
| SECTION 2.12. | Defaulted Interest | 33 |
| SECTION 2.13. | CUSIP or ISIN Numbers | 34 |
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| ARTICLE III |
| | |
| REDEMPTION |
| | |
| SECTION 3.01. | Notices to Trustee | 34 |
| SECTION 3.02. | Selection of Notes to Be Redeemed | 34 |
| SECTION 3.03. | Notice of Redemption | 35 |
| SECTION 3.04. | Effect of Notice of Redemption | 36 |
| SECTION 3.05. | Deposit of Redemption or Purchase Price | 36 |
| SECTION 3.06. | Notes Redeemed or Purchased in Part | 36 |
| SECTION 3.07. | Optional Redemption | 37 |
| SECTION 3.08. | Mandatory Redemption | 37 |
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| | | | | | | | |
| ARTICLE IV |
| | |
| COVENANTS |
| | |
| SECTION 4.01. | Payment of Notes | 38 |
| SECTION 4.02. | Maintenance of Office or Agency | 38 |
| SECTION 4.03. | Reports | 39 |
| SECTION 4.04. | Compliance Certificate | 41 |
| SECTION 4.05. | Stay, Extension and Usury Laws | 41 |
| SECTION 4.06. | Limitation on Sale/Lease-back Transactions | 41 |
| SECTION 4.07. | Change of Control | 42 |
| SECTION 4.08. | Limitation on Liens | 43 |
| SECTION 4.09. | Future Guarantors | 45 |
| SECTION 4.10. | Corporate Existence | 45 |
| SECTION 4.11. | Payment of Taxes and Other Claims | 45 |
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| ARTICLE V |
| | |
| CONSOLIDATIONS, MERGERS AND SALES OF ASSETS |
| | |
| SECTION 5.01. | When Company or Subsidiary Guarantors May Merge or Otherwise Dispose of Assets | 45 |
| | |
| ARTICLE VI |
| | |
| DEFAULTS AND REMEDIES |
| | |
| SECTION 6.01. | Events of Default | 47 |
| SECTION 6.02. | Acceleration | 48 |
| SECTION 6.03. | Other Remedies | 49 |
| SECTION 6.04. | Waiver of Past Defaults | 49 |
| SECTION 6.05. | Limitation on Suits | 49 |
| SECTION 6.06. | Rights of Holders to Receive Payment | 50 |
| SECTION 6.07. | Collection Suit by Trustee | 50 |
| SECTION 6.08. | Restoration of Rights and Remedies | 50 |
| SECTION 6.09. | Rights and Remedies Cumulative | 50 |
| SECTION 6.10. | Delay or Omission Not Waiver | 50 |
| SECTION 6.11. | Trustee May File Proofs of Claim | 50 |
| SECTION 6.12. | Priorities | 51 |
| SECTION 6.13. | Undertaking for Costs | 51 |
| SECTION 6.14. | Control by Holders of Notes | 51 |
| SECTION 6.15. | Notices of Default; Compliance Certificate | 51 |
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| | | | | | | | |
| ARTICLE VII |
| | |
| TRUSTEE |
| | |
| SECTION 7.01. | Duties of Trustee | 53 |
| SECTION 7.02. | Rights of Trustee | 54 |
| SECTION 7.03. | Individual Rights of Trustee | 55 |
| SECTION 7.04. | Trustee’s Disclaimer | 55 |
| SECTION 7.05. | Notice of Defaults | 55 |
| SECTION 7.06. | Compensation and Indemnity | 56 |
| SECTION 7.07. | Replacement of Trustee | 57 |
| SECTION 7.08. | Successor Trustee by Merger, etc. | 58 |
| SECTION 7.09. | Eligibility; Disqualification | 58 |
| | |
| ARTICLE VIII |
| | |
| DEFEASANCE AND COVENANT DEFEASANCE |
| | |
| SECTION 8.01. | Defeasance | 58 |
| SECTION 8.02. | Conditions to Defeasance | 59 |
| SECTION 8.03. | Application of Trust Money | 60 |
| SECTION 8.04. | Repayment to Company | 60 |
| SECTION 8.05. | Indemnity for U.S. Government Obligations | 60 |
| SECTION 8.06. | Deposited Money and Government Notes to be Held in Trust; Other Miscellaneous Provisions | 60 |
| SECTION 8.07. | Reinstatement | 61 |
| | |
| ARTICLE IX |
| | |
| AMENDMENT AND WAIVERS |
| | |
| SECTION 9.01. | Without Consent of Holders | 61 |
| SECTION 9.02. | With Consent of Holders | 62 |
| SECTION 9.03. | Revocation and Effects of Consents and Waivers | 63 |
| SECTION 9.04. | Notation on or Exchange of Notes | 63 |
| SECTION 9.05. | Trustee to Sign Amendments, etc. | 64 |
| | |
| ARTICLE X |
| | |
| GUARANTEES |
| | |
| SECTION 10.01. | Guarantee | 64 |
| SECTION 10.02. | Limitation on Guarantor Liability | 66 |
| SECTION 10.03. | Execution and Delivery | 66 |
| SECTION 10.04. | Subrogation | 66 |
| SECTION 10.05. | Benefits Acknowledged | 67 |
| SECTION 10.06. | Release of Subsidiary Guarantees | 67 |
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| ARTICLE XI |
| | |
| SATISFACTION AND DISCHARGE |
| | |
| SECTION 11.01. | Satisfaction and Discharge | 67 |
| SECTION 11.02. | Application of Trust Money | 68 |
| | |
| ARTICLE XII |
| | |
| MISCELLANEOUS |
| | |
| SECTION 12.01. | Notices | 69 |
| SECTION 12.02. | Certificate and Opinion as to Conditions Precedent | 70 |
| SECTION 12.03. | Statements Required in Certificate or Opinion | 70 |
| SECTION 12.04. | Rules by Trustee and Agents | 71 |
| SECTION 12.05. | No Personal Liability of Directors, Officers, Employees and Stockholders | 71 |
| SECTION 12.06. | Governing Law | 71 |
| SECTION 12.07. | Waiver of Jury Trial | 71 |
| SECTION 12.08. | Appointment of Note Registrar and Paying Agent | 71 |
| SECTION 12.09. | No Adverse Interpretation of Other Agreements | 72 |
| SECTION 12.10. | Successors | 72 |
| SECTION 12.11. | Severability | 72 |
| SECTION 12.12. | Counterpart Originals | 72 |
| SECTION 12.13. | Table of Contents; Headings | 72 |
| SECTION 12.14. | U.S.A. Patriot Act | 72 |
EXHIBIT A-1 Form of the Note
EXHIBIT A-2 Form of Regulation S Temporary Note
EXHIBIT B Form of Certificate of Transfer
EXHIBIT C Form of Certificate of Exchange
EXHIBIT D Form of Supplemental Indenture to be Delivered by Subsidiary Guarantors
INDENTURE (this “Indenture”), dated as of February 1, 2017, among SMITHFIELD FOODS, INC., a corporation duly organized and existing under the laws of the Commonwealth of Virginia (the “Company”), the Subsidiary Guarantors listed on the signature pages hereto and U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America and having a corporate trust office in Atlanta, Georgia, as trustee (the “Trustee”).
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the creation of an issue of $600,000,000 aggregate principal amount of 4.250% Senior Notes due 2027 (the “Initial Notes”). The Initial Notes and any Additional Notes, if and when issued, shall be treated as a single class for all purposes under this Indenture, including waivers, amendments, redemptions and offers to purchase (the Initial Notes and any Additional Notes, collectively referred to herein as the “Notes”); and
WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have duly authorized the execution and delivery of this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree, for the equal and proportionate benefit of the Holders, as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definitions.
For all purposes of this Indenture and any Notes issued hereunder:
“144A Global Note” means a Global Note substantially in the form of Exhibit A-1 hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold or to be sold in reliance on Rule 144A.
“Additional Notes” means any additional Notes issued under this Indenture in accordance with the terms hereof, including Section 2.01(d), from time to time after the Issue Date.
“Adjusted Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the applicable Comparable Treasury Issue (expressed as a percentage amount) equal to the applicable Comparable Treasury Price for such redemption date.
“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. 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.
“Agent” means any Registrar, co-registrar, Paying Agent or additional paying agent.
“Applicable Procedures” means, with respect to any transfer, redemption, tender or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear or Clearstream that apply to such transfer or exchange.
“Attributable Debt” means, as to any particular lease under which any Person is at the time liable, other than a Financing Lease Obligation, and at any date as of which the amount of such lease is to be determined, the total net amount of rent required to be paid by such Person under such lease during the initial term of such lease as determined in accordance with GAAP, discounted from the last date of such initial term to the date of determination at a rate per annum equal to the discount rate which would be applicable to a financing or capital lease with like term in accordance with GAAP. The net amount of rent required to be paid under any such lease for any such period shall be the aggregate amount of rent payable by the lessee with respect to such period after excluding amounts required to be paid on account of insurance, taxes, assessments, utility, operating and labor costs and similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. “Attributable Debt” means, as to a Financing Lease Obligation under which any Person is at the time liable and at any date as of which the amount of such lease is to be determined, the amount of such lease that would appear as a liability on the face of a balance sheet of such Person in accordance with GAAP.
“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.
“Board of Directors” means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board
“Business Day” means each day which is not a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York 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 Common Stock or 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.
“Change of Control” means the occurrence of any of the following:
(i) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company (or its successor by merger, consolidation or purchase of all or substantially all of its assets);
(ii) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any Person (including any “person” (as that term is used in Section 13(d)(3) of the Exchange Act)) other than to one or more Permitted Holders, the Company or one of the Company’s Subsidiaries;
(iii) the Company consolidates with, or merges with or into, any Person (other than the Company or one of its Subsidiaries), or any Person (other than the Company or one of its Subsidiaries) consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities or other Property, other than any such transaction where the shares of the Voting Stock of the Company outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving Person immediately after giving effect to such transaction; or
(iv) the adoption of a plan relating to the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control solely as a result of the Company becoming a direct or indirect wholly owned Subsidiary of another company (whether the Company is directly owned by such company or indirectly through other subsidiaries of such company); provided that no “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of such company.
“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Event with respect to the Notes. Notwithstanding the foregoing, no Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated.
“Clearstream” means Clearstream Banking, Société Anonyme, and any successor thereto.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means with respect to any Person, any and all shares, interest or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock.
“Company” has the meaning set forth in the Preamble.
“Company Order” means a written request or order signed on behalf of the Company by an Officer, and delivered to the Trustee.
“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining term of the Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.
“Comparable Treasury Price” means, with respect to any redemption date, (i) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Company obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such Quotations.
“Consolidated Net Tangible Assets” means, as of the date of determination, an amount equal to the excess over the current liabilities of the Company of all of its assets appearing on the most recent quarterly or annual consolidated balance sheet of the Company and its Subsidiaries on a consolidated basis, after deducting goodwill, trademarks, patents, other like intangibles and minority interests of others.
“Corporate Trust Office” means the designated office of the Trustee at which, at any particular time, its corporate trust business shall be administered (which office at the Issue Date is located at Two Midtown Plaza, 1349 W. Peachtree Street, NW, Suite 1050, Atlanta, Georgia 30309, Attention: Global Corporate Trust Services), or such other address as the Trustee may designate from time to time by notice to the Company or the principal corporate office of any successor trustee (or such other address as a successor trustee may designate from time to time by notice to the Company).
“Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.
“Debt Facilities” means one or more debt facilities (including, without limitation, the Inventory Revolver and the Senior Credit Facilities) or commercial paper facilities, securities purchase agreements, indentures or similar agreements, in each case, with banks or other institutional lenders or investors providing for revolving loans, term loans, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables), letters of credit or the issuance of debt securities, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, replaced (whether
upon or after termination or otherwise), refinanced, supplemented, modified or otherwise changed (in whole or
in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time.
“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.
“Definitive Notes” means certificated securities substantially in the form of Exhibit A-1 hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto).
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States, any State thereof or the District of Columbia.
“Euroclear” means Euroclear S.A./N.V., as operator of the Euroclear system, and any successor thereto.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Exempted Debt” means the sum, without duplication, of the following items outstanding of the date Exempted Debt is being determined:
(1) Indebtedness of the Company and its Restricted Subsidiaries incurred after the date of this Indenture and secured by Liens created, assumed or otherwise incurred or permitted to exist pursuant to the provision described in the last paragraph under Section 4.08; and
(2) Attributable Debt of the Company and its Restricted Subsidiaries in respect of all sale and lease-back transactions with regard to any Principal Property entered into pursuant to the provision described in the last paragraph under Section 4.06.
“Financing Lease Obligation” means an obligation that would be required to be classified and accounted for as a financing or capital lease (and, for the avoidance of doubt, not a straight-line or operating lease) on both the balance sheet and income statement for financial reporting purposes in accordance with GAAP in existence on the Issue Date. At any time any determination thereof is to be made, the amount of the liability in respect of a financing or capital lease would be the amount required to be reflected as a liability on such balance sheet (excluding the footnotes thereto) in accordance with GAAP in existence on the Issue Date.
“Fitch” means Fitch Ratings and its successors.
“GAAP” means generally accepted accounting principles in the United States of America as in effect as of 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. At any time after adoption of International Financial Reporting Standards (“IFRS”) by the Company for its financial statements and reports for all financial reporting purposes the Company may elect to apply IFRS for all purposes of this Indenture, and, upon any
such election, references in this Indenture to GAAP shall be construed to mean IFRS as in effect on the date of such election; provided that
(1) any such election once made shall be irrevocable (and shall only be made once);
(2) all financial statements and reports required to be provided after such election pursuant to this Indenture shall be prepared on the basis of IFRS;
(3) from and after such election, all computations, calculations and other determinations based on GAAP contained in this Indenture shall be computed in conformity with IFRS with retroactive effect being given thereto assuming that such election had been made on the Issue Date;
(4) such election shall not have the effect of rendering invalid any Lien created, incurred or suffered to exist made prior to the date of such election pursuant to Section 4.08 or any or any sale or transfer of Principal Property made prior to the date of such election pursuant to Section 4.06 if creation, incurrence, sale or transfer or other action was valid under this Indenture on the date made; and
(5) all accounting terms and references in this Indenture to accounting standards shall be deemed to be references to the most comparable terms or standards under IFRS. The Company shall give written notice of any election to the Trustee and the Holders within 15 days of such election.
“Global Note Legend” means the legend set forth in Section 2.06(f)(ii), which is required to be placed on all Global Notes issued under this Indenture.
“Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A-1 hereto, issued in accordance with Section 2.01, 2.06(b) or 2.06(d).
“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such other Person:
(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or
(2) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness 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.
“Holder” means with respect to the Notes, the Person in whose name a Note is registered in the Note Register.
“Indebtedness” means, with respect to any Person, without duplication (a) any notes, debentures, bonds, loans or other similar evidences of indebtedness for money borrowed and (b) any Guarantees thereof.
“Indenture” has the meaning set forth in the Preamble.
“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.
“Initial Notes” has the meaning set forth in the Preamble.
“Initial Purchasers” means Morgan Stanley & Co. LLC, Barclays Capital Inc., Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of China (Hong Kong) Limited, BMO Capital Markets Corp., J.P. Morgan Securities LLC, Rabo Securities USA, Inc. and US Bancorp Investments, Inc.
“interest” means, with respect to the Notes, interest on the Notes (regardless of whether so stated).
“Interest Payment Date” means February 1 and August 1 of each year to Stated Maturity.
“Intralinks” means the digital internet workspace located at http://www.intralinks.com.
“Inventory Revolver” means the Third Amended and Restated Credit Agreement, dated as of April 2, 2015, among the Company, as borrower, certain subsidiaries of the Company, as guarantors, the lenders parties thereto and Rabobank, as administrative agent (or its successor in such capacity), as it may be amended, supplemented or modified from time to time and any renewal, increase, 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 Inventory Revolver or one or more other credit or other agreements or indentures).
“Inventory Revolver Guarantee Trigger Date” means the earlier of (i) the date on which the Senior Credit Facilities Commitment Termination Event occurs and (ii) the date that is 60 days after the Issue Date.
“Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s), a rating of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P) and a rating of BBB- or better by Fitch (or its equivalent under any successor rating categories of Fitch) and the equivalent investment grade credit rating from any replacement rating agency or rating agencies selected by the Company under the circumstances permitting it to select a replacement rating agency and in the manner for
selecting a replacement rating agency, in each case as set forth in the definition of “Rating Agency.”
“Issue Date” means February 1, 2017.
“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind.
“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors.
“Non-U.S. Person” means a Person who is not a U.S. Person.
“Notes” has the meaning set forth in the Preamble.
“Offering Memorandum” means the offering memorandum, dated January 25, 2017, related to the offer and sale of the Notes.
“Officer” means any one 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 or any other person of the Company having substantially the same responsibilities as the aforementioned officers.
“Officer’s Certificate” means a certificate signed by one Officer or that otherwise meets the requirements set forth in this Indenture.
“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.
“Par Call Date” means November 1, 2026.
“Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to the Depositary, shall include Euroclear and Clearstream).
“Permitted Holders” means WH Group Limited or any of its Affiliates and any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members; provided that, in the case of such group and without giving effect to the existence of such group or any other group, such Persons, collectively, have direct or indirect beneficial ownership of more than 50% of the Voting Stock of the Company. Any Person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of this Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.
“Person” means any individual, corporation, partnership, limited liability company, 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 Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.
“principal” of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time.
“Principal Property” means any plant, facility, warehouse or building owned or leased and used by the Company or a Restricted Subsidiary primarily for processing, producing, packaging or storing its products, raw materials, inventories or other materials and supplies and located within the United States of America and having an acquisition cost plus capitalized improvements (including related land and improvements thereon and all associated factory equipment therein without deduction of any depreciation reserves) in excess of 2.0% of Consolidated Net Tangible Assets as of the date of such determination, but shall not include any such property or assets that are financed through the issuance of tax exempt governmental obligations, or any such property or assets that have been determined by a resolution of the Board of Directors not to be of material importance to the respective businesses conducted by the Company or such Restricted Subsidiary, effective as of the date such resolution is adopted.
“Private Placement Legend” means the legend set forth in Section 2.06(f)(i) to be placed on all Notes issued under this Indenture, except where otherwise permitted by the provisions of this Indenture.
“QIB” means a “qualified institutional buyer” as defined in Rule 144A.
“Quotation Agent” means the Reference Treasury Dealer appointed by the Company.
“Rabobank” means Coöperatieve Rabobank U.A. (formerly known as Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., “Rabobank Nederland”), New York Branch.
“Rating Agencies” means (i) each of Moody’s, S&P and Fitch; and (ii) if any of Moody’s, S&P or Fitch ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act that is selected by the Company (as certified by a resolution of the Board of Directors) as a replacement agency for Moody’s, S&P or Fitch, or each of them, as the case may be.
“Rating Event” means, with respect to the Notes, (i) the rating of the Notes is lowered by two of the three Rating Agencies on any day during the period (the “Trigger Period”) commencing on the earlier of (a) the occurrence of a Change of Control and (b) the first public
notice of the Company’s intention to effect a Change of Control, and ending 60 days following consummation of such Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies), and (ii) the Notes are rated below Investment Grade by two of the three Rating Agencies on any day during the Trigger Period; provided that a Rating Event will not be deemed to have occurred in respect of a particular Change of Control (and thus will not be deemed a Rating Event for purposes of the definition of Change of Control Triggering Event) if each Rating Agency making the reduction in rating does not publicly announce, or confirm or inform the Trustee in writing at the Company’s request, that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the Change of Control (whether or not the applicable Change of Control has occurred at the time of the Rating Event). If a Rating Agency is not providing a rating for the Notes at the commencement of such period, the Notes will be deemed to have ceased to be rated as Investment Grade by such Rating Agency during such period.
“Record Date” means, with respect to an applicable Interest Payment Date January 15 or July 15 (whether or not a Business Day) next preceding such Interest Payment Date.
“Reference Treasury Dealer” means any of Barclays Capital Inc., Goldman, Sachs and Co. and Morgan Stanley & Co. LLC and their respective successors. However, if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by us, of the bid and asked prices for the applicable Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third Business Day preceding such redemption date.
“Regulation S” means Regulation S promulgated under the Securities Act.
“Regulation S Global Note” means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as applicable. “Regulation S Permanent Global Note” means a permanent Global Note in the form of Exhibit A-1 hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the applicable Restricted Period.
“Regulation S Temporary Global Note” means a temporary Global Note in the form of Exhibit A-2 hereto, bearing the Global Note Legend, the Private Placement Legend and the Regulation S Temporary Global Note Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903.
“Regulation S Temporary Global Note Legend” means the legend set forth in Section 2.06(f)(iii).
“Remaining Scheduled Payments” means, with respect to each Note to be redeemed, the remaining scheduled payments of principal and interest on the Note that would be due after the Redemption Date therefor if such Note matured on the Par Call Date. If the redemption date is not an interest payment date with respect to a Note, the amount of the next succeeding scheduled interest payment date on the Note will be reduced by the amount of interest accrued on the Note to the redemption date.
“Responsible Officer” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, trust officer, assistant trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by any of the aforementioned officers and also means, with respect to a particular corporate trust matter, any other officer to whom any such matter is referred because of such Person’s knowledge of and familiarity with the particular subject; and provided such Persons shall have direct responsibility for the administration of this Indenture.
“Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.
“Restricted Global Note” means a Global Note bearing the Private Placement Legend.
“Restricted Period” means the 40-day distribution compliance period as defined in Regulation S.
“Restricted Subsidiary” means (i) any Subsidiary organized and existing under the laws of the United States of America and the principal business of which is carried on within the United States of America which owns or is a lessee pursuant to a financing or capital lease of any Principal Property or owns shares of Capital Stock or Indebtedness of another Restricted Subsidiary other than each Subsidiary the major part of whose business consists of finance, banking, credit, leasing, insurance, financial services or other similar operations, or any combination of such operations and (ii) any Subsidiary that is a Subsidiary Guarantor.
“Rule 144” means Rule 144 promulgated under the Securities Act.
“Rule 144A” means Rule 144A promulgated under the Securities Act.
“Rule 903” means Rule 903 promulgated under the Securities Act.
“Rule 904” means Rule 904 promulgated under the Securities Act.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Securitization Facility” means the Second Amended and Restated Credit and Security Agreement, dated as of April 28, 2014, among Smithfield Receivables Funding LLC, as borrower, the Company, as servicer, the lenders parties thereto and Rabobank, as administrative agent and letter of credit issuer (or its successor in such capacity), as it has been and may be further amended, supplemented or modified from time to time and any renewal, increase, 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 Securitization Facility or one or more other securitization or other structured facilities).
“Senior Credit Facilities” means the credit agreement expected to be entered into after the Issue Date among the Company, as borrower, certain subsidiaries of the Company, as borrowers or guarantors, the lenders parties thereto and Bank of America, N.A., as administrative agent (or its successor in such capacity), as it may be amended, supplemented or modified from time to time and any renewal, increase, 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 Senior Credit Facilities or one or more other credit or other agreements or indentures).
“Senior Credit Facilities Commitment Termination Event” means the termination of all of the lenders’ commitments with respect to the Senior Credit Facilities prior to the Senior Credit Facilities Effective Date.
“Senior Credit Facilities Effective Date” means the date on which the Senior Credit Facilities become effective in accordance with the terms thereof.
“Significant Subsidiary” means any Subsidiary that would be 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 Services, a division of The McGraw-Hill Companies, Inc., and its successors.
“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final 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 unless such contingency has occurred).
“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by:
(1) such Person;
(2) such Person and one or more Subsidiaries of such Person; or
(3) one or more Subsidiaries of such Person.
“Subsidiary Guarantee” means any Guarantee of payment of the Notes by a Subsidiary Guarantor pursuant to the terms of this Indenture and any supplemental indenture hereto.
“Subsidiary Guarantor” means (i) each Domestic Subsidiary in existence on the Issue Date that provides a Subsidiary Guarantee on the Issue Date and (ii) any Domestic Subsidiary that provides a Subsidiary Guarantee after the Issue Date; provided that upon release or discharge of such Subsidiary from its Subsidiary Guarantee in accordance with this Indenture, such Subsidiary ceases to be a Subsidiary Guarantor.
“Trustee” means the party named as such in this Indenture until a successor replaces it and, thereafter, means such successor.
“Unrestricted Definitive Note” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.
“Unrestricted Global Note” means a permanent Global Note, substantially in the form of Exhibit A-1 hereto, that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that does not bear the Private Placement Legend.
“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 at the issuer’s option.
“U.S. Person” has the meaning ascribed thereto in Rule 902 under the Securities Act.
“Voting Stock” of a person means all classes of Capital Stock of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.
SECTION 1.02. Other Definitions.
| | | | | |
| Term | Defined in Section |
| “Authentication Order” | 2.02 |
| “Change of Control Offer” | 4.07 |
| “covenant defeasance option” | 8.01 |
| “Event of Default” | 6.01 |
| “legal defeasance option” | 8.01 |
| “Note Register” | 2.03 |
| “Paying Agent” | 2.03 |
| “Redemption Date” | 3.07 |
| | | | | |
| “Registrar” | 2.03 |
| “Successor Company” | 5.01 |
| “Successor Guarantor” | 5.01 |
SECTION 1.03. Rules of Construction. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(c) “or” is not exclusive;
(d) “including” means “including without limitation”;
(e) “will” shall be interpreted to express a command;
(f) words in the singular include the plural and words in the plural include the singular;
(g) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured Indebtedness;
(h) 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;
(i) 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;
(j) each reference to “Indenture” in this Indenture shall mean the provisions of this Indenture and future amendments and supplements hereto, applicable to the Notes and exclusive of amendments and supplements that relate to future issuances of other series of securities issued at a later date under this Indenture; and
(k) the terms “above”, “below”, “hereof”, “herein”, “hereby”, “hereto”, “hereunder” and “herewith” refer to this Indenture.
SECTION 1.04. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Proof of
execution of any such instrument or of a writing appointing any such agent, or the holding by any Person of a Note, shall be sufficient for any purpose of this Indenture and (subject to Section 7.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.04.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of any action taken, suffered or omitted by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Note.
(e) The Company may set a record date for purposes of determining the identity of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or take any other act, or to vote or consent to any action by vote or consent authorized or permitted to be given or taken by Holders. Unless otherwise specified, if not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or in the case of any such vote, prior to such vote, any such record date, if there is to be a record date, shall be the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation.
(f) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount pursuant to this paragraph shall have the same effect as if given or taken by separate Holders of each such different part.
(g) Without limiting the generality of the foregoing, a Holder, including the Depositary, that is the Holder of a Global Note, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and any Person that is the Holder of a Global Note, including the Depositary, may provide its proxy or proxies to the beneficial owners of interests in any such Global Note through such depositary’s standing instructions and customary practices.
(h) The Company may, at its option, fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Note held by the Depositary entitled under the procedures of such depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders. If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 90 days after such record date.
ARTICLE II
THE NOTES
SECTION 2.01. Form and Dating; Terms.
(a) General. The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rules or usage in addition to those provided for in Exhibit A hereto. Each Note shall be dated the date of its authentication. The Notes shall be in minimum amounts of $2,000 and integral multiples of $1,000 in excess of $2,000.
(b) Global Notes.
(i) Notes issued in global form shall be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note shall represent such aggregate principal amount of the outstanding Notes as shall be specified in the “Schedule of Exchanges of Interests in the Global Note” attached thereto and each shall provide that it shall represent up to the aggregate principal amount of Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as applicable, to reflect exchanges and redemptions and transfers of interests therein. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06.
(ii) Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and authenticated by the Trustee as provided in this Indenture. Following the termination of the Restricted Period, beneficial interests
in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in the Regulation S Permanent Global Note pursuant to Section 2.06 and the Applicable Procedures. Simultaneously with the authentication of the Regulation S Permanent Global Note, the Trustee shall cancel such Regulation S Temporary Global Note. The aggregate principal amount of a Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as provided in this Indenture.
(c) Participants shall have no rights under this Indenture or any Global Note with respect to any Global Note held on their behalf by the Depositary or by the Trustee as custodian for the Depositary, and the Depositary shall be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note 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 Participants, the Applicable Procedures or the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note.
(d) Terms. The aggregate principal amount of Initial Notes that may be authenticated and delivered under this Indenture on the Issue Date is $600,000,000, and the aggregate amount of Additional Notes that may be authenticated and delivered under this Indenture is unlimited (so long as not otherwise prohibited by the terms of this Indenture). With respect to any Additional Notes, the Company shall set forth in (1) a resolution of the Board of Directors and (2) (i) an Officer’s Certificate or (ii) one or more indentures supplemental hereto, the following information:
(A) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;
(B) the issue price and the issue date of such Additional Notes, including the date from which interest shall accrue; and
(C) whether such Additional Notes shall be either Restricted Definitive Notes or Restricted Global Notes.
In authenticating and delivering Additional Notes, the Trustee shall be entitled to receive and shall be fully protected in relying upon, in addition to the Opinion of Counsel and Officer’s Certificate required by Section 12.02, an Opinion of Counsel as to the due authorization, execution, delivery, validity and enforceability of such Additional Notes. The Initial Notes and any Additional Notes shall be treated as a single class for all purposes under this Indenture, including, without limitation, voting, waivers, amendments, redemptions and offers to purchase; provided that any Additional Notes that are not fungible with the Initial Notes for U.S. federal income tax purposes shall have separate CUSIP and ISIN numbers.
The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
The Notes shall be subject to repurchase by the Company pursuant to a Change of Control Offer as provided in Section 4.07. The Notes shall not be redeemable, other than as provided in Article III.
(e) Euroclear and Clearstream Procedures Applicable. The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests in a Regulation S Global Note that are held by Participants through Euroclear or Clearstream.
SECTION 2.02. Execution and Authentication.
One Officer shall execute the Notes on behalf of the Company by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be entitled to any benefit under this Indenture or be valid or obligatory for any purpose until authenticated substantially in the form of Exhibit A hereto, as the case may be, by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been duly authenticated and delivered under this Indenture.
On the Issue Date, the Trustee shall, upon receipt of a Company Order directing authentication (an “Authentication Order”), authenticate and deliver the Initial Notes specified in such Authentication Order. In addition, at any time, from time to time, the Trustee shall upon receipt of an Authentication Order authenticate and deliver any Additional Notes for an aggregate principal amount specified in such Authentication Order for such Additional Notes issued hereunder.
The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. Unless otherwise provided in such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent shall have the same rights as the Trustee to deal with Holders, the Company or an Affiliate of the Company.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the “Registrar”) and an office or agency where Notes may be presented for payment (the “Paying Agent”). The Registrar shall keep a register of the Notes
(the “Note Register”) and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co- registrar and the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder but upon written notice to such Registrar or Paying Agent and to the Trustee; provided, however, that no such removal shall become effective until (i) acceptance of any appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee and the passage of any waiting or notice periods required by the procedures of the Depositary or (ii) written notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i) of this Section 2.03. The Registrar or Paying Agent may resign at any time upon written notice to the Company and the Trustee. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Paying Agent and Registrar for the Notes. The Trustee shall also act as Custodian for the Depositary with respect to the Global Notes.
SECTION 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and shall notify the Trustee in writing of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it relating to the Notes to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or one of its Subsidiaries) shall have no further liability for the money. If the Company or one of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any Event of Default under Section 6.01(6) or (7), the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. Holder 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 all Holders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least two 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 the Holders.
SECTION 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. Except as otherwise set forth in this Section 2.06, a Global Note may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor Depositary or a nominee of such successor Depositary. A beneficial interest in a Global Note may not be exchanged for a Definitive Note unless (i) the Depositary (x) notifies the Company that it is unwilling or unable to continue as Depositary for such Global Note or (y) has ceased to be a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 90 days; (ii) there shall have occurred and be continuing an Event of Default with respect to the Notes and the Depositary shall have requested the issuance of Definitive Notes; or (iii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes; provided, however, that the Regulation S Temporary Global Note may not be exchanged for Definitive Notes prior to (1) the expiration of the Restricted Period and (2) the receipt by the Registrar of any certificates required by Rule 903(b)(3)(ii)(B) of the Securities Act. Upon the occurrence of any of the preceding events in subclauses (i), (ii) or (iii) of this Section 2.06(a), Definitive Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the Depositary (in accordance with its customary procedures). Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10, shall be authenticated and delivered in the form of, and shall be, a Global Note, except for Definitive Notes issued subsequent to any of the preceding events in subclauses (i), (ii) or (iii) of this Section 2.06(a) and pursuant to Section 2.06(c). A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); provided, however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c).
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) of this Section 2.06(b) below, as applicable, as well as one or more of the other following subparagraphs of this Section 2.06(b), as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend and any Applicable Procedures; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. Except as may be required by any Applicable Procedures, no written orders
or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests in a Global Note that are not subject to Section 2.06(b)(i), the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) if permitted under Section 2.06(a), a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g).
(iii) Transfer of Beneficial Interests in any Restricted Global Note to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; or
(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer
complies with the requirements of Section 2.06(b)(ii) and the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in subparagraphs (1) and (2) above, if the Registrar or the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(b)(iv), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.
If any such transfer is effected pursuant to this Section 2.06(b)(iv) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to this Section 2.06(b)(iv).
Beneficial interests in an Unrestricted Global Note may not be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon the occurrence of any of the events in paragraph (i), (ii) or (iii) of Section 2.06(a) and receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(F) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g), and the Company shall execute and the Trustee shall authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes. Notwithstanding Sections 2.06 (c)(i)(A) and (C), a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted
Definitive Note only upon the occurrence of any of the events in subclause (i), (ii) or (iii) of Section 2.06(a) and if the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (iii), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon the occurrence of any of the events in subclause (i), (ii) or (iii) of Section 2.06(a) and satisfaction of the conditions set forth in Section 2.06(b)(ii), the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g), and the Company shall execute and the Trustee shall authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from or through the Depositary and the Participant or Indirect Participant. The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(F) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of, in the case of clause (A) of this Section 2.06(d)(i), the applicable Restricted Global Note, in the case of clause (B) of this Section 2.06(d)(i), the applicable 144A Global Note, and in the case of clause (C) of this Section 2.06(d)(i), the applicable Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial
interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (ii), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a written request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraph (ii) or (iii) of this Section 2.06(d) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon written request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e):
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made to a QIB in accordance with Rule 144A, then the transferor must deliver a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; or
(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (ii), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a written request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.
(f) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture:
(i) Private Placement Legend.
(A) Except as permitted by subparagraphs (B) and (C) and of this Section 2.06(f)(i), each Global Note and each Definitive Note (and all Notes
issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
“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 OR 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”) THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY),] [IN THE CASE OF REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE DATE ON WHICH THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S], ONLY (A) TO ISSUER OR ANY SUBSIDIARY THEREOF, (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 (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A 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 TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) or (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. [IN THE CASE OF REGULATION S NOTES: BY ITS
ACQUISITION HEREOF, THE HOLDER HEREOF 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.]”
(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form:
“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06(g) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) 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 SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE 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.”
(iii) Regulation S Temporary Global Note Legend. The Regulation S Temporary Global Note shall bear a legend in substantially the following form:
“THIS GLOBAL NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT. BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF 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.”
(g) Cancellation or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and, if the Registrar and the Trustee are not the same entity, notice to the Trustee of such exchange or transfer of an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, the aggregate principal amount of such other Global Note shall be increased in a corresponding amount pursuant to this Section 2.06(g) and if the Registrar and the Trustee are not the same entity, notice to the Trustee of such exchange or transfer of an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 or at the Registrar’s written request.
(ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company or the Trustee may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.07, 2.10, 3.06, 3.08, 4.07 and 9.04).
(iii) Neither the Registrar nor the Company shall be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required
(A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of the sending of a notice of redemption of Notes for redemption under Section 3.03 and ending at the close of business on the day such notice was sent,
(B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part or tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer, except the unredeemed portion of any Note being redeemed in part, or
(C) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.
(vii) Upon surrender for registration of transfer of any Note at the office or agency of the Company designated pursuant to Section 4.02, the Company shall execute, and the Trustee shall authenticate and mail, in the name of the designated transferee or transferees, one or more replacement Notes of any authorized denomination or denominations of a like aggregate principal amount.
(viii) At the option of the Holder, subject to Section 2.06(a), Notes may be exchanged for other Notes of any authorized denomination or denominations of a like aggregate principal amount upon surrender of the Notes to be exchanged at such office or agency. Whenever any Global Notes or Definitive Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and mail, the replacement Global Notes and Definitive Notes to which the Holder making the exchange is entitled in accordance with the provisions of Section 2.02.
(ix) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile or electronically (in PDF format).
(x) 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 Note (including any transfers between or among Participants or beneficial owners of interests in any Global Note) 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.
Neither the Trustee nor any Trustee agent shall have any responsibility or liability for any actions taken or not taken by the Depositary.
SECTION 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, the Registrar or the Company and the Trustee receives evidence to their satisfaction of the ownership and destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee’s requirements are met. An indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, the Registrar and the Paying Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. At the Company’s request, such Holder shall reimburse the Company for its expenses in replacing a Note.
Every replacement Note issued in accordance with this Section 2.07 is a contractual obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company or an Affiliate thereof) holds, on a Redemption Date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Affiliate
of the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Notes so owned that have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to deliver any such direction, waiver or consent with respect to the pledged Notes and that the pledgee is not the Company or any obligor upon the Notes or any Affiliate of the Company or of such other obligor.
SECTION 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders and beneficial holders, as the case may be, of temporary Notes shall be entitled to all of the benefits accorded to Holders, or beneficial holders, respectively, of Notes under this Indenture.
SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of cancelled Notes in accordance with its customary procedures (subject to the record retention requirement of the Exchange Act). The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, the Company shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest to the Persons who are Holders on a special record date, which may be after the existing Record Date, in each case at the rate provided in the Notes and in Section 4.01. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Trustee shall fix or cause to be fixed each such special record date and payment date; provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. The Trustee shall promptly notify the Company of such special record date and in any event at least 20 days before such special record date. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall send or cause to be sent, via electronic transmission or by first class postage prepaid, to each
Holder a notice at his or her address as it appears in the Note Register that states the special record date, the related payment date and the amount of such interest to be paid.
Subject to the foregoing provisions of this Section 2.12 and for greater certainty, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.
SECTION 2.13. CUSIP or ISIN Numbers.
The Company in issuing the Notes may use CUSIP or ISIN numbers (if then generally in use) and, if so, the Trustee shall use CUSIP or ISIN numbers in notices, including notices of redemption, exchange or offers to purchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice and that reliance may be placed only on the other identification numbers printed on the Notes, and any related redemption, exchange or offers to purchase shall not be affected by any defect in or omission of such numbers. The Company will as promptly as practicable notify the Trustee in writing of any change in the CUSIP or ISIN numbers. Additional Notes issued under this Indenture may have the same or differing CUSIP or ISIN numbers as those given to the Initial Notes.
ARTICLE III
REDEMPTION
SECTION 3.01. Notices to Trustee. If the Company elects to redeem Notes pursuant to Section 3.07, it shall furnish to the Trustee, at least 15 days before notice of redemption is required to be sent or caused to be sent to Holders pursuant to Section 3.03 hereof (unless a shorter notice shall be agreed to by the Trustee) but not more than 60 days before a Redemption Date, an Officer’s Certificate setting forth (i) the paragraph or subparagraph of such Note or Section of this Indenture pursuant to which the redemption shall occur, (ii) the Redemption Date, (iii) the principal amount of the Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. Selection of Notes to Be Redeemed. In the case of any partial redemption, the Trustee shall select the Notes for redemption (i) in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are issued, or, (ii) if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, in each case for the avoidance of doubt, in accordance with applicable procedures of the Depositary. No Note of $2,000 in original principal amount or less will be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof shall be issued in the name of the Holder thereof upon cancellation of the original Note.
The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed.
SECTION 3.03. Notice of Redemption.
The Company shall cause notices of redemption to be sent by electronic delivery or mailed by first-class mail at least 15 days but not more than 60 days before the Redemption Date to each Holder to be redeemed at such Holder’s registered address, except that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Article VIII or Article XI hereof.
The notice shall identify the Notes (including the CUSIP and ISIN numbers) to be redeemed and shall state:
(a) the Redemption Date;
(b) the redemption price;
(c) if any Note is to be redeemed in part only, the portion of the principal amount of that Note that is to be redeemed and that, after the Redemption Date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion of the original Note representing the same indebtedness to the extent not redeemed will be issued in the name of the Holder upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;
(g) the paragraph or subparagraph of the Notes or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of the CUSIP or ISIN number, if any, listed in such notice or printed on the Notes.
At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its expense; provided that the Company shall have delivered to the Trustee, at least 15 days before notice of redemption is required to be sent or caused to be sent to Holders pursuant to this Section 3.03 (unless a shorter notice shall be agreed to by the Trustee), an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is sent in accordance with Section 3.03, Notes called for redemption become irrevocably due and payable on the Redemption Date at the redemption price. The notice, if sent in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice or any defect in the notice to the Holder of any Note designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Subject to Section 3.05, on and after the Redemption Date, interest ceases to accrue on Notes or portions of Notes called for redemption.
SECTION 3.05. Deposit of Redemption or Purchase Price.
Prior to 11:00 a.m. (New York City time) on the redemption or purchase date, the Company shall deposit or cause to be deposited with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued and unpaid interest on all Notes to be redeemed or purchased on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest on, all Notes to be redeemed or purchased.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption or purchase. Redemption amounts shall only be paid upon presentation and surrender of any such Notes to be redeemed. If a Note is redeemed or purchased on or after a Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest to the redemption or purchase date shall be paid to the Person in whose name such Note was registered at the close of business on such Record Date. If any Note called for redemption or purchase shall not be so paid upon surrender for redemption or purchase because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest accrued to the redemption or purchase date not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01.
Payment of the redemption price and performance of the Company’s obligations in connection with any redemption may be performed by another Person.
SECTION 3.06. Notes Redeemed or Purchased in Part.
Upon surrender of a Definitive Note that is redeemed or purchased in part, the Company shall issue and the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Definitive Note surrendered representing the same indebtedness to the extent not redeemed or purchased; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000. It is understood that, notwithstanding anything in this Indenture to the contrary, only an Authentication Order and not an Opinion of Counsel or Officer’s Certificate is required for the Trustee to authenticate such new Note.
SECTION 3.07. Optional Redemption.
(a) At any time prior to the Par Call Date, the Notes may be redeemed by the Company, in whole or in part, at the Company’s option, at a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but excluding, the Redemption Date; or
(ii) the sum of the Remaining Scheduled Payments on such Notes being redeemed (not including any portion of the payments of interest accrued as of the redemption date (the “Redemption Date”)), discounted to its present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, as determined by the Quotation Agent, plus 30 basis points, plus accrued and unpaid interest on the principal amount of such Notes being redeemed to, but excluding, the Redemption Date.
(b) At any time on and after the Par Call Date, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Notes to be redeemed, plus accrued and unpaid interest, if any, on the Notes to the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(c) If the optional Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Company. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption.
SECTION 3.08. Mandatory Redemption. The Company is not required to make mandatory redemption payments or sinking fund payments with respect to the Notes; provided, however, under certain circumstances, the Company may be required to offer to purchase the Notes described under Section 4.07. Except as provided under Sections 3.07 and 4.07(d), the Notes shall not be redeemable at the option of the Company. The Company may at any time and from time to time purchase the Notes in the open market otherwise.
ARTICLE IV
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall pay principal of, premium, if any, and interest on the Notes, and the Notes may be exchanged or transferred, at the office or agency designated by the Company in Atlanta, Georgia (which initially will be the Corporate Trust Office of the Trustee in Atlanta, Georgia), except that the Company may, at its option, pay interest on the Notes by check to Holders at their registered address as it appears in the Note Register; provided that the Company shall pay principal of, premium, if any, and interest on, Note in global form registered in the name of or held by the Depository or its nominee by wire in immediately available funds to the Depository or its nominee, as the case may be, as the registered Holder of such Notes in global form. No service charge will be imposed by the Company, the Trustee or the Registrar for any registration of Notes, but the Company may require a Holder to pay a sum sufficient to cover any transfer tax or other governmental taxes and fees required by law or permitted by this Indenture.
Notwithstanding the foregoing, in any case where any Interest Payment Date, Redemption Date, Stated Maturity or other date of repurchase, redemption or payment of principal in respect of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or any Note or coupon other than a provision in the Notes which specifically states that such provision shall apply in lieu of this Section 4.01), payment of principal (or premium, if any) or interest, if any, need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date, or at the Stated Maturity or other date or repurchase, redemption or payment of principal in respect of the Notes; provided that (x) for scheduled payments of interest on February 1 and August 1, the amount of interest payable shall be equal to the amount payable on the scheduled Interest Payment Date and (y) with respect to the payment of interest in connection with Redemption Dates, and upon Stated Maturity or redemptions, repayments or other payments of principal, the amount of interest shall include interest up to such Redemption Date or Stated Maturity or to the date of such redemption, repurchase or other payment of principal in respect of the Notes, as the case may be.
The Company shall pay interest on overdue principal at the rate specified therefor in the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
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 4.02. Maintenance of Office or Agency. The Company shall maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of 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.
The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office as one such office or agency of the Company in accordance with Section 2.03.
SECTION 4.03. Reports.
(a) So long as any Notes are outstanding, the Company shall furnish to the Trustee and the Holders:
(i) on or prior to the 90th day after the end of each fiscal year of the Company, (A) a consolidated balance sheet and statement of shareholders’ equity of the Company, as of the end of such fiscal year and the immediately preceding fiscal year, and the related consolidated statements of income, comprehensive income and of cash flows for such fiscal year, setting forth in comparative form consolidated figures for the immediately preceding two fiscal years, all such financial statements to be prepared in accordance with GAAP and audited by an independent registered public accounting firm of recognized national standing and accompanied by an opinion of such accountants; and (B) a summary of the Company’s business and operations;
(ii) on or prior to the 45th day after the end of each of the first three fiscal quarters in each fiscal year of the Company, (A) a consolidated balance sheet of the Company, as of the end of such fiscal quarter and the corresponding period of the preceding fiscal year, and the related consolidated statements of income, comprehensive income and of cash flows for such fiscal quarter and the then elapsed portion of such fiscal year, setting forth in comparative form consolidated figures for the corresponding periods of the preceding fiscal year, all such financial statements to be prepared in accordance with GAAP and accompanied by an Officer’s Certificate to the effect that such quarterly financial statements have been prepared in accordance with GAAP for interim financial reporting and present fairly in all material respects the consolidated financial position and consolidated results of operations and cash flows of the Company in accordance with GAAP subject to changes resulting from normal year-end audit adjustments; and (B) a summary of the Company’s business and operations; and
(iii) information substantially similar to the information that would be required to be included in a Current Report on Form 8-K (as in effect on the Issue Date) filed with the SEC by the Company (if the Company were required to file such reports) pursuant to Item 1.01 (Entry into a Material Definitive Agreement), Item 1.02 (Termination
of a Material Definitive Agreement), Item 1.03 (Bankruptcy or Receivership), Item 2.01 (Completion of Acquisition or Disposition of Assets), Item 2.03 (Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant), Item 2.04 (Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement), Item 2.06 (Material Impairments), Item 4.01 (Changes in Registrant’s Certifying Accountants), Item 4.02 (Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review), Item 5.01 (Changes in Control of Registrant), clauses (b) and (c)(1) of Item 5.02 (Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers) of such form, within ten business days of the date of the event requiring disclosure; provided, however, that no such information will be required to be furnished if the Company determines in its good faith judgment that such event is not material to Holders or the business, assets, operations, financial position or prospects of the Company and its Restricted Subsidiaries, taken as a whole.
In connection with this clause (a), it being understood that (a) the Company shall not be required to furnish any information, certificates or reports required by (i) Section 302, Section 404 or Section 906 of the Sarbanes-Oxley Act of 2002, or related Items 307 or 308 of Regulation S-K, (ii) Regulation G or Item 10(e) of Regulation S-K promulgated by the SEC with respect to any non-generally accepted accounting principles financial measures contained therein, (iii) segment accounting rules, (iv) Rule 3-05, 3-09 and 3-10 of Regulation S-X (provided that the Company shall present summary financial information with respect to Subsidiaries that are not Subsidiary Guarantors of the type and scope included in the Offering Memorandum), (v) any compensation or beneficial ownership information or (vi) any information that is not otherwise similar to information currently included in, or incorporated by reference into, the Offering Memorandum, other than with respect to reports provided under clause (iii) above and (b) such reports shall not be required to include any exhibits that would have been required to be filed pursuant to Item 601 of Regulation S-K.
(b) The Company also shall provide the information described in paragraph (a) above to (i) beneficial owners of the Notes, (ii) any prospective investor that is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) and (iii) any securities analyst reasonably acceptable to the Company, in each case, upon their written request. In addition, the Company shall, for so long as any Notes remain outstanding, furnish to such Holders and to securities analysts and prospective investors, upon their written request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act, as in effect on the Issue Date.
(c) Notwithstanding the foregoing, the Company shall be deemed to have satisfied the reporting requirements referred to above if (x) the Company has filed reports containing such information with the SEC or (y) the Company has (i) made such information available on Intralinks or any comparable password protected online data system and (ii) made readily available any password or other login information to the Trustee, the Holders and any such additional Persons set forth in paragraph (b) who have so requested in writing
(d) Notwithstanding the foregoing, the financial statements, information and other documents required to be provided pursuant to this Section 4.03, may be those of any direct or indirect parent of the Company;
provided that, (i) such direct or indirect parent of the Company provides a full and unconditional guarantee of the Company’s obligations under the Notes and this Indenture and (ii) if the financial information so furnished relates to such direct or indirect parent of the Company and any such parent company has any material operations, assets or liabilities separate and apart from its ownership of the Company, the same is accompanied by consolidating information that summarizes in reasonable detail the differences between the information relating to such parent, on the one hand, and the information relating to the Company on a standalone basis, on the other hand.
SECTION 4.04. Compliance Certificate. The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year ending after the Issue Date, a certificate from a principal executive officer, principal financial officer or principal accounting officer stating that a review of the activities of the Company and the Restricted Subsidiaries during the preceding fiscal year have been made under the supervision of the signing Officer with a view to determining whether the Company has kept, observed, performed and fulfilled their obligations under this Indenture, and further stating, as to such Officer signing such certificate, that to the best of his or her knowledge the Company has, during such fiscal year, kept, observed, performed and fulfilled each and every condition and covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions, covenants and conditions of this Indenture (or, if a Default or an Event of Default shall have occurred and be continuing, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto).
SECTION 4.05. Stay, Extension and Usury Laws.
The Company and each of the Subsidiary Guarantors, if any, covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Subsidiary Guarantors, if any, (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant that they shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.
SECTION 4.06. Limitation on Sale/Lease-back Transactions. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, sell or transfer, directly or indirectly, except to the Company or a Restricted Subsidiary, any Principal Property as an entirety, or any substantial portion of such a Principal Property, with the intention of taking back a lease of such Principal Property, except a lease for a period of three years or less at the end of which it is intended that the use of such Principal Property by the lessee will be discontinued; provided that, notwithstanding the foregoing, the Company or any Restricted Subsidiary may sell any such Principal Property and lease it back for a longer period:
(i) if the Company or such Restricted Subsidiary would be entitled, pursuant to Section 4.08, to create a Lien on the property to be leased securing Indebtedness in an amount equal to the Attributable Debt with respect to such sale and lease-back transaction without equally and ratably securing the outstanding Notes; or
(ii) if (A) the Company promptly informs the Trustee of such transaction, (B) the net proceeds of such transaction are at least equal to the fair market value (as determined by a resolution of the Board of Directors) of such property and (C) the Company causes an amount equal to the net proceeds of the sale to be applied to the retirement, within 180 days after receipt of such proceeds, of Indebtedness incurred or assumed by the Company or a Restricted Subsidiary (including the Notes) other than Indebtedness that is contractually subordinated in right of payment to the Notes; provided further that, in lieu of applying all of or any part of such net proceeds to such retirement of Indebtedness, the Company may, within 90 days after such sale, deliver or cause to be delivered to the applicable Trustee for cancellation either debentures or notes evidencing Indebtedness of the Company (which may include the outstanding Notes) or of a Restricted Subsidiary previously authenticated and delivered by the applicable Trustee, and not previously tendered for sinking fund purposes or called for a sinking fund or otherwise applied as a credit against an obligation to redeem or retire such notes or debentures, and an Officer’s Certificate (which will be delivered to the applicable Trustee and paying agent) stating that the Company elects to deliver or cause to be delivered such debentures or notes in lieu of retiring Indebtedness as provided in this Indenture. If the Company shall so deliver debentures or notes to the applicable Trustee and the Company shall duly deliver such Officer’s Certificate, the amount of cash which the Company will be required to apply to the retirement of Indebtedness under this provision shall be reduced by an amount equal to the aggregate of the then applicable optional redemption prices (not including any optional sinking fund redemption prices) of such debentures or notes or, if there are no such redemption prices, the principal amount of such debentures or notes; provided, that in the case of debentures or notes which provide for an amount less than the principal amount of such debentures or notes to be due and payable upon a declaration of the maturity of such debentures or notes, such amount of cash shall be reduced by the amount of principal of such debentures or notes that would be due and payable as of the date of such application upon a declaration of acceleration of the maturity of such debentures or notes pursuant to the terms of the financing arrangement pursuant to which such debentures or notes were issued.
(b) Notwithstanding the foregoing, the Company or any Restricted Subsidiary may enter into sale and lease-back transactions in addition to those permitted by the preceding paragraph and without any obligation to retire any outstanding Notes or other Indebtedness, provided that at the time of entering into such sale and lease-back transactions and after giving effect to such transactions, Exempted Debt does not exceed 15.0% of Consolidated Net Tangible Assets.
SECTION 4.07. Change of Control. (a) Upon the occurrence of a Change of Control Triggering Event, each Holder shall have the right to require that the Company repurchase such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(b) Within 30 days following the date upon which any Change of Control Triggering Event with respect to the Notes shall have occurred, the Company shall mail a notice by first-class mail to each Holder with a copy to the Trustee (the “Change of Control Offer”) or,
at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, stating:
(i) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest on the relevant Interest Payment Date);
(ii) the purchase date (which shall be no earlier than 15 days nor later than 60 days from the date such notice is mailed); and
(iii) the instructions, as determined by the Company, consistent with this Section 4.07, that a Holder must follow in order to have its Notes purchased.
(c) The Company shall not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. A Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making of the Change of Control Offer.
(d) If Holders of not less than 90% in aggregate principal amount of the outstanding Notes validly tender and do not withdraw such Notes in a Change of Control Offer and the Company, or any other Person making a Change of Control Offer in lieu of the Company as described in clause (c) of this Section 4.07, purchases all of the Notes validly tendered and not withdrawn by such Holders, the Company shall have the right, upon not less than 15 no more than 60 days’ prior notice, given not more than 30 days following such purchase pursuant to the Change of Control Offer described in clause (b) of this Section 4.07, to redeem all Notes that remain outstanding following such purchase at a redemption price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, 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).
(e) The Company shall 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 Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.07, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Indenture by virtue of its compliance with such securities laws or regulations.
SECTION 4.08. Limitation on Liens. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, create, incur or suffer to exist any Lien, as security for any Indebtedness, on or of any shares of stock, Indebtedness or other intercompany obligations of
a Subsidiary or any Principal Property of the Company or a Restricted Subsidiary, whether such shares of stock, Indebtedness or other obligations of a Subsidiary or Principal Property is owned at the date of this Indenture or acquired after the date of this Indenture, unless the Company secures or causes such Restricted Subsidiary to secure the outstanding Notes equally and ratably with all Indebtedness secured by such Lien, so long as such Indebtedness shall be so secured. This covenant shall not apply in the case of:
(1) the creation of any Lien on any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property acquired after the date of this Indenture (including acquisitions by way of merger or consolidation) by the Company or a Restricted Subsidiary contemporaneously with such acquisition, or within 180 days after such acquisition, to secure or provide for the payment or financing of any part of the purchase price of such acquisition, or the assumption of any mortgage, pledge or other lien upon any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property acquired after the date of this Indenture existing at the time of such acquisition, or the acquisition of any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property subject to any mortgage, pledge or other lien without the express assumption of such Lien, provided that every such Lien referred to in this clause (1) will attach only to the shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property so acquired and fixed improvements on such Principal Property;
(2) any Lien on any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property existing on the Issue Date, other than Liens permitted by clause (3) hereof;
(3) any Lien securing obligations under the Securitization Facility, in an amount not to exceed $275.0 million;
(4) any Lien on any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property in favor of the Company or any Restricted Subsidiary;
(5) any Lien on Principal Property being constructed or improved securing loans to finance such construction or improvements;
(6) any Lien on shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property incurred in connection with the issuance of tax- exempt governmental obligations; and
(7) any renewal of or substitution for any Lien permitted by any of the preceding clauses (1) through (6), provided, in the case of a renewal of or substitution for any Lien permitted under clause (1), (2), (3) or (5), the Indebtedness secured is not increased nor the Lien extended to any additional shares of stock, Indebtedness or other obligations of a Subsidiary or any additional Principal Property.
(b) Notwithstanding the foregoing, the Company or any Restricted Subsidiary may create or assume Liens in addition to those permitted by clauses (1) through (7) of the preceding paragraph, and renew, extend or replace such liens, provided that at the time of such
creation, assumption, renewal, extension or replacement, and after giving effect to such creation, assumption, renewal, extension or replacement, Exempted Debt does not exceed 15.0% of Consolidated Net Tangible Assets.
SECTION 4.09. Future Guarantors. The Company shall cause each Domestic Subsidiary of the Company that is a borrower under or guarantees obligations under (x) any Debt Facility in excess of an aggregate principal amount of $75.0 million (other than the Securitization Facility and, prior to the Inventory Revolver Guarantee Trigger Date, the Inventory Revolver) of the Company or any Subsidiary Guarantor, unless such Domestic Subsidiary is not required to become a guarantor under the Senior Credit Facilities and (y) on and after the Inventory Revolver Guarantee Trigger Date, the Inventory Revolver within 30 days (or within 5 days of the Inventory Revolver Guarantee Trigger Date, in the case of the Inventory Revolver) of becoming a borrower or the incurrence of such Guarantee, execute and deliver to the Trustee a supplemental indenture to this Indenture pursuant to which such Subsidiary will Guarantee payment of the Notes on the same terms and conditions as those set forth in Article X hereof.
SECTION 4.10. Corporate Existence. Subject to Article V, the Company shall 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 Subsidiary Guarantor and the corporate rights (charter and statutory) licenses and franchises of the Company and each Subsidiary Guarantor; provided, however, that the Company shall not be required to preserve any such existence (except that of the Company), right, license or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and each of its Subsidiary Guarantors, and that the loss thereof is not, and will not be, disadvantageous in any material respect to the Holders.
SECTION 4.11. Payment of Taxes and Other Claims. The Company shall pay, and shall cause each of its Subsidiary Guarantors to pay, prior to delinquency, all material taxes, assessments and governmental levies except such as are contested in good faith by appropriate proceedings or where the failure to effect such payment or discharge would not reasonably be expected to be adverse in any material respect to the Holders.
ARTICLE V
CONSOLIDATIONS, MERGERS AND SALES OF ASSETS
SECTION 5.01. When Company or Subsidiary Guarantors May Merge or Otherwise Dispose of Assets. (a) The Company shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the “Successor Company”) shall 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) shall 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 Notes and this Indenture;
(2) immediately after giving pro forma effect to such transaction, no Default shall have occurred and be continuing; and
(3) the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture.
(b) The Company shall not permit any Subsidiary Guarantor to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:
(1) (A) the resulting, surviving or transferee Person (the “Successor Guarantor”) shall 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 such Subsidiary Guarantor) shall expressly assume, by an indenture supplemental thereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of such Subsidiary Guarantor in respect of each Subsidiary Guarantee and under this Indenture;
(B) immediately after giving pro forma effect to such transaction, no Default shall have occurred and be continuing; and
(C) the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture; or
(2) the transaction results in the release of such Subsidiary Guarantor’s Subsidiary Guarantee under clause (1) of Section 10.06.
Notwithstanding the foregoing Section 5.01(b), any Subsidiary Guarantor may merge with or into or transfer all or part of its assets to the Company or any other Subsidiary Guarantor.
(c) For purposes of the foregoing Section 5.01(a) and (b), the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company or a Subsidiary Guarantor, as the case may be, which properties and assets, if held by the Company or such Subsidiary Guarantor instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company or such Subsidiary Guarantor on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company or such Subsidiary Guarantor.
(d) The Successor Company shall be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company
under this Indenture, and the predecessor Company, except in the case of a lease, shall be released from the obligation to pay the principal of and interest on the Notes. The Successor Guarantor shall be the successor to the applicable Subsidiary Guarantor and shall succeed
to, and be substituted for, and may exercise every right and power of, such Subsidiary Guarantor under this Indenture, and the predecessor Subsidiary Guarantor, except in the case of a lease, shall be released from its obligations under its Subsidiary Guarantee.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default. Each of the following shall be an Event of Default with respect to the Notes (an “Event of Default”):
(1) a default in the payment of principal of or premium, if any, on any Note when due at its Stated Maturity, upon redemption, required repurchase, upon declaration or otherwise;
(2) a default in any payment of interest on any Note when due, continued for 30 days;
(3) the failure by the Company or any Subsidiary Guarantor to comply with its obligations under Article V of this Indenture;
(4) a failure by the Company or any Subsidiary Guarantor to comply with any of its obligations, covenants or agreements (other than a default referred to in clauses (1), (2) and (3) above) contained in this Indenture or under the Notes for a period of 60 consecutive days after receipt by the Company of written notice of such failure by the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes;
(5) the failure by the Company or any Significant Subsidiary to pay any Indebtedness within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof if the total amount of such Indebtedness unpaid or accelerated exceeds $75.0 million or its foreign currency equivalent;
(6) the Company or a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(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 of it or for any substantial part of its property;
(D) makes a general assignment for the benefit of its creditors; or
(E) takes any comparable action under any foreign laws relating to insolvency;
(7) 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;
(C) orders the winding up or liquidation of the Company or any Significant Subsidiary; or
(D) or any similar relief is granted under any foreign laws and the order, decree or relief remains unstayed and in effect for 60 days;
(8) the rendering of any judgment or decree for the payment of money in excess of $50.0 million or its foreign currency equivalent 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
(9) any Subsidiary Guarantee of a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms of this Indenture) or is declared null and void in a judicial proceeding or any Subsidiary Guarantor that is a Significant Subsidiary denies or disaffirms its obligations under this Indenture or its Subsidiary Guarantee.
The foregoing shall 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. However, a Default under clause (4) shall not constitute an Event of Default until the Trustee or the Holders of at least 25% in aggregate principal amount of the outstanding Notes notify the Company of the Default and the Company does not cure such Default within the time specified in clause (4) after receipt of such notice.
SECTION 6.02. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.01(6) or (7) 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 aggregate outstanding principal amount of the Notes 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 Notes to be due and payable. Upon such a declaration, such principal, premium and interest shall be immediately due and payable. In the event of a declaration of acceleration because an Event of Default set forth in Section 6.01(5) 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 6.01(5) shall be remedied or cured by the Company 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; provided that, (i) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived and (ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. If an Event of Default specified in Section 6.01(6) or (7) with respect to the Company or a Significant Subsidiary occurs and is continuing, the principal of, premium, if any, and interest on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.
SECTION 6.03. 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 premium, if any) or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder 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 6.04. Waiver of Past Defaults. The Holders of a majority in aggregate principal amount of the outstanding Notes may waive all past Defaults or Events of Default (except with respect to nonpayment of principal, premium or interest) and rescind any such acceleration with respect to the Notes 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 Notes 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 6.05. Limitation on Suits. A Holder may not pursue any remedy with respect to this Indenture or the Notes 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 Notes make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer 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 outstanding Notes do not give the Trustee a direction inconsistent with the request during such 60-day period.
A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder.
SECTION 6.06. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the contractual right of any Holder to institute suit for the enforcement of any payment of principal, premium, if any, and interest on or with respect to such Holder’s Notes on or after the due dates expressed or provided for in such Note shall not be amended without the consent of such Holder.
SECTION 6.07. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(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).
SECTION 6.08. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceedings, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding has been instituted.
SECTION 6.09. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.07 hereof, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
SECTION 6.10. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article VI or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 6.11. 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 Holders 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.
SECTION 6.12. Priorities. If the Trustee collects any money or property pursuant to this Article VI, it shall pay out the money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.07, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;
SECOND: to Holders for amounts due and unpaid on the Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.12. At least 15 days before such record date, the Company shall mail to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid.
SECTION 6.13. 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 6.13 does not apply to a suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to Section 6.06 or a suit by Holders of more than 10% in outstanding principal amount of the Notes.
SECTION 6.14. Control by Holders of Notes. The Holders of a majority in principal amount of the Notes 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 the Notes or, that the Trustee determines is unduly prejudicial to the rights of other Holders 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.
SECTION 6.15. Notices of Default; Compliance Certificate. If a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each Holder notice of the Default or Event of Default within 90 days after it occurs unless the Default has been
previously cured. In addition, except in the case of a Default in the payment of principal of, premium, if any, or interest on any Note, the Trustee shall be protected in withholding notice if and so long as the Trustee in good faith determines that withholding notice is in the interests of the Holders. In addition, the Company is required to deliver to the Trustee, within 120 days after the end of each fiscal year, an Officer’s Certificate indicating whether the signers thereof know of any Default or Event of Default that occurred during the previous year. The Company also is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice and a description of any event which would constitute a Default or Event of Default, their status and what action the Company is taking or proposes to take in respect thereof.
ARTICLE VII
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its 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:
(i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) 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 provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein.
(c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved in a court of competent jurisdiction that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) 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 6.14 hereof.
(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee shall be under no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any Holder unless such Holder has offered to the Trustee indemnity or security satisfactory to it against any loss, liability or expense.
(f) 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. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
SECTION 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or 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, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.
(b) Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company.
(f) None of the provisions of this Indenture shall require the Trustee to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, 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 for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured to it.
(g) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default is received by a Responsible Officer of the Trustee at the Corporate Trust Office, and such notice references the Notes and this Indenture.
(h) In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to,
loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
(i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder and each agent, custodian and other Person employed to act hereunder.
(j) The permissive rights of the Trustee enumerated herein shall not be construed as duties.
(k) The Trustee may request that the Company delivers an Officer’s Certificate setting forth the names of individuals or titles of officers authorized at such time to take specified actions pursuant to this Indenture.
(l) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days or resign. The Paying Agent or Registrar does the same with like rights and duties. The Trustee is also subject to Section 7.09.
SECTION 7.04. 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 Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05. Notice of Defaults.
If a Default occurs and is continuing and if it is known to a Responsible Officer of the Trustee, the Trustee shall send to Holders a notice of the Default within 90 days of the occurrence of such Default. Except in the case of a Default relating to the payment of principal, premium, if any, or interest on any Note, the Trustee may withhold from the Holders notice of any continuing Default if and so long as it in good faith determines that withholding the notice is in the interests of the Holders. The Trustee shall not be deemed to know of any Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is such a Default is received by a Responsible Officer of the Trustee at the Corporate Trust Office. The provisions of this Section 7.05 are subject to the provisions of Section 6.15.
SECTION 7.06. Compensation and Indemnity.
(a) The Company shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder 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 promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.
(b) The Company and Subsidiary Guarantors shall indemnify the Trustee for, and hold the Trustee harmless against, any and all loss, damage, claims, liability or expense (including attorneys’ fees and expenses and taxes (other than taxes based upon the income of the Trustee)) incurred by it in connection with the acceptance or administration of this trust and the performance of its duties hereunder (including the costs and expenses of enforcing this Indenture against the Company or any Subsidiary Guarantors (including this Section 7.07) or defending itself against any claim whether asserted by any Holder, the Company or any Subsidiary Guarantor, or liability in connection with the acceptance, exercise or performance of any of its powers or duties hereunder). 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 except to the extent actually prejudiced thereby. The Issuer shall defend the claim, and the Trustee shall cooperate in the defense of such claim. The Trustee may have separate counsel if the Trustee shall have been advised by counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the Company and in the reasonable judgment of such counsel it is advisable for the Trustee to engage separate counsel, and the Company shall pay the reasonable and documented fees and expenses of any one such separate counsel (as well as such fees and expenses of one firm of local counsel in each jurisdiction in which the primary counsel is not admitted to practice and where local counsel is necessary or advisable). The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred as determined in a final judgment by a court of competent jurisdiction to have resulted from the Trustee’s own willful misconduct or negligence.
(c) The obligations of the Company and the Subsidiary Guarantors, if any, under this Section 7.07 shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee.
(d) To secure the payment obligations of the Company in this Section 7.07, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.
(e) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.07. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.08. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing not less than 30 days prior to the effective date of such removal. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.09;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the Company’s expense), the Company or the Holders of at least 10% in principal amount of the then outstanding Notes may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.09, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of 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 Holders. The retiring Trustee shall, at the expense of the Company, promptly transfer all property held by it as Trustee to the successor Trustee; provided that all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company’s obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. The predecessor Trustee shall have no liability for any action or inaction by any successor Trustee.
SECTION 7.08. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee.
SECTION 7.09. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.
ARTICLE VIII
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Defeasance. (a) Subject to Sections 8.01(b) and 8.02, the Company at its option and at any time may terminate
(i) all the obligations of the Company and any Subsidiary Guarantor under the outstanding Notes and this Indenture (“legal defeasance option”); or
(ii) the obligations of the Company under Sections 4.03, 4.06, 4.07, 4.08, 4.09, and 5.01(a)(3) 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 with such covenants or provisions shall no longer constitute a Default or an Event of Default under Section 6.01(3) and 6.01(4) (“covenant defeasance option”), but except as specified above, the remainder of this Indenture and the Notes 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 or covenant defeasance option with respect to the outstanding Notes, the related Subsidiary Guarantees in effect at such time shall be automatically released.
If the Company exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in Sections 6.01(4), 6.01(5), 6.01(6) (but only with respect to a Significant Subsidiary), 6.01(7) (but only with respect to a Significant Subsidiary), 6.01(8) or 6.01(9), or because of the failure of the Company to comply with Section 5.01(a)(3) or 5.01(b)(1)(C).
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.
(b) Notwithstanding the provisions of Section 8.01(a), the Company’s obligations in Sections 2.02, 2.06, 2.07, 6.06, 6.07, 8.04, 8.05 and 8.07 shall survive until the Notes have been paid in full. Thereafter, the Company’s obligations in Sections 6.06, 8.04 and 8.05 of this Indenture shall survive.
SECTION 8.02. Conditions to Defeasance. In order to exercise either legal defeasance option or covenant defeasance option with respect to the Notes:
(1) the Company shall irrevocably deposit with the Trustee, in trust, for the benefit of the Holders cash in U.S. dollars, non-callable U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Notes on the stated date for payment thereof or on the Redemption Date, as the case may be;
(2) in the case of legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) 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 beneficial owners will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance option 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 option had not occurred;
(3) in the case of covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that the beneficial owners will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance option and will be subject to federal income tax on the same amounts, in the same manner at the same times as would have been the case if such covenant defeasance option had not occurred;
(4) no Default or Event of Default with respect to the Notes shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default with respect to this Indenture resulting from the incurrence of Indebtedness, all or a portion of which will be used to defease the Notes concurrently with such incurrence);
(5) such legal defeasance option or covenant defeasance option 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 (other than a Default or Event of Default with respect to this Indenture resulting from the incurrence of Indebtedness, all or a portion of which will be used to defease the Notes concurrently with such incurrence);
(6) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that (A) the Notes 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 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’ rights generally; and
(7) the Company shall have delivered to the Trustee an Officer’s Certificate stating that all conditions precedent provided for or relating to the legal defeasance option or covenant defeasance option, as the case may be, have been complied with.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article VIII. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes.
SECTION 8.04. Repayment to Company. (a) 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 VIII 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 option or covenant defeasance option, 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 Section 8.04(a).
(b) 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 Notes that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Company for payment as general creditors.
SECTION 8.05. 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 8.06. Deposited Money and Government Notes to be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.04, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.06, the “Trustee”) pursuant to Section 8.02 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes
of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.
Anything in this Article VIII to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the written request of the Company any money or U.S. Government Obligations held by it as provided in Section 8.02 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.02 hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent legal defeasance or covenant defeasance.
SECTION 8.07. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article VIII 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 Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII 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 VIII; provided, however, that, if the Company has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENT AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company and the Trustee may amend or supplement this Indenture and the Notes and the Subsidiary Guarantees issued hereunder without notice to or consent of any Holder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V of this Indenture in respect of the assumption by a Successor Company, as the case may be, of the obligations of the Company or any Subsidiary Guarantor under this Indenture, the Notes and the Subsidiary Guarantees issued hereunder;
(3) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided, however, that such uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code;
(4) to add Guarantees with respect to the Notes or release any such Guarantees in accordance with the applicable provisions of this Indenture;
(5) to add to the covenants of the Company and its Subsidiaries for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or its Subsidiaries;
(6) to conform the text of this Indenture, any Subsidiary Guarantees or the Notes to the “Description of Notes” in the Offering Memorandum;
(7) to secure the Notes and any Subsidiary Guarantee;
(8) to make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes as permitted by this Indenture, including, without limitation, to facilitate the issuance and administration of the Notes; provided, however, that (i) compliance with this Indenture as so amended would not result in the Notes being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer the Notes;
(9) to evidence and provide for the acceptance of appointment by a successor Trustee; provided that the successor Trustee is otherwise qualified and eligible to act as such under the terms of this Indenture;
(10) to provide for or confirm the issuance of Additional Notes; and
(11) to make any change that does not adversely affect the rights of any Holder of the Notes.
After an amendment under this Section 9.01 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.01.
SECTION 9.02. With Consent of Holders. The Company and the Trustee may amend or supplement this Indenture, the Notes and the Subsidiary Guarantees issued hereunder without notice to any Holder but with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding. However, without the consent of each Holder affected, an amendment may not:
(1) reduce the principal amount of Notes whose Holders must consent to an amendment;
(2) reduce the rate of or extend the time for payment of interest on any Note;
(3) reduce the principal of or extend the Stated Maturity of any Note;
(4) reduce the premium payable upon the redemption or repurchase of any Note or change the time at which any Note may be redeemed in accordance with Article III;
(5) make any Note payable in money other than that stated in the Note;
(6) amend the contractual right of any Holder of Notes to institute suit for the enforcement of any payment of principal, premium, if any, and interest on or with respect to such Holder’s Notes on or after the due dates expressed or provided for in such Note;
(7) make any change in the amendment or waiver provisions which require the consent of each Holder of Notes; or
(8) modify the Subsidiary Guarantees in any manner adverse to the Holders of the Notes.
It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.
SECTION 9.03. Revocation and Effects of Consents and Waivers. A consent to an amendment, supplement or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent, supplement or waiver as to such Holder’s Note or portion of the Note if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective. After an amendment, supplement or waiver becomes effective, it shall bind every Holder. An amendment, supplement or waiver made pursuant to Section 9.02 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 Holders 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 Holders 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 9.04. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.05. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article IX if the amendment, supplement or waiver does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment, supplement or waiver until the Board of Directors approves it. In executing any amendment, supplement or waiver, the Trustee shall be provided with and (subject to Section 7.01) shall be fully protected in conclusively relying upon, in addition to the documents required by Section 12.02, an Officer’s Certificate and an Opinion of Counsel, each stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture and such Opinion of Counsel shall state that such amendment, supplement or waiver is the legal, valid and binding obligation of the Company and any Subsidiary Guarantors party thereto, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof.
ARTICLE X
GUARANTEES
SECTION 10.01. Guarantee.
Subject to this Article X, each of the Subsidiary Guarantors hereby, jointly and severally, fully and unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of, interest, premium, if any, on the Notes, subject to any applicable grace period, shall be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment by the Company when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors shall be jointly and severally obligated to pay the same immediately. Each Subsidiary Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.
Each Subsidiary Guarantor hereby agrees that, to the maximum extent permitted under applicable law, their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor (other than payment in full of all of the Obligations of the Company hereunder and under the Notes). Each Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture or by release in accordance with the provisions of this Indenture.
Each Subsidiary Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ and agents’ fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section 10.01.
If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Subsidiary Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Subsidiary Guarantors any amount paid either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.
Each Subsidiary Guarantor agrees that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article VI hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantors for the purpose of this Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantees.
Each Subsidiary Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation, reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company’s assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes or Subsidiary Guarantees, whether as a “voidable preference,” “fraudulent transfer” or otherwise, all as though such payment or performance had not been made. In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
In case any provision of any Subsidiary Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
The Subsidiary Guarantee issued by any Subsidiary Guarantor shall be a general unsecured (unless the Notes are secured pursuant to Section 4.08) obligation of such Subsidiary Guarantor and shall rank equally in right of payment to all existing and future senior Indebtedness of such Subsidiary Guarantor.
Each payment to be made by a Subsidiary Guarantor in respect of its Subsidiary Guarantee shall be made without set-off, counterclaim, reduction or diminution of any kind or nature.
SECTION 10.02. Limitation on Guarantor Liability.
Each Subsidiary Guarantor and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Subsidiary Guarantee of such Subsidiary Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Subsidiary Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors hereby irrevocably agree that the obligations of each Subsidiary Guarantor shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Subsidiary Guarantor that are relevant under such laws and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under this Article X, result in the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law. Each Subsidiary Guarantor that makes a payment under its Subsidiary Guarantee shall be entitled upon payment in full of all guaranteed obligations under this Indenture to a contribution from each other Subsidiary Guarantor in an amount equal to such other Subsidiary Guarantor’s pro rata portion of such payment based on the respective net assets of all the Subsidiary Guarantors at the time of such payment determined in accordance with GAAP.
SECTION 10.03. Execution and Delivery.
Each Subsidiary Guarantor hereby agrees that its execution and delivery of a supplemental indenture substantially in the form of Exhibit D hereto, executed on behalf of such Subsidiary Guarantor by an officer thereof shall evidence its Subsidiary Guarantee set forth in Section 10.01 without the need for any further notation on the Notes. Upon the execution and delivery of the supplemental indenture, the Subsidiary Guarantees set forth in this Indenture shall be deemed duly delivered, without any further action by any Person, on behalf of the Subsidiary Guarantors.
Each of the Subsidiary Guarantors hereby agrees that its Subsidiary Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Subsidiary Guarantee. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of any Subsidiary Guarantors.
SECTION 10.04. Subrogation.
Each Subsidiary Guarantor shall be subrogated to all rights of Holders against the Company in respect of any amounts paid by any Subsidiary Guarantor pursuant to the provisions of Section 10.01; provided that no Subsidiary Guarantor shall be entitled to enforce or receive any
payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Company under this Indenture or the Notes shall have been paid in full.
SECTION 10.05. Benefits Acknowledged.
Each Subsidiary Guarantor acknowledges that it shall receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the guarantee and waivers made by it pursuant to its Subsidiary Guarantee are knowingly made in contemplation of such benefits.
SECTION 10.06. Release of Subsidiary Guarantees.
A Subsidiary Guarantee by a Subsidiary Guarantor shall be automatically released:
(1) upon the sale or other disposition (including by way of consolidation or merger) of the Capital Stock of such Subsidiary Guarantor, as a result of which such Subsidiary Guarantor ceases to be a Subsidiary of the Company;
(2) at such time as such Subsidiary Guarantor no longer is a borrower under or Guarantees obligations under any Debt Facility of the Company or any Subsidiary Guarantor that resulted in the issuance of the Subsidiary Guarantee;
(3) upon the defeasance of the Notes, as provided under Section 8.01 hereof;
(4) upon the discharge of this Indenture, as provided under Section 11.01 hereof; or
(5) as described under Article IX hereof; and
provided that clause (2) above shall not apply with respect to any Subsidiary Guarantee provided on the Issue Date prior to the Senior Credit Facilities Commitment Termination Event.
In the event that any released Subsidiary Guarantor (in the case of clause (2) above) thereafter borrows money or Guarantees obligations under any Debt Facility of the Company or any Subsidiary Guarantor, such former Subsidiary Guarantor will again provide a Subsidiary Guarantee in accordance with Section 4.09 hereof.
ARTICLE XI
SATISFACTION AND DISCHARGE
SECTION 11.01. Satisfaction and Discharge.
This Indenture shall be discharged and will cease to be of further effect as to all Notes, when:
(1) either (a) all Notes theretofore authenticated and delivered, except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust, have been delivered to the applicable Trustee for cancellation; or (b) all Notes not theretofore delivered to the applicable Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise, will become due and payable within one year or are to be called for redemption and redeemed within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company and the Company or any Subsidiary Guarantor have irrevocably deposited or caused to be deposited with the applicable Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on the Notes not theretofore delivered to the applicable Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption,
(2) the Company has paid or caused to be paid all sums payable by it under this Indenture; and
(3) the Company has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be.
In addition, upon its request for written acknowledgement of satisfaction and discharge, the Company must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, if money shall have been deposited with the Trustee pursuant to Section 11.01(1), the provisions of Section 11.02 and Section 8.04 shall survive such satisfaction and discharge.
SECTION 11.02. Application of Trust Money.
Subject to the provisions of Section 8.04, all money deposited with the Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 11.01 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 Company’s and any Subsidiary Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01; provided that if the Company has made any payment of principal of,
premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Notices.
Any notice or communication by the Company or any Subsidiary Guarantor or the Trustee to the others is duly given if in writing and delivered in person or mailed by first-class mail (registered or certified, return receipt requested), electronic delivery (in PDF format), fax or overnight air courier guaranteeing next day delivery, to the others’ address:
If to the Company or any Subsidiary Guarantor:
Smithfield Foods, Inc.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
Fax: (757) 365-3070
with copies to:
Paul Hastings LLP
200 Park Avenue
New York, NY 10166
Attention: Michael Chernick, Esq.
Fax: (212) 230-7639
If to the Trustee:
U.S. Bank National Association
Global Corporate Trust Services
Two Midtown Plaza
1349 West Peachtree Street, NW, Suite 1050
Atlanta, GA 30309
Attention: David Ferrell
Fax: 404-898-2467
The Company, any Subsidiary Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: as of the date so delivered if delivered electronically, in PDF format; at the time delivered by hand, if personally delivered; five calendar days after being deposited in the mail, postage prepaid, if mailed by first-class mail; when receipt acknowledged, if faxed; and the
next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery; provided that any notice or communication delivered to the Trustee shall be deemed effective upon actual receipt thereof.
Any notice or communication to a Holder shall be sent electronically, mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed or otherwise delivered in the manner provided above within the time prescribed, such notice or communication shall be deemed duly given, whether or not the addressee receives it.
The Trustee agrees to accept and act upon facsimile or electronically sent (in PDF format) transmission of written instructions or directions pursuant to this Indenture given by the Company, provided, however that: (i) if requested, the Company, subsequent to such facsimile transmission of written instructions or directions, shall provide the originally executed instructions or directions to the Trustee in a timely manner and (ii) such originally executed instructions or directions shall be signed by an Officer of the Company.
If the Company sends a notice or communication to Holders, it shall send a copy to the Trustee and each Agent at the same time.
SECTION 12.02. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(a) An Officer’s Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.03) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
(b) An Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.03) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.
SECTION 12.03. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 4.04) and shall include:
(a) a statement that the Person making such certificate or opinion has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she 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
(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.
With respect to matters of fact, an Opinion of Counsel may rely on an Officer’s Certificate, certificates of public officials or reports or opinions of experts.
SECTION 12.04. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
SECTION 12.05. No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator or stockholder of the Company or the Subsidiary Guarantors, if any, as such, shall have any liability for any obligations of the Company under the Notes, this Indenture or the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy.
SECTION 12.06. Governing Law. THIS INDENTURE, THE NOTES AND ANY SUBSIDIARY GUARANTEE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 12.07. Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 12.08. Appointment of Note Registrar and Paying Agent. The Trustee will initially act as Paying Agent and Note Registrar. The Company may change the Paying Agent or Note Registrar without prior notice to the Holders, and the Company or any of its Restricted Subsidiaries may act as Paying Agent or Note Registrar.
SECTION 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or the Restricted Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.10. Successors.
All agreements of the Company in this Indenture and the Notes shall bind their successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Subsidiary Guarantor, if any, in this Indenture shall bind its successors, except as otherwise provided in Section 10.06.
SECTION 12.11. Severability.
In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture which, when taken together, shall constitute one instrument. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
SECTION 12.13. 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.
SECTION 12.14. U.S.A. Patriot Act.
The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.
[Signatures on following pages]
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written.
| | | | | | | | | | | |
| U.S. Bank National Association, as Trustee |
| | | |
| | | |
| | | |
| | | |
| By: | /s/ David Ferrell |
| Name: | David Ferrell |
| Title: | Vice President |
[SFD - Signature Page to 2027 Indenture]
| | | | | | | | | | | |
| COMPANY: | Smithfield Foods, Inc., |
| a Virginia corporation |
| | | |
| | | |
| | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President and Corporate Treasurer |
| | | | | | | | | | | | | | |
| SUBSIDIARY GUARANTORS: | | | | |
| | | | |
| Smithfield Farmland Sales Corp., | |
| a Delaware corporation | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | |
| Smithfield Packaged Meats Corp., | |
| a Delaware corporation | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | |
| John Morrell & Co., | |
| a Delaware corporation | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | |
| Smithfield Farmland Corp., | |
| a Delaware corporation | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
[SFD - Signature Page to 2027 Indenture]
| | | | | | | | | | | | | | |
| Smithfield Global Products Inc., | |
| a Delaware corporation | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | |
| Smithfield Support Services Corp., |
| a Delaware corporation | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | |
| Smithfield Strategic Sourcing & Service Co.,
Inc., |
| a Delaware corporation | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | |
| Tar Heel Turkey Hatchery, Inc., | |
| a North Carolina corporation | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
[SFD - Signature Page to 2027 Indenture]
| | | | | | | | | | | | | | |
| SF Investments, Inc., | |
| a Delaware corporation | |
| | | | |
| By: | /s/ Jeffrey A. Porter | |
| Name: Jeffrey A. Porter | |
| Title: President | |
| | | | |
| Patcud Investments, Inc., |
| a Delaware corporation | |
| | | | |
| By: | /s/ Jeffrey A. Porter | |
| Name: Jeffrey A. Porter | |
| Title: President | |
| | | | |
| Jonmor Investments, Inc., |
| a Delaware corporation | |
| | | | |
| By: | /s/ Jeffrey A. Porter | |
| Name: Jeffrey A. Porter | |
| Title: President | |
[SFD - Signature Page to 2027 Indenture]
| | | | | | | | | | | | | | |
| KC2 Real Estate, LLC, | |
| a Delaware limited liability company |
| | | | |
| By:Murphy-Brown of Missouri LLC, fka
Premium Standard Farms LLC, |
| | Member | |
| | | | |
| By: Smithfield Foods, Inc., | |
| | Member | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President and Corporate Treasurer |
| | | | |
| Murphy-Brown of Missori LLC, |
| a Delaware limited liability company |
| | | | |
| By: Smithfield Foods, Inc., | |
| | Member | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President and Corporate Treasurer |
[SFD - Signature Page to 2027 Indenture]
| | | | | | | | | | | | | | |
| Duplin Marketing Company, LLC |
| a North Carolina limited liability company |
| MB Grain LLC, |
| a Delaware limited liability company |
| | | | |
| By:Murphy-Brown LLC, |
| | each entity’s Member | |
| | | | |
| By: John Morrell & Co., | |
| | Member | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President |
| | | | |
| Smithfield Specialty Foods Group, LLC, |
| a Delaware limited liability company |
| | | | |
| By: Smithfield Farmland Corp., | |
| | Member | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President |
[SFD - Signature Page to 2027 Indenture]
| | | | | | | | | | | | | | |
| Murphy-Brown LLC |
| a Delaware limited liability company |
| Armour-Eckrich Meats LLC, |
| a Delaware limited liability company |
| Patrick Cudahy, LLC, |
| a Delaware limited liability company |
| Premium Pet Health, LLC, |
| a Delaware limited liability company |
| Smithfield-Kinston LLC |
| a Delaware limited liability company |
| | | | |
| By: John Morrell & Co., |
| | each entity’s Member | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President |
[SFD - Signature Page to 2027 Indenture]
| | | | | | | | | | | | | | |
| Brown’s Realty Partnership, |
| a North Carolina partnership |
| | | | |
| By:Murphy-Brown LLC, |
| | Partner | |
| | | | |
| By: John Morrell & Co., | |
| | Member | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President |
| | | | |
| By: Smithfield Purchase Corporation, |
| | Partner | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President |
| | | | |
| Carroll’s Realty Partnership, |
| a North Carolina partnership |
| | | | |
| By:Murphy-Brown LLC, |
| | Partner | |
| | | | |
| By: John Morrell & Co., | |
| | Member | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President |
| | | | |
| By: Smithfield Purchase Corporation, |
| | Partner | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President |
[SFD - Signature Page to 2027 Indenture]
| | | | | | | | | | | | | | |
| Smithfield-Carroll’s Farms, |
| a Virginia partnership |
| | | | |
| By:Murphy-Brown LLC, |
| | Partner | |
| | | | |
| By: John Morrell & Co., | |
| | Member | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President |
| | | | |
| By: Smithfield Purchase Corporation, |
| | Partner | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President |
[SFD - Signature Page to 2027 Indenture]
FORM OF NOTE
[Face of Note]
[Insert the Global Note Legend, if applicable, pursuant to the provisions of the Indenture]
[Insert the Private Placement Legend, if applicable, pursuant to the provisions of the Indenture]
CUSIP [l][l]
ISIN [l][l]
[RULE 144A] [REGULATION S] GLOBAL NOTE
4.250% Senior Notes due 2027
SMITHFIELD FOODS, INC.
promises to pay to CEDE & CO. or registered assigns, the principal sum set forth on the Schedule of Exchanges of Interests in the Global Note attached hereto in United States Dollars on February 1, 2027.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
IN WITNESS HEREOF, the Company has caused this instrument to be duly executed.
| | | | | | | | |
| SMITHFIELD FOODS, INC. |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
This is one of the Notes referred to in the within-mentioned Indenture:
Dated:
| | | | | | | | |
| U.S. BANK NATIONAL ASSOCIATION,
as Trustee |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
[Reverse of Note]
4.250% Senior Notes due 2027
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Smithfield Foods, Inc., a Virginia corporation (the “Company”) promises to pay interest on the principal amount of this Note at 4.250% per annum from February 1, 2017 until maturity. The Company shall pay interest, semi-annually in arrears on February 1 and August 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that the first Interest Payment Date shall be August 1, 20171. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the interest rate on the Notes to the extent lawful. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes to the Persons who are registered Holders at the close of business on the January 15 or July 15 (whether or not a Business Day), as the case may be, immediately preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. Payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank National Association, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to the Holders. The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture, dated as of February 1, 2017 (the “Indenture”), between the Company, and the Trustee. This Note is one of a duly authorized issue of Notes of the Company designated as its 4.250% Senior Notes due 2027. The Company shall be entitled to issue Additional Notes pursuant to Section 2.01 of the Indenture. To the extent any provision of this Note conflicts with the express provisions of the
1 With respect to Initial Notes issued on the Issue Date.
Indenture, the provisions of the Indenture shall govern and be controlling, and Holders are referred to the Indenture for a statement of such terms.
5. OPTIONAL REDEMPTION.
(a) At any time prior to the Par Call Date, the Notes may be redeemed by the Company, in whole or in part, at the Company’s option, at a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but excluding, the Redemption Date; or
(ii) the sum of the Remaining Scheduled Payments on such Notes being redeemed (not including any portion of the payments of interest accrued as of the redemption date (the “Redemption Date”)), discounted to its present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Adjusted Treasury Rate, as determined by the Quotation Agent, plus 30 basis points, plus accrued and unpaid interest on the principal amount of such Notes being redeemed to, but excluding, the Redemption Date.
(b) At any time on and after the Par Call Date, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Notes to be redeemed, plus accrued and unpaid interest, if any, on the Notes to the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(c) If the optional Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Company. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption.
(d) If less than all of the Notes are to be redeemed, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Definitive Note surrendered representing the same indebtedness to the extent not redeemed or purchased; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000.
(e) In addition to the Company’s rights to redeem the Notes as set forth above, the Company may purchase Notes in open-market transactions, tender offers or otherwise invest such net proceeds in any manner that is not prohibited by the Indenture.
6. MANDATORY REDEMPTION. The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Subject to Section 3.03 of the Indenture, notice of redemption shall be sent by electronic delivery or mailed by first-class mail at least 15
days but not more than 60 days before the Redemption Date to each Holder to be redeemed at such Holder’s registered address, except that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Articles VIII or XI of the Indenture.
8. OFFERS TO REPURCHASE. If a Change of Control Triggering Event occurs, each Holder will have the right to require the Company to purchase all or any part (in integral multiples of $1,000 except that no purchase will be permitted that would result in a Note having a remaining principal amount of less than $2,000) of such Holder’s Notes pursuant to a Change of Control Offer. In the Change of Control Offer, the Company will offer to purchase all of the Notes, at a purchase price in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the rights of Holders of record on relevant Record Dates to receive interest due on an Interest Payment Date). The Change of Control Offer shall be made in accordance with Section 4.07 of the Indenture.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Notes or portion of Notes selected for redemption, except for the unredeemed portion of any Notes being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture or the Notes may be amended or supplemented as provided in the Indenture.
12. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture. If any Event of Default (other than as specified in Section 6.01(6) or 6.01(7) of the Indenture with respect to the Company or a Significant Subsidiary) shall occur and be continuing with respect to the Indenture, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders) and upon any such declaration, such principal, premium, if any, and interest shall become due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default as specified in Section 6.01(6) or 6.01(7), with respect to the Company or a Significant Subsidiary occurs and is continuing, then all the Notes shall automatically become and be due and payable immediately in an amount equal to the principal amount of the Notes, together with accrued and unpaid interest, if any, to the date the Notes become due and payable, without any declaration or other act on the part of the Trustee or any holder. Holders may not enforce the Indenture or the Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or and its consequences under the Indenture except a continuing Default in payment of the principal of, premium, if any, or interest on, any of the Notes held by a non-consenting Holder. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required within 30 days after becoming aware of any Default, to deliver to the Trustee a statement specifying such Default and what action the Company proposes to take with respect thereto.
13. AUTHENTICATION. This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.
14. GOVERNING LAW. THIS NOTE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. CUSIP/ISIN NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP/ISIN numbers to be printed on the Notes and the Trustee may use CUSIP/ISIN numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
16. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to the Company at the following addresses:
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
with a copy to Paul Hastings LLP
200 Park Avenue
New York, New York 10166
Attention: Michael Chernick, Esq.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: _______________________________________
(Insert assignee’ legal name)
| | | | | |
| |
| (Insert assignee’s soc. sec. or tax I.D. no.) |
| |
| |
| |
| |
| (Print or type assignee’s name, address and zip code) |
| and irrevocably appoint | |
| to transfer this Note on the books of the Company. The agent may substitute another to act for him. |
| | | | | | | | | | | |
| Date: | | | |
| | | |
| | Your Signature: | |
| | | (Sign exactly as your name appears on the face of this Note) |
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 4.07 of the Indenture, check the appropriate box below:
o Section 4.07
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.07 of the Indenture, state the amount you elect to have purchased:
$_______________
Date: _____________________
| | | | | |
| Your Signature: | |
| (Sign exactly as your name appears on the face of this Note) |
| |
| Tax Identification No.: | |
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The initial outstanding principal amount of this Global Note is $[•]. The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global or Definitive Note for an interest in this Global Note, have been made:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Date of Exchange | | Amount of
decrease in
Principal
Amount of this
Global Note | | Amount of
increase in
Principal
Amount of this
Global Note | | Principal
Amount of this
Global Note
following such
decrease or
increase | | Signature of
authorized
signatory of
Trustee or Notes
Registrar |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
__________________
*This schedule should be included only if the Note is issued in global form.
[Face of Regulation S Temporary Note]
[Insert Regulation S Temporary Global Note Legend]
[Insert the Global Note Legend]
[Insert the Private Placement Legend]
CUSIP [•][•]
ISIN [•]
TEMPORARY REGULATION S GLOBAL NOTE
4.250% Senior Notes due 2027
SMITHFIELD FOODS, INC.
promises to pay to CEDE & CO. or registered assigns, the principal sum of [•] United States Dollars on February 1, 2027.
Interest Payment Dates: February 1 and August 1
Record Dates: January 15 and July 15
IN WITNESS HEREOF, the Company has caused this instrument to be duly executed.
| | | | | |
| SMITHFIELD FOODS, INC. |
| |
| By: | |
| Name: |
| Title: |
This is one of the Notes referred to in the within-mentioned Indenture:
Dated:
| | | | | |
U.S. BANK NATIONAL ASSOCIATION,
as Trustee |
| |
| By: | |
| Name: |
| Title: |
[Reverse of Note]
4.250% Senior Notes due 2027
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Smithfield Foods, Inc., a Virginia corporation (the “Company”) promises to pay interest on the principal amount of this Note at 4.250% per annum from February 1, 2017 until maturity. The Company will pay interest, semi-annually in arrears on February 1 and August 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that the first Interest Payment Date shall be August 1, 20172. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the interest rate on the Notes to the extent lawful. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes to the Persons who are registered Holders at the close of business on the January 15 or July 15 (whether or not a Business Day), as the case may be, immediately preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. Payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank National Association, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to the Holders. The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture, dated as of February 1, 2017 (the “Indenture”), between the Company, and the Trustee. This Note is one of a duly authorized issue of Notes of the Company designated as its 4.250% Senior Notes due 2027. The Company shall be entitled to issue Additional Notes pursuant to Section 2.01 of the
2 With respect to Initial Notes issued on the Issue Date.
Indenture. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling, and Holders are referred to the Indenture for a statement of such terms.
5. OPTIONAL REDEMPTION.
(a) At any time prior to the Par Call Date, the Notes may be redeemed by the Company, in whole or in part, at the Company’s option, at a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but excluding, the Redemption Date; or
(ii) the sum of the Remaining Scheduled Payments on such Notes being redeemed (not including any portion of the payments of interest accrued as of the redemption date (the “Redemption Date”)), discounted to its present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Adjusted Treasury Rate, as determined by the Quotation Agent, plus 30 basis points, plus accrued and unpaid interest on the principal amount of such Notes being redeemed to, but excluding, the Redemption Date.
(b) At any time on and after the Par Call Date, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Notes to be redeemed, plus accrued and unpaid interest, if any, on the Notes to the Redemption Date (subject to the right of Holders of record on the relevant ant Record Date to receive interest due on the relevant Interest Payment Date).
(c) If the optional Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Company. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption.
(d) If less than all of the Notes are to be redeemed, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Definitive Note surrendered representing the same indebtedness to the extent not redeemed or purchased; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000.
(e) In addition to the Company’s rights to redeem the Notes as set forth above, the Company may purchase Notes in open-market transactions, tender offers or otherwise invest such net proceeds in any manner that is not prohibited by the Indenture.
6. MANDATORY REDEMPTION. The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Subject to Section 3.03 of the Indenture, notice of redemption shall be sent by electronic delivery or mailed by first-class mail at least
15 days but not more than 60 days before the Redemption Date to each Holder to be redeemed at such Holder’s registered address, except that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Articles VIII or XI of the Indenture.
8. OFFERS TO REPURCHASE. If a Change of Control Triggering Event occurs, each Holder will have the right to require the Company to purchase all or any part (in integral multiples of $1,000 except that no purchase will be permitted that would result in a Note having a remaining principal amount of less than $2,000) of such Holder’s Notes pursuant to a Change of Control Offer. In the Change of Control Offer, the Company will offer to purchase all of the Notes, at a purchase price in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the rights of Holders of record on relevant Record Dates to receive interest due on an Interest Payment Date). The Change of Control Offer shall be made in accordance with Section 4.07 of the Indenture.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Notes or portion of Notes selected for redemption, except for the unredeemed portion of any Notes being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture or the Notes may be amended or supplemented as provided in the Indenture.
12. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture. If any Event of Default (other than as specified in Section 6.01(6) or 6.01(7) of the Indenture with respect to the Company or a Significant Subsidiary) shall occur and be continuing with respect to the Indenture, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders) and upon any such declaration, such principal, premium, if any, and interest shall become due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default as specified in Section 6.01(6) or 6.01(7), with respect to the Company or a Significant Subsidiary occurs and is continuing, then all the Notes shall automatically become and be due and payable immediately in an amount equal to the principal amount of the Notes, together with accrued and unpaid interest, if any, to the date the Notes become due and payable, without any declaration or other act on the part of the Trustee or
any holder. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or and its consequences under the Indenture except a continuing Default in payment of the principal of, premium, if any, or interest on, any of the Notes held by a non-consenting Holder. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required within 30 days after becoming aware of any Default, to deliver to the Trustee a statement specifying such Default and what action the Company proposes to take with respect thereto.
13. AUTHENTICATION. This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.
14. GOVERNING LAW. THIS NOTE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. CUSIP/ISIN NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP/ISIN numbers to be printed on the Notes and the Trustee may use CUSIP/ISIN numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
16. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to the Company at the following addresses:
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
with a copy to Paul Hastings LLP
200 Park Avenue
New York, New York 10166
Attention: Michael Chernick, Esq.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: __________________________________________
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| (Insert assignee’s soc. sec. or tax I.D. no.) |
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| (Print or type assignee’s name, address and zip code) |
| and irrevocably appoint | |
| to transfer this Note on the books of the Company. The agent may substitute another to act for him. |
(Insert assignee’ legal name)
(Insert assignee’s soc. sec. or tax I.D. no.)
(Print or type assignee’s name, address and zip code)
and irrevocably appoint __________________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him.
Date: _____________________
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| Your Signature: | |
| (Sign exactly as your name appears on the face of this Note) |
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 4.07 of the Indenture, check the appropriate box below:
o Section 4.07
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.07 of the Indenture, state the amount you elect to have purchased:
$_______________
Date: _____________________
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| Your Signature: | |
| (Sign exactly as your name appears on the face of this Note) |
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| Tax Identification No.: | |
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
SCHEDULE OF EXCHANGES OF INTERESTS IN THE REGULATION S TEMPORARY GLOBAL NOTE*
The initial outstanding principal amount of this Regulation S Temporary Global Note is $[•]. The following exchanges of a part of this Regulation S Temporary Global Note for an interest in another Regulation S Temporary Global Note or for a Definitive Note, or exchanges of a part of another Regulation S Temporary Global or Definitive Note for an interest in this Regulation S Temporary Global Note, have been made:
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| Date of Exchange | | Amount of decrease in Principal Amount of this Regulation S Temporary Global Note | | Amount of increase in Principal Amount of this Regulation S Temporary Global Note | | Principal Amount of this Regulation S Temporary Global Note following such decrease or increase | | Signature of authorized signatory of Trustee or Notes
Registrar |
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__________________
*This schedule should be included only if the Note is issued in global form.
FORM OF CERTIFICATE OF TRANSFER
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
U.S. Bank National Association
Global Corporate Trust Services
Two Midtown Plaza
1349 West Peachtree Street, NW,
Suite 1050 Atlanta, GA 30309
ATTN: David Ferrell
Re: 4.250% Senior Notes due 2027
Reference is hereby made to the Indenture, dated as of February 1, 2017 (the “Indenture”), among Smithfield Foods, Inc., the Subsidiary Guarantors party thereto and the Trustee with respect to the 4.250% Senior Notes due 2027. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
_______________ (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the “Transfer”), to _______________ (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. ☐ CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States.
2. ☐ CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S TEMPORARY GLOBAL NOTE, THE REGULATION S PERMANENT GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or
Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Temporary Global Note, the Regulation S Permanent Global Note and/or the Restricted Definitive Note Indenture and the Securities Act.
3. ☐ CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):
(a) ☐ such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;
or
(b) ☐ such Transfer is being effected to the Company or a subsidiary thereof;
or
(c) ☐ such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or
(d) ☐ such Transfer is being effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904 and the Transfer complies with the applicable transfer restrictions and the requirements of the exemption claimed, which certification is supported by an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act.
4. ☐ CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) ☐ CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 to a Person who is not an affiliate (as defined in Rule 144) of the Company under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(b) ☐ CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act to a Person who is not an affiliate (as defined in Rule 144) of the Company and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) ☐ CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 to a Person who is not an affiliate (as defined in Rule 144) of the Company and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.
5. ☐ CHECK IF TRANSFEROR IS AN AFFILIATE OF THE COMPANY.
6. ☐ CHECK IF TRANSFEREE IS AN AFFILIATE OF THE COMPANY.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company.
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| [Insert Name of Transferor] |
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| By: | |
| Name: |
| Title: |
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) ☐ a beneficial interest in the:
(i) ☐ 144A Global Note (CUSIP [l]), or
(ii) ☐ Regulation S Global Note (CUSIP [l]), or
(b) ☐ a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) ☐ a beneficial interest in the:
(i) ☐ 144A Global Note (CUSIP [l]), or
(ii) ☐ Regulation S Global Note (CUSIP [l]), or
(iii) ☐ Unrestricted Global Note (CUSIP [l]), or
(b) ☐ a Restricted Definitive Note; or
(c) ☐ an Unrestricted Definitive Note, in accordance with the terms of the Indenture.
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
U.S. Bank National Association
Global Corporate Trust Services
Two Midtown Plaza
1349 West Peachtree Street, NW,
Suite 1050
Atlanta, GA 30309
ATTN: David Ferrell
Re: 4.250% Senior Notes due 2027
Reference is hereby made to the Indenture, dated as of February 1, 2017 (the “Indenture”), among Smithfield Foods, Inc., the Subsidiary Guarantors party thereto and the Trustee with respect to the 4.250% Senior Notes due 2027. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
___________ (the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $__________ in such Note[s] or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:
1) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE
a) ☐ CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
b) ☐ CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
c) ☐ CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
d) ☐ CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
2) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES
a) ☐ CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the
terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.
b) ☐ CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] [ ] 144A Global Note [ ] Regulation S Global Note, with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.
3) ☐ CHECK IF OWNER IS AN AFFILIATE OF THE COMPANY.
4) ☐ CHECK IF OWNER IS EXCHANGING THIS NOTE IN CONNECTION WITH AN EXPECTED TRANSFER TO AN AFFILIATE OF THE COMPANY.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company and are Dated __________________.
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| [Insert Name of Transferor] |
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| By: | |
| Name: |
| Title: |
[FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS]
Supplemental Indenture (this “Supplemental Indenture”), dated as of __________, among __________________ (the “Guaranteeing Subsidiary”), a subsidiary of Smithfield Foods, Inc., a Virginia corporation (the “Company”) and U.S. Bank National Association, a national banking association organized and existing under the bank of the United States of America, as trustee (the “Trustee”).
W I T N E S S E T H
WHEREAS, each of the Company and the Subsidiary Guarantors (as defined in the Indenture referred to below) has heretofore executed and delivered to the Trustee an indenture (as supplemented, the “Indenture”), dated as of February 1, 2017, providing for the issuance of an unlimited aggregate principal amount of 4.250% Senior Notes due 2027 (the “Notes”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally Guarantee all of the Company’s obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
(1) Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
(2) Agreement to be Bound. The Guaranteeing Subsidiary hereby becomes a party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.
(3) Guarantee. The Guaranteeing Subsidiary agrees, on a joint and several basis with all the existing Subsidiary Guarantors, if any, to Guarantee to each Holder and the Trustee the obligations of the Company under the Notes and the Indenture pursuant to Article X of the Indenture.
(4) No Recourse Against Others. No director, officer, employee, incorporator or stockholder of the Guaranteeing Subsidiary shall have any liability for any obligations of the Company (including the Guaranteeing Subsidiary) under the Notes, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes and the Subsidiary Guarantees.
(5) Notices. All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, at its address set forth below, with a copy to the Company as provided in the Indenture for notices to the Company.
(5) Notices. All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, at its address set forth below, with a copy to the Company as provided in the Indenture for notices to the Company.
(6) Parties. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture or the Indenture or any provision herein or therein contained.
(7) Governing Law. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.
(8) Severability Clause. In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
(9) Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. Every reference in the Indenture to the Indenture shall hereby be deemed to mean the Indenture as supplemented by this Supplemental Indenture. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture.
(10) Counterparts. The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
(11) Headings. The headings of the sections in this Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.
[Signatures on following page]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.
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[NAME OF GUARANTEEING
SUBSIDIARY], as a Guarantor |
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| By: | |
| Name: |
| Title: |
Exhibit 4.2
EXECUTION VERSION
SMITHFIELD FOODS, INC.,
as Issuer,
the Subsidiary Guarantors listed on the signature pages hereto,
$400,000,000
5.200% Senior Notes due 2029
INDENTURE
Dated as of April 1, 2019
U.S. Bank National Association,
as Trustee
Table of Contents
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| ARTICLE I |
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| DEFINITIONS AND RULES OF CONSTRUCTION |
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| SECTION 1.01. | Definitions | 1 |
| SECTION 1.02. | Other Definitions | 14 |
| SECTION 1.03. | Rules of Construction | 14 |
| SECTION 1.04. | Acts of Holders | 15 |
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| ARTICLE II |
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| THE NOTES |
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| SECTION 2.01. | Form and Dating; Terms | 16 |
| SECTION 2.02. | Execution and Authentication | 18 |
| SECTION 2.03. | Registrar and Paying Agent | 19 |
| SECTION 2.04. | Paying Agent to Hold Money in Trust | 20 |
| SECTION 2.05. | Holder Lists | 20 |
| SECTION 2.06. | Transfer and Exchange | 20 |
| SECTION 2.07. | Replacement Notes | 33 |
| SECTION 2.08. | Outstanding Notes | 33 |
| SECTION 2.09. | Treasury Notes | 34 |
| SECTION 2.10. | Temporary Notes | 34 |
| SECTION 2.11. | Cancellation | 34 |
| SECTION 2.12. | Defaulted Interest | 35 |
| SECTION 2.13. | CUSIP or ISIN Numbers | 35 |
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| ARTICLE III |
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| REDEMPTION |
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| SECTION 3.01. | Notices to Trustee | 35 |
| SECTION 3.02. | Selection of Notes to Be Redeemed | 36 |
| SECTION 3.03. | Notice of Redemption | 36 |
| SECTION 3.04. | Effect of Notice of Redemption | 37 |
| SECTION 3.05. | Deposit of Redemption or Purchase Price | 37 |
| SECTION 3.06. | Notes Redeemed or Purchased in Part | 38 |
| SECTION 3.07. | Optional Redemption | 38 |
| SECTION 3.08. | Mandatory Redemption | 39 |
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| ARTICLE IV |
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| COVENANTS |
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| SECTION 4.01. | Payment of Notes | 39 |
| SECTION 4.02. | Maintenance of Office or Agency | 40 |
| SECTION 4.03. | Reports | 40 |
| SECTION 4.04. | Compliance Certificate | 42 |
| SECTION 4.05. | Stay, Extension and Usury Laws | 43 |
| SECTION 4.06. | Limitation on Sale/Lease-back Transactions | 43 |
| SECTION 4.07. | Change of Control | 44 |
| SECTION 4.08. | Limitation on Liens | 45 |
| SECTION 4.09. | Future Guarantors | 46 |
| SECTION 4.10. | Corporate Existence | 47 |
| SECTION 4.11. | Payment of Taxes and Other Claims | 47 |
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| ARTICLE V |
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| CONSOLIDATIONS, MERGERS AND SALES OF ASSETS |
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| SECTION 5.01. | When Company or Subsidiary Guarantors May Merge or Otherwise Dispose of Assets | 47 |
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| ARTICLE VI |
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| DEFAULTS AND REMEDIES |
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| SECTION 6.01. | Events of Default | 49 |
| SECTION 6.02. | Acceleration | 50 |
| SECTION 6.03. | Other Remedies | 51 |
| SECTION 6.04. | Waiver of Past Defaults | 51 |
| SECTION 6.05. | Limitation on Suits | 51 |
| SECTION 6.06. | Rights of Holders to Receive Payment | 52 |
| SECTION 6.07. | Collection Suit by Trustee | 52 |
| SECTION 6.08. | Restoration of Rights and Remedies | 52 |
| SECTION 6.09. | Rights and Remedies Cumulative | 52 |
| SECTION 6.10. | Delay or Omission Not Waiver | 52 |
| SECTION 6.11. | Trustee May File Proofs of Claim | 53 |
| SECTION 6.12. | Priorities | 53 |
| SECTION 6.13. | Undertaking for Costs | 53 |
| SECTION 6.14. | Control by Holders of Notes | 53 |
| SECTION 6.15. | Notices of Default; Compliance Certificate | 54 |
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| ARTICLE VII |
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| TRUSTEE |
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| SECTION 7.01. | Duties of Trustee | 54 |
| SECTION 7.02. | Rights of Trustee | 55 |
| SECTION 7.03. | Individual Rights of Trustee | 57 |
| SECTION 7.04. | Trustee’s Disclaimer | 57 |
| SECTION 7.05. | Notice of Defaults | 57 |
| SECTION 7.06. | Compensation and Indemnity | 57 |
| SECTION 7.07. | Replacement of Trustee | 58 |
| SECTION 7.08. | Successor Trustee by Merger, etc. | 59 |
| SECTION 7.09. | Eligibility; Disqualification | 59 |
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| ARTICLE VIII |
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| DEFEASANCE AND COVENANT DEFEASANCE |
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| SECTION 8.01. | Defeasance | 60 |
| SECTION 8.02. | Conditions to Defeasance | 61 |
| SECTION 8.03. | Application of Trust Money | 62 |
| SECTION 8.04. | Repayment to Company | 62 |
| SECTION 8.05. | Indemnity for U.S. Government Obligations | 62 |
| SECTION 8.06. | Deposited Money and Government Notes to be Held in Trust; Other Miscellaneous Provisions | 62 |
| SECTION 8.07. | Reinstatement | 63 |
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| ARTICLE IX |
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| AMENDMENT AND WAIVERS |
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| SECTION 9.01. | Without Consent of Holders | 63 |
| SECTION 9.02. | With Consent of Holders | 64 |
| SECTION 9.03. | Revocation and Effects of Consents and Waivers | 65 |
| SECTION 9.04. | Notation on or Exchange of Notes | 65 |
| SECTION 9.05. | Trustee to Sign Amendments, etc. | 66 |
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| ARTICLE X |
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| GUARANTEES |
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| SECTION 10.01. | Guarantee | 66 |
| SECTION 10.02. | Limitation on Guarantor Liability | 68 |
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| SECTION 10.03. | Execution and Delivery | 68 |
| SECTION 10.04. | Subrogation | 69 |
| SECTION 10.05. | Benefits Acknowledged | 69 |
| SECTION 10.06. | Release of Subsidiary Guarantees | 69 |
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| ARTICLE XI |
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| SATISFACTION AND DISCHARGE |
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| SECTION 11.01. | Satisfaction and Discharge | 70 |
| SECTION 11.02. | Application of Trust Money | 70 |
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| ARTICLE XII |
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| MISCELLANEOUS |
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| SECTION 12.01. | Notices | 71 |
| SECTION 12.02. | Certificate and Opinion as to Conditions Precedent | 73 |
| SECTION 12.03. | Statements Required in Certificate or Opinion | 73 |
| SECTION 12.04. | Rules by Trustee and Agents | 73 |
| SECTION 12.05. | No Personal Liability of Directors, Officers, Employees and Stockholders | 73 |
| SECTION 12.06. | Governing Law | 74 |
| SECTION 12.07. | Waiver of Jury Trial | 74 |
| SECTION 12.08. | Appointment of Note Registrar and Paying Agent | 74 |
| SECTION 12.09. | No Adverse Interpretation of Other Agreements | 74 |
| SECTION 12.10. | Successors | 74 |
| SECTION 12.11. | Severability | 74 |
| SECTION 12.12. | Counterpart Originals | 74 |
| SECTION 12.13. | Table of Contents; Headings | 75 |
| SECTION 12.14. | U.S.A. Patriot Act | 75 |
EXHIBIT A-1 Form of Face of Note
EXHIBIT A-2 Form of Face of Regulation S Temporary Note
EXHIBIT B Form of Certificate of Transfer
EXHIBIT C Form of Certificate of Exchange
EXHIBIT D Form of Supplemental Indenture to be Delivered by Subsidiary Guarantors
INDENTURE (this “Indenture”), dated as of April 1, 2019, among SMITHFIELD FOODS, INC., a corporation duly organized and existing under the laws of the Commonwealth of Virginia (the “Company”), the Subsidiary Guarantors listed on the signature pages hereto and U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America and having a corporate trust office in Atlanta, Georgia, as trustee (the “Trustee”).
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the creation of an issue of $400,000,000 aggregate principal amount of 5.200% Senior Notes due 2029 (the “Initial Notes”). The Initial Notes and any Additional Notes, if and when issued, shall be treated as a single class for all purposes under this Indenture, including waivers, amendments, redemptions and offers to purchase (the Initial Notes and any Additional Notes, collectively referred to herein as the “Notes”); and
WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have duly authorized the execution and delivery of this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree, for the equal and proportionate benefit of the Holders, as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definitions.
For all purposes of this Indenture and any Notes issued hereunder:
“144A Global Note” means a Global Note substantially in the form of Exhibit A-1 hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold or to be sold in reliance on Rule 144A.
“Additional Notes” means any additional Notes issued under this Indenture in accordance with the terms hereof, including Section 2.01(d), from time to time after the Issue Date.
“Adjusted Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the applicable Comparable Treasury Issue (expressed as a percentage amount) equal to the applicable Comparable Treasury Price for such redemption date.
“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. 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.
“Agent” means any Registrar, co-registrar, Paying Agent or additional paying agent.
“Applicable Procedures” means, with respect to any transfer, redemption, tender or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear or Clearstream that apply to such transfer or exchange.
“Attributable Debt” means, as to any particular lease under which any Person is at the time liable, other than a Financing Lease Obligation, and at any date as of which the amount of such lease is to be determined, the total net amount of rent required to be paid by such Person under such lease during the initial term of such lease as determined in accordance with GAAP, discounted from the last date of such initial term to the date of determination at a rate per annum equal to the discount rate which would be applicable to a financing or capital lease with like term in accordance with GAAP. The net amount of rent required to be paid under any such lease for any such period shall be the aggregate amount of rent payable by the lessee with respect to such period after excluding amounts required to be paid on account of insurance, taxes, assessments, utility, operating and labor costs and similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. “Attributable Debt” means, as to a Financing Lease Obligation under which any Person is at the time liable and at any date as of which the amount of such lease is to be determined, the amount of such lease that would appear as a liability on the face of a balance sheet of such Person in accordance with GAAP.
“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.
“Board of Directors” means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board.
“Business Day” means each day which is not a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York 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 Common Stock or 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.
“Change of Control” means the occurrence of any of the following:
(i) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company (or its successor by merger, consolidation or purchase of all or substantially all of its assets);
(ii) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any Person (including any “person” (as that term is used in Section 13(d)(3) of the Exchange Act)) other than to one or more Permitted Holders, the Company or one of the Company’s Subsidiaries;
(iii) the Company consolidates with, or merges with or into, any Person (other than the Company or one of its Subsidiaries), or any Person (other than the Company or one of its Subsidiaries) consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities or other Property, other than any such transaction where the shares of the Voting Stock of the Company outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving Person immediately after giving effect to such transaction; or
(iv) the adoption of a plan relating to the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control solely as a result of the Company becoming a direct or indirect wholly owned Subsidiary of another company (whether the Company is directly owned by such company or indirectly through other subsidiaries of such company); provided that no “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of such company.
“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Event with respect to the Notes. Notwithstanding the foregoing, no Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated.
“Clearstream” means Clearstream Banking, Société Anonyme, and any successor thereto.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means with respect to any Person, any and all shares, interest or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock.
“Company” has the meaning set forth in the Preamble.
“Company Order” means a written request or order signed on behalf of the Company by an Officer, and delivered to the Trustee.
“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining term of the Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.
“Comparable Treasury Price” means, with respect to any redemption date, (i) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Company obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.
“Consolidated Net Tangible Assets” means, as of the date of determination, an amount equal to the excess over the current liabilities of the Company of all of its assets appearing on the most recent quarterly or annual consolidated balance sheet of the Company and its Subsidiaries on a consolidated basis, after deducting goodwill, trademarks, patents, other like intangibles and minority interests of others.
“Corporate Trust Office” means the designated office of the Trustee at which, at any particular time, its corporate trust business shall be administered (which office at the Issue Date is located at Two Midtown Plaza, 1349 W. Peachtree Street, NW, Suite 1050, Atlanta, Georgia 30309, Attention: Global Corporate Trust Services), or such other address as the Trustee may designate from time to time by notice to the Company or the principal corporate office of any successor trustee (or such other address as a successor trustee may designate from time to time by notice to the Company).
“Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.
“Debt Facilities” means one or more debt facilities (including, without limitation, the Senior Credit Facility) or commercial paper facilities, securities purchase agreements,
indentures or similar agreements, in each case, with banks or other institutional lenders or investors providing for revolving loans, term loans, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables), letters of credit or the issuance of debt securities, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, replaced (whether upon or after termination or otherwise), refinanced, supplemented, modified or otherwise changed (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time.
“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.
“Definitive Notes” means certificated securities substantially in the form of Exhibit A-1 hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto).
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States, any State thereof or the District of Columbia.
“Euroclear” means Euroclear S.A./N.V., as operator of the Euroclear system, and any successor thereto.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Exempted Debt” means the sum, without duplication, of the following items outstanding of the date Exempted Debt is being determined:
(1) Indebtedness of the Company and its Restricted Subsidiaries incurred after the date of this Indenture and secured by Liens created, assumed or otherwise incurred or permitted to exist pursuant to the provision described in the last paragraph under Section 4.08; and
(2) Attributable Debt of the Company and its Restricted Subsidiaries in respect of all sale and lease-back transactions with regard to any Principal Property entered into pursuant to the provision described in the last paragraph under Section 4.06.
“Financing Lease Obligation” means an obligation that would be required to be classified and accounted for as a financing or capital lease (and, for the avoidance of doubt, not a straight-line or operating lease) on both the balance sheet and income statement for financial reporting purposes in accordance with GAAP in existence on the Issue Date. At any time any determination thereof is to be made, the amount of the liability in respect of a financing or capital lease would be the amount required to be reflected as a liability on such balance sheet (excluding the footnotes thereto) in accordance with GAAP in existence on the Issue Date.
“Fitch” means Fitch Ratings and its successors.
“GAAP” means generally accepted accounting principles in the United States of America as in effect as of 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. At any time after adoption of International Financial Reporting Standards (“IFRS”) by the Company for its financial statements and reports for all financial reporting purposes the Company may elect to apply IFRS for all purposes of this Indenture, and, upon any such election, references in this Indenture to GAAP shall be construed to mean IFRS as in effect on the date of such election; provided that
(1) any such election once made shall be irrevocable (and shall only be made once);
(2) all financial statements and reports required to be provided after such election pursuant to this Indenture shall be prepared on the basis of IFRS;
(3) from and after such election, all computations, calculations and other determinations based on GAAP contained in this Indenture shall be computed in conformity with IFRS with retroactive effect being given thereto assuming that such election had been made on the Issue Date;
(4) such election shall not have the effect of rendering invalid any Lien created, incurred or suffered to exist made prior to the date of such election pursuant to Section 4.08 or any or any sale or transfer of Principal Property made prior to the date of such election pursuant to Section 4.06 if creation, incurrence, sale or transfer or other action was valid under this Indenture on the date made; and
(5) all accounting terms and references in this Indenture to accounting standards shall be deemed to be references to the most comparable terms or standards under IFRS. The Company shall give written notice of any election to the Trustee and the Holders within 15 days of such election.
“Global Note Legend” means the legend set forth in Section 2.06(f)(ii), which is required to be placed on all Global Notes issued under this Indenture.
“Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A-1 hereto, issued in accordance with Section 2.01, 2.06(b) or 2.06(d).
“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such other Person:
(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or
(2) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness 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.
“Holder” means with respect to the Notes, the Person in whose name a Note is registered in the Note Register.
“Indebtedness” means, with respect to any Person, without duplication (a) any notes, debentures, bonds, loans or other similar evidences of indebtedness for money borrowed and (b) any Guarantees thereof.
“Indenture” has the meaning set forth in the Preamble. “Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.
“Initial Notes” has the meaning set forth in the Recitals.
“Initial Purchasers” means Barclays Capital Inc., Goldman Sachs & Co. LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of China (Hong Kong) Limited, BMO Capital Markets Corp., ICBC Standard Bank Plc, Rabo Securities USA, Inc. and U.S. Bancorp Investments, Inc.
“interest” means, with respect to the Notes, interest on the Notes (regardless of whether so stated).
“Interest Payment Date” means April 1 and October 1 of each year to Stated Maturity.
“Intralinks” means the digital internet workspace located at http://www.intralinks.com.
“Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s), a rating of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P) and a rating of BBB- or better by Fitch (or its equivalent under any successor rating categories of Fitch) and the equivalent investment grade credit rating from any replacement rating agency or rating agencies selected by the Company under the circumstances permitting it to select a replacement rating agency and in the manner for selecting a replacement rating agency, in each case as set forth in the definition of “Rating Agency.”
“Issue Date” means April 1, 2019.
“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind.
“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors.
“Non-U.S. Person” means a Person who is not a U.S. Person.
“Notes” has the meaning set forth in the Recitals.
“Offering Memorandum” means the offering memorandum, dated March 27, 2019, related to the offer and sale of the Notes.
“Officer” means any one 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 or any other person of the Company having substantially the same responsibilities as the aforementioned officers.
“Officer’s Certificate” means a certificate signed by one Officer or that otherwise meets the requirements set forth in this Indenture.
“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.
“Par Call Date” means January 1, 2029.
“Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to the Depositary, shall include Euroclear and Clearstream).
“Permitted Holders” means WH Group Limited or any of its Affiliates and any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members; provided that, in the case of such group and without giving effect to the existence of such group or any other group, such Persons, collectively, have direct or indirect beneficial ownership of more than 50% of the Voting Stock of the Company. Any Person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in accordance with the requirements of this Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.
“Person” means any individual, corporation, partnership, limited liability company, 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 Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of
dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.
“principal” of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time.
“Principal Property” means any plant, facility, warehouse or building owned or leased and used by the Company or a Restricted Subsidiary primarily for processing, producing, packaging or storing its products, raw materials, inventories or other materials and supplies and located within the United States of America and having an acquisition cost plus capitalized improvements (including related land and improvements thereon and all associated factory equipment therein without deduction of any depreciation reserves) in excess of 2.0% of Consolidated Net Tangible Assets as of the date of such determination, but shall not include any such property or assets that are financed through the issuance of tax exempt governmental obligations, or any such property or assets that have been determined by a resolution of the Board of Directors not to be of material importance to the respective businesses conducted by the Company or such Restricted Subsidiary, effective as of the date such resolution is adopted.
“Private Placement Legend” means the legend set forth in Section 2.06(f)(i) to be placed on all Notes issued under this Indenture, except where otherwise permitted by the provisions of this Indenture.
“QIB” means a “qualified institutional buyer” as defined in Rule 144A.
“Quotation Agent” means the Reference Treasury Dealer appointed by the Company.
“Rabobank” means Coöperatieve Rabobank U.A. (formerly known as Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.), New York Branch.
“Rating Agencies” means (i) each of Moody’s, S&P and Fitch; and (ii) if any of Moody’s, S&P or Fitch ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act that is selected by the Company (as certified by a resolution of the Board of Directors) as a replacement agency for Moody’s, S&P or Fitch, or each of them, as the case may be.
“Rating Event” means, with respect to the Notes, (i) the rating of the Notes is lowered by two of the three Rating Agencies on any day during the period (the “Trigger Period”) commencing on the earlier of (a) the occurrence of a Change of Control and (b) the first public notice of the Company’s intention to effect a Change of Control, and ending 60 days following consummation of such Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies), and (ii) the Notes are rated below Investment Grade by two of the three Rating Agencies on any day during the Trigger Period; provided that a Rating Event will not be deemed
to have occurred in respect of a particular Change of Control (and thus will not be deemed a Rating Event for purposes of the definition of Change of Control Triggering Event) if each Rating Agency making the reduction in rating does not publicly announce, or confirm or inform the Trustee in writing at the Company’s request, that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the Change of Control (whether or not the applicable Change of Control has occurred at the time of the Rating Event). If a Rating Agency is not providing a rating for the Notes at the commencement of such period, the Notes will be deemed to have ceased to be rated as Investment Grade by such Rating Agency during such period.
“Record Date” means, with respect to an applicable Interest Payment Date, March 15 or September 15 (whether or not a Business Day) next preceding such Interest Payment Date.
“Reference Treasury Dealer” means any of Barclays Capital Inc., Goldman Sachs & Co. LLC, and Merrill Lynch, Pierce, Fenner & Smith Incorporated and their respective successors. However, if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by us, of the bid and asked prices for the applicable Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third Business Day preceding such redemption date.
“Regulation S” means Regulation S promulgated under the Securities Act.
“Regulation S Global Note” means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as applicable.
“Regulation S Permanent Global Note” means a permanent Global Note in the form of Exhibit A-1 hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the applicable Restricted Period.
“Regulation S Temporary Global Note” means a temporary Global Note in the form of Exhibit A-2 hereto, bearing the Global Note Legend, the Private Placement Legend and the Regulation S Temporary Global Note Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903.
“Regulation S Temporary Global Note Legend” means the legend set forth in Section 2.06(f)(iii).
“Remaining Scheduled Payments” means, with respect to each Note to be redeemed, the remaining scheduled payments of principal and interest on the Note that would be due after the Redemption Date therefor if such Note matured on the Par Call Date. If the redemption date is not an interest payment date with respect to a Note, the amount of the next succeeding scheduled interest payment date on the Note will be reduced by the amount of interest accrued on the Note to the redemption date.
“Responsible Officer” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, trust officer, assistant trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by any of the aforementioned officers and also means, with respect to a particular corporate trust matter, any other officer to whom any such matter is referred because of such Person’s knowledge of and familiarity with the particular subject; and provided such Persons shall have direct responsibility for the administration of this Indenture.
“Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.
“Restricted Global Note” means a Global Note bearing the Private Placement Legend.
“Restricted Period” means the 40-day distribution compliance period as defined in Regulation S.
“Restricted Subsidiary” means (i) any Subsidiary organized and existing under the laws of the United States of America and the principal business of which is carried on within the United States of America which owns or is a lessee pursuant to a financing or capital lease of any Principal Property or owns shares of Capital Stock or Indebtedness of another Restricted Subsidiary other than each Subsidiary the major part of whose business consists of finance, banking, credit, leasing, insurance, financial services or other similar operations, or any combination of such operations and (ii) any Subsidiary that is a Subsidiary Guarantor.
“Rule 144” means Rule 144 promulgated under the Securities Act.
“Rule 144A” means Rule 144A promulgated under the Securities Act.
“Rule 903” means Rule 903 promulgated under the Securities Act.
“Rule 904” means Rule 904 promulgated under the Securities Act.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Securitization Facility” means the Fourth Amended and Restated Credit and Security Agreement, dated as of November 21, 2018, among Smithfield Receivables Funding
LLC, as borrower, the Company, as servicer, the lenders parties thereto and Rabobank, as administrative agent and letter of credit issuer (or its successor in such capacity), as it has been and may be further amended, supplemented or modified from time to time and any renewal, increase, 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 Securitization Facility or one or more other securitization or other structured facilities).
“Senior Credit Facility” means the Credit Agreement, dated as of February 17, 2017, and amended March 13, 2018, among the Company, as borrower, certain subsidiaries of the Company, as borrowers or guarantors, the lenders parties thereto and Bank of America, N.A., as administrative agent (or its successor in such capacity), as it may be amended, supplemented or modified from time to time and any renewal, increase, 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 Senior Credit Facility or one or more other credit or other agreements or indentures).
“Significant Subsidiary” means any Subsidiary that would be 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 Services, a division of The McGraw- Hill Companies, Inc., and its successors.
“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final 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 unless such contingency has occurred).
“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by:
(1) such Person;
(2) such Person and one or more Subsidiaries of such Person; or
(3) one or more Subsidiaries of such Person.
“Subsidiary Guarantee” means any Guarantee of payment of the Notes by a Subsidiary Guarantor pursuant to the terms of this Indenture and any supplemental indenture hereto.
“Subsidiary Guarantor” means (i) each Domestic Subsidiary in existence on the Issue Date that provides a Subsidiary Guarantee on the Issue Date and (ii) any Domestic Subsidiary that provides a Subsidiary Guarantee after the Issue Date; provided that upon release or discharge of such Subsidiary from its Subsidiary Guarantee in accordance with this Indenture, such Subsidiary ceases to be a Subsidiary Guarantor.
“Trustee” means the party named as such in this Indenture until a successor replaces it and, thereafter, means such successor.
“Unrestricted Definitive Note” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.
“Unrestricted Global Note” means a permanent Global Note, substantially in the form of Exhibit A-1 hereto, that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that does not bear the Private Placement Legend.
“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 at the issuer’s option.
“U.S. Person” has the meaning ascribed thereto in Rule 902 under the Securities Act.
“Voting Stock” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.
SECTION 1.02. Other Definitions.
| | | | | |
| Term | Defined in Section |
| “Authentication Order” | 2.02 |
| “Change of Control Offer” | 4.07 |
| “covenant defeasance option” | 8.01 |
| “Event of Default” | 6.01 |
| “legal defeasance option” | 8.01 |
| “Note Register” | 2.03 |
| “Paying Agent” | 2.03 |
| “Redemption Date” | 3.07 |
| “Registrar” | 2.03 |
| “Successor Company” | 5.01 |
| “Successor Guarantor” | 5.01 |
SECTION 1.03. Rules of Construction. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(c) “or” is not exclusive;
(d) “including” means “including without limitation”;
(e) “will” shall be interpreted to express a command;
(f) words in the singular include the plural and words in the plural include the singular;
(g) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured Indebtedness;
(h) 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;
(i) 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;
(j) each reference to “Indenture” in this Indenture shall mean the provisions of this Indenture and future amendments and supplements hereto, applicable to the Notes and exclusive of amendments and supplements that relate to future issuances of other series of securities issued at a later date under this Indenture; and
(k) the terms “above”, “below”, “hereof”, “herein”, “hereby”, “hereto”, “hereunder” and “herewith” refer to this Indenture.
SECTION 1.04. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Proof of execution of any such instrument or of a writing appointing any such agent, or the holding by any Person of a Note, shall be sufficient for any purpose of this Indenture and (subject to Section 7.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.04.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of any action taken, suffered or omitted by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Note.
(e) The Company may set a record date for purposes of determining the identity of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or take any other act, or to vote or consent to any action by vote or consent authorized or permitted to be given or taken by Holders. Unless otherwise specified, if not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or in the case of any such vote, prior to such vote, any such record date, if there is to be a record date,
shall be the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation.
(f) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount pursuant to this paragraph shall have the same effect as if given or taken by separate Holders of each such different part.
(g) Without limiting the generality of the foregoing, a Holder, including the Depositary, that is the Holder of a Global Note, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and any Person that is the Holder of a Global Note, including the Depositary, may provide its proxy or proxies to the beneficial owners of interests in any such Global Note through such depositary’s standing instructions and customary practices.
(h) The Company may, at its option, fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Note held by the Depositary entitled under the procedures of such depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders. If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 90 days after such record date.
ARTICLE II
THE NOTES
SECTION 2.01. Form and Dating; Terms.
(a) General. The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rules or usage in addition to those provided for in Exhibit A hereto. Each Note shall be dated the date of its authentication. The Notes shall be in minimum amounts of $2,000 and integral multiples of $1,000 in excess of $2,000.
(b) Global Notes.
(i) Notes issued in global form shall be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note shall represent such aggregate principal amount of the outstanding Notes as shall be specified in the “Schedule of Exchanges of Interests in the Global Note” attached thereto and each shall provide that it shall represent up to the aggregate principal amount of Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as applicable, to reflect exchanges and redemptions and transfers of interests therein. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06.
(ii) Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and authenticated by the Trustee as provided in this Indenture. Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in the Regulation S Permanent Global Note pursuant to Section 2.06 and the Applicable Procedures. Simultaneously with the authentication of the Regulation S Permanent Global Note, the Trustee shall cancel such Regulation S Temporary Global Note. The aggregate principal amount of a Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as provided in this Indenture.
(c) Participants shall have no rights under this Indenture or any Global Note with respect to any Global Note held on their behalf by the Depositary or by the Trustee as custodian for the Depositary, and the Depositary shall be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note 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 Participants, the Applicable Procedures or the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note.
(d) Terms. The aggregate principal amount of Initial Notes that may be authenticated and delivered under this Indenture on the Issue Date is $400,000,000, and the
aggregate amount of Additional Notes that may be authenticated and delivered under this Indenture is unlimited (so long as not otherwise prohibited by the terms of this Indenture). With respect to any Additional Notes, the Company shall set forth in (1) a resolution of the Board of Directors and (2) (i) an Officer’s Certificate or (ii) one or more indentures supplemental hereto, the following information:
(A) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;
(B) the issue price and the issue date of such Additional Notes, including the date from which interest shall accrue; and
(C) whether such Additional Notes shall be either Restricted Definitive Notes or Restricted Global Notes.
In authenticating and delivering Additional Notes, the Trustee shall be entitled to receive and shall be fully protected in relying upon, in addition to the Opinion of Counsel and Officer’s Certificate required by Section 12.02, an Opinion of Counsel as to the due authorization, execution, delivery, validity and enforceability of such Additional Notes. The Initial Notes and any Additional Notes shall be treated as a single class for all purposes under this Indenture, including, without limitation, voting, waivers, amendments, redemptions and offers to purchase; provided that any Additional Notes that are not fungible with the Initial Notes for U.S. federal income tax purposes shall have separate CUSIP and ISIN numbers.
The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
The Notes shall be subject to repurchase by the Company pursuant to a Change of Control Offer as provided in Section 4.07. The Notes shall not be redeemable, other than as provided in Article III hereof.
(e) Euroclear and Clearstream Procedures Applicable. The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests in a Regulation S Global Note that are held by Participants through Euroclear or Clearstream.
SECTION 2.02. Execution and Authentication.
One Officer shall execute the Notes on behalf of the Company by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be entitled to any benefit under this Indenture or be valid or obligatory for any purpose until authenticated substantially in the form of Exhibit A hereto, as the case may be, by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been duly authenticated and delivered under this Indenture.
On the Issue Date, the Trustee shall, upon receipt of a Company Order directing authentication (an “Authentication Order”), authenticate and deliver the Initial Notes specified in such Authentication Order. In addition, at any time, from time to time, the Trustee shall upon receipt of an Authentication Order authenticate and deliver any Additional Notes for an aggregate principal amount specified in such Authentication Order for such Additional Notes issued hereunder.
The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. Unless otherwise provided in such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent shall have the same rights as the Trustee to deal with Holders, the Company or an Affiliate of the Company.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the “Registrar”) and an office or agency where Notes may be presented for payment (the “Paying Agent”). The Registrar shall keep a register of the Notes (the “Note Register”) and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder but upon written notice to such Registrar or Paying Agent and to the Trustee; provided, however, that no such removal shall become effective until (i) acceptance of any appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee and the passage of any waiting or notice periods required by the procedures of the Depositary or (ii) written notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i) of this Section 2.03. The Registrar or Paying Agent may resign at any time upon written notice to the Company and the Trustee. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Paying Agent and Registrar for the Notes. The Trustee shall also act as Custodian for the Depositary with respect to the Global Notes.
SECTION 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and shall notify the Trustee in writing of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it relating to the Notes to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or one of its Subsidiaries) shall have no further liability for the money. If the Company or one of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any Event of Default under Section 6.01(6) or (7), the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. Holder 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 all Holders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least two 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 the Holders.
SECTION 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. Except as otherwise set forth in this Section 2.06, a Global Note may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor Depositary or a nominee of such successor Depositary. A beneficial interest in a Global Note may not be exchanged for a Definitive Note unless (i) the Depositary (x) notifies the Company that it is unwilling or unable to continue as Depositary for such Global Note or (y) has ceased to be a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 90 days; (ii) there shall have occurred and be continuing an Event of Default with respect to the Notes and the Depositary shall have requested the issuance of Definitive Notes; or (iii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes; provided, however, that the Regulation S Temporary Global Note may not be exchanged for Definitive Notes prior to (1) the expiration of the Restricted Period and (2) the receipt by the Registrar of any certificates required by Rule 903(b)(3)(ii)(B) of the Securities Act. Upon the occurrence of any of the preceding events in subclauses (i), (ii) or (iii) of this Section 2.06(a), Definitive Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the Depositary (in accordance with its customary procedures). Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10, shall be authenticated and delivered in the form of, and shall be, a Global Note, except for Definitive Notes issued subsequent to any of the preceding events in subclauses (i), (ii) or (iii) of this Section 2.06(a) and pursuant to Section 2.06(c). A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); provided, however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c).
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) of this Section 2.06(b) below, as applicable, as well as one or more of the other following subparagraphs of this Section 2.06(b), as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend and any Applicable Procedures; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. Except as may be required by any Applicable Procedures, no written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests in a Global Note that are not subject to Section 2.06(b)(i), the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) if permitted under Section 2.06(a), a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g).
(iii) Transfer of Beneficial Interests in any Restricted Global Note to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; or
(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) and the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in subparagraphs (1) and (2) above, if the Registrar or the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(b)(iv), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.
If any such transfer is effected pursuant to this Section 2.06(b)(iv) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to this Section 2.06(b)(iv).
Beneficial interests in an Unrestricted Global Note may not be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon the occurrence of any of the events in paragraph (i), (ii) or (iii) of Section 2.06(a) and receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(F) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g), and the Company shall execute and the Trustee shall authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes. Notwithstanding Sections 2.06 (c)(i)(A) and (C), a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only upon the occurrence of any of the events in subclause (i), (ii) or (iii) of Section 2.06(a) and if the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (iii), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon the occurrence of any of the events in subclause (i), (ii) or (iii) of Section 2.06(a) and satisfaction of the conditions set forth in Section 2.06(b)(ii), the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g), and the Company shall execute and the Trustee shall authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from or through the Depositary and the Participant or Indirect Participant. The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(F) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of, in the case of clause (A) of this Section 2.06(d)(i), the applicable Restricted Global Note, in the case of clause (B) of this Section 2.06(d)(i), the applicable 144A Global Note, and in the case of clause (C) of this Section 2.06(d)(i), the applicable Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (ii), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a written request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraph (ii) or (iii) of this Section 2.06(d) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon written request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e):
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made to a QIB in accordance with Rule 144A, then the transferor must deliver a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; or
(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (ii), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a written request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.
(f) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture:
(i) Private Placement Legend.
(A) Except as permitted by subparagraphs (B) and (C) and of this Section 2.06(f)(i), each Global Note and each Definitive Note (and all Notes
issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
“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 OR 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”) THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY),] [IN THE CASE OF REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE DATE ON WHICH THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S], ONLY (A) TO ISSUER OR ANY SUBSIDIARY THEREOF, (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 (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A 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 TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. [IN THE CASE OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF 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.]”
(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form:
“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06(g) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) 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 SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE 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.”
(iii) Regulation S Temporary Global Note Legend. The Regulation S Temporary Global Note shall bear a legend in substantially the following form:
“THIS GLOBAL NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT. BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF 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.”
(g) Cancellation or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and, if the Registrar and the Trustee are not the same entity, notice to the Trustee of such exchange or transfer of an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, the aggregate principal amount of such other Global Note shall be increased in a corresponding amount pursuant to this Section 2.06(g) and if the Registrar and the Trustee are not the same entity, notice to the Trustee of such exchange or transfer of an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 or at the Registrar’s written request.
(ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company or the Trustee may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.07, 2.10, 3.06, 3.08, 4.07 and 9.04).
(iii) Neither the Registrar nor the Company shall be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of the sending of a notice of redemption of Notes for redemption under Section 3.03 and ending at the close of business on the day such notice was sent, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part or tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.
(vii) Upon surrender for registration of transfer of any Note at the office or agency of the Company designated pursuant to Section 4.02, the Company shall execute, and the Trustee shall authenticate and mail, in the name of the designated transferee or transferees, one or more replacement Notes of any authorized denomination or denominations of a like aggregate principal amount.
(viii) At the option of the Holder, subject to Section 2.06(a), Notes may be exchanged for other Notes of any authorized denomination or denominations of a like aggregate principal amount upon surrender of the Notes to be exchanged at such office or agency. Whenever any Global Notes or Definitive Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and mail, the
replacement Global Notes and Definitive Notes to which the Holder making the exchange is entitled in accordance with the provisions of Section 2.02.
(ix) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile or electronically (in PDF format).
(x) 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 Note (including any transfers between or among Participants or beneficial owners of interests in any Global Note) 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.
Neither the Trustee nor any Trustee agent shall have any responsibility or liability for any actions taken or not taken by the Depositary.
SECTION 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, the Registrar or the Company and the Trustee receives evidence to their satisfaction of the ownership and destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee’s requirements are met. An indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, the Registrar and the Paying Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. At the Company’s request, such Holder shall reimburse the Company for its expenses in replacing a Note.
Every replacement Note issued in accordance with this Section 2.07 is a contractual obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company or an Affiliate thereof) holds, on a Redemption Date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Affiliate of the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Notes so owned that have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to deliver any such direction, waiver or consent with respect to the pledged Notes and that the pledgee is not the Company or any obligor upon the Notes or any Affiliate of the Company or of such other obligor.
SECTION 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders and beneficial holders, as the case may be, of temporary Notes shall be entitled to all of the benefits accorded to Holders, or beneficial holders, respectively, of Notes under this Indenture.
SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of cancelled Notes in accordance with its customary procedures (subject to the record retention requirement of the
Exchange Act). The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, the Company shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest to the Persons who are Holders on a special record date, which may be after the existing Record Date, in each case at the rate provided in the Notes and in Section 4.01. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Trustee shall fix or cause to be fixed each such special record date and payment date; provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. The Trustee shall promptly notify the Company of such special record date and in any event at least 20 days before such special record date. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall send or cause to be sent, via electronic transmission or by first class postage prepaid, to each Holder a notice at his or her address as it appears in the Note Register that states the special record date, the related payment date and the amount of such interest to be paid.
Subject to the foregoing provisions of this Section 2.12 and for greater certainty, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.
SECTION 2.13. CUSIP or ISIN Numbers.
The Company in issuing the Notes may use CUSIP or ISIN numbers (if then generally in use) and, if so, the Trustee shall use CUSIP or ISIN numbers in notices, including notices of redemption, exchange or offers to purchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice and that reliance may be placed only on the other identification numbers printed on the Notes, and any related redemption, exchange or offers to purchase shall not be affected by any defect in or omission of such numbers. The Company will as promptly as practicable notify the Trustee in writing of any change in the CUSIP or ISIN numbers. Additional Notes issued under this Indenture may have the same or differing CUSIP or ISIN numbers as those given to the Initial Notes.
ARTICLE III
REDEMPTION
SECTION 3.01. Notices to Trustee. If the Company elects to redeem Notes pursuant to Section 3.07, it shall furnish to the Trustee, at least 15 days before notice of redemption is required to be sent or caused to be sent to Holders pursuant to Section 3.03 hereof
(unless a shorter notice shall be agreed to by the Trustee) but not more than 60 days before a Redemption Date, an Officer’s Certificate setting forth (i) the paragraph or subparagraph of such Note or Section of this Indenture pursuant to which the redemption shall occur, (ii) the Redemption Date, (iii) the principal amount of the Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. Selection of Notes to Be Redeemed. In the case of any partial redemption, the Trustee shall select the Notes for redemption (i) in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are issued, or, (ii) if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, in each case for the avoidance of doubt, in accordance with Applicable Procedures of the Depositary. No Note of $2,000 in original principal amount or less will be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof shall be issued in the name of the Holder thereof upon cancellation of the original Note.
The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed.
SECTION 3.03. Notice of Redemption.
The Company shall cause notices of redemption to be sent by electronic delivery or mailed by first-class mail at least 15 days but not more than 60 days before the Redemption Date to each Holder to be redeemed at such Holder’s registered address, except that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Article VIII or Article XI hereof.
The notice shall identify the Notes (including the CUSIP and ISIN numbers) to be redeemed and shall state:
(a) the Redemption Date;
(b) the redemption price;
(c) if any Note is to be redeemed in part only, the portion of the principal amount of that Note that is to be redeemed and that, after the Redemption Date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed
portion of the original Note representing the same indebtedness to the extent not redeemed will be issued in the name of the Holder upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;
(g) the paragraph or subparagraph of the Notes or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of the CUSIP or ISIN number, if any, listed in such notice or printed on the Notes.
At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its expense; provided that the Company shall have delivered to the Trustee, at least 15 days before notice of redemption is required to be sent or caused to be sent to Holders pursuant to this Section 3.03 (unless a shorter notice shall be agreed to by the Trustee), an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is sent in accordance with Section 3.03, Notes called for redemption become irrevocably due and payable on the Redemption Date at the redemption price. The notice, if sent in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice or any defect in the notice to the Holder of any Note designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Subject to Section 3.05, on and after the Redemption Date, interest ceases to accrue on Notes or portions of Notes called for redemption.
SECTION 3.05. Deposit of Redemption or Purchase Price.
Prior to 11:00 a.m. (New York City time) on the redemption or purchase date, the Company shall deposit or cause to be deposited with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued and unpaid interest on all Notes to be redeemed or purchased on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest on, all Notes to be redeemed or purchased.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest shall cease to accrue on the Notes or the portions
of Notes called for redemption or purchase. Redemption amounts shall only be paid upon presentation and surrender of any such Notes to be redeemed. If a Note is redeemed or purchased on or after a Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest to the redemption or purchase date shall be paid to the Person in whose name such Note was registered at the close of business on such Record Date. If any Note called for redemption or purchase shall not be so paid upon surrender for redemption or purchase because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest accrued to the redemption or purchase date not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01.
Payment of the redemption price and performance of the Company’s obligations in connection with any redemption may be performed by another Person.
SECTION 3.06. Notes Redeemed or Purchased in Part.
Upon surrender of a Definitive Note that is redeemed or purchased in part, the Company shall issue and the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Definitive Note surrendered representing the same indebtedness to the extent not redeemed or purchased; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000. It is understood that, notwithstanding anything in this Indenture to the contrary, only an Authentication Order and not an Opinion of Counsel or Officer’s Certificate is required for the Trustee to authenticate such new Note.
SECTION 3.07. Optional Redemption.
(a) At any time prior to the Par Call Date, the Notes may be redeemed by the Company, in whole or in part, at the Company’s option, at a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest thereon to, but excluding, the Redemption Date; or
(ii) the sum of the Remaining Scheduled Payments on such Notes being redeemed (not including any portion of the payments of interest accrued as of the redemption date (the “Redemption Date”)), discounted to its present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, as determined by the Quotation Agent, plus 45 basis points, plus accrued and unpaid interest on the principal amount of such Notes being redeemed to, but excluding, the Redemption Date.
(b) At any time on or after the Par Call Date, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Notes to be redeemed, plus accrued and unpaid interest, if any, on the Notes to, but excluding, the
Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(c) If the optional Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Company. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption.
SECTION 3.08. Mandatory Redemption. The Company is not required to make mandatory redemption payments or sinking fund payments with respect to the Notes; provided, however, under certain circumstances, the Company may be required to offer to purchase the Notes described under Section 4.07. Except as provided under Sections 3.07 and 4.07(d), the Notes shall not be redeemable at the option of the Company. The Company may at any time and from time to time purchase the Notes in the open market otherwise.
ARTICLE IV
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall pay principal of, premium, if any, and interest on the Notes, and the Notes may be exchanged or transferred, at the office or agency designated by the Company in Atlanta, Georgia (which initially will be the Corporate Trust Office of the Trustee in Atlanta, Georgia), except that the Company may, at its option, pay interest on the Notes by check to Holders at their registered address as it appears in the Note Register; provided that the Company shall pay principal of, premium, if any, and interest on, Note in global form registered in the name of or held by the Depository or its nominee by wire in immediately available funds to the Depository or its nominee, as the case may be, as the registered Holder of such Notes in global form. No service charge will be imposed by the Company, the Trustee or the Registrar for any registration of Notes, but the Company may require a Holder to pay a sum sufficient to cover any transfer tax or other governmental taxes and fees required by law or permitted by this Indenture.
Notwithstanding the foregoing, in any case where any Interest Payment Date, Redemption Date, Stated Maturity or other date of repurchase, redemption or payment of principal in respect of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or any Note or coupon other than a provision in the Notes which specifically states that such provision shall apply in lieu of this Section 4.01), payment of principal (or premium, if any) or interest, if any, need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date, or at the Stated Maturity or other date or repurchase, redemption or payment of principal in respect of the Notes; provided that (x) for scheduled payments of interest on April 1 and October 1, the amount of interest payable shall be equal to the amount payable on the scheduled Interest Payment Date and (y) with respect to the payment of interest in connection with Redemption Dates, and upon Stated Maturity or redemptions,
repayments or other payments of principal, the amount of interest shall include interest up to such Redemption Date or Stated Maturity or to the date of such redemption, repurchase or other payment of principal in respect of the Notes, as the case may be.
The Company shall pay interest on overdue principal at the rate specified therefor in the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
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 4.02. Maintenance of Office or Agency. The Company shall maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of 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.
The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office as one such office or agency of the Company in accordance with Section 2.03.
SECTION 4.03. Reports.
(a) So long as any Notes are outstanding, the Company shall furnish to the Trustee and the Holders:
(i) on or prior to the 90th day after the end of each fiscal year of the Company, (A) a consolidated balance sheet and statement of shareholders’ equity of the Company, as of the end of such fiscal year and the immediately preceding fiscal year, and the related consolidated statements of income, comprehensive income and of cash flows for such fiscal year, setting forth in comparative form consolidated figures for the immediately preceding two fiscal years, all such financial statements to be prepared in accordance with GAAP and audited by an independent audit firm of recognized national
standing and accompanied by an opinion of such accountants; and (B) a summary of the Company’s business and operations;
(ii) on or prior to the 45th day after the end of each of the first three fiscal quarters in each fiscal year of the Company, (A) a consolidated balance sheet of the Company, as of the end of such fiscal quarter and the corresponding period of the preceding fiscal year, and the related consolidated statements of income, comprehensive income and of cash flows for such fiscal quarter and the then elapsed portion of such fiscal year, setting forth in comparative form consolidated figures for the corresponding periods of the preceding fiscal year, all such financial statements to be prepared in accordance with GAAP and accompanied by an Officer’s Certificate to the effect that such quarterly financial statements have been prepared in accordance with GAAP for interim financial reporting and present fairly in all material respects the consolidated financial position and consolidated results of operations and cash flows of the Company in accordance with GAAP subject to changes resulting from normal year-end audit adjustments; and (B) a summary of the Company’s business and operations; and
(iii) information substantially similar to the information that would be required to be included in a Current Report on Form 8-K (as in effect on the Issue Date) filed with the SEC by the Company (if the Company were required to file such reports) pursuant to Item 1.01 (Entry into a Material Definitive Agreement), Item 1.02 (Termination of a Material Definitive Agreement), Item 1.03 (Bankruptcy or Receivership), Item 2.01 (Completion of Acquisition or Disposition of Assets), Item 2.03 (Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant), Item 2.04 (Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement), Item 2.06 (Material Impairments), Item 4.01 (Changes in Registrant’s Certifying Accountants), Item 4.02 (Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review), Item 5.01 (Changes in Control of Registrant), clauses (b) and (c)(1) of Item 5.02 (Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers) of such form, within ten business days of the date of the event requiring disclosure; provided, however, that no such information will be required to be furnished if the Company determines in its good faith judgment that such event is not material to Holders or the business, assets, operations, financial position or prospects of the Company and its Restricted Subsidiaries, taken as a whole.
In connection with this clause (a), it is understood that the Company shall not be required to furnish (a) any information, certificates or reports required by (i) Section 302, Section 404 or Section 906 of the Sarbanes-Oxley Act of 2002, or related Items 307 or 308 of Regulation S-K, (ii) Regulation G or Item 10(e) of Regulation S-K promulgated by the SEC with respect to any non-generally accepted accounting principles financial measures contained therein, (iii) segment accounting rules, or (iv) Rule 3-05, 3-09 and 3-10 of Regulation S-X (provided that the Company shall present summary financial information with respect to Subsidiaries that are not Subsidiary Guarantors of the type and scope included in the Offering Memorandum), or (b) any
compensation or beneficial ownership information or (c) any information that is not otherwise similar to information currently included in the Offering Memorandum, other than with respect to reports provided under clause (iii) above. In addition, such reports shall not be required to include any exhibits that would have been required to be filed pursuant to Item 601 of Regulation S-K.
(b) The Company also shall provide the information described in paragraph (a) above to (i) beneficial owners of the Notes, (ii) any prospective investor that is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) and (iii) any securities analyst reasonably acceptable to the Company, in each case, upon their written request. In addition, the Company shall, for so long as any Notes remain outstanding, furnish to such Holders and to securities analysts and prospective investors, upon their written request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act, as in effect on the Issue Date.
(c) Notwithstanding the foregoing, the Company shall be deemed to have satisfied the reporting requirements referred to above if (x) the Company has filed reports containing such information with the SEC or (y) the Company has (i) made such information available on Intralinks or any comparable password protected online data system and (ii) made readily available any password or other login information to the Trustee, the Holders and any such additional Persons set forth in paragraph (b) who have so requested in writing
(d) Notwithstanding the foregoing, the financial statements, information and other documents required to be provided pursuant to this Section 4.03, may be those of any direct or indirect parent of the Company; provided that, (i) such direct or indirect parent of the Company provides a full and unconditional guarantee of the Company’s obligations under the Notes and this Indenture and (ii) if the financial information so furnished relates to such direct or indirect parent of the Company and any such parent company has any material operations, assets or liabilities separate and apart from its ownership of the Company, the same is accompanied by consolidating information that summarizes in reasonable detail the differences between the information relating to such parent, on the one hand, and the information relating to the Company on a standalone basis, on the other hand.
SECTION 4.04. Compliance Certificate. The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year ending after the Issue Date, a certificate from a principal executive officer, principal financial officer or principal accounting officer stating that a review of the activities of the Company and the Restricted Subsidiaries during the preceding fiscal year have been made under the supervision of the signing Officer with a view to determining whether the Company has kept, observed, performed and fulfilled their obligations under this Indenture, and further stating, as to such Officer signing such certificate, that to the best of his or her knowledge the Company has, during such fiscal year, kept, observed, performed and fulfilled each and every condition and covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions, covenants and conditions of this Indenture (or, if a Default or an Event of Default shall have occurred and be
continuing, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto).
SECTION 4.05. Stay, Extension and Usury Laws.
The Company and each of the Subsidiary Guarantors, if any, covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Subsidiary Guarantors, if any, (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant that they shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.
SECTION 4.06. Limitation on Sale/Lease-back Transactions. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, sell or transfer, directly or indirectly, except to the Company or a Restricted Subsidiary, any Principal Property as an entirety, or any substantial portion of such a Principal Property, with the intention of taking back a lease of such Principal Property, except a lease for a period of three years or less at the end of which it is intended that the use of such Principal Property by the lessee will be discontinued; provided that, notwithstanding the foregoing, the Company or any Restricted Subsidiary may sell any such Principal Property and lease it back for a longer period:
(i) if the Company or such Restricted Subsidiary would be entitled, pursuant to Section 4.08, to create a Lien on the property to be leased securing Indebtedness in an amount equal to the Attributable Debt with respect to such sale and lease-back transaction without equally and ratably securing the outstanding Notes; or
(ii) if (A) the Company promptly informs the Trustee of such transaction, (B) the net proceeds of such transaction are at least equal to the fair market value (as determined by a resolution of the Board of Directors) of such property and (C) the Company causes an amount equal to the net proceeds of the sale to be applied to the retirement, within 180 days after receipt of such proceeds, of Indebtedness incurred or assumed by the Company or a Restricted Subsidiary (including the Notes) other than Indebtedness that is contractually subordinated in right of payment to the Notes; provided further that, in lieu of applying all of or any part of such net proceeds to such retirement of Indebtedness, the Company may, within 90 days after such sale, deliver or cause to be delivered to the applicable trustee for cancellation either debentures or notes evidencing Indebtedness of the Company (which may include the outstanding Notes) or of a Restricted Subsidiary previously authenticated and delivered by the applicable trustee, and not previously tendered for sinking fund purposes or called for a sinking fund or otherwise applied as a credit against an obligation to redeem or retire such notes or debentures, and an Officer’s Certificate (which will be delivered to the applicable trustee and paying agent) stating that the Company elects to deliver or cause to be delivered such debentures or notes in lieu of retiring Indebtedness as provided in this Indenture. If the Company shall so deliver debentures or notes to the applicable trustee and the Company shall duly deliver such Officer’s Certificate, the
amount of cash which the Company will be required to apply to the retirement of Indebtedness under this provision shall be reduced by an amount equal to the aggregate of the then applicable optional redemption prices (not including any optional sinking fund redemption prices) of such debentures or notes or, if there are no such redemption prices, the principal amount of such debentures or notes; provided, that in the case of debentures or notes which provide for an amount less than the principal amount of such debentures or notes to be due and payable upon a declaration of the maturity of such debentures or notes, such amount of cash shall be reduced by the amount of principal of such debentures or notes that would be due and payable as of the date of such application upon a declaration of acceleration of the maturity of such debentures or notes pursuant to the terms of the financing arrangement pursuant to which such debentures or notes were issued.
(b) Notwithstanding the foregoing, the Company or any Restricted Subsidiary may enter into sale and lease-back transactions in addition to those permitted by the preceding paragraph and without any obligation to retire any outstanding Notes or other Indebtedness, provided that at the time of entering into such sale and lease-back transactions and after giving effect to such transactions, Exempted Debt does not exceed 15.0% of Consolidated Net Tangible Assets.
SECTION 4.07. Change of Control. (a) Upon the occurrence of a Change of Control Triggering Event, each Holder shall have the right to require that the Company repurchase such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(b) Within 30 days following the date upon which any Change of Control Triggering Event with respect to the Notes shall have occurred, the Company shall mail a notice by first-class mail to each Holder with a copy to the Trustee (the “Change of Control Offer”) or, at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, stating:
(i) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date);
(ii) the purchase date (which shall be no earlier than 15 days nor later than 60 days from the date such notice is mailed); and
(iii) the instructions, as determined by the Company, consistent with this Section 4.07, that a Holder must follow in order to have its Notes purchased.
(c) The Company shall not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner,
at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. A Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of the making of the Change of Control Offer.
(d) If Holders of not less than 90% in aggregate principal amount of the outstanding Notes validly tender and do not withdraw such Notes in a Change of Control Offer and the Company, or any other Person making a Change of Control Offer in lieu of the Company as described in clause (c) of this Section 4.07, purchases all of the Notes validly tendered and not withdrawn by such Holders, the Company shall have the right, upon not less than 15 nor more than 60 days’ prior notice, given not more than 30 days following such purchase pursuant to the Change of Control Offer described in clause (b) of this Section 4.07, to redeem all Notes that remain outstanding following such purchase at a redemption price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, 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).
(e) The Company shall 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 Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.07, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Indenture by virtue of its compliance with such securities laws or regulations.
SECTION 4.08. Limitation on Liens. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, create, incur or suffer to exist any Lien, as security for any Indebtedness, on or of any shares of stock, Indebtedness or other intercompany obligations of a Subsidiary or any Principal Property of the Company or a Restricted Subsidiary, whether such shares of stock, Indebtedness or other obligations of a Subsidiary or Principal Property is owned at the date of this Indenture or acquired after the date of this Indenture, unless the Company secures or causes such Restricted Subsidiary to secure the outstanding Notes equally and ratably with all Indebtedness secured by such Lien, so long as such Indebtedness shall be so secured. This covenant shall not apply in the case of:
(1) the creation of any Lien on any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property acquired after the date of this Indenture (including acquisitions by way of merger or consolidation) by the Company or a Restricted Subsidiary contemporaneously with such acquisition, or within 180 days after such acquisition, to secure or provide for the payment or financing of any part of the purchase price of such acquisition, or the assumption of any mortgage, pledge or other lien upon any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property acquired after the date of this Indenture existing at the time of such
acquisition, or the acquisition of any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property subject to any mortgage, pledge or other lien without the express assumption of such Lien, provided that every such Lien referred to in this clause (1) will attach only to the shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property so acquired and fixed improvements on such Principal Property;
(2) any Lien on any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property existing on the Issue Date, other than Liens permitted by clause (3) hereof;
(3) any Lien securing obligations under the Securitization Facility, in an amount not to exceed $350.0 million;
(4) any Lien on any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property in favor of the Company or any Restricted Subsidiary;
(5) any Lien on Principal Property being constructed or improved securing loans to finance such construction or improvements;
(6) any Lien on shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property incurred in connection with the issuance of tax- exempt governmental obligations; and
(7) any renewal of or substitution for any Lien permitted by any of the preceding clauses (1) through (6), provided, in the case of a renewal of or substitution for any Lien permitted under clause (1), (2), (3) or (5), the Indebtedness secured is not increased nor the Lien extended to any additional shares of stock, Indebtedness or other obligations of a Subsidiary or any additional Principal Property.
(b) Notwithstanding the foregoing, the Company or any Restricted Subsidiary may create or assume Liens in addition to those permitted by clauses (1) through (7) of the preceding paragraph, and renew, extend or replace such liens, provided that at the time of such creation, assumption, renewal, extension or replacement, and after giving effect to such creation, assumption, renewal, extension or replacement, Exempted Debt does not exceed 15.0% of Consolidated Net Tangible Assets.
SECTION 4.09. Future Guarantors. The Company shall cause each Domestic Subsidiary of the Company that is a borrower under or guarantees obligations under any Debt Facility in excess of an aggregate principal amount of $75.0 million (other than the Securitization Facility) of the Company or any Subsidiary Guarantor, unless such Domestic Subsidiary is not required to become a guarantor under the Senior Credit Facility, within 30 days of becoming a borrower or the incurrence of such Guarantee, to execute and deliver to the Trustee a supplemental indenture to this Indenture pursuant to which such Subsidiary will
Guarantee payment of the Notes on the same terms and conditions as those set forth in Article X hereof.
SECTION 4.10. Corporate Existence. Subject to Article V hereof, the Company shall 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 Subsidiary Guarantor and the corporate rights (charter and statutory) licenses and franchises of the Company and each Subsidiary Guarantor; provided, however, that the Company shall not be required to preserve any such existence (except that of the Company), right, license or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and each of its Subsidiary Guarantors, and that the loss thereof is not, and will not be, disadvantageous in any material respect to the Holders.
SECTION 4.11. Payment of Taxes and Other Claims. The Company shall pay, and shall cause each of its Subsidiary Guarantors to pay, prior to delinquency, all material taxes, assessments and governmental levies except such as are contested in good faith by appropriate proceedings or where the failure to effect such payment or discharge would not reasonably be expected to be adverse in any material respect to the Holders.
ARTICLE V
CONSOLIDATIONS, MERGERS AND SALES OF ASSETS
SECTION 5.01. When Company or Subsidiary Guarantors May Merge or Otherwise Dispose of Assets. (a) The Company shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the “Successor Company”) shall 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) shall 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 Notes and this Indenture;
(2) immediately after giving pro forma effect to such transaction, no Default shall have occurred and be continuing; and
(3) the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture.
(b) The Company shall not permit any Subsidiary Guarantor to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:
(1) (A) the resulting, surviving or transferee Person (the “Successor Guarantor”) shall 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 such Subsidiary Guarantor) shall expressly assume, by an indenture supplemental thereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of such Subsidiary Guarantor in respect of each Subsidiary Guarantee and under this Indenture;
(B) immediately after giving pro forma effect to such transaction, no Default shall have occurred and be continuing; and
(C) the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture; or
(2) the transaction results in the release of such Subsidiary Guarantor’s Subsidiary Guarantee under clause (1) of Section 10.06.
Notwithstanding the foregoing Section 5.01(b), any Subsidiary Guarantor may merge with or into or transfer all or part of its assets to the Company or any other Subsidiary Guarantor.
(c) For purposes of the foregoing Section 5.01(a) and (b), the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company or a Subsidiary Guarantor, as the case may be, which properties and assets, if held by the Company or such Subsidiary Guarantor instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company or such Subsidiary Guarantor on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company or such Subsidiary Guarantor.
(d) The Successor Company shall be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, and the predecessor Company, except in the case of a lease, shall be released from the obligation to pay the principal of and interest on the Notes. The Successor Guarantor shall be the successor to the applicable Subsidiary Guarantor and shall succeed to, and be substituted for, and may exercise every right and power of, such Subsidiary Guarantor under this Indenture, and the predecessor Subsidiary Guarantor, except in the case of a lease, shall be released from its obligations under its Subsidiary Guarantee.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default. Each of the following shall be an Event of Default with respect to the Notes (an “Event of Default”):
(1) a default in the payment of principal of or premium, if any, on any Note when due at its Stated Maturity, upon redemption, required repurchase, upon declaration or otherwise;
(2) a default in any payment of interest on any Note when due, continued for 30 days;
(3) the failure by the Company or any Subsidiary Guarantor to comply with its obligations under Article V of this Indenture;
(4) a failure by the Company or any Subsidiary Guarantor to comply with any of its obligations, covenants or agreements (other than a default referred to in clauses (1), (2) and (3) above) contained in this Indenture or under the Notes for a period of 60 consecutive days after receipt by the Company of written notice of such failure by the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes;
(5) the failure by the Company or any Significant Subsidiary to pay any Indebtedness within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof if the total amount of such Indebtedness unpaid or accelerated exceeds $75.0 million or its foreign currency equivalent;
(6) the Company or a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(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 of it or for any substantial part of its property;
(D) makes a general assignment for the benefit of its creditors; or
(E) takes any comparable action under any foreign laws relating to insolvency;
(7) 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;
(C) orders the winding up or liquidation of the Company or any Significant Subsidiary; or
(D) or any similar relief is granted under any foreign laws and the order, decree or relief remains unstayed and in effect for 60 days;
(8) the rendering of any judgment or decree for the payment of money in excess of $50.0 million or its foreign currency equivalent 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
(9) any Subsidiary Guarantee of a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms of this Indenture) or is declared null and void in a judicial proceeding or any Subsidiary Guarantor that is a Significant Subsidiary denies or disaffirms its obligations under this Indenture or its Subsidiary Guarantee.
The foregoing shall 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. However, a Default under clause (4) shall not constitute an Event of Default until the Trustee or the Holders of at least 25% in aggregate principal amount of the outstanding Notes notify the Company of the Default and the Company does not cure such Default within the time specified in clause (4) after receipt of such notice.
SECTION 6.02. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.01(6) or (7) 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 aggregate outstanding principal amount of the Notes 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 Notes to be due and payable. Upon such a declaration, such principal, premium and interest shall be immediately due and payable. In the event of a declaration of acceleration because an Event of Default set forth in Section 6.01(5) 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 6.01(5) shall be remedied or cured by the Company 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; provided that, (i) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived and (ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. If an Event of Default specified in Section 6.01(6) or (7) with respect to the Company or a Significant Subsidiary occurs and is continuing, the principal of, premium, if any, and interest on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.
SECTION 6.03. 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 premium, if any) or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder 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 6.04. Waiver of Past Defaults. The Holders of a majority in aggregate principal amount of the outstanding Notes may waive all past Defaults or Events of Default (except with respect to nonpayment of principal, premium or interest) and rescind any such acceleration with respect to the Notes 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 Notes 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 6.05. Limitation on Suits. A Holder may not pursue any remedy with respect to this Indenture or the Notes 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 Notes make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer 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 outstanding Notes do not give the Trustee a direction inconsistent with the request during such 60-day period.
A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder.
SECTION 6.06. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the contractual right of any Holder to institute suit for the enforcement of any payment of principal, premium, if any, and interest on or with respect to such Holder’s Notes on or after the due dates expressed or provided for in such Note shall not be amended without the consent of such Holder.
SECTION 6.07. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(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).
SECTION 6.08. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceedings, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding has been instituted.
SECTION 6.09. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.07 hereof, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
SECTION 6.10. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article VI or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 6.11. 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 Holders 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.
SECTION 6.12. Priorities. If the Trustee collects any money or property pursuant to this Article VI, it shall pay out the money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.06, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;
SECOND: to Holders for amounts due and unpaid on the Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.12. At least 15 days before such record date, the Company shall mail to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid.
SECTION 6.13. 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 6.13 does not apply to a suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to Section 6.06 or a suit by Holders of more than 10% in outstanding principal amount of the Notes.
SECTION 6.14. Control by Holders of Notes. The Holders of a majority in principal amount of the Notes 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 the Notes or, that the Trustee determines is unduly prejudicial to the rights of other Holders 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.
SECTION 6.15. Notices of Default; Compliance Certificate. If a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each Holder notice of the Default or Event of Default within 90 days after it occurs unless the Default has been previously cured. In addition, except in the case of a Default in the payment of principal of, premium, if any, or interest on any Note, the Trustee shall be protected in withholding notice if and so long as the Trustee in good faith determines that withholding notice is in the interests of the Holders. In addition, the Company is required to deliver to the Trustee, within 120 days after the end of each fiscal year, an Officer’s Certificate indicating whether the signers thereof know of any Default or Event of Default that occurred during the previous year. The Company also is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice and a description of any event which would constitute a Default or Event of Default, their status and what action the Company is taking or proposes to take in respect thereof.
ARTICLE VII
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its 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:
(i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) 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 provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein.
(c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved in a court of competent jurisdiction that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) 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 6.14 hereof.
(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee shall be under no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any Holder unless such Holder has offered to the Trustee indemnity or security satisfactory to it against any loss, liability or expense.
(f) 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. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
SECTION 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or 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, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.
(b) Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company.
(f) None of the provisions of this Indenture shall require the Trustee to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, 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 for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured to it.
(g) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default is received by a Responsible Officer of the Trustee at the Corporate Trust Office, and such notice references the Notes and this Indenture.
(h) In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
(i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder and each agent, custodian and other Person employed to act hereunder.
(j) The permissive rights of the Trustee enumerated herein shall not be construed as duties.
(k) The Trustee may request that the Company delivers an Officer’s Certificate setting forth the names of individuals or titles of officers authorized at such time to take specified actions pursuant to this Indenture.
(l) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days or resign. The Paying Agent or Registrar does the same with like rights and duties. The Trustee is also subject to Section 7.09.
SECTION 7.04. 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 Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05. Notice of Defaults.
If a Default occurs and is continuing and if it is known to a Responsible Officer of the Trustee, the Trustee shall send to Holders a notice of the Default within 90 days of the occurrence of such Default. Except in the case of a Default relating to the payment of principal, premium, if any, or interest on any Note, the Trustee may withhold from the Holders notice of any continuing Default if and so long as it in good faith determines that withholding the notice is in the interests of the Holders. The Trustee shall not be deemed to know of any Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is such a Default is received by a Responsible Officer of the Trustee at the Corporate Trust Office. The provisions of this Section 7.05 are subject to the provisions of Section 6.15.
SECTION 7.06. Compensation and Indemnity.
(a) The Company shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder 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 promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.
(b) The Company and Subsidiary Guarantors shall indemnify the Trustee for, and hold the Trustee harmless against, any and all loss, damage, claims, liability or expense (including attorneys’ fees and expenses and taxes (other than taxes based upon the income of the
Trustee)) incurred by it in connection with the acceptance or administration of this trust and the performance of its duties hereunder (including the costs and expenses of enforcing this Indenture against the Company or any Subsidiary Guarantors (including this Section 7.06) or defending itself against any claim whether asserted by any Holder, the Company or any Subsidiary Guarantor, or liability in connection with the acceptance, exercise or performance of any of its powers or duties hereunder). 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 except to the extent actually prejudiced thereby. The Issuer shall defend the claim, and the Trustee shall cooperate in the defense of such claim. The Trustee may have separate counsel if the Trustee shall have been advised by counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the Company and in the reasonable judgment of such counsel it is advisable for the Trustee to engage separate counsel, and the Company shall pay the reasonable and documented fees and expenses of any one such separate counsel (as well as such fees and expenses of one firm of local counsel in each jurisdiction in which the primary counsel is not admitted to practice and where local counsel is necessary or advisable). The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred as determined in a final judgment by a court of competent jurisdiction to have resulted from the Trustee’s own willful misconduct or negligence.
(c) The obligations of the Company and the Subsidiary Guarantors, if any, under this Section 7.06 shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee.
(d) To secure the payment obligations of the Company in this Section 7.06, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.
(e) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.07. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.07. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing not less than 30 days prior to the effective date of such removal. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.09;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the Company’s expense), the Company or the Holders of at least 10% in principal amount of the then outstanding Notes may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.09, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of 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 Holders. The retiring Trustee shall, at the expense of the Company, promptly transfer all property held by it as Trustee to the successor Trustee; provided that all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.06. Notwithstanding replacement of the Trustee pursuant to this Section 7.07, the Company’s obligations under Section 7.06 shall continue for the benefit of the retiring Trustee. The predecessor Trustee shall have no liability for any action or inaction by any successor Trustee.
SECTION 7.08. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee.
SECTION 7.09. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or
examination by federal or state authorities and that has a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.
ARTICLE VIII
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Defeasance. (a) Subject to Sections 8.01(b) and 8.02, the Company at its option and at any time may terminate
(i) all the obligations of the Company and any Subsidiary Guarantor under the outstanding Notes and this Indenture (“legal defeasance option”); or
(ii) the obligations of the Company under Sections 4.03, 4.06, 4.07, 4.08, 4.09, and 5.01(a)(3) 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 with such covenants or provisions shall no longer constitute a Default or an Event of Default under Section 6.01(3) and 6.01(4) (“covenant defeasance option”), but except as specified above, the remainder of this Indenture and the Notes 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 or covenant defeasance option with respect to the outstanding Notes, the related Subsidiary Guarantees in effect at such time shall be automatically released.
If the Company exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in Sections 6.01(4), 6.01(5), 6.01(6) (but only with respect to a Significant Subsidiary), 6.01(7) (but only with respect to a Significant Subsidiary), 6.01(8) or 6.01(9), or because of the failure of the Company to comply with Section 5.01(a)(3) or 5.01(b)(1)(C).
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.
(b) Notwithstanding the provisions of Section 8.01(a), the Company’s obligations in Sections 2.02, 2.06, 2.07, 6.06, 6.07, 8.04, 8.05 and 8.07 shall survive until the Notes have been paid in full. Thereafter, the Company’s obligations in Sections 6.06, 8.04 and 8.05 of this Indenture shall survive.
SECTION 8.02. Conditions to Defeasance. In order to exercise either legal defeasance option or covenant defeasance option with respect to the Notes:
(1) the Company shall irrevocably deposit with the Trustee, in trust, for the benefit of the Holders cash in U.S. dollars, non-callable U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Notes on the stated date for payment thereof or on the Redemption Date, as the case may be;
(2) in the case of legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) 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 beneficial owners will not recognize income, gain or loss for federal income tax purposes as a result of such legal defeasance option 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 option had not occurred;
(3) in the case of covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that the beneficial owners will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance option and will be subject to federal income tax on the same amounts, in the same manner at the same times as would have been the case if such covenant defeasance option had not occurred;
(4) no Default or Event of Default with respect to the Notes shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default with respect to this Indenture resulting from the incurrence of Indebtedness, all or a portion of which will be used to defease the Notes concurrently with such incurrence);
(5) such legal defeasance option or covenant defeasance option 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 (other than a Default or Event of Default with respect to this Indenture resulting from the incurrence of Indebtedness, all or a portion of which will be used to defease the Notes concurrently with such incurrence);
(6) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that (A) the Notes 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 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’ rights generally; and
(7) the Company shall have delivered to the Trustee an Officer’s Certificate stating that all conditions precedent provided for or relating to the legal defeasance option or covenant defeasance option, as the case may be, have been complied with.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article VIII. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes.
SECTION 8.04. Repayment to Company. (a) 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 VIII 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 option or covenant defeasance option, 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 Section 8.04(a).
(b) 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 Notes that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Company for payment as general creditors.
SECTION 8.05. 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 8.06. Deposited Money and Government Notes to be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.04, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.06, the “Trustee”) pursuant to Section 8.02 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.
Anything in this Article VIII to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the written request of the Company any money or U.S. Government Obligations held by it as provided in Section 8.02 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.02 hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent legal defeasance or covenant defeasance.
SECTION 8.07. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article VIII 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 Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII 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 VIII; provided, however, that, if the Company has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENT AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company and the Trustee may amend or supplement this Indenture and the Notes and the Subsidiary Guarantees issued hereunder without notice to or consent of any Holder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V of this Indenture in respect of the assumption by a Successor Company, as the case may be, of the obligations of the Company or any Subsidiary Guarantor under this Indenture, the Notes and the Subsidiary Guarantees issued hereunder;
(3) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided, however, that such uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code;
(4) to add Guarantees with respect to the Notes or release any such Guarantees in accordance with the applicable provisions of this Indenture;
(5) to add to the covenants of the Company and its Subsidiaries for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or its Subsidiaries;
(6) to conform the text of this Indenture, any Subsidiary Guarantees or the Notes to the “Description of Notes” in the Offering Memorandum;
(7) to secure the Notes and any Subsidiary Guarantee;
(8) to make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes as permitted by this Indenture, including, without limitation, to facilitate the issuance and administration of the Notes; provided, however, that (i) compliance with this Indenture as so amended would not result in the Notes being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer the Notes;
(9) to evidence and provide for the acceptance of appointment by a successor Trustee; provided that the successor Trustee is otherwise qualified and eligible to act as such under the terms of this Indenture;
(10) to provide for or confirm the issuance of Additional Notes; and
(11) to make any change that does not adversely affect the rights of any Holder of the Notes.
After an amendment under this Section 9.01 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.01.
SECTION 9.02. With Consent of Holders. The Company and the Trustee may amend or supplement this Indenture, the Notes and the Subsidiary Guarantees issued hereunder without notice to any Holder but with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding. However, without the consent of each Holder affected, an amendment may not:
(1) reduce the principal amount of Notes whose Holders must consent to an amendment;
(2) reduce the rate of or extend the time for payment of interest on any Note;
(3) reduce the principal of or extend the Stated Maturity of any Note;
(4) reduce the premium payable upon the redemption or repurchase of any Note or change the time at which any Note may be redeemed in accordance with Article III hereof;
(5) make any Note payable in money other than that stated in the Note;
(6) amend the contractual right of any Holder of Notes to institute suit for the enforcement of any payment of principal, premium, if any, and interest on or with respect to such Holder’s Notes on or after the due dates expressed or provided for in such Note;
(7) make any change in the amendment or waiver provisions which require the consent of each Holder of Notes; or
(8) modify the Subsidiary Guarantees in any manner adverse to the Holders of the Notes.
It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.
SECTION 9.03. Revocation and Effects of Consents and Waivers. A consent to an amendment, supplement or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent, supplement or waiver as to such Holder’s Note or portion of the Note if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective. After an amendment, supplement or waiver becomes effective, it shall bind every Holder. An amendment, supplement or waiver made pursuant to Section 9.02 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 Holders 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 Holders 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 9.04. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.05. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article IX if the amendment, supplement or waiver does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment, supplement or waiver until the Board of Directors approves it. In executing any amendment, supplement or waiver, the Trustee shall be provided with and (subject to Section 7.01) shall be fully protected in conclusively relying upon, in addition to the documents required by Section 12.02, an Officer’s Certificate and an Opinion of Counsel, each stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture and such Opinion of Counsel shall state that such amendment, supplement or waiver is the legal, valid and binding obligation of the Company and any Subsidiary Guarantors party thereto, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof.
ARTICLE X
GUARANTEES
SECTION 10.01. Guarantee.
Subject to this Article X, each of the Subsidiary Guarantors hereby, jointly and severally, fully and unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of, interest, premium, if any, on the Notes, subject to any applicable grace period, shall be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment by the Company when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors shall be jointly and severally obligated to pay the same immediately. Each Subsidiary Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.
Each Subsidiary Guarantor hereby agrees that, to the maximum extent permitted under applicable law, their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or
any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor (other than payment in full of all of the Obligations of the Company hereunder and under the Notes). Each Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture or by release in accordance with the provisions of this Indenture.
Each Subsidiary Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ and agents’ fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section 10.01.
If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Subsidiary Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Subsidiary Guarantors any amount paid either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.
Each Subsidiary Guarantor agrees that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article VI hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantors for the purpose of this Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantees.
Each Subsidiary Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation, reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company’s assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes or Subsidiary Guarantees, whether as a “voidable preference,” “fraudulent transfer” or otherwise, all as though such payment or performance had not been made. In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
In case any provision of any Subsidiary Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
The Subsidiary Guarantee issued by any Subsidiary Guarantor shall be a general unsecured (unless the Notes are secured pursuant to Section 4.08) obligation of such Subsidiary Guarantor and shall rank equally in right of payment to all existing and future senior Indebtedness of such Subsidiary Guarantor.
Each payment to be made by a Subsidiary Guarantor in respect of its Subsidiary Guarantee shall be made without set-off, counterclaim, reduction or diminution of any kind or nature.
SECTION 10.02. Limitation on Guarantor Liability.
Each Subsidiary Guarantor and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Subsidiary Guarantee of such Subsidiary Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Subsidiary Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors hereby irrevocably agree that the obligations of each Subsidiary Guarantor shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Subsidiary Guarantor that are relevant under such laws and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under this Article X, result in the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law. Each Subsidiary Guarantor that makes a payment under its Subsidiary Guarantee shall be entitled upon payment in full of all guaranteed obligations under this Indenture to a contribution from each other Subsidiary Guarantor in an amount equal to such other Subsidiary Guarantor’s pro rata portion of such payment based on the respective net assets of all the Subsidiary Guarantors at the time of such payment determined in accordance with GAAP.
SECTION 10.03. Execution and Delivery.
Each Subsidiary Guarantor hereby agrees that its execution and delivery of a supplemental indenture substantially in the form of Exhibit D hereto, executed on behalf of such Subsidiary Guarantor by an officer thereof shall evidence its Subsidiary Guarantee set forth in Section 10.01 without the need for any further notation on the Notes. Upon the execution and delivery of the supplemental indenture, the Subsidiary Guarantees set forth in this Indenture shall be deemed duly delivered, without any further action by any Person, on behalf of the Subsidiary Guarantors.
Each of the Subsidiary Guarantors hereby agrees that its Subsidiary Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding the absence of the
endorsement of any notation of such Subsidiary Guarantee. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of any Subsidiary Guarantors.
SECTION 10.04. Subrogation.
Each Subsidiary Guarantor shall be subrogated to all rights of Holders against the Company in respect of any amounts paid by any Subsidiary Guarantor pursuant to the provisions of Section 10.01; provided that no Subsidiary Guarantor shall be entitled to enforce or receive any payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Company under this Indenture or the Notes shall have been paid in full.
SECTION 10.05. Benefits Acknowledged.
Each Subsidiary Guarantor acknowledges that it shall receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the guarantee and waivers made by it pursuant to its Subsidiary Guarantee are knowingly made in contemplation of such benefits.
SECTION 10.06. Release of Subsidiary Guarantees.
A Subsidiary Guarantee by a Subsidiary Guarantor shall be automatically released:
(1) upon the sale or other disposition (including by way of consolidation or merger) of the Capital Stock of such Subsidiary Guarantor, as a result of which such Subsidiary Guarantor ceases to be a Subsidiary of the Company;
(2) at such time as such Subsidiary Guarantor no longer is a borrower under or Guarantees obligations under any Debt Facility of the Company or any Subsidiary Guarantor that resulted in the issuance of the Subsidiary Guarantee;
(3) upon the defeasance of the Notes, as provided under Section 8.01 hereof;
(4) upon the discharge of this Indenture, as provided under Section 11.01 hereof; or
(5) as described under Article IX hereof.
In the event that any released Subsidiary Guarantor (in the case of clause (2) above) thereafter borrows money or Guarantees obligations under any Debt Facility of the Company or any Subsidiary Guarantor, such former Subsidiary Guarantor will again provide a Subsidiary Guarantee in accordance with Section 4.09 hereof.
ARTICLE XI
SATISFACTION AND DISCHARGE
SECTION 11.01. Satisfaction and Discharge.
This Indenture shall be discharged and will cease to be of further effect as to all Notes, when:
(1) either (a) all Notes theretofore authenticated and delivered, except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust, have been delivered to the applicable Trustee for cancellation; or (b) all Notes not theretofore delivered to the applicable Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise, will become due and payable within one year or are to be called for redemption and redeemed within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company and the Company or any Subsidiary Guarantor have irrevocably deposited or caused to be deposited with the applicable Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on the Notes not theretofore delivered to the applicable Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;
(2) the Company has paid or caused to be paid all sums payable by it under this Indenture; and
(3) the Company has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be.
In addition, upon its request for written acknowledgement of satisfaction and discharge, the Company must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, if money shall have been deposited with the Trustee pursuant to Section 11.01(1), the provisions of Section 11.02 and Section 8.04 shall survive such satisfaction and discharge.
SECTION 11.02. Application of Trust Money.
Subject to the provisions of Section 8.04, all money deposited with the Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 11.01 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 Company’s and any Subsidiary Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01; provided that if the Company has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Notices.
Any notice or communication by the Company or any Subsidiary Guarantor or the Trustee to the others is duly given if in writing and delivered in person or mailed by first-class mail (registered or certified, return receipt requested), electronic delivery (in PDF format), fax or overnight air courier guaranteeing next day delivery, to the others’ address:
If to the Company or any Subsidiary Guarantor:
Smithfield Foods, Inc.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
with copies to:
Hogan Lovells US LLP
555 Thirteenth Street, NW
Washington, D.C. 20004
Attention: Bruce Gilchrist, Esq.
If to the Trustee:
U.S. Bank National Association
Global Corporate Trust Services
Two Midtown Plaza
1349 West Peachtree Street, NW, Suite 1050
Atlanta, GA 30309
Attention: David Ferrell
The Company, any Subsidiary Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: as of the date so delivered if delivered electronically, in PDF format; at the time delivered by hand, if personally delivered; five calendar days after being deposited in the mail, postage prepaid, if mailed by first-class mail; when receipt acknowledged, if faxed; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery; provided that any notice or communication delivered to the Trustee shall be deemed effective upon actual receipt thereof.
Any notice or communication to a Holder shall be sent electronically, mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed or otherwise delivered in the manner provided above within the time prescribed, such notice or communication shall be deemed duly given, whether or not the addressee receives it.
The Trustee agrees to accept and act upon facsimile or electronically sent (in PDF format) transmission of written instructions or directions pursuant to this Indenture given by the Company, provided, however that: (i) if requested, the Company, subsequent to such facsimile transmission of written instructions or directions, shall provide the originally executed instructions or directions to the Trustee in a timely manner and (ii) such originally executed instructions or directions shall be signed by an Officer of the Company.
If the Company sends a notice or communication to Holders, it shall send a copy to the Trustee and each Agent at the same time.
SECTION 12.02. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(a) An Officer’s Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.03) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
(b) An Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.03) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.
SECTION 12.03. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 4.04) and shall include:
(a) a statement that the Person making such certificate or opinion has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she 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
(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.
With respect to matters of fact, an Opinion of Counsel may rely on an Officer’s Certificate, certificates of public officials or reports or opinions of experts.
SECTION 12.04. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
SECTION 12.05. No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator or stockholder of the Company or the Subsidiary Guarantors, if any, as such, shall have any liability
for any obligations of the Company under the Notes, this Indenture or the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy.
SECTION 12.06. Governing Law. THIS INDENTURE, THE NOTES AND ANY SUBSIDIARY GUARANTEE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 12.07. Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 12.08. Appointment of Note Registrar and Paying Agent. The Trustee will initially act as Paying Agent and Note Registrar. The Company may change the Paying Agent or Note Registrar without prior notice to the Holders, and the Company or any of its Restricted Subsidiaries may act as Paying Agent or Note Registrar.
SECTION 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or the Restricted Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.10. Successors.
All agreements of the Company in this Indenture and the Notes shall bind their successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Subsidiary Guarantor, if any, in this Indenture shall bind its successors, except as otherwise provided in Section 10.06.
SECTION 12.11. Severability.
In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture which, when taken together, shall constitute one instrument. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and
delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
SECTION 12.13. 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.
SECTION 12.14. U.S.A. Patriot Act.
The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.
[Signatures on following pages]
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written.
| | | | | | | | | | | |
| U.S. Bank National Association, as Trustee |
| | | |
| | | |
| | | |
| | | |
| By: | /s/ David Ferrell |
| Name: | David Ferrell |
| Title: | Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | |
| COMPANY: | Smithfield Foods, Inc., |
| a Virginia corporation |
| | | |
| | | |
| | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President and Corporate Treasurer |
| | | | | | | | | | | | | | |
| SUBSIDIARY GUARANTORS: | | | | |
| | | | |
| Brown’s Realty Partnership, |
| a North Carolina partnership |
| | | | |
| By: | Murphy-Brown LLC, |
| | Partner |
| | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | |
| By: | Smithfield Purchase Corporation, |
| | Partner | |
| | | | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | |
| Carroll’s Realty Partnership, |
| a North Carolina partnership |
| | | | | |
| By: | Murphy-Brown LLC, |
| | Partner |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| By: | Smithfield Purchase Corporation, |
| | Partner | | |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Duplin Marketing Company, LLC, |
| a North Carolina limited liability company |
| | | | | |
| | | | | |
| By: | /s/ Michael H. Cole | |
| Name: Michael H. Cole |
| Title: Manager |
| | | | | |
| | | | | |
| Jonmor Investments, Inc., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Jeffrey A. Porter |
| Name: Jeffrey A. Porter |
| Title: President |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | |
| KC2 Real Estate, LLC, |
| a Delaware limited liability company |
| | | | | |
| By: | Murphy-Brown of Missouri LLC, |
| | its sole Member |
| | | | | |
| By: | MB Missouri Holdings LLC, |
| | its sole Member |
| | | | | |
| By: | Murphy-Brown LLC, |
| | its Managing Member |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| | | | | |
| MB Grain LLC, |
| a Delaware limited liability company |
| | | | | |
| By: | Murphy-Brown LLC, |
| | its sole Member |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P.Dykstra |
| Title: Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | |
| MB Missouri Holdings LLC, |
| a Delaware limited liability company |
| | | | | |
| By: | Murphy-Brown LLC, |
| | its Managing Member |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Murphy-Brown LLC, |
| a Delaware limited liability company |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Murphy-Brown of Missouri LLC, |
| a Delaware limited liability company |
| | | | | |
| By: | MB Missouri Holdings LLC, |
| | its sole Member |
| | | | | |
| By: | Murphy-Brown LLC, |
| | its Managing Member |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P.Dykstra |
| Title: Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | |
| Patcud Investments, Inc., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Jeffrey A. Porter | | |
| Name: Jeffrey A. Porter |
| Title: President |
| | | | | |
| | | | | |
| SF Investments, Inc., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Jeffrey A. Porter | | |
| Name: Jeffrey A. Porter |
| Title: President |
| | | | | |
| | | | | |
| Smithfield Direct, LLC, |
| a Delaware limited liability company |
| | | | | |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | |
| | | | | |
| | By: | /s/ Timothy P. Dykstra | | |
| | Name: Timothy P. Dykstra | | |
| | Title: Vice President | | |
| | | | | |
| | | | | |
| Smithfield Fresh Holdings, Inc., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield Fresh Meats Corp., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | |
| Smithfield Fresh Meats Sales Corp., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield Packaged Meats Corp., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield Packaged Meats Sales Corp., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield Specialty Foods Group, LLC, |
| a Delaware limited liability company |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield Strategic Sourcing & Service Co., |
| Inc., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | |
| Smithfield Support Services Corp., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield-Carroll’s Farms, |
| a Virginia partnership |
| | | | | |
| By: | Murphy-Brown LLC, |
| | Partner |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| By: | Smithfield Purchase Corporation, |
| | Partner |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield-Kinston LLC |
| a Delaware limited liability company |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | | | | |
| Tar Heel Turkey Hatchery, Inc., |
| a North Carolina corporation |
| | | | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
[Signature Page to Indenture]
EXHIBIT A
FORM OF NOTE
EXHIBIT A-1
[Face of Note]
[Insert the Global Note Legend, if applicable, pursuant to the provisions of the Indenture]
[Insert the Private Placement Legend, if applicable, pursuant to the provisions of the Indenture]
CUSIP [ó][ó]
ISIN [ó]
[RULE 144A] [REGULATION S] GLOBAL NOTE
5.200% Senior Notes due 2029
SMITHFIELD FOODS, INC.
promises to pay to CEDE & CO. or registered assigns, the principal sum set forth on the Schedule of Exchanges of Interests in the Global Note attached hereto in United States Dollars on April 1, 2029.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
IN WITNESS HEREOF, the Company has caused this instrument to be duly executed.
| | | | | | | | |
| SMITHFIELD FOODS, INC. |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
This is one of the Notes referred to in the within-mentioned Indenture:
Dated:
| | | | | | | | |
| U.S. BANK NATIONAL ASSOCIATION,
as Trustee |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
[Reverse of Note]
5.200% Senior Notes due 2029
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Smithfield Foods, Inc., a Virginia corporation (the “Company”) promises to pay interest on the principal amount of this Note at 5.200% per annum from April 1, 2019 until maturity. The Company shall pay interest, semi-annually in arrears on April 1 and October 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that the first Interest Payment Date shall be October 1, 20191. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the interest rate on the Notes to the extent lawful. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes to the Persons who are registered Holders at the close of business on the March 15 or September 15 (whether or not a Business Day), as the case may be, immediately preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. Payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank National Association, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to the Holders. The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture, dated as of April 1, 2019 (the “Indenture”), among the Company, the Subsidiary Guarantors party thereto and the Trustee. This Note is one of a duly authorized issue of Notes of the Company
1 With respect to Initial Notes issued on the Issue Date.
designated as its 5.200% Senior Notes due 2029. The Company shall be entitled to issue Additional Notes pursuant to Section 2.01 of the Indenture. To the extent any provision of this
5. OPTIONAL REDEMPTION.
(a) At any time prior to the Par Call Date, the Notes may be redeemed by the Company, in whole or in part, at the Company’s option, at a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but excluding, the Redemption Date; or
(ii) the sum of the Remaining Scheduled Payments on such Notes being redeemed (not including any portion of the payments of interest accrued as of the redemption date (the “Redemption Date”)), discounted to its present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Adjusted Treasury Rate, as determined by the Quotation Agent, plus 45 basis points, plus accrued and unpaid interest on the principal amount of such Notes being redeemed to, but excluding, the Redemption Date.
(b) At any time on or after the Par Call Date, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Notes to be redeemed, plus accrued and unpaid interest, if any, on the Notes to, but excluding, the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(c) If the optional Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Company. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption.
(d) If less than all of the Notes are to be redeemed, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Definitive Note surrendered representing the same indebtedness to the extent not redeemed or purchased; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000.
(e) In addition to the Company’s rights to redeem the Notes as set forth above, the Company may purchase Notes in open-market transactions, tender offers or otherwise invest such net proceeds in any manner that is not prohibited by the Indenture.
6. MANDATORY REDEMPTION. The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Subject to Section 3.03 of the Indenture, notice of redemption shall be sent by electronic delivery or mailed by first-class mail at least 15 days but not more than 60 days before the Redemption Date to each Holder to be redeemed at such Holder’s registered address, except that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Articles VIII or XI of the Indenture.
8. OFFERS TO REPURCHASE. If a Change of Control Triggering Event occurs, each Holder will have the right to require the Company to purchase all or any part (in integral multiples of $1,000 except that no purchase will be permitted that would result in a Note having a remaining principal amount of less than $2,000) of such Holder’s Notes pursuant to a Change of Control Offer. In the Change of Control Offer, the Company will offer to purchase all of the Notes, at a purchase price in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the rights of Holders of record on relevant Record Dates to receive interest due on an Interest Payment Date). The Change of Control Offer shall be made in accordance with Section 4.07 of the Indenture.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Notes or portion of Notes selected for redemption, except for the unredeemed portion of any Notes being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture or the Notes may be amended or supplemented as provided in the Indenture.
12. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture. If any Event of Default (other than as specified in Section 6.01(6) or 6.01(7) of the Indenture with respect to the Company or a Significant Subsidiary) shall occur and be continuing with respect to the Indenture, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders) and upon any such declaration, such principal, premium, if any, and interest shall become due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default as specified in Section 6.01(6) or 6.01(7), with respect to the Company or a Significant Subsidiary occurs and is
continuing, then all the Notes shall automatically become and be due and payable immediately in an amount equal to the principal amount of the Notes, together with accrued and unpaid interest, if any, to the date the Notes become due and payable, without any declaration or other act on the part of the Trustee or any holder. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or and its consequences under the Indenture except a continuing Default in payment of the principal of, premium, if any, or interest on, any of the Notes held by a non-consenting Holder. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required within 30 days after becoming aware of any Default, to deliver to the Trustee a statement specifying such Default and what action the Company proposes to take with respect thereto.
13. AUTHENTICATION. This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.
14. GOVERNING LAW. THIS NOTE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. CUSIP/ISIN NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP/ISIN numbers to be printed on the Notes and the Trustee may use CUSIP/ISIN numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
16. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to the Company at the following addresses:
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
with a copy to Hogan Lovells US LLP
555 Thirteenth Street, NW
Washington, D.C. 20004
Attention: Bruce Gilchrist, Esq.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: _______________________________________
(Insert assignee’ legal name)
______________________________________________________________________________
(Insert assignee’s soc. sec. or tax I.D. no.)
(Print or type assignee’s name, address and zip code)
and irrevocably appoint __________________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him.
Date: _____________________
Your Signature: ____________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 4.07 of the Indenture, check the appropriate box below:
o Section 4.07
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.07 of the Indenture, state the amount you elect to have purchased:
$_______________
Date: _____________________
Your Signature: ____________________________
(Sign exactly as your name appears on the face of this Note)
Tax Identification No.: _______________________
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The initial outstanding principal amount of this Global Note is $[•]. The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global or Definitive Note for an interest in this Global Note, have been made:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Date of Exchange | | Amount of
decrease in
Principal
Amount of this
Global Note | | Amount of
increase in
Principal
Amount of this
Global Note | | Principal
Amount of this
Global Note
following such
decrease or
increase | | Signature of
authorized
signatory of
Trustee or Notes
Registrar |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
__________________
*This schedule should be included only if the Note is issued in global form.
EXHIBIT A-2
[Face of Regulation S Temporary Note]
[Insert Regulation S Temporary Global Note Legend]
[Insert the Global Note Legend]
[Insert the Private Placement Legend]
CUSIP [ó][ó]
ISIN [ó]
TEMPORARY REGULATION S GLOBAL NOTE
5.200% Senior Notes due 2029
SMITHFIELD FOODS, INC.
promises to pay to CEDE & CO. or registered assigns, the principal sum of [•] United States Dollars on April 1, 2029.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
IN WITNESS HEREOF, the Company has caused this instrument to be duly executed.
| | | | | | | | |
| SMITHFIELD FOODS, INC. |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
This is one of the Notes referred to in the within-mentioned Indenture:
Dated:
| | | | | | | | |
| U.S. BANK NATIONAL ASSOCIATION,
as Trustee |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
[Reverse of Note]
5.200% Senior Notes due 2029
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Smithfield Foods, Inc., a Virginia corporation (the “Company”) promises to pay interest on the principal amount of this Note at 5.200% per annum from April 1, 2019 until maturity. The Company will pay interest, semi-annually in arrears on April 1 and October 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that the first Interest Payment Date shall be October 1, 20192. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the interest rate on the Notes to the extent lawful. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes to the Persons who are registered Holders at the close of business on the March 15 or September 15 (whether or not a Business Day), as the case may be, immediately preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. Payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank National Association, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to the Holders. The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture, dated as of April 1, 2019 (the “Indenture”), among the Company, the Subsidiary Guarantors party thereto and the Trustee. This Note is one of a duly authorized issue of Notes of the Company designated as its 5.200% Senior Notes due 2029. The Company shall be entitled to issue
2 With respect to Initial Notes issued on the Issue Date.
Additional Notes pursuant to Section 2.01 of the Indenture. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling, and Holders are referred to the Indenture for a statement of such terms.
5. OPTIONAL REDEMPTION.
(a) At any time prior to the Par Call Date, the Notes may be redeemed by the Company, in whole or in part, at the Company’s option, at a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but excluding, the Redemption Date; or
(ii) the sum of the Remaining Scheduled Payments on such Notes being redeemed (not including any portion of the payments of interest accrued as of the redemption date (the “Redemption Date”)), discounted to its present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Adjusted Treasury Rate, as determined by the Quotation Agent, plus 45 basis points, plus accrued and unpaid interest on the principal amount of such Notes being redeemed to, but excluding, the Redemption Date.
(b) At any time on or after the Par Call Date, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Notes to be redeemed, plus accrued and unpaid interest, if any, on the Notes to, but excluding, the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(c) If the optional Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Company. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption.
(d) If less than all of the Notes are to be redeemed, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Definitive Note surrendered representing the same indebtedness to the extent not redeemed or purchased; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000.
(e) In addition to the Company’s rights to redeem the Notes as set forth above, the Company may purchase Notes in open-market transactions, tender offers or otherwise invest such net proceeds in any manner that is not prohibited by the Indenture.
6. MANDATORY REDEMPTION. The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Subject to Section 3.03 of the Indenture, notice of redemption shall be sent by electronic delivery or mailed by first-class mail at least 15 days but not more than 60 days before the Redemption Date to each Holder to be redeemed at such Holder’s registered address, except that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Articles VIII or XI of the Indenture.
8. OFFERS TO REPURCHASE. If a Change of Control Triggering Event occurs, each Holder will have the right to require the Company to purchase all or any part (in integral multiples of $1,000 except that no purchase will be permitted that would result in a Note having a remaining principal amount of less than $2,000) of such Holder’s Notes pursuant to a Change of Control Offer. In the Change of Control Offer, the Company will offer to purchase all of the Notes, at a purchase price in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the rights of Holders of record on relevant Record Dates to receive interest due on an Interest Payment Date). The Change of Control Offer shall be made in accordance with Section 4.07 of the Indenture.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Notes or portion of Notes selected for redemption, except for the unredeemed portion of any Notes being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture or the Notes may be amended or supplemented as provided in the Indenture.
12. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture. If any Event of Default (other than as specified in Section 6.01(6) or 6.01(7) of the Indenture with respect to the Company or a Significant Subsidiary) shall occur and be continuing with respect to the Indenture, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders) and upon any such
declaration, such principal, premium, if any, and interest shall become due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default as specified in Section 6.01(6) or 6.01(7), with respect to the Company or a Significant Subsidiary occurs and is continuing, then all the Notes shall automatically become and be due and payable immediately in an amount equal to the principal amount of the Notes, together with accrued and unpaid interest, if any, to the date the Notes become due and payable, without any declaration or other act on the part of the Trustee or any holder. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or and its consequences under the Indenture except a continuing Default in payment of the principal of, premium, if any, or interest on, any of the Notes held by a non-consenting Holder. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required within 30 days after becoming aware of any Default, to deliver to the Trustee a statement specifying such Default and what action the Company proposes to take with respect thereto.
13. AUTHENTICATION. This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.
14. GOVERNING LAW. THIS NOTE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. CUSIP/ISIN NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP/ISIN numbers to be printed on the Notes and the Trustee may use CUSIP/ISIN numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
16. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to the Company at the following addresses:
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
with a copy to Hogan Lovells US LLP
555 Thirteenth Street, NW
Washington, D.C. 20004
Attention: Bruce Gilchrist, Esq.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: __________________________________________
(Insert assignee’ legal name)
______________________________________________________________________________
(Insert assignee’s soc. sec. or tax I.D. no.)
(Print or type assignee’s name, address and zip code)
and irrevocably appoint __________________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him.
Date: _____________________
Your Signature: ____________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 4.07 of the Indenture, check the appropriate box below:
o Section 4.07
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.07 of the Indenture, state the amount you elect to have purchased:
$_______________
Date: _____________________
Your Signature: ____________________________
(Sign exactly as your name appears on the face of this Note)
Tax Identification No.: _______________________
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
SCHEDULE OF EXCHANGES OF INTERESTS IN THE REGULATION S TEMPORARY GLOBAL NOTE*
The initial outstanding principal amount of this Regulation S Temporary Global Note is $[•]. The following exchanges of a part of this Regulation S Temporary Global Note for an interest in another Regulation S Temporary Global Note or for a Definitive Note, or exchanges of a part of another Regulation S Temporary Global or Definitive Note for an interest in this Regulation S Temporary Global Note, have been made:
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| Date of Exchange | | Amount of decrease in Principal Amount of this Regulation S Temporary Global Note | | Amount of increase in Principal Amount of this Regulation S Temporary Global Note | | Principal Amount of this Regulation S Temporary Global Note following such decrease or increase | | Signature of authorized signatory of Trustee or Notes
Registrar |
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__________________
*This schedule should be included only if the Note is issued in global form.
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
U.S. Bank National Association
Global Corporate Trust Services
Two Midtown Plaza
1349 West Peachtree Street, NW,
Suite 1050
Atlanta, GA 30309
ATTN: David Ferrell
Re: 5.200% Senior Notes due 2029
Reference is hereby made to the Indenture, dated as of April 1, 2019 (the “Indenture”), among Smithfield Foods, Inc., the Subsidiary Guarantors party thereto and the Trustee with respect to the 5.200% Senior Notes due 2029. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
_______________ (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the “Transfer”), to _______________ (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. o CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States.
2. o CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S TEMPORARY GLOBAL NOTE, THE REGULATION S PERMANENT GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Temporary Global Note, the Regulation S Permanent Global Note and/or the Restricted Definitive Note Indenture and the Securities Act.
3. o CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):
(a) o such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;
or
(b) o such Transfer is being effected to the Company or a subsidiary thereof;
or
(c) such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or
(d) o such Transfer is being effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904 and
the Transfer complies with the applicable transfer restrictions and the requirements of the exemption claimed, which certification is supported by an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act.
4. o CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) o CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 to a Person who is not an affiliate (as defined in Rule 144) of the Company under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(b) CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act to a Person who is not an affiliate (as defined in Rule 144) of the Company and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) o CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 to a Person who is not an affiliate (as defined in Rule 144) of the Company and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.
5. o CHECK IF TRANSFEROR IS AN AFFILIATE OF THE COMPANY.
6. o CHECK IF TRANSFEREE IS AN AFFILIATE OF THE COMPANY.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company.
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| | | [Insert Name of Transferor] |
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| Dated: | | | | |
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) o a beneficial interest in the:
(i) o 144A Global Note (CUSIP [l]), or
(ii) o Regulation S Global Note (CUSIP [l]), or
(b) o a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) o a beneficial interest in the:
(i) o 144A Global Note (CUSIP [l]), or
(ii) o Regulation S Global Note (CUSIP [l]), or
(iii) o Unrestricted Global Note (CUSIP [l]), or
(b) o a Restricted Definitive Note; or
(c) o an Unrestricted Definitive Note, in accordance with the terms of the Indenture.
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
U.S. Bank National Association
Global Corporate Trust Services
Two Midtown Plaza
1349 West Peachtree Street, NW,
Suite 1050
Atlanta, GA 30309
ATTN: David Ferrell
Re: 5.200% Senior Notes due 2029
Reference is hereby made to the Indenture, dated as of April 1, 2019 (the “Indenture”), among Smithfield Foods, Inc., the Subsidiary Guarantors party thereto and the Trustee with respect to the 5.200% Senior Notes due 2029. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
___________ (the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $__________ in such Note[s] or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:
(1) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE
a) o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any
state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
b) o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
c) o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
d) o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
2) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES
a) o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.
b) o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] [ ] 144A Global Note [ ] Regulation S Global Note, with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.
3) o CHECK IF OWNER IS AN AFFILIATE OF THE COMPANY.
4) o CHECK IF OWNER IS EXCHANGING THIS NOTE IN CONNECTION WITH AN EXPECTED TRANSFER TO AN AFFILIATE OF THE COMPANY.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company and are dated ______________________.
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| | | [Insert Name of Transferor] |
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| | | | Name: |
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EXHIBIT D
[FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS]
Supplemental Indenture (this “Supplemental Indenture”), dated as of __________, among __________________ (the “Guaranteeing Subsidiary”), a subsidiary of Smithfield Foods, Inc., a Virginia corporation (the “Company”) and U.S. Bank National Association, a national banking association organized and existing under the bank of the United States of America, as trustee (the “Trustee”).
W I T N E S S E T H
WHEREAS, each of the Company and the Subsidiary Guarantors (as defined in the Indenture referred to below) has heretofore executed and delivered to the Trustee an indenture (as supplemented, the “Indenture”), dated as of April 1, 2019, providing for the issuance of an unlimited aggregate principal amount of 5.200% Senior Notes due 2029 (the “Notes”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally Guarantee all of the Company’s obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
1) Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
(2) Agreement to be Bound. The Guaranteeing Subsidiary hereby becomes a party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.
(3) Guarantee. The Guaranteeing Subsidiary agrees, on a joint and several basis with all the existing Subsidiary Guarantors, if any, to Guarantee to each Holder and the Trustee the obligations of the Company under the Notes and the Indenture pursuant to Article X of the Indenture.
(4) No Recourse Against Others. No director, officer, employee, incorporator or stockholder of the Guaranteeing Subsidiary shall have any liability for any obligations of the Company (including the Guaranteeing Subsidiary) under the Notes, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes and the Subsidiary Guarantees.
(5) Notices. All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, at its address set forth below, with a copy to the Company as provided in the Indenture for notices to the Company.
(6) Parties. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture or the Indenture or any provision herein or therein contained.
(7) Governing Law. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.
(8) Severability Clause. In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
(9) Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. Every reference in the Indenture to the Indenture shall hereby be deemed to mean the Indenture as supplemented by this Supplemental Indenture. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture.
(10) Counterparts. The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
(11) Headings. The headings of the sections in this Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.
[Signatures on following page]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.
| | | | | | | | |
| [NAME OF GUARANTEEING
SUBSIDIARY], as a Guarantor |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
Exhibit 4.3
EXECUTION VERSION
SMITHFIELD FOODS, INC.,
as Issuer,
the Subsidiary Guarantors listed on the signature pages hereto,
$500,000,000
3.000% Senior Notes due 2030
INDENTURE
Dated as of September 15, 2020
U.S. Bank National Association,
as Trustee
Table of Contents
| | | | | | | | |
| | Page |
| | |
| ARTICLE I |
| | |
| DEFINITIONS AND RULES OF CONSTRUCTION |
| | |
| SECTION 1.01. | Definitions | 1 |
| SECTION 1.02. | Other Definitions | 14 |
| SECTION 1.03. | Rules of Construction | 14 |
| SECTION 1.04. | Acts of Holders | 15 |
| | |
| ARTICLE II |
| | |
| THE NOTES |
| | |
| SECTION 2.01. | Form and Dating; Terms | 17 |
| SECTION 2.02. | Execution and Authentication | 19 |
| SECTION 2.03. | Registrar and Paying Agent | 19 |
| SECTION 2.04. | Paying Agent to Hold Money in Trust | 20 |
| SECTION 2.05. | Holder Lists | 20 |
| SECTION 2.06. | Transfer and Exchange | 20 |
| SECTION 2.07. | Replacement Notes | 33 |
| SECTION 2.08. | Outstanding Notes | 34 |
| SECTION 2.09. | Treasury Notes | 34 |
| SECTION 2.10. | Temporary Notes | 34 |
| SECTION 2.11. | Cancellation | 35 |
| SECTION 2.12. | Defaulted Interest | 35 |
| SECTION 2.13. | CUSIP or ISIN Numbers | 35 |
| | |
| ARTICLE III |
| | |
| REDEMPTION |
| | |
| SECTION 3.01. | Notices to Trustee | 36 |
| SECTION 3.02. | Selection of Notes to Be Redeemed | 36 |
| SECTION 3.03. | Notice of Redemption | 36 |
| SECTION 3.04. | Effect of Notice of Redemption | 37 |
| SECTION 3.05. | Deposit of Redemption or Purchase Price | 38 |
| SECTION 3.06. | Notes Redeemed or Purchased in Part | 38 |
| SECTION 3.07. | Optional Redemption | 38 |
| SECTION 3.08. | Mandatory Redemption | 39 |
| | | | | | | | |
| | |
| ARTICLE IV |
| | |
| COVENANTS |
| | |
| SECTION 4.01. | Payment of Notes | 39 |
| SECTION 4.02. | Maintenance of Office or Agency | 40 |
| SECTION 4.03. | Reports | 41 |
| SECTION 4.04. | Compliance Certificate | 43 |
| SECTION 4.05. | Stay, Extension and Usury Laws | 43 |
| SECTION 4.06. | Limitation on Sale/Lease-back Transactions | 43 |
| SECTION 4.07. | Change of Control | 44 |
| SECTION 4.08. | Limitation on Liens | 45 |
| SECTION 4.09. | Future Guarantors | 47 |
| SECTION 4.10. | Corporate Existence | 47 |
| SECTION 4.11. | Payment of Taxes and Other Claims | 47 |
| | |
| ARTICLE V |
| | |
| CONSOLIDATIONS, MERGERS AND SALES OF ASSETS |
| | |
| SECTION 5.01. | When Company or Subsidiary Guarantors May Merge or Otherwise Dispose of Assets | 47 |
| | |
| ARTICLE VI |
| | |
| DEFAULTS AND REMEDIES |
| | |
| SECTION 6.01. | Events of Default | 49 |
| SECTION 6.02. | Acceleration | 50 |
| SECTION 6.03. | Other Remedies | 51 |
| SECTION 6.04. | Waiver of Past Defaults | 51 |
| SECTION 6.05. | Limitation on Suits | 51 |
| SECTION 6.06. | Rights of Holders to Receive Payment | 52 |
| SECTION 6.07. | Collection Suit by Trustee | 52 |
| SECTION 6.08. | Restoration of Rights and Remedies | 52 |
| SECTION 6.09. | Rights and Remedies Cumulative | 52 |
| SECTION 6.10. | Delay or Omission Not Waiver | 53 |
| SECTION 6.11. | Trustee May File Proofs of Claim | 53 |
| SECTION 6.12. | Priorities | 53 |
| SECTION 6.13. | Undertaking for Costs | 53 |
| SECTION 6.14. | Control by Holders of Notes | 54 |
| SECTION 6.15. | Notices of Default; Compliance Certificate | 54 |
| | | | | | | | |
| | |
| ARTICLE VII |
| | |
| TRUSTEE |
| | |
| SECTION 7.01. | Duties of Trustee | 54 |
| SECTION 7.02. | Rights of Trustee | 55 |
| SECTION 7.03. | Individual Rights of Trustee | 57 |
| SECTION 7.04. | Trustee’s Disclaimer | 57 |
| SECTION 7.05. | Notice of Defaults | 57 |
| SECTION 7.06. | Compensation and Indemnity | 57 |
| SECTION 7.07. | Replacement of Trustee | 58 |
| SECTION 7.08. | Successor Trustee by Merger, etc. | 60 |
| SECTION 7.09. | Eligibility; Disqualification | 60 |
| | |
| ARTICLE VIII |
| | |
| DEFEASANCE AND COVENANT DEFEASANCE |
| | |
| SECTION 8.01. | Defeasance | 60 |
| SECTION 8.02. | Conditions to Defeasance | 61 |
| SECTION 8.03. | Application of Trust Money | 62 |
| SECTION 8.04. | Repayment to Company | 62 |
| SECTION 8.05. | Indemnity for U.S. Government Obligations | 62 |
| SECTION 8.06. | Deposited Money and Government Notes to be Held in Trust; Other Miscellaneous Provisions | 63 |
| SECTION 8.07. | Reinstatement | 63 |
| | |
| ARTICLE IX |
| | |
| AMENDMENT AND WAIVERS |
| | |
| SECTION 9.01. | Without Consent of Holders | 63 |
| SECTION 9.02. | With Consent of Holders | 64 |
| SECTION 9.03. | Revocation and Effects of Consents and Waivers | 65 |
| SECTION 9.04. | Notation on or Exchange of Notes | 66 |
| SECTION 9.05. | Trustee to Sign Amendments, etc. | 66 |
| | |
| ARTICLE X |
| | |
| GUARANTEES |
| | |
| SECTION 10.01. | Guarantee | 66 |
| SECTION 10.02. | Limitation on Guarantor Liability | 68 |
| | | | | | | | |
| SECTION 10.03. | Execution and Delivery | 69 |
| SECTION 10.04. | Subrogation | 69 |
| SECTION 10.05. | Benefits Acknowledged | 69 |
| SECTION 10.06. | Release of Subsidiary Guarantees | 69 |
| | |
| ARTICLE XI |
| | |
| SATISFACTION AND DISCHARGE |
| | |
| SECTION 11.01. | Satisfaction and Discharge | 70 |
| SECTION 11.02. | Application of Trust Money | 71 |
| | |
| ARTICLE XII |
| | |
| MISCELLANEOUS |
| | |
| SECTION 12.01. | Notices | 71 |
| SECTION 12.02. | Certificate and Opinion as to Conditions Precedent | 73 |
| SECTION 12.03. | Statements Required in Certificate or Opinion | 73 |
| SECTION 12.04. | Rules by Trustee and Agents | 74 |
| SECTION 12.05. | No Personal Liability of Directors, Officers, Employees and Stockholders | 74 |
| SECTION 12.06. | Governing Law | 74 |
| SECTION 12.07. | Waiver of Jury Trial | 74 |
| SECTION 12.08. | Appointment of Note Registrar and Paying Agent | 74 |
| SECTION 12.09. | No Adverse Interpretation of Other Agreements | 74 |
| SECTION 12.10. | Successors | 75 |
| SECTION 12.11. | Severability | 75 |
| SECTION 12.12. | Counterpart Originals | 75 |
| SECTION 12.13. | Table of Contents; Headings | 75 |
| SECTION 12.14. | U.S.A. Patriot Act | 75 |
| | | | | |
EXHIBIT A-1 | Form of Face of Note |
EXHIBIT A-2 | Form of Face of Regulation S Temporary Note |
EXHIBIT B | Form of Certificate of Transfer |
EXHIBIT C | Form of Certificate of Exchange |
EXHIBIT D | Form of Supplemental Indenture to be Delivered by Subsidiary Guarantors |
INDENTURE (this “Indenture”), dated as of September 15, 2020, among SMITHFIELD FOODS, INC., a corporation duly organized and existing under the laws of the Commonwealth of Virginia (the “Company”), the Subsidiary Guarantors listed on the signature pages hereto and U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America and having a corporate trust office in Atlanta, Georgia, as trustee (the “Trustee”).
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the creation of an issue of $500,000,000 aggregate principal amount of 3.000% Senior Notes due 2030 (the “Initial Notes”). The Initial Notes and any Additional Notes, if and when issued, shall be treated as a single class for all purposes under this Indenture, including waivers, amendments, redemptions and offers to purchase (the Initial Notes and any Additional Notes, collectively referred to herein as the “Notes”); and
WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have duly authorized the execution and delivery of this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree, for the equal and proportionate benefit of the Holders, as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definitions.
For all purposes of this Indenture and any Notes issued hereunder:
“144A Global Note” means a Global Note substantially in the form of Exhibit A-1 hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold or to be sold in reliance on Rule 144A.
“Additional Notes” means any additional Notes issued under this Indenture in accordance with the terms hereof, including Section 2.01(d), from time to time after the Issue Date.
“Adjusted Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage amount) equal to the Comparable Treasury Price for such redemption date.
“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. 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.
“Agent” means any Registrar, co-registrar, Paying Agent or additional paying agent.
“Applicable Procedures” means, with respect to any transfer, redemption, tender or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear or Clearstream that apply to such transfer or exchange.
“Attributable Debt” means, as to any particular lease under which any Person is at the time liable, other than a Financing Lease Obligation, and at any date as of which the amount of such lease is to be determined, the total net amount of rent required to be paid by such Person under such lease during the initial term of such lease as determined in accordance with GAAP, discounted from the last date of such initial term to the date of determination at a rate per annum equal to the discount rate which would be applicable to a financing or capital lease with like term in accordance with GAAP. The net amount of rent required to be paid under any such lease for any such period shall be the aggregate amount of rent payable by the lessee with respect to such period after excluding amounts required to be paid on account of insurance, taxes, assessments, utility, operating and labor costs and similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. “Attributable Debt” means, as to a Financing Lease Obligation under which any Person is at the time liable and at any date as of which the amount of such lease is to be determined, the amount of such lease that would appear as a liability on the face of a balance sheet of such Person in accordance with GAAP.
“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.
“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.
“Business Day” means each day which is not a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York 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 Common Stock or 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.
“Change of Control” means the occurrence of any of the following:
(i) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company (or its successor by merger, consolidation or purchase of all or substantially all of its assets);
(ii) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any Person (including any “person” (as that term is used in Section 13(d)(3) of the Exchange Act)) other than to one or more Permitted Holders, the Company or one of the Company’s Subsidiaries;
(iii) the Company consolidates with, or merges with or into, any Person (other than the Company or one of its Subsidiaries), or any Person (other than the Company or one of its Subsidiaries) consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the Voting Stock of the Company outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving Person immediately after giving effect to such transaction; or
(iv) the adoption of a plan relating to the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control solely as a result of the Company becoming a direct or indirect wholly-owned Subsidiary of another company (whether the Company is directly owned by such company or indirectly through other subsidiaries of such company); provided that no “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of such company.
“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Event with respect to the Notes. Notwithstanding the foregoing, no Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated.
“Clearstream” means Clearstream Banking, Société Anonyme, and any successor thereto.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means with respect to any Person, any and all shares, interest or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock.
“Company” has the meaning set forth in the Preamble.
“Company Order” means a written request or order signed on behalf of the Company by an Officer, and delivered to the Trustee.
“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.
“Comparable Treasury Price” means, with respect to any redemption date, (i) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Company obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.
“Consolidated Net Tangible Assets” means, as of the date of determination, an amount equal to the excess over the current liabilities of the Company of all of its assets appearing on the most recent quarterly or annual consolidated balance sheet of the Company and its Subsidiaries on a consolidated basis, after deducting goodwill, trademarks, patents, other like intangibles and minority interests of others.
“Corporate Trust Office” means the designated office of the Trustee at which, at any particular time, its corporate trust business shall be administered (which office at the Issue Date is located at Two Midtown Plaza, 1349 W. Peachtree Street, NW, Suite 1050, Atlanta, Georgia 30309, Attention: Global Corporate Trust; provided, however, that presentation of notes for payment and exchange shall be at the Trustee’s principal corporate trust office at 60 Livingston Avenue, St. Paul, Minnesota 55107, Attn: Global Corporate Trust), or such other address as the Trustee may designate from time to time by notice to the Company or the principal corporate office of any successor trustee (or such other address as a successor trustee may designate from time to time by notice to the Company).
“Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.
“Debt Facilities” means one or more debt facilities (including, without limitation, the Senior Credit Facility) or commercial paper facilities, securities purchase agreements, indentures or similar agreements, in each case, with banks or other institutional lenders or investors providing for revolving loans, term loans, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables), letters of credit or the issuance of debt securities, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, replaced (whether upon or after termination or otherwise), refinanced, supplemented, modified or otherwise changed (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time.
“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.
“Definitive Notes” means certificated securities substantially in the form of Exhibit A-l hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto).
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States, any State thereof or the District of Columbia.
“Euroclear” means Euroclear S.A./N.V., as operator of the Euroclear system, and any successor thereto.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Exempted Debt” means the sum, without duplication, of the following items outstanding of the date Exempted Debt is being determined:
(1) Indebtedness of the Company and its Restricted Subsidiaries incurred after the date of this Indenture and secured by Liens created, assumed or otherwise incurred or permitted to exist pursuant to the provision described in the last paragraph under Section 4.08; and
(2) Attributable Debt of the Company and its Restricted Subsidiaries in respect of all sale and lease-back transactions with regard to any Principal Property entered into pursuant to the provision described in the last paragraph under Section 4.06.
“Financing Lease Obligation” means an obligation that would be required to be classified and accounted for as a financing or capital lease (and, for the avoidance of doubt, not a straight-line or operating lease) on both the balance sheet and income statement for financial reporting purposes in accordance with GAAP in existence on the Issue Date. At any time any determination thereof is to be made, the amount of the liability in respect of a financing or capital lease would be the amount required to be reflected as a liability on such balance sheet (excluding the footnotes thereto) in accordance with GAAP in existence on the Issue Date.
“Fitch” means Fitch Ratings and its successors.
“GAAP” means generally accepted accounting principles in the United States of America as in effect as of 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. At any time after adoption of International Financial Reporting Standards (“IFRS”) by the Company for its financial statements and reports for all financial reporting purposes the Company may elect to apply IFRS for all purposes of this Indenture, and, upon any such election, references in this Indenture to GAAP shall be construed to mean IFRS as in effect on the date of such election; provided that
(1) any such election once made shall be irrevocable (and shall only be made once);
(2) all financial statements and reports required to be provided after such election pursuant to this Indenture shall be prepared on the basis of IFRS;
(3) from and after such election, all computations, calculations and other determinations based on GAAP contained in this Indenture shall be computed in conformity with IFRS with retroactive effect being given thereto assuming that such election had been made on the Issue Date;
(4) such election shall not have the effect of rendering invalid any Lien created, incurred or suffered to exist made prior to the date of such election pursuant to Section 4.08 or any sale or transfer of Principal Property made prior to the date of such election pursuant to Section 4.06 if creation, incurrence, sale or transfer or other action was valid under this Indenture on the date made; and
(5) all accounting terms and references in this Indenture to accounting standards shall be deemed to be references to the most comparable terms or standards under IFRS. The Company shall give written notice of any election to the Trustee and the Holders within 15 days of such election.
“Global Note Legend” means the legend set forth in Section 2.06(f)(ii), which is required to be placed on all Global Notes issued under this Indenture.
“Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A-l hereto, issued in accordance with Section 2.01, 2.06(b) or 2.06(d).
“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such other Person:
(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or
(2) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness 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.
“Holder” means with respect to the Notes, the Person in whose name a Note is registered in the Note Register.
“Indebtedness” means, with respect to any Person, without duplication (a) any notes, debentures, bonds, loans or other similar evidences of indebtedness for money borrowed and (b) any Guarantees thereof.
“Indenture” has the meaning set forth in the Preamble.
“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.
“Initial Notes” has the meaning set forth in the Recitals.
“Initial Purchasers” means Barclays Capital Inc., BofA Securities, Inc., Morgan Stanley & Co. LLC, U.S. Bancorp Investments, Inc., Bank of China (Hong Kong) Limited, ICBC Standard Bank Plc and Rabo Securities USA, Inc.
“interest” means, with respect to the Notes, interest on the Notes (regardless of whether so stated).
“Interest Payment Date” means April 15 and October 15 of each year to Stated Maturity.
“Intralinks” means the digital internet workspace located at http://www.intralinks.com.
“Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s), a rating of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P) and a rating of BBB- or better by
Fitch (or its equivalent under any successor rating categories of Fitch) and the equivalent investment grade credit rating from any replacement rating agency or rating agencies selected by the Company under the circumstances permitting it to select a replacement rating agency and in the manner for selecting a replacement rating agency, in each case as set forth in the definition of “Rating Agency.”
“Issue Date” means September 15, 2020.
“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind.
“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors.
“Non-U.S. Person” means a Person who is not a U.S. Person.
“Notes” has the meaning set forth in the Recitals.
“Offering Memorandum” means the offering memorandum, dated September 10, 2020, related to the offer and sale of the Notes.
“Officer” means any one of the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief Operating Officer, any Vice President, the Treasurer, the Secretary or the Controller of the Company or any other person of the Company having substantially the same responsibilities as the aforementioned officers.
“Officer’s Certificate” means a certificate signed by one Officer or that otherwise meets the requirements set forth in this Indenture.
“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.
“Par Call Date” means July 15, 2030.
“Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to the Depositary, shall include Euroclear and Clearstream).
“Permitted Holders” means WH Group Limited or any of its Affiliates and any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members; provided that, in the case of such group and without giving effect to the existence of such group or any other group, such Persons, collectively, have direct or indirect beneficial ownership of more than 50% of the Voting Stock of the Company. Any Person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in
accordance with the requirements of this Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.
“Person” means any individual, corporation, partnership, limited liability company, 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 Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.
“principal” of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time.
“Principal Property” means any plant, facility, warehouse or building owned or leased and used by the Company or a Restricted Subsidiary primarily for processing, producing, packaging or storing its products, raw materials, inventories or other materials and supplies and located within the United States of America and having an acquisition cost plus capitalized improvements (including related land and improvements thereon and all associated factory equipment therein without deduction of any depreciation reserves) in excess of 2.0% of Consolidated Net Tangible Assets as of the date of such determination, but shall not include any such property or assets that are financed through the issuance of tax exempt governmental obligations, or any such property or assets that have been determined by a resolution of the Board of Directors not to be of material importance to the respective businesses conducted by the Company or such Restricted Subsidiary, effective as of the date such resolution is adopted.
“Private Placement Legend” means the legend set forth in Section 2.06(f)(i) to be placed on all Notes issued under this Indenture, except where otherwise permitted by the provisions of this Indenture.
“QIB” means a “qualified institutional buyer” as defined in Rule 144A.
“Quotation Agent” means the Reference Treasury Dealer appointed by the Company.
“Rabobank” means Coӧperatieve Rabobank U.A. (formerly known as Coӧperatieve Centrale Raiffeisen-Boerenleenbank B.A.), New York Branch.
“Rating Agencies” means (i) each of Moody’s, S&P and Fitch; and (ii) if any of Moody’s, S&P or Fitch ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act that is selected by the Company (as certified by a resolution of the Board of Directors) as a replacement agency for Moody’s, S&P or Fitch, or each of them, as the case may be.
“Rating Event” means, with respect to the Notes, (i) the rating of the Notes is lowered by two of the three Rating Agencies on any day during the period (the “Trigger Period”) commencing on the earlier of (a) the occurrence of a Change of Control and (b) the first public notice of the Company’s intention to effect a Change of Control, and ending 60 days following consummation of such Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies), and (ii) the Notes are rated below Investment Grade by two of the three Rating Agencies on any day during the Trigger Period; provided that a Rating Event will not be deemed to have occurred in respect of a particular Change of Control (and thus will not be deemed a Rating Event for purposes of the definition of Change of Control Triggering Event) if each Rating Agency making the reduction in rating does not publicly announce, or confirm or inform the Trustee in writing at the Company’s request, that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the Change of Control (whether or not the applicable Change of Control has occurred at the time of the Rating Event). If a Rating Agency is not providing a rating for the Notes at the commencement of such period, the Notes will be deemed to have ceased to be rated as Investment Grade by such Rating Agency during such period.
“Record Date” means, with respect to an applicable Interest Payment Date, April 1 or October 1 (whether or not a Business Day) next preceding such Interest Payment Date.
“Reference Treasury Dealer” means any of Barclays Capital Inc., BofA Securities, Inc. and Morgan Stanley & Co. LLC and their respective successors. However, if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by us, of the bid and asked prices for the applicable Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third Business Day preceding such redemption date.
“Regulation S” means Regulation S promulgated under the Securities Act.
“Regulation S Global Note” means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as applicable.
“Regulation S Permanent Global Note” means a permanent Global Note in the form of Exhibit A-l hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the applicable Restricted Period.
“Regulation S Temporary Global Note” means a temporary Global Note in the form of Exhibit A-2 hereto, bearing the Global Note Legend, the Private Placement Legend and
the Regulation S Temporary Global Note Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903.
“Regulation S Temporary Global Note Legend” means the legend set forth in Section 2.06(f)(iii).
“Remaining Scheduled Payments” means, with respect to each Note to be redeemed, the remaining scheduled payments of principal and interest on the Note that would be due after the Redemption Date therefor if such Note matured on the Par Call Date. If the redemption date is not an interest payment date with respect to a Note, the amount of the next succeeding scheduled interest payment date on the Note will be reduced by the amount of interest accrued on the Note to the redemption date.
“Responsible Officer” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, trust officer, assistant trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by any of the aforementioned officers and also means, with respect to a particular corporate trust matter, any other officer to whom any such matter is referred because of such Person’s knowledge of and familiarity with the particular subject; and provided such Persons shall have direct responsibility for the administration of this Indenture.
“Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.
“Restricted Global Note” means a Global Note bearing the Private Placement Legend.
“Restricted Period” means the 40-day distribution compliance period as defined in Regulation S.
“Restricted Subsidiary” means (i) any Subsidiary organized and existing under the laws of the United States of America and the principal business of which is carried on within the United States of America which owns or is a lessee pursuant to a financing or capital lease of any Principal Property or owns shares of Capital Stock or Indebtedness of another Restricted Subsidiary other than each Subsidiary the major part of whose business consists of finance, banking, credit, leasing, insurance, financial services or other similar operations, or any combination of such operations and (ii) any Subsidiary that is a Subsidiary Guarantor.
“Rule 144” means Rule 144 promulgated under the Securities Act.
“Rule 144A” means Rule 144A promulgated under the Securities Act.
“Rule 903” means Rule 903 promulgated under the Securities Act.
“Rule 904” means Rule 904 promulgated under the Securities Act.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Securitization Facility” means the Fourth Amended and Restated Credit and Security Agreement, dated as of November 21, 2018, among Smithfield Receivables Funding LLC, as borrower, the Company, as servicer, the lenders and co-agents party thereto and Rabobank, as administrative agent and letter of credit issuer (or its successor in such capacity), as it has been and may be further amended, supplemented or modified from time to time and any renewal, increase, 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 Securitization Facility or one or more other securitization or other structured facilities).
“Senior Credit Facility” means the Credit Agreement, dated as of February 17, 2017, and amended March 13, 2018, among the Company, as borrower, certain subsidiaries of the Company, as borrowers or guarantors, the lenders parties thereto and Bank of America, N.A., as administrative agent (or its successor in such capacity), as it may be amended, supplemented or modified from time to time and any renewal, increase, 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 Senior Credit Facility or one or more other credit or other agreements or indentures).
“Significant Subsidiary” means any Subsidiary that would be 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 Services, a division of The McGraw- Hill Companies, Inc., and its successors.
“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final 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 unless such contingency has occurred).
“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by:
(1) such Person;
(2) such Person and one or more Subsidiaries of such Person; or
(3) one or more Subsidiaries of such Person.
“Subsidiary Guarantee” means any Guarantee of payment of the Notes by a Subsidiary Guarantor pursuant to the terms of this Indenture and any supplemental indenture hereto.
“Subsidiary Guarantor” means (i) each Domestic Subsidiary in existence on the Issue Date that provides a Subsidiary Guarantee on the Issue Date and (ii) any Domestic Subsidiary that provides a Subsidiary Guarantee after the Issue Date; provided that upon release or discharge of such Subsidiary from its Subsidiary Guarantee in accordance with this Indenture, such Subsidiary ceases to be a Subsidiary Guarantor.
“Trustee” means the party named as such in this Indenture until a successor replaces it and, thereafter, means such successor.
“Unrestricted Definitive Note” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.
“Unrestricted Global Note” means a permanent Global Note, substantially in the form of Exhibit A-l hereto, that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that does not bear the Private Placement Legend.
“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 at the issuer’s option.
“U.S. Person” has the meaning ascribed thereto in Rule 902 under the Securities Act.
“Voting Stock” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.
SECTION 1.02. Other Definitions.
| | | | | |
Term | Defined in Section |
| “Authentication Order” | 2.02 |
| “Change of Control Offer” | 4.07 |
| “covenant defeasance option” | 8.01 |
| “Event of Default” | 6.01 |
| “legal defeasance option” | 8.01 |
| “Note Register” | 2.03 |
| “Paying Agent” | 2.03 |
| “Redemption Date” | 3.07 |
| “Registrar” | 2.03 |
| “Successor Company” | 5.01 |
| “Successor Guarantor” | 5.01 |
SECTION 1.03. Rules of Construction. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(c) “or” is not exclusive;
(d) “including” means “including without limitation”;
(e) “will” shall be interpreted to express a command;
(f) words in the singular include the plural and words in the plural include the singular;
(g) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured Indebtedness;
(h) 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;
(i) 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;
(j) each reference to “Indenture” in this Indenture shall mean the provisions of this Indenture and future amendments and supplements hereto, applicable to the Notes and exclusive of amendments and supplements that relate to future issuances of other series of securities issued at a later date under this Indenture; and
(k) the terms “above”, “below”, “hereof”, “herein”, “hereby”, “hereto”, “hereunder” and “herewith” refer to this Indenture.
SECTION 1.04. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Proof of execution of any such instrument or of a writing appointing any such agent, or the holding by any Person of a Note, shall be sufficient for any purpose of this Indenture and (subject to Section 7.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.04.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of any action taken, suffered or omitted by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Note.
(e) The Company may set a record date for purposes of determining the identity of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or take any other act, or to vote or consent to any action by vote or consent authorized or permitted to be given or taken by Holders. Unless otherwise specified, if not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or in the case of any such vote, prior to such vote, any such record date, if there is to be a record date,
shall be the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation.
(f) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount pursuant to this paragraph shall have the same effect as if given or taken by separate Holders of each such different part.
(g) Without limiting the generality of the foregoing, a Holder, including the Depositary, that is the Holder of a Global Note, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and any Person that is the Holder of a Global Note, including the Depositary, may provide its proxy or proxies to the beneficial owners of interests in any such Global Note through such depositary’s standing instructions and customary practices.
(h) The Company may, at its option, fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Note held by the Depositary entitled under the procedures of such depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders. If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 90 days after such record date.
ARTICLE II
THE NOTES
SECTION 2.01. Form and Dating; Terms.
(a) General. The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rules or usage in addition to those provided for in Exhibit A hereto. Each Note shall be dated the date of its authentication. The Notes shall be in minimum amounts of $2,000 and integral multiples of $1,000 in excess of $2,000.
(b) Global Notes.
(i) Notes issued in global form shall be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note shall represent such aggregate principal amount of the outstanding Notes as shall be specified in the “Schedule of Exchanges of Interests in the Global Note” attached thereto and each shall provide that it shall represent up to the aggregate principal amount of Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as applicable, to reflect exchanges and redemptions and transfers of interests therein. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06.
(ii) Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and authenticated by the Trustee as provided in this Indenture. Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in the Regulation S Permanent Global Note pursuant to Section 2.06 and the Applicable Procedures. Simultaneously with the authentication of the Regulation S Permanent Global Note, the Trustee shall cancel such Regulation S Temporary Global Note. The aggregate principal amount of a Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as provided in this Indenture.
(c) Participants shall have no rights under this Indenture or any Global Note with respect to any Global Note held on their behalf by the Depositary or by the Trustee as
custodian for the Depositary, and the Depositary shall be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note 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 Participants, the Applicable Procedures or the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note.
(d) Terms. The aggregate principal amount of Initial Notes that may be authenticated and delivered under this Indenture on the Issue Date is $500,000,000, and the aggregate amount of Additional Notes that may be authenticated and delivered under this Indenture is unlimited (so long as not otherwise prohibited by the terms of this Indenture). With respect to any Additional Notes, the Company shall set forth in (1) a resolution of the Board of Directors and (2) (i) an Officer’s Certificate or (ii) one or more indentures supplemental hereto, the following information:
(A) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;
(B) the issue price and the issue date of such Additional Notes, including the date from which interest shall accrue; and
(C) whether such Additional Notes shall be either Restricted Definitive Notes or Restricted Global Notes.
In authenticating and delivering Additional Notes, the Trustee shall be entitled to receive and shall be fully protected in relying upon, in addition to the Opinion of Counsel and Officer’s Certificate required by Section 12.02, an Opinion of Counsel as to the due authorization, execution, delivery, validity and enforceability of such Additional Notes. The Initial Notes and any Additional Notes shall be treated as a single class for all purposes under this Indenture, including, without limitation, voting, waivers, amendments, redemptions and offers to purchase; provided that any Additional Notes that are not fungible with the Initial Notes for U.S. federal income tax purposes shall have separate CUSIP and ISIN numbers.
The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
The Notes shall be subject to repurchase by the Company pursuant to a Change of Control Offer as provided in Section 4.07. The Notes shall not be redeemable, other than as provided in Article III hereof.
(e) Euroclear and Clearstream Procedures Applicable. The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests in a Regulation S Global Note that are held by Participants through Euroclear or Clearstream.
SECTION 2.02. Execution and Authentication.
One Officer shall execute the Notes on behalf of the Company by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be entitled to any benefit under this Indenture or be valid or obligatory for any purpose until authenticated substantially in the form of Exhibit A hereto, as the case may be, by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been duly authenticated and delivered under this Indenture.
On the Issue Date, the Trustee shall, upon receipt of a Company Order directing authentication (an “Authentication Order”), authenticate and deliver the Initial Notes specified in such Authentication Order. In addition, at any time, from time to time, the Trustee shall upon receipt of an Authentication Order authenticate and deliver any Additional Notes for an aggregate principal amount specified in such Authentication Order for such Additional Notes issued hereunder.
The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. Unless otherwise provided in such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent shall have the same rights as the Trustee to deal with Holders, the Company or an Affiliate of the Company.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the “Registrar”) and an office or agency where Notes may be presented for payment (the “Paying Agent”). The Registrar shall keep a register of the Notes (the “Note Register”) and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder but upon written notice to such Registrar or Paying Agent and to the Trustee; provided, however, that no such removal shall become effective until (i) acceptance of any appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee and the passage of
any waiting or notice periods required by the procedures of the Depositary or (ii) written notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i) of this Section 2.03. The Registrar or Paying Agent may resign at any time upon written notice to the Company and the Trustee. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Paying Agent and Registrar for the Notes. The Trustee shall also act as Custodian for the Depositary with respect to the Global Notes.
SECTION 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and shall notify the Trustee in writing of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it relating to the Notes to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or one of its Subsidiaries) shall have no further liability for the money. If the Company or one of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any Event of Default under Section 6.01(6) or (7), the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. Holder 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 all Holders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least two 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 the Holders.
SECTION 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. Except as otherwise set forth in this Section 2.06, a Global Note may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor Depositary or a nominee of such successor Depositary. A beneficial interest in a Global Note may not be exchanged for a Definitive Note
unless (i) the Depositary (x) notifies the Company that it is unwilling or unable to continue as Depositary for such Global Note or (y) has ceased to be a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 90 days; (ii) there shall have occurred and be continuing an Event of Default with respect to the Notes and the Depositary shall have requested the issuance of Definitive Notes; or (iii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes; provided, however, that the Regulation S Temporary Global Note may not be exchanged for Definitive Notes prior to (1) the expiration of the Restricted Period and (2) the receipt by the Registrar of any certificates required by Rule 903(b)(3)(ii)(B) of the Securities Act. Upon the occurrence of any of the preceding events in subclauses (i), (ii) or (iii) of this Section 2.06(a), Definitive Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations, requested by or on behalf of the Depositary (in accordance with its customary procedures). Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10, shall be authenticated and delivered in the form of, and shall be, a Global Note, except for Definitive Notes issued subsequent to any of the preceding events in subclauses (i), (ii) or (iii) of this Section 2.06(a) and pursuant to Section 2.06(c). A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); provided, however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c).
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) of this Section 2.06(b) below, as applicable, as well as one or more of the other following subparagraphs of this Section 2.06(b), as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend and any Applicable Procedures; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. Except as may be required by any Applicable Procedures, no written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests in a Global Note that are not subject to Section 2.06(b)(i), the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) if permitted under Section 2.06(a), a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g).
(iii) Transfer of Beneficial Interests in any Restricted Global Note to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; or
(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange
or transfer complies with the requirements of Section 2.06(b)(ii) and the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in subparagraphs (1) and (2) above, if the Registrar or the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(b)(iv), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.
If any such transfer is effected pursuant to this Section 2.06(b)(iv) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to this Section 2.06(b)(iv).
Beneficial interests in an Unrestricted Global Note may not be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon the occurrence of any of the events in paragraph
(i), (ii) or (iii) of Section 2.06(a) and receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(F) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g), and the Company shall execute and the Trustee shall authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes. Notwithstanding Sections 2.06 (c)(i)(A) and (C), a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior
to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only upon the occurrence of any of the events in subclause (i), (ii) or (iii) of Section 2.06(a) and if the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (1 )(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (iii), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon the occurrence of any of the events in subclause (i), (ii) or (iii) of Section 2.06(a) and satisfaction of the conditions set forth in Section 2.06(b)(ii), the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g), and the Company shall execute and the Trustee shall authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from or through the Depositary and the Participant or Indirect Participant. The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(F) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note , increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of, in the case of clause (A) of this Section 2.06(d)(i), the applicable Restricted Global Note, in the case of clause (B) of this Section 2.06(d)(i), the applicable 144A Global Note, and in the case of clause (C) of this Section 2.06(d)(i), the applicable Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a
beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (ii), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a written request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraph (ii) or (iii) of this Section 2.06(d) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon written request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of
Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e):
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made to a QIB in accordance with Rule 144A, then the transferor must deliver a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; or
(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (ii), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a written request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.
(f) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture:
(i) Private Placement Legend.
(A) Except as permitted by subparagraphs (B) and (C) of this Section 2.06(f)(i), each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
“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 OR 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”) THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES 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),] [IN THE CASE OF REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE DATE ON WHICH THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S], ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (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 (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A 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 TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E) 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 PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. [IN THE CASE OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF 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.]”
Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form:
“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06(g) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO
A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) 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 SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE 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.”
(iii) Regulation S Temporary Global Note Legend. The Regulation S Temporary Global Note shall bear a legend in substantially the following form:
“THIS GLOBAL NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT. BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF 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.”
(g) Cancellation or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and, if the Registrar and the Trustee are not the same entity, notice to the Trustee of such exchange or transfer of an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged
for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, the aggregate principal amount of such other Global Note shall be increased in a corresponding amount pursuant to this Section 2.06(g) and if the Registrar and the Trustee are not the same entity, notice to the Trustee of such exchange or transfer of an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 or at the Registrar’s written request.
(ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company or the Trustee may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.07, 2.10, 3.06, 3.08, 4.07 and 9.04).
(iii) Neither the Registrar nor the Company shall be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of the sending of a notice of redemption of Notes for redemption under Section 3.03 and ending at the close of business on the day such notice was sent, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part or tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and interest on such Notes and
for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.
(vii) Upon surrender for registration of transfer of any Note at the office or agency of the Company designated pursuant to Section 4.02, the Company shall execute, and the Trustee shall authenticate and mail, in the name of the designated transferee or transferees, one or more replacement Notes of any authorized denomination or denominations of a like aggregate principal amount.
(viii) At the option of the Holder, subject to Section 2.06(a), Notes may be exchanged for other Notes of any authorized denomination or denominations of a like aggregate principal amount upon surrender of the Notes to be exchanged at such office or agency. Whenever any Global Notes or Definitive Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and mail, the replacement Global Notes and Definitive Notes to which the Holder making the exchange is entitled in accordance with the provisions of Section 2.02.
(ix) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile or electronically (in PDF format).
(x) 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 Note (including any transfers between or among Participants or beneficial owners of interests in any Global Note) 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.
Neither the Trustee nor any Trustee agent shall have any responsibility or liability for any actions taken or not taken by the Depositary.
SECTION 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, the Registrar or the Company and the Trustee receives evidence to their satisfaction of the ownership and destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee’s requirements are met. An indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, the Registrar and the Paying Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. At the Company’s request, such Holder shall reimburse the Company for its expenses in replacing a Note.
Every replacement Note issued in accordance with this Section 2.07 is a contractual obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company or an Affiliate thereof) holds, on a Redemption Date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Affiliate of the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Notes so owned that have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to deliver any such direction, waiver or consent with respect to the pledged Notes and that the pledgee is not the Company or any obligor upon the Notes or any Affiliate of the Company or of such other obligor.
SECTION 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders and beneficial holders, as the case may be, of temporary Notes shall be entitled to all of the benefits accorded to Holders, or beneficial holders, respectively, of Notes under this Indenture.
SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of cancelled Notes in accordance with its customary procedures (subject to the record retention requirement of the Exchange Act). The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, the Company shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest to the Persons who are Holders on a special record date, which may be after the existing Record Date, in each case at the rate provided in the Notes and in Section 4.01. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Trustee shall fix or cause to be fixed each such special record date and payment date; provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. The Trustee shall promptly notify the Company of such special record date and in any event at least 20 days before such special record date. At least 15 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall send or cause to be sent, via electronic transmission or by first class postage prepaid, to each Holder a notice at his or her address as it appears in the Note Register that states the special record date, the related payment date and the amount of such interest to be paid.
Subject to the foregoing provisions of this Section 2.12 and for greater certainty, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.
SECTION 2.13. CUSIP or ISIN Numbers.
The Company in issuing the Notes may use CUSIP or ISIN numbers (if then generally in use) and, if so, the Trustee shall use CUSIP or ISIN numbers in notices, including notices of redemption, exchange or offers to purchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice and that reliance may be placed only on the other identification numbers printed on the Notes, and any related redemption, exchange
or offers to purchase shall not be affected by any defect in or omission of such numbers. The Company will as promptly as practicable notify the Trustee in writing of any change in the CUSIP or ISIN numbers. Additional Notes issued under this Indenture may have the same or differing CUSIP or ISIN numbers as those given to the Initial Notes.
ARTICLE III
REDEMPTION
SECTION 3.01. Notices to Trustee. If the Company elects to redeem Notes pursuant to Section 3.07, it shall furnish to the Trustee, at least 15 days before notice of redemption is required to be sent or caused to be sent to Holders pursuant to Section 3.03 hereof (unless a shorter notice shall be agreed to by the Trustee) but not more than 60 days before a Redemption Date, an Officer’s Certificate setting forth (i) the paragraph or subparagraph of such Note or Section of this Indenture pursuant to which the redemption shall occur, (ii) the Redemption Date, (iii) the principal amount of the Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. Selection of Notes to Be Redeemed. In the case of any partial redemption, the Trustee shall select the Notes for redemption (i) in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are issued, or, (ii) if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, in each case for the avoidance of doubt, in accordance with Applicable Procedures of the Depositary. No Note of $2,000 in original principal amount or less will be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof shall be issued in the name of the Holder thereof upon cancellation of the original Note.
The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed.
SECTION 3.03. Notice of Redemption.
The Company shall cause notices of redemption to be sent by electronic delivery or mailed by first-class mail at least 15 days but not more than 60 days before the Redemption Date to each Holder to be redeemed at such Holder’s registered address, except that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Article VIII or Article XI hereof.
The notice shall identify the Notes (including the CUSIP and ISIN numbers) to be redeemed and shall state:
(a) the Redemption Date;
(b) the redemption price;
(c) if any Note is to be redeemed in part only, the portion of the principal amount of that Note that is to be redeemed and that, after the Redemption Date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion of the original Note representing the same indebtedness to the extent not redeemed will be issued in the name of the Holder upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;
(g) the paragraph or subparagraph of the Notes or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of the CUSIP or ISIN number, if any, listed in such notice or printed on the Notes.
At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its expense; provided that the Company shall have delivered to the Trustee, at least 15 days before notice of redemption is required to be sent or caused to be sent to Holders pursuant to this Section 3.03 (unless a shorter notice shall be agreed to by the Trustee), an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is sent in accordance with Section 3.03, Notes called for redemption become irrevocably due and payable on the Redemption Date at the redemption price. The notice, if sent in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice or any defect in the notice to the Holder of any Note designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Subject to Section 3.05, on and after the Redemption Date, interest ceases to accrue on Notes or portions of Notes called for redemption.
SECTION 3.05. Deposit of Redemption or Purchase Price.
Prior to 11:00 a.m. (New York City time) on the redemption or purchase date, the Company shall deposit or cause to be deposited with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued and unpaid interest on all Notes to be redeemed or purchased on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest on, all Notes to be redeemed or purchased.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption or purchase. Redemption amounts shall only be paid upon presentation and surrender of any such Notes to be redeemed. If a Note is redeemed or purchased on or after a Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest to the redemption or purchase date shall be paid to the Person in whose name such Note was registered at the close of business on such Record Date. If any Note called for redemption or purchase shall not be so paid upon surrender for redemption or purchase because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest accrued to the redemption or purchase date not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01.
Payment of the redemption price and performance of the Company’s obligations in connection with any redemption may be performed by another Person.
SECTION 3.06. Notes Redeemed or Purchased in Part.
Upon surrender of a Definitive Note that is redeemed or purchased in part, the Company shall issue and the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Definitive Note surrendered representing the same indebtedness to the extent not redeemed or purchased; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000. It is understood that, notwithstanding anything in this Indenture to the contrary, only an Authentication Order and not an Opinion of Counsel or Officer’s Certificate is required for the Trustee to authenticate such new Note.
SECTION 3.07. Optional Redemption.
(a) At any time prior to the Par Call Date, the Notes may be redeemed by the Company, in whole or in part, at the Company’s option, at a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest thereon to, but excluding, the Redemption Date; or
(ii) the sum of the Remaining Scheduled Payments on such Notes being redeemed (not including any portion of the payments of interest accrued as of the redemption date (the “Redemption Date”)), discounted to its present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, as determined by the Quotation Agent, plus 40 basis points, plus accrued and unpaid interest on the principal amount of such Notes being redeemed to, but excluding, the Redemption Date.
(b) At any time on or after the Par Call Date, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Notes to be redeemed, plus accrued and unpaid interest, if any, on the Notes to, but excluding, the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(c) If the optional Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Company. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption.
SECTION 3.08. Mandatory Redemption. The Company is not required to make any mandatory redemption payments or sinking fund payments with respect to the Notes; provided, however, under certain circumstances, the Company may be required to offer to purchase the Notes in accordance with Section 4.07. Except as provided under Sections 3.07 and 4.07(d), the Notes shall not be redeemable at the option of the Company. The Company may at any time and from time to time purchase the Notes in the open market or otherwise.
ARTICLE IV
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall pay principal of, premium, if any, and interest on the Notes, and the Notes may be exchanged or transferred, at the office or agency designated by the Company in Atlanta, Georgia (which initially will be the Corporate Trust Office of the Trustee in Atlanta, Georgia), except that the Company may, at its option, pay interest on the Notes by check to Holders at their registered address as it appears in the Note Register; provided that the Company shall pay principal of, premium, if any, and interest on, the Note in global form registered in the name of or held by the Depository or its nominee by wire in immediately available funds to the Depository or its nominee, as the case may be, as the registered Holder of such Notes in global form. No service charge will be imposed by the Company, the Trustee or the Registrar for any registration of Notes, but the Company may require a Holder to pay a sum sufficient to cover any transfer tax or other governmental taxes and fees required by law or permitted by this Indenture.
Notwithstanding the foregoing, in any case where any Interest Payment Date, Redemption Date, Stated Maturity or other date of repurchase, redemption or payment of principal in respect of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or any Note or coupon other than a provision in the Notes which specifically states that such provision shall apply in lieu of this Section 4.01), payment of principal (or premium, if any) or interest, if any, need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date, or at the Stated Maturity or other date or repurchase, redemption or payment of principal in respect of the Notes; provided that (x) for scheduled payments of interest on April 15 and October 15, the amount of interest payable shall be equal to the amount payable on the scheduled Interest Payment Date and (y) with respect to the payment of interest in connection with Redemption Dates, and upon Stated Maturity or redemptions, repayments or other payments of principal, the amount of interest shall include interest up to such Redemption Date or Stated Maturity or to the date of such redemption, repurchase or other payment of principal in respect of the Notes, as the case may be.
The Company shall pay interest on overdue principal at the rate specified therefor in the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
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 4.02. Maintenance of Office or Agency. The Company shall maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of 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.
The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office as one such office or agency of the Company in accordance with Section 2.03.
SECTION 4.03. Reports.
(a) So long as any Notes are outstanding, the Company shall furnish to the Trustee and the Holders:
(i) on or prior to the 90th day after the end of each fiscal year of the Company, (A) a consolidated balance sheet and statement of shareholders’ equity of the Company, as of the end of such fiscal year and the immediately preceding fiscal year, and the related consolidated statements of income, comprehensive income and of cash flows for such fiscal year, setting forth in comparative form consolidated figures for the immediately preceding two fiscal years, all such financial statements to be prepared in accordance with GAAP and audited by an independent audit firm of recognized national standing and accompanied by an opinion of such accountants; and (B) a summary of the Company’s business and operations;
(ii) on or prior to the 45th day after the end of each of the first three fiscal quarters in each fiscal year of the Company, (A) a consolidated balance sheet of the Company, as of the end of such fiscal quarter and the corresponding period of the preceding fiscal year, and the related consolidated statements of income, comprehensive income and of cash flows for such fiscal quarter and the then elapsed portion of such fiscal year, setting forth in comparative form consolidated figures for the corresponding periods of the preceding fiscal year, all such financial statements to be prepared in accordance with GAAP and accompanied by an Officer’s Certificate to the effect that such quarterly financial statements have been prepared in accordance with GAAP for interim financial reporting and present fairly in all material respects the consolidated financial position and consolidated results of operations and cash flows of the Company in accordance with GAAP subject to changes resulting from normal year-end audit adjustments; and (B) a summary of the Company’s business and operations; and
(iii) information substantially similar to the information that would be required to be included in a Current Report on Form 8-K (as in effect on the Issue Date) filed with the SEC by the Company (if the Company were required to file such reports) pursuant to Item 1.01 (Entry into a Material Definitive Agreement), Item 1.02 (Termination of a Material Definitive Agreement), Item 1.03 (Bankruptcy or Receivership), Item 2.01 (Completion of Acquisition or Disposition of Assets), Item 2.03 (Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant), Item 2.04 (Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement), Item 2.06 (Material Impairments), Item 4.01 (Changes in Registrant’s Certifying Accountants), Item 4.02 (Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review), Item 5.01 (Changes in Control of Registrant), clauses (b) and (c)(1) of Item 5.02 (Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers) of such form, within ten business days of the date of the event requiring disclosure; provided, however, that no such information will be required to be furnished if the Company determines in its good
faith judgment that such event is not material to Holders or the business, assets, operations, financial position or prospects of the Company and its Restricted Subsidiaries, taken as a whole.
In connection with this clause (a), it is understood that the Company shall not be required to furnish (a) any information, certificates or reports required by (i) Section 302, Section 404 or Section 906 of the Sarbanes-Oxley Act of 2002, or related Items 307 or 308 of Regulation S-K, (ii) Regulation G or Item 10(e) of Regulation S-K promulgated by the SEC with respect to any non-generally accepted accounting principles financial measures contained therein, (iii) segment accounting rules, or (iv) Rules 3-05, 3-09 and 3-10 of Regulation S-X (provided that the Company shall present summary financial information with respect to Subsidiaries that are not Subsidiary Guarantors of the type and scope included in the Offering Memorandum), or (b) any compensation or beneficial ownership information or (c) any information that is not otherwise similar to information currently included in the Offering Memorandum, other than with respect to reports provided under clause (iii) above. In addition, such reports shall not be required to include any exhibits that would have been required to be filed pursuant to Item 601 of Regulation S-K.
(b) The Company also shall provide the information described in paragraph (a) above to (i) beneficial owners of the Notes, (ii) any prospective investor that is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) and (iii) any securities analyst reasonably acceptable to the Company, in each case, upon their written request. In addition, the Company shall, for so long as any Notes remain outstanding, furnish to such Holders and to securities analysts and prospective investors, upon their written request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act, as in effect on the Issue Date.
(c) Notwithstanding the foregoing, the Company shall be deemed to have satisfied the reporting requirements referred to above if (x) the Company has filed reports containing such information with the SEC or (y) the Company has (i) made such information available on Intralinks or any comparable password protected online data system and (ii) made readily available any password or other login information to the Trustee, the Holders and any such additional Persons set forth in paragraph (b) who have so requested in writing
(d) Notwithstanding the foregoing, the financial statements, information and other documents required to be provided pursuant to this Section 4.03, may be those of any direct or indirect parent of the Company; provided that, (i) such direct or indirect parent of the Company provides a full and unconditional guarantee of the Company’s obligations under the Notes and this Indenture and (ii) if the financial information so furnished relates to such direct or indirect parent of the Company and any such parent company has any material operations, assets or liabilities separate and apart from its ownership of the Company, the same is accompanied by consolidating information that summarizes in reasonable detail the differences between the information relating to such parent, on the one hand, and the information relating to the Company on a standalone basis, on the other hand.
SECTION 4.04. Compliance Certificate. The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year ending after the Issue Date, a certificate from a principal executive officer, principal financial officer or principal accounting officer stating that a review of the activities of the Company and the Restricted Subsidiaries during the preceding fiscal year have been made under the supervision of the signing Officer with a view to determining whether the Company has kept, observed, performed and fulfilled their obligations under this Indenture, and further stating, as to such Officer signing such certificate, that to the best of his or her knowledge the Company has, during such fiscal year, kept, observed, performed and fulfilled each and every condition and covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions, covenants and conditions of this Indenture (or, if a Default or an Event of Default shall have occurred and be continuing, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto).
SECTION 4.05. Stay, Extension and Usury Laws.
The Company and each of the Subsidiary Guarantors, if any, covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Subsidiary Guarantors, if any, (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant that they shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.
SECTION 4.06. Limitation on Sale/Lease-back Transactions. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, sell or transfer, directly or indirectly, except to the Company or a Restricted Subsidiary, any Principal Property as an entirety, or any substantial portion of such a Principal Property, with the intention of taking back a lease of such Principal Property, except a lease for a period of three years or less at the end of which it is intended that the use of such Principal Property by the lessee will be discontinued; provided that, notwithstanding the foregoing, the Company or any Restricted Subsidiary may sell any such Principal Property and lease it back for a longer period:
(i) if the Company or such Restricted Subsidiary would be entitled, pursuant to Section 4.08, to create a Lien on the property to be leased securing Indebtedness in an amount equal to the Attributable Debt with respect to such sale and lease-back transaction without equally and ratably securing the outstanding Notes; or
(ii) if (A) the Company promptly informs the Trustee of such transaction, (B) the net proceeds of such transaction are at least equal to the fair market value (as determined by a resolution of the Board of Directors) of such property and (C) the Company causes an amount equal to the net proceeds of the sale to be applied to the retirement, within 180 days after receipt of such proceeds, of Indebtedness incurred or assumed by the Company or a Restricted Subsidiary (including the Notes) other than Indebtedness that is contractually subordinated in
right of payment to the Notes; provided further that, in lieu of applying all of or any part of such net proceeds to such retirement of Indebtedness, the Company may, within 90 days after such sale, deliver or cause to be delivered to the applicable trustee for cancellation either debentures or notes evidencing Indebtedness of the Company (which may include the outstanding Notes) or of a Restricted Subsidiary previously authenticated and delivered by the applicable trustee, and not previously tendered for sinking fund purposes or called for a sinking fund or otherwise applied as a credit against an obligation to redeem or retire such notes or debentures, and an Officer’s Certificate (which will be delivered to the applicable trustee and paying agent) stating that the Company elects to deliver or cause to be delivered such debentures or notes in lieu of retiring Indebtedness as provided in this Indenture. If the Company shall so deliver debentures or notes to the applicable trustee and the Company shall duly deliver such Officer’s Certificate, the amount of cash which the Company will be required to apply to the retirement of Indebtedness under this provision shall be reduced by an amount equal to the aggregate of the then applicable optional redemption prices (not including any optional sinking fund redemption prices) of such debentures or notes or, if there are no such redemption prices, the principal amount of such debentures or notes; provided, that in the case of debentures or notes which provide for an amount less than the principal amount of such debentures or notes to be due and payable upon a declaration of the maturity of such debentures or notes, such amount of cash shall be reduced by the amount of principal of such debentures or notes that would be due and payable as of the date of such application upon a declaration of acceleration of the maturity of such debentures or notes pursuant to the terms of the financing arrangement pursuant to which such debentures or notes were issued.
(b) Notwithstanding the foregoing, the Company or any Restricted Subsidiary may enter into sale and lease-back transactions in addition to those permitted by the preceding paragraph and without any obligation to retire any outstanding Notes or other Indebtedness, provided that at the time of entering into such sale and lease-back transactions and after giving effect to such transactions, Exempted Debt does not exceed 15.0% of Consolidated Net Tangible Assets.
SECTION 4.07. Change of Control. (a) Upon the occurrence of a Change of Control Triggering Event, each Holder shall have the right to require that the Company repurchase such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(b) Within 30 days following the date upon which any Change of Control Triggering Event with respect to the Notes shall have occurred, the Company shall mail a notice by first-class mail to each Holder with a copy to the Trustee (the “Change of Control Offer”) or, at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, stating:
(i) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder’s Notes at a purchase price in cash
equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date);
(ii) the purchase date (which shall be no earlier than 15 days nor later than 60 days from the date such notice is mailed); and
(iii) the instructions, as determined by the Company, consistent with this Section 4.07, that a Holder must follow in order to have its Notes purchased.
(c) The Company shall not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. A Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of the making of the Change of Control Offer.
(d) If Holders of not less than 90% in aggregate principal amount of the outstanding Notes validly tender and do not withdraw such Notes in a Change of Control Offer and the Company, or any other Person making a Change of Control Offer in lieu of the Company as described in clause (c) of this Section 4.07, purchases all of the Notes validly tendered and not withdrawn by such Holders, the Company shall have the right, upon not less than 15 nor more than 60 days’ prior notice, given not more than 30 days following such purchase pursuant to the Change of Control Offer described in clause (b) of this Section 4.07, to redeem all Notes that remain outstanding following such purchase at a redemption price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, 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).
(e) The Company shall 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 Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.07, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Indenture by virtue of its compliance with such securities laws or regulations.
SECTION 4.08. Limitation on Liens. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, create, incur or suffer to exist any Lien, as security for any Indebtedness, on or of any shares of stock, Indebtedness or other intercompany obligations of a Subsidiary or any Principal Property of the Company or a Restricted Subsidiary, whether such shares of stock, Indebtedness or other obligations of a Subsidiary or Principal Property is owned at the date of this Indenture or acquired after the date of this Indenture, unless the Company secures or causes such Restricted Subsidiary to secure the outstanding Notes equally
and ratably with all Indebtedness secured by such Lien, so long as such Indebtedness shall be so secured. This covenant shall not apply in the case of:
(1) the creation of any Lien on any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property acquired after the date of this Indenture (including acquisitions by way of merger or consolidation) by the Company or a Restricted Subsidiary contemporaneously with such acquisition, or within 180 days after such acquisition, to secure or provide for the payment or financing of any part of the purchase price of such acquisition, or the assumption of any mortgage, pledge or other lien upon any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property acquired after the date of this Indenture existing at the time of such acquisition, or the acquisition of any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property subject to any mortgage, pledge or other lien without the express assumption of such Lien, provided that every such Lien referred to in this clause (1) will attach only to the shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property so acquired and fixed improvements on such Principal Property;
(2) any Lien on any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property existing on the Issue Date, other than Liens permitted by clause (3) hereof;
(3) any Lien securing obligations under the Securitization Facility, in an amount not to exceed $350.0 million;
(4) any Lien on any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property in favor of the Company or any Restricted Subsidiary;
(5) any Lien on Principal Property being constructed or improved securing loans to finance such construction or improvements;
(6) any Lien on shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property incurred in connection with the issuance of tax-exempt governmental obligations; and
(7) any renewal of or substitution for any Lien permitted by any of the preceding clauses (1) through (6), provided, in the case of a renewal of or substitution for any Lien permitted under clause (1), (2), (3) or (5), the Indebtedness secured is not increased nor the Lien extended to any additional shares of stock, Indebtedness or other obligations of a Subsidiary or any additional Principal Property.
(b) Notwithstanding the foregoing, the Company or any Restricted Subsidiary may create or assume Liens in addition to those permitted by clauses (1) through (7) of the preceding paragraph, and renew, extend or replace such liens, provided that at the time of such creation, assumption, renewal, extension or replacement, and after giving effect to such creation,
assumption, renewal, extension or replacement, Exempted Debt does not exceed 15.0% of Consolidated Net Tangible Assets.
SECTION 4.09. Future Guarantors. The Company shall cause each Domestic Subsidiary of the Company that is a borrower under or guarantees obligations under any Debt Facility in excess of an aggregate principal amount of $75.0 million (other than the Securitization Facility) of the Company or any Subsidiary Guarantor, unless such Domestic Subsidiary is not required to become a guarantor under the Senior Credit Facility, within 30 days of becoming a borrower or the incurrence of such Guarantee, to execute and deliver to the Trustee a supplemental indenture to this Indenture pursuant to which such Subsidiary will Guarantee payment of the Notes on the same terms and conditions as those set forth in Article X hereof.
SECTION 4.10. Corporate Existence. Subject to Article V hereof, the Company shall 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 Subsidiary Guarantor and the corporate rights (charter and statutory) licenses and franchises of the Company and each Subsidiary Guarantor; provided, however, that the Company shall not be required to preserve any such existence (except that of the Company), right, license or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and each of its Subsidiary Guarantors, and that the loss thereof is not, and will not be, disadvantageous in any material respect to the Holders.
SECTION 4.11. Payment of Taxes and Other Claims. The Company shall pay, and shall cause each of its Subsidiary Guarantors to pay, prior to delinquency, all material taxes, assessments and governmental levies except such as are contested in good faith by appropriate proceedings or where the failure to effect such payment or discharge would not reasonably be expected to be adverse in any material respect to the Holders.
ARTICLE V
CONSOLIDATIONS, MERGERS AND SALES OF ASSETS
SECTION 5.01. When Company or Subsidiary Guarantors May Merge or Otherwise Dispose of Assets. (a) The Company shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the “Successor Company”) shall 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) shall 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 Notes and this Indenture;
(2) immediately after giving pro forma effect to such transaction, no Default shall have occurred and be continuing; and
(3) the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture.
(b) The Company shall not permit any Subsidiary Guarantor to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:
(1) (A) the resulting, surviving or transferee Person (the “Successor Guarantor”) shall 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 such Subsidiary Guarantor) shall expressly assume, by an indenture supplemental thereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of such Subsidiary Guarantor in respect of each Subsidiary Guarantee and under this Indenture;
(B) immediately after giving pro forma effect to such transaction, no Default shall have occurred and be continuing; and
(C) the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture; or
(2) the transaction results in the release of such Subsidiary Guarantor’s Subsidiary Guarantee under clause (1) of Section 10.06.
Notwithstanding the foregoing Section 5.01(b), any Subsidiary Guarantor may merge with or into or transfer all or part of its assets to the Company or any other Subsidiary Guarantor.
(c) For purposes of the foregoing Section 5.01(a) and (b), the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company or a Subsidiary Guarantor, as the case may be, which properties and assets, if held by the Company or such Subsidiary Guarantor instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company or such Subsidiary Guarantor on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company or such Subsidiary Guarantor.
(d) The Successor Company shall be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture, and the predecessor Company, except in the case of a lease, shall be released from the obligation to pay the principal of and interest on the Notes. The Successor Guarantor shall be the successor to the applicable Subsidiary Guarantor and shall succeed to, and be substituted for, and may exercise every right and power of, such Subsidiary Guarantor under this Indenture, and the predecessor Subsidiary Guarantor, except in the case of a lease, shall be released from its obligations under its Subsidiary Guarantee.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default. Each of the following shall be an Event of Default with respect to the Notes (an “Event of Default”):
(1) a default in the payment of principal of or premium, if any, on any Note when due at its Stated Maturity, upon redemption, required repurchase, upon declaration or otherwise;
(2) a default in any payment of interest on any Note when due, continued for 30 days;
(3) the failure by the Company or any Subsidiary Guarantor to comply with its obligations under Article V of this Indenture;
(4) a failure by the Company or any Subsidiary Guarantor to comply with any of its obligations, covenants or agreements (other than a default referred to in clauses (1), (2) and (3) above) contained in this Indenture or under the Notes for a period of 60 consecutive days after receipt by the Company of written notice of such failure by the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes;
(5) the failure by the Company or any Significant Subsidiary to pay any Indebtedness within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof if the total amount of such Indebtedness unpaid or accelerated exceeds $75.0 million or its foreign currency equivalent;
(6) the Company or a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(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 of it or for any substantial part of its property;
(D) makes a general assignment for the benefit of its creditors; or
(E) takes any comparable action under any foreign laws relating to insolvency;
(7) 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;
(C) orders the winding up or liquidation of the Company or any Significant Subsidiary; or
(D) any similar relief is granted under any foreign laws and the order, decree or relief remains unstayed and in effect for 60 days;
(8) the rendering of any judgment or decree for the payment of money in excess of $50.0 million or its foreign currency equivalent 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
(9) any Subsidiary Guarantee of a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms of this Indenture) or is declared null and void in a judicial proceeding or any Subsidiary Guarantor that is a Significant Subsidiary denies or disaffirms its obligations under this Indenture or its Subsidiary Guarantee.
The foregoing shall 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. However, a Default under clause (4) shall not constitute an Event of Default until the Trustee or the Holders of at least 25% in aggregate principal amount of the outstanding Notes notify the Company of the Default and the Company does not cure such Default within the time specified in clause (4) after receipt of such notice.
SECTION 6.02. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.01(6) or (7) 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 aggregate principal amount of the outstanding Notes 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 Notes to be due and payable. Upon such a declaration, such principal, premium and interest shall be immediately due and payable. In the event of a declaration of acceleration because an Event of Default set forth in Section 6.01(5) 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 6.01(5) shall be remedied or cured by the Company 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; provided that, (i) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived and (ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. If an Event of Default specified in Section 6.01(6) or (7) with respect to the Company or a Significant Subsidiary occurs and is continuing, the principal of, premium, if any, and interest on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.
SECTION 6.03. 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 premium, if any) or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder 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 6.04. Waiver of Past Defaults. The Holders of a majority in aggregate principal amount of the outstanding Notes may waive all past Defaults or Events of Default (except with respect to nonpayment of principal, premium or interest) and rescind any such acceleration with respect to the Notes 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 Notes 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 6.05. Limitation on Suits. A Holder may not pursue any remedy with respect to this Indenture or the Notes 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 aggregate principal amount of the outstanding Notes make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer 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 aggregate principal amount of the outstanding Notes do not give the Trustee a direction inconsistent with the request during such 60-day period.
A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder.
SECTION 6.06. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the contractual right of any Holder to institute suit for the enforcement of any payment of principal, premium, if any, and interest on or with respect to such Holder’s Notes on or after the due dates expressed or provided for in such Note shall not be amended without the consent of such Holder.
SECTION 6.07. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(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).
SECTION 6.08. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceedings, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding has been instituted.
SECTION 6.09. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.07 hereof, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
SECTION 6.10. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article VI or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 6.11. 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 Holders 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.
SECTION 6.12. Priorities. If the Trustee collects any money or property pursuant to this Article VI, it shall pay out the money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.06, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;
SECOND: to Holders for amounts due and unpaid on the Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.12. At least 15 days before such record date, the Company shall mail to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid.
SECTION 6.13. 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 6.13 does not apply to a suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to Section 6.06 or a suit by Holders of more than 10% in outstanding principal amount of the Notes.
SECTION 6.14. Control by Holders of Notes. The Holders of a majority in aggregate principal amount of the Notes 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 the Notes or, that the Trustee determines is unduly prejudicial to the rights of other Holders 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.
SECTION 6.15. Notices of Default; Compliance Certificate. If a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each Holder notice of the Default or Event of Default within 90 days after it occurs unless the Default has been previously cured. In addition, except in the case of a Default in the payment of principal of, premium, if any, or interest on any Note, the Trustee shall be protected in withholding notice if and so long as the Trustee in good faith determines that withholding notice is in the interests of the Holders. In addition, the Company is required to deliver to the Trustee, within 120 days after the end of each fiscal year, an Officer’s Certificate indicating whether the signers thereof know of any Default or Event of Default that occurred during the previous year. The Company also is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice and a description of any event which would constitute a Default or Event of Default, their status and what action the Company is taking or proposes to take in respect thereof.
ARTICLE VII
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its 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:
(i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) 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 provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein.
(c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved in a court of competent jurisdiction that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) 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 6.14 hereof.
(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee shall be under no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any Holder unless such Holder has offered to the Trustee indemnity or security satisfactory to it against any loss, liability or expense.
(f) 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. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
SECTION 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or 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, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.
(b) Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company.
(f) None of the provisions of this Indenture shall require the Trustee to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, 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 for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured to it.
(g) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default is received by a Responsible Officer of the Trustee at the Corporate Trust Office, and such notice references the Notes and this Indenture.
(h) In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
(i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder and each agent, custodian and other Person employed to act hereunder.
(j) The permissive rights of the Trustee enumerated herein shall not be construed as duties.
(k) The Trustee may request that the Company delivers an Officer’s Certificate setting forth the names of individuals or titles of officers authorized at such time to take specified actions pursuant to this Indenture.
(l) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days or resign. The Paying Agent or Registrar does the same with like rights and duties. The Trustee is also subject to Section 7.09.
SECTION 7.04. 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 Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05. Notice of Defaults.
If a Default occurs and is continuing and if it is known to a Responsible Officer of the Trustee, the Trustee shall send to Holders a notice of the Default within 90 days of the occurrence of such Default. Except in the case of a Default relating to the payment of principal, premium, if any, or interest on any Note, the Trustee may withhold from the Holders notice of any continuing Default if and so long as it in good faith determines that withholding the notice is in the interests of the Holders. The Trustee shall not be deemed to know of any Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is such a Default is received by a Responsible Officer of the Trustee at the Corporate Trust Office. The provisions of this Section 7.05 are subject to the provisions of Section 6.15.
SECTION 7.06. Compensation and Indemnity.
(a) The Company shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder 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
promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.
(b) The Company and Subsidiary Guarantors shall indemnify the Trustee for, and hold the Trustee harmless against, any and all loss, damage, claims, liability or expense (including attorneys’ fees and expenses and taxes (other than taxes based upon the income of the Trustee)) incurred by it in connection with the acceptance or administration of this trust and the performance of its duties hereunder (including the costs and expenses of enforcing this Indenture against the Company or any Subsidiary Guarantors (including this Section 7.06) or defending itself against any claim whether asserted by any Holder, the Company or any Subsidiary Guarantor, or liability in connection with the acceptance, exercise or performance of any of its powers or duties hereunder). 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 except to the extent actually prejudiced thereby. The Company shall defend the claim, and the Trustee shall cooperate in the defense of such claim. The Trustee may have separate counsel if the Trustee shall have been advised by counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the Company and in the reasonable judgment of such counsel it is advisable for the Trustee to engage separate counsel, and the Company shall pay the reasonable and documented fees and expenses of any one such separate counsel (as well as such fees and expenses of one firm of local counsel in each jurisdiction in which the primary counsel is not admitted to practice and where local counsel is necessary or advisable). The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred as determined in a final judgment by a court of competent jurisdiction to have resulted from the Trustee’s own willful misconduct or negligence.
(c) The obligations of the Company and the Subsidiary Guarantors, if any, under this Section 7.06 shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee.
(d) To secure the payment obligations of the Company in this Section 7.06, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.
(e) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.07. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided
in this Section 7.07. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing not less than 30 days prior to the effective date of such removal. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.09;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the Company’s expense), the Company or the Holders of at least 10% in principal amount of the then outstanding Notes may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.09, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of 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 Holders. The retiring Trustee shall, at the expense of the Company, promptly transfer all property held by it as Trustee to the successor Trustee; provided that all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.06. Notwithstanding replacement of the Trustee pursuant to this Section 7.07, the Company’s obligations under Section 7.06 shall continue for the benefit of the retiring Trustee. The predecessor Trustee shall have no liability for any action or inaction by any successor Trustee.
SECTION 7.08. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee.
SECTION 7.09. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.
ARTICLE VIII
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Defeasance. (a) Subject to Sections 8.01(b) and 8.02, the Company at its option and at any time may terminate
(i) all the obligations of the Company and any Subsidiary Guarantor under the outstanding Notes and this Indenture (“legal defeasance option”); or
(ii) the obligations of the Company under Sections 4.03, 4.06, 4.07, 4.08, 4.09, and 5.01(a)(3) 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 with such covenants or provisions shall no longer constitute a Default or an Event of Default under Section 6.01(3) and 6.01(4) (“covenant defeasance option”), but except as specified above, the remainder of this Indenture and the Notes 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 or covenant defeasance option with respect to the outstanding Notes, the related Subsidiary Guarantees in effect at such time shall be automatically released.
If the Company exercises its legal defeasance option with respect to the Notes, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option with respect to the Notes, payment of the Notes may not be accelerated because of an Event of Default specified in Sections 6.01(4), 6.01(5), 6.01(6) (but only with respect to a Significant Subsidiary), 6.01(7) (but only with respect
to a Significant Subsidiary), 6.01(8) or 6.01(9), or because of the failure of the Company to comply with Section 5.01(a)(3) or 5.01(b)(1)(C).
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.
(b) Notwithstanding the provisions of Section 8.01(a), the Company’s obligations in Sections 2.02, 2.06, 2.07, 6.06, 6.07, 8.04, 8.05 and 8.07 shall survive until the Notes have been paid in full. Thereafter, the Company’s obligations in Sections 6.06, 8.04 and 8.05 of this Indenture shall survive.
SECTION 8.02. Conditions to Defeasance. In order for the Company to exercise either its legal defeasance option or covenant defeasance option with respect to the Notes:
(1) the Company shall irrevocably deposit with the Trustee, in trust, for the benefit of the Holders cash in U.S. dollars, non-callable U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Notes on the stated date for payment thereof or on the Redemption Date, as the case may be;
(2) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) 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 beneficial owners of the Notes 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;
(3) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that the beneficial owners of the Notes 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 at the same times as would have been the case if such covenant defeasance had not occurred;
(4) no Default or Event of Default with respect to the Notes shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default with respect to this Indenture resulting from the incurrence of Indebtedness, all or a portion of which will be used to defease the Notes concurrently with such incurrence);
(5) such legal defeasance option or covenant defeasance option 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 (other than a Default or Event of Default with respect to this Indenture resulting from the incurrence of Indebtedness and Liens, all or a portion of which will be used to defease the Notes concurrently with such incurrence);
(6) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that (A) the Notes 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 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’ rights generally; and
(7) the Company shall have delivered to the Trustee an Officer’s Certificate stating that all conditions precedent provided for or relating to the legal defeasance option or covenant defeasance option, as the case may be, have been complied with.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article VIII. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes.
SECTION 8.04. Repayment to Company. (a) 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 VIII 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 option or covenant defeasance option, 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 Section 8.04(a).
(b) 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 Notes that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Company for payment as general creditors.
SECTION 8.05. 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 8.06. Deposited Money and Government Notes to be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.04, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.06, the “Trustee”) pursuant to Section 8.02 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.
Anything in this Article VIII to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the written request of the Company any money or U.S. Government Obligations held by it as provided in Section 8.02 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.02 hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent legal defeasance or covenant defeasance.
SECTION 8.07. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article VIII 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 Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII 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 VIII; provided, however, that, if the Company has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENT AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company and the Trustee may amend or supplement this Indenture and the Notes and the Subsidiary Guarantees issued hereunder without notice to or consent of any Holder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V of this Indenture in respect of the assumption by a Successor Company, as the case may be, of the obligations of the Company or any
Subsidiary Guarantor under this Indenture, the Notes and the Subsidiary Guarantees issued hereunder;
(3) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided, however, that such uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code;
(4) to add Guarantees with respect to the Notes or release any such Guarantees in accordance with the applicable provisions of this Indenture;
(5) to add to the covenants of the Company and its Subsidiaries for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or its Subsidiaries;
(6) to conform the text of this Indenture, any Subsidiary Guarantees or the Notes to the “Description of Notes” in the Offering Memorandum;
(7) to secure the Notes and any Subsidiary Guarantee;
(8) to make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes as permitted by this Indenture, including, without limitation, to facilitate the issuance and administration of the Notes; provided, however, that (i) compliance with this Indenture as so amended would not result in the Notes being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer the Notes;
(9) to evidence and provide for the acceptance of appointment by a successor Trustee; provided that the successor Trustee is otherwise qualified and eligible to act as such under the terms of this Indenture;
(10) to provide for or confirm the issuance of Additional Notes; and
(11) to make any change that does not adversely affect the rights of any Holder of the Notes.
After an amendment under this Section 9.01 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.01.
SECTION 9.02. With Consent of Holders. The Company and the Trustee may amend or supplement this Indenture, the Notes and the Subsidiary Guarantees issued hereunder without notice to any Holder but with the written consent of the Holders of at least a
majority in aggregate principal amount of the Notes then outstanding. However, without the consent of each Holder affected, an amendment may not:
(1) reduce the principal amount of Notes whose Holders must consent to an amendment;
(2) reduce the rate of or extend the time for payment of interest on any Note;
(3) reduce the principal of or extend the Stated Maturity of any Note;
(4) reduce the premium payable upon the redemption or repurchase of any Note or change the time at which any Note may be redeemed in accordance with Article III hereof;
(5) make any Note payable in money other than that stated in the Note;
(6) amend the contractual right of any Holder of Notes to institute suit for the enforcement of any payment of principal, premium, if any, and interest on or with respect to such Holder’s Notes on or after the due dates expressed or provided for in such Note;
(7) make any change in the amendment or waiver provisions which require the consent of each Holder of Notes; or
(8) modify the Subsidiary Guarantees in any manner adverse to the Holders of the Notes.
It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02.
SECTION 9.03. Revocation and Effects of Consents and Waivers. A consent to an amendment, supplement or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent, supplement or waiver as to such Holder’s Note or portion of the Note if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective. After an amendment, supplement or waiver becomes effective, it shall bind every Holder. An amendment, supplement or waiver made pursuant to Section 9.02 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 Holders 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 Holders 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 9.04. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.05. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article IX if the amendment, supplement or waiver does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment, supplement or waiver until the Board of Directors approves it. In executing any amendment, supplement or waiver, the Trustee shall be provided with and (subject to Section 7.01) shall be fully protected in conclusively relying upon, in addition to the documents required by Section 12.02, an Officer’s Certificate and an Opinion of Counsel, each stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture and such Opinion of Counsel shall state that such amendment, supplement or waiver is the legal, valid and binding obligation of the Company and any Subsidiary Guarantors party thereto, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof.
ARTICLE X
GUARANTEES
SECTION 10.01. Guarantee.
Subject to this Article X, each of the Subsidiary Guarantors hereby, jointly and severally, fully and unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of, interest, premium, if any, on the Notes, subject to any applicable grace period, shall be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment by the Company when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors shall be jointly and severally obligated to pay the same immediately. Each Subsidiary Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.
Each Subsidiary Guarantor hereby agrees that, to the maximum extent permitted under applicable law, their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor (other than payment in full of all of the obligations of the Company hereunder and under the Notes). Each Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture or by release in accordance with the provisions of this Indenture.
Each Subsidiary Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ and agents’ fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section 10.01.
If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Subsidiary Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Subsidiary Guarantors any amount paid either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.
Each Subsidiary Guarantor agrees that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article VI hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantors for the purpose of this Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor so long as
the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantees.
Each Subsidiary Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation, reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company’s assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes or Subsidiary Guarantees, whether as a “voidable preference,” “fraudulent transfer” or otherwise, all as though such payment or performance had not been made. In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
In case any provision of any Subsidiary Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
The Subsidiary Guarantee issued by any Subsidiary Guarantor shall be a general unsecured (unless the Notes are secured pursuant to Section 4.08) obligation of such Subsidiary Guarantor and shall rank equally in right of payment to all existing and future senior Indebtedness of such Subsidiary Guarantor.
Each payment to be made by a Subsidiary Guarantor in respect of its Subsidiary Guarantee shall be made without set-off, counterclaim, reduction or diminution of any kind or nature.
SECTION 10.02. Limitation on Guarantor Liability.
Each Subsidiary Guarantor and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Subsidiary Guarantee of such Subsidiary Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Subsidiary Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors hereby irrevocably agree that the obligations of each Subsidiary Guarantor shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Subsidiary Guarantor that are relevant under such laws and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under this Article X, result in the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law. Each Subsidiary Guarantor that makes a payment under its Subsidiary Guarantee shall be entitled upon payment in full of all guaranteed obligations under this Indenture to a
contribution from each other Subsidiary Guarantor in an amount equal to such other Subsidiary Guarantor’s pro rata portion of such payment based on the respective net assets of all the Subsidiary Guarantors at the time of such payment determined in accordance with GAAP.
SECTION 10.03. Execution and Delivery.
Each Subsidiary Guarantor hereby agrees that its execution and delivery of a supplemental indenture substantially in the form of Exhibit D hereto, executed on behalf of such Subsidiary Guarantor by an officer thereof shall evidence its Subsidiary Guarantee set forth in Section 10.01 without the need for any further notation on the Notes. Upon the execution and delivery of the supplemental indenture, the Subsidiary Guarantees set forth in this Indenture shall be deemed duly delivered, without any further action by any Person, on behalf of the Subsidiary Guarantors.
Each of the Subsidiary Guarantors hereby agrees that its Subsidiary Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Subsidiary Guarantee. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of any Subsidiary Guarantors.
SECTION 10.04. Subrogation.
Each Subsidiary Guarantor shall be subrogated to all rights of Holders against the Company in respect of any amounts paid by any Subsidiary Guarantor pursuant to the provisions of Section 10.01; provided that no Subsidiary Guarantor shall be entitled to enforce or receive any payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Company under this Indenture or the Notes shall have been paid in full.
SECTION 10.05. Benefits Acknowledged.
Each Subsidiary Guarantor acknowledges that it shall receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the guarantee and waivers made by it pursuant to its Subsidiary Guarantee are knowingly made in contemplation of such benefits.
SECTION 10.06. Release of Subsidiary Guarantees.
A Subsidiary Guarantee by a Subsidiary Guarantor shall be automatically released:
(1) upon the sale or other disposition (including by way of consolidation or merger) of the Capital Stock of such Subsidiary Guarantor, as a result of which such Subsidiary Guarantor ceases to be a Subsidiary of the Company;
(2) at such time as such Subsidiary Guarantor no longer is a borrower under or Guarantees obligations under any Debt Facility of the Company or any Subsidiary Guarantor that resulted in the issuance of the Subsidiary Guarantee;
(3) upon the defeasance of the Notes, as provided under Section 8.01 hereof;
(4) upon the discharge of this Indenture, as provided under Section 11.01 hereof; or
(5) as described under Article IX hereof.
In the event that any released Subsidiary Guarantor (in the case of clause (2) above) thereafter borrows money or Guarantees obligations under any Debt Facility of the Company or any Subsidiary Guarantor, such former Subsidiary Guarantor will again provide a Subsidiary Guarantee in accordance with Section 4.09 hereof.
ARTICLE XI
SATISFACTION AND DISCHARGE
SECTION 11.01. Satisfaction and Discharge.
This Indenture shall be discharged and will cease to be of further effect as to all Notes, when:
(1) either (a) all Notes theretofore authenticated and delivered, except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust, have been delivered to the applicable Trustee for cancellation; or (b) all Notes not theretofore delivered to the applicable Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise, will become due and payable within one year or are to be called for redemption and redeemed within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company and the Company has irrevocably deposited or caused to be deposited with the applicable Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on the Notes not theretofore delivered to the applicable Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;
(2) the Company has paid or caused to be paid all sums payable by it under this Indenture; and
(3) the Company has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be.
In addition, upon its request for written acknowledgement of satisfaction and discharge, the Company must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, if money shall have been deposited with the Trustee pursuant to Section 11.01(1), the provisions of Section 11.02 and Section 8.04 shall survive such satisfaction and discharge.
SECTION 11.02. Application of Trust Money.
Subject to the provisions of Section 8.04, all money deposited with the Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 11.01 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 Company’s and any Subsidiary Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01; provided that if the Company has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Notices.
Any notice or communication by the Company or any Subsidiary Guarantor or the Trustee to the others is duly given if in writing and delivered in person or mailed by first-class
mail (registered or certified, return receipt requested), electronic delivery (in PDF format), fax or overnight air courier guaranteeing next day delivery, to the others’ address:
If to the Company or any Subsidiary Guarantor:
Smithfield Foods, Inc.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
with copies to:
Hogan Lovells US LLP
555 Thirteenth Street, NW
Washington, D.C. 20004
Attention: Eve N. Howard, Esq.
If to the Trustee:
U.S. Bank National Association
Global Corporate Trust Services
Two Midtown Plaza
1349 West Peachtree Street, NW, Suite 1050
Atlanta, GA 30309
Attention: David Ferrell
The Company, any Subsidiary Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: as of the date so delivered if delivered electronically, in PDF format; at the time delivered by hand, if personally delivered; five calendar days after being deposited in the mail, postage prepaid, if mailed by first-class mail; when receipt acknowledged, if faxed; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery; provided that any notice or communication delivered to the Trustee shall be deemed effective upon actual receipt thereof.
Any notice or communication to a Holder shall be sent electronically, mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed or otherwise delivered in the manner provided above within the time prescribed, such notice or communication shall be deemed duly given, whether or not the addressee receives it.
The Trustee agrees to accept and act upon facsimile or electronically sent (in PDF format) transmission of written instructions or directions pursuant to this Indenture given by the Company, provided, however that: (i) if requested, the Company, subsequent to such facsimile transmission of written instructions or directions, shall provide the originally executed instructions or directions to the Trustee in a timely manner and (ii) such originally executed instructions or directions shall be signed by an Officer of the Company.
If the Company sends a notice or communication to Holders, it shall send a copy to the Trustee and each Agent at the same time.
SECTION 12.02. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(a) An Officer’s Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.03) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
(b) An Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.03) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.
SECTION 12.03. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 4.04) and shall include:
(a) a statement that the Person making such certificate or opinion has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she 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
(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.
With respect to matters of fact, an Opinion of Counsel may rely on an Officer’s Certificate, certificates of public officials or reports or opinions of experts.
SECTION 12.04. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
SECTION 12.05. No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator or stockholder of the Company or the Subsidiary Guarantors, if any, as such, shall have any liability for any obligations of the Company or any Subsidiary Guarantor under the Notes, this Indenture or the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive liabilities under the U.S. federal securities laws, and it is the view of the SEC that such a waiver is against public policy.
SECTION 12.06. Governing Law. THIS INDENTURE, THE NOTES AND ANY SUBSIDIARY GUARANTEE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 12.07. Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 12.08. Appointment of Note Registrar and Paying Agent. The Trustee will initially act as Paying Agent and Note Registrar. The Company may change the Paying Agent or Note Registrar without prior notice to the Holders, and the Company or any of its Restricted Subsidiaries may act as Paying Agent or Note Registrar.
SECTION 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or the Restricted Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.10. Successors.
All agreements of the Company in this Indenture and the Notes shall bind their successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Subsidiary Guarantor, if any, in this Indenture shall bind its successors, except as otherwise provided in Section 10.06.
SECTION 12.11. Severability.
In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture which, when taken together, shall constitute one instrument. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes. “The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Indenture or any document to be signed in connection with this Indenture shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions contemplated hereunder by electronic means. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the Electronic Signatures in Global and National Commerce Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law (e.g., www.docusign.com)) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be legally valid, effective and enforceable for all purposes.
SECTION 12.13. 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.
SECTION 12.14. U.S.A. Patriot Act.
The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.
[Signatures on following pages]
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written.
| | | | | | | | | | | | | | | | | |
| U.S. Bank National Association, as Trustee |
| | | | | |
| | | | | |
| By: | /s/ Stephanie Cox |
| | | Name: | Stephanie Cox |
| | | Title: | Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | |
COMPANY: | Smithfield Foods, Inc., | |
| a Virginia corporation | |
| | | | | |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra | |
| Title: Vice President and Corporate Treasurer |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
SUBSIDIARY GUARANTORS: | | | | | |
| | | | | |
| | | | | |
| Brown’s Realty Partnership, | |
| a North Carolina partnership | |
| | | | | |
| By: | Murphy-Brown LLC, | |
| | Partner | |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member | |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | |
| By: | Smithfield Purchase Corporation, |
| | Partner | |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | | | | | | | |
| Carroll’s Realty Partnership, | |
| a North Carolina partnership | |
| | | | | | | |
| By: | Murphy-Brown LLC, | | | |
| | | Partner | | | |
| | | | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | | its sole Member |
| | |
| | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | | | |
| By: | Smithfield Purchase Corporation, |
| | | Partner | |
| | | | | | | |
| | | | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | | | |
| | | | | | | |
| Duplin Marketing Company, LLC, |
| a North Carolina limited liability company |
| | | | | | | |
| | | | | | | |
| By: | /s/ Michael H. Cole | |
| Name: Michael H. Cole | |
| Title: Manager | |
| | | | | | | |
| | | | | | | |
| Jonmor Investments, Inc., |
| a Delaware corporation |
| | | | | | | |
| | | | | | | |
| By: | /s/ Jeffrey A. Porter | | |
| Name: Jeffrey A. Porter | |
| Title: President | |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | | | | |
| KC2 Real Estate, LLC, |
| a Delaware limited liability company |
| | | | | | |
| By: | Murphy-Brown of Missouri LLC, |
| | its sole Member | | | |
| | | | | | |
| By: | MB Missouri Holdings LLC, |
| | its sole Member |
| | | | | | |
| By: | Murphy-Brown LLC, |
| | its Managing Member |
| | | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | | |
| | | | | | |
| MB Grain LLC, | | | |
| a Delaware limited liability company |
| | | | | | |
| By: | Murphy-Brown LLC, |
| | its sole Member |
| | | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | | |
| | | | | | |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | | | | |
| MB Missouri Holdings LLC, |
| a Delaware limited liability company |
| | | | | | |
| By: | Murphy-Brown LLC, |
| | its Managing Member |
| | | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | | |
| | | | | | |
| Murphy-Brown LLC, |
| a Delaware limited liability company |
| | | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | | |
| | | | | | |
| Murphy-Brown of Missouri LLC, |
| a Delaware limited liability company |
| | | | | | |
| By: | MB Missouri Holdings LLC, |
| | its sole Member |
| | | | | | |
| By: | Murphy-Brown LLC, |
| | its Managing Member |
| | | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | | | | |
| Patcud Investments, Inc., |
| a Delaware corporation |
| | | | | | |
| | | | | | |
| By: | /s/ Jeffrey A. Porter | | |
| Name: Jeffrey A. Porter |
| Title: President |
| | |
| | |
| SF Investments, Inc., |
| a Delaware corporation |
| | | |
| | |
| By: | /s/ Jeffrey A. Porter | | |
| Name: Jeffrey A. Porter |
| Title: President |
| | | | | | |
| | | | | | |
| Smithfield Direct, LLC, |
| a Delaware limited liability company |
| | | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | | |
| | | | | | |
| Smithfield Fresh Holdings, Inc., |
| a Delaware corporation |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | | |
| | | | | | |
| Smithfield Fresh Meats Corp., |
| a Delaware corporation |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | | | | |
| Smithfield Fresh Meats Sales Corp., |
| a Delaware corporation |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | |
| | |
| Smithfield Packaged Meats Corp., |
| a Delaware corporation |
| | | |
| | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | | |
| | | | | | |
| Smithfield Packaged Meats Sales Corp., |
| a Delaware corporation |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | | |
| | | | | | |
| Smithfield Specialty Foods Group, LLC, |
| a Delaware limited liability company |
| | | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | | |
| | | | | | |
| Smithfield Strategic Sourcing & Service Co., Inc., |
| a Delaware corporation |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | | | | |
| Smithfield Support Services Corp., |
| a Delaware corporation |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | |
| | |
| Smithfield-Carroll’s Farms, |
| a Virginia partnership |
| | | | | | |
| By: | Murphy-Brown LLC, |
| | Partner |
| | | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | | |
| | | | | | |
| By: | Smithfield Purchase Corporation, |
| | Partner |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
| | | | | | |
| | | | | | |
| Smithfield-Kinston LLC |
| a Delaware limited liability company |
| | | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | | | | |
| Tar Heel Turkey Hatchery, Inc., |
| a North Carolina corporation |
| | | | | | |
| | | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra | |
| Title: Vice President | |
[Signature Page to Indenture]
EXHIBIT A
FORM OF NOTE
EXHIBIT A-1
[Face of Note]
[Insert the Global Note Legend, if applicable, pursuant to the provisions of the Indenture]
[Insert the Private Placement Legend, if applicable, pursuant to the provisions of the Indenture]
CUSIP [l][l]
ISIN [l][l]
[RULE 144A] [REGULATION S] GLOBAL NOTE
3.000% Senior Notes due 2030
SMITHFIELD FOODS, INC.
promises to pay to CEDE & CO. or registered assigns, the principal sum set forth on the Schedule of Exchanges of Interests in the Global Note attached hereto in United States Dollars on October 15, 2030.
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
IN WITNESS HEREOF, the Company has caused this instrument to be duly executed.
| | | | | | | | |
| SMITHFIELD FOODS, INC. |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
This is one of the Notes referred to in the within-mentioned Indenture:
| | | | | | | | |
| Dated: | | |
| | |
| | |
| U.S. BANK NATIONAL ASSOCIATION, as Trustee |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
[Reverse of Note]
3.000% Senior Notes due 2030
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Smithfield Foods, Inc., a Virginia corporation (the “Company”) promises to pay interest on the principal amount of this Note at 3.000% per annum from September 15, 2020 until maturity. The Company shall pay interest, semi-annually in arrears on April 15 and October 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that the first Interest Payment Date shall be April 15, 20211. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the interest rate on the Notes to the extent lawful. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes to the Persons who are registered Holders at the close of business on the April 1 or October 1 (whether or not a Business Day), as the case may be, immediately preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. Payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank National Association, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to the Holders. The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture, dated as of September 15, 2020 (the “Indenture”), among the Company, the Subsidiary Guarantors party thereto and the Trustee. This Note is one of a duly authorized issue of Notes of the Company designated as its 3.000% Senior Notes due 2030. The Company shall be entitled to
1 With respect to Initial Notes issued on the Issue Date.
issue Additional Notes pursuant to Section 2.01 of the Indenture. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling, and Holders are referred to the Indenture for a statement of such terms.
5. OPTIONAL REDEMPTION.
(a) At any time prior to the Par Call Date, the Notes may be redeemed by the Company, in whole or in part, at the Company’s option, at a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but excluding, the Redemption Date; or
(ii) the sum of the Remaining Scheduled Payments on such Notes being redeemed (not including any portion of the payments of interest accrued as of the redemption date (the “Redemption Date”)), discounted to its present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, as determined by the Quotation Agent, plus 40 basis points, plus accrued and unpaid interest on the principal amount of such Notes being redeemed to, but excluding, the Redemption Date.
(b) At any time on or after the Par Call Date, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Notes to be redeemed, plus accrued and unpaid interest, if any, on the Notes to, but excluding, the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(c) If the optional Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Company. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption.
(d) If less than all of the Notes are to be redeemed, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Definitive Note surrendered representing the same indebtedness to the extent not redeemed or purchased; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000.
(e) In addition to the Company’s rights to redeem the Notes as set forth above, the Company may purchase Notes in open-market transactions, tender offers or otherwise invest such net proceeds in any manner that is not prohibited by the Indenture.
6. MANDATORY REDEMPTION. The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Subject to Section 3.03 of the Indenture, notice of redemption shall be sent by electronic delivery or mailed by first-class mail at least 15 days but not more than 60 days before the Redemption Date to each Holder to be redeemed at such Holder’s registered address, except that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Articles VIII or XI of the Indenture.
8. OFFERS TO REPURCHASE. If a Change of Control Triggering Event occurs, each Holder will have the right to require the Company to purchase all or any part (in integral multiples of $1,000 except that no purchase will be permitted that would result in a Note having a remaining principal amount of less than $2,000) of such Holder’s Notes pursuant to a Change of Control Offer. In the Change of Control Offer, the Company will offer to purchase all of the Notes, at a purchase price in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the rights of Holders of record on relevant Record Dates to receive interest due on an Interest Payment Date). The Change of Control Offer shall be made in accordance with Section 4.07 of the Indenture.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Notes or portion of Notes selected for redemption, except for the unredeemed portion of any Notes being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture or the Notes may be amended or supplemented as provided in the Indenture.
12. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture. If any Event of Default (other than as specified in Section 6.01(6) or 6.01(7) of the Indenture with respect to the Company or a Significant Subsidiary) shall occur and be continuing with respect to the Indenture, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders) and upon any such
declaration, such principal, premium, if any, and interest shall become due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default as specified in Section 6.01(6) or 6.01(7), with respect to the Company or a Significant Subsidiary occurs and is continuing, then all the Notes shall automatically become and be due and payable immediately in an amount equal to the principal amount of the Notes, together with accrued and unpaid interest, if any, to the date the Notes become due and payable, without any declaration or other act on the part of the Trustee or any holder. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or and its consequences under the Indenture except a continuing Default in payment of the principal of, premium, if any, or interest on, any of the Notes held by a non-consenting Holder. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required within 30 days after becoming aware of any Default, to deliver to the Trustee a statement specifying such Default and what action the Company proposes to take with respect thereto.
13. AUTHENTICATION. This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.
14. GOVERNING LAW. THIS NOTE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. CUSIP/ISIN NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP/ISIN numbers to be printed on the Notes and the Trustee may use CUSIP/ISIN numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
16. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to the Company at the following addresses:
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
with a copy to Hogan Lovells US LLP
555 Thirteenth Street, NW
Washington, D.C. 20004
Attention: Eve N. Howard, Esq.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: ___________________________________________
(Insert assignee’s legal name)
| | |
|
| (Insert assignee’s soc. sec. or tax I.D. no.) |
|
|
|
|
| (Print or type assignee’s name, address and zip code) |
and irrevocably appoint __________________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him.
Date: _____________________
Your Signature: ____________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 4.07 of the Indenture, check the appropriate box below:
o Section 4.07
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.07 of the Indenture, state the amount you elect to have purchased:
$_______________
Date: _____________________
Your Signature: _____________________________
(Sign exactly as your name appears
on the face of this Note)
Tax Identification No.: _______________________
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The initial outstanding principal amount of this Global Note is $[•]. The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global or Definitive Note for an interest in this Global Note, have been made:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Date of Exchange | | Amount of
decrease in
Principal
Amount of this
Global Note | | Amount of
increase in
Principal
Amount of this
Global Note | | Principal
Amount of this
Global Note
following such
decrease or
increase | | Signature of
authorized
signatory of
Trustee or Notes
Registrar |
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__________________
*This schedule should be included only if the Note is issued in global form.
EXHIBIT A-2
[Face of Regulation S Temporary Note]
[Insert Regulation S Temporary Global Note Legend]
[Insert the Global Note Legend]
[Insert the Private Placement Legend]
CUSIP [•][•]
ISIN [•]
TEMPORARY REGULATION S GLOBAL NOTE
3.000% Senior Notes due 2030
SMITHFIELD FOODS, INC.
promises to pay to CEDE & CO. or registered assigns, the principal sum of [•] United States Dollars on October 15, 2030.
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
IN WITNESS HEREOF, the Company has caused this instrument to be duly executed.
| | | | | | | | |
| SMITHFIELD FOODS, INC. |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
This is one of the Notes referred to in the within-mentioned Indenture:
| | | | | | | | |
| Dated: | | |
| | |
| | |
| U.S. BANK NATIONAL ASSOCIATION, as Trustee |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
[Reverse of Note]
3.000% Senior Notes due 2030
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Smithfield Foods, Inc., a Virginia corporation (the “Company”) promises to pay interest on the principal amount of this Note at 3.000% per annum from September 15, 2020 until maturity. The Company will pay interest, semi-annually in arrears on April 15 and October 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that the first Interest Payment Date shall be April 15, 20212 . The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the interest rate on the Notes to the extent lawful. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes to the Persons who are registered Holders at the close of business on the April 1 or October 1 (whether or not a Business Day), as the case may be, immediately preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. Payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank National Association, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to the Holders. The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture, dated as of September 15, 2020 (the “Indenture”), among the Company, the Subsidiary Guarantors party thereto and the Trustee. This Note is one of a duly authorized issue of Notes of the Company designated as its 3.000% Senior Notes due 2030. The Company shall be entitled to
2 With respect to Initial Notes issued on the Issue Date.
issue Additional Notes pursuant to Section 2.01 of the Indenture. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling, and Holders are referred to the Indenture for a statement of such terms.
5. OPTIONAL REDEMPTION.
(a) At any time prior to the Par Call Date, the Notes may be redeemed by the Company, in whole or in part, at the Company’s option, at a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but excluding, the Redemption Date; or
(ii) the sum of the Remaining Scheduled Payments on such Notes being redeemed (not including any portion of the payments of interest accrued as of the redemption date (the “Redemption Date”)), discounted to its present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Adjusted Treasury Rate, as determined by the Quotation Agent, plus 40 basis points, plus accrued and unpaid interest on the principal amount of such Notes being redeemed to, but excluding, the Redemption Date.
(b) At any time on or after the Par Call Date, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Notes to be redeemed, plus accrued and unpaid interest, if any, on the Notes to, but excluding, the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(c) If the optional Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Company. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption.
(d) If less than all of the Notes are to be redeemed, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Definitive Note surrendered representing the same indebtedness to the extent not redeemed or purchased; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000.
(e) In addition to the Company’s rights to redeem the Notes as set forth above, the Company may purchase Notes in open-market transactions, tender offers or otherwise invest such net proceeds in any manner that is not prohibited by the Indenture.
6. MANDATORY REDEMPTION. The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Subject to Section 3.03 of the Indenture, notice of redemption shall be sent by electronic delivery or mailed by first-class mail at least 15 days but not more than 60 days before the Redemption Date to each Holder to be redeemed at such Holder’s registered address, except that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Articles VIII or XI of the Indenture.
8. OFFERS TO REPURCHASE. If a Change of Control Triggering Event occurs, each Holder will have the right to require the Company to purchase all or any part (in integral multiples of $1,000 except that no purchase will be permitted that would result in a Note having a remaining principal amount of less than $2,000) of such Holder’s Notes pursuant to a Change of Control Offer. In the Change of Control Offer, the Company will offer to purchase all of the Notes, at a purchase price in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the rights of Holders of record on relevant Record Dates to receive interest due on an Interest Payment Date). The Change of Control Offer shall be made in accordance with Section 4.07 of the Indenture.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Notes or portion of Notes selected for redemption, except for the unredeemed portion of any Notes being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture or the Notes may be amended or supplemented as provided in the Indenture.
12. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture. If any Event of Default (other than as specified in Section 6.01(6) or 6.01(7) of the Indenture with respect to the Company or a Significant Subsidiary) shall occur and be continuing with respect to the Indenture, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders) and upon any such
declaration, such principal, premium, if any, and interest shall become due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default as specified in Section 6.01(6) or 6.01(7), with respect to the Company or a Significant Subsidiary occurs and is continuing, then all the Notes shall automatically become and be due and payable immediately in an amount equal to the principal amount of the Notes, together with accrued and unpaid interest, if any, to the date the Notes become due and payable, without any declaration or other act on the part of the Trustee or any holder. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or and its consequences under the Indenture except a continuing Default in payment of the principal of, premium, if any, or interest on, any of the Notes held by a non-consenting Holder. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required within 30 days after becoming aware of any Default, to deliver to the Trustee a statement specifying such Default and what action the Company proposes to take with respect thereto.
13. AUTHENTICATION. This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.
14. GOVERNING LAW. THIS NOTE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. CUSIP/ISIN NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP/ISIN numbers to be printed on the Notes and the Trustee may use CUSIP/ISIN numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
16. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to the Company at the following addresses:
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
with a copy to Hogan Lovells US LLP
555 Thirteenth Street, NW
Washington, D.C. 20004
Attention: Eve N. Howard, Esq.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: ___________________________________________
(Insert assignee’s legal name)
| | |
|
| (Insert assignee’s soc. sec. or tax I.D. no.) |
|
|
|
|
| (Print or type assignee’s name, address and zip code) |
and irrevocably appoint __________________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him.
Date: _____________________
Your Signature: ____________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 4.07 of the Indenture, check the appropriate box below:
o Section 4.07
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.07 of the Indenture, state the amount you elect to have purchased:
$_______________
Date: _____________________
Your Signature: _____________________________
(Sign exactly as your name appears
on the face of this Note)
Tax Identification No.: _______________________
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
SCHEDULE OF EXCHANGES OF INTERESTS IN THE REGULATION S TEMPORARY GLOBAL NOTE*
The initial outstanding principal amount of this Regulation S Temporary Global Note is $[•]. The following exchanges of a part of this Regulation S Temporary Global Note for an interest in another Regulation S Temporary Global Note or for a Definitive Note, or exchanges of a part of another Regulation S Temporary Global or Definitive Note for an interest in this Regulation S Temporary Global Note, have been made:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Date of Exchange | | Amount of decrease in Principal Amount of this Regulation S Temporary Global Note | | Amount of increase in Principal Amount of this Regulation S Temporary Global Note | | Principal Amount of this Regulation S Temporary Global Note following such decrease or increase | | Signature of authorized signatory of Trustee or Notes Registrar |
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__________________
*This schedule should be included only if the Note is issued in global form.
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
U.S. Bank National Association
Global Corporate Trust Services
Two Midtown Plaza
1349 West Peachtree Street, NW,
Suite 1050
Atlanta, GA 30309
ATTN: David Ferrell
Re: 3.000% Senior Notes due 2030
Reference is hereby made to the Indenture, dated as of September 15, 2020 (the “Indenture”), among Smithfield Foods, Inc., the Subsidiary Guarantors party thereto and the Trustee with respect to the 3.000% Senior Notes due 2030. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
_______________ (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $______________in such Note[s] or interests (the “Transfer”), to_____________(the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. o CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States.
2. o CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S TEMPORARY GLOBAL NOTE, THE
REGULATION S PERMANENT GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Temporary Global Note, the Regulation S Permanent Global Note and/or the Restricted Definitive Note Indenture and the Securities Act.
3. o CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):
(a) o such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;
or
(b) o such Transfer is being effected to the Company or a subsidiary thereof;
or
(c) o such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or
(d) o such Transfer is being effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904 and the Transfer complies with the applicable transfer restrictions and the requirements of the exemption claimed, which certification is supported by an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act.
4. o CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) o CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 to a Person who is not an affiliate (as defined in Rule 144) of the Company under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(b) o CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act to a Person who is not an affiliate (as defined in Rule 144) of the Company and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) o CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION, (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 to a Person who is not an affiliate (as defined in Rule 144) of the Company and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.
5. o CHECK IF TRANSFEROR IS AN AFFILIATE OF THE COMPANY.
6. o CHECK IF TRANSFEREE IS AN AFFILIATE OF THE COMPANY.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company.
| | | | | | | | | | | | | | |
| | | [Insert Name of Transferor] |
| | | | |
| | | | |
| | | By: | |
| | | | Name: |
| | | | Title: |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Dated: | | | | |
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) o a beneficial interest in the:
(i) o 144A Global Note (CUSIP [l]), or
(ii) o Regulation S Global Note (CUSIP [l]), or
(b) o a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) o a beneficial interest in the:
(i) o 144A Global Note (CUSIP [l]), or
(ii) o Regulation S Global Note (CUSIP [l]), or
(iii) o Unrestricted Global Note (CUSIP [l]), or
(b) o a Restricted Definitive Note; or
(c) o an Unrestricted Definitive Note, in accordance with the terms of the Indenture.
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
U.S. Bank National Association
Global Corporate Trust Services
Two Midtown Plaza
1349 West Peachtree Street, NW,
Suite 1050
Atlanta, GA 30309
Attn: David Ferrell
Re: 3.000% Senior Notes due 2030
Reference is hereby made to the Indenture, dated as of September 15, 2020 (the “Indenture”), among Smithfield Foods, Inc., the Subsidiary Guarantors party thereto and the Trustee with respect to the 3.000% Senior Notes due 2030. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
__________ (the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $__________ in such Note[s] or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:
1) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE
a) o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any
state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
b) o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
c) o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
d) o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
2) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES
a) o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.
b) o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] [ ] 144A Global Note [ ] Regulation S Global Note, with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.
3) o CHECK IF OWNER IS AN AFFILIATE OF THE COMPANY.
4) o CHECK IF OWNER IS EXCHANGING THIS NOTE IN CONNECTION WITH AN EXPECTED TRANSFER TO AN AFFILIATE OF THE COMPANY.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company and are dated____________________.
| | | | | | | | | | | | | | |
| | | [Insert Name of Transferor] |
| | | | |
| | | By: | |
| | | | Name: |
| | | | Title: |
| | | | |
| Dated: | | | | |
EXHIBIT D
[FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS]
Supplemental Indenture (this “Supplemental Indenture”), dated as of__________, among ____________ (the “Guaranteeing Subsidiary”), a subsidiary of Smithfield Foods, Inc., a Virginia corporation (the “Company”) and U.S. Bank National Association, a national banking association organized and existing under the bank of the United States of America, as trustee (the “Trustee”).
W I T N E S S E T H
WHEREAS, each of the Company and the Subsidiary Guarantors (as defined in the Indenture referred to below) has heretofore executed and delivered to the Trustee an indenture (as supplemented, the “Indenture”), dated as of September 15, 2020, providing for the issuance of an unlimited aggregate principal amount of 3.000% Senior Notes due 2030 (the “Notes”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally Guarantee all of the Company’s obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
(1) Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
(2) Agreement to be Bound. The Guaranteeing Subsidiary hereby becomes a party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.
(3) Guarantee. The Guaranteeing Subsidiary agrees, on a joint and several basis with all the existing Subsidiary Guarantors, if any, to Guarantee to each Holder and the Trustee the obligations of the Company under the Notes and the Indenture pursuant to Article X of the Indenture.
(4) No Recourse Against Others. No director, officer, employee, incorporator or stockholder of the Guaranteeing Subsidiary shall have any liability for any obligations of the Company (including the Guaranteeing Subsidiary) under the Notes, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes and the Subsidiary Guarantees.
(5) Notices. All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, at its address set forth below, with a copy to the Company as provided in the Indenture for notices to the Company.
(6) Parties. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture or the Indenture or any provision herein or therein contained.
(7) Governing Law. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.
(8) Severability Clause. In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
(9) Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. Every reference in the Indenture to the Indenture shall hereby be deemed to mean the Indenture as supplemented by this Supplemental Indenture. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture.
(10) Counterparts. The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
(11) Headings. The headings of the sections in this Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.
[Signatures on following page]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.
| | | | | | | | |
| [NAME OF GUARANTEEING
SUBSIDIARY], as a Guarantor |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
Exhibit 4.4
EXECUTION VERSION
SMITHFIELD FOODS, INC.,
as Issuer,
the Subsidiary Guarantors listed on the signature pages hereto,
$500,000,000
2.625% Senior Notes due 2031
INDENTURE
Dated as of September 13, 2021
U.S. Bank National Association,
as Trustee
Table of Contents
| | | | | | | | |
| | Page |
| | |
| ARTICLE I |
| | |
| DEFINITIONS AND RULES OF CONSTRUCTION |
| | |
| SECTION 1.01. | Definitions | 1 |
| SECTION 1.02. | Other Definitions | 14 |
| SECTION 1.03. | Rules of Construction | 14 |
| SECTION 1.04. | Acts of Holders | 15 |
| | |
| ARTICLE II |
| | |
| THE NOTES |
| | |
| SECTION 2.01. | Form and Dating; Terms | 16 |
| SECTION 2.02. | Execution and Authentication | 18 |
| SECTION 2.03. | Registrar and Paying Agent | 19 |
| SECTION 2.04. | Paying Agent to Hold Money in Trust | 20 |
| SECTION 2.05. | Holder Lists | 20 |
| SECTION 2.06. | Transfer and Exchange | 20 |
| SECTION 2.07. | Replacement Notes | 33 |
| SECTION 2.08. | Outstanding Notes | 33 |
| SECTION 2.09. | Treasury Notes | 34 |
| SECTION 2.10. | Temporary Notes | 34 |
| SECTION 2.11. | Cancellation | 34 |
| SECTION 2.12. | Defaulted Interest | 35 |
| SECTION 2.13. | CUSIP or ISIN Numbers | 35 |
| | |
| ARTICLE III |
| | |
| REDEMPTION |
| | |
| SECTION 3.01. | Notices to Trustee | 35 |
| SECTION 3.02. | Selection of Notes to Be Redeemed | 36 |
| SECTION 3.03. | Notice of Redemption | 36 |
| SECTION 3.04. | Effect of Notice of Redemption | 37 |
| SECTION 3.05. | Deposit of Redemption or Purchase Price | 37 |
| SECTION 3.06. | Notes Redeemed or Purchased in Part | 38 |
| SECTION 3.07. | Optional Redemption | 38 |
| SECTION 3.08. | Mandatory Redemption | 39 |
| | |
| | | | | | | | |
| ARTICLE IV |
| | |
| COVENANTS |
| | |
| SECTION 4.01. | Payment of Notes | 39 |
| SECTION 4.02. | Maintenance of Office or Agency | 40 |
| SECTION 4.03. | Reports | 40 |
| SECTION 4.04. | Compliance Certificate | 42 |
| SECTION 4.05. | Stay, Extension and Usury Laws | 43 |
| SECTION 4.06. | Limitation on Sale/Lease-back Transactions | 43 |
| SECTION 4.07. | Change of Control | 44 |
| SECTION 4.08. | Limitation on Liens | 45 |
| SECTION 4.09. | Future Guarantors | 46 |
| SECTION 4.10. | Corporate Existence | 47 |
| SECTION 4.11. | Payment of Taxes and Other Claims | 47 |
| | |
| ARTICLE V |
| | |
| CONSOLIDATIONS, MERGERS AND SALES OF ASSETS |
| | |
| SECTION 5.01. | When Company or Subsidiary Guarantors May Merge or Otherwise Dispose of Assets | 47 |
| | |
| ARTICLE VI |
| | |
| DEFAULTS AND REMEDIES |
| | |
| SECTION 6.01. | Events of Default | 49 |
| SECTION 6.02. | Acceleration | 50 |
| SECTION 6.03. | Other Remedies | 51 |
| SECTION 6.04. | Waiver of Past Defaults | 51 |
| SECTION 6.05. | Limitation on Suits | 51 |
| SECTION 6.06. | Rights of Holders to Receive Payment | 52 |
| SECTION 6.07. | Collection Suit by Trustee | 52 |
| SECTION 6.08. | Restoration of Rights and Remedies | 52 |
| SECTION 6.09. | Rights and Remedies Cumulative | 52 |
| SECTION 6.10. | Delay or Omission Not Waiver | 52 |
| SECTION 6.11. | Trustee May File Proofs of Claim | 53 |
| SECTION 6.12. | Priorities | 53 |
| SECTION 6.13. | Undertaking for Costs | 53 |
| SECTION 6.14. | Control by Holders of Notes | 53 |
| SECTION 6.15. | Notices of Default; Compliance Certificate | 54 |
| | |
| | | | | | | | |
| ARTICLE VII |
| | |
| TRUSTEE |
| | |
| SECTION 7.01. | Duties of Trustee | 54 |
| SECTION 7.02. | Rights of Trustee | 55 |
| SECTION 7.03. | Individual Rights of Trustee | 57 |
| SECTION 7.04. | Trustee’s Disclaimer | 57 |
| SECTION 7.05. | Notice of Defaults | 57 |
| SECTION 7.06. | Compensation and Indemnity | 57 |
| SECTION 7.07. | Replacement of Trustee | 58 |
| SECTION 7.08. | Successor Trustee by Merger, etc. | 59 |
| SECTION 7.09. | Eligibility; Disqualification | 59 |
| | |
| ARTICLE VIII |
| | |
| DEFEASANCE AND COVENANT DEFEASANCE |
| | |
| SECTION 8.01. | Defeasance | 60 |
| SECTION 8.02. | Conditions to Defeasance | 61 |
| SECTION 8.03. | Application of Trust Money | 62 |
| SECTION 8.04. | Repayment to Company | 62 |
| SECTION 8.05. | Indemnity for U.S. Government Obligations | 62 |
| SECTION 8.06. | Deposited Money and Government Notes to be Held in Trust; Other Miscellaneous Provisions | 62 |
| SECTION 8.07. | Reinstatement | 63 |
| | |
| ARTICLE IX |
| | |
| AMENDMENT AND WAIVERS |
| | |
| SECTION 9.01. | Without Consent of Holders | 63 |
| SECTION 9.02. | With Consent of Holders | 64 |
| SECTION 9.03. | Revocation and Effects of Consents and Waivers | 65 |
| SECTION 9.04. | Notation on or Exchange of Notes | 65 |
| SECTION 9.05. | Trustee to Sign Amendments, etc. | 66 |
| | |
| ARTICLE X |
| | |
| GUARANTEES |
| | |
| SECTION 10.01. | Guarantee | 66 |
| SECTION 10.02. | Limitation on Guarantor Liability | 68 |
| SECTION 10.03. | Execution and Delivery | 68 |
| | | | | | | | |
| SECTION 10.04. | Subrogation | 69 |
| SECTION 10.05. | Benefits Acknowledged | 69 |
| SECTION 10.06. | Release of Subsidiary Guarantees | 69 |
| | |
| ARTICLE XI |
| | |
| SATISFACTION AND DISCHARGE |
| | |
| SECTION 11.01. | Satisfaction and Discharge | 70 |
| SECTION 11.02. | Application of Trust Money | 70 |
| | |
| ARTICLE XII |
| | |
| MISCELLANEOUS |
| | |
| SECTION 12.01. | Notices | 71 |
| SECTION 12.02. | Certificate and Opinion as to Conditions Precedent | 73 |
| SECTION 12.03. | Statements Required in Certificate or Opinion | 73 |
| SECTION 12.04. | Rules by Trustee and Agents | 73 |
| SECTION 12.05. | No Personal Liability of Directors, Officers, Employees and Stockholders | 73 |
| SECTION 12.06. | Governing Law | 74 |
| SECTION 12.07. | Waiver of Jury Trial | 74 |
| SECTION 12.08. | Appointment of Note Registrar and Paying Agent | 74 |
| SECTION 12.09. | No Adverse Interpretation of Other Agreements | 74 |
| SECTION 12.10. | Successors | 74 |
| SECTION 12.11. | Severability | 74 |
| SECTION 12.12. | Counterpart Originals | 74 |
| SECTION 12.13. | Table of Contents; Headings | 75 |
| SECTION 12.14. | U.S.A. Patriot Act | 75 |
EXHIBIT A-1 Form of Face of Note
EXHIBIT A-2 Form of Face of Regulation S Temporary Note
EXHIBIT B Form of Certificate of Transfer
EXHIBIT C Form of Certificate of Exchange
EXHIBIT D Form of Supplemental Indenture to be Delivered by Subsidiary Guarantors
INDENTURE (this “Indenture”), dated as of September 13, 2021, among SMITHFIELD FOODS, INC., a corporation duly organized and existing under the laws of the Commonwealth of Virginia (the “Company”), the Subsidiary Guarantors listed on the signature pages hereto and U.S. Bank National Association, a national banking association duly organized and existing under the laws of the United States of America and having a corporate trust office in Atlanta, Georgia, as trustee (the “Trustee”).
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the creation of an issue of $500,000,000 aggregate principal amount of 2.625% Senior Notes due 2031 (the “Initial Notes”). The Initial Notes and any Additional Notes, if and when issued, shall be treated as a single class for all purposes under this Indenture, including waivers, amendments, redemptions and offers to purchase (the Initial Notes and any Additional Notes, collectively referred to herein as the “Notes”); and
WHEREAS, the Company, the Subsidiary Guarantors and the Trustee have duly authorized the execution and delivery of this Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto hereby agree, for the equal and proportionate benefit of the Holders, as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. Definitions.
For all purposes of this Indenture and any Notes issued hereunder:
“144A Global Note” means a Global Note substantially in the form of Exhibit A-1 hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold or to be sold in reliance on Rule 144A.
“Additional Notes” means any additional Notes issued under this Indenture in accordance with the terms hereof, including Section 2.01(d), from time to time after the Issue Date.
“Adjusted Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage amount) equal to the Comparable Treasury Price for such redemption date.
“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. 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.
“Agent” means any Registrar, co-registrar, Paying Agent or additional paying agent.
“Applicable Procedures” means, with respect to any transfer, redemption, tender or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear or Clearstream that apply to such transfer or exchange.
“Attributable Debt” means, as to any particular lease under which any Person is at the time liable, other than a Financing Lease Obligation, and at any date as of which the amount of such lease is to be determined, the total net amount of rent required to be paid by such Person under such lease during the initial term of such lease as determined in accordance with GAAP, discounted from the last date of such initial term to the date of determination at a rate per annum equal to the discount rate which would be applicable to a financing or finance lease with like term in accordance with GAAP. The net amount of rent required to be paid under any such lease for any such period shall be the aggregate amount of rent payable by the lessee with respect to such period after excluding amounts required to be paid on account of insurance, taxes, assessments, utility, operating and labor costs and similar charges. In the case of any lease which is terminable by the lessee upon the payment of a penalty, such net amount shall also include the amount of such penalty, but no rent shall be considered as required to be paid under such lease subsequent to the first date upon which it may be so terminated. “Attributable Debt” means, as to a Financing Lease Obligation under which any Person is at the time liable and at any date as of which the amount of such lease is to be determined, the amount of such lease that would appear as a liability on the face of a balance sheet of such Person in accordance with GAAP.
“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.
“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.
“Business Day” means each day which is not a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York 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 Common Stock or 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.
“Change of Control” means the occurrence of any of the following:
(i) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company (or its successor by merger, consolidation or purchase of all or substantially all of its assets);
(ii) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any Person (including any “person” (as that term is used in Section 13(d)(3) of the Exchange Act)) other than to one or more Permitted Holders, the Company or one of the Company’s Subsidiaries;
(iii) the Company consolidates with, or merges with or into, any Person (other than the Company or one of its Subsidiaries), or any Person (other than the Company or one of its Subsidiaries) consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where the shares of the Voting Stock of the Company outstanding immediately prior to such transaction constitute, or are converted into or exchanged for, a majority of the Voting Stock of the surviving Person immediately after giving effect to such transaction; or
(iv) the adoption of a plan relating to the liquidation or dissolution of the Company.
Notwithstanding the foregoing, a transaction will not be deemed to involve a Change of Control solely as a result of the Company becoming a direct or indirect wholly-owned Subsidiary of another company (whether the Company is directly owned by such company or indirectly through other subsidiaries of such company); provided that no “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of such company.
“Change of Control Triggering Event” means the occurrence of both a Change of Control and a Rating Event with respect to the Notes. Notwithstanding the foregoing, no Change of Control Triggering Event will be deemed to have occurred in connection with any particular Change of Control unless and until such Change of Control has actually been consummated.
“Clearstream” means Clearstream Banking, Société Anonyme, and any successor thereto.
“Code” means the Internal Revenue Code of 1986, as amended.
“Common Stock” means with respect to any Person, any and all shares, interest or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock.
“Company” has the meaning set forth in the Preamble.
“Company Order” means a written request or order signed on behalf of the Company by an Officer, and delivered to the Trustee.
“Comparable Treasury Issue” means the United States Treasury security selected by the Quotation Agent as having an actual or interpolated maturity comparable to the remaining term of the Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Notes.
“Comparable Treasury Price” means, with respect to any redemption date, (i) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (ii) if the Company obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.
“Consolidated Net Tangible Assets” means, as of the date of determination, an amount equal to the excess over the current liabilities of the Company of all of its assets appearing on the most recent quarterly or annual consolidated balance sheet of the Company and its Subsidiaries on a consolidated basis, after deducting goodwill, trademarks, patents, other like intangibles and minority interests of others.
“Corporate Trust Office” means the designated office of the Trustee at which, at any particular time, its corporate trust business shall be administered (which office at the Issue Date is located at Two Midtown Plaza, 1349 W. Peachtree Street, NW, Suite 1050, Atlanta, Georgia 30309, Attention: Global Corporate Trust; provided, however, that presentation of notes for payment and exchange shall be at the Trustee’s principal corporate trust office at 60 Livingston Avenue, St. Paul, Minnesota 55107, Attn: Global Corporate Trust), or such other address as the Trustee may designate from time to time by notice to the Company or the principal corporate office of any successor trustee (or such other address as a successor trustee may designate from time to time by notice to the Company).
“Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.
“Debt Facilities” means one or more debt facilities (including, without limitation, the Senior Credit Facility) or commercial paper facilities, securities purchase agreements, indentures or similar agreements, in each case, with banks or other institutional lenders or investors providing for revolving loans, term loans, receivables financing (including through the sale of receivables to lenders or to special purpose entities formed to borrow from lenders against such receivables), letters of credit or the issuance of debt securities, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, replaced (whether upon or after termination or otherwise), refinanced, supplemented, modified or otherwise changed (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time.
“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.
“Definitive Notes” means certificated securities substantially in the form of Exhibit A-1 hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto).
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States, any State thereof or the District of Columbia.
“Euroclear” means Euroclear S.A./N.V., as operator of the Euroclear system, and any successor thereto.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Exempted Debt” means the sum, without duplication, of the following items outstanding of the date Exempted Debt is being determined:
(1) Indebtedness of the Company and its Restricted Subsidiaries incurred after the date of this Indenture and secured by Liens created, assumed or otherwise incurred or permitted to exist pursuant to the provision described in the last paragraph under Section 4.08; and
(2) Attributable Debt of the Company and its Restricted Subsidiaries in respect of all sale and lease-back transactions with regard to any Principal Property entered into pursuant to the provision described in the last paragraph under Section 4.06.
“Financing Lease Obligation” means an obligation that would be required to be classified and accounted for as a financing or finance lease (and, for the avoidance of doubt, not a straight-line or operating lease) on both the balance sheet and income statement for financial reporting purposes in accordance with GAAP in existence on the Issue Date. At any time any determination thereof is to be made, the amount of the liability in respect of a financing or finance lease would be the amount required to be reflected as a liability on such balance sheet (excluding the footnotes thereto) in accordance with GAAP in existence on the Issue Date.
“Fitch” means Fitch Ratings and its successors.
“GAAP” means generally accepted accounting principles in the United States of America as in effect as of 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. At any time after adoption of International Financial Reporting Standards (“IFRS”) by the Company for its financial statements and reports for all financial reporting purposes the Company may elect to apply IFRS for all purposes of this Indenture, and, upon any such election, references in this Indenture to GAAP shall be construed to mean IFRS as in effect on the date of such election; provided that
(1) any such election once made shall be irrevocable (and shall only be made only once);
(2) all financial statements and reports required to be provided after such election pursuant to this Indenture shall be prepared on the basis of IFRS;
(3) from and after such election, all computations, calculations and other determinations based on GAAP contained in this Indenture shall be computed in conformity with IFRS with retroactive effect being given thereto assuming that such election had been made on the Issue Date;
(4) such election shall not have the effect of rendering invalid any Lien created, incurred or suffered to exist made prior to the date of such election pursuant to Section 4.08 or any sale or transfer of Principal Property made prior to the date of such election pursuant to Section 4.06 if creation, incurrence, sale or transfer or other action was valid under this Indenture on the date made; and
(5) all accounting terms and references in this Indenture to accounting standards shall be deemed to be references to the most comparable terms or standards under IFRS. The Company shall give written notice of any election to the Trustee and the Holders within 15 days of such election.
“Global Note Legend” means the legend set forth in Section 2.06(f)(ii), which is required to be placed on all Global Notes issued under this Indenture.
“Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibit A-1 hereto, issued in accordance with Section 2.01, 2.06(b) or 2.06(d).
“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such other Person:
(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or
(2) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness 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.
“Holder” means with respect to the Notes, the Person in whose name a Note is registered in the Note Register.
“Indebtedness” means, with respect to any Person, without duplication (a) any notes, debentures, bonds, loans or other similar evidences of indebtedness for money borrowed and (b) any Guarantees thereof.
“Indenture” has the meaning set forth in the Preamble.
“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.
“Initial Notes” has the meaning set forth in the Recitals.
“Initial Purchasers” means Barclays Capital Inc., BofA Securities, Inc., Goldman Sachs & Co. LLC, Credit Agricole Securities (USA) Inc., ICBC Standard Bank Plc, Loop Capital Markets LLC, Rabo Securities USA, Inc. and U.S. Bancorp Investments, Inc.
“interest” means, with respect to the Notes, interest on the Notes (regardless of whether so stated).
“Interest Payment Date” means March 13 and September 13 of each year to Stated Maturity.
“Intralinks” means the digital internet workspace located at http://www.intralinks.com.
“Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s), a rating of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P) and a rating of BBB- or better by
Fitch (or its equivalent under any successor rating categories of Fitch) and the equivalent investment grade credit rating from any replacement rating agency or rating agencies selected by the Company under the circumstances permitting it to select a replacement rating agency and in the manner for selecting a replacement rating agency, in each case as set forth in the definition of “Rating Agency.”
“Issue Date” means September 13, 2021.
“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind.
“Moody’s” means Moody’s Investors Service, Inc., a subsidiary of Moody’s Corporation, and its successors.
“Non-U.S. Person” means a Person who is not a U.S. Person.
“Notes” has the meaning set forth in the Recitals.
“Offering Memorandum” means the offering memorandum, dated September 8, 2021, related to the offer and sale of the Notes.
“Officer” means any one of the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief Operating Officer, any Vice President, the Treasurer, the Secretary or the Controller of the Company or any other person of the Company having substantially the same responsibilities as the aforementioned officers.
“Officer’s Certificate” means a certificate signed by one Officer or that otherwise meets the requirements set forth in this Indenture.
“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.
“Par Call Date” means June 13, 2031.
“Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to the Depositary, shall include Euroclear and Clearstream).
“Permitted Holders” means WH Group Limited or any of its Affiliates and any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members; provided that, in the case of such group and without giving effect to the existence of such group or any other group, such Persons, collectively, have direct or indirect beneficial ownership of more than 50% of the Voting Stock of the Company. Any Person or group whose acquisition of beneficial ownership constitutes a Change of Control in respect of which a Change of Control Offer is made in
accordance with the requirements of this Indenture will thereafter, together with its Affiliates, constitute an additional Permitted Holder.
“Person” means any individual, corporation, partnership, limited liability company, 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 Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.
“principal” of a Note means the principal of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time.
“Principal Property” means any plant, facility, warehouse or building owned or leased and used by the Company or a Restricted Subsidiary primarily for processing, producing, packaging or storing its products, raw materials, inventories or other materials and supplies and located within the United States of America and having an acquisition cost plus capitalized improvements (including related land and improvements thereon and all associated factory equipment therein without deduction of any depreciation reserves) in excess of 2.0% of Consolidated Net Tangible Assets as of the date of such determination, but shall not include any such property or assets that are financed through the issuance of tax exempt governmental obligations, or any such property or assets that have been determined by a resolution of the Board of Directors not to be of material importance to the respective businesses conducted by the Company or such Restricted Subsidiary, effective as of the date such resolution is adopted.
“Private Placement Legend” means the legend set forth in Section 2.06(f)(i) to be placed on all Notes issued under this Indenture, except where otherwise permitted by the provisions of this Indenture.
“QIB” means a “qualified institutional buyer” as defined in Rule 144A.
“Quotation Agent” means the Reference Treasury Dealer appointed by the Company.
“Rabobank” means Coöperatieve Rabobank U.A. (formerly known as Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.), New York Branch.
“Rating Agencies” means (i) each of Moody’s, S&P and Fitch; and (ii) if any of Moody’s, S&P or Fitch ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the Company’s control, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act that is selected by the Company (as certified by a resolution of the Board of Directors) as a replacement agency for Moody’s, S&P or Fitch, or each of them, as the case may be.
“Rating Event” means, with respect to the Notes, (i) the rating of the Notes is lowered by two of the three Rating Agencies on any day during the period (the “Trigger Period”) commencing on the earlier of (a) the occurrence of a Change of Control and (b) the first public notice of the Company’s intention to effect a Change of Control, and ending 60 days following consummation of such Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any of the Rating Agencies), and (ii) the Notes are rated below Investment Grade by two of the three Rating Agencies on any day during the Trigger Period; provided that a Rating Event will not be deemed to have occurred in respect of a particular Change of Control (and thus will not be deemed a Rating Event for purposes of the definition of Change of Control Triggering Event) if each Rating Agency making the reduction in rating does not publicly announce, or confirm or inform the Trustee in writing at the Company’s request, that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the Change of Control (whether or not the applicable Change of Control has occurred at the time of the Rating Event). If a Rating Agency is not providing a rating for the Notes at the commencement of such period, the Notes will be deemed to have ceased to be rated as Investment Grade by such Rating Agency during such period.
“Record Date” means, with respect to an applicable Interest Payment Date, February 27 or August 30 (whether or not a Business Day) next preceding such Interest Payment Date.
“Reference Treasury Dealer” means any of Barclays Capital Inc., BofA Securities, Inc. and Goldman Sachs & Co. LLC and their respective successors. However, if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer.
“Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by us, of the bid and asked prices for the applicable Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Company by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third Business Day preceding such redemption date.
“Regulation S” means Regulation S promulgated under the Securities Act.
“Regulation S Global Note” means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as applicable.
“Regulation S Permanent Global Note” means a permanent Global Note in the form of Exhibit A-1 hereto, bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the applicable Restricted Period.
“Regulation S Temporary Global Note” means a temporary Global Note in the form of Exhibit A-2 hereto, bearing the Global Note Legend, the Private Placement Legend and the Regulation S Temporary Global Note Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903.
“Regulation S Temporary Global Note Legend” means the legend set forth in Section 2.06(f)(iii).
“Remaining Scheduled Payments” means, with respect to each Note to be redeemed, the remaining scheduled payments of principal and interest on the Note that would be due after the Redemption Date therefor if such Note matured on the Par Call Date. If the redemption date is not an interest payment date with respect to a Note, the amount of the next succeeding scheduled interest payment date on the Note will be reduced by the amount of interest accrued on the Note to the redemption date.
“Responsible Officer” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, trust officer, assistant trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by any of the aforementioned officers and also means, with respect to a particular corporate trust matter, any other officer to whom any such matter is referred because of such Person’s knowledge of and familiarity with the particular subject; and provided such Persons shall have direct responsibility for the administration of this Indenture.
“Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.
“Restricted Global Note” means a Global Note bearing the Private Placement Legend.
“Restricted Period” means the 40-day distribution compliance period as defined in Regulation S.
“Restricted Subsidiary” means (i) any Subsidiary organized and existing under the laws of the United States of America and the principal business of which is carried on within the United States of America which owns or is a lessee pursuant to a financing or finance lease of any Principal Property or owns shares of Capital Stock or Indebtedness of another Restricted Subsidiary other than each Subsidiary the major part of whose business consists of finance, banking, credit, leasing, insurance, financial services or other similar operations, or any combination of such operations and (ii) any Subsidiary that is a Subsidiary Guarantor.
“Rule 144” means Rule 144 promulgated under the Securities Act.
“Rule 144A” means Rule 144A promulgated under the Securities Act.
“Rule 903” means Rule 903 promulgated under the Securities Act.
“Rule 904” means Rule 904 promulgated under the Securities Act.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the U.S. Securities Act of 1933, as amended.
“Securitization Facility” means the Fourth Amended and Restated Credit and Security Agreement, dated as of November 21, 2018, among Smithfield Receivables Funding LLC, as borrower, the Company, as servicer, the lenders and co-agents party thereto and Rabobank, as administrative agent and letter of credit issuer (or its successor in such capacity), as it has been and may be further amended, supplemented or modified from time to time and any renewal, increase, 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 Securitization Facility or one or more other securitization or other structured facilities).
“Senior Credit Facility” means the Second Amended and Restated Credit Agreement, dated as of May 21, 2021, among the Company, as borrower, certain subsidiaries of the Company, as borrowers or guarantors, the lenders parties thereto and Bank of America, N.A., as administrative agent (or its successor in such capacity), as it may be amended, supplemented or modified from time to time and any renewal, increase, 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 Senior Credit Facility or one or more other credit or other agreements or indentures).
“Significant Subsidiary” means any Subsidiary that would be 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 Services, a division of The McGraw- Hill Companies, Inc., and its successors.
“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the final 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 unless such contingency has occurred).
“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by:
(1) such Person;
(2) such Person and one or more Subsidiaries of such Person; or
(3) one or more Subsidiaries of such Person.
“Subsidiary Guarantee” means any Guarantee of payment of the Notes by a Subsidiary Guarantor pursuant to the terms of this Indenture and any supplemental indenture hereto.
“Subsidiary Guarantor” means (i) each Domestic Subsidiary in existence on the Issue Date that provides a Subsidiary Guarantee on the Issue Date and (ii) any Domestic Subsidiary that provides a Subsidiary Guarantee after the Issue Date; provided that upon release or discharge of such Subsidiary from its Subsidiary Guarantee in accordance with this Indenture, such Subsidiary ceases to be a Subsidiary Guarantor.
“Trustee” means the party named as such in this Indenture until a successor replaces it and, thereafter, means such successor.
“Unrestricted Definitive Note” means one or more Definitive Notes that do not bear and are not required to bear the Private Placement Legend.
“Unrestricted Global Note” means a permanent Global Note, substantially in the form of Exhibit A-1 hereto, that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depositary, representing Notes that does not bear the Private Placement Legend.
“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 at the issuer’s option.
“U.S. Person” has the meaning ascribed thereto in Rule 902 under the Securities Act.
“Voting Stock” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.
SECTION 1.02. Other Definitions.
| | | | | |
| Term | Defined in Section |
| “Authentication Order” | 2.02 |
| “Change of Control Offer” | 4.07 |
| “covenant defeasance option” | 8.01 |
| “Event of Default” | 6.01 |
| “legal defeasance option” | 8.01 |
| “Note Register” | 2.03 |
| “Paying Agent” | 2.03 |
| “Redemption Date” | 3.07 |
| “Registrar” | 2.03 |
| “Successor Company” | 5.01 |
| “Successor Guarantor” | 5.01 |
SECTION 1.03. Rules of Construction. Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
(c) “or” is not exclusive;
(d) “including” means “including without limitation”;
(e) “will” shall be interpreted to express a command;
(f) words in the singular include the plural and words in the plural include the singular;
(g) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured Indebtedness;
(h) 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;
(i) 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;
(j) each reference to “Indenture” in this Indenture shall mean the provisions of this Indenture and future amendments and supplements hereto, applicable to the Notes and exclusive of amendments and supplements that relate to future issuances of other series of securities issued at a later date under this Indenture; and
(k) the terms “above”, “below”, “hereof”, “herein”, “hereby”, “hereto”, “hereunder” and “herewith” refer to this Indenture.
SECTION 1.04. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Proof of execution of any such instrument or of a writing appointing any such agent, or the holding by any Person of a Note, shall be sufficient for any purpose of this Indenture and (subject to Section 7.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.04.
(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of any action taken, suffered or omitted by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Note.
(e) The Company may set a record date for purposes of determining the identity of Holders entitled to give any request, demand, authorization, direction, notice, consent, waiver or take any other act, or to vote or consent to any action by vote or consent authorized or permitted to be given or taken by Holders. Unless otherwise specified, if not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such action, or in the case of any such vote, prior to such vote, any such record date, if there is to be a record date,
shall be the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation.
(f) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount pursuant to this paragraph shall have the same effect as if given or taken by separate Holders of each such different part.
(g) Without limiting the generality of the foregoing, a Holder, including the Depositary, that is the Holder of a Global Note, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and any Person that is the Holder of a Global Note, including the Depositary, may provide its proxy or proxies to the beneficial owners of interests in any such Global Note through such depositary’s standing instructions and customary practices.
(h) The Company may, at its option, fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Note held by the Depositary entitled under the procedures of such depositary to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders. If such a record date is fixed, the Holders on such record date or their duly appointed proxy or proxies, and only such Persons, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other action shall be valid or effective if made, given or taken more than 90 days after such record date.
ARTICLE II
THE NOTES
SECTION 2.01. Form and Dating; Terms.
(a) General. The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rules or usage in addition to those provided for in Exhibit A hereto. Each Note shall be dated the date of its authentication. The Notes shall be in minimum amounts of $2,000 and integral multiples of $1,000 in excess of $2,000.
(b) Global Notes.
(i) Notes issued in global form shall be substantially in the form of Exhibit A hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note shall represent such aggregate principal amount of the outstanding Notes as shall be specified in the “Schedule of Exchanges of Interests in the Global Note” attached thereto and each shall provide that it shall represent up to the aggregate principal amount of Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as applicable, to reflect exchanges and redemptions and transfers of interests therein. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06.
(ii) Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and authenticated by the Trustee as provided in this Indenture. Following the termination of the Restricted Period, beneficial interests in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in the Regulation S Permanent Global Note pursuant to Section 2.06 and the Applicable Procedures. Simultaneously with the authentication of the Regulation S Permanent Global Note, the Trustee shall cancel such Regulation S Temporary Global Note. The aggregate principal amount of a Regulation S Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as provided in this Indenture.
(c) Participants shall have no rights under this Indenture or any Global Note with respect to any Global Note held on their behalf by the Depositary or by the Trustee as custodian for the Depositary, and the Depositary shall be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note 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 Participants, the Applicable Procedures or the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note.
(d) Terms. The aggregate principal amount of Initial Notes that may be authenticated and delivered under this Indenture on the Issue Date is $500,000,000, and the
aggregate amount of Additional Notes that may be authenticated and delivered under this Indenture is unlimited (so long as not otherwise prohibited by the terms of this Indenture). With respect to any Additional Notes, the Company shall set forth in (1) a resolution of the Board of Directors and (2) (i) an Officer’s Certificate or (ii) one or more indentures supplemental hereto, the following information:
(A) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;
(B) the issue price and the issue date of such Additional Notes, including the date from which interest shall accrue; and
(C) whether such Additional Notes shall be either Restricted Definitive Notes or Restricted Global Notes.
In authenticating and delivering Additional Notes, the Trustee shall be entitled to receive and shall be fully protected in relying upon, in addition to the Opinion of Counsel and Officer’s Certificate required by Section 12.02, an Opinion of Counsel as to the due authorization, execution, delivery, validity and enforceability of such Additional Notes. The Initial Notes and any Additional Notes shall be treated as a single class for all purposes under this Indenture, including, without limitation, voting, waivers, amendments, redemptions and offers to purchase; provided that any Additional Notes that are not fungible with the Initial Notes for U.S. federal income tax purposes shall have separate CUSIP and ISIN numbers.
The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.
The Notes shall be subject to repurchase by the Company pursuant to a Change of Control Offer as provided in Section 4.07. The Notes shall not be redeemable, other than as provided in Article III hereof.
(e) Euroclear and Clearstream Procedures Applicable. The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream shall be applicable to transfers of beneficial interests in a Regulation S Global Note that are held by Participants through Euroclear or Clearstream.
SECTION 2.02. Execution and Authentication.
One Officer shall execute the Notes on behalf of the Company by manual or facsimile signature.
If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be entitled to any benefit under this Indenture or be valid or obligatory for any purpose until authenticated substantially in the form of Exhibit A hereto, as the case may be, by the manual signature of the Trustee. The signature shall be conclusive evidence that the Note has been duly authenticated and delivered under this Indenture.
On the Issue Date, the Trustee shall, upon receipt of a Company Order directing authentication (an “Authentication Order”), authenticate and deliver the Initial Notes specified in such Authentication Order. In addition, at any time, from time to time, the Trustee shall upon receipt of an Authentication Order authenticate and deliver any Additional Notes for an aggregate principal amount specified in such Authentication Order for such Additional Notes issued hereunder.
The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. Unless otherwise provided in such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent shall have the same rights as the Trustee to deal with Holders, the Company or an Affiliate of the Company.
SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the “Registrar”) and an office or agency where Notes may be presented for payment (the “Paying Agent”). The Registrar shall keep a register of the Notes (the “Note Register”) and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder but upon written notice to such Registrar or Paying Agent and to the Trustee; provided, however, that no such removal shall become effective until (i) acceptance of any appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee and the passage of any waiting or notice periods required by the procedures of the Depositary or (ii) written notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (i) of this Section 2.03. The Registrar or Paying Agent may resign at any time upon written notice to the Company and the Trustee. The Company shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Paying Agent and Registrar for the Notes. The Trustee shall also act as Custodian for the Depositary with respect to the Global Notes.
SECTION 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal, premium, if any, or interest on the Notes, and shall notify the Trustee in writing of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it relating to the Notes to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or one of its Subsidiaries) shall have no further liability for the money. If the Company or one of its Subsidiaries acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any Event of Default under Section 6.01(6) or (7), the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. Holder 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 all Holders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least two 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 the Holders.
SECTION 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. Except as otherwise set forth in this Section 2.06, a Global Note may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor Depositary or a nominee of such successor Depositary. A beneficial interest in a Global Note may not be exchanged for a Definitive Note unless (i) the Depositary (x) notifies the Company that it is unwilling or unable to continue as Depositary for such Global Note or (y) has ceased to be a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 90 days; (ii) there shall have occurred and be continuing an Event of Default with respect to the Notes and the Depositary shall have requested the issuance of Definitive Notes; or (iii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of Definitive Notes; provided, however, that the Regulation S Temporary Global Note may not be exchanged for Definitive Notes prior to (1) the expiration of the Restricted Period and (2) the receipt by the Registrar of any certificates required by Rule 903(b)(3)(ii)(B) of the Securities Act. Upon the occurrence of any of the preceding events in subclauses (i), (ii) or (iii) of this Section 2.06(a), Definitive Notes delivered in exchange for any Global Note or beneficial interests therein will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the Depositary (in accordance with its customary procedures). Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Sections 2.07 or 2.10, shall be authenticated and delivered in the form of, and shall be, a Global Note, except for Definitive Notes issued subsequent to any of the preceding events in subclauses (i), (ii) or (iii) of this Section 2.06(a) and pursuant to Section 2.06(c). A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); provided, however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c).
(b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with either subparagraph (i) or (ii) of this Section 2.06(b) below, as applicable, as well as one or more of the other following subparagraphs of this Section 2.06(b), as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend and any Applicable Procedures; provided, however, that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. Except as may be required by any Applicable Procedures, no written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests in a Global Note that are not subject to Section 2.06(b)(i), the transferor of such beneficial interest must deliver to the Registrar either (A) (1) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B) (1) if permitted under Section 2.06(a), a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above; provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g).
(iii) Transfer of Beneficial Interests in any Restricted Global Note to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof; or
(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) and the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in subparagraphs (1) and (2) above, if the Registrar or the Company so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(b)(iv), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.
If any such transfer is effected pursuant to this Section 2.06(b)(iv) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to this Section 2.06(b)(iv).
Beneficial interests in an Unrestricted Global Note may not be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon the occurrence of any of the events in paragraph (i), (ii) or (iii) of Section 2.06(a) and receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(F) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g), and the Company shall execute and the Trustee shall authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.
(ii) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes. Notwithstanding Sections 2.06 (c)(i)(A) and (C), a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) of the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only upon the occurrence of any of the events in subclause (i), (ii) or (iii) of Section 2.06(a) and if the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (iii), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon the occurrence of any of the events in subclause (i), (ii) or (iii) of Section 2.06(a) and satisfaction of the conditions set forth in Section 2.06(b)(ii), the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g), and the Company shall execute and the Trustee shall authenticate and mail to the Person designated in the instructions a Definitive Note in the applicable principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from or through the Depositary and the Participant or Indirect Participant. The Trustee shall mail such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iv) shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(b) thereof; or
(F) if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate substantially in the form of Exhibit B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of, in the case of clause (A) of this Section 2.06(d)(i), the applicable Restricted Global Note, in the case of clause (B) of this Section 2.06(d)(i), the applicable 144A Global Note, and in the case of clause (C) of this Section 2.06(d)(i), the applicable Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (ii), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a written request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased in a corresponding amount pursuant to Section 2.06(g) the aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraph (ii) or (iii) of this Section 2.06(d) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon written request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e):
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:
(A) if the transfer will be made to a QIB in accordance with Rule 144A, then the transferor must deliver a certificate substantially in the form of Exhibit B hereto, including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; or
(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder substantially in the form of Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (ii), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a written request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.
(f) Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture:
(i) Private Placement Legend.
(A) Except as permitted by subparagraphs (B) and (C) of this Section 2.06(f)(i), each Global Note and each Definitive Note (and all Notes
issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:
“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 OR 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”) THAT IS [IN THE CASE OF RULE 144A NOTES: ONE YEAR AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF, THE ORIGINAL ISSUE DATE OF THE ISSUANCE OF ANY ADDITIONAL NOTES 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),] [IN THE CASE OF REGULATION S NOTES: 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE DATE ON WHICH THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) WAS FIRST OFFERED TO PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN RULE 902 OF REGULATION S) IN RELIANCE ON REGULATION S], ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (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 (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A 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 TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, OR (E) 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 PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. [IN THE CASE OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF 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.]”
Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(iv), (c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in substantially the following form:
“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06(g) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”) 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 SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE 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.”
(iii) Regulation S Temporary Global Note Legend. The Regulation S Temporary Global Note shall bear a legend in substantially the following form:
“THIS GLOBAL NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION ORIGINALLY EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE TRANSFERRED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S. PERSON EXCEPT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS. TERMS USED ABOVE HAVE THE MEANINGS GIVEN TO THEM IN REGULATION S UNDER THE SECURITIES ACT. BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF 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.”
(g) Cancellation or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and, if the Registrar and the Trustee are not the same entity, notice to the Trustee of such exchange or transfer of an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, the aggregate principal amount of such other Global Note shall be increased in a corresponding amount pursuant to this Section 2.06(g) and if the Registrar and the Trustee are not the same entity, notice to the Trustee of such exchange or transfer of an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 or at the Registrar’s written request.
(ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company or the Trustee may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.07, 2.10, 3.06, 3.08, 4.07 and 9.04).
(iii) Neither the Registrar nor the Company shall be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of the sending of a notice of redemption of Notes for redemption under Section 3.03 and ending at the close of business on the day such notice was sent, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part or tendered (and not withdrawn) for repurchase in connection with a Change of Control Offer, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.
(vii) Upon surrender for registration of transfer of any Note at the office or agency of the Company designated pursuant to Section 4.02, the Company shall execute, and the Trustee shall authenticate and mail, in the name of the designated transferee or transferees, one or more replacement Notes of any authorized denomination or denominations of a like aggregate principal amount.
(viii) At the option of the Holder, subject to Section 2.06(a), Notes may be exchanged for other Notes of any authorized denomination or denominations of a like aggregate principal amount upon surrender of the Notes to be exchanged at such office or agency. Whenever any Global Notes or Definitive Notes are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and mail, the
replacement Global Notes and Definitive Notes to which the Holder making the exchange is entitled in accordance with the provisions of Section 2.02.
(ix) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile or electronically (in PDF format).
(x) 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 Note (including any transfers between or among Participants or beneficial owners of interests in any Global Note) 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.
Neither the Trustee nor any Trustee agent shall have any responsibility or liability for any actions taken or not taken by the Depositary.
SECTION 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, the Registrar or the Company and the Trustee receives evidence to their satisfaction of the ownership and destruction, loss or theft of any Note, the Company shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee’s requirements are met. An indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, the Registrar and the Paying Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. At the Company’s request, such Holder shall reimburse the Company for its expenses in replacing a Note.
Every replacement Note issued in accordance with this Section 2.07 is a contractual obligation of the Company and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company or an Affiliate thereof) holds, on a Redemption Date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company, or by any Affiliate of the Company, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Notes so owned that have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to deliver any such direction, waiver or consent with respect to the pledged Notes and that the pledgee is not the Company or any obligor upon the Notes or any Affiliate of the Company or of such other obligor.
SECTION 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders and beneficial holders, as the case may be, of temporary Notes shall be entitled to all of the benefits accorded to Holders, or beneficial holders, respectively, of Notes under this Indenture.
SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall dispose of cancelled Notes in accordance with its customary procedures (subject to the record retention requirement of the
Exchange Act). The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, the Company shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest to the Persons who are Holders on a special record date, which may be after the existing Record Date, in each case at the rate provided in the Notes and in Section 4.01. The Company shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Trustee shall fix or cause to be fixed each such special record date and payment date; provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. The Trustee shall promptly notify the Company of such special record date and in any event at least 20 days before such special record date. At least 10 days before the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) shall send or cause to be sent, via electronic transmission or by first class postage prepaid, to each Holder a notice at his or her address as it appears in the Note Register that states the special record date, the related payment date and the amount of such interest to be paid.
Subject to the foregoing provisions of this Section 2.12 and for greater certainty, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note.
SECTION 2.13. CUSIP or ISIN Numbers.
The Company in issuing the Notes may use CUSIP or ISIN numbers (if then generally in use) and, if so, the Trustee shall use CUSIP or ISIN numbers in notices, including notices of redemption, exchange or offers to purchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice and that reliance may be placed only on the other identification numbers printed on the Notes, and any related redemption, exchange or offers to purchase shall not be affected by any defect in or omission of such numbers. The Company will as promptly as practicable notify the Trustee in writing of any change in the CUSIP or ISIN numbers. Additional Notes issued under this Indenture may have the same or differing CUSIP or ISIN numbers as those given to the Initial Notes.
ARTICLE III
REDEMPTION
SECTION 3.01. Notices to Trustee. If the Company elects to redeem Notes pursuant to Section 3.07, it shall furnish to the Trustee, at least 10 days before notice of redemption is required to be sent or caused to be sent to Holders pursuant to Section 3.03 hereof
(unless a shorter notice shall be agreed to by the Trustee) but not more than 60 days before a Redemption Date, an Officer’s Certificate setting forth (i) the paragraph or subparagraph of such Note or Section of this Indenture pursuant to which the redemption shall occur, (ii) the Redemption Date, (iii) the principal amount of the Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. Selection of Notes to Be Redeemed. In the case of any partial redemption, the Trustee shall select the Notes for redemption (i) in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are issued, or, (ii) if the Notes are not listed, then on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate, in each case for the avoidance of doubt, in accordance with Applicable Procedures of the Depositary. No Note of $2,000 in original principal amount or less will be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof shall be issued in the name of the Holder thereof upon cancellation of the original Note.
The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed.
SECTION 3.03. Notice of Redemption.
The Company shall cause notices of redemption to be sent by electronic delivery or mailed by first-class mail at least 10 days but not more than 60 days before the Redemption Date to each Holder to be redeemed at such Holder’s registered address, except that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Article VIII or Article XI hereof.
The notice shall identify the Notes (including the CUSIP and ISIN numbers) to be redeemed and shall state:
(a) the Redemption Date;
(b) the redemption price;
(c) if any Note is to be redeemed in part only, the portion of the principal amount of that Note that is to be redeemed and that, after the Redemption Date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed
portion of the original Note representing the same indebtedness to the extent not redeemed will be issued in the name of the Holder upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;
(g) the paragraph or subparagraph of the Notes or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of the CUSIP or ISIN number, if any, listed in such notice or printed on the Notes.
At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at its expense; provided that the Company shall have delivered to the Trustee, at least 10 days before notice of redemption is required to be sent or caused to be sent to Holders pursuant to this Section 3.03 (unless a shorter notice shall be agreed to by the Trustee), an Officer’s Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is sent in accordance with Section 3.03, Notes called for redemption become irrevocably due and payable on the Redemption Date at the redemption price. The notice, if sent in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice or any defect in the notice to the Holder of any Note designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Subject to Section 3.05, on and after the Redemption Date, interest ceases to accrue on Notes or portions of Notes called for redemption.
SECTION 3.05. Deposit of Redemption or Purchase Price.
Prior to 11:00 a.m. (New York City time) on the redemption or purchase date, the Company shall deposit or cause to be deposited with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued and unpaid interest on all Notes to be redeemed or purchased on that date. The Trustee or the Paying Agent shall promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption price of, and accrued and unpaid interest on, all Notes to be redeemed or purchased.
If the Company complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption or purchase. Redemption amounts shall only be paid upon presentation and surrender of any such Notes to be redeemed. If a Note is redeemed or purchased on or after a Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest to the redemption or purchase date shall be paid to the Person in whose name such Note was registered at the close of business on such Record Date. If any Note called for redemption or purchase shall not be so paid upon surrender for redemption or purchase because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest accrued to the redemption or purchase date not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01.
Payment of the redemption price and performance of the Company’s obligations in connection with any redemption may be performed by another Person.
SECTION 3.06. Notes Redeemed or Purchased in Part.
Upon surrender of a Definitive Note that is redeemed or purchased in part, the Company shall issue and the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Definitive Note surrendered representing the same indebtedness to the extent not redeemed or purchased; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000. It is understood that, notwithstanding anything in this Indenture to the contrary, only an Authentication Order and not an Opinion of Counsel or Officer’s Certificate is required for the Trustee to authenticate such new Note.
SECTION 3.07. Optional Redemption.
(a) At any time prior to the Par Call Date, the Notes may be redeemed by the Company, in whole or in part, at the Company’s option, at a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest thereon to, but excluding, the Redemption Date; or
(ii) the sum of the Remaining Scheduled Payments on such Notes being redeemed (not including any portion of the payments of interest accrued as of the redemption date (the “Redemption Date”)), discounted to its present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, as determined by the Quotation Agent, plus 25 basis points, plus accrued and unpaid interest on the principal amount of such Notes being redeemed to, but excluding, the Redemption Date.
(b) At any time on or after the Par Call Date, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Notes
to be redeemed, plus accrued and unpaid interest, if any, on the Notes to, but excluding, the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(c) If the optional Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Company. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption.
SECTION 3.08. Mandatory Redemption. The Company is not required to make any mandatory redemption payments or sinking fund payments with respect to the Notes; provided, however, under certain circumstances, the Company may be required to offer to purchase the Notes in accordance with Section 4.07. Except as provided under Sections 3.07 and 4.07(d), the Notes shall not be redeemable at the option of the Company. The Company may at any time and from time to time purchase the Notes in the open market or otherwise.
ARTICLE IV
COVENANTS
SECTION 4.01. Payment of Notes. The Company shall pay principal of, premium, if any, and interest on the Notes, and the Notes may be exchanged or transferred, at the office or agency designated by the Company in Atlanta, Georgia (which initially will be the Corporate Trust Office of the Trustee in Atlanta, Georgia), except that the Company may, at its option, pay interest on the Notes by check to Holders at their registered address as it appears in the Note Register; provided that the Company shall pay principal of, premium, if any, and interest on, the Note in global form registered in the name of or held by the Depository or its nominee by wire in immediately available funds to the Depository or its nominee, as the case may be, as the registered Holder of such Notes in global form. No service charge will be imposed by the Company, the Trustee or the Registrar for any registration of Notes, but the Company may require a Holder to pay a sum sufficient to cover any transfer tax or other governmental taxes and fees required by law or permitted by this Indenture.
Notwithstanding the foregoing, in any case where any Interest Payment Date, Redemption Date, Stated Maturity or other date of repurchase, redemption or payment of principal in respect of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or any Note or coupon other than a provision in the Notes which specifically states that such provision shall apply in lieu of this Section 4.01), payment of principal (or premium, if any) or interest, if any, need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date, or at the Stated Maturity or other date or repurchase, redemption or payment of principal in respect of the Notes; provided that (x) for scheduled payments of interest on March 13 and September 13, the amount of interest payable shall be equal to the amount payable on the scheduled Interest Payment Date and (y) with respect to the
payment of interest in connection with Redemption Dates, and upon Stated Maturity or redemptions, repayments or other payments of principal, the amount of interest shall include interest up to such Redemption Date or Stated Maturity or to the date of such redemption, repurchase or other payment of principal in respect of the Notes, as the case may be.
The Company shall pay interest on overdue principal at the rate specified therefor in the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.
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 4.02. Maintenance of Office or Agency. The Company shall maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of 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.
The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office as one such office or agency of the Company in accordance with Section 2.03.
SECTION 4.03. Reports.
(a) So long as any Notes are outstanding, the Company shall furnish to the Trustee and the Holders:
(i) on or prior to the 90th day after the end of each fiscal year of the Company, (A) a consolidated balance sheet and statement of shareholders’ equity of the Company, as of the end of such fiscal year and the immediately preceding fiscal year, and the related consolidated statements of income, comprehensive income and of cash flows for such fiscal year, setting forth in comparative form consolidated figures for the immediately preceding two fiscal years, all such financial statements to be prepared in accordance with GAAP and audited by an independent audit firm of recognized national
standing and accompanied by an opinion of such accountants; and (B) a summary of the Company’s business and operations;
(ii) on or prior to the 45th day after the end of each of the first three fiscal quarters in each fiscal year of the Company, (A) a consolidated balance sheet of the Company, as of the end of such fiscal quarter and the corresponding period of the preceding fiscal year, and the related consolidated statements of income, comprehensive income and of cash flows for such fiscal quarter and the then elapsed portion of such fiscal year, setting forth in comparative form consolidated figures for the corresponding periods of the preceding fiscal year, all such financial statements to be prepared in accordance with GAAP and accompanied by an Officer’s Certificate to the effect that such quarterly financial statements have been prepared in accordance with GAAP for interim financial reporting and present fairly in all material respects the consolidated financial position and consolidated results of operations and cash flows of the Company in accordance with GAAP subject to changes resulting from normal year-end audit adjustments; and (B) a summary of the Company’s business and operations; and
(iii) information substantially similar to the information that would be required to be included in a Current Report on Form 8-K (as in effect on the Issue Date) filed with the SEC by the Company (if the Company were required to file such reports) pursuant to Item 1.01 (Entry into a Material Definitive Agreement), Item 1.02 (Termination of a Material Definitive Agreement), Item 1.03 (Bankruptcy or Receivership), Item 2.01 (Completion of Acquisition or Disposition of Assets), Item 2.03 (Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant), Item 2.04 (Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement), Item 2.06 (Material Impairments), Item 4.01 (Changes in Registrant’s Certifying Accountants), Item 4.02 (Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review), Item 5.01 (Changes in Control of Registrant), clauses (b) and (c)(1) of Item 5.02 (Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers) of such form, within ten business days of the date of the event requiring disclosure; provided, however, that no such information will be required to be furnished if the Company determines in its good faith judgment that such event is not material to Holders or the business, assets, operations, financial position or prospects of the Company and its Restricted Subsidiaries, taken as a whole.
In connection with this clause (a), it is understood that the Company shall not be required to furnish (a) any information, certificates or reports required by (i) Section 302, Section 404 or Section 906 of the Sarbanes-Oxley Act of 2002, or related Items 307 or 308 of Regulation S-K, (ii) Regulation G or Item 10(e) of Regulation S-K promulgated by the SEC with respect to any non-generally accepted accounting principles financial measures contained therein, (iii) segment accounting rules, or (iv) Rules 3-05, 3-09 and 3-10 of Regulation S-X (provided that the Company shall present summary financial information with respect to Subsidiaries that are not Subsidiary Guarantors of the type and scope included in the Offering Memorandum), or (b) any
compensation or beneficial ownership information or (c) any information that is not otherwise similar to information currently included in the Offering Memorandum, other than with respect to reports provided under clause (iii) above. In addition, such reports shall not be required to include any exhibits that would have been required to be filed pursuant to Item 601 of Regulation S-K.
(b) The Company also shall provide the information described in paragraph (a) above to (i) beneficial owners of the Notes, (ii) any prospective investor that is a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) and (iii) any securities analyst reasonably acceptable to the Company, in each case, upon their written request. In addition, the Company shall, for so long as any Notes remain outstanding, furnish to such Holders and to securities analysts and prospective investors, upon their written request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act, as in effect on the Issue Date.
(c) Notwithstanding the foregoing, the Company shall be deemed to have satisfied the reporting requirements referred to above if (x) the Company has filed reports containing such information with the SEC or (y) the Company has (i) made such information available on Intralinks or any comparable password protected online data system and (ii) made readily available any password or other login information to the Trustee, the Holders and any such additional Persons set forth in paragraph (b) who have so requested in writing.
(d) Notwithstanding the foregoing, the financial statements, information and other documents required to be provided pursuant to this Section 4.03, may be those of any direct or indirect parent of the Company; provided that, (i) such direct or indirect parent of the Company provides a full and unconditional guarantee of the Company’s obligations under the Notes and this Indenture and (ii) if the financial information so furnished relates to such direct or indirect parent of the Company and any such parent company has any material operations, assets or liabilities separate and apart from its ownership of the Company, the same is accompanied by consolidating information that summarizes in reasonable detail the differences between the information relating to such parent, on the one hand, and the information relating to the Company on a standalone basis, on the other hand.
SECTION 4.04. Compliance Certificate. The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year ending after the Issue Date, a certificate from a principal executive officer, principal financial officer or principal accounting officer stating that a review of the activities of the Company and the Restricted Subsidiaries during the preceding fiscal year have been made under the supervision of the signing Officer with a view to determining whether the Company has kept, observed, performed and fulfilled their obligations under this Indenture, and further stating, as to such Officer signing such certificate, that to the best of his or her knowledge the Company has, during such fiscal year, kept, observed, performed and fulfilled each and every condition and covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions, covenants and conditions of this Indenture (or, if a Default or an Event of Default shall have occurred and be
continuing, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto).
SECTION 4.05. Stay, Extension and Usury Laws.
The Company and each of the Subsidiary Guarantors, if any, covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Subsidiary Guarantors, if any, (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and covenant that they shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.
SECTION 4.06. Limitation on Sale/Lease-back Transactions. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, sell or transfer, directly or indirectly, except to the Company or a Restricted Subsidiary, any Principal Property as an entirety, or any substantial portion of such a Principal Property, with the intention of taking back a lease of such Principal Property, except a lease for a period of three years or less at the end of which it is intended that the use of such Principal Property by the lessee will be discontinued; provided that, notwithstanding the foregoing, the Company or any Restricted Subsidiary may sell any such Principal Property and lease it back for a longer period:
(i) if the Company or such Restricted Subsidiary would be entitled, pursuant to Section 4.08, to create a Lien on the property to be leased securing Indebtedness in an amount equal to the Attributable Debt with respect to such sale and lease-back transaction without equally and ratably securing the outstanding Notes; or
(ii) if (A) the Company promptly informs the Trustee of such transaction, (B) the net proceeds of such transaction are at least equal to the fair market value (as determined by a resolution of the Board of Directors) of such property and (C) the Company causes an amount equal to the net proceeds of the sale to be applied to the retirement, within 180 days after receipt of such proceeds, of Indebtedness incurred or assumed by the Company or a Restricted Subsidiary (including the Notes) other than Indebtedness that is contractually subordinated in right of payment to the Notes; provided further that, in lieu of applying all of or any part of such net proceeds to such retirement of Indebtedness, the Company may, within 90 days after such sale, deliver or cause to be delivered to the applicable trustee for cancellation either debentures or notes evidencing Indebtedness of the Company (which may include the outstanding Notes) or of a Restricted Subsidiary previously authenticated and delivered by the applicable trustee, and not previously tendered for sinking fund purposes or called for a sinking fund or otherwise applied as a credit against an obligation to redeem or retire such notes or debentures, and an Officer’s Certificate (which will be delivered to the applicable trustee and paying agent) stating that the Company elects to deliver or cause to be delivered such debentures or notes in lieu of retiring Indebtedness as provided in this Indenture. If the Company shall so deliver debentures or notes to the applicable trustee and the Company shall duly deliver such Officer’s Certificate, the
amount of cash which the Company will be required to apply to the retirement of Indebtedness under this provision shall be reduced by an amount equal to the aggregate of the then applicable optional redemption prices (not including any optional sinking fund redemption prices) of such debentures or notes or, if there are no such redemption prices, the principal amount of such debentures or notes; provided, that in the case of debentures or notes which provide for an amount less than the principal amount of such debentures or notes to be due and payable upon a declaration of the maturity of such debentures or notes, such amount of cash shall be reduced by the amount of principal of such debentures or notes that would be due and payable as of the date of such application upon a declaration of acceleration of the maturity of such debentures or notes pursuant to the terms of the financing arrangement pursuant to which such debentures or notes were issued.
(b) Notwithstanding the foregoing, the Company or any Restricted Subsidiary may enter into sale and lease-back transactions in addition to those permitted by the preceding paragraph and without any obligation to retire any outstanding Notes or other Indebtedness, provided that at the time of entering into such sale and lease-back transactions and after giving effect to such transactions, Exempted Debt does not exceed 15.0% of Consolidated Net Tangible Assets.
SECTION 4.07. Change of Control. (a) Upon the occurrence of a Change of Control Triggering Event, each Holder shall have the right to require that the Company repurchase such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(b) Within 30 days following the date upon which any Change of Control Triggering Event with respect to the Notes shall have occurred, the Company shall mail a notice by first-class mail to each Holder with a copy to the Trustee (the “Change of Control Offer”) or, at the Company’s option, prior to any Change of Control but after the public announcement of the pending Change of Control, stating:
(i) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date);
(ii) the purchase date (which shall be no earlier than 10 days nor later than 60 days from the date such notice is mailed); and
(iii) the instructions, as determined by the Company, consistent with this Section 4.07, that a Holder must follow in order to have its Notes purchased.
(c) The Company shall not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner,
at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. A Change of Control Offer may be made in advance of a Change of Control, conditional upon such Change of Control, if a definitive agreement is in place for the Change of Control at the time of the making of the Change of Control Offer.
(d) If Holders of not less than 90% in aggregate principal amount of the outstanding Notes validly tender and do not withdraw such Notes in a Change of Control Offer and the Company, or any other Person making a Change of Control Offer in lieu of the Company as described in clause (c) of this Section 4.07, purchases all of the Notes validly tendered and not withdrawn by such Holders, the Company shall have the right, upon not less than 10 nor more than 60 days’ prior notice, given not more than 30 days following such purchase pursuant to the Change of Control Offer described in clause (b) of this Section 4.07, to redeem all Notes that remain outstanding following such purchase at a redemption price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, 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).
(e) The Company shall 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 Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.07, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Indenture by virtue of its compliance with such securities laws or regulations.
SECTION 4.08. Limitation on Liens. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, create, incur or suffer to exist any Lien, as security for any Indebtedness, on or of any shares of stock, Indebtedness or other intercompany obligations of a Subsidiary or any Principal Property of the Company or a Restricted Subsidiary, whether such shares of stock, Indebtedness or other obligations of a Subsidiary or Principal Property is owned at the date of this Indenture or acquired after the date of this Indenture, unless the Company secures or causes such Restricted Subsidiary to secure the outstanding Notes equally and ratably with all Indebtedness secured by such Lien, so long as such Indebtedness shall be so secured. This covenant shall not apply in the case of:
(1) the creation of any Lien on any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property acquired after the date of this Indenture (including acquisitions by way of merger or consolidation) by the Company or a Restricted Subsidiary contemporaneously with such acquisition, or within 180 days after such acquisition, to secure or provide for the payment or financing of any part of the purchase price of such acquisition, or the assumption of any mortgage, pledge or other lien upon any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property acquired after the date of this Indenture existing at the time of such
acquisition, or the acquisition of any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property subject to any mortgage, pledge or other lien without the express assumption of such Lien, provided that every such Lien referred to in this clause (1) will attach only to the shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property so acquired and fixed improvements on such Principal Property;
(2) any Lien on any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property existing on the Issue Date, other than Liens permitted by clause (3) hereof;
(3) any Lien securing obligations under the Securitization Facility, in an amount not to exceed $350.0 million;
(4) any Lien on any shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property in favor of the Company or any Restricted Subsidiary;
(5) any Lien on Principal Property being constructed or improved securing loans to finance such construction or improvements;
(6) any Lien on shares of stock, Indebtedness or other obligations of a Subsidiary or any Principal Property incurred in connection with the issuance of tax- exempt governmental obligations; and
(7) any renewal of or substitution for any Lien permitted by any of the preceding clauses (1) through (6), provided, in the case of a renewal of or substitution for any Lien permitted under clause (1), (2), (3) or (5), the Indebtedness secured is not increased nor the Lien extended to any additional shares of stock, Indebtedness or other obligations of a Subsidiary or any additional Principal Property.
(b) Notwithstanding the foregoing, the Company or any Restricted Subsidiary may create or assume Liens in addition to those permitted by clauses (1) through (7) of the preceding paragraph, and renew, extend or replace such liens, provided that at the time of such creation, assumption, renewal, extension or replacement, and after giving effect to such creation, assumption, renewal, extension or replacement, Exempted Debt does not exceed 15.0% of Consolidated Net Tangible Assets.
SECTION 4.09. Future Guarantors. The Company shall cause each Domestic Subsidiary of the Company that is a borrower under or guarantees obligations under any Debt Facility in excess of an aggregate principal amount of $75.0 million (other than the Securitization Facility) of the Company or any Subsidiary Guarantor, unless such Domestic Subsidiary is not required to become a guarantor under the Senior Credit Facility, within 30 days of becoming a borrower or the incurrence of such Guarantee, to execute and deliver to the Trustee a supplemental indenture to this Indenture pursuant to which such Subsidiary will
Guarantee payment of the Notes on the same terms and conditions as those set forth in Article X hereof.
SECTION 4.10. Corporate Existence. Subject to Article V hereof, the Company shall 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 Subsidiary Guarantor and the corporate rights (charter and statutory) licenses and franchises of the Company and each Subsidiary Guarantor; provided, however, that the Company shall not be required to preserve any such existence (except that of the Company), right, license or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and each of its Subsidiary Guarantors, and that the loss thereof is not, and will not be, disadvantageous in any material respect to the Holders.
SECTION 4.11. Payment of Taxes and Other Claims. The Company shall pay, and shall cause each of its Subsidiary Guarantors to pay, prior to delinquency, all material taxes, assessments and governmental levies except such as are contested in good faith by appropriate proceedings or where the failure to effect such payment or discharge would not reasonably be expected to be adverse in any material respect to the Holders.
ARTICLE V
CONSOLIDATIONS, MERGERS AND SALES OF ASSETS
SECTION 5.01. When Company or Subsidiary Guarantors May Merge or Otherwise Dispose of Assets. (a) The Company shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:
(1) the resulting, surviving or transferee Person (the “Successor Company”) shall 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) shall 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 Notes and this Indenture;
(2) immediately after giving pro forma effect to such transaction, no Default shall have occurred and be continuing; and
(3) the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture.
(b) The Company shall not permit any Subsidiary Guarantor to consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:
(1) (A) the resulting, surviving or transferee Person (the “Successor Guarantor”) shall 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 such Subsidiary Guarantor) shall expressly assume, by an indenture supplemental thereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of such Subsidiary Guarantor in respect of each Subsidiary Guarantee and under this Indenture;
(B) immediately after giving pro forma effect to such transaction, no Default shall have occurred and be continuing; and
(C) the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture; or
(2) the transaction results in the release of such Subsidiary Guarantor’s Subsidiary Guarantee under clause (1) of Section 10.06.
Notwithstanding the foregoing Section 5.01(b), any Subsidiary Guarantor may merge with or into or transfer all or part of its assets to the Company or any other Subsidiary Guarantor.
(c) For purposes of the foregoing Section 5.01(a) and (b), the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company or a Subsidiary Guarantor, as the case may be, which properties and assets, if held by the Company or such Subsidiary Guarantor instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Company or such Subsidiary Guarantor on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company or such Subsidiary Guarantor.
(d) The Successor Company shall be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, and the predecessor Company, except in the case of a lease, shall be released from the obligation to pay the principal of and interest on the Notes. The Successor Guarantor shall be the successor to the applicable Subsidiary Guarantor and shall succeed to, and be substituted for, and may exercise every right and power of, such Subsidiary Guarantor under this Indenture, and the predecessor Subsidiary Guarantor, except in the case of a lease, shall be released from its obligations under its Subsidiary Guarantee.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default. Each of the following shall be an Event of Default with respect to the Notes (an “Event of Default”):
(1) a default in the payment of principal of or premium, if any, on any Note when due at its Stated Maturity, upon redemption, required repurchase, upon declaration or otherwise;
(2) a default in any payment of interest on any Note when due, continued for 30 days;
(3) the failure by the Company or any Subsidiary Guarantor to comply with its obligations under Article V of this Indenture;
(4) a failure by the Company or any Subsidiary Guarantor to comply with any of its obligations, covenants or agreements (other than a default referred to in clauses (1), (2) and (3) above) contained in this Indenture or under the Notes for a period of 60 consecutive days after receipt by the Company of written notice of such failure by the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes;
(5) the failure by the Company or any Significant Subsidiary to pay any Indebtedness within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof if the total amount of such Indebtedness unpaid or accelerated exceeds $75.0 million or its foreign currency equivalent;
(6) the Company or a Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:
(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 of it or for any substantial part of its property;
(D) makes a general assignment for the benefit of its creditors; or
(E) takes any comparable action under any foreign laws relating to insolvency;
(7) 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;
(C) orders the winding up or liquidation of the Company or any Significant Subsidiary; or
(D) any similar relief is granted under any foreign laws and the order, decree or relief remains unstayed and in effect for 60 days;
(8) the rendering of any judgment or decree for the payment of money in excess of $50.0 million or its foreign currency equivalent 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
(9) any Subsidiary Guarantee of a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms of this Indenture) or is declared null and void in a judicial proceeding or any Subsidiary Guarantor that is a Significant Subsidiary denies or disaffirms its obligations under this Indenture or its Subsidiary Guarantee.
The foregoing shall 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. However, a Default under clause (4) shall not constitute an Event of Default until the Trustee or the Holders of at least 25% in aggregate principal amount of the outstanding Notes notify the Company of the Default and the Company does not cure such Default within the time specified in clause (4) after receipt of such notice.
SECTION 6.02. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.01(6) or (7) 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 aggregate principal amount of the outstanding Notes 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 Notes to be due and payable. Upon such a declaration, such principal, premium and interest shall be immediately due and payable. In the event of a declaration of acceleration because an Event of Default set forth in Section 6.01(5) 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 6.01(5) shall be remedied or cured by the Company 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; provided that, (i) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived and (ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. If an Event of Default specified in Section 6.01(6) or (7) with respect to the Company or a Significant Subsidiary occurs and is continuing, the principal of, premium, if any, and interest on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.
SECTION 6.03. 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 premium, if any) or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder 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 6.04. Waiver of Past Defaults. The Holders of a majority in aggregate principal amount of the outstanding Notes may waive all past Defaults or Events of Default (except with respect to nonpayment of principal, premium or interest) and rescind any such acceleration with respect to the Notes 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 Notes 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 6.05. Limitation on Suits. A Holder may not pursue any remedy with respect to this Indenture or the Notes 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 aggregate principal amount of the outstanding Notes make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer 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 aggregate principal amount of the outstanding Notes do not give the Trustee a direction inconsistent with the request during such 60-day period.
A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder.
SECTION 6.06. Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the contractual right of any Holder to institute suit for the enforcement of any payment of principal, premium, if any, and interest on or with respect to such Holder’s Notes on or after the due dates expressed or provided for in such Note shall not be amended without the consent of such Holder.
SECTION 6.07. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(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).
SECTION 6.08. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceedings, the Company, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding has been instituted.
SECTION 6.09. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.07 hereof, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
SECTION 6.10. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article VI or by law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 6.11. 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 Holders 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.
SECTION 6.12. Priorities. If the Trustee collects any money or property pursuant to this Article VI, it shall pay out the money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.06, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;
SECOND: to Holders for amounts due and unpaid on the Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.12. At least 15 days before such record date, the Company shall mail to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid.
SECTION 6.13. 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 6.13 does not apply to a suit by the Trustee, a suit by the Company, a suit by a Holder pursuant to Section 6.06 or a suit by Holders of more than 10% in outstanding principal amount of the Notes.
SECTION 6.14. Control by Holders of Notes. The Holders of a majority in aggregate principal amount of the Notes 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 the Notes or, that the Trustee determines is unduly
prejudicial to the rights of other Holders 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.
SECTION 6.15. Notices of Default; Compliance Certificate. If a Default occurs and is continuing and is known to the Trustee, the Trustee must mail to each Holder notice of the Default or Event of Default within 90 days after it occurs unless the Default has been previously cured. In addition, except in the case of a Default in the payment of principal of, premium, if any, or interest on any Note, the Trustee shall be protected in withholding notice if and so long as the Trustee in good faith determines that withholding notice is in the interests of the Holders. In addition, the Company is required to deliver to the Trustee, within 120 days after the end of each fiscal year, an Officer’s Certificate indicating whether the signers thereof know of any Default or Event of Default that occurred during the previous year. The Company also is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice and a description of any event which would constitute a Default or Event of Default, their status and what action the Company is taking or proposes to take in respect thereof.
ARTICLE VII
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its 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:
(i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
(ii) 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 provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein.
(c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved in a court of competent jurisdiction that the Trustee was negligent in ascertaining the pertinent facts; and
(iii) 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 6.14 hereof.
(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) The Trustee shall be under no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any Holder unless such Holder has offered to the Trustee indemnity or security satisfactory to it against any loss, liability or expense.
(f) 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. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.
SECTION 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or 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, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.
(b) Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company.
(f) None of the provisions of this Indenture shall require the Trustee to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, 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 for believing that repayment of such funds or indemnity satisfactory to it against such risk or liability is not assured to it.
(g) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a Default is received by a Responsible Officer of the Trustee at the Corporate Trust Office, and such notice references the Notes and this Indenture.
(h) In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
(i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder and each agent, custodian and other Person employed to act hereunder.
(j) The permissive rights of the Trustee enumerated herein shall not be construed as duties.
(k) The Trustee may request that the Company delivers an Officer’s Certificate setting forth the names of individuals or titles of officers authorized at such time to take specified actions pursuant to this Indenture.
(l) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days or resign. The Paying Agent or Registrar does the same with like rights and duties. The Trustee is also subject to Section 7.09.
SECTION 7.04. 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 Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.
SECTION 7.05. Notice of Defaults.
If a Default occurs and is continuing and if it is known to a Responsible Officer of the Trustee, the Trustee shall send to Holders a notice of the Default within 90 days of the occurrence of such Default. Except in the case of a Default relating to the payment of principal, premium, if any, or interest on any Note, the Trustee may withhold from the Holders notice of any continuing Default if and so long as it in good faith determines that withholding the notice is in the interests of the Holders. The Trustee shall not be deemed to know of any Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is such a Default is received by a Responsible Officer of the Trustee at the Corporate Trust Office. The provisions of this Section 7.05 are subject to the provisions of Section 6.15.
SECTION 7.06. Compensation and Indemnity.
(a) The Company shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder 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 promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.
(b) The Company and Subsidiary Guarantors shall indemnify the Trustee for, and hold the Trustee harmless against, any and all loss, damage, claims, liability or expense (including attorneys’ fees and expenses and taxes (other than taxes based upon the income of the
Trustee)) incurred by it in connection with the acceptance or administration of this trust and the performance of its duties hereunder (including the costs and expenses of enforcing this Indenture against the Company or any Subsidiary Guarantors (including this Section 7.06) or defending itself against any claim whether asserted by any Holder, the Company or any Subsidiary Guarantor, or liability in connection with the acceptance, exercise or performance of any of its powers or duties hereunder). 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 except to the extent actually prejudiced thereby. The Company shall defend the claim, and the Trustee shall cooperate in the defense of such claim. The Trustee may have separate counsel if the Trustee shall have been advised by counsel that there may be one or more legal defenses available to it that are different from or additional to those available to the Company and in the reasonable judgment of such counsel it is advisable for the Trustee to engage separate counsel, and the Company shall pay the reasonable and documented fees and expenses of any one such separate counsel (as well as such fees and expenses of one firm of local counsel in each jurisdiction in which the primary counsel is not admitted to practice and where local counsel is necessary or advisable). The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred as determined in a final judgment by a court of competent jurisdiction to have resulted from the Trustee’s own willful misconduct or negligence.
(c) The obligations of the Company and the Subsidiary Guarantors, if any, under this Section 7.06 shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee.
(d) To secure the payment obligations of the Company in this Section 7.06, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.
(e) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.07. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.07. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing not less than 30 days prior to the effective date of such removal. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.09;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the Company’s expense), the Company or the Holders of at least 10% in principal amount of the then outstanding Notes may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.09, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of 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 Holders. The retiring Trustee shall, at the expense of the Company, promptly transfer all property held by it as Trustee to the successor Trustee; provided that all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.06. Notwithstanding replacement of the Trustee pursuant to this Section 7.07, the Company’s obligations under Section 7.06 shall continue for the benefit of the retiring Trustee. The predecessor Trustee shall have no liability for any action or inaction by any successor Trustee.
SECTION 7.08. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee.
SECTION 7.09. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or
examination by federal or state authorities and that has a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.
ARTICLE VIII
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Defeasance. (a) Subject to Sections 8.01(b) and 8.02, the Company at its option and at any time may terminate
(i) all the obligations of the Company and any Subsidiary Guarantor under the outstanding Notes and this Indenture (“legal defeasance option”); or
(ii) the obligations of the Company under Sections 4.03, 4.06, 4.07, 4.08, 4.09, and 5.01(a)(3) 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 with such covenants or provisions shall no longer constitute a Default or an Event of Default under Section 6.01(3) and 6.01(4) (“covenant defeasance option”), but except as specified above, the remainder of this Indenture and the Notes 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 or covenant defeasance option with respect to the outstanding Notes, the related Subsidiary Guarantees in effect at such time shall be automatically released.
If the Company exercises its legal defeasance option with respect to the Notes, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If the Company exercises its covenant defeasance option with respect to the Notes, payment of the Notes may not be accelerated because of an Event of Default specified in Sections 6.01(4), 6.01(5), 6.01(6) (but only with respect to a Significant Subsidiary), 6.01(7) (but only with respect to a Significant Subsidiary), 6.01(8) or 6.01(9), or because of the failure of the Company to comply with Section 5.01(a)(3) or 5.01(b)(1)(C).
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.
(b) Notwithstanding the provisions of Section 8.01(a), the Company’s obligations in Sections 2.02, 2.06, 2.07, 6.06, 6.07, 8.04, 8.05 and 8.07 shall survive until the Notes have been paid in full. Thereafter, the Company’s obligations in Sections 6.06, 8.04 and 8.05 of this Indenture shall survive.
SECTION 8.02. Conditions to Defeasance. In order for the Company to exercise either its legal defeasance option or covenant defeasance option with respect to the Notes:
(1) the Company shall irrevocably deposit with the Trustee, in trust, for the benefit of the Holders cash in U.S. dollars, non-callable U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the Notes on the stated date for payment thereof or on the Redemption Date, as the case may be;
(2) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) 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 beneficial owners of the Notes 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;
(3) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that the beneficial owners of the Notes 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 at the same times as would have been the case if such covenant defeasance had not occurred;
(4) no Default or Event of Default with respect to the Notes shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default with respect to this Indenture resulting from the incurrence of Indebtedness, all or a portion of which will be used to defease the Notes concurrently with such incurrence);
(5) such legal defeasance option or covenant defeasance option 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 (other than a Default or Event of Default with respect to this Indenture resulting from the incurrence of Indebtedness and Liens, all or a portion of which will be used to defease the Notes concurrently with such incurrence);
(6) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that (A) the Notes 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 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’ rights generally; and
(7) the Company shall have delivered to the Trustee an Officer’s Certificate stating that all conditions precedent provided for or relating to the legal defeasance option or covenant defeasance option, as the case may be, have been complied with.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article VIII. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Notes.
SECTION 8.04. Repayment to Company. (a) 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 VIII 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 option or covenant defeasance option, 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 Section 8.04(a).
(b) 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 Notes that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Company for payment as general creditors.
SECTION 8.05. 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 8.06. Deposited Money and Government Notes to be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.04, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.06, the “Trustee”) pursuant to Section 8.02 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.
Anything in this Article VIII to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon the written request of the Company any money or U.S. Government Obligations held by it as provided in Section 8.02 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.02 hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent legal defeasance or covenant defeasance.
SECTION 8.07. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article VIII 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 Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII 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 VIII; provided, however, that, if the Company has made any payment of interest on or principal of any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENT AND WAIVERS
SECTION 9.01. Without Consent of Holders. The Company and the Trustee may amend or supplement this Indenture and the Notes and the Subsidiary Guarantees issued hereunder without notice to or consent of any Holder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V of this Indenture in respect of the assumption by a Successor Company, as the case may be, of the obligations of the Company or any Subsidiary Guarantor under this Indenture, the Notes and the Subsidiary Guarantees issued hereunder;
(3) to provide for uncertificated Notes in addition to or in place of certificated Notes; provided, however, that such uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code;
(4) to add Guarantees with respect to the Notes or release any such Guarantees in accordance with the applicable provisions of this Indenture;
(5) to add to the covenants of the Company and its Subsidiaries for the benefit of the Holders or to surrender any right or power herein conferred upon the Company or its Subsidiaries;
(6) to conform the text of this Indenture, any Subsidiary Guarantees or the Notes to the “Description of Notes” in the Offering Memorandum;
(7) to secure the Notes and any Subsidiary Guarantee;
(8) to make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes as permitted by this Indenture, including, without limitation, to facilitate the issuance and administration of the Notes; provided, however, that (i) compliance with this Indenture as so amended would not result in the Notes being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer the Notes;
(9) to evidence and provide for the acceptance of appointment by a successor Trustee; provided that the successor Trustee is otherwise qualified and eligible to act as such under the terms of this Indenture;
(10) to provide for or confirm the issuance of Additional Notes; and
(11) to make any change that does not adversely affect the rights of any Holder of the Notes.
After an amendment under this Section 9.01 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. However, the failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.01.
SECTION 9.02. With Consent of Holders. The Company and the Trustee may amend or supplement this Indenture, the Notes and the Subsidiary Guarantees issued hereunder without notice to any Holder but with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding. However, without the consent of each Holder affected, an amendment may not:
(1) reduce the principal amount of Notes whose Holders must consent to an amendment;
(2) reduce the rate of or extend the time for payment of interest on any Note;
(3) reduce the principal of or extend the Stated Maturity of any Note;
(4) reduce the premium payable upon the redemption or repurchase of any Note or change the time at which any Note may be redeemed in accordance with Article III hereof;
(5) make any Note payable in money other than that stated in the Note;
(6) amend the contractual right of any Holder of Notes to institute suit for the enforcement of any payment of principal, premium, if any, and interest on or with respect to such Holder’s Notes on or after the due dates expressed or provided for in such Note;
(7) make any change in the amendment or waiver provisions which require the consent of each Holder of Notes; or
(8) modify the Subsidiary Guarantees in any manner adverse to the Holders of the Notes.
It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section 9.02.
SECTION 9.03. Revocation and Effects of Consents and Waivers. A consent to an amendment, supplement or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent, supplement or waiver as to such Holder’s Note or portion of the Note if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective. After an amendment, supplement or waiver becomes effective, it shall bind every Holder. An amendment, supplement or waiver made pursuant to Section 9.02 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 Holders 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 Holders 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 9.04. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may
issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.05. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article IX if the amendment, supplement or waiver does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amendment, supplement or waiver until the Board of Directors approves it. In executing any amendment, supplement or waiver, the Trustee shall be provided with and (subject to Section 7.01) shall be fully protected in conclusively relying upon, in addition to the documents required by Section 12.02, an Officer’s Certificate and an Opinion of Counsel, each stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture and such Opinion of Counsel shall state that such amendment, supplement or waiver is the legal, valid and binding obligation of the Company and any Subsidiary Guarantors party thereto, enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof.
ARTICLE X
GUARANTEES
SECTION 10.01. Guarantee.
Subject to this Article X, each of the Subsidiary Guarantors hereby, jointly and severally, fully and unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that: (a) the principal of, interest, premium, if any, on the Notes, subject to any applicable grace period, shall be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment by the Company when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Subsidiary Guarantors shall be jointly and severally obligated to pay the same immediately. Each Subsidiary Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.
Each Subsidiary Guarantor hereby agrees that, to the maximum extent permitted under applicable law, their obligations hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor (other than payment in full of all of the obligations of the Company hereunder and under the Notes). Each Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture or by release in accordance with the provisions of this Indenture.
Each Subsidiary Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ and agents’ fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section 10.01.
If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Subsidiary Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Subsidiary Guarantors any amount paid either to the Trustee or such Holder, this Subsidiary Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.
Each Subsidiary Guarantor agrees that, as between the Subsidiary Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article VI hereof for the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such obligations as provided in Article VI hereof, such obligations (whether or not due and payable) shall forthwith become due and payable by the Subsidiary Guarantors for the purpose of this Subsidiary Guarantee. The Subsidiary Guarantors shall have the right to seek contribution from any non-paying Subsidiary Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Subsidiary Guarantees.
Each Subsidiary Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation, reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company’s assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes or Subsidiary Guarantees, whether as a “voidable preference,” “fraudulent transfer” or otherwise, all as though such payment or performance had not been made. In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the
fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
In case any provision of any Subsidiary Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
The Subsidiary Guarantee issued by any Subsidiary Guarantor shall be a general unsecured (unless the Notes are secured pursuant to Section 4.08) obligation of such Subsidiary Guarantor and shall rank equally in right of payment to all existing and future senior Indebtedness of such Subsidiary Guarantor.
Each payment to be made by a Subsidiary Guarantor in respect of its Subsidiary Guarantee shall be made without set-off, counterclaim, reduction or diminution of any kind or nature.
SECTION 10.02. Limitation on Guarantor Liability.
Each Subsidiary Guarantor and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Subsidiary Guarantee of such Subsidiary Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Subsidiary Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Subsidiary Guarantors hereby irrevocably agree that the obligations of each Subsidiary Guarantor shall be limited to the maximum amount as will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Subsidiary Guarantor that are relevant under such laws and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under this Article X, result in the obligations of such Subsidiary Guarantor under its Subsidiary Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law. Each Subsidiary Guarantor that makes a payment under its Subsidiary Guarantee shall be entitled upon payment in full of all guaranteed obligations under this Indenture to a contribution from each other Subsidiary Guarantor in an amount equal to such other Subsidiary Guarantor’s pro rata portion of such payment based on the respective net assets of all the Subsidiary Guarantors at the time of such payment determined in accordance with GAAP.
SECTION 10.03. Execution and Delivery.
Each Subsidiary Guarantor hereby agrees that its execution and delivery of a supplemental indenture substantially in the form of Exhibit D hereto, executed on behalf of such Subsidiary Guarantor by an officer thereof shall evidence its Subsidiary Guarantee set forth in Section 10.01 without the need for any further notation on the Notes. Upon the execution and delivery of the supplemental indenture, the Subsidiary Guarantees set forth in this Indenture shall be deemed duly delivered, without any further action by any Person, on behalf of the Subsidiary Guarantors.
Each of the Subsidiary Guarantors hereby agrees that its Subsidiary Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Subsidiary Guarantee. The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth in this Indenture on behalf of any Subsidiary Guarantors.
SECTION 10.04. Subrogation.
Each Subsidiary Guarantor shall be subrogated to all rights of Holders against the Company in respect of any amounts paid by any Subsidiary Guarantor pursuant to the provisions of Section 10.01; provided that no Subsidiary Guarantor shall be entitled to enforce or receive any payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Company under this Indenture or the Notes shall have been paid in full.
SECTION 10.05. Benefits Acknowledged.
Each Subsidiary Guarantor acknowledges that it shall receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the guarantee and waivers made by it pursuant to its Subsidiary Guarantee are knowingly made in contemplation of such benefits.
SECTION 10.06. Release of Subsidiary Guarantees.
A Subsidiary Guarantee by a Subsidiary Guarantor shall be automatically released:
(1) upon the sale or other disposition (including by way of consolidation or merger) of the Capital Stock of such Subsidiary Guarantor, as a result of which such Subsidiary Guarantor ceases to be a Subsidiary of the Company;
(2) at such time as such Subsidiary Guarantor no longer is a borrower under or Guarantees obligations under any Debt Facility of the Company or any Subsidiary Guarantor that resulted in the issuance of the Subsidiary Guarantee;
(3) upon the defeasance of the Notes, as provided under Section 8.01 hereof;
(4) upon the discharge of this Indenture, as provided under Section 11.01 hereof; or
(5) as described under Article IX hereof.
In the event that any released Subsidiary Guarantor (in the case of clause (2) above) thereafter borrows money or Guarantees obligations under any Debt Facility of the Company or any Subsidiary Guarantor, such former Subsidiary Guarantor will again provide a Subsidiary Guarantee in accordance with Section 4.09 hereof.
ARTICLE XI
SATISFACTION AND DISCHARGE
SECTION 11.01. Satisfaction and Discharge.
This Indenture shall be discharged and will cease to be of further effect as to all Notes, when:
(1) either (a) all Notes theretofore authenticated and delivered, except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust, have been delivered to the applicable Trustee for cancellation; or (b) all Notes not theretofore delivered to the applicable Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise, will become due and payable within one year or are to be called for redemption and redeemed within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company and the Company has irrevocably deposited or caused to be deposited with the applicable Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, U.S. Government Obligations, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on the Notes not theretofore delivered to the applicable Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;
(2) the Company has paid or caused to be paid all sums payable by it under this Indenture; and
(3) the Company has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the Redemption Date, as the case may be.
In addition, upon its request for written acknowledgement of satisfaction and discharge, the Company must deliver an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, if money shall have been deposited with the Trustee pursuant to Section 11.01(1), the provisions of Section 11.02 and Section 8.04 shall survive such satisfaction and discharge.
SECTION 11.02. Application of Trust Money.
Subject to the provisions of Section 8.04, all money deposited with the Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the
Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 11.01 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 Company’s and any Subsidiary Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01; provided that if the Company has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Notices.
Any notice or communication by the Company or any Subsidiary Guarantor or the Trustee to the others is duly given if in writing and delivered in person or mailed by first-class mail (registered or certified, return receipt requested), electronic delivery (in PDF format), fax or overnight air courier guaranteeing next day delivery, to the others’ address:
If to the Company or any Subsidiary Guarantor:
Smithfield Foods, Inc.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
with copies to:
Hogan Lovells US LLP
555 Thirteenth Street, NW
Washington, D.C. 20004
Attention: Eve N. Howard, Esq.
If to the Trustee:
U.S. Bank National Association
Global Corporate Trust Services
Two Midtown Plaza
1349 West Peachtree Street, NW, Suite 1050
Atlanta, GA 30309
Attention: David Ferrell
The Company, any Subsidiary Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: as of the date so delivered if delivered electronically, in PDF format; at the time delivered by hand, if personally delivered; five calendar days after being deposited in the mail, postage prepaid, if mailed by first-class mail; when receipt acknowledged, if faxed; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery; provided that any notice or communication delivered to the Trustee shall be deemed effective upon actual receipt thereof.
Any notice or communication to a Holder shall be sent electronically, mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed or otherwise delivered in the manner provided above within the time prescribed, such notice or communication shall be deemed duly given, whether or not the addressee receives it.
The Trustee agrees to accept and act upon facsimile or electronically sent (in PDF format) transmission of written instructions or directions pursuant to this Indenture given by the
Company, provided, however that: (i) if requested, the Company, subsequent to such facsimile transmission of written instructions or directions, shall provide the originally executed instructions or directions to the Trustee in a timely manner and (ii) such originally executed instructions or directions shall be signed by an Officer of the Company.
If the Company sends a notice or communication to Holders, it shall send a copy to the Trustee and each Agent at the same time.
SECTION 12.02. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(a) An Officer’s Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.03) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and
(b) An Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.03) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.
SECTION 12.03. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 4.04) and shall include:
(a) a statement that the Person making such certificate or opinion has read such covenant or condition;
(b) 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;
(c) a statement that, in the opinion of such Person, he or she 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
(d) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.
With respect to matters of fact, an Opinion of Counsel may rely on an Officer’s Certificate, certificates of public officials or reports or opinions of experts.
SECTION 12.04. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.
SECTION 12.05. No Personal Liability of Directors, Officers, Employees and Stockholders. No past, present or future director, officer, employee, incorporator or stockholder of the Company or the Subsidiary Guarantors, if any, as such, shall have any liability for any obligations of the Company or any Subsidiary Guarantor under the Notes, this Indenture or the Subsidiary Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive liabilities under the U.S. federal securities laws, and it is the view of the SEC that such a waiver is against public policy.
SECTION 12.06. Governing Law. THIS INDENTURE, THE NOTES AND ANY SUBSIDIARY GUARANTEE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 12.07. Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 12.08. Appointment of Note Registrar and Paying Agent. The Trustee will initially act as Paying Agent and Note Registrar. The Company may change the Paying Agent or Note Registrar without prior notice to the Holders, and the Company or any of its Restricted Subsidiaries may act as Paying Agent or Note Registrar.
SECTION 12.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or the Restricted Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 12.10. Successors.
All agreements of the Company in this Indenture and the Notes shall bind their successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Subsidiary Guarantor, if any, in this Indenture shall bind its successors, except as otherwise provided in Section 10.06.
SECTION 12.11. Severability.
In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture which, when taken together, shall constitute one instrument. Each signed copy shall be an original, but all of them together represent the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes. “The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Indenture or any document to be signed in connection with this Indenture shall be deemed to include electronic signatures, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions contemplated hereunder by electronic means. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the Electronic Signatures in Global and National Commerce Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law (e.g., www.docusign.com)) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be legally valid, effective and enforceable for all purposes.
SECTION 12.13. 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.
SECTION 12.14. U.S.A. Patriot Act.
The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.
[Signatures on following pages]
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written.
| | | | | | | | | | | |
| U.S. Bank National Association, as Trustee |
| | | |
| | | |
| By: | /s/ David Ferrell |
| | Name: | David Ferrell |
| | Title: | Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | |
| COMPANY: | Smithfield Foods, Inc., |
| a Virginia corporation |
| | | |
| | | |
| | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President and Corporate Treasurer |
| | | | | | | | | | | | | | |
| SUBSIDIARY GUARANTORS: | | | | |
| | | | |
| Brown's Realty Partnership, |
| a North Carolina partnership |
| | | | |
| By: | Murphy-Brown LLC, |
| | Partner |
| | | | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | |
| By: | Smithfield Purchase Corporation, |
| | Partner | |
| | | | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | |
| Carroll’s Realty Partnership, |
| a North Carolina partnership |
| | | | | |
| By: | Murphy-Brown LLC, |
| | Partner |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| By: | Smithfield Purchase Corporation, |
| | Partner | | |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Duplin Marketing Company, LLC, |
| a North Carolina limited liability company |
| | | | | |
| | | | | |
| By: | /s/ David L. Coleman | |
| Name: David L. Coleman |
| Title: Manager |
| | | | | |
| | | | | |
| Jonmor Investments, Inc., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Jeffrey A. Porter | | |
| Name: Jeffrey A. Porter |
| Title: President and Assistant Secretary |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | |
| KC2 Real Estate, LLC, |
| a Delaware limited liability company |
| | | | | |
| By: | Murphy-Brown of Missouri LLC, |
| | its sole Member |
| | | | | |
| By: | MB Missouri Holdings LLC, |
| | its sole Member |
| | | | | |
| By: | Murphy-Brown LLC, |
| | its Managing Member |
| | | | | |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| | | | | |
| MB Grain LLC, |
| a Delaware limited liability company |
| | | | | |
| By: | Murphy-Brown LLC, |
| | its sole Member |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P.Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| MB Missouri Holdings LLC, |
| a Delaware limited liability company |
| | | | | |
| By: | Murphy-Brown LLC, |
| | its Managing Member |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | |
| Murphy-Brown LLC, |
| a Delaware limited liability company |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Murphy-Brown of Missouri LLC, |
| a Delaware limited liability company |
| | | | | |
| By: | MB Missouri Holdings LLC, |
| | its sole Member |
| | |
| By: | Murphy-Brown LLC, |
| | its Managing Member |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Patcud Investments, Inc., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Jeffrey A. Porter | | |
| Name: Jeffrey A. Porter |
| Title: President and Assistant Secretary |
| | | | | |
| | | | | |
| SF Investments, Inc., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Jeffrey A. Porter | | |
| Name: Jeffrey A. Porter |
| Title: President and Assistant Secretary |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | |
| Smithfield Direct, LLC, |
| a Delaware limited liability company |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield Distribution, LLC, |
| a Delaware limited liability company |
| | | | | |
| By: | Smithfield Foods, Inc., its sole |
| Member |
| | |
| | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield Fresh Holdings, Inc., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield Fresh Meats Corp., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | |
| Smithfield Fresh Meats Sales Corp., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield Packaged Meats Corp., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield Packaged Meats Sales Corp., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield Specialty Foods Group, LLC, |
| a Delaware limited liability company |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield Strategic Sourcing & Service Co., |
| Inc., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | | | | | | | |
| Smithfield Support Services Corp., |
| a Delaware corporation |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield-Carroll’s Farms, |
| a Virginia partnership |
| | | | | |
| By: | Murphy-Brown LLC, |
| | Partner |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| By: | Smithfield Purchase Corporation, |
| | Partner |
| | | | | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
| | | | | |
| | | | | |
| Smithfield-Kinston LLC |
| a Delaware limited liability company |
| | | | | |
| By: | Smithfield Packaged Meats Corp., |
| | its sole Member |
| | |
| | | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
[Signature Page to Indenture]
| | | | | | | | | | | | | | |
| Tar Heel Turkey Hatchery, Inc., |
| a North Carolina corporation |
| | | | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| Name: Timothy P. Dykstra |
| Title: Vice President |
[Signature Page to Indenture]
EXHIBIT A
FORM OF NOTE
EXHIBIT A-1
[Face of Note]
[Insert the Global Note Legend, if applicable, pursuant to the provisions of the Indenture]
[Insert the Private Placement Legend, if applicable, pursuant to the provisions of the Indenture]
CUSIP [•][•]
ISIN [•][•]
[RULE 144A] [REGULATION S] GLOBAL NOTE
2.625% Senior Notes due 2031
SMITHFIELD FOODS, INC.
promises to pay to CEDE & CO. or registered assigns, the principal sum set forth on the Schedule of Exchanges of Interests in the Global Note attached hereto in United States Dollars on September 13, 2031.
Interest Payment Dates: March 13 and September 13
Record Dates: February 27 and August 30
IN WITNESS HEREOF, the Company has caused this instrument to be duly executed.
| | | | | | | | |
| SMITHFIELD FOODS, INC. |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
This is one of the Notes referred to in the within-mentioned Indenture:
Dated:
| | | | | | | | |
| U.S. BANK NATIONAL ASSOCIATION,
as Trustee |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
[Reverse of Note]
2.625% Senior Notes due 2031
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Smithfield Foods, Inc., a Virginia corporation (the “Company”) promises to pay interest on the principal amount of this Note at 2.625% per annum from September 13, 2021 until maturity. The Company shall pay interest, semi-annually in arrears on March 13 and September 13 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that the first Interest Payment Date shall be March 13, 20221. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the interest rate on the Notes to the extent lawful. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes to the Persons who are registered Holders at the close of business on the February 27 or August 30 (whether or not a Business Day), as the case may be, immediately preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. Payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank National Association, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to the Holders. The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture, dated as of September 13, 2021 (the “Indenture”), among the Company, the Subsidiary Guarantors party thereto and the Trustee. This Note is one of a duly authorized issue of Notes of the Company designated as its 2.625% Senior Notes due 2031. The Company shall be entitled to
1 With respect to Initial Notes issued on the Issue Date.
issue Additional Notes pursuant to Section 2.01 of the Indenture. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling, and Holders are referred to the Indenture for a statement of such terms.
5. OPTIONAL REDEMPTION.
(a) At any time prior to the Par Call Date, the Notes may be redeemed by the Company, in whole or in part, at the Company’s option, at a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but excluding, the Redemption Date; or
(ii) the sum of the Remaining Scheduled Payments on such Notes being redeemed (not including any portion of the payments of interest accrued as of the redemption date (the “Redemption Date”)), discounted to its present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, as determined by the Quotation Agent, plus 25 basis points, plus accrued and unpaid interest on the principal amount of such Notes being redeemed to, but excluding, the Redemption Date.
(b) At any time on or after the Par Call Date, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Notes to be redeemed, plus accrued and unpaid interest, if any, on the Notes to, but excluding, the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(c) If the optional Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Company. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption.
(d) If less than all of the Notes are to be redeemed, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Definitive Note surrendered representing the same indebtedness to the extent not redeemed or purchased; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000.
(e) In addition to the Company’s rights to redeem the Notes as set forth above, the Company may purchase Notes in open-market transactions, tender offers or otherwise invest such net proceeds in any manner that is not prohibited by the Indenture.
6. MANDATORY REDEMPTION. The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Subject to Section 3.03 of the Indenture, notice of redemption shall be sent by electronic delivery or mailed by first-class mail at least 10 days but not more than 60 days before the Redemption Date to each Holder to be redeemed at such Holder’s registered address, except that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Articles VIII or XI of the Indenture.
8. OFFERS TO REPURCHASE. If a Change of Control Triggering Event occurs, each Holder will have the right to require the Company to purchase all or any part (in integral multiples of $1,000 except that no purchase will be permitted that would result in a Note having a remaining principal amount of less than $2,000) of such Holder’s Notes pursuant to a Change of Control Offer. In the Change of Control Offer, the Company will offer to purchase all of the Notes, at a purchase price in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the rights of Holders of record on relevant Record Dates to receive interest due on an Interest Payment Date). The Change of Control Offer shall be made in accordance with Section 4.07 of the Indenture.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Notes or portion of Notes selected for redemption, except for the unredeemed portion of any Notes being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture or the Notes may be amended or supplemented as provided in the Indenture.
12. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture. If any Event of Default (other than as specified in Section 6.01(6) or 6.01(7) of the Indenture with respect to the Company or a Significant Subsidiary) shall occur and be continuing with respect to the Indenture, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders) and upon any such
declaration, such principal, premium, if any, and interest shall become due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default as specified in Section 6.01(6) or 6.01(7), with respect to the Company or a Significant Subsidiary occurs and is continuing, then all the Notes shall automatically become and be due and payable immediately in an amount equal to the principal amount of the Notes, together with accrued and unpaid interest, if any, to the date the Notes become due and payable, without any declaration or other act on the part of the Trustee or any holder. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or and its consequences under the Indenture except a continuing Default in payment of the principal of, premium, if any, or interest on, any of the Notes held by a non-consenting Holder. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required within 30 days after becoming aware of any Default, to deliver to the Trustee a statement specifying such Default and what action the Company proposes to take with respect thereto.
13. AUTHENTICATION. This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.
14. GOVERNING LAW. THIS NOTE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. CUSIP/ISIN NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP/ISIN numbers to be printed on the Notes and the Trustee may use CUSIP/ISIN numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
16. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to the Company at the following addresses:
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
with a copy to:
Hogan Lovells US LLP
555 Thirteenth Street, NW
Washington, D.C. 20004
Attention: Eve N. Howard, Esq.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: ___________________________________________
(Insert assignee’s legal name)
______________________________________________________________________________
(Insert assignee’s soc. sec. or tax I.D. no.)
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________(Print or type assignee’s name, address and zip code)
and irrevocably appoint __________________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him.
Date: _____________________
Your Signature: ____________________________
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 4.07 of the Indenture, check the appropriate box below:
o Section 4.07
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.07 of the Indenture, state the amount you elect to have purchased:
$_______________
Date: _____________________
Your Signature: ____________________________
(Sign exactly as your name appears on the face of this Note)
Tax Identification No.: _______________________
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The initial outstanding principal amount of this Global Note is $[•]. The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global or Definitive Note for an interest in this Global Note, have been made:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Date of Exchange | | Amount of
decrease in
Principal
Amount of this
Global Note | | Amount of
increase in
Principal
Amount of this
Global Note | | Principal
Amount of this
Global Note
following such
decrease or
increase | | Signature of
authorized
signatory of
Trustee or Notes
Registrar |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
__________________
*This schedule should be included only if the Note is issued in global form.
EXHIBIT A-2
[Face of Regulation S Temporary Note]
[Insert Regulation S Temporary Global Note Legend]
[Insert the Global Note Legend]
[Insert the Private Placement Legend]
CUSIP [•][•]
ISIN [•]
TEMPORARY REGULATION S GLOBAL NOTE
2.625% Senior Notes due 2031
SMITHFIELD FOODS, INC.
promises to pay to CEDE & CO. or registered assigns, the principal sum of [•] United States Dollars on September 13, 2031.
Interest Payment Dates: March 13 and September 13
Record Dates: February 27 and August 30
IN WITNESS HEREOF, the Company has caused this instrument to be duly executed.
| | | | | | | | |
| SMITHFIELD FOODS, INC. |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
This is one of the Notes referred to in the within-mentioned Indenture:
Dated:
| | | | | | | | |
| U.S. BANK NATIONAL ASSOCIATION,
as Trustee |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
[Reverse of Note]
2.625% Senior Notes due 2031
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Smithfield Foods, Inc., a Virginia corporation (the “Company”) promises to pay interest on the principal amount of this Note at 2.625% per annum from September 13, 2021 until maturity. The Company will pay interest, semi-annually in arrears on March 13 and September 13 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that the first Interest Payment Date shall be March 13, 20222. The Company shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the interest rate on the Notes to the extent lawful. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay interest on the Notes to the Persons who are registered Holders at the close of business on the February 27 or August 30 (whether or not a Business Day), as the case may be, immediately preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. Payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Company or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank National Association, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to the Holders. The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture, dated as of September 13, 2021 (the “Indenture”), among the Company, the Subsidiary Guarantors party thereto and the Trustee. This Note is one of a duly authorized issue of Notes of the Company designated as its 2.625% Senior Notes due 2031. The Company shall be entitled to
2 With respect to Initial Notes issued on the Issue Date
issue Additional Notes pursuant to Section 2.01 of the Indenture. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling, and Holders are referred to the Indenture for a statement of such terms.
5. OPTIONAL REDEMPTION.
(a) At any time prior to the Par Call Date, the Notes may be redeemed by the Company, in whole or in part, at the Company’s option, at a redemption price equal to the greater of:
(i) 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest thereon to, but excluding, the Redemption Date; or
(ii) the sum of the Remaining Scheduled Payments on such Notes being redeemed (not including any portion of the payments of interest accrued as of the redemption date (the “Redemption Date”)), discounted to its present value as of the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the applicable Adjusted Treasury Rate, as determined by the Quotation Agent, plus 25 basis points, plus accrued and unpaid interest on the principal amount of such Notes being redeemed to, but excluding, the Redemption Date.
(b) At any time on or after the Par Call Date, the Company may redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of Notes to be redeemed, plus accrued and unpaid interest, if any, on the Notes to, but excluding, the Redemption Date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).
(c) If the optional Redemption Date is on or after a Record Date and on or before the related Interest Payment Date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Note is registered at the close of business on such Record Date, and no additional interest will be payable to Holders whose Notes will be subject to redemption by the Company. On and after the Redemption Date, interest will cease to accrue on Notes or portions thereof called for redemption.
(d) If less than all of the Notes are to be redeemed, the Trustee shall authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Definitive Note surrendered representing the same indebtedness to the extent not redeemed or purchased; provided that each new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess of $2,000.
(e) In addition to the Company’s rights to redeem the Notes as set forth above, the Company may purchase Notes in open-market transactions, tender offers or otherwise invest such net proceeds in any manner that is not prohibited by the Indenture.
6. MANDATORY REDEMPTION. The Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.
7. NOTICE OF REDEMPTION. Subject to Section 3.03 of the Indenture, notice of redemption shall be sent by electronic delivery or mailed by first-class mail at least 10 days but not more than 60 days before the Redemption Date to each Holder to be redeemed at such Holder’s registered address, except that redemption notices may be sent more than 60 days prior to a Redemption Date if the notice is issued in connection with Articles VIII or XI of the Indenture.
8. OFFERS TO REPURCHASE. If a Change of Control Triggering Event occurs, each Holder will have the right to require the Company to purchase all or any part (in integral multiples of $1,000 except that no purchase will be permitted that would result in a Note having a remaining principal amount of less than $2,000) of such Holder’s Notes pursuant to a Change of Control Offer. In the Change of Control Offer, the Company will offer to purchase all of the Notes, at a purchase price in cash in an amount equal to 101% of the principal amount of such Notes, plus accrued and unpaid interest, if any, to (but not including) the date of purchase (subject to the rights of Holders of record on relevant Record Dates to receive interest due on an Interest Payment Date). The Change of Control Offer shall be made in accordance with Section 4.07 of the Indenture.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Notes or portion of Notes selected for redemption, except for the unredeemed portion of any Notes being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture or the Notes may be amended or supplemented as provided in the Indenture.
12. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture. If any Event of Default (other than as specified in Section 6.01(6) or 6.01(7) of the Indenture with respect to the Company or a Significant Subsidiary) shall occur and be continuing with respect to the Indenture, the Trustee or the Holders of not less than 25% in aggregate principal amount of the Notes then outstanding may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, premium, if any, and accrued interest on all Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders) and upon any such
declaration, such principal, premium, if any, and interest shall become due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default as specified in Section 6.01(6) or 6.01(7), with respect to the Company or a Significant Subsidiary occurs and is continuing, then all the Notes shall automatically become and be due and payable immediately in an amount equal to the principal amount of the Notes, together with accrued and unpaid interest, if any, to the date the Notes become due and payable, without any declaration or other act on the part of the Trustee or any holder. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in aggregate principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default relating to the payment of principal, premium, if any, or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or and its consequences under the Indenture except a continuing Default in payment of the principal of, premium, if any, or interest on, any of the Notes held by a non-consenting Holder. The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required within 30 days after becoming aware of any Default, to deliver to the Trustee a statement specifying such Default and what action the Company proposes to take with respect thereto.
13. AUTHENTICATION. This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the manual signature of the Trustee.
14. GOVERNING LAW. THIS NOTE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
15. CUSIP/ISIN NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP/ISIN numbers to be printed on the Notes and the Trustee may use CUSIP/ISIN numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
16. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to the Company at the following addresses:
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
with a copy to:
Hogan Lovells US LLP
555 Thirteenth Street, NW
Washington, D.C. 20004
Attention: Eve N. Howard, Esq.
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: _______________________________________
(Insert assignee’s legal name)
(Insert assignee’s soc. sec. or tax I.D. no.)
(Print or type assignee’s name, address and zip code)
and irrevocably appoint __________________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him.
Date: _____________________
| | | | | |
| Your Signature: | |
| (Sign exactly as your name appears on the face of this Note) |
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to Section 4.07 of the Indenture, check the appropriate box below:
oSection 4.07
If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.07 of the Indenture, state the amount you elect to have purchased:
$_______________
Date: _____________________
| | | | | |
| Your Signature: | |
| (Sign exactly as your name appears on the face of this Note) |
Signature Guarantee*: __________________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
SCHEDULE OF EXCHANGES OF INTERESTS IN THE REGULATION S TEMPORARY GLOBAL NOTE*
The initial outstanding principal amount of this Regulation S Temporary Global Note is $[•]. The following exchanges of a part of this Regulation S Temporary Global Note for an interest in another Regulation S Temporary Global Note or for a Definitive Note, or exchanges of a part of another Regulation S Temporary Global or Definitive Note for an interest in this Regulation S Temporary Global Note, have been made:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Date of Exchange | | Amount of
decrease in
Principal
Amount of this
Regulation S
Temporary
Global Note | | Amount of
increase in
Principal
Amount of this
Regulation S
Temporary
Global Note | | Principal
Amount of this
Regulation S
Temporary
Global Note
following such
decrease or
increase | | Signature of
authorized
signatory of
Trustee or Notes
Registrar |
| | | | | | | | |
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| | | | | | | | |
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| | | | | | | | |
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| | | | | | | | |
| | | | | | | | |
__________________
*This schedule should be included only if the Note is issued in global form.
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
U.S. Bank National Association
Global Corporate Trust Services
Two Midtown Plaza
1349 West Peachtree Street, NW,
Suite 1050
Atlanta, GA 30309
Attn: David Ferrell
Re: 2.625% Senior Notes due 2031
Reference is hereby made to the Indenture, dated as of September 13, 2021 (the “Indenture”), among Smithfield Foods, Inc., the Subsidiary Guarantors party thereto and the Trustee with respect to the 2.625% Senior Notes due 2031. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
_______________ (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the “Transfer”), to _______________ (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. o CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE 144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States.
2. o CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE REGULATION S TEMPORARY GLOBAL NOTE, THE
REGULATION S PERMANENT GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Temporary Global Note, the Regulation S Permanent Global Note and/or the Restricted Definitive Note Indenture and the Securities Act.
3. o CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):
(a) o such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;
or
(b) o such Transfer is being effected to the Company or a subsidiary thereof;
or
(c) o such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act; or
(d) o such Transfer is being effected pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904 and the Transfer complies with the applicable transfer restrictions and the requirements of the exemption claimed, which certification is supported by an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act.
4. o CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.
(a) o CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 to a Person who is not an affiliate (as defined in Rule 144) of the Company under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(b) o CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act to a Person who is not an affiliate (as defined in Rule 144) of the Company and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.
(c) o CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 to a Person who is not an affiliate (as defined in Rule 144) of the Company and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.
5. o CHECK IF TRANSFEROR IS AN AFFILIATE OF THE COMPANY.
6. o CHECK IF TRANSFEREE IS AN AFFILIATE OF THE COMPANY.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company.
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| | | [Insert Name of Transferor] |
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| | | | |
| | | By: | |
| | | | Name: |
| | | | Title: |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Dated: | | | | |
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) a beneficial interest in the:
(i) 144A Global Note (CUSIP [l]), or
(ii) Regulation S Global Note (CUSIP [l]), or
(b) a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) a beneficial interest in the:
(i) 144A Global Note (CUSIP [l]), or
(ii) Regulation S Global Note (CUSIP [l]), or
(iii) Unrestricted Global Note (CUSIP [l]), or
(b) a Restricted Definitive Note; or
(c) an Unrestricted Definitive Note, in accordance with the terms of the Indenture.
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
SMITHFIELD FOODS, INC.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Timothy P. Dykstra, Vice President and Corporate Treasurer
U.S. Bank National Association
Global Corporate Trust Services
Two Midtown Plaza
1349 West Peachtree Street, NW,
Suite 1050
Atlanta, GA 30309
Attn: David Ferrell
Re: 2.625% Senior Notes due 2031
Reference is hereby made to the Indenture, dated as of September 13, 2021 (the “Indenture”), among Smithfield Foods, Inc., the Subsidiary Guarantors party thereto and the Trustee with respect to the 2.625% Senior Notes due 2031. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.
___________ (the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $__________ in such Note[s] or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:
1) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE
a) o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any
state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
b) o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
c) o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
d) o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act, (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States and (v) the Owner is not an affiliate (as defined in Rule 144) of the Company.
2) EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN RESTRICTED GLOBAL NOTES
a) o CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.
b) o CHECK IF EXCHANGE IS FROM RESTRICTED DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] [ ] 144A Global Note [ ] Regulation S Global Note, with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.
3) o CHECK IF OWNER IS AN AFFILIATE OF THE COMPANY.
4) o CHECK IF OWNER IS EXCHANGING THIS NOTE IN CONNECTION WITH AN EXPECTED TRANSFER TO AN AFFILIATE OF THE COMPANY.
This certificate and the statements contained herein are made for your benefit and the benefit of the Company and are dated ______________________.
| | | | | | | | | | | | | | |
| | | [Insert Name of Transferor] |
| | | | |
| | | | |
| | | By: | |
| | | | Name: |
| | | | Title: |
| | | | |
| | | | |
| Dated: | | | | |
EXHIBIT D
[FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT SUBSIDIARY GUARANTORS]
Supplemental Indenture (this “Supplemental Indenture”), dated as of __________, among __________________ (the “Guaranteeing Subsidiary”), a subsidiary of Smithfield Foods, Inc., a Virginia corporation (the “Company”) and U.S. Bank National Association, a national banking association organized and existing under the bank of the United States of America, as trustee (the “Trustee”).
W I T N E S S E T H
WHEREAS, each of the Company and the Subsidiary Guarantors (as defined in the Indenture referred to below) has heretofore executed and delivered to the Trustee an indenture (as supplemented, the “Indenture”), dated as of September 13, 2021, providing for the issuance of an unlimited aggregate principal amount of 2.625% Senior Notes due 2031 (the “Notes”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally Guarantee all of the Company’s obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
(1) Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.
(2) Agreement to be Bound. The Guaranteeing Subsidiary hereby becomes a party to the Indenture as a Subsidiary Guarantor and as such will have all of the rights and be subject to all of the obligations and agreements of a Subsidiary Guarantor under the Indenture.
(3) Guarantee. The Guaranteeing Subsidiary agrees, on a joint and several basis with all the existing Subsidiary Guarantors, if any, to Guarantee to each Holder and the Trustee the obligations of the Company under the Notes and the Indenture pursuant to Article X of the Indenture.
(4) No Recourse Against Others. No director, officer, employee, incorporator or stockholder of the Guaranteeing Subsidiary shall have any liability for any obligations of the Company (including the Guaranteeing Subsidiary) under the Notes, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes and the Subsidiary Guarantees.
(5) Notices. All notices and other communications to the Guaranteeing Subsidiary shall be given as provided in the Indenture to the Guaranteeing Subsidiary, at its address set forth below, with a copy to the Company as provided in the Indenture for notices to the Company.
(6) Parties. Nothing expressed or mentioned herein is intended or shall be construed to give any Person, firm or corporation, other than the Holders and the Trustee, any legal or equitable right, remedy or claim under or in respect of this Supplemental Indenture or the Indenture or any provision herein or therein contained.
(7) Governing Law. This Supplemental Indenture shall be governed by, and construed in accordance with, the laws of the State of New York.
(8) Severability Clause. In case any provision in this Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and such provision shall be ineffective only to the extent of such invalidity, illegality or unenforceability.
(9) Ratification of Indenture; Supplemental Indentures Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. Every reference in the Indenture to the Indenture shall hereby be deemed to mean the Indenture as supplemented by this Supplemental Indenture. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder heretofore or hereafter authenticated and delivered shall be bound hereby. The Trustee makes no representation or warranty as to the validity or sufficiency of this Supplemental Indenture.
(10) Counterparts. The parties hereto may sign one or more copies of this Supplemental Indenture in counterparts, all of which together shall constitute one and the same agreement. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.
(11) Headings. The headings of the sections in this Supplemental Indenture are for convenience of reference only and shall not be deemed to alter or affect the meaning or interpretation of any provisions hereof.
[Signatures on following page]
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written.
| | | | | | | | |
| [NAME OF GUARANTEEING
SUBSIDIARY], as a Guarantor |
| | |
| | |
| By: | |
| | Name: |
| | Title: |
Exhibit 10.1
Execution Version
Published Deal CUSIP Number: 83224VAQ0
Published US Dollar Revolving Credit Facility CUSIP Number: 83224VAR8
Published Multicurrency Revolving Credit Facility CUSIP Number: 83224VAS6
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 21, 2021
among
SMITHFIELD FOODS, INC.,
as Borrower,
CERTAIN SUBSIDIARIES,
as Borrowers,
BANK OF AMERICA, N.A.,
as Administrative Agent, Swing Line Lender
and
L/C Issuer,
and
The Other Lenders Party Hereto
BOFA SECURITIES, INC.,
AGFIRST FARM CREDIT BANK
BANK OF CHINA, NEW YORK BRANCH
INDUSTRIAL AND COMMERCIAL BANK OF CHINA NEW YORK BRANCH
BARCLAYS BANK PLC
COÖPERATIEVE RABOBANK U.A., NEW YORK BRANCH
GOLDMAN SACHS BANK USA
MORGAN STANLEY SENIOR FUNDING, INC.
U.S. BANK NATIONAL ASSOCIATION,
as Joint Lead Arrangers and Joint Bookrunners
COBANK, FCB
COMPEER FINANCIAL
CITIBANK, N.A.
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
ING CAPITAL LLC
JPMORGAN CHASE BANK, N.A.
PNC BANK, NATIONAL ASSOCIATION
TRUIST BANK,
as Documentation Agents
| | | | | | | | | | | |
| Section | | Page |
| | | |
| ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS | 1 |
| 1.01 | Defined Terms | 1 |
| 1.02 | Other Interpretive Provisions | 44 |
| 1.03 | Accounting Terms | 45 |
| 1.04 | Rounding | 46 |
| 1.05 | Exchange Rates; Currency Equivalents | 46 |
| 1.06 | Additional Alternative Currencies | 47 |
| 1.07 | Change of Currency | 48 |
| 1.08 | Times of Day | 48 |
| 1.09 | Letter of Credit Amounts | 48 |
| | | |
| ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS | 49 |
| 2.01 | Committed Loans | 49 |
| 2.02 | Borrowings, Conversions and Continuations of Committed Loans | 49 |
| 2.03 | Letters of Credit | 51 |
| 2.04 | Swing Line Loans | 62 |
| 2.05 | Prepayments | 65 |
| 2.06 | Termination or Reduction of Commitments | 66 |
| 2.07 | Repayment of Loans | 67 |
| 2.08 | Interest | 67 |
| 2.09 | Fees | 68 |
| 2.10 | Computation of Interest and Fees | 69 |
| 2.11 | Evidence of Debt | 69 |
| 2.12 | Payments Generally; Administrative Agent’s Clawback | 70 |
| 2.13 | Sharing of Payments by Lenders | 72 |
| 2.14 | Designated Borrowers | 73 |
| 2.15 | Increase in Revolving Credit Commitments | 74 |
| 2.16 | Cash Collateral | 75 |
| 2.17 | Defaulting Lenders | 77 |
| 2.18 | Extension of Maturity Date | 79 |
| | | |
| ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY | 81 |
| 3.01 | Taxes | 81 |
| 3.02 | Illegality | 86 |
| 3.03 | Inability to Determine Rates | 87 |
| 3.04 | Increased Costs; Reserves on Eurocurrency Rate Loans | 93 |
| 3.05 | Compensation for Losses | 95 |
| 3.06 | Mitigation Obligations; Replacement of Lenders | 96 |
| 3.07 | Survival | 96 |
| | | |
TABLE OF CONTENTS (continued)
| | | | | | | | | | | |
| Section | | | Page |
| | | |
| ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS | 97 |
| 4.01 | Conditions of Restatement Effective Date | 97 |
| 4.02 | Conditions to all Credit Extensions | 98 |
| | | |
| ARTICLE V. REPRESENTATIONS AND WARRANTIES | 99 |
| 5.01 | Organization; Powers | 99 |
| 5.02 | Authorization; Enforceability | 100 |
| 5.03 | Governmental Approvals; No Conflicts | 100 |
| 5.04 | Financial Statements; No Material Adverse Effect | 100 |
| 5.05 | Properties | 101 |
| 5.06 | Litigation Matters | 101 |
| 5.07 | Compliance with Laws and Agreements | 101 |
| 5.08 | Investment Company Status | 101 |
| 5.09 | Taxes | 101 |
| 5.10 | ERISA | 101 |
| 5.11 | Disclosure | 102 |
| 5.12 | Insurance | 102 |
| 5.13 | Use of Proceeds | 102 |
| 5.14 | Subsidiaries | 103 |
| 5.15 | Event of Default | 103 |
| 5.16 | Sanctions; Anti-Corruption Laws | 103 |
| 5.17 | Money Laundering and Counter-Terrorist Financing Laws | 103 |
| | | |
| ARTICLE VI. AFFIRMATIVE COVENANTS | 103 |
| 6.01 | Financial Statements and Other Information | 104 |
| 6.02 | Notices of Material Events | 106 |
| 6.03 | Existence; Conduct of Business | 107 |
| 6.04 | Payment of Taxes | 107 |
| 6.05 | Maintenance of Properties | 108 |
| 6.06 | Books and Records; Inspection Rights | 108 |
| 6.07 | Compliance with Laws | 108 |
| 6.08 | Use of Proceeds; Letters of Credit | 108 |
| 6.09 | Insurance | 109 |
| 6.10 | Further Assurances | 109 |
| | | |
| ARTICLE VII. NEGATIVE COVENANTS | 109 |
| 7.01 | Indebtedness | 110 |
| 7.02 | Liens | 112 |
| 7.03 | Fundamental Changes; Business Activities | 113 |
| 7.04 | [Reserved] | 114 |
TABLE OF CONTENTS (continued)
| | | | | | | | | | | |
| Section | | | Page |
| | | |
| 7.05 | Swap Agreements | 114 |
| 7.06 | Transactions with Affiliates | 114 |
| 7.07 | Restricted Payments | 114 |
| 7.08 | [Reserved] | 115 |
| 7.09 | [Reserved] | 115 |
| 7.10 | Consolidated Funded Debt to Consolidated Capitalization Ratio | 115 |
| 7.11 | Consolidated EBITDA to Consolidated Interest Expense | 116 |
| | | |
| ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES | 116 |
| 8.01 | Events of Default | 116 |
| 8.02 | Remedies Upon Event of Default | 118 |
| 8.03 | Application of Funds | 119 |
| | | |
| ARTICLE IX. ADMINISTRATIVE AGENT | 120 |
| 9.01 | Appointment and Authority | 120 |
| 9.02 | Rights as a Lender | 120 |
| 9.03 | Exculpatory Provisions | 120 |
| 9.04 | Reliance by Administrative Agent | 121 |
| 9.05 | Delegation of Duties | 122 |
| 9.06 | Resignation of Administrative Agent | 122 |
| 9.07 | Non-Reliance on Administrative Agent and Other Lenders | 124 |
| 9.08 | No Other Duties, Etc | 125 |
| 9.09 | Administrative Agent May File Proofs of Claim | 125 |
| 9.10 | Guaranty Matters | 125 |
| 9.11 | Certain ERISA Matters | 126 |
| 9.12 | Recovery of Erroneous Payments | 127 |
| | | |
| ARTICLE X. MISCELLANEOUS | 127 |
| 10.01 | Amendments, Etc | 127 |
| 10.02 | Notices; Effectiveness; Electronic Communication | 130 |
| 10.03 | No Waiver; Cumulative Remedies; Enforcement | 132 |
| 10.04 | Expenses; Indemnity; Damage Waiver | 132 |
| 10.05 | Payments Set Aside | 135 |
| 10.06 | Successors and Assigns | 135 |
| 10.07 | Treatment of Certain Information; Confidentiality | 142 |
| 10.08 | Right of Setoff | 143 |
| 10.09 | Interest Rate Limitation | 144 |
| 10.10 | Counterparts; Integration; Effectiveness | 144 |
| 10.11 | Survival of Representations and Warranties | 144 |
| 10.12 | Severability | 145 |
TABLE OF CONTENTS (continued)
| | | | | | | | | | | |
| Section | | | Page |
| | | |
| 10.13 | Replacement of Lenders | 145 |
| 10.14 | Governing Law; Jurisdiction; Etc | 146 |
| 10.15 | Waiver of Jury Trial | 147 |
| 10.16 | No Advisory or Fiduciary Responsibility | 147 |
| 10.17 | Electronic Execution of Agreement Communications | 148 |
| 10.18 | USA PATRIOT Act | 149 |
| 10.19 | Judgment Currency | 149 |
| 10.20 | Entire Agreement | 149 |
| 10.21 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | 150 |
| 10.22 | Acknowledgement Regarding Any Supported QFCs | 150 |
| 10.23 | Amendment and Restatement | 151 |
| | | |
| | | |
| SIGNATURES | S-1 |
| | | | | | | | |
| SCHEDULES | |
| | |
| 2.01 | Commitments, L/C Fronting Sublimits and Applicable Percentages |
| 5.06 | Litigation |
| 5.14 | Loan Parties |
| 7.01 | Indebtedness |
| 7.02 | Liens |
| 10.02 | Administrative Agent’s Office; Certain Addresses for Notices |
| | |
| | |
| | |
| EXHIBITS | |
| A | Form of Committed Loan Notice |
| B | Form of Swing Line Loan Notice |
| C-1 | [Reserved] |
| C-2 | Form of Multicurrency Revolving Credit Note |
| C-3 | Form of US Dollar Revolving Credit Note |
| D-1 | [Reserved] |
| D-2 | [Reserved] |
| E-1 | Form of Assignment and Assumption |
| E-2 | Form of Administrative Questionnaire |
| F | Form of Compliance Certificate |
| G | Form of Designated Borrower Request and Assumption Agreement |
| H | Form of Designated Borrower Notice |
| I | Form of U.S. Tax Compliance Certificate |
| J | Form of Letter of Credit Report |
| K | Form of Extension Agreement |
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is entered into as of May 21, 2021, among Smithfield Foods, Inc., a corporation organized under the laws of the State of Virginia (the “Company”), certain Subsidiaries of the Company party hereto pursuant to Section 2.14 (each a “Designated Borrower” and, together with the Company, the “Borrowers” and, each a “Borrower”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.
WHEREAS, the Company, the lenders party thereto and the Administrative Agent are parties to that certain Amended and Restated Credit Agreement, dated as of March 13, 2018 (the “Existing Credit Agreement”), which amended and restated that certain Credit Agreement, dated as of the Original Closing Date (the “Original Credit Agreement”); and
WHEREAS, the Company has requested that the Lenders and the Administrative Agent amend and restate, in its entirety, the Existing Credit Agreement upon and subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree that the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:
“2015 Audited Financial Statements” means the audited consolidated balance sheet of the Company and its Subsidiaries for the fiscal year ended January 3, 2016, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Company and its Subsidiaries, including the notes thereto.
“Act” has the meaning specified in Section 10.18.
“Additional Commitment Lender” has the meaning specified in Section 2.18.
“Adjusted Eurocurrency Rate” shall mean, subject to the implementation of a LIBOR Successor Rate in accordance with Section 3.03(b), (a) with respect to any Eurocurrency Rate Loan denominated in Sterling, the Eurocurrency Rate for Sterling and (b) with respect to any other Eurocurrency Rate Loan for any Interest Period, an interest rate per annum equal to (i) the Eurocurrency Rate in effect for such Interest Period divided by (ii) 1 minus the Statutory Reserves (if any) for such Borrowing of Eurocurrency Rate Loans for such Interest Period; provided, that if the Adjusted Eurocurrency Rate shall be less than zero, such rate shall be deemed zero.
“Adjustment” has the meaning specified in Section 3.03.
“Administrative Agent”means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.
“Administrative Agent’s Office” means, with respect to any currency, the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02 with respect to such currency, or such other address or account with respect to such currency as the Administrative Agent may from time to time notify the Company and the Lenders.
“Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit E-2 or any other form approved by the Administrative Agent.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided, however, that for purposes of Section 7.06, the term “Affiliate” shall also mean any Person that is an executive officer or director of the Person specified, any Person that directly or indirectly beneficially owns Equity Interests in the Person specified representing 10% or more of the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding Equity Interests in the Person specified and any Person that would be an Affiliate of any such beneficial owner pursuant to this definition (but without giving effect to this proviso).
“Agent Parties” has the meaning set forth in Section 10.02(c).
“Aggregate Commitments” means, as of any date of determination, the aggregate amount of all of the Commitments of all of the Lenders at such time.
“Agreement” has the meaning specified in the introductory paragraph hereto.
“Agreement Currency” has the meaning specified in Section 10.19.
“Alternative Currency” means each of the following currencies: Euro, Sterling, Yen and Canadian Dollars, together with each other currency (other than Dollars) that is approved in accordance with Section 1.06.
“Alternative Currency Equivalent” means, at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Alternative Currency as determined by the Administrative Agent or the L/C Issuer, as the case may be, by reference to Bloomberg (or such other publicly available service for displaying exchange rates), to be the exchange rate for the purchase of such Alternative Currency with Dollars at approximately 11:00 a.m. on the date two (2) Business Days prior to the date as of which the foreign exchange computation is made; provided, however, that if no such rate is available, the “Alternative Currency Equivalent” shall be determined by the Administrative Agent or the L/C Issuer, as the
case may be, using any reasonable method of determination its deems appropriate in its sole discretion (and such determination shall be conclusive absent manifest error).
“Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction applicable to any Loan Party or any Loan Party’s Subsidiaries from time to time concerning or relating to bribery or corruption.
“Applicable Currency” means Dollars or an Alternative Currency.
“Applicable Debt Rating” means, as of any date of determination, the ratings for the Company’s Index Debt from S&P, Moody’s and Fitch.
“Applicable Percentage” means (a) with respect to any Multicurrency Revolving Credit Lender at any time, the fraction, expressed as a percentage (carried out to the ninth decimal place), the numerator of which is the Multicurrency Revolving Credit Commitment of such Multicurrency Revolving Credit Lender and the denominator of which is the aggregate amount of the Multicurrency Revolving Credit Commitments and (b) with respect to any US Dollar Revolving Credit Lender at any time, the fraction, expressed as a percentage (carried out to the ninth decimal place), the numerator of which is the US Dollar Revolving Credit Commitment of such US Dollar Revolving Credit Lender and the denominator of which is the aggregate amount of the US Dollar Revolving Credit Commitments. If the commitment of each Revolving Credit Lender to make Revolving Credit Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the Revolving Credit Commitments have expired, then the Applicable Percentage of each Revolving Credit Lender shall be determined based on the Applicable Percentage of such Revolving Credit Lender most recently in effect, giving effect to any subsequent assignments and to any Lender’s status as a Defaulting Lender at the time of determination. The initial Applicable Percentage of each Lender in respect of each Facility is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable. The Applicable Percentage of any Lender is subject to adjustment as provided in Section 2.17.
“Applicable Rate” means, from time to time, the following percentages per annum, based upon the Applicable Debt Rating as set forth below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Applicable Rate | |
| | | | | | | | | | | | | | |
| Pricing Level | | | Applicable Debt Ratings (S&P /
Moody’s / Fitch) | | | Commitment Fee | | | Eurocurrency Rate + Letters of Credit | | | Base
Rate | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| 1 | | | ≥A- / A3 / A- | | | 0.090% | | | 0.875% | | | 0.000% | |
| 2 | | | BBB+ / Baa1 / BBB+ | | | 0.110% | | | 1.000% | | | 0.000% | |
| 3 | | | BBB / Baa2 / BBB | | | 0.150% | | | 1.125% | | | 0.125% | |
| 4 | | | BBB- / Baa3 / BBB- | | | 0.175% | | | 1.250% | | | 0.250% | |
| 5 | | | ≤BB+ / Ba1 / BB+ | | | 0.225% | | | 1.500% | | | 0.500% | |
If (a) the Company does not have any Applicable Debt Rating (other than by reason of the circumstances referred in the paragraph immediately below), then Pricing Level 5 shall apply, (b) the Company has only one Applicable Debt Rating, such Applicable Debt Rating shall apply, (c) the Company has Applicable Debt Ratings from only two Rating Agencies, then the higher of such Applicable Debt Ratings shall apply, unless there is a split in Applicable Debt Ratings of more than one ratings level, in which case the Applicable Debt Rating that is one level lower than the higher of the Company’s two Applicable Debt Ratings shall apply and (d) the Company has Applicable Debt Ratings from all three Rating Agencies, if (i) two Applicable Debt Ratings are equivalent and the third Applicable Debt Rating is lower, the higher Applicable Debt Rating shall apply, (ii) two Applicable Debt Ratings are equivalent and the third Applicable Debt Rating is higher, the lower Applicable Debt Rating shall apply and (iii) no Applicable Debt Ratings are equivalent, the Applicable Debt Rating that is neither the highest nor the lowest Applicable Debt Rating shall apply. Initially, the Applicable Rate shall be determined based upon the Applicable Debt Rating in effect on the Restatement Effective Date. Thereafter, each change in the Applicable Rate resulting from a publicly announced change in the Applicable Debt Rating (other than as a result of a change in the rating system of a Rating Agency) shall be effective during the period commencing on the date of delivery by the Company to the Administrative Agent of notice thereof pursuant to Section 6.01(f) and ending on the date immediately preceding the effective date of the next such change.
If the rating system of a Rating Agency shall change or if a Rating Agency shall cease to be in the business of rating corporate debt obligations, the Company and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such Rating Agency and, pending the effectiveness of any such amendment, the Applicable Rate shall be determined by reference to the Applicable Debt Rating most recently in effect prior to such change or cessation.
“Applicable Reference Rate” means, (a) for any Eurocurrency Rate Loan denominated in U.S. Dollars or any Alternative Currency not referenced in this definition, LIBOR, (b) for any Eurocurrency Rate Loan denominated in Euro, EURIBOR, (c) for any Eurocurrency Rate Loan
denominated in Sterling, SONIA, (d) for any Eurocurrency Rate Loan denominated in Canadian Dollars, CDOR and (e) for any Eurocurrency Rate Loan denominated in Yen, TIBOR.
“Applicable Time” means, with respect to any borrowings and payments in any Alternative Currency, the local time in the place of settlement for such Alternative Currency as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be necessary for timely settlement on the relevant date in accordance with normal banking procedures in the place of payment.
“Applicant Borrower” has the meaning specified in Section 2.14.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Arranger” or “Arrangers” means the Lead Arranger and AgFirst Farm Credit Bank, Bank of China, New York Branch, Industrial and Commercial Bank of China New York Branch, Barclays Bank PLC, Coöperatieve Rabobank U.A., New York Branch, Goldman Sachs Bank USA, Morgan Stanley Senior Funding, Inc. and U.S. Bank National Association, each in its capacity as a joint lead arranger and joint bookrunner.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit E-1 or any other form (including electronic documentation generated by use of an electronic platform) approved by the Administrative Agent.
“Auto-Extension Letter of Credit” has the meaning specified in Section 2.03(b)(iii).
“Availability Period” means, in respect of any Class of the Revolving Credit Facility, the period from and including the Restatement Effective Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Revolving Credit Commitments of such Class pursuant to Section 2.06, and (c) the date of termination of the Commitment of each Revolving Credit Lender of such Class to make Revolving Credit Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other
financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bank of America” means Bank of America,N.A. and its successors.
“Base Rate” means for any day a fluctuating rate of interest per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) the Adjusted Eurocurrency Rate for Dollar-denominated Loans plus 1.00%. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change. If the Base Rate is being used as an alternate rate of interest pursuant to Section 3.03 hereof, then the Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above.
“Base Rate Committed Loan” means a Committed Loan that is a Base Rate Loan.
“Base Rate Loan” means a Loan that bears interest based on the Base Rate. All Base Rate Loans shall be denominated in Dollars.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“BHC Act Affiliate” has the meaning specified in Section 10.22(b).
“Board” means the Board of Governors of the Federal Reserve System of the United States (or any successor thereto).
“Borrower” and “Borrowers” each has the meaning specified in the introductory paragraph hereto.
“Borrower Materials” has the meaning specified in the last paragraph of Section 6.01.
“Borrowing” means a Multicurrency Revolving Credit Borrowing, a US Dollar Revolving Credit Borrowing or a Swing Line Borrowing, as the context may require.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office with respect to Obligations denominated in Dollars is located and:
(a) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in Dollars, any fundings, disbursements, settlements and payments in Dollars in respect of any such Eurocurrency Rate Loan, or any other dealings in Dollars to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan, means any such day that is also a London Banking Day;
(b) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in Euro, any fundings, disbursements, settlements and payments in Euro in respect of any such Eurocurrency Rate Loan, or any other dealings in Euro to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan, means a TARGET Day;
(c) if such day relates to any interest rate settings as to a Eurocurrency Loan denominated in (i) Sterling, means a day other than a day banks are closed for general business in London, or (ii) Yen, means a day other than when banks are closed for general business in Japan;
(d) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in a currency other than any Applicable Currency referred to above in this definition, means any such day on which dealings in deposits in the relevant currency are conducted by and between banks in the London or other applicable offshore interbank market for such currency; and
(e) if such day relates to any fundings, disbursements, settlements and payments in a currency other than any Applicable Currency referred to above in this definition in respect of a Eurocurrency Rate Loan denominated in a currency other than any Applicable Currency referred to above in this definition, or any other dealings in any currency other than any Applicable Currency referred to above in this definition to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan (other than any interest rate settings), means any such day on which banks are open for foreign exchange business in the principal financial center of the country of such currency.
“Canadian Dollars” means the lawful currency of Canada.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital or finance leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
“Capital Stock” of any Person means (a) 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 Common Stock or Preferred Stock, and (b) 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.
“Cash Collateralize” means to deposit in a Controlled Account or to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the L/C Issuer or the US Dollar Revolving Credit Lenders, as collateral for L/C Obligations or obligations of the US Dollar Revolving Credit Lenders to fund participations in respect of L/C Obligations, cash or deposit account balances or, if the Administrative Agent and the L/C Issuer shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuer. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
“CFC” shall mean a Subsidiary of the Company that is a “controlled foreign corporation” within the meaning of Section 957 of the Code.
“CFC Holding Company” shall mean any Subsidiary of the Company that owns no material assets other than (a) equity interests (including, for this purpose, any debt or other instrument treated as equity for U.S. federal income tax purposes) in, or indebtedness of, one or more Subsidiaries that are CFCs or CFC Holding Companies or (b) incidental assets (including cash or cash equivalents) related thereto held on a temporary basis.
“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Change of Control” means 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 Securities Exchange Act of 1934), directly or indirectly, of more than 50% of the Company’s Voting Stock (or its successor by merger, consolidation or purchase of all or substantially all of its assets).
“Class” (a) when used with respect to Lenders, refers to whether such Lenders are Multicurrency Revolving Credit Lenders or US Dollar Revolving Credit Lenders, (b) when used with respect to Commitments, refers to whether such Commitments are Multicurrency Revolving Credit Commitments or US Dollar Revolving Credit Commitments, (c) when used with respect to Loans or a Borrowing, refers to whether such Loans, or the Loans comprising such Borrowing, are Multicurrency Revolving Credit Loans or US Dollar Revolving Credit Loans and (d) when used with respect to any Facility, refers to whether such Facility is the Multicurrency Revolving Credit Facility or US Dollar Revolving Credit Facility.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Commitment” means a Multicurrency Revolving Credit Commitment or a US Dollar Revolving Credit Commitment, as the context may require.
“Committed Borrowing” means a borrowing consisting of simultaneous Committed Loans of the same Type and Class in the same currency and, in the case of Eurocurrency Rate Loans not denominated in Sterling, having the same Interest Period made by each of the Lenders pursuant to Section 2.01.
“Committed Loan” means a Multicurrency Revolving Credit Loan or US Dollar Revolving Credit Loan, as the context may require.
“Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a conversion of Committed Loans from one Type to the other, or (c) a continuation of Eurocurrency Rate Loans, pursuant to Section 2.02(a), which shall be substantially in the form of Exhibit A or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.
“Common Stock” means with respect to any Person, any and all shares, interest or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Restatement Effective Date, and includes, without limitation, all series and classes of such common stock.
“Company” has the meaning specified in the introductory paragraph hereto.
“Competitor” means any Person that is a competitor of the Company or its Subsidiaries, which has been designated by the Company as a competitor by written notice to the Administrative Agent on or prior to the Restatement Effective Date (or Affiliates of such Person that are either identified in writing by the Company on or prior to the Restatement Effective Date or readily identifiable on the basis of such Affiliate’s name).
“Competitor List” has the meaning specified in Section 10.06(h)(ii).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Capitalization” means, as of any date of determination, the sum of (i) Consolidated Funded Debt plus (ii) total shareholders’ equity for the Company and its consolidated Subsidiaries.
“Consolidated EBITDA” means, for any period, for the Company and its Subsidiaries on a consolidated basis, an amount equal to Net Income for such period plus, (a) without duplication and to the extent subtracted in determining such Net Income, provisions for (i) taxes based on income, (ii) Consolidated Interest Expense, (iii) depreciation and amortization expense, (iv) any other non-cash charges for such period (but excluding (x) any non-cash charge in respect of an item that was included in Net Income in a prior period and (y) any non-cash charge that relates to the write-down or write-off of inventory) and (v) fees and expenses incurred during such period in respect of acquisitions, dispositions, investments and debt or equity issuances contemplated or consummated during such period (including, for the avoidance of doubt, any such transactions that fail to close) minus (b) without duplication and to the extent otherwise included in such Net Income, (i) any cash payments made during such period in respect of non-cash charges described in clause (a)(iv) taken in a prior period and (ii) non-cash gains for such period (provided that any such cash received with respect to non-cash gains shall be added in computing Consolidated EBITDA during the period in which such cash is received) minus (c) without duplication and to the extent otherwise included in such Net Income, any cash distribution received from unconsolidated joint ventures to the extent such distributions were not made from operating earnings of such unconsolidated joint ventures. For purposes of calculating Consolidated EBITDA for any period, if during such period the Company or any Subsidiary shall have consummated a Material Transaction, Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto.
“Consolidated Funded Debt” means, at the time of determination for the Company and its Subsidiaries on a consolidated basis in accordance with GAAP (a) all Indebtedness of the Company and its Subsidiaries, limited in the case of clause (e) of the definition of Indebtedness to drawn and unreimbursed obligations and limited in the case of clause (g) of the definition of Indebtedness to the Guaranties by the Company or its Subsidiaries of Indebtedness of others that would constitute Consolidated Funded Debt if incurred directly by the Company or its Subsidiaries minus (b) the positive difference, if any, equal to (i) the amount of domestically held unrestricted cash of the Company and its consolidated Subsidiaries as set forth on the balance sheet of the Company most recently delivered to the Administrative Agent under Section 6.01 minus (ii) $50,000,000. The Indebtedness of any Person of the type included in Consolidated Funded Debt shall include the Indebtedness of any other entity (including any partnership in which such person is a general partner) to the extent such person is liable therefor as a result of such person's ownership interest in or other relationship with such entity, except to the extent the terms of such indebtedness provide that such person is not liable therefor.
“Consolidated Interest Expense” means, for any period, the interest expense of the Company and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. For purposes of calculating Consolidated Interest Expense for any period, if during such period the Company or any Subsidiary shall have consummated a Material Transaction, Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto.
“Consolidated Net Tangible Assets”means, at any date, total assets of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP minus (a) current liabilities (excluding short-term Indebtedness and the current portion of long-term Indebtedness) of the Company and its Subsidiaries and (b) goodwill and other intangible assets of the Company and its Subsidiaries, in each case determined on a consolidated basis in accordance with GAAP.
“Consolidated Total Assets” means, as to any Person on any date, the aggregate amount of assets of such Person and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, or the dismissal or appointment of the management, of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. Solely for purposes of the definition of “Affiliate”, “Control” shall also mean the possession, directly or indirectly, of the power to vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of a Person.
“Controlled Account” means each deposit account that is subject to an account control agreement in form and substance reasonably satisfactory to the Administrative Agent and the L/C Issuer.
“Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.
“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
“Default Rate” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum; provided, however, that with respect to a Eurocurrency Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, and (b)
when used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus 2% per annum.
“Defaulting Lender” means, subject to Section 2.17(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Company in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the L/C Issuer, the Swing Line Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swing Line Loans) within two Business Days of the date when due, (b) has notified the Company, the Administrative Agent, the L/C Issuer or the Swing Line Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Company, to confirm in writing to the Administrative Agent and the Company that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Company), or (d) has, or has a direct or indirect parent company that has (other than through an Undisclosed Administration), become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.17(b)) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Company, the L/C Issuer, the Swing Line Lender and each other Lender promptly following such determination.
“Designated Borrower” has the meaning specified in the introductory paragraph hereto.
“Designated Borrower Notice” has the meaning specified in Section 2.14.
“Designated Borrower Request and Assumption Agreement” has the meaning specified in Section 2.14.
“Designated Jurisdiction” means any country, region or territory to the extent that such country, region or territory itself is the subject of any Sanction.
“Dollar” and “$” mean lawful money of the United States.
“Dollar Equivalent” means, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any Alternative Currency, the equivalent amount thereof in Dollars as determined by the Administrative Agent or the L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Dollars with such Alternative Currency.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Electronic Copy” has the meaning specified in Section 10.17.
“Electronic Record” has the meaning specified in Section 10.17.
“Electronic Signature” has the meaning specified in Section 10.17.
“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii) and (v) (subject to such consents, if any, as may be required under Section 10.06(b)(iii)).
“Environmental Laws” means all treaties, statutes, laws (including common law), rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating
in any way to the environment, the preservation or reclamation of natural resources, the generation, management, use, presence, release or threatened release of, or exposure to, any Hazardous Material, or to health and safety matters.
“Environmental Liability” means all liabilities or obligations, including all claims, actions, suits, judgments, orders, damages, injunctive relief, losses, fines, penalties, fees, expenses (including reasonable fees and expenses of attorneys and consultants) or costs, whether contingent or otherwise, arising from or relating to (a) any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling, transportation, storage, treatment, disposal or arrangement for disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. For the avoidance of doubt, when any provision in this Agreement relates to a past event or period of time within the last six years, the term “ERISA Affiliate” includes any trade or business (whether or not incorporated) that was, as to the time of such past event or period of time, an ERISA Affiliate within the meaning of the preceding sentence.
“ERISA Event” means (a) any “reportable event”, as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the complete or partial withdrawal of the Company or any ERISA Affiliate from any Plan or Multiemployer Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (c) the filing of a notice of intent to terminate a Plan in a “distress termination” as defined in Section 4041(c) of ERISA, or the treatment of a Multiemployer Plan amendment as a termination under Section 4041A of ERISA; (d) the institution of proceedings to terminate a Plan or a Multiemployer Plan by the PBGC under Section 4041 or 4042 of ERISA; (e) the failure by the Company to make required contributions to any Plan; (f) the failure of the Company to satisfy the minimum funding standard (as defined in Section 412 of the Code or Section 302 of ERISA) applicable to any Plan; (g) a determination that any Plan is in “at risk” status (as defined in Section 430(i)(4) of the Code or Section 303(i)(4) of ERISA); (h) the incurrence by the Company or any ERISA Affiliate of any “withdrawal liability” (within the meaning of Section 4201 of ERISA), or any determination that a Multiemployer Plan is insolvent or in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA); (i) the occurrence of a non-exempt
“prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA) with respect to which any Loan Party or ERISA Affiliate is held liable for an amount that would reasonably be expected to result in a Material Adverse Effect; and (j) any other event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan by the PBGC or the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Euro” and “€” mean the single currency of the Participating Member States.
“Eurocurrency Rate” means:
(a) with respect to any Credit Extension:
(x) with respect to any Eurocurrency Rate Loan for any Interest Period:
(i) subject to the implementation of a LIBOR Successor Rate in accordance with Section 3.03(b), denominated in Dollars, the rate per annum equal to the London Interbank Offered Rate (“LIBOR”) or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, on the Rate Determination Date for deposits in the relevant currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period;
(ii) denominated in Euro, the rate per annum equal to the Euro Interbank Offered Rate (“EURIBOR”) or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m. (Brussels, Belgium time) on the Rate Determination Date for deposits in the relevant currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period;
(iii) denominated in Canadian dollars, the rate per annum equal to the Canadian Dealer Offered Rate (“CDOR”), or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at or about 10:00 a.m. (Toronto, Ontario time) on the Rate Determination Date with a term equivalent to such Interest Period;
(iv) denominated in Yen, the rate per annum equal to the Japanese Yen Tokyo interbank offered rate administered by the Ippan Shadan Hojin JBA TIBOR Administration (“TIBOR”), or a comparable or successor rate which rate is approved by the Administrative Agent, as published
on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at or about 11:00 a.m. (Japan time) on the Rate Determination Date with a term equivalent to such Interest Period;
(v) denominated in any Alternative Currency not otherwise set forth in this definition, the rate per annum as designated with respect to such Alternative Currency at the time such Alternative Currency is approved by the Administrative Agent and the Lenders pursuant to Section 1.06(a); and
(y) with respect to any Eurocurrency Rate Loan denominated in Sterling, SONIA Daily Rate; and
(b) subject to the implementation of a LIBOR Successor Rate in accordance with Section 3.03(b), for any rate calculation with respect to a Base Rate Loan on any date, the rate per annum equal to LIBOR, at or about 11:00 a.m., London time determined two Business Days prior to such date for U.S. Dollar deposits with a term of one month commencing that day;
provided that to the extent a comparable or successor rate is approved by the Administrative Agent in connection with any rate set forth in this definition, the approved rate shall be applied in a manner consistent with market practice; provided, further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent; and if the Eurocurrency Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.
“Eurocurrency Rate Loan” means a Committed Loan that bears interest at a rate based on the Adjusted Eurocurrency Rate. Eurocurrency Rate Loans may be denominated in Dollars or in an Alternative Currency. All Committed Loans denominated in an Alternative Currency must be Eurocurrency Rate Loans.
“Eurocurrency Successor Rate” has the meaning specified in Section 3.03.
“Event of Default” has the meaning assigned to such term in Article VIII.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Excluded Subsidiary” means (a) each Subsidiary that is not a Material Guarantor Subsidiary, (b) any Foreign Subsidiary, (c) each joint venture and each Subsidiary that is not a wholly-owned Subsidiary on any date such Subsidiary would otherwise be required to become a Guarantor pursuant to the requirements of Section 6.10 (for so long as such Subsidiary remains a non-wholly-owned Subsidiary), (d) any CFC Holding Company, (e) any Domestic Subsidiary that is a Subsidiary of (i) a Foreign Subsidiary that is a CFC or (ii) a CFC Holding Company, (f) any Subsidiary for which Guarantees are (i) prohibited by law or require consent, approval, license or authorization of a Governmental Authority, unless such consent, approval, license or
authorization has been received; provided, that there shall be no obligation to obtain such consent or (ii) contractually prohibited on the Restatement Effective Date or, following the Restatement Effective Date, the date of acquisition of such Subsidiary, so long as such prohibition is in effect on the date of such acquisition and was not created in contemplation of such acquisition, (g) any Subsidiary where the burden or cost of obtaining a Guarantee outweighs the benefit to the Lenders, as determined by the Administrative Agent and the Company, (h) any other Subsidiary with respect to which providing such a Guarantee could reasonably be expected to result in material adverse tax consequences to the Company and its Subsidiaries in the aggregate (including as a result of the operation of Section 956 of the Code) as reasonably determined by the Company in consultation with the Administrative Agent, (i) any captive insurance Subsidiary, (j) any special purpose entity, including Smithfield Receivables Funding LLC, any SPE Subsidiary and any obligor under the Receivables Securitization and (k) each not-for-profit Subsidiary.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender becomes a party to this Agreement (other than pursuant to an assignment request by the Company under Section 10.13) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01(a)(ii) or (c), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(e), (d) any backup withholding Taxes and (e) any Taxes imposed pursuant to FATCA.
“Existing Credit Agreement” has the meaning given to such term in the recitals to this Agreement.
“Exiting Lender” has the meaning specified in Section 10.23.
“Extending Lender” has the meaning specified in Section 2.18.
“Extension Agreement” means an extension agreement substantially in the form of Exhibit K or any other form approved by the Administrative Agent.
“Extension Effective Date” has the meaning set forth in Section 2.18.
“Facility” or “Facilities”means the Multicurrency Revolving Credit Facility or the US Dollar Revolving Credit Facility, as the context may require.
“Farm Credit Lender” means a lending institution organized and existing pursuant to the provisions of the Farm Credit Act of 1971, as amended, and under the regulation of the Farm Credit Administration.
“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement between a nonU.S. jurisdiction and the United States with respect to the foregoing and any law or regulation adopted pursuant to, or facilitating the implementation of, any such intergovernmental agreement.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.
“Fee Letters” means (a) the letter agreement, dated as of December 15, 2016, among the Company, the Administrative Agent and the Lead Arranger (the “Original Fee Letter”), and (b) the letter agreement, dated as of April 16, 2021, among the Company, the Administrative Agent and the Lead Arranger.
“Financial Covenants” means each of the financial covenants set forth in Section 7.10 and Section 7.11.
“Financial Officer” means the chief financial officer, principal accounting officer, vice president of finance, treasurer, controller or any other Person with equivalent responsibilities, in each case, of the Company.
“Fitch” means Fitch Ratings, Inc., and any successor to its rating agency business.
“Foreign Lender” means, with respect to any Borrower, (a) if such Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if such Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which such Borrower is resident for tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“Foreign Plan” means any employee benefit plan, program, policy, arrangement or agreement (other than a Plan or Multiemployer Plan) maintained or contributed to by any Loan Party or any Subsidiary thereof with respect to employees employed outside the United States.
“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States, a State thereof or the District of Columbia.
“Fronting Exposure” means, at any time there is a Defaulting Lender under the US Dollar Revolving Credit Facility, (a) with respect to the L/C Issuer, such Defaulting Lender’s Applicable Percentage of the Outstanding Amount of all outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Applicable Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders in accordance with the terms hereof.
“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.
“Governmental Authority” means the government of the U.S., any other nation or any political subdivision thereof, whether state, provisional, territorial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national body such as the European Union or the European Central Bank) having jurisdiction over the Company, any Subsidiary or any Lender, as the context may require.
“Granting Lender” has the meaning specified in Section 10.06(g).
“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or
level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“Guaranty Agreement” means the Guaranty Agreement, dated as of February 17, 2017, among the Company, each of the Subsidiary Guarantors party thereto and the Administrative Agent, as amended by Guaranty Amendment No. 1 and Guaranty Amendment No. 2 and as otherwise amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Guaranty Amendment No. 1” means Amendment No. 1 to the Guaranty Agreement, dated as of March 13, 2018, by and among the Company, the Subsidiary Guarantors party thereto and the Administrative Agent.
“Guaranty Amendment No. 2” means Amendment No. 2 to the Guaranty Agreement, dated as of May 21, 2021, by and among the Company, the Subsidiary Guarantors party thereto and the Administrative Agent.
“Guaranty Joinder Agreement” means a guaranty joinder agreement signed by a joining party and the Administrative Agent substantially in the form of Exhibit A to the Guaranty Agreement.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including any petroleum products or byproducts and all other hydrocarbons, radon gas, molds, asbestos or asbestos-containing materials, urea formaldehyde foam insulation, polychlorinated biphenyls, chlorofluorocarbons and all other ozone-depleting substances, per- and polyfluoroalkyl substances, infectious or medical wastes, odors or odor-causing substances and all other substances or wastes of any nature that are prohibited, limited or regulated pursuant to, or that could give rise to liability under, any Environmental Law.
“Honor Date” has the meaning specified in Section 2.03(c)(i).
“Impacted Loans” has the meaning specified in Section 3.03.
“Indebtedness” of any Person means, without duplication,
(a) all obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments,
(c) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable incurred in the ordinary course of business which are not past due by more than 90 days (unless being contested in good faith by appropriate proceedings)),
(d) all Capital Lease Obligations of such Person,
(e) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit, letters of guaranty, bankers’ acceptances or other similar instruments (other than obligations with respect to letters of credit securing obligations (other than obligations that would otherwise constitute “Indebtedness”) entered into in the ordinary course of business of such Person to the extent 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 payment on the letter of credit),
(f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, the amount of such Indebtedness being deemed to be the lesser of the fair market value (as determined reasonably and in good faith by the Chief Financial Officer of the Company) of such property or assets and the amount of the Indebtedness so secured,
(g) all Guarantees by such Person of Indebtedness of others, and
(h) all obligations of such Person in respect of any Securitization Transaction (valued as set forth in the definition of Securitization Transaction).
Indebtedness shall not include obligations under any operating lease of property that is not capitalized on the balance sheet of the Company or any Subsidiary. The Indebtedness of any Person shall include the Indebtedness of any other Person (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such other Person, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, in connection with the purchase by the Company or any Subsidiary of any business, the term “Indebtedness” will exclude post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 60 days thereafter. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all obligations as described above; provided, however, that, in the case of
Indebtedness sold by the obligor at a discount, the amount of such Indebtedness at any time shall be the accreted value thereof at such time. Except as otherwise expressly provided herein, the term “Indebtedness” shall not include cash interest thereon.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“Indemnitees” has the meaning specified in Section 10.04(b).
“Index Debt” means senior, unsecured non-credit enhanced (other than by guarantees of subsidiaries that also guarantee the Obligations at such time) long-term debt for borrowed money.
“Information” has the meaning specified in Section 10.07.
“Interest Payment Date” means, (a) as to any Loan not denominated in Sterling other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan, and the Maturity Date; provided, however, that if any Interest Period for a Eurocurrency Rate Loan not denominated in Sterling exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; (b) as to any Loan denominated in Sterling, the first Business Day after the end of each month and the Maturity Date and (c) as to any Base Rate Loan (including a Swing Line Loan), the last Business Day of each March, June, September and December and the Maturity Date.
“Interest Period” means as to each Eurocurrency Rate Loan not denominated in Sterling, the period commencing on the date such Eurocurrency Rate Loan is disbursed or converted to or continued as a Eurocurrency Rate Loan and ending on the date one, three or six months thereafter (in each case, subject to availability), as selected by the Company in its Committed Loan Notice; provided that:
(a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case of a Eurocurrency Rate Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;
(b) any Interest Period pertaining to a Eurocurrency Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Maturity Date.
“IRS” means the United States Internal Revenue Service.
“ISDA Definitions” means the 2006 ISDA Definitions (or successor definitional booklet for interest rate derivatives) published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time.
“ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).
“Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Company (or any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of Credit.
“Judgment Currency” has the meaning specified in Section 10.19.
“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
“Lead Arranger” means BofA Securities, Inc.
“L/C Advance” means, with respect to each US Dollar Revolving Credit Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage. All L/C Advances shall be denominated in Dollars.
“L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Committed Borrowing. All L/C Borrowings shall be denominated in Dollars.
“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.
“L/C Issuer” means (a) Bank of America, in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder, (b) each other Lender that agrees to act as an issuer of Letters of Credit appointed by the Company (with the consent of the Administrative Agent) as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder and (c) any Lender appointed by the Company (with the consent of the Administrative Agent) as such by notice to the Lenders as a replacement for any L/C Issuer who is at the time of such appointment a Defaulting Lender. In the event that there is more than one L/C Issuer any time, references herein and in the other Loan Documents to the L/C Issuer shall be deemed to refer to the L/C Issuer in respect of the applicable Letter of Credit or to all L/C Issuers, as the context requires.
“L/C Issuer Fronting Sublimit” means, with respect to each L/C Issuer, its Fronting Sublimit set forth on Schedule 2.01, or in the applicable documentation pursuant to which such L/C Issuer was appointed as the L/C Issuer hereunder.
“L/C Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.09. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“Lender” has the meaning specified in the introductory paragraph hereto and, unless the context requires otherwise, includes the Swing Line Lender.
“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Company and the Administrative Agent which office may include any Affiliate of such Lender or any domestic or foreign branch of such Lender or such Affiliate. Unless the context otherwise requires each reference to a Lender shall include its applicable Lending Office.
“Letter of Credit” means any standby letter of credit issued hereunder providing for the payment of cash upon the honoring of a presentation thereunder. Letters of Credit may be issued in Dollars or in an Alternative Currency.
“Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.
“Letter of Credit Expiration Date” means the day that is seven days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).
“Letter of Credit Fee” has the meaning specified in Section 2.03(h).
“Letter of Credit Report” means a certificate substantially in the form of Exhibit J or any other form approved by the Administrative Agent.
“Letter of Credit Sublimit” means an amount equal to $200,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the US Dollar Revolving Credit Commitment.
“LIBOR” has the meaning specified in the definition of Eurocurrency Rate.
“LIBOR Replacement Date” has the meaning specified in Section 3.03(b).
“LIBOR Successor Rate” has the meaning specified in Section 3.03(b).
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.
“Loan” means an extension of credit by a Lender to a Borrower under Article II in the form of a Committed Loan or a Swing Line Loan.
“Loan Documents” means this Agreement, each Designated Borrower Request and Assumption Agreement, each Note, each Issuer Document, any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.16, the Fee Letters, the Guaranty Agreement, any Guaranty Joinder Agreement and any other agreement, instrument or document executed and delivered by a Loan Party and designated by its terms as a “Loan Document”.
“Loan Parties” means, collectively, the Company, each of the Subsidiary Guarantors and each Designated Borrower.
“London Banking Day” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank Eurodollar market.
“Margin Stock” means “margin stock” within the meaning of Regulations T, U and X of the Board.
“Material Acquisition” means any acquisition or a series of related acquisitions (other than solely among the Company and its Subsidiaries) of (a) Equity Interests in any Person if, after giving effect thereto, such Person will become a Subsidiary or (b) assets comprising all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of) any Person; provided that the aggregate cash consideration therefor equals or exceeds $500,000,000.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect on, the operations, business, assets, properties, liabilities (actual or contingent) or financial condition of the Company and its Subsidiaries, taken as a whole; (b) a material impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan Document, or of the ability of the Loan Parties, taken as a whole, to perform their material obligations under the Loan Documents; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Company or any Subsidiary Guarantor under any material provision of any Loan Document to which it is a party.
“Material Guarantor Subsidiary” means each Subsidiary (other than a Foreign Subsidiary) of the Company that is to become a Subsidiary Guarantor hereunder in order to ensure that the Company and the Subsidiary Guarantors directly (a) own, on a consolidated basis, at least 90% of the Consolidated Total Assets of the Company (excluding the Consolidated Total Assets of Excluded Subsidiaries pursuant to any of clauses (b) through (k) of the definition of
“Excluded Subsidiary”) (such Consolidated Total Assets, the “Non-Excluded Consolidated Total Assets”) and (b) generate at least 90% of the consolidated revenues of the Company (excluding the consolidated revenues of Excluded Subsidiaries pursuant to any of clauses (b) through (k) of the definition of “Excluded Subsidiary”) (such consolidated revenues, the “Non-Excluded Consolidated Revenues”), in each case of the foregoing clauses (a) and (b) as of the end of or for the most recent period of four consecutive fiscal quarters of the Company for which financial statements have been delivered pursuant to Section 6.01(a) or 6.01(b) (or, prior to the first delivery of any such financial statements, as of the end of or for the period of four consecutive fiscal quarters of the Company ended March 31, 2021); provided that in no event shall any Subsidiary of the Company that (x) owns 1.5% or less of the Non-Excluded Consolidated Total Assets and (y) generates 1.5% or less of the Non-Excluded Consolidated Revenues, in each case of the foregoing clauses (x) and (y) as of the end of or for the most recent period of four consecutive fiscal quarters of the Company for which financial statements have been delivered pursuant to Section 6.01(a) or 6.01(b), constitute a Material Guarantor Subsidiary (notwithstanding, for the avoidance of doubt, that the exclusion of such Subsidiary would cause the requirement set forth above to not be satisfied), except that, if at the end of or for any such most recent period of four consecutive fiscal quarters the combined Consolidated Total Assets or combined consolidated revenues of all such Subsidiaries that would not constitute Material Guarantor Subsidiaries pursuant to this proviso would exceed 10% of the Non-Excluded Assets or 10% of the Non-Excluded Revenues, as applicable, then one or more of such excluded Subsidiaries selected by the Company shall be deemed to be Material Guarantor Subsidiaries for all purposes of this Agreement (including, without limitation, the Subsidiary Guarantee Requirement) until such excess shall have been eliminated, in each case, as reasonably determined by the Company based on such financial statements and other information available to the Company.
“Material Indebtedness” means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of any Loan Party and its respective Subsidiaries in an aggregate outstanding principal amount exceeding $150,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Company or any Subsidiary in respect of any Swap Agreement at any time shall be the Swap Termination Value for such Swap Agreement at such time.
“Material Subsidiary” means each Subsidiary of the Company (a) the Consolidated Total Assets of which equal 3.75% or more of the Consolidated Total Assets of the Company or (b) the consolidated revenues of which equal 3.75% or more of the consolidated revenues of the Company, in each case as of the end of or for the most recent period of four consecutive fiscal quarters of the Company for which financial statements have been delivered pursuant to Section 6.01(a) or 6.01(b) (or, prior to the first delivery of any such financial statements, as of the end of or for the period of four consecutive fiscal quarters of the Company ended October 1, 2017); provided that if at the end of or for any such most recent period of four consecutive fiscal quarters the combined Consolidated Total Assets or combined consolidated revenues of all Subsidiaries that under clauses (a) and (b) above would not constitute Material Subsidiaries shall have exceeded 10% of the Consolidated Total Assets of the Company or 10% of the consolidated revenues of the Company (calculated without duplication of assets or revenues), then one or
more of such excluded Subsidiaries shall for all purposes of this Agreement be deemed to be Material Subsidiaries in descending order based on the amounts of their Consolidated Total Assets or consolidated revenues, as the case may be, until such excess shall have been eliminated in each case, as reasonably determined by the Company based on such financial statements and other information available to the Company.
“Material Transaction” means any disposition or acquisition by the Company or by a Subsidiary of a Subsidiary, or a business unit, division, product line or line of business, for consideration in excess of $100,000,000.
“Maturity Date” means the date that is five years after the Restatement Effective Date or such later date as may be extended from time to time pursuant to Section 2.18 (and, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day); provided, however, that the Maturity Date with respect to any Lender that is a Non-Extending Lender pursuant to Section 2.18(b) shall be the Maturity Date in effect immediately prior to the applicable Extension Effective Date for all purposes of this Agreement.
“Maximum Rate” has the meaning specified in Section 10.09.
“Minimum Collateral Amount” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances provided to reduce or eliminate Fronting Exposure during the existence of a Defaulting Lender under the US Dollar Revolving Credit Facility, an amount equal to 105% of the Fronting Exposure of the L/C Issuer with respect to Letters of Credit issued and outstanding at such time, (b) with respect to Cash Collateral consisting of cash or deposit account balances provided in accordance with the provisions of Section 2.16(a)(i), (a)(ii) or (a)(iii), an amount equal to 105% of the Outstanding Amount of all LC Obligations, and (c) otherwise, an amount determined by the Administrative Agent and the L/C Issuer in their sole discretion.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
“Multicurrency Revolving Credit Borrowing” means a borrowing consisting of one or more simultaneous Multicurrency Revolving Credit Loans of the same Type and, in the case of Eurocurrency Rate Loans not denominated in Sterling, having the same Interest Period made pursuant to Section 2.01.
“Multicurrency Revolving Credit Commitment” means, as to each Multicurrency Revolving Credit Lender, its obligation to make Multicurrency Revolving Credit Loans to the Borrowers pursuant to Section 2.01 in an aggregate principal amount at any one time outstanding not to exceed the Dollar Equivalent of the amount set forth opposite such Lender’s name on Schedule 2.01 under the caption “Multicurrency Revolving Credit Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. On the Restatement Effective Date, the aggregate Multicurrency Revolving Credit Commitment shall be $250,000,000.
“Multicurrency Revolving Credit Exposure” means, as to any Multicurrency Revolving Credit Lender at any time, the aggregate Outstanding Amount at such time of its Committed Loans.
“Multicurrency Revolving Credit Facility” means, at any time, the aggregate amount of the Multicurrency Revolving Credit Lenders’ Multicurrency Revolving Credit Commitments and Multicurrency Revolving Credit Loans at such time.
“Multicurrency Revolving Credit Lender” means, at any time, any Lender that has a Multicurrency Revolving Credit Commitment or holds a Multicurrency Revolving Credit Loan at such time.
“Multicurrency Revolving Credit Loan” has the meaning specified in Section 2.01.
“Multicurrency Revolving Credit Note” means a promissory note made by the Borrower in favor of a Multicurrency Revolving Credit Lender evidencing Multicurrency Revolving Credit Loans made by such Multicurrency Revolving Credit Lender, substantially in the form of Exhibit C-2.
“Multiemployer Plan” means, at any time, a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Loan Party or any ERISA Affiliate is then making or accruing an obligation to make contributions or has within the preceding six plan years made or had any obligation to make contributions.
“Net Income” means, for any period, without duplication, the consolidated net income (loss) of the Company and its Subsidiaries determined in accordance with GAAP.
“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 10.01 and (ii) has been approved by the Required Lenders.
“Non-Extending Lender” has the meaning specified in Section 2.18.
“Non-Extension Notice Date” has the meaning specified in Section 2.03(b)(iii).
“Note” means a Multicurrency Revolving Credit Note or a US Dollar Revolving Credit Note, as the context may require.
“Notice Date” has the meaning set forth in Section 2.18.
“Obligations” means (a) the due and punctual payment by any Borrower of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any Borrower in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of L/C Obligations, interest thereon (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) and obligations to provide cash collateral and (iii) all other monetary obligations of any Borrower to any of the Lenders or the Administrative Agent under any Loan Document, including obligations to pay fees, expense reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of any Borrower under or pursuant to any Loan Document and (c) the due and punctual payment and performance of all the obligations of each other Loan Party under or pursuant to each Loan Document (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding).
“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
“Original Closing Date” means February 17, 2017.
“Original Credit Agreement” has the meaning given to such term in the recitals to this Agreement.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.06).
“Outstanding Amount” means (i) with respect to Committed Loans on any date, the Dollar Equivalent of the aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of such Committed Loans occurring on such date, (ii) with respect to Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of such Swing Line Loans occurring on such date; and (iii) with respect to any L/C Obligations on any date, the Dollar Equivalent amount of the aggregate outstanding amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the Company of Unreimbursed Amounts.
“Overnight Rate” means, for any day, (a) with respect to any amount denominated in Dollars, the greater of (i) the Federal Funds Rate and (ii) an overnight rate determined by the Administrative Agent, the L/C Issuer, or the Swing Line Lender, as the case may be, in accordance with banking industry rules on interbank compensation, and (b) with respect to any amount denominated in an Alternative Currency, the rate of interest per annum at which overnight deposits in the applicable Alternative Currency, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day by a branch or Affiliate of Bank of America in the applicable offshore interbank market for such currency to major banks in such interbank market.
“PACA” means the Perishable Agricultural Commodities Act, as amended.
“Participant” has the meaning specified in Section 10.06(d).
“Participating Member State” means any member state of the European Union that has the Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
“Participant Register” has the meaning specified in Section 10.06(d).
“Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended from time to time.
“PBGC” means the Pension Benefit Guaranty Corporation or any successor entity thereto.
“Permitted Encumbrances” means:
(a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance with Section 6.04;
(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 60 days or are being contested in compliance with Section 6.04;
(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute an Event of Default;
(f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not interfere with the ordinary conduct of business of the Company or any of its Subsidiaries;
(g) banker’s liens, rights of setoff or similar rights and remedies as to deposit accounts or other funds maintained with depository institutions; provided that, except with respect to any deposit account or funds subject to the Lien of a Loan Document, such deposit accounts or funds are not established or deposited for the purpose of providing collateral for any Indebtedness and are not subject to restrictions on access by the Company or any of its Subsidiaries in excess of those required by applicable banking regulations;
(h) Liens in favor of, or claims or rights of any producer, grower or seller of livestock, poultry or agricultural commodities under PACA, PSA or any similar state or federal laws or regulations;
(i) any Lien, claim or right of any Governmental Authority arising under any law or regulation in any inventory or farm products allocable to any procurement contract with such Governmental Authority;
(j) Liens arising by virtue of Uniform Commercial Code financing statement filings (or similar filings under applicable law) regarding operating leases entered into by the Company and its Subsidiaries in the ordinary course of business;
provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.
“Permitted Holders” means WH Group or any of its Affiliates (but without giving effect to the third sentence of the definition of “Control”) and any “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members; provided that, in the case of such group and without giving effect to the existence of such group or any other group, such Persons, collectively, have direct or indirect beneficial ownership of more than 50% of the Voting Stock of the Company.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA (other than a Multiemployer Plan or Foreign Plan), that is subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and that (i) is
sponsored, maintained or contributed to, by any Loan Party or any ERISA Affiliate or (ii) has at any time within the preceding six years been maintained, or contributed to by any Loan Party or any ERISA Affiliate.
“Platform” has the meaning specified in Section 6.01.
“Pre-Adjustment Successor Rate” has the meaning specified in Section 3.03(b).
“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.
“PSA” means the Packers and Stockyards Act, as amended.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public Lender” has the meaning specified in Section 6.01.
“QFC” has the meaning specified in Section 10.22(b).
“QFC Credit Support” has the meaning specified in Section 10.22.
“Rabobank” means Coöperatieve Rabobank U.A., New York Branch.
“Rate Determination Date” means two (2) Business Days prior to the commencement of such Interest Period (or such other day as is generally treated as the rate fixing day by market practice in such interbank market, as determined by the Administrative Agent; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, such other day as otherwise reasonably determined by the Administrative Agent).
“Rating” means the public ratings from time to time established by Moody’s, S&P and Fitch for the Index Debt (or, at any time when no Index Debt shall be outstanding, (a) the Company’s corporate credit rating then in effect from S&P, (b) the Company’s corporate family rating then in effect from Moody’s and (c) the Company’s issuer default rating then effect from Fitch).
“Rating Agency” means any of S&P, Moody’s and Fitch.
“Recipient” means the Administrative Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.
“Receivables Securitization” means the Securitization Transaction pursuant to that certain Fourth Amended and Restated Credit and Security Agreement dated as of November 21, 2018
among Rabobank as the administrative agent, Smithfield Receivables Funding LLC, the Company and the lenders party thereto (as amended, amended and restated, replaced, increased, supplemented or otherwise modified from time to time).
“Refinancing” means the repayment in full by the Company of all outstanding Indebtedness, and the termination of all Commitments (as defined in the Existing Credit Agreement), under the Existing Credit Agreement.
“Refinancing Indebtedness” means, in respect of any Indebtedness (the “Original Indebtedness”), any Indebtedness that extends, renews or refinances such Original Indebtedness (or any Refinancing Indebtedness in respect thereof); provided that (a) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of such Original Indebtedness (except to the extent used to finance accrued interest and premium (including tender or make-whole premiums) thereon and underwriting discounts, defeasance costs, fees, commissions and expenses), (b) the maturity of such Refinancing Indebtedness shall not be earlier, and the weighted average life to maturity of such Refinancing Indebtedness shall not be shorter, than that of such Original Indebtedness; (c) such Refinancing Indebtedness shall not be required to be repaid, prepaid, redeemed, repurchased or defeased upon the occurrence of one or more events or at the option of any holder thereof (except, in each case, upon the occurrence of an event of default or a change in control or as and to the extent such repayment, prepayment, redemption, repurchase or defeasance would have been required pursuant to the terms of such Original Indebtedness) prior to the earlier of (i) the maturity of such Original Indebtedness and (ii) the date that is six months after the Maturity Date; provided that this clause (c) shall not apply to the final maturity or regularly scheduled amortization of any Indebtedness, (d) such Refinancing Indebtedness shall not constitute an obligation of the Company or any Subsidiary that shall not have been (or, in the case of after-acquired Subsidiaries, shall not have been required to become) an obligor in respect of such Original Indebtedness and shall constitute an obligation of such Subsidiary or of the Company only to the extent of their obligations in respect of such Original Indebtedness; (e) if such Original Indebtedness shall have been expressly subordinated to the Obligations, such Refinancing Indebtedness shall also be expressly subordinated to the Obligations on terms not less favorable in any material respect to the Lenders; and (f) such Refinancing Indebtedness shall not be secured by any Lien on any asset other than the assets that secured such Original Indebtedness (or would have been required to secure such Original Indebtedness pursuant to the terms thereof).
“Register” has the meaning specified in Section 10.06(c).
“Related Adjustment” means, in determining any LIBOR Successor Rate, the first relevant available alternative set forth in the order below that can be determined by the Administrative Agent applicable to such LIBOR Successor Rate:
(A) with respect to Term SOFR, (x) 0.11448% (11.448 basis points) for an Interest Period of one-month’s duration, (y) 0.26161% (26.161 basis points) for an Interest Period of three-months’ duration and (z) 0.42826% (42.826 basis points) for an Interest Period of six-months’ duration;
(B) with respect to SOFR, 0.11448% (11.448 basis points);
(C) the spread adjustment, or method for calculating or determining such spread adjustment, that has been selected or recommended by the Relevant Governmental Body for the relevant Pre-Adjustment Successor Rate (taking into account the interest period, interest payment date or payment period for interest calculated and/or tenor thereto) and which adjustment or method is published on an information service as selected by the Administrative Agent from time to time in its discretion; or
(D) the spread adjustment that would apply (or has previously been applied) to the fallback rate for a derivative transaction referencing the ISDA Definitions (taking into account the interest period, interest payment date or payment period for interest calculated and/or tenor thereto).
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York.
“Removal Effective Date” has the meaning specified in Section 9.06(b).
“Report” means reports prepared by the Administrative Agent or another Person showing the results of inspections with respect to the assets of any Loan Party from information furnished by or on behalf of any Loan Party, after the Administrative Agent has exercised its rights of inspection pursuant to this Agreement, which Reports may be distributed to the Lenders by the Administrative Agent.
“Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Committed Loans, a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.
“Required Facility Lenders” means, with respect to any Facility as of any date of determination, Lenders holding more than 50% of the sum of the (a) Total Outstandings under such Facility (with the aggregate amount of each US Dollar Revolving Credit Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such US Dollar Revolving Credit Lender for purposes of this definition) and (b) aggregate unused Commitments under such Facility; provided that the unused Commitments under such Facility of, and the portion of the Total Outstandings under such Facility held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Facility Lenders.
“Required Lenders” means, at any time, Lenders holding more than 50% of the sum of the (a) Total Outstandings (with the aggregate amount of each US Dollar Revolving Credit Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such US Dollar Revolving Credit Lender for purposes of this definition) and (b) aggregate unused Commitments. The Total Outstandings and undrawn Commitments of any Defaulting Lender shall be disregarded in determining Required Lenders at any time; provided that the amount of any participation in any Swing Line Loan and Unreimbursed Amounts that such Defaulting Lender has failed to fund that have not been reallocated to and funded by another Lender shall be deemed to be held by the Lender that is the Swing Line Lender or L/C Issuer, as the case may be, in making such determination.
“Requirement of Law” means, with respect to any Person, (a) the charter, articles or certificate of organization or incorporation and bylaws or other organizational or governing documents of such Person and (b) any Law, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Rescindable Amount” means any payment that the Administrative Agent makes for the account of the Lenders or the L/C Issuer hereunder as to which the Administrative Agent determines (which determination shall be conclusive absent manifest error) that any of the following applies: (a) the Borrower has not in fact made such payment; (b) the Administrative Agent has made a payment in excess of the amount so paid by the Borrower (whether or not then owed); or (c) the Administrative Agent has for any reason otherwise erroneously made such payment.
“Resignation Effective Date” has the meaning specified in Section 9.06(a).
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer, controller or assistant controller of a Loan Party and, solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01, the secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“Restatement Effective Date” means the date on which all of the conditions specified in Section 4.01 shall first be satisfied (or waived).
“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in any Borrower or any
Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancelation or termination of any Equity Interests in a Borrower or any Subsidiary, whether now or hereafter outstanding, or any option, warrant, or other right to acquire any such Equity Interests in a Borrower or any Subsidiary, or any other payment that has a substantially similar effect to any of the foregoing.
“Revaluation Date” means (a) with respect to any Loan, each of the following: (i) each date of a Borrowing of a Eurocurrency Rate Loan denominated in an Alternative Currency, (ii) each date of a continuation of a Eurocurrency Rate Loan denominated in an Alternative Currency pursuant to Section 2.02, and (iii) such additional dates as the Administrative Agent shall determine or the Required Lenders shall require; and (b) with respect to any Letter of Credit, each of the following: (i) each date of issuance of a Letter of Credit denominated in an Alternative Currency, (ii) each date of an amendment of any such Letter of Credit having the effect of increasing the amount thereof, (iii) each date of any payment by the L/C Issuer under any Letter of Credit denominated in an Alternative Currency, and (iv) such additional dates as the Administrative Agent or the L/C Issuer shall determine or the Required Lenders shall require.
“Revolving Credit Borrowing” means a Multicurrency Revolving Credit Borrowing or a US Dollar Revolving Credit Borrowing, as the context may require.
“Revolving Credit Commitment” means a Multicurrency Revolving Credit Commitment or a US Dollar Revolving Credit Commitment, as the context may require.
“Revolving Credit Facility” means, collectively, the Multicurrency Revolving Credit Facility and the US Dollar Revolving Credit Facility.
“Revolving Credit Increase Effective Date” has the meaning specified in Section 2.15(d).
“Revolving Credit Lender” means a Multicurrency Revolving Credit Lender or a US Dollar Revolving Credit Lender, as the context may require.
“Revolving Credit Loans” has the meaning specified in Section 2.01.
“Sanction(s)” means economic or financial sanctions imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. (or any successor providing ratings).
“Same Day Funds” means (a) with respect to disbursements and payments in Dollars, immediately available funds, and (b) with respect to disbursements and payments in an Alternative Currency, same day or other funds as may be determined by the Administrative
Agent or the L/C Issuer, as the case may be, to be customary in the place of disbursement or payment for the settlement of international banking transactions in the relevant Alternative Currency.
“Scheduled Unavailability Date” has the meaning set forth in Section 3.03(b)(ii).
“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“SEC Filings” has the meaning assigned to such term in Section 5.11.
“Securitization Transaction” means any arrangement under which the Company or any Subsidiary transfers accounts receivable and/or payment intangibles, interests therein and/or related assets and rights (a) to a trust, partnership, corporation, limited liability company or other entity (which may be an SPE Subsidiary), which transfer is funded in whole or in part, directly or indirectly, by the incurrence or issuance by the transferee or successor transferee (which may be an SPE Subsidiary) of Indebtedness, other securities or interests that are to receive payments from, or that represent interests in, the cash flow derived from such accounts receivable and/or payment intangibles, interests therein or related assets and rights, or (b) directly to one or more investors or other purchasers. The “amount” or “principal amount” of any Securitization Transaction shall be deemed at any time to be the aggregate principal, capital or stated amount (or the substantive equivalent of any of the foregoing) of the Indebtedness, other securities or interests referred to in the first sentence of this definition or, if there shall be no such principal, capital or stated amount (or the substantive equivalent of any of the foregoing), the uncollected amount of the accounts receivable or interests therein transferred pursuant to such Securitization Transaction, net of any such accounts receivables or interests therein that have been written off as uncollectible. Such “amount” or “principal amount” shall not include any amount of Indebtedness owing by any SPE Subsidiary to the Company or any Subsidiary to the extent that such intercompany Indebtedness has been incurred to finance, in part, the transfers of accounts receivable and/or payment intangibles, interests therein and/or related assets and rights to such SPE Subsidiary. For the avoidance of doubt, the Receivables Securitization in effect as of the date hereof constitutes a Securitization Transaction.
“Senior Notes” means (i) the 3.350% Senior Notes due 2022, issued by the Company on February 1, 2017, (ii) the 4.250% Senior Notes due 2027, issued by the Company on February 1, 2017, (iii) the 2.650% Senior Notes due 2021, issued by the Company on October 3, 2017, (iv) the 5.200% Senior Notes due 2029, issued by the Company on April 1, 2019 and (v) the 3.000% Senior Notes due 2030 issued by the Company on September 15, 2020.
“SOFR” with respect to any Business Day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark (or a successor administrator) on the Federal Reserve Bank of New York’s website (or any successor source) at approximately 8:00 a.m. (New York City time) on the immediately succeeding Business Day and, in each case, that has been selected or recommended by the Relevant Governmental Body.
“SONIA” means, for each day with respect to any Credit Extension denominated in Sterling, the Sterling Overnight Index Average as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) on the fifth Business Day preceding such day; provided that if such day is not a Business Day, then SONIA means such rate published on the Business Day immediately prior thereto; provided, further, that SONIA as determined hereunder shall not have the same date of determination for any outstanding Loan based on SONIA for more than four consecutive days.
“SONIA Adjustment” means 0.0326% per annum.
“SONIA Daily Rate” means, for any day, with respect to any Credit Extension denominated in Sterling, the rate per annum equal to SONIA determined pursuant to the definition thereof plus the SONIA Adjustment; provided that, if any SONIA Daily Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement. Any change in an SONIA Daily Rate shall be effective from and including the date of such change without further notice.
“SONIA Daily Rate Loan” means a Eurocurrency Rate Loan denominated in Sterling that bears interest at a rate based on the definition of “SONIA Daily Rate”.
“SONIA Rate Conforming Changes” means, with respect to the use, administration of or any conventions associated with the SONIA Daily Rate, any conforming changes, including changes to the definitions of SONIA and Interest Period, and any related definitions, the timing and frequency of determining rates and making payments of interest and other technical, administrative or operative matters (including, for the avoidance of doubt, the definition of Business Day, timing of borrowing requests or prepayment, conversion or continuation notices and length of look-back periods), as determined in the Administrative Agent’s reasonable discretion, as may be appropriate to reflect the adoption and implementation of the SONIA Daily Rate, and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of the SONIA Daily Rate exists, in such other manner of administration as the Administrative Agent determines is reasonably necessary in connection with the administration of this Agreement and any other Loan Document).
“SPC” has the meaning specified in Section 10.06(g).
“SPE Subsidiary” means any Subsidiary formed solely for the purpose of, and that engages only in, one or more Securitization Transactions and transactions related or incidental thereto.
“Special Notice Currency” means at any time an Alternative Currency, other than the currency of a country that is a member of the Organization for Economic Cooperation and Development at such time located in North America or Europe.
“Spot Rate” for a currency means the rate determined by the Administrative Agent or the L/C Issuer, as applicable, to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the Administrative Agent or the L/C Issuer may obtain such spot rate from another financial institution designated by the Administrative Agent or the L/C Issuer if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency; and provided further that the L/C Issuer may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Letter of Credit denominated in an Alternative Currency.
“Statutory Reserves” shall mean, without duplication of any amounts paid pursuant to Section 3.04(e), for any Interest Period for any Borrowing of Eurocurrency Rate Loans, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the United States Federal Reserve System in New York City with deposits exceeding one billion dollar against “Eurocurrency liabilities” (as such term is used in Regulation D). Eurodollar Borrowings shall be deemed to constitute Eurodollar liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Lender under Regulation D.
“Sterling” and “£” mean the lawful currency of the United Kingdom.
“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Company.
“Subsidiary Guarantee Requirement” means the requirement that:
(a) the Administrative Agent shall have received on the Restatement Effective Date from the Company and each of the Subsidiary Guarantors a counterpart of Guaranty Amendment No. 2 duly executed and delivered on behalf of such Person, together with any documents, certificates and opinions required by Section 4.01(a)(iii) through (vi);
(b) promptly and in any event within one Business Day of a Person (i) becoming a Subsidiary of the Company (other than an Excluded Subsidiary) after the Restatement Effective Date or (ii) that is a Subsidiary of the Company providing a Guarantee of the Senior Notes (or any replacement, refinancing, refunding, renewal or extension thereof) or any Material Indebtedness of the Company after the Restatement Effective Date, the Company shall deliver notice thereof in writing to the Administrative Agent; and
(c) promptly (and in any event within 30 days of such Person (i) becoming a Subsidiary of the Company (other than an Excluded Subsidiary) or (ii) providing a Guarantee of the Senior Notes (or any replacement, refinancing, refunding, renewal or extension thereof)) or any Material Indebtedness of the Company cause such Person to (x) become a Subsidiary Guarantor by executing and delivering to the Administrative Agent a Guaranty Joinder Agreement or such other document as the Administrative Agent shall reasonably deem appropriate for such purpose, and (y) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent the documents, certificates and opinions of the types referred to in Section 4.01 (a)(iii) through (vi), in each case in form substantially consistent with those delivered on the Restatement Effective Date to the extent applicable to the transactions contemplated by the foregoing clause (i) and subject to modifications reasonably acceptable to the Administrative Agent (in the case of legal opinions, taking into account any Change in Law after the Restatement Effective Date); provided that the requirements set forth above in clauses (a), (b)(i) and (c)(i) (but not, for the avoidance of doubt, clause (b)(ii) or (c)(ii)) shall be suspended upon and solely for so long as the Applicable Debt Ratings (i) are Baa3, BBB- and BBB-, from each of Moody’s, S&P and Fitch, respectively, or better, (ii) from at least two of the three Ratings Agencies are Baa2, BBB and BBB, from Moody’s, S&P and Fitch, respectively, or better and (iii) from each of the Ratings Agencies has a stable outlook, except, in the case of any Applicable Debt Rating with respect to this clause (iii), to the extent such Applicable Debt Rating is higher than Baa2, BBB or BBB, as applicable; provided, further, that at any time that the requirements in the foregoing proviso are not met, each of the requirements under clause (a), (b)(i) and (c)(i) above shall automatically be reinstated and each such applicable Subsidiary shall be required to provide a Guaranty Joinder Agreement in accordance with the above.
“Subsidiary Guarantors” means, collectively, each (a) existing and future direct or indirect Subsidiary of the Company (other than an Excluded Subsidiary) and (b) existing and future direct or indirect Subsidiary of the Company that provides a Guarantee of the Senior Notes (or any replacement, refinancing, refunding, renewal or extension thereof) or any Material Indebtedness of the Company, in each case to the extent such Subsidiary is a party to the Guaranty Agreement or a Guaranty Joinder Agreement.
“Successor Rate” has the meaning specified in Section 3.03(b).
“Successor Rate Conforming Changes” means, with respect to the use, administration of or any conventions associated with any proposed LIBOR Successor Rate or Eurocurrency Successor Rate for an Applicable Currency, any conforming changes, including changes to the definitions of Base Rate and Interest Period, and any related definitions, the timing and frequency of determining rates and making payments of interest and other technical, administrative or operative matters (including, for the avoidance of doubt, the definition of Business Day, timing of borrowing requests or prepayment, conversion or continuation notices and length of look-back periods), as determined in the Administrative Agent’s reasonable discretion, as may be appropriate to reflect the adoption and implementation of such LIBOR Successor Rate or Eurocurrency Successor Rate, as applicable, and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice for such Applicable Currency (or, if the Administrative Agent determines that adoption of any
portion of such market practice for such Applicable Currency is not administratively feasible or that no market practice for the administration of such LIBOR Successor Rate or Eurocurrency Successor Rate for such Applicable Currency exists, in such other manner of administration as the Administrative Agent determines is reasonably necessary in connection with the administration of this Agreement and any other Loan Document).
“Supported QFC” has the meaning specified in Section 10.22.
“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions, provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Company or the Subsidiaries shall be a Swap Agreement.
“Swap Termination Value” means, in respect of any one or more Swap Agreements, after taking into account the effect of any netting agreement relating to such Swap Agreements, (a) for any date on or after the date such Swap Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause(a), the amount(s) determined as the mark-to-market value(s) for such Swap Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Agreements (which may include a Lender or any Affiliate of a Lender).
“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04.
“Swing Line Lender” means Bank of America in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.
“Swing Line Loan” has the meaning specified in Section 2.04(a).
“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b), which shall be substantially in the form of Exhibit B or such other form as approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approve by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.
“Swing Line Sublimit” means an amount equal to the lesser of (a) $50,000,000 and (b) the US Dollar Revolving Credit Commitments. The Swing Line Sublimit is part of, and not in addition to, the US Dollar Revolving Credit Commitment.
“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilizes a single shared platform and which was launched on November 19, 2007.
“TARGET Day” means any day on which TARGET2 (or, if such payment system ceases to be operative, such other payment system, if any, determined by the Administrative Agent to be a suitable replacement) is open for the settlement of payments in Euro.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority including any interest, additions to tax or penalties applicable thereto.
“Term SOFR” means the forward-looking term rate for any period that is approximately (as determined by the Administrative Agent) as long as any of the Interest Period options set forth in the definition of “Interest Period” and that is based on SOFR and that has been selected or recommended for use by the Relevant Governmental Body, in each case as published on an information service as selected by the Administrative Agent from time to time in its discretion.
“Total Multicurrency Revolving Credit Outstandings” means the aggregate Outstanding Amount of all Multicurrency Revolving Credit Loans.
“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C Obligations.
“Total Revolving Credit Outstandings” means, collectively, the Total Multicurrency Revolving Credit Outstandings and the Total US Dollar Revolving Credit Outstandings.
“Total US Dollar Revolving Credit Outstandings” means the aggregate Outstanding Amount of all US Dollar Revolving Credit Loans, Swing Line Loans and L/C Obligations.
“Transaction” means the execution, delivery and performance by the Loan Parties of this Agreement and the other Loan Documents to which they are a party, the borrowing of Loans and other credit extensions (in each case, on the Restatement Effective Date), the use of the proceeds thereof, the Refinancing, the continuation or issuance of Letters of Credit hereunder and the creation and perfection of any Liens created by the Loan Documents.
“Type” means, with respect to a Committed Loan, its character as a Base Rate Loan or a Eurocurrency Rate Loan.
“UCP” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce (“ICC”) Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct
Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Undisclosed Administration” means, with respect to any Lender or its direct or indirect parent company, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender or such parent company is subject to home jurisdiction supervision if applicable law requires that such appointment is not to be publicly disclosed.
“United States” and “U.S.” mean the United States of America.
“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).
“US Dollar Revolving Credit Borrowing” means a borrowing consisting of one or more simultaneous US Dollar Revolving Credit Loans of the same Type and, in the case of Eurocurrency Rate Loans, having the same Interest Period made pursuant to Section 2.01.
“US Dollar Revolving Credit Commitment” means, as to each US Dollar Revolving Credit Lender, its obligation to (a) make US Dollar Revolving Credit Loans to the Borrowers pursuant to Section 2.01, (b) purchase participations in L/C Obligations and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 under the caption “US Dollar Revolving Credit Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. On the Restatement Effective Date, the aggregate US Dollar Revolving Credit Commitment shall be $1,850,000,000.
“US Dollar Revolving Credit Exposure” means, as to any US Dollar Revolving Credit Lender at any time, the aggregate Outstanding Amount at such time of its Committed Loans and the aggregate Outstanding Amount of such US Dollar Revolving Credit Lender’s participation in L/C Obligations and Swing Line Loans at such time
“US Dollar Revolving Credit Facility” means, at any time, the aggregate amount of the US Dollar Revolving Credit Lenders’ US Dollar Revolving Credit Commitments and (without duplication) US Dollar Revolving Credit Loans at such time.
“US Dollar Revolving Credit Lender” means, at any time, any Lender that has a US Dollar Revolving Credit Commitment or holds a US Dollar Revolving Credit Loan at such time.
“US Dollar Revolving Credit Loan” has the meaning specified in Section 2.01.
“US Dollar Revolving Credit Note” means a promissory note made by the Borrower in favor of a US Dollar Revolving Credit Lender evidencing US Dollar Revolving Credit Loans or Swing Line Loans, as the case may be, made by such US Dollar Revolving Credit Lender, substantially in the form of Exhibit C-3.
“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
“U.S. Special Resolution Regimes” has the meaning specified in Section 10.22.
“U.S. Tax Compliance Certificate” has the meaning specified in Section 3.01(e)(ii)(B)(III).
“WH Group” means WH Group Ltd., an exempted company incorporated with limited liability status under the laws of Cayman Islands.
“Withholding Agent” means any Loan Party and the Administrative Agent.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
“Voting Participant” has the meaning specified in Section 10.06(d).
“Voting Participant Notification” has the meaning specified in Section 10.06(d).
“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.
“Yen” and “¥” mean the lawful currency of Japan.
1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a)The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will”
shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
(b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”
(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
(d) Any reference herein to a merger, transfer, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any division of a limited liability company shall constitute a separate Person hereunder (and each division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).
1.03 Accounting Terms. (a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, as in effect from time to time, applied on a consistent basis throughout the periods reflected therein, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Company and its Subsidiaries shall be deemed to be carried at 100% of the
outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.
(b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Company or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Company shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (A) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (B) if a request for such an amendment has been made, the Company shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
(c) All pro forma computations required to be made hereunder shall be calculated on a pro forma basis after giving pro forma effect to any Material Transaction consummated during the period covered by any component of such pro forma computation or, other than with respect to compliance with the Financial Covenants, and without duplication, following such period and on or prior to the date of such computation, and, to the extent applicable, to the historical earnings and cash flows associated with the assets acquired or disposed of in such Material Transaction and any related incurrence or reduction of Indebtedness, all in accordance with Article 11 of Regulation S-X under the Securities Act. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest 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 Swap Agreement applicable to such Indebtedness if such Swap Agreement has a remaining term in excess of 12 months).
1.04 Rounding. Any financial ratios required to be maintained by the Company pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
1.05 Exchange Rates; Currency Equivalents. (a) The Administrative Agent or the L/C Issuer, as applicable, shall determine the Spot Rates as of each Revaluation Date to be used for calculating Dollar Equivalent amounts of Credit Extensions and Outstanding Amounts denominated in Alternative Currencies. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except for purposes of financial statements delivered by Loan Parties hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be such Dollar Equivalent amount as so determined by the Administrative Agent or the L/C Issuer, as applicable.
(b) Wherever in this Agreement in connection with a Committed Borrowing, conversion, continuation or prepayment of a Eurocurrency Rate Loan or the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Committed Borrowing, Eurocurrency Rate Loan or Letter of Credit is denominated in an Alternative Currency, such amount shall be the relevant Alternative Currency Equivalent of such Dollar amount (rounded to the nearest unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent or the L/C Issuer, as the case may be.
(c) The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “Eurocurrency Rate” or with respect to any comparable or successor rate thereto.
1.06 Additional Alternative Currencies. (a) The Company may from time to time request that Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility be made and/or Letters of Credit be issued in a currency other than those specifically listed in the definition of “Alternative Currency;” provided that such requested currency is a lawful currency (other than Dollars) that is readily available and freely transferable and convertible into Dollars. In the case of any such request with respect to the making of Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility, such request shall be subject to the approval of the Administrative Agent and the Multicurrency Revolving Credit Lenders; and in the case of any such request with respect to the issuance of Letters of Credit, such request shall be subject to the approval of the Administrative Agent and the L/C Issuer.
(b) Any such request shall be made to the Administrative Agent not later than 11:00 a.m., 20 Business Days prior to the date of the desired Credit Extension (or such other time or date as may be agreed by the Administrative Agent and, in the case of any such request pertaining to Letters of Credit, the L/C Issuer, in its or their sole discretion). In the case of any such request pertaining to Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility, the Administrative Agent shall promptly notify each Multicurrency Revolving Credit Lender thereof; and in the case of any such request pertaining to Letters of Credit, the Administrative Agent shall promptly notify the L/C Issuer thereof. Each Multicurrency Revolving Credit Lender (in the case of any such request pertaining to Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility) or the L/C Issuer (in the case of a request pertaining to Letters of Credit) shall notify the Administrative Agent, not later than 11:00 a.m., ten Business Days after receipt of such request whether it consents, in its sole discretion, to the making of Eurocurrency Rate Loans or the issuance of Letters of Credit, as the case may be, in such requested currency.
(c) Any failure by a Multicurrency Revolving Credit Lender or the L/C Issuer, as the case may be, to respond to such request within the time period specified in the preceding sentence shall be deemed to be a refusal by such Multicurrency Revolving Credit Lender or the L/C Issuer, as the case may be, to permit Eurocurrency Rate Loans to be made under the Multicurrency Revolving Credit Facility or Letters of Credit to be issued in such requested
currency. If the Administrative Agent and all the Multicurrency Revolving Credit Lenders consent to making Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility in such requested currency, the Administrative Agent shall so notify the Company and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Committed Borrowings of Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility; and if the Administrative Agent and the L/C Issuer consent to the issuance of Letters of Credit in such requested currency, the Administrative Agent shall so notify the Company and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Letter of Credit issuances. If the Administrative Agent shall fail to obtain consent to any request for an additional currency under this Section 1.06, the Administrative Agent shall promptly so notify the Company.
1.07 Change of Currency. (a) Each obligation of the Borrowers to make a payment denominated in the national currency unit of any member state of the European Union that adopts the Euro as its lawful currency after the date hereof shall be redenominated into Euro at the time of such adoption. If, in relation to the currency of any such member state, the basis of accrual of interest expressed in this Agreement in respect of that currency shall be inconsistent with any convention or practice in the London interbank market for the basis of accrual of interest in respect of the Euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which such member state adopts the Euro as its lawful currency; provided that if any Committed Borrowing in the currency of such member state is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Committed Borrowing, at the end of the then current Interest Period.
(b) Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect the adoption of the Euro by any member state of the European Union and any relevant market conventions or practices relating to the Euro.
(c) Each provision of this Agreement also shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect a change in currency of any other country and any relevant market conventions or practices relating to the change in currency.
1.08 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
1.09 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the Dollar Equivalent of the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the Dollar Equivalent of the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.
ARTICLE II.
THE COMMITMENTS AND CREDIT EXTENSIONS
2.01 Committed Loans. Subject to the terms and conditions set forth herein, (i) each Multicurrency Revolving Credit Lender severally agrees to make loans (each such loan, a “Multicurrency Revolving Credit Loan”) to the Borrowers in Dollars or in one or more Alternative Currencies from time to time, on any Business Day during the Availability Period for the Multicurrency Revolving Credit Facility, in an aggregate amount not to exceed at any time outstanding such Multicurrency Revolving Credit Lender’s Multicurrency Revolving Credit Commitment and (ii) each US Dollar Revolving Credit Lender severally agrees to make loans (each such loan, a “US Dollar Revolving Credit Loan” and, together with the Multicurrency Revolving Credit Loans, the “Revolving Credit Loans”) to the Borrowers in Dollars from time to time, on any Business Day during the Availability Period for the US Dollar Revolving Credit Facility, in an aggregate amount not to exceed at any time outstanding the amount of such US Dollar Revolving Credit Lender’s US Dollar Revolving Credit Commitment; provided, however, that after giving effect to any Committed Borrowing of Revolving Credit Loans, (i) the Total Revolving Credit Outstandings shall not exceed the Revolving Credit Commitments, (ii) the Multicurrency Revolving Credit Exposure of any Multicurrency Revolving Credit Lender shall not exceed such Multicurrency Revolving Credit Lender’s Multicurrency Revolving Credit Commitment and (iii) the US Dollar Revolving Credit Exposure of any US Dollar Revolving Credit Lender shall not exceed such US Dollar Revolving Credit Lender’s US Dollar Revolving Credit Commitment. Within the limits of each Revolving Credit Lender’s Revolving Credit Commitment, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.01, prepay under Section 2.05, and reborrow under this Section 2.01. Revolving Credit Loans may be Base Rate Loans or Eurocurrency Rate Loans, as further provided herein.
2.02 Borrowings, Conversions and Continuations of Committed Loans. (a) Each Committed Borrowing, each conversion of Committed Loans from one Type to the other, and each continuation of Eurocurrency Rate Loans shall be made upon the Company’s irrevocable notice to the Administrative Agent, which may be given by (A) telephone or (B) a Committed Loan Notice; provided that any telephonic notice must be confirmed immediately by delivery to the Administrative Agent of a committed Loan Notice. Each such Committed Loan Notice must be received by the Administrative Agent not later than 12:00 p.m. (noon) (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurocurrency Rate Loans denominated in Dollars or of any conversion of Eurocurrency Rate Loans denominated in Dollars to Base Rate Committed Loans, (ii) four Business Days (or five Business Days in the case of a Special Notice Currency) prior to the requested date of any Borrowing or continuation of Eurocurrency Rate Loans denominated in Alternative Currencies and (iii) on the requested date of any Borrowing of Base Rate Committed Loans. Each Borrowing of, conversion to or continuation of Eurocurrency Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof Except as provided in Sections 2.03(c) and 2.04(c), each Committed Borrowing of or conversion to Base Rate Committed Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan Notice shall specify (i) whether the Company is requesting a Committed
Borrowing, a conversion of Committed Loans from one Type to the other, or a continuation of Eurocurrency Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of the Committed Loans to be borrowed, converted or continued, (iv) the Class and Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted (it being understood that in the case of Revolving Credit Loans to be denominated in Dollars, the applicable Revolving Credit Loans shall be allocated, first, to the US Dollar Revolving Credit Facility to the full extent of the then unused US Dollar Revolving Credit Commitment and, second, to the Multicurrency Revolving Credit Facility to the full extent of the then unused Multicurrency Revolving Credit Commitments), (v) if applicable, the duration of the Interest Period with respect thereto, (vi)in the case of Multicurrency Revolving Credit Borrowings or Multicurrency Revolving Credit Loans, the currency of the Committed Loans to be borrowed or continued and (vii) if applicable, the Designated Borrower. If the Company fails to specify a currency in a Committed Loan Notice requesting a Borrowing, then the Committed Loans so requested shall be made in Dollars (allocated as described in clause (iv) of the preceding sentence). If the Company fails to specify a Type of Committed Loan in a Committed Loan Notice or if the Company fails to give a timely notice requesting a conversion or continuation, then the applicable Committed Loans shall be made as, or converted to, Base Rate Loans; provided, however, that in the case of a failure to timely request a continuation of Committed Loans denominated in an Alternative Currency, such Loans shall be continued as Eurocurrency Rate Loans in their original currency with an Interest Period of one month, as applicable. Any automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Eurocurrency Rate Loans. If the Company requests a Borrowing of, conversion to, or continuation of Eurocurrency Rate Loans not denominated in Sterling in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. No Committed Loan may be converted into or continued as a Committed Loan denominated in a different currency, but instead must be prepaid in the original currency of such Committed Loan and reborrowed in the other currency.
(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount (and currency) of its Applicable Percentage under the applicable Facility of the applicable Committed Loans, and if no timely notice of a conversion or continuation is provided by the Company, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans or continuation of Committed Loans denominated in a currency other than Dollars, in each case as described in the preceding subsection. In the case of a Committed Borrowing, each Lender shall make the amount of its Committed Loan available to the Administrative Agent in Same Day Funds at the Administrative Agent’s Office for the applicable currency not later than 1:00 p.m., in the case of any Committed Loan denominated in Dollars, and not later than the Applicable Time specified by the Administrative Agent in the case of any Committed Loan in an Alternative Currency, in each case on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received available to the Company or the other applicable Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of such Borrower on the books of Bank of America with
the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Company; provided, however, that if, on the date the Committed Loan Notice with respect to such Revolving Credit Borrowing denominated in Dollars is given by the Company, there are L/C Borrowings outstanding, then the proceeds of such Borrowing, first, shall be applied to the payment in full of any such L/C Borrowings, and, second, shall be made available to the applicable Borrower as provided above.
(c) Except as otherwise provided herein, a Eurocurrency Rate Loan not denominated in Sterling may be continued or converted only on the last day of an Interest Period for such Eurocurrency Rate Loan not denominated in Sterling. Eurocurrency Loans denominated in Sterling shall automatically continue each day as SONIA Daily Rate Loans. During the existence of a Default, no Loans may be requested as, converted to or continued as Eurocurrency Rate Loans (whether in Dollars or any Alternative Currency) without the consent of the Required Facility Lenders with respect to the Facility for which such borrowing, conversion or continuation is requested, and the Required Facility Lenders with respect to the Multicurrency Revolving Credit Facility may demand that any or all of the then outstanding Eurocurrency Rate Loans denominated in an Alternative Currency be prepaid, or redenominated into Dollars in the amount of the Dollar Equivalent thereof, on the last day of the then current Interest Period with respect thereto, as applicable.
(d) The Administrative Agent shall promptly notify the Company and the Lenders of the interest rate applicable to any Interest Period for Eurocurrency Rate Loans not denominated in Sterling or the interest rate applicable to any Eurocurrency Rate Loans denominated in Sterling, upon determination of such interest rate. The determination of the Eurocurrency Rate and the SONIA Daily Rate, as applicable, by the Administrative Agent shall be conclusive in the absence of manifest error.
(e) After giving effect to all Committed Borrowings of Revolving Credit Loans, all conversions of Revolving Credit Loans from one Type to the other and all continuations of Revolving Credit Loans as the same Type, there shall not be more than ten Interest Periods in effect with respect to all Loans.
(f) With respect to SONIA Daily Rate, the Administrative Agent will have the right to make SONIA Rate Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such SONIA Rate Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document; provided that, with respect to any such amendment effected, the Administrative Agent shall post each such amendment implementing such SONIA Rate Conforming Changes to the Company and the Lenders reasonably promptly after such amendment becomes effective.
2.03 Letters of Credit. (a) The Letter of Credit Commitment.
(i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the US Dollar Revolving Credit Lenders set
forth in this Section 2.03, (1) from time to time on any Business Day during the period from the Restatement Effective Date until the Letter of Credit Expiration Date, to issue Letters of Credit denominated in Dollars or in one or more Alternative Currencies for the account of the Company or its Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the US Dollar Revolving Credit Lenders severally agree to participate in Letters of Credit issued for the account of the Company or its Subsidiaries and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (w) the Total Revolving Credit Outstandings shall not exceed the Revolving Credit Commitment, (x) the US Dollar Revolving Credit Exposure of any US Dollar Revolving Credit Lender shall not exceed such US Dollar Revolving Credit Lender’s Commitment, (y) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit and (z) the Outstanding Amount of L/C Obligations under Letters of Credit issued by any L/C Issuer shall not exceed such L/C Issuer’s L/C Issuer Fronting Sublimit. Each request by the Company for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Company that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Company’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Company may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.
(ii) The L/C Issuer shall not issue any Letter of Credit, if:
(A) subject to Section 2.03(b)(iii), the expiry date of the requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Facility Lenders with respect to the US Dollar Revolving Credit Facility have approved such expiry date; or
(B) the expiry date of the requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the US Dollar Revolving Credit Lenders have approved such expiry date.
(iii) The L/C Issuer shall not be under any obligation to issue any Letter of Credit if:
(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing the Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon the L/C Issuer with respect to the Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Restatement Effective Date,
or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Restatement Effective Date and which the L/C Issuer in good faith deems material to it;
(B) the issuance of the Letter of Credit would violate one or more policies of the L/C Issuer applicable to letters of credit generally;
(C) except as otherwise agreed by the Administrative Agent and the L/C Issuer, the Letter of Credit is to be denominated in a currency other than Dollars or an Alternative Currency;
(D) the L/C Issuer does not as of the issuance date of the requested Letter of Credit issue Letters of Credit in the requested currency;
(E) any US Dollar Revolving Credit Lender is at that time a Defaulting Lender, unless the L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to the L/C Issuer (in its sole discretion) with the Company or such US Dollar Revolving Credit Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.17(a)(iv)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which the L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion; or
(F) the Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder;
(iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue the Letter of Credit in its amended form under the terms hereof.
(v) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue the Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does not accept the proposed amendment to the Letter of Credit.
(vi) The L/C Issuer shall act on behalf of the US Dollar Revolving Credit Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.
(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit.
(i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Company delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Company. Such Letter of Credit Application may be sent by facsimile, by United States mail, by overnight courier, by electronic transmission using the system provided by the L/C Issuer, by personal delivery or by any other means acceptable to the L/C Issuer. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount and currency thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and (H) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. Additionally, the Company shall furnish to the L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or the Administrative Agent may require.
(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Company and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof Unless the L/C Issuer has received written notice from any US Dollar Revolving Credit Lender, the Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Company (or the applicable Subsidiary) or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each US Dollar Revolving Credit Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/
C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such US Dollar Revolving Credit Lender’s Applicable Percentage times the amount of such Letter of Credit.
(iii) If the Company so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Company shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the US Dollar Revolving Credit Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Facility Lenders with respect to the US Dollar Revolving Credit Facility have elected not to permit such extension or (2) from the Administrative Agent, any US Dollar Revolving Credit Lender or the Company that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.
(iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Company and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.
(c) Drawings and Reimbursements; Funding of Participations.
(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the Company and the Administrative Agent thereof. In the case of a Letter of Credit denominated in an Alternative Currency, the Company shall reimburse the L/C Issuer in such Alternative Currency, unless (A) the L/C Issuer (at its option) shall have specified in such notice that it will require reimbursement in Dollars, or (B) in the absence of any such requirement for reimbursement in Dollars, the Company shall have notified the L/C Issuer promptly following receipt of the notice of drawing that the Company will reimburse the L/C Issuer in Dollars. In the case of any such reimbursement in Dollars of a drawing under a
Letter of Credit denominated in an Alternative Currency, the L/C Issuer shall notify the Company of the Dollar Equivalent of the amount of the drawing promptly following the determination thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit to be reimbursed in Dollars, or the Applicable Time on the date of any payment by the L/C Issuer under a Letter of Credit to be reimbursed in an Alternative Currency (each such date, an “Honor Date”), the Company shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing and in the applicable currency. In the event that (A) a drawing denominated in an Alternative Currency is to be reimbursed in Dollars pursuant to the second sentence in this Section 2.03(c)(i) and (B) the Dollar amount paid by the Company, whether on or after the Honor Date, shall not be adequate on the date of that payment to purchase in accordance with normal banking procedures a sum denominated in the Alternative Currency equal to the drawing, the Company agrees, as a separate and independent obligation, to indemnify the L/C Issuer for the loss resulting from its inability on that date to purchase the .Alternative Currency in the full amount of the drawing. If the Company fails to timely reimburse the L/C Issuer on the Honor Date, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (expressed in Dollars in the amount of the Dollar Equivalent thereof in the case of a Letter of Credit denominated in an Alternative Currency) (the “Unreimbursed Amount”), and the amount of such Lender’s Applicable Percentage thereof. In such event, the Company shall be deemed to have requested a Committed Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
(ii) Each US Dollar Revolving Credit Lender shall upon any notice pursuant to Section 2.03(c)(i) make funds available (and the Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the L/C Issuer, in Dollars, at the Administrative Agent’s Office for Dollar-denominated payments in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each US Dollar Revolving Credit Lender that so makes funds available shall be deemed to have made a Base Rate Committed Loan to the Company in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer in Dollars.
(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Committed Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Company shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed
Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each US Dollar Revolving Credit Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such US Dollar Revolving Credit Lender in satisfaction of its participation obligation under this Section 2.03.
(iv) Until each US Dollar Revolving Credit Lender funds its Committed Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such US Dollar Revolving Credit Lender’s Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.
(v) Each US Dollar Revolving Credit Lender’s obligation to make Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, the Company, any Subsidiary or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each US Dollar Revolving Credit Lender’s obligation to make Committed Loans pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the Company of a Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Company to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.
(vi) If any US Dollar Revolving Credit Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such US Dollar Revolving Credit Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), then, without limiting the other provisions of this Agreement, the L/C Issuer shall be entitled to recover from such US Dollar Revolving Credit Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the applicable Overnight Rate from time to time in effect, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. If such US Dollar Revolving Credit Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such US Dollar Revolving Credit Lender’s Committed Loan included in the relevant Committed Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the L/C Issuer submitted to any US Dollar Revolving Credit Lender
(through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.
(d) Repayment of Participations.
(i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any US Dollar Revolving Credit Lender such US Dollar Revolving Credit Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c), if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Company or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such US Dollar Revolving Credit Lender its Applicable Percentage thereof in Dollars and in the same funds as those received by the Administrative Agent.
(ii) If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each US Dollar Revolving Credit Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such US Dollar Revolving Credit Lender, at a rate per annum equal to the applicable Overnight Rate from time to time in effect. The obligations of the US Dollar Revolving Credit Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e) Obligations Absolute. The obligation of the Company to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:
(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;
(ii) the existence of any claim, counterclaim, setoff, defense or other right that the Company or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;
(iv) waiver by the L/C Issuer of any requirement that exists for the L/C Issuer’s protection and not the protection of the Company or any waiver by the L/C Issuer which does not in fact materially prejudice the Company;
(v) honor of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft;
(vi) any payment made by the L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which documents must be received under, such Letter of Credit if presentation after such date is authorized by the UCC, the ISP or the UCP, as applicable;
(vii) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;
(viii) any adverse change in the relevant exchange rates or in the availability of the relevant Alternative Currency to the Company or any Subsidiary or in the relevant currency markets generally; or
(xi) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or any Subsidiary.
The Company shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Company’s instructions or other irregularity, the Company will immediately notify the L/C Issuer. The Company shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.
(f) Role of L/C Issuer. Each Lender and the Company agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the US Dollar Revolving Credit Lenders or the Required Facility Lenders with respect to the US Dollar Revolving Credit
Facility, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Company hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Company’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (viii) of Section 2.03(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Company may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Company, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Company which the Company proves were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. The L/C Issuer may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication (“SWIFT’) message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary.
(g) Applicability of ISP and UCP; Limitation of Liability. Unless otherwise expressly agreed by the L/C Issuer and the Company when a Letter of Credit is issued, the rules of the ISP shall apply to each standby Letter of Credit. Notwithstanding the foregoing, the L/C Issuer shall not be responsible to the Company for, and the L/C Issuer’s rights and remedies against the Company shall not be impaired by, any action or inaction of the L/C Issuer required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the Law or any order of a jurisdiction where the L/C Issuer or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.
(h) Letter of Credit Fees. The Company shall pay to the Administrative Agent for the account of each US Dollar Revolving Credit Lender in accordance, subject to adjustment as provided in Section 2.17, with its Applicable Percentage, in Dollars, a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter of Credit equal to the Applicable Rate times the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of
such Letter of Credit shall be determined in accordance with Section 1.09. Letter of Credit Fees shall be (i) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears. If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary contained herein, upon the request of the Required Facility Lenders with respect to the US Dollar Revolving Credit Facility, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Rate.
(i) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The Company shall pay directly to the L/C Issuer for its own account, in Dollars, a fronting fee with respect to each Letter of Credit, at a rate per annum of 0.125%, computed on the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting fee shall be due and payable on the tenth Business Day after the end of each March, June, September and December in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.09. In addition, the Company shall pay directly to the L/C Issuer for its own account, in Dollars, the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.
(j) Conflict with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.
(k) L/C Issuer Reports to the Administrative Agent. Unless otherwise agreed by the Administrative Agent, each L/C Issuer shall, in addition to its notification obligations set forth elsewhere in this Section, provide the Administrative Agent a Letter of Credit Report, as set forth below:
(i) reasonably prior to the time that such L/C Issuer issues, amends, renews, increases or extends a Letter of Credit, the date of such issuance, amendment, renewal, increase or extension and the stated amount of the applicable Letters of Credit after giving effect to such issuance, amendment, renewal or extension (and whether the amounts thereof shall have changed);
(ii) on each Business Day on which such L/C Issuer makes a payment pursuant to a Letter of Credit, the date and amount of such payment;
(iii) on any Business Day on which the Borrower fails to reimburse a payment made pursuant to a Letter of Credit required to be reimbursed to such L/C Issuer on such day, the date of such failure and the amount of such payment;
(iv) on any other Business Day, such other information as the Administrative Agent shall reasonably request as to the Letters of Credit issued by such L/C Issuer; and
(v) for so long as any Letter of Credit issued by an L/C Issuer is outstanding, such L/C Issuer shall deliver to the Administrative Agent (A) on the last Business Day of each calendar month, (B) at all other times a Letter of Credit Report is required to be delivered pursuant to this Agreement, and (C) on each date that (1) an L/C Credit Extension occurs or (2) there is any expiration, cancellation and/or disbursement, in each case, with respect to any such Letter of Credit, a Letter of Credit Report appropriately completed with the information for every outstanding Letter of Credit issued by such L/C Issuer.
(l) Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Company shall be obligated to reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit. The Company hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Company, and that the Company’s business derives substantial benefits from the businesses of such Subsidiaries.
2.04 Swing Line Loans.
(a) The Swing Line. Subject to the terms and conditions set forth herein, the Swing Line Lender, in reliance upon the agreements of the other Lenders set forth in this Section 2.04, shall make loans in Dollars (each such loan, a “Swing Line Loan”) to the Company from time to time on any Business Day during the Availability Period with respect to the US Dollar Revolving Credit Facility in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of US Dollar Revolving Credit Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s US Dollar Revolving Credit Commitment; provided, however, that (x) after giving effect to any Swing Line Loan, (i) the Total Revolving Credit Outstandings shall not exceed the Revolving Credit Commitments, and (ii) the US Dollar Revolving Credit Exposure of any US Dollar Revolving Credit Lender shall not exceed such US Dollar Revolving Credit Lender’s US Dollar Revolving Credit Commitment, (y) the Company shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan, and (z) the Swing Line Lender shall not be under any obligation to make any Swing Line Loan if it shall determine (which determination shall be conclusive and binding absent manifest error) that it has, or by such Credit Extension may have, Fronting Exposure. Within the foregoing limits, and subject to the other terms and conditions hereof, the Company may borrow under this Section 2.04, prepay under Section 2.05, and reborrow under this Section 2.04. Each Swing Line Loan shall be a Base Rate Loan. Immediately upon the making of a Swing Line Loan, each US Dollar Revolving Credit Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such US Dollar Revolving Credit Lender’s Applicable Percentage times the amount of such Swing Line Loan.
(b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the Company’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by (A) telephone or (B) by a Swing Line Loan Notice; provided that any telephonic notice must be confirmed promptly by delivery to the Swing line Lender and the Administrative Agent of a Swing Line Loan Notice. Each such Swing Line Loan Notice must be received by the Swing Line Lender and the Administrative Agent not later than 3:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $500,000, and (ii) the requested borrowing date, which shall be a Business Day. Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any US Dollar Revolving Credit Lender) prior to 5:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.04(a), or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 5:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Company at its office by crediting the account of the Company on the books of the Swing Line Lender in Same Day Funds.
(c) Refinancing of Swing Line Loans.
(i) The Swing Line Lender at any time in its sole discretion may request, on behalf of the Company (which hereby irrevocably authorizes the Swing Line Lender to so request on its behalf), that each US Dollar Revolving Credit Lender make a Base Rate Committed Loan in an amount equal to such US Dollar Revolving Credit Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the US Dollar Revolving Credit Commitments and the conditions set forth in Section 4.02. The Swing Line Lender shall furnish the Company with a copy of the applicable Committed Loan Notice promptly after delivering such notice to the Administrative Agent. Each US Dollar Revolving Credit Lender shall make an amount equal to its Applicable Percentage of the amount specified in such Committed Loan Notice available to the Administrative Agent in Same Day Funds (and the Administrative Agent may apply Cash Collateral available with respect to the applicable Swing Line-Loan) for the account of the Swing Line Lender at the Administrative Agent’s Office for Dollar-denominated payments not later
than 1:00 p.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii), each US Dollar Revolving Credit Lender that so makes funds available shall be deemed to have made a Base Rate Committed Loan to the Company in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender.
(ii) If for any reason any Swing Line Loan cannot be refinanced by such a Committed Borrowing in accordance with Section 2.04(c)(i), the request for Base Rate Committed Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the US Dollar Revolving Credit Lenders fund its risk participation in the relevant Swing Line Loan and each US Dollar Revolving Credit Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.
(iii) If any US Dollar Revolving Credit Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such US Dollar Revolving Credit Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled to recover from such US Dollar Revolving Credit Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the applicable Overnight Rate from time to time in effect, plus any administrative, processing or similar fees customarily charged by the Swing Line Lender in connection with the foregoing. If such US Dollar Revolving Credit Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such US Dollar Revolving Credit Lender’s Committed Loan included in the relevant Committed Borrowing of US Dollar Revolving Credit Loans or funded participation in the relevant Swing Line Loan, as the case may be. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.
(iv) Each US Dollar Revolving Credit Lender’s obligation to make Committed Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such US Dollar Revolving Credit Lender may have against the Swing Line Lender, the Company or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each US Dollar Revolving Credit Lender’s obligation to make Committed Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 4.02. No such funding of risk participations shall relieve or otherwise impair the obligation of the Company to repay Swing Line Loans, together with interest as provided herein.
(d) Repayment of Participations.
(i) At any time after any US Dollar Revolving Credit Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such US Dollar Revolving Credit Lender its Applicable Percentage thereof in the same funds as those received by the Swing Line Lender.
(ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each US Dollar Revolving Credit Lender shall pay to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the applicable Overnight Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be responsible for invoicing the Company for interest on the Swing Line Loans. Until each US Dollar Revolving Credit Lender funds its Base Rate Committed Loan or risk participation pursuant to this Section 2.04 to refinance such US Dollar Revolving Credit Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be solely for the account of the Swing Line Lender.
(f) Payments Directly to Swing Line Lender. The Company shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.
2.05 Prepayments. (a) Each Borrower may, upon notice from the Company to the Administrative Agent, at any time or from time to time voluntarily prepay Committed Loans of any Class in whole or in part without premium or penalty; provided that (i) such notice must be in a form acceptable to the Administrative Agent and be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurocurrency Rate Loans denominated in Dollars, (B) four Business Days (or five, in the case of prepayment of Loans denominated in Special Notice Currencies) prior to any date of prepayment of Eurocurrency Rate Loans denominated in Alternative Currencies and (C) on the date of prepayment of Base Rate Committed Loans; (ii) any prepayment of Eurocurrency Rate Loans denominated in Dollars shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; (iii) any prepayment of Eurocurrency Rate Loans denominated in Alternative Currencies shall be in a minimum principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iv) any prepayment of Base Rate Committed Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding; provided, further that such notice may be revocable if the Company specifies therein that such prepayment is contingent upon the consummation of an anticipated transaction. Each such notice shall
specify the date and amount of such prepayment, the Type(s), Class(es) and currency or currencies of Committed Loans to be prepaid and, if Eurocurrency Rate Loans not denominated in Sterling are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of the applicable Class its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given by the Company, the applicable Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Eurocurrency Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05. Subject to Section 2.17, each such prepayment shall be applied to the Committed Loans of the Lenders of the applicable Class in accordance with their respective Applicable Percentages.
(b) The Company may, upon notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $100,000. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.
(c) If the Administrative Agent notifies the Company at any time that the Total Revolving Credit Outstandings for the US Dollar Revolving Credit Facility at such time exceed an amount equal to 100% of the US Dollar Revolving Credit Commitments then in effect, then, within two Business Days after receipt of such notice, the Borrowers shall prepay US Dollar Revolving Credit Loans and/or the Company shall Cash Collateralize the L/C Obligations in an aggregate amount at least equal to such excess; provided, however, that, subject to the provisions of Section 2.16(a), the Company shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(c) unless after the prepayment in full of the US Dollar Revolving Credit Loans the Total Revolving Credit Outstandings under the US Dollar Revolving Credit Facility exceed the US Dollar Revolving Credit Commitments then in effect. If the Administrative Agent notifies the Company at any time that the Total Revolving Credit Outstandings for the Multicurrency Revolving Credit Facility at such time exceed an amount equal to 105% of the Multicurrency Revolving Credit Commitments then in effect, then, within two Business Days after receipt of such notice, the Borrowers shall prepay Multicurrency Revolving Credit Loans and/or the Company shall Cash Collateralize the L/C Obligations in an aggregate amount at least equal to such excess over the Multicurrency Revolving Credit Commitments; provided, however, that, subject to the provisions of Section 2.16(a), the Company shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(c) unless after the prepayment in full of the Multicurrency Revolving Credit Loans the Total Revolving Credit Outstandings under the Multicurrency Revolving Credit Facility exceed the Multicurrency Revolving Credit Commitments then in effect.
2.06 Termination or Reduction of Commitments. The Company may, upon notice to the Administrative Agent, terminate the Revolving Credit Commitments of either Class, or from
time to time permanently reduce the Revolving Credit Commitments of either Class; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. three Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the Company shall not terminate or reduce (x) the Revolving Credit Commitments of either Class if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Revolving Credit Outstandings would exceed the Revolving Credit Commitments, (y) the Multicurrency Revolving Credit Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Multicurrency Revolving Credit Outstandings would exceed the Multicurrency Revolving Credit Commitments, (z) the US Dollar Revolving Credit Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total US Dollar Revolving Credit Outstandings would exceed the US Dollar Revolving Credit Commitments and (iv) if, after giving effect to any reduction of the Revolving Credit Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the Revolving Credit Commitments, such Sublimit shall be automatically reduced by the amount of such excess provided, further that such notice may be revocable if the Company specifies therein that such reduction or termination is contingent upon the consummation of an anticipated transaction. The Administrative Agent will promptly notify the Revolving Credit Lenders of the applicable Class of any such notice of termination or reduction of the Revolving Credit Commitments. The amount of any such Revolving Credit Commitment reduction shall not be applied to the Letter of Credit Sublimit unless otherwise specified by the Company or otherwise required by the preceding sentence. Any reduction of the Revolving Credit Commitments of any Class shall be applied to the Commitment of each Revolving Credit Lender of such Class according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Revolving Credit Commitments of any Class shall be paid on the effective date of such termination.
2.07 Repayment of Loans. (a) Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of Committed Loans made to such Borrower outstanding on such date.
(b) The Company shall repay each Swing Line Loan on the earlier to occur of (i) the date ten Business Days after such Loan is made and (ii) the Maturity Date.
2.08 Interest. (a) Subject to the provisions of subsection (b) below, (i) each Eurocurrency Rate Loan not denominated in Sterling shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Adjusted Eurocurrency Rate for such Interest Period plus the Applicable Rate; (ii) each Eurocurrency Rate Loan denominated in Sterling shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Adjusted Eurocurrency Rate plus the Applicable Rate; (iii) each Base Rate Committed Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate and (iv) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate.
(b) While any Event of Default under Section 8.01(a), (b), (h) or (i) shall be continuing,
(i) if any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws; and
(ii) if any amount (other than principal of any Loan) payable by any Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.
(iii) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
(d) For the purposes of the Interest Act (Canada), (i) whenever a rate of interest or fee rate hereunder is calculated on the basis of a year (the “deemed year”) that contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest or fee rate shall be expressed as a yearly rate by multiplying such rate of interest or fee rate by the actual number of days in the calendar year of calculation and dividing it by the number of days in the deemed year, (ii) the principle of deemed reinvestment of interest shall not apply to any interest calculation hereunder and (iii) the rates of interest stipulated herein are intended to be nominal rates and not effective rates or yields.
2.09 Fees. In addition to certain fees described in subsections (h) and (i) of Section 2.03:
(a) Commitment Fee. The Company shall pay to the Administrative Agent (x) for the account of each US Dollar Revolving Credit Lender in accordance with its Applicable Percentage, a commitment fee in Dollars equal to the Applicable Rate times the actual daily amount by which the US Dollar Revolving Credit Commitments exceed the sum of (i) the Outstanding Amount of Committed Loans that are US Dollar Revolving Credit Loans and (ii) the Outstanding Amount of L/C Obligations, subject to adjustment as provided in Section 2.17 and (y) for the account of each Multicurrency Revolving Credit Lender in accordance with its Applicable Percentage, a commitment fee in Dollars equal to the Applicable Rate times the actual daily amount by which the Multicurrency Revolving Credit Commitments exceed the
Outstanding Amount of Committed Loans that are Multicurrency Revolving Credit Loans, subject to adjustment as provided in Section 2.17. For the avoidance of doubt, the Outstanding Amount of Swing Line Loans shall not be counted towards or considered usage of the Revolving Credit Commitments for purposes of determining the commitment fee. The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Restatement Effective Date, and on the last day of the Availability Period. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.
(b) Other Fees. (i) The Company shall pay to the Lead Arranger and the Administrative Agent for their own respective accounts, in Dollars, fees in the amounts and at the times specified in the Fee Letter (including, without limitation, the Administrative Agency Fee and the Letter of Credit Fronting Fee set forth in the Original Fee Letter). Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.
(ii) The Company shall pay to the Lenders, in Dollars, such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.
2.10 Computation of Interest and Fees. All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the Eurocurrency Rate) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year), or, in the case of interest in respect of Committed Loans denominated in Alternative Currencies as to which market practice differs from the foregoing, in accordance with such market practice. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a), bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error. With respect to any Alternative Currency not set forth in the definition of “Eurocurrency Rate”, the calculation of the applicable interest rate shall be determined in accordance with market practice.
2.11 Evidence of Debt. (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrowers and the interest and
payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender to a Borrower made through the Administrative Agent, such Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans to such Borrower in addition to such accounts or records. Each Lender may attach schedules to a Note and endorse thereon the date, Class, Type (if applicable), amount, currency and maturity of its Loans and payments with respect thereto.
(b) In addition to the accounts and records referred to in subsection (a) above, each Revolving Credit Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Revolving Credit Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
2.12 Payments Generally; Administrative Agent’s Clawback. . (a) General. All payments to be made by the Borrowers shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein and except with respect to principal of and interest on Loans denominated in an Alternative Currency, all payments by the Borrowers hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in Dollars and in Same Day Funds not later than 2:00 p.m. on the date specified herein. Except as otherwise expressly provided herein, all payments by the Borrowers hereunder with respect to principal and interest on Loans denominated in an Alternative Currency shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in such Alternative Currency and in Same Day Funds not later than the Applicable Time specified by the Administrative Agent on the dates specified herein. Without limiting the generality of the foregoing, the Administrative Agent may require that any payments due under this Agreement be made in the United States. If, for any reason, any Borrower is prohibited by any Law from making any required payment hereunder in an Alternative Currency, such Borrower shall make such payment in Dollars in the Dollar Equivalent of the Alternative Currency payment amount. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent (i) after 2:00 p.m., in the case of payments in Dollars, or (ii) after the Applicable Time specified by the Administrative Agent in the case of payments in an Alternative Currency, shall in each case be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by any Borrower shall come due on a day other than a Business Day,
payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.
(b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Committed Borrowing of Eurocurrency Rate Loans (or, in the case of any Committed Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Committed Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Committed Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Committed Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Committed Borrowing available to the Administrative Agent, then the applicable Lender and the applicable Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in Same Day Funds with interest thereon, for each day from and including the date such amount is made available to such Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the Overnight Rate, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by such Borrower, the interest rate applicable to Base Rate Loans. If such Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to such Borrower the amount of such interest paid by such Borrower for such period. If such Lender pays its share of the applicable Committed Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Committed Loan included in such Committed Borrowing. Any payment by such Borrower shall be without prejudice to any claim such Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
(ii) Payments by Borrowers; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from a Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the L/C Issuer hereunder that such Borrower will not make such payment, the Administrative Agent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if such Borrower has not in fact made such payment, then each of the Lenders or the L/C Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in Same Day Funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Overnight Rate.
A notice of the Administrative Agent to any Lender or Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.
(c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender to any Borrower as provided in the foregoing provisions of this Article II, and such funds are not made available to such Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.
(d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make Committed Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Section 10.04(c) are several and not joint. The failure of any Lender to make any Committed Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan, to purchase its participation or to make its payment under Section 10.04(c).
(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.
2.13 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Committed Loans made by it, or the participations in L/C Obligations or in Swing Line Loans held by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Committed Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Committed Loans and subparticipations in L/C Obligations and Swing Line Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Committed Loans and other amounts owing them, provided that:
(i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and
(ii) the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of any Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the
existence of a Defaulting Lender or Competitor), (y) the application of Cash Collateral provided for in Section 2.16, or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Committed Loans or subparticipations in L/C Obligations or Swing Line Loans to any assignee or participant, other than an assignment to the Company or any Subsidiary thereof (as to which the provisions of this Section shall apply).
Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.
2.14 Designated Borrowers. (a) The Company may at any time, upon not less than 15 Business Days’ notice from the Company to the Administrative Agent (or such shorter period as may be agreed by the Administrative Agent in its sole discretion), designate any Subsidiary of the Company (other than an Excluded Subsidiary) (an “Applicant Borrower”) as a Designated Borrower to receive Revolving Credit Loans hereunder by delivering to the Administrative Agent (which shall promptly deliver counterparts thereof to each Lender) a duly executed notice and agreement in substantially the form of Exhibit G (a “Designated Borrower Request and Assumption Agreement”). The parties hereto acknowledge and agree that prior to any Applicant Borrower becoming entitled to utilize the Revolving Credit Facilities provided for herein the Administrative Agent and the Lenders shall have received such supporting resolutions, incumbency certificates, opinions of counsel and other documents or information (including documents and other information required by regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Patriot Act), in form, content and scope reasonably satisfactory to the Administrative Agent, as may be reasonably requested by the Administrative Agent or any Revolving Credit Lender in its reasonable discretion, and Notes signed by such new Borrowers to the extent any Revolving Credit Lenders so request. Promptly following receipt of all such requested resolutions, incumbency certificates, opinions of counsel and other documents or information, the Administrative Agent shall send a notice in substantially the form of Exhibit H (a “Designated Borrower Notice”) to the Company and the Revolving Credit Lenders specifying the effective date upon which the Applicant Borrower shall constitute a Designated Borrower for purposes hereof, whereupon each of the Lenders agrees to permit such Designated Borrower to receive Revolving Credit Loans hereunder, on the terms and conditions set forth herein, and each of the parties agrees that such Designated Borrower otherwise shall be a Borrower for all purposes of this Agreement; provided, that no Committed Loan Notice or Letter of Credit Application may be submitted by or on behalf of such Designated Borrower until the date five Business Days after such effective date
(b) The Obligations of the Company and each Designated Borrower shall be joint and several in nature.
(c) Each Subsidiary of the Company that is or becomes a “Designated Borrower” pursuant to this Section 2.14 hereby irrevocably appoints the Company as its agent for all purposes relevant to this Agreement and each of the other Loan Documents, including (i) the giving and receipt of notices, (ii) the execution and delivery of all documents, instruments and certificates contemplated herein and all modifications hereto, and (iii) the receipt of the proceeds of any Loans made by the Lenders to any such Designated Borrower hereunder. Any acknowledgment, consent, direction, certification or other action which might otherwise be valid or effective only if given or taken by all Borrowers, or by each Borrower acting singly, shall be valid and effective if given or taken only by the Company, whether or not any such other Borrower joins therein. Any notice, demand, consent, acknowledgement, direction, certification or other communication delivered to the Company in accordance with the terms of this Agreement shall be deemed to have been delivered to each Designated Borrower.
(d) The Company may from time to time, upon not less than 15 Business Days’ notice from the Company to the Administrative Agent (or such shorter period as may be agreed by the Administrative Agent in its sole discretion), terminate a Designated Borrower’s status as such, provided that there are no outstanding Loans payable by such Designated Borrower, or other amounts payable by such Designated Borrower on account of any Loans made to it, as of the effective date of such termination. The Administrative Agent will promptly notify the Lenders of any such termination of a Designated Borrower’s status.
2.15 Increase in Revolving Credit Commitments. (a) Request for Increase. Provided there exists no Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Company may from time to time, request an increase in the Revolving Credit Commitments of any Class by an amount (for all such requests) not exceeding $500,000,000; provided that any such request for an increase shall be in a minimum amount of $5,000,000. At the time of sending such notice, the Company (in consultation with the Administrative Agent) shall specify the time period within which each Revolving Credit Lender of the applicable Class is requested to respond (which shall in no event be less than ten Business Days from the date of delivery of such notice to the Lenders).
(b) Lender Elections to Increase. Each Revolving Credit Lender of the applicable Class shall notify the Administrative Agent within such time period whether or not it agrees to increase its Revolving Credit Commitment of such Class and, if so, whether by an amount equal to, greater than, or less than its Applicable Percentage of such requested increase. Any Revolving Credit Lender of the applicable Class not responding within such time period shall be deemed to have declined to increase its Revolving Credit Commitment of such Class.
(c) Notification by Administrative Agent; Additional Lenders. The Administrative Agent shall notify the Company and each Lender of the Revolving Credit Lenders’ responses to each request made hereunder. To achieve the full amount of a requested increase and subject to the approval of the Administrative Agent, the L/C Issuer and the Swing Line Lender (in each case, not to be unreasonably withheld or delayed), the Company may also invite additional Eligible Assignees to become Revolving Credit Lenders of the applicable Class pursuant to a
joinder agreement in form and substance reasonably satisfactory to the Administrative Agent and its counsel.
(d) Effective Date and Allocations. If the Revolving Credit Commitments of the applicable Class are increased in accordance with this Section, the Administrative Agent and the Company shall determine the effective date (the “Revolving Credit Increase Effective Date”) and the final allocation of such increase. The Administrative Agent shall promptly notify the Company and the Revolving Credit Lenders of the applicable Class of the final allocation of such increase and the Revolving Credit Increase Effective Date.
(e) Conditions to Effectiveness of Increase. As a condition precedent to such increase, the Company shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Revolving Credit Increase Effective Date signed by a Responsible Officer of such Loan Party (x) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (y) in the case of the Company, certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Article V and the other Loan Documents are true and correct in all material respects (provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) on and as of the Revolving Credit Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section 2.15, the representations and warranties contained in subsection (a) of Section 5.04 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01, and (B) no Default or Event of Default exists. The Borrowers shall prepay any Revolving Credit Loans of the applicable Class outstanding on the Revolving Credit Increase Effective Date (and pay any additional amounts required pursuant to Section 3.05) to the extent necessary to keep the outstanding Revolving Credit Loans of the applicable Class ratable with any revised Applicable Percentages arising from any nonratable increase in the Revolving Credit Commitments of the applicable Class under this Section. If the US Dollar Revolving Credit Commitments are increased in accordance with this Section, then the participations of the US Dollar Revolving Credit Lenders in Letters of Credit issued for the account of the Company or its Subsidiaries and any drawings thereunder and in Swing Line Loans shall be automatically reallocated as of the Revolving Credit Increase Effective Date in accordance with each US Dollar Revolving Credit Lender’s Applicable Percentage (giving effect to such increase).
(f) Conflicting Provisions. This Section shall supersede any provisions in Section 2.13 or 10.01 to the contrary.
2.16 Cash Collateral. (a) Certain Credit Support Events. If (i) the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, (ii) as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, (iii) the Company shall be required to provide Cash Collateral pursuant to Section 8.02(c), or (iv) there shall exist a Defaulting Lender, the Company shall immediately (in the case of clause (iii) above) or within one Business Day (in all other
cases) following any request by the Administrative Agent or the L/C Issuer, provide Cash Collateral in an amount not less than the applicable Minimum Collateral Amount (determined in the case of Cash Collateral provided pursuant to clause (iv) above, after giving effect to Section 2.17(a)(iv) and any Cash Collateral provided by the Defaulting Lender). Additionally, if the Administrative Agent notifies the Company at any time that the Outstanding Amount of all L/C Obligations at such time exceeds 105% of the Letter of Credit Sublimit then in effect, then, within two Business Days after receipt of such notice, the Company shall provide Cash Collateral for the Outstanding Amount of the L/C Obligations in an amount not less than the amount by which the Outstanding Amount of all L/C Obligations exceeds the Letter of Credit Sublimit.
(b) Grant of Security Interest. The Company, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuer and the Lenders, and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.16(c). If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent or the L/C Issuer as herein provided, other than non-consensual Liens permitted pursuant to Section 7.02, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Company will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency. All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in one or more Controlled Accounts at Bank of America. The Company shall pay on demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral.
(c) Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.16 or Sections 2.03, 2.05, 2.17 or 8.02 in respect of Letters of Credit shall be held and applied to the satisfaction of the specific L/C Obligations, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.
(d) Release. Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or to secure other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 10.06(b)(vi))) or (ii) the determination by the Administrative Agent and the L/C Issuer that there exists excess Cash Collateral; provided, however, (x) any such release shall be without prejudice to, and any disbursement or other transfer of Cash Collateral shall be and remain subject to, any other Lien
conferred under the Loan Documents and the other applicable provisions of the Loan Documents, and (y) the Person providing Cash Collateral and the L/C Issuer may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.
2.17 Defaulting Lenders. (a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 10.01.
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 10.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the L/C Issuer or Swing Line Lender hereunder; third, to Cash Collateralize the L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.16; fourth, as the Company may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Company, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the L/C Issuer’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.16; sixth, to the payment of any amounts owing to the Lenders, the L/C Issuer or Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or the Swing Line Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default exists, to the payment of any amounts owing to the Company as a result of any judgment of a court of competent jurisdiction obtained by the Company against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Revolving Credit Loans of any Class or, with respect to the US Dollar Revolving Credit Facility, L/C Borrowings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to
pay the Revolving Credit Loans of, and L/C Obligations owed to, all Lenders of the applicable Class who are not Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Revolving Credit Loans of, or L/C Obligations owed to, such Defaulting Lender until such time as all Revolving Credit Loans and funded and unfunded participations in L/C Obligations and Swing Line Loans are held by the Revolving Credit Lenders of the applicable Class pro rata in accordance with the Revolving Credit Commitments of such Class hereunder without giving effect to Section 2.17(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.17(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii) Certain Fees.
(A) No Defaulting Lender shall be entitled to receive any fee payable under Section 2.09(a) for any period during which that Lender is a Defaulting Lender (and the Company shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).
(B) Each Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.16.
(C) With respect to any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Company shall (x) pay to each US Dollar Revolving Credit Lender who is not a Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations or that has been reallocated to such US Dollar Revolving Credit Lender who is not a Defaulting Lender pursuant to clause (iv) below, (y) pay to the L/C Issuer the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.
(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in L/C Obligations and Swing Line Loans shall, subject to there being no Event of Default then in existence, be reallocated among the US Dollar Revolving Credit Lenders who are not Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation does not cause the aggregate US Dollar Revolving Credit Exposure of any US Dollar Revolving Credit Lender who is not a Defaulting Lender to exceed such Lender’s US
Dollar Revolving Credit Commitment. Subject to Section 10.21, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a US Dollar Revolving Credit Lender who is not Defaulting Lender as a result of such Lender’s increased exposure following such reallocation.
(v) Cash Collateral, Repayment of Swing Line Loans. If the reallocation described in clause (a)(iv) above cannot, or can only partially, be effected, the Company shall, without prejudice to any right or remedy available to it hereunder or under applicable Law, (x) first, prepay Swing Line Loans in an amount equal to the Swing Line Lenders’ Fronting Exposure and (y) second, Cash Collateralize the L/C Issuers’ Fronting Exposure in accordance with the procedures set forth in Section 2.16.
(b) Defaulting Lender Cure. If the Company, the Administrative Agent, Swing Line Lender and the L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders of the applicable Class or Classes or take such other actions as the Administrative Agent may determine to be necessary to cause the Committed Loans and funded and unfunded participations in Letters of Credit and Swing Line Loans to be held on a pro rata basis by the Lenders of the applicable Class or Classes in accordance with their Applicable Percentages (without giving effect to Section 2.17(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Company while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
2.18 Extension of Maturity Date.
(a) Requests for Extension. The Company may, on up to two (2) occasions and by notice to the Administrative Agent (who shall promptly notify the Lenders) not earlier than sixty (60) days and not later than thirty (30) days prior to any anniversary of the Restatement Effective Date (the “Extension Effective Date”), request that each Lender extend such Lender’s Maturity Date then in effect for an additional year from the Maturity Date then in effect with respect to such Lender. For the avoidance of doubt, any such request to extend the Maturity Date shall constitute a request to extend the Maturity Date with respect to both the US Dollar Revolving Credit Commitment and the Multicurrency Revolving Credit Commitment.
(b) Lender Elections to Extend. Each Lender, acting in its sole and individual discretion, shall, by notice to the Administrative Agent, given not earlier than thirty (30) days prior to the Extension Effective Date and not later than the date (the “Notice Date”) that is fifteen (15) days prior to the Extension Effective Date, advise the Administrative Agent whether or not such Lender agrees to such extension (and each Lender that determines not to so extend its
Maturity Date (a “Non-Extending Lender”) shall notify the Administrative Agent of such fact promptly after such determination (but in any event no later than the Notice Date) and any Lender that does not so advise the Administrative Agent on or before the Notice Date shall be deemed to be a Non-Extending Lender. The election of any Lender to agree to such extension shall not obligate any other Lender to so agree.
(c) Notification by Administrative Agent. The Administrative Agent shall notify the Company of each Lender’s determination under this Section no later than the date fifteen (15) days prior to the Extension Effective Date (or, if such date is not a Business Day, on the next preceding Business Day).
(d) Additional Commitment Lenders. The Company shall have the right to replace each Non-Extending Lender with, and add as “Lenders” under this Agreement in place thereof, one or more Eligible Assignees (each, an “Additional Commitment Lender”) as provided in Section 10.13; provided that each of such Additional Commitment Lenders shall enter into an Assignment and Assumption pursuant to which such Additional Commitment Lender shall, effective as of the Extension Effective Date, undertake a Commitment (and, if any such Additional Commitment Lender is already a Lender, its Commitment shall be in addition to such Lender’s Commitment hereunder on such date).
(e) Minimum Extension Requirement. If (and only if) the total of all of the Commitments of the Lenders (excluding any Additional Commitment Lender) with respect to the Multicurrency Revolving Credit Facility and the US Dollar Revolving Credit Facility that have agreed so to extend their Maturity Date (each, an “Extending Lender”) shall be more than 50% of the aggregate amount of all of the Commitments of all of the Lenders (excluding any Additional Commitment Lender) with respect to the Multicurrency Revolving Credit Facility and the US Dollar Revolving Credit Facility in effect immediately prior to the Extension Effective Date, the Maturity Date of each Extending Lender and each Additional Commitment Lender shall be extended to the date falling one year after the then applicable Maturity Date for such Lenders (except that, if such date is not a Business Day, such Maturity Date as so extended shall be the next preceding Business Day) and each Additional Commitment Lender shall thereupon become a “Lender” for all purposes of this Agreement.
(f) Conditions to Effectiveness of Extensions. As conditions precedent to such extension, (i) the Company shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Extension Effective Date signed by a Responsible Officer of such Loan Party (A) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such extension and (B) in the case of the Company, certifying that, immediately before and after giving effect to such extension, (1) the representations and warranties contained in Article V and the other Loan Documents are true and correct in all material respects (provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) on and as of the Extension Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects (provided that any representation or warranty that is qualified as to
“materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) as of such earlier date, and except that for purposes of this Section 2.18, the representations and warranties contained in subsection (a) of Section 5.04 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01, and (2) no Default or Event of Default exists, (ii) the Administrative Agent shall have received an Extension Agreement duly completed and signed by the Company and all of the Extending Lenders as required by Section 2.18(e) and (iii) the Company shall have paid (A) to the Arrangers and the Administrative Agent, for their own respective accounts, fees in the amounts and at the times specified as set forth in any fee letter related to the extension, (B) to the Lenders, for their respective own accounts, such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified and (C) any other fees and expenses required to be paid in accordance with the Loan Documents. In addition, on the Maturity Date of each Non-Extending Lender, the Borrowers shall prepay any Committed Loans outstanding on such date (and pay any additional amounts required pursuant to Section 3.05) to the extent necessary to keep outstanding Committed Loans ratable with any revised Applicable Percentages of the respective Lenders effective as of such date.
(g) Conflicting Provisions. This Section shall supersede any provisions in Section 2.13 or 10.01 to the contrary.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes. (a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes. (i) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable Laws. If any applicable Laws (as determined in the good faith discretion of the applicable Withholding Agent) require the deduction or withholding of any Tax from any such payment by the Withholding Agent, then the Withholding Agent shall be entitled to make such deduction or withholding, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.
(i) If any Withholding Agent shall be required by the Code to withhold or deduct any Taxes, including both United States federal backup withholding and withholding taxes, from any payment, then (A) the Withholding Agent shall withhold or make such deductions as are determined by the Withholding Agent to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Withholding Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction of Indemnified Taxes been made.
(ii) If any Withholding Agent shall be required by any applicable Laws other than the Code to withhold or deduct any Taxes from any payment, then (A) such Withholding Agent, as required by such Laws, shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) such Withholding Agent, to the extent required by such Laws, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with such Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction of Indemnified Taxes been made.
(b) Payment of Other Taxes by the Loan Parties. Without limiting the provisions of subsection (a) above, the Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable Laws, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(c) Tax Indemnifications. (i) Each of the Loan Parties shall, and does hereby, jointly and severally indemnify each Recipient, and shall make payment in respect thereof within 10 days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient, and any penalties, interest and reasonable out-of-pocket expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority (other than interest and penalties imposed as a result of the gross negligence or willful misconduct of such Recipient); provided, however, that if such Recipient does not notify the Loan Parties and the Administrative Agent, if applicable, of any indemnification required under this Section 3.01 within 180 days after such Recipient has received actual notice of the specific assessment or deficiency from the relevant Governmental Authority giving rise to such indemnification claim, the Loan Parties shall not be required to indemnify such Recipient for any incremental interest, penalties or cost resulting from such Recipient’s failure to so notify the Loan Parties measured from and after the end of such 180 day period. A certificate as to the amount of such payment or liability delivered to the Company by a Lender or the L/C Issuer (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error.
(ii) Each Lender and the L/C Issuer shall, and does hereby, severally indemnify, and shall make payment in respect thereof within 10 days after demand therefor, (x)the Administrative Agent against any Indemnified Taxes attributable to such Lender or the L/C Issuer (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Party to do so), (y) the Administrative Agent and the Loan Party, as applicable,
against any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.06(d) relating to the maintenance of a Participant Register and (z) the Administrative Agent and the Loan Party, as applicable, against any Excluded Taxes attributable to such Lender or the L/C Issuer, in each case, that are payable or paid by the Administrative Agent or a Loan Party in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender and the L/C Issuer hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender or the L/C Issuer, as the case may be, under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (ii).
(d) Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority as provided in this Section 3.01, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(e) Status of Lenders; Tax Documentation. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Company and the Administrative Agent, at the time or times reasonably requested by the Company or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Company or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Company or the Administrative Agent, shall deliver such other documentation prescribed by applicable Laws or reasonably requested by the Company or the Administrative Agent as will enable the Company or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation either set forth in Section 3.01(e)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing, in the event that a Borrower is a U.S. Person,
(A) any Lender that is a U.S. Person shall deliver to the Company and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Administrative Agent), executed
copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding;
(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Company and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Administrative Agent), whichever of the following is applicable:
(I) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN-E (or W-8BEN, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E (or W-8BEN, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(II) executed copies of IRS Form W-8ECI;
(III) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit I-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Company within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN-E (or W-8BEN, as applicable); or
(IV) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E (or W-8BEN, as applicable), a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-2 or Exhibit I-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-4 on behalf of each such direct and indirect partner;
(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Company and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to
time thereafter upon the reasonable request of the Company or the Administrative Agent), executed copies of any other form prescribed by applicable Laws as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Company or the Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender or shall deliver to the Company and, when applicable, the Administrative Agent at the time or times prescribed by Laws and at such time or times reasonably requested by the Company or the Administrative Agent such documentation prescribed by applicable Laws (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Company or the Administrative Agent as may be necessary for the Company and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(iii) On or before the date it becomes a party to this Agreement, any Administrative Agent that is a U.S. Person shall deliver to the Company two duly completed copies of IRS Form W-9, or any subsequent versions or successors to such form, certifying that such Administrative Agent is exempt from U.S. federal backup withholding. Any Administrative Agent, and any successor or supplemental Administrative Agent, that is not a U.S. Person for U.S. federal income tax purposes, shall deliver to the Company (i) two duly completed copies of IRS Form W-8IMY certifying that, with respect to such payments received by it (on behalf of the Lenders) from the Loan Parties, it is a “U.S. branch,” the payments are not effectively connected with the conduct of a trade or business in the United States, and it is using such form as evidence of its agreement with the Loan Parties to be treated as a U.S. Person with respect to such payment and (ii) with respect to payments received for its own account, two duly completed copies of IRS Form W-8ECI.
Each Recipient agrees that if any form or certification it previously delivered pursuant to this Section 3.01 expires or becomes obsolete or inaccurate in any respect, or at the time or times reasonably requested by the Company or Administrative Agent, it shall update such form or
certification or promptly notify the Company and the Administrative Agent in writing of its legal inability to do so.
(f) Treatment of Certain Refunds. Unless required by applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender or the L/C Issuer, or have any obligation to pay to any Lender or the L/C Issuer, any refund of Taxes withheld or deducted from funds paid for the account of such Lender or the L/C Issuer, as the case may be. If any Recipient determines, in its sole discretion that it has received a refund of any Taxes to which it has been indemnified pursuant to this Section 3.01 (including paid additional amounts pursuant to this Section 3.01), it shall pay to such Loan Party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 3.01 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that each Loan Party, upon the request of the Recipient, agrees to repay the amount paid over to such Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection, in no event will the applicable Recipient be required to pay any amount to such Loan Party pursuant to this subsection the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any Recipient to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to any Loan Party or any other Person.
(g) Survival. Each party’s obligations under this Section 3.01 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender or the L/C Issuer, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.
3.02 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to perform any of its obligations hereunder or make, maintain or fund or charge interest with respect to any Credit Extension or to determine or charge interest rates based upon the Eurocurrency Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars or any Alternative Currency in the applicable interbank market, then, on notice thereof by such Lender to the Company through the Administrative Agent, (i) any obligation of such Lender to issue, make, maintain, fund or charge interest with respect to any such Credit Extension or to make or continue Eurocurrency Rate Loans in the affected currency or currencies or, in the case of Eurocurrency Rate Loans in Dollars, to convert Base Rate Committed Loans to Eurocurrency Rate Loans, shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to
the Eurocurrency Rate component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurocurrency Rate component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Company that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrowers shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable and such Loans are denominated in Dollars, convert all Eurocurrency Rate Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurocurrency Rate component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurocurrency Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Loans or if such Loans are Eurocurrency Rate Loans denominated in Sterling and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Eurocurrency Rate, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Eurocurrency Rate component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurocurrency Rate. Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or converted.
3.03 Inability to Determine Rates. (a) Except in the case of circumstances described in Section 3.03(b), if in connection with any request for a Eurocurrency Rate Loan or a conversion to or continuation thereof, (i) the Administrative Agent determines that (A) deposits (whether denominated in Dollars or an Alternative Currency) are not being offered to banks in the applicable offshore interbank market for such currency for (x) the applicable amount and Interest Period of such Eurocurrency Rate Loan not denominated in Sterling or (y) the applicable amount of such Eurocurrency Rate Loan denominated in Sterling, or (B)(x) adequate and reasonable means do not exist for determining (1) in the case of a Eurocurrency Rate Loan not denominated in Sterling, the Eurocurrency Rate for any requested Interest Period with respect to such proposed Eurocurrency Rate Loan or (2) in the case of a Eurocurrency Rate Loan denominated in Sterling, the Eurocurrency Rate with respect to such proposed Eurocurrency Rate Loan or in connection with an existing or proposed Base Rate Loan and (y) the circumstances described in Section 3.03(b) do not apply (in each case with respect to this clause (a)(i), “Impacted Loans”), or (ii) the Administrative Agent or the Required Lenders determine that for any reason (1) in the case of a Eurocurrency Rate Loan not denominated in Sterling, the Eurocurrency Rate for any requested Interest Period with respect to such proposed Eurocurrency Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Eurocurrency Rate Loan or (2) in the case of a Eurocurrency Rate Loan denominated in Sterling, the Eurocurrency Rate with respect to such proposed Eurocurrency Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Eurocurrency Rate Loan, the Administrative Agent will promptly so notify the Company and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Eurocurrency Rate Loans in the affected currency or currencies shall be suspended (to the extent of the affected Eurocurrency Rate Loans or Interest Periods), and (y) in the event of a determination described in the preceding sentence
with respect to the Eurocurrency Rate component of the Base Rate, the utilization of the Eurocurrency Rate component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (or, in the case of any determination by the Required Lenders described in clause (a)(ii) above, until the Administrative Agent, upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, (x) the Company may revoke any pending request for a Borrowing of, conversion to or continuation of Eurocurrency Rate Loans in the affected currency or currencies (to the extent of the affected Eurocurrency Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Committed Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount specified therein and (y)(A) any outstanding affected Eurocurrency Rate Loans denominated in Dollars will be deemed to have been converted into Base Rate Loans at the end of the applicable Interest Period and (B) any outstanding affected Eurocurrency Rate Loans, at the Company’s election, shall either (1) be converted into a Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount of such outstanding Eurocurrency Rate Loans denominated in Sterling (immediately) or Eurocurrency Rate Loans not denominated in Sterling (at the end of the applicable Interest Period) or (2) be prepaid in full (immediately, or at the end of the applicable Interest Period with respect to Eurocurrency Rate Loans not denominated in Sterling, as applicable); provided that if no election is made by the Company by the earlier of (X) the date that is three Business Days after receipt by the Company of such notice and (Y) the last day of the current Interest Period for the applicable Eurocurrency Rate Loan not denominated in Sterling, the Company shall be deemed to have elected clause (1) above.
Notwithstanding the foregoing, if the Administrative Agent has made the determination described in clause (a)(i) of this section, the Administrative Agent, in consultation with the Company and the affected Lenders, may establish an alternative interest rate for the Impacted Loans, in which case, such alternative rate of interest shall apply with respect to the Impacted Loans until (1) the Administrative Agent revokes the notice delivered with respect to the Impacted Loans under clause (a)(i) of the first sentence of this section, (2) the Administrative Agent or the affected Lenders notify the Administrative Agent and the Company that such alternative interest rate does not adequately and fairly reflect the cost to such Lenders of funding the Impacted Loans, or (3) any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to such alternative rate of interest or to determine or charge interest rates based upon such rate or any Governmental Authority has imposed material restrictions on the authority of such Lender to do any of the foregoing and provides the Administrative Agent and the Company written notice thereof. The Administrative Agent will promptly (in one or more notices) notify the Company and each Lender of the establishment of an alternative interest rate pursuant to this paragraph.
(b) Notwithstanding anything to the contrary in this Agreement or any other Loan Documents, if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Company or Required Lenders notify the Administrative Agent
(with, in the case of the Required Lenders, a copy to the Company) that the Company or Required Lenders (as applicable) have determined, that:
(i) adequate and reasonable means do not exist for ascertaining (A) in the case of a Eurocurrency Rate Loan not denominated in Sterling, the Applicable Reference Rate for an Applicable Currency for any requested Interest Period or any other tenors of the Eurocurrency Rate or (B) in the case of a Eurocurrency Rate Loan denominated in Sterling, the Applicable Reference Rate therefor, including, in each case, without limitation, because the Applicable Reference Rate for such Applicable Currency is not available or published on a current basis and such circumstances are unlikely to be temporary, or
(ii) the administrator of the Applicable Reference Rate for an Applicable Currency or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which the Applicable Reference Rate for such Applicable Currency shall no longer be made available, or used for determining the interest rate of loans denominated in such Applicable Currency (provided that, at the time of such statement, there is no successor administrator that is satisfactory to the Administrative Agent that will continue to provide the Applicable Reference Rate for such Applicable Currency) (such specific date, the “Scheduled Unavailability Date”), or
(iii) the administrator of the Applicable Reference Rate for an Applicable Currency or a Governmental Authority having jurisdiction over such administrator has made a public statement announcing that all Interest Periods and other tenors of such Applicable Reference Rate are no longer representative, or
(iv) syndicated loans currently being executed, or that include language similar to that contained in this Section, are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace the Applicable Reference Rate for such Applicable Currency,
then, (A) in the case of a Eurocurrency Rate Loan denominated in Dollars:
in the case of clauses (i)-(iii) above, on a date and time determined by the Administrative Agent (any such date, the “LIBOR Replacement Date”), which date shall be at the end of an Interest Period or on the relevant interest payment date, as applicable, for interest calculated and shall occur within a reasonable period of time after the occurrence of any of the events or circumstances under clause (i), (ii) or (iii) above and, solely with respect to clause (ii) above, no later than the Scheduled Unavailability Date, LIBOR will be replaced hereunder and under the other Loan Documents with, subject to the proviso below, the first available alternative set forth in the order below for any payment period for interest calculated that can be determined by the Administrative Agent, in each case, without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document (the “LIBOR Successor Rate”; and
any such rate before giving effect to the Related Adjustment, the “Pre-Adjustment Successor Rate”):
(x) Term SOFR plus the Related Adjustment; and
(y) SOFR plus the Related Adjustment;
and in the case of clause (iv) above, the Company and Administrative Agent may amend this Agreement solely for the purpose of replacing LIBOR under this Agreement and under any other Loan Document (1) in accordance with the definition of “LIBOR Successor Rate” or (2) if the Administrative Agent and the Company elect to replace LIBOR with a LIBOR Successor Rate other than a SOFR-based rate, with the sum of (a) the alternate benchmark rate plus (b) the Related Adjustment, in each case of the foregoing clauses (a) and (b), that has been selected by the Administrative Agent and the Company giving due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by a Relevant Governmental Body, for U.S. dollar-denominated syndicated credit facilities at such time (and, for the avoidance of doubt, any such proposed rate and adjustment shall constitute a LIBOR Successor Rate), and, in each case of the foregoing clauses (1) and (2), such amendment will become effective at 5:00 p.m., New York City time on the fifth Business Day after the Administrative Agent shall have notified all Lenders and the Company of the occurrence of the circumstances described in clause (iv) above unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to the implementation of a LIBOR Successor Rate pursuant to such clause;
provided that, if the Administrative Agent determines that Term SOFR has become available, is administratively feasible for the Administrative Agent and would have been identified as the Pre-Adjustment Successor Rate in accordance with the foregoing if it had been so available at the time that the LIBOR Successor Rate then in effect was so identified, and the Administrative Agent notifies the Company and Lenders of such availability, then from and after the beginning of the Interest Period, relevant interest payment date or payment period for interest calculated, in each case, commencing no less than thirty (30) days after the date of such notice, the Pre-Adjustment Successor Rate shall be Term SOFR and the LIBOR Successor Rate shall be Term SOFR plus the relevant Related Adjustment.
The Administrative Agent will promptly (in one or more notices) notify the Company and Lenders of (x) any occurrence of any of the events, periods or circumstances under clauses (i) through (iii) above, (y) a LIBOR Replacement Date and (z) the LIBOR Successor Rate.
Notwithstanding anything else herein, if at any time any LIBOR Successor Rate as so determined would otherwise be less than 0%, the LIBOR Successor Rate will be deemed to be 0% for the purposes of this Agreement and the other Loan Documents.
If the events or circumstances of the type described in clauses (i) through (iii) above have occurred with respect to the LIBOR Successor Rate then in effect, then the successor rate thereto shall be determined in accordance with the definition of “LIBOR Successor Rate”.
Notwithstanding anything to the contrary herein, (i) after any such determination by the Administrative Agent or receipt by the Administrative Agent of any such notice described under clauses (i) through (iii) above, as applicable, if the Administrative Agent determines that none of the LIBOR Successor Rates is available on or prior to the LIBOR Replacement Date, (ii) if the events or circumstances described in clause (iv) above have occurred but none of the LIBOR Successor Rates is available, or (iii) if the events or circumstances of the type described in clauses (i) through (iii) above have occurred with respect to the LIBOR Successor Rate then in effect and the Administrative Agent determines that none of the LIBOR Successor Rates is available, then in each case, the Administrative Agent and the Company may amend this Agreement solely for the purpose of replacing LIBOR or any then current LIBOR Successor Rate in accordance with this Section 3.03 at the end of any Interest Period, relevant interest payment date or payment period for interest calculated, as applicable, with another alternate benchmark rate giving due consideration to any evolving or the then existing convention for similar Dollar-denominated syndicated credit facilities for such alternative benchmarks and, in each case, including any Related Adjustments and any other mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar Dollar-denominated syndicated credit facilities for such benchmarks, which adjustment or method for calculating such adjustment shall be published on one or more information services as selected by the Administrative Agent from time to time in its discretion and may be periodically updated. For the avoidance of doubt, any such proposed rate and adjustment shall constitute a LIBOR Successor Rate. Any such amendment shall become effective at 5:00 p.m. (New York time) on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Company unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to such amendment.
If, at the end of any Interest Period, relevant interest payment date or payment period for interest calculated, no LIBOR Successor Rate has been determined in accordance with the foregoing provisions of this Section 3.03(b) and the circumstances under clause (i) or (iii) above exist or the Scheduled Unavailability Date has occurred (as applicable), the Administrative Agent will promptly so notify the Company and Lenders. Thereafter, (x) the obligation of the Lenders to make or maintain Eurocurrency Rate Loans denominated in Dollars (to the extent of the affected Eurocurrency Rate Loans denominated in Dollars, Interest Periods, interest payment dates or payment periods) shall be suspended and (y) the Eurocurrency component shall no longer be utilized in determining the Base Rate, until the LIBOR Successor Rate has been determined in accordance with the foregoing provisions of this Section 3.03(b). Upon receipt of such notice, the Company may revoke any pending request for a Borrowing of, conversion to
or continuation of, Eurocurrency Rate Loans denominated in Dollars (to the extent of the affected Loans, Interest Periods, interest payment dates or payment periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans (subject to the foregoing clause (y)). If the LIBOR Successor Rate is SOFR plus the relevant Related Adjustment, all interest payments will be payable on a monthly basis.
and (B) in the case of a Eurocurrency Rate Loan denominated in an Alternative Currency:
reasonably promptly after such determination by the Administrative Agent or receipt by the Administrative Agent of such notice, as applicable, the Administrative Agent and the Company may amend this Agreement to replace the Applicable Reference Rate for such Alternative Currency in accordance with this Section 3.03 with an alternate benchmark rate giving due consideration to any evolving or the then existing convention for similar syndicated credit facilities syndicated in the U.S. and denominated in such Alternative Currency for such alternative benchmarks and, in each case, including any mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar syndicated credit facilities syndicated in the U.S. and denominated in such Alternative Currency for such benchmarks, each of which adjustments or methods for calculating such adjustments shall be published on one or more information services as selected by the Administrative Agent from time to time in its discretion and may be periodically updated (each, an “Adjustment”; and any such proposed rate, a “Eurocurrency Successor Rate”), and any such amendment shall become effective at 5:00 p.m. (New York time) on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Company unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to such amendment. Such Eurocurrency Successor Rate for such Alternative Currency shall be applied in a manner consistent with market practice; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, such Eurocurrency Successor Rate for such Alternative Currency shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.
If no Eurocurrency Successor Rate has been determined for any Alternative Currency and the circumstances under clause (i) or (iii) above exist or the Scheduled Unavailability Date has occurred (as applicable), the Administrative Agent will promptly so notify the Company and each Lender. Thereafter, the obligation of the Lenders to make or maintain Eurocurrency Rate Loans in each such Alternative Currency shall be suspended (to the extent of the affected Eurocurrency Rate Loans or Interest Periods). Upon receipt of such notice, (i) the Company may revoke any pending request for a Borrowing of, conversion to or continuation of Eurocurrency Rate Loans in each such affected Alternative Currency (to the extent of the affected Eurocurrency Rate Loans or Interest Periods) or, failing that, will be deemed to have converted each such request into a request for a Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount specified therein and (ii) any outstanding affected Eurocurrency
Rate Loans denominated in an Alternative Currency, at the Company’s election, shall either (1) be converted into a Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount of such outstanding Eurocurrency Rate Loan at the end of the applicable Interest Period (or immediately in the case of a Eurocurrency Rate Loan denominated in Sterling) or (2) be prepaid at the end of the applicable Interest Period (or immediately in the case of a Eurocurrency Rate Loan denominated in Sterling) in full; provided that if no election is made by the Company by the earlier of (x) the date that is three Business Days after receipt by the Company of such notice and (y) the last day of the current Interest Period for the applicable Eurocurrency Rate Loan (or on the same day in the case of a Eurocurrency Rate Loan denominated in Sterling), the Company shall be deemed to have elected clause (1) above.
Notwithstanding anything else herein, any definition of Eurocurrency Successor Rate shall provide that in no event shall such Eurocurrency Successor Rate be less than zero for purposes of this Agreement.
In connection with the implementation of a LIBOR Successor Rate or Eurocurrency Successor Rate for any currency, the Administrative Agent will have the right to make Successor Rate Conforming Changes with respect to such currency from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Successor Rate Conforming Changes will become effective without any further action or consent of any other party to this Agreement; provided that, with respect to any such amendment effected, the Administrative Agent shall post each such amendment implementing such Successor Rate Conforming Changes for the Applicable Currency to the Company and the Lenders reasonably promptly after such amendment becomes effective.
3.04 Increased Costs; Reserves on Eurocurrency Rate Loans. (a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurocurrency Rate, other than as set forth below) or the L/C Issuer;
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (e) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or Eurocurrency Rate Loans made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer, the Company will pay (or cause the applicable Designated Borrower to pay) to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the L/C Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swing Line Loans held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Company will pay (or cause the applicable Designated Borrower to pay) to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of a Lender or the L/C Issuer (i) setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Company, and (ii) certifying that such Lender or L/C Issuer is generally charging such amounts to similarly situated borrowers, shall be conclusive absent manifest error. The Company shall pay (or cause the applicable Designated Borrower to pay) such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation, provided that no Borrower shall be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies the Company of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-
month period referred to above shall be extended to include the period of retroactive effect thereof).
(e) Additional Reserve Requirements. The Company shall pay (or cause the applicable Designated Borrower to pay) to each Lender, as long as such Lender shall be required to comply with any reserve ratio requirement or analogous requirement of any central banking or financial regulatory authority imposed in respect of the maintenance of the Commitments or the funding of the Eurocurrency Rate Loans, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Commitment or Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Company shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional costs from such Lender. If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest or costs shall be due and payable 10 days from receipt of such notice.
3.05 Compensation for Losses. Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Company shall promptly compensate (or cause the applicable Designated Borrower to compensate) such Lender for and hold such Lender harmless from any loss (other than the loss of anticipated profits), cost or expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);
(b) any failure by any Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Company or the applicable Designated Borrower;
(c) any failure by any Borrower to make payment of any Loan or drawing under any Letter of Credit (or interest due thereon) denominated in an Alternative Currency on its scheduled due date or any payment thereof in a different currency; or
(d) any assignment of a Eurocurrency Rate Loan not denominated in Sterling on a day other than the last day of the Interest Period therefor as a result of a request by the Company pursuant to Section 10.13;
including any foreign exchange losses and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan, from fees payable to terminate the deposits from which such funds were obtained or from the performance of any foreign exchange contract. The Company shall also pay (or cause the applicable Designated Borrower to pay) any customary administrative fees charged by such Lender in connection with the foregoing.
For purposes of calculating amounts payable by the Company (or the applicable Designated Borrower) to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurocurrency Rate Loan made by it at the Eurocurrency base rate used in determining the Eurocurrency Rate for such Loan by a matching deposit or other borrowing in the offshore interbank market for such currency for a comparable amount and for a comparable period, whether or not such Eurocurrency Rate Loan was in fact so funded. Each Lender claiming any payment pursuant to this Section 3.05 shall do so by giving notice thereof to the Company and the Administrative Agent (showing calculation of the amount claimed in reasonable detail) within 60 Business Days after a failure to borrow, convert or continue Eurocurrency Rate Loans not denominated in Sterling, or to prepay, after notice or after a prepayment of Eurocurrency Rate Loans not denominated in Sterling on a day which is not the last day of an Interest Period therefor.
3.06 Mitigation Obligations; Replacement of Lenders. (a) Designation of a Different Lending Office. Each Lender may make any Credit Extension to the Borrower through any Lending Office, provided that the exercise of this option shall not affect the obligation of the Borrower to repay the Credit Extension in accordance with the terms of this Agreement. If any Lender requests compensation under Section 3.04, or requires any Borrower to pay any Indemnified Taxes or additional amounts to any Lender, the L/C Issuer, or any Governmental Authority for the account of any Lender or the L/C Issuer pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then at the request of the Company such Lender or the L/C Issuer shall, as applicable, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender or the L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender or the L/C Issuer, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or the L/C Issuer, as the case may be. The Company hereby agrees to pay (or cause the applicable Designated Borrower to pay) all reasonable costs and expenses incurred by any Lender or the L/C Issuer in connection with any such designation or assignment.
(b) Replacement of Lenders. If any Lender gives notice under Section 3.02, requests compensation under Section 3.04, or if any Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.06(a), the Company may replace such Lender in accordance with Section 10.13.
3.07 Survival. All obligations of the Loan Parties under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.
ARTICLE IV.
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01 Conditions of Restatement Effective Date. The occurrence of the Restatement Effective Date is subject to satisfaction (or waiver in accordance with Section 10.01) of the following conditions precedent:
(a) The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Restatement Effective Date (or, in the case of certificates of governmental officials, a recent date before the Restatement Effective Date) and each in form and substance reasonably satisfactory to the Administrative Agent and each of the Lenders:
(i) executed counterparts of this Agreement and Guaranty Amendment No. 2;
(ii) Notes executed by the applicable Borrowers in favor of each Lender requesting Notes at least three Business Days prior to the Restatement Effective Date;
(iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party;
(iv) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing, in good standing and qualified to engage in business in its jurisdiction of organization;
(v) (A) a favorable opinion of Hogan Lovells US LLP, New York and Virginia counsel to the Loan Parties, addressed to the Administrative Agent and each Lender and (B) a favorable opinion of McGuireWoods LLP, North Carolina counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, in each case in a customary form and reasonably satisfactory to the Administrative Agent and its counsel;
(vi) a certificate signed by a Responsible Officer of the Company certifying that (A) the conditions specified in Sections 4.02(a) and (b) have been satisfied, (B) there has been no event or circumstance since January 3, 2021 that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect, (C) there is no action, suit, investigation or proceeding pending or, to the knowledge of the Company, threatened in any court or before any Governmental Authority that could reasonably be expected to have a Material Adverse Effect and (D) the value of the consolidated assets of the Company and its Subsidiaries at present fair
saleable value is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of the Company and its Subsidiaries on a consolidated basis, and the Company and its Subsidiaries on a consolidated basis are able to pay all their liabilities as such liabilities mature and do not have unreasonably small capital with which to carry on their business.
(b) The Refinancing shall have been consummated substantially concurrently with the Restatement Effective Date, and the Administrative Agent shall have received reasonably satisfactory evidence thereof.
(c) The Company shall have paid (i) all fees owed pursuant to the Fee Letters, (ii) without duplication of any fees paid pursuant to Section 4.02(b), all fees owed to the Lenders pursuant to the Existing Credit Agreement and (ii) all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced at least three (3) Business Days prior to the Restatement Effective Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Company and the Administrative Agent).
(d) (i) Upon the reasonable request of any Lender made at least 5 days prior to the Restatement Effective Date, the Company shall have provided to such Lender, and such Lender shall be reasonably satisfied with, the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act, in each case at least 3 days prior to the Restatement Effective Date and (ii) at least 5 days prior to the Restatement Effective Date, any Loan Party that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall deliver a Beneficial Ownership Certification in relation to such Loan Party.
Without limiting the generality of the provisions of the last paragraph of Section 9.03, for purposes of determining compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Restatement Effective Date specifying its objection thereto.
4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type, or a continuation of Eurocurrency Rate Loans) is subject to the following conditions precedent:
(a) The representations and warranties of (i) the Borrowers contained in Article V and (ii) each Loan Party contained in each other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects (provided that any representation or warranty that is qualified as to
“materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 4.02, the representations and warranties contained in subsection (a) of Section 5.04 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01; provided, however, that for so long as the Borrower maintains a customary commercial paper lending facility, the representations set forth in Section 5.04(b) and Section 5.06 shall be excluded from this clause (a).
(b) No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.
(c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.
(d) If the applicable Borrower is a Designated Borrower, then the conditions of Section 2.14 to the designation of such Borrower as a Designated Borrower shall have been met to the satisfaction of the Administrative Agent.
(e) In the case of a Credit Extension to be denominated in an Alternative Currency, there shall not have occurred any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which in the reasonable opinion of the Administrative Agent, the Required Lenders (in the case of any Loans to be denominated in an Alternative Currency) or the L/C Issuer (in the case of any Letter of Credit to be denominated in an Alternative Currency) would make it impracticable for such Credit Extension to be denominated in the relevant Alternative Currency.
Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type or a continuation of Eurocurrency Rate Loans) submitted by the Company shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Administrative Agent and the Lenders on the Restatement Effective Date, on each Extension Effective Date, on each Revolving Credit Increase Effective Date and on each date required pursuant to Section 4.02 that (subject to any exceptions set forth in Section 4.02):
5.01 Organization; Powers. Each Loan Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and as proposed to be conducted, to execute,
deliver and perform its obligations under each Loan Document to which it is a party and to effect the Transactions, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure to so qualify, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
5.02 Authorization; Enforceability. The Transactions to be entered into by each Loan Party and the execution, delivery and performance by each Loan Party of the Loan Documents have been duly authorized by all necessary corporate or other action and, if required, action by the holders of such Loan Party’s Equity Interests. This Agreement has been duly executed and delivered by each Borrower and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of such Borrower or such Loan Party (as the case may be), enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
5.03 Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (b) will not violate any material Requirement of Law applicable to any Loan Party or any Subsidiary to the extent failure to comply with which could reasonably be expected to have a Material Adverse Effect, (c) will not violate the charter, by-laws or other organizational documents of any Loan Party, (d) will not violate or result in a material default under any material indenture, agreement or other instrument binding upon any Loan Party or any Subsidiary or their respective assets, or give rise to a right thereunder to require any material payment to be made by any Loan Party or any Subsidiary or give rise to a right of, or result in, termination, cancelation or acceleration of any material obligation thereunder and (e) will not result in the creation or imposition of any Lien (other than a Lien permitted under Section 7.02) on any asset of the Loan Party or any Subsidiary.
5.04 Financial Statements; No Material Adverse Effect. (a) The Company has heretofore furnished to the Lenders (i) its consolidated balance sheet and consolidated statements of income, stockholders’ equity and cash flows as of and for the fiscal year ended January 3, 2021, reported on by Ernst & Young LLP, independent public accountants and (ii) its consolidated condensed balance sheet and statement of income and cash flows as of and for the fiscal quarter and the portion of the fiscal year ended April 4, 2021. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Company and the Subsidiaries as of such dates and for such periods in accordance with GAAP consistently applied, subject to year-end audit adjustments and the absence of footnotes and consolidated statements of stockholders’ equity in the case of the statements referred to in clause (ii) above.
(b) Since January 3, 2021, there has not occurred any event, change or condition that has had, or could reasonably be expected to have, a Material Adverse Effect.
5.05 Properties. (a) Each Borrower and each of the Subsidiaries has good title to, or valid leasehold interests in, all the real and personal property that is material to its business, free of all Liens other than Liens permitted by Section 7.02.
(b) Each Borrower and each of the Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrowers and the Subsidiaries does not infringe upon the rights of any other Person, except for such infringements that could not reasonably be expected to result in a Material Adverse Effect.
5.06 Litigation Matters. There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of any Responsible Officer of the Company, threatened against or affecting any Borrower or any Subsidiary (i) which could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (except as set forth on Schedule 5.06) or (ii) that involve any of the Loan Documents or the Transactions.
5.07 Compliance with Laws and Agreements. Each Borrower and each of the Subsidiaries is in compliance with (a) all Requirements of Law applicable to it or its property except with respect to any noncompliance therewith which could not reasonably be expected to result in a Material Adverse Effect and (b) all indentures and agreements and other instruments binding upon it or its property except with respect to any noncompliance therewith which could not reasonably be expected to result in a Material Adverse Effect.
5.08 Investment Company Status. No Loan Party nor any of its Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, or is subject to registration under such Act.
5.09 Taxes. The Company and each of the Subsidiaries (a) has timely filed or caused to be filed all Tax returns and reports required to have been filed, except to the extent that failure to do so could not reasonably be expected to result in a Material Adverse Effect, and (b) except to the extent that failure to do so could not reasonably be expected to result in a Material Adverse Effect, has paid or caused to be paid all Taxes required to have been paid by it, except any Taxes that are being contested in good faith by appropriate proceedings, provided that the Company or such Subsidiary, as the case may be, has set aside on its books adequate reserves therefor in accordance with GAAP, and the failure to pay such Taxes could not reasonably be expected to result in a Material Adverse Effect. No material Tax liens have been filed (other than a Lien permitted under Section 7.02) and no material claims are being asserted with respect to any Taxes, except for such claims that could not reasonably be expected to result in a Material Adverse Effect.
5.10 ERISA. (a) Except as could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (i) each Loan Party and each of their respective ERISA Affiliates is in compliance with the applicable provisions of ERISA and of the Code relating to Plans and the regulations and published interpretations thereunder, (ii) no ERISA Event has occurred or is reasonably expected to occur, and (iii) (A) each Foreign Plan has been
maintained in compliance with its terms and with the requirements of any and all applicable Laws, (B) no Loan Party has incurred any obligation or liability in connection with the termination of or withdrawal from any Foreign Plan, (C) the present value of the accrued benefit liabilities (whether or not vested) under each Foreign Plan that is required to be funded by any Loan Party does not exceed the current value of the assets of such Foreign Plan and (D) for each Foreign Plan which is not required to be funded, the obligations or liabilities of such Foreign Plan are properly accrued.
(b) The Company represents and warrants that the Company is not and will not be using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments.
5.11 Disclosure. None of (a) the Company’s Quarterly Report on Form 10-Q for the period ended October 2, 2016, and the other filings of the Company made with the SEC since October 2, 2016 and prior to the Restatement Effective Date (collectively, the “SEC Filings”) or (b) any of the other reports, financial statements, certificates or other information furnished by or on behalf of the Company to the Administrative Agent or any Lender pursuant to any Loan Document or delivered thereunder (as modified or supplemented by other information then or theretofore furnished by or on behalf of the Borrowers to the Administrative Agent in connection herewith), as of the date such disclosures are delivered, contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, provided that, with respect to projected financial information, each Loan Party represents only that such information was prepared in good faith based upon assumptions believed by them to be reasonable at the time delivered (unless otherwise updated subsequent thereto, in which case such information was prepared in good faith based upon assumptions believed by it to be reasonable at the time updated). As of the Restatement Effective Date, the information included in the Beneficial Ownership Certification, if applicable, is true and correct in all respects.
5.12 Insurance. As of the Restatement Effective Date, all premiums due in respect of all insurance (including self-insurance) maintained by or on behalf of the Loan Parties have been paid. The properties of the Company and its Subsidiaries are insured with financially sound and reputable insurance companies or through self-insurance and the Company believes that such insurance maintained by or on behalf of the Loan Parties and their subsidiaries is adequate.
5.13 Use of Proceeds. (a) Neither the Company nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock. Following the application of the proceeds of each Borrowing or drawing under each Letter of Credit, not more than 25% of the value of the assets (either of the applicable Borrower or of the Company and its Subsidiaries on a consolidated basis) subject to the provisions of Section 7.02 or any other provision restricting the disposition or pledge of such assets, or subject to any restriction on the disposition or pledge of such assets contained in any agreement or instrument
between any Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of clauses (f) or (g) of Article VIII, will be Margin Stock.
(b) Each Borrower shall use the proceeds of the Loans for working capital and other general corporate purposes, including to consummate the Refinancing. No part of the proceeds of any Loan will be used to purchase or carry Margin Stock or to extend credit to others for the purpose of purchasing or carrying Margin Stock.
5.14 Subsidiaries. Schedule 5.14 sets forth, as of the Restatement Effective Date, a correct and complete list of the name and type of entity of each Loan Party. All of the issued and outstanding Equity Interests owned by any Loan Party in its Subsidiaries have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid and nonassessable.
5.15 Event of Default. No Default or Event of Default has occurred and is continuing.
5.16 Sanctions; Anti-Corruption Laws. (i) None of the Company or any of its Subsidiaries, nor to the knowledge of any Responsible Officer of the Company, any director, officer, employee, agent or Affiliate thereof is a Person that is, or is owned or controlled by one or more Persons that are: (i) the subject of any Sanctions; or (ii) located, organized or resident in a Designated Jurisdiction, including, without limitation, Cuba, Iran, North Korea, Crimea and Syria. Each Loan Party, their respective Subsidiaries and, to the knowledge of each Responsible Officer of such Loan Party, their respective directors, officers, employees, agents and Affiliates are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. Each Loan Party has implemented and maintains in effect policies and procedures designed to ensure compliance by such Loan Party, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws.
5.17 Money Laundering and Counter-Terrorist Financing Laws. Each Loan Party is in compliance, in all material respects, with the Bank Secrecy Act, as amended by Title III of the Patriot Act, and all other applicable anti-money laundering and counter terrorist financing laws and regulations.
ARTICLE VI.
AFFIRMATIVE COVENANTS
Until the Commitments shall have expired or been terminated, the principal of and interest on each Loan and all fees, expenses and other amounts payable under any Loan Document (other than contingent amounts not yet due) shall have been paid in full, all Letters of Credit shall have expired or been terminated or cash collateralized as provided in Section 2.16
and all L/C Obligations shall have been reimbursed, each Borrower covenants and agrees with the Lenders that:
6.01 Financial Statements and Other Information. The Borrowers, or the Company on behalf of the Borrowers, will furnish to the Administrative Agent for prompt delivery to each Lender:
(a) as soon as possible, but in any event within 90 days after the end of each fiscal year of the Company, the Company’s audited consolidated balance sheet and audited consolidated condensed statements of income, stockholders’ equity and cash flows as of the end of and for such year, and related notes thereto, setting forth in each case in comparative form the corresponding figures for (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all reported on by Ernst & Young LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception (other than a “going concern” qualification or exception solely as a result of the upcoming maturity of the Loans on the Maturity Date and except for qualifications solely relating to changes in accounting principles or practices reflecting changes in GAAP and required or approved by the Company’s independent certified public accountant) and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
(b) as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Company, the Company’s unaudited consolidated balance sheet and unaudited consolidated condensed statements of income and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by a Financial Officer of the Company as presenting fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery or deemed delivery of financial statements under paragraph (a) or (b) above (or, in the case of any such delivery under paragraph (a) above, within 90 days after the end of the applicable fiscal year of the Company) a certificate of a Financial Officer of the Company substantially in the form of Exhibit F certifying (i) (solely in the case of financial statements delivered pursuant to paragraph (b) above) such financial statements as presenting fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes, (ii) as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (iii) setting forth reasonably detailed calculations demonstrating compliance with the covenants contained in
Sections 7.10 and 7.11 and (iv) stating whether any change in GAAP or in the application thereof that applies to the Company or any of its consolidated Subsidiaries has occurred since the later of the date of the Company’s most recent audited financial statements referred to in Section 5.04 and the date of the most recent prior certificate delivered pursuant to this paragraph (c) indicating such a change and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under paragraph (a) of this Section, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their audit of such financial statements of any failure of the Company to comply with the terms, covenants, provisions or conditions of Section 7.10 or Section 7.11 insofar as they relate to accounting matters and, if such accounting firm has obtained such knowledge of any failure to comply, a statement as to the nature thereof (which certificate may be limited to the extent required by accounting rules or guidelines);
(e) concurrently with any delivery of financial statements under paragraph (a) of this Section, a certificate signed by a Responsible Officer of the Company setting forth the names, jurisdictions of incorporation and consolidated revenues and Consolidated Total Assets for the Subsidiary Guarantors as of the end of the fiscal year to which such financial statements apply;
(f) promptly after Moody’s, S&P or Fitch shall have announced (i) a change in its Rating, (ii) that it shall no longer maintain a Rating or (iii) that it shall cease to be in the business of issuing corporate debt ratings, written notice of such development or rating change;
(g) promptly following any reasonable request therefor from the Administrative Agent, copies of any documents described in Sections 101(k) or 101(l) of ERISA that any Loan Party or any ERISA Affiliate may request with respect to any Multiemployer Plan; provided that if the Loan Parties or any of the ERISA Affiliates have not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Administrative Agent, the Loan Parties and/or the ERISA Affiliates shall promptly make a request for such documents or notices from such administrator or sponsor and the Loan Parties shall provide copies of such documents and notices promptly after receipt thereof;
(h) promptly following any reasonable request therefor, such other information regarding the operations, business affairs and financial condition of any Borrower or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent (on behalf of any Lender) may reasonably request; and
(i) promptly following any request therefor, information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act and the Beneficial Ownership Regulation.
(j) Information required to be delivered pursuant to Sections 6.01(a) and (b) shall be deemed to have been delivered on the date on which such information has been posted on the SEC website on the Internet at www.sec.gov, or, to the extent the Company provides notice to
the Administrative Agent, at another website identified in such notice and accessible by the Lenders without charge, provided that such notice may be included in a certificate delivered pursuant to Section 6.01(c).
Each Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers may, but shall not be obligated to, make available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf of such Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks, Syndtrak, ClearPar, or a substantially similar electronic transmission system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to any of the Borrowers or their respective Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities; provided, however, that each Public Lender shall in any event designate one or more persons who are entitled to view material non-public information to the same extent as Lenders who are not Public Lenders. Each Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrowers shall be deemed to have authorized the Administrative Agent, the Arrangers, the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrowers or their respective securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent and the Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.” Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC.”
In no event shall the requirements set forth in Section 6.01(h) or any other Loan Document require the Company or any Subsidiary to provide any such information which (i) constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by Law, fiduciary duty or third-party contractual obligations (not created in contemplation thereof) or (iii) is subject to attorney-client or similar privilege or constitutes attorney work-product; provided that the Company shall notify the Administrative Agent promptly upon obtaining knowledge that such information is being withheld in reliance on this paragraph and, solely with respect to information being withheld due to third-party contractual obligations, use commercially reasonable efforts to secure the requisite consent to disclose such information.
6.02 Notices of Material Events. The Company will furnish to the Administrative Agent (for prompt distribution to each Lender through the Administrative Agent) written notice promptly, but in any event within five Business Days of, any of the Chief Executive Officer, the
President, the General Counsel or the Chief Financial Officer of any Borrower obtaining actual knowledge of the following:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or, to the knowledge of the Chief Financial Officer or another executive officer of the Company or any Subsidiary, affecting the Company or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that alone or together with any other ERISA Events that have occurred or are reasonably expected to occur, could reasonably be expected to result in a liability in excess of $50,000,000;
(d) with respect to a funded Foreign Plan, a termination, withdrawal or noncompliance with applicable law or plan terms that would reasonably be expected to result in a liability in excess of $50,000,000;
(e) any event, notice or circumstance or any correspondence with any Governmental Authority (including with respect to any release into the indoor or outdoor environment of any Hazardous Material that is required by any applicable Environmental Law to be reported to a Governmental Authority) which could reasonably be expected to lead to any Material Adverse Effect; and
(f) any other development (including notice of any Environmental Liability) that results in, or could reasonably be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a written statement of the Chief Financial Officer or other executive officer of the Company setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
6.03 Existence; Conduct of Business. Each Borrower will, and will cause its Subsidiaries to, do or cause to be done all things necessary to obtain, preserve, renew and keep in full force and effect its legal existence and, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect, the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business, provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 7.03 or other disposition permitted hereunder.
6.04 Payment of Taxes. Each Borrower will, and will cause its Subsidiaries to, pay or discharge all material Taxes, before such Taxes shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Company or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (c) no attempt is being made to effect collection, or such contest effectively suspends collection, of the contested obligation and the enforcement
of any Lien securing such obligation and (d) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.
6.05 Maintenance of Properties. Each Borrower will, and will cause its Subsidiaries to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear and casualty and condemnation events excepted.
6.06 Books and Records; Inspection Rights. Each Borrower will, and will cause each Subsidiary to, (a) keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities and (b) in the case of each Loan Party, permit any representatives designated by the Administrative Agent or any Lender (including employees of the Administrative Agent, any Lender or any consultants, accountants, lawyers and appraisers retained by the Administrative Agent or any Lender), upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records (including environmental assessment reports and Phase I or Phase II studies, and other environmental documents, in each case, that are not protected by attorney-client privilege) and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times during normal business hours and as often as reasonably requested (but no more frequently than annually unless an Event of Default exists) and all with a representative of the Company present; provided, however, that absent the existence of an Event of Default, the Company shall not be required to pay for more than one such inspection and visit by the Administrative Agent and the Lenders (taken as a whole) in any fiscal year of the Company. The Borrowers acknowledge that the Administrative Agent, after exercising its rights of inspection, may prepare and distribute to the Lenders certain Reports pertaining to the Loan Parties’ and their respective Subsidiaries’ assets for internal use by the Administrative Agent and the Lenders. The employees, consultants, accountants, lawyers and appraisers of the Administrative Agent and each Lender shall comply with the Company’s applicable safety and biosecurity procedures during any such visit or inspection to the extent the same are made available to the Administrative Agent or such Lender.
6.07 Compliance with Laws. (a) Each Borrower will, and will cause each of its Subsidiaries to, comply with all Requirements of Law with respect to it or its property, except where non-compliance could not reasonably be expected to result in a Material Adverse Effect or where the necessity of compliance therewith is contested in good faith by appropriate proceedings.
(b) Each Borrower will, and will cause each of its Subsidiaries to, (i) comply with all applicable Environmental Laws and (ii) generate, use, treat, store, release, transport, dispose of and otherwise manage all Hazardous Materials in a manner that would not reasonably be expected to result in a liability to any Loan Party or Subsidiary, except in the case of (i) and (ii) as could not reasonably be expected to result in a Material Adverse Effect.
6.08 Use of Proceeds; Letters of Credit. (a) The proceeds of the Loans will be used, and Letters of Credit will be issued, to finance general working capital needs and for other general corporate purposes, including to consummate the Refinancing, in each case of the Company and the Subsidiaries. No part of the proceeds of any Loan will be used, whether
directly or indirectly, to purchase or carry Margin Stock, to extend credit to others for the purpose of purchasing or carrying Margin Stock or for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X or for the purpose of financing any unsolicited offer for the Equity Interests of any Person or any hostile acquisition.
(b) The Company will not directly or indirectly use the proceeds of the Loans, or lend, contribute or otherwise make available such proceeds of the Loans to any Person, for the purpose of financing activities or business of or with any Person, or in any country or territory that, at the time of such financing, is the subject of any Sanctions.
(c) No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of any Anti-Corruption Laws.
6.09 Insurance. The Company will, and will cause each Subsidiary to, maintain with financially sound and reputable insurance companies or through self-insurance, (a) insurance or self-insurance in such amounts (with no greater risk retention) and against such risks as is considered adequate by the Company, in its good faith judgment, and (b) all other insurance as may be required by law. The Company will furnish to the Administrative Agent, upon the reasonable request of the Administrative Agent, information in reasonable detail as to the insurance so maintained.
6.10 Further Assurances. (a) The Company will, and will cause each Subsidiary to, execute any and all further documents, agreements and instruments, and take all such further actions that may be required under any applicable law, or that the Administrative Agent or the Required Lenders may reasonably request, to cause the Subsidiary Guarantee Requirement to be and remain satisfied at all times or otherwise to give effect to the provisions of the Loan Documents, all at the expense of the Loan Parties.
(b) The Company will execute any and all further documents, agreements and instruments, and take all such further actions that may be required under any applicable law, or that the Administrative Agent or the Required Lenders may reasonably request, to give effect to the provisions of the Loan Documents, all at the expense of the Loan Parties.
ARTICLE VII.
NEGATIVE COVENANTS
Until the Commitments shall have expired or been terminated, the principal of and interest on each Loan and all fees, expenses and other amounts payable under any Loan Document (other than contingent amounts not yet due) shall have been paid in full, all Letters of Credit shall have expired or been terminated or cash collateralized as provided in Section 2.16
and all L/C Obligations shall have been reimbursed, each Borrower covenants and agrees with the Lenders that:
7.01 Indebtedness. (a) The Company will not permit any Subsidiary that is not a Loan Party to directly or indirectly, create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) Indebtedness existing on the Restatement Effective Date and set forth on Schedule 7.01 and Refinancing Indebtedness in respect thereof;
(iii) Indebtedness of any Subsidiary to the Company or any other Subsidiary; provided that such Indebtedness shall not have been transferred or pledged to any other Person (other than the Company or any Subsidiary);
(iv) Guarantees by any Subsidiary that is not a Loan Party of Indebtedness of any other Subsidiary that is not a Loan Party; provided that the Indebtedness so guaranteed shall not be prohibited by this Section;
(v) Indebtedness of any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets, and Refinancing Indebtedness in respect thereof; provided that such Indebtedness is incurred prior to or within 180 days after such acquisition or the completion of such construction or improvement;
(vi) Indebtedness of any Person that becomes a Subsidiary (or of any Person not previously a Subsidiary that is merged or consolidated with or into a Subsidiary in a transaction permitted hereunder) after the Restatement Effective Date, or Indebtedness of any Person that is assumed by any Subsidiary in connection with an acquisition of assets by such Subsidiary, and Refinancing Indebtedness in respect thereof; provided that (A) such original Indebtedness exists at the time such Person becomes a Subsidiary (or is so merged or consolidated) or such assets are acquired and is not created in contemplation of or in connection with such Person becoming a Subsidiary (or such merger or consolidation) or such assets being acquired and (B) neither the Company nor any Subsidiary (other than such Person or the Subsidiary with which such Person is merged or consolidated or that so assumes such Person’s Indebtedness) shall Guarantee or otherwise become liable for the payment of such Indebtedness;
(vii) performance bonds, bid bonds, surety bonds, appeal bonds, completion Guarantees and similar obligations, in each case provided in the ordinary course of business or in connection with the enforcement of rights or claims of the Company or its Subsidiaries or in connection with judgments that do not result in a Default or an Event of Default;
(viii) Indebtedness owed to any Person providing workers’ compensation, health, disability or other employee benefits or property, casualty or liability insurance, pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business;
(ix) Indebtedness under Swap Agreements permitted under Section 7.05;
(x) Indebtedness owed in respect of overdrafts and related liabilities arising from treasury, depository and cash management services or in connection with any automated clearinghouse transfers of funds;
(xi) Indebtedness consisting of indemnification, adjustment of purchase price, earnout or similar obligations (and Guarantees of such Indebtedness), in each case, incurred in connection with the disposition of any business, assets or a Subsidiary of the Company, other than Guarantees of Indebtedness incurred or assumed by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing or otherwise in connection with such acquisition; provided, however, that (A) such Indebtedness is not reflected on the balance sheet of the Company or any Subsidiary prepared in accordance with GAAP (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (A)) and (B) the maximum aggregate liability in respect of all such Indebtedness shall not exceed the gross proceeds, including the fair market value of non-cash proceeds (the fair market value of such non-cash proceeds being measured at the time such proceeds are received and without giving effect to any subsequent changes in value), actually received by the Company and the Subsidiaries in connection with such disposition;
(xii) customer deposits and advance payments received in the ordinary course of business and consistent with past practices from customers for goods purchased in the ordinary course of business;
(xiii) Indebtedness of Foreign Subsidiaries not to exceed $750,000,000 at any time outstanding;
(xiv) other Indebtedness (including Indebtedness with respect to any trade financing facility and any Securitization Transaction); provided that the aggregate principal amount of Indebtedness of Subsidiaries outstanding under this clause (xiv), plus, without duplication, the aggregate principal amount of Indebtedness of the Company or any Subsidiary secured by Liens permitted under Section 7.02(k) (including, without duplication, obligations with respect to any trade financing facility and any Securitization Transaction) at any time shall not exceed 12.5% of Consolidated Net Tangible Assets; and
(xv) Guarantees by any Subsidiary of third party grower obligations incurred in the ordinary course of business in an aggregate amount outstanding at any time not to exceed $250,000,000.
(b) Notwithstanding the provisions of paragraph (a) of this Section 7.01, no Subsidiary shall be liable for any Material Indebtedness of the Company under any Guarantee or otherwise, unless it shall also Guarantee the Obligations on terms and under documentation reasonably satisfactory to the Administrative Agent.
7.02 Liens. The Company will not, nor will it permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any asset now owned or hereafter acquired by it, except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
(c) any Lien on any asset of the Company or any Subsidiary existing on the Restatement Effective Date and set forth on Schedule 7.02 (including any Lien that attaches by law to the proceeds thereof); provided that (i) such Lien shall not apply to any other property or asset of the Company or any Subsidiary and (ii) such Lien shall secure only those obligations that it secures on the Restatement Effective Date or Refinancing Indebtedness in respect thereof;
(d) any Lien existing on any asset, including any Lien that attaches by law to the proceeds thereof, prior to the acquisition thereof by the Company or any Subsidiary or existing on any property or asset, including any Lien that attaches by law to the proceeds thereof, of any Person that becomes a Subsidiary or is merged or consolidated with the Company or any Subsidiary after the Restatement Effective Date prior to the time such Person becomes a Subsidiary or is so merged or consolidated securing Indebtedness of a type that would be permitted under Section 7.01(a)(vi) if incurred by a non-Loan Party Subsidiary of the Company; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition, merger or consolidation or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other asset of the Company or any Subsidiary and (iii) such Lien shall secure only those obligations that it secures on the date of such acquisition, merger or consolidation or the date such Person becomes a Subsidiary, as the case may be, or Refinancing Indebtedness in respect thereof;
(e) Liens on fixed or capital assets acquired, constructed or improved by the Company or any Subsidiary, including any Lien that attaches by law to the proceeds thereof; provided that (i) such Liens secure Indebtedness of a type that would be permitted by clause (a)(v) of Section 7.01 if incurred by a non-Loan Party Subsidiary of the Company, (ii) such Liens and the Indebtedness secured thereby are incurred prior to or within 180 days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does not exceed the cost of acquiring, constructing or improving such fixed or capital assets and any financing costs associated therewith and (iv) such Liens shall not apply to any other property or asset of the Company or any Subsidiary;
(f) in connection with the sale or transfer of all the Equity Interests in a Subsidiary in a transaction permitted hereunder, customary rights and restrictions contained in agreements relating to such sale or transfer pending the completion thereof;
(g) in the case of any Subsidiary that is not a wholly-owned Subsidiary, any put and call arrangements, drag-along and tag-along rights and obligations, and transfer restrictions related to its Equity Interests set forth in its organizational documents or any related joint venture or similar agreement;
(h) any Lien on assets of any Foreign Subsidiary; provided that such Lien shall secure only Indebtedness or other obligations of such Foreign Subsidiary, or any other Foreign Subsidiary organized under the laws of the same nation as such Foreign Subsidiary, permitted hereunder;
(i) Liens on cash, cash equivalents or marketable securities of the Company or any Subsidiary securing obligations of the Company or any Subsidiary under Swap Agreements permitted under Section 7.05;
(j) Liens in favor of Smithfield Insurance Co. Ltd. on assets of the Company and its Subsidiaries securing extensions of credit from Smithfield Insurance Co. Ltd. to the Company and its Subsidiaries in an aggregate principal amount not to exceed $150,000,000 at any time outstanding; and
(k) other Liens on assets securing Indebtedness or other obligations (including obligations with respect to any trade financing facility and any Securitization Transaction); provided that the aggregate amount of such Indebtedness and other obligations, plus, without duplication, the aggregate principal amount of Indebtedness of Subsidiaries that are not Loan Parties outstanding under Section 7.01(a)(xiv) at any time shall not exceed 12.5% of Consolidated Net Tangible Assets.
7.03 Fundamental Changes; Business Activities. (a) The Company will not, nor will it permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or transfer all or substantially all its assets to any Person, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing, (i) any Subsidiary may merge into or transfer all or substantially all its assets to another Subsidiary, (ii) any Person acquired in a transaction not otherwise prohibited by this Agreement may merge into or consolidate with, or transfer all or substantially all its assets to, (x) any Subsidiary in a transaction in which the surviving or acquiring entity is a Subsidiary and (y) the Company in a transaction in which the surviving or acquiring entity is the Company, (iii) any special purpose Subsidiary formed for the purpose of effecting an acquisition and not conducting any business or holding assets other than de minimis assets may merge into or consolidate with any Person to be acquired in a transaction not otherwise prohibited by this Agreement, (iv) any Subsidiary may merge into or consolidate with or transfer all or substantially all its assets to any Person in a transaction permitted hereunder in which the surviving or acquiring entity is not a Subsidiary, (v) any Subsidiary may merge into or consolidate with or transfer all or substantially all its assets to the Company in a transaction in which the surviving or acquiring entity is the Company, and (vi) any Subsidiary may liquidate or dissolve if the Company determines in good faith that such liquidation or dissolution is in the best interests of the Company and is not materially disadvantageous to the Lenders.
(b) The Company will not, nor will it permit any Subsidiary to, engage, to any material extent, in any business other than (i) the production, marketing and distribution of food products, any related food or agricultural products, processes or business, the production, marketing and distribution of renewable fuels, neutraceuticals, biotech products and other renewable products (or by-products), any other business in which the Company or any Subsidiary was engaged on the Restatement Effective Date, and any business related, ancillary or complementary to the foregoing, (ii) transfers to and agreements with SPE Subsidiaries relating to Securitization Transactions and (iii) in the case of SPE Subsidiaries, Securitization Transactions and transactions incidental or related thereto.
7.04 [Reserved].
7.05 Swap Agreements. The Company will not, nor will it permit any Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which the Company or a Subsidiary has actual exposure and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any current or anticipated interest-bearing liability, Indebtedness or investment of the Company or any Subsidiary; provided, that the Company may enter into put and call option agreements in order effectively to fix price ranges for the purchases of shares of the Company’s capital stock to be made pursuant to share repurchase programs approved by its board of directors.
7.06 Transactions with Affiliates. The Company will not, nor will it permit any Subsidiary to, sell, lease, license or otherwise transfer any assets to, or purchase, lease, license or otherwise acquire any assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) transactions in the ordinary course of business that are at prices and on terms and conditions not less favorable to the Company or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Company and the Subsidiaries not involving any other Affiliate, (c) any Restricted Payment, (d) investments in joint ventures pursuant to transactions otherwise permitted by this Agreement or (e) compensation and indemnification of, and other employment arrangements with, directors, officers and employees of the Company or such Subsidiary entered in the ordinary course of business.
7.07 Restricted Payments. The Company will not, nor will it permit any of its Subsidiaries to, declare or make, directly or indirectly, any Restricted Payment except (a) the Company may declare and pay dividends with respect to its common stock payable solely in additional shares of its common stock, and, with respect to its Preferred Stock, payable solely in additional shares of such Preferred Stock or in shares of its common stock, (b) Subsidiaries may declare and pay dividends ratably with respect to their Equity Interests, (c) Restricted Payments not otherwise permitted under this Section 7.07 as long as with respect to any Restricted Payment made in reliance on this clause (c): (i) no Event of Default shall exist or result therefrom and (ii) the Dollar Equivalent amount of such Restricted Payment, together with the aggregate amount of all Restricted Payments made between the Original Closing Date and March 12, 2018 pursuant to Section 7.07(c) of the Original Credit Agreement, made between March 13,
2018 and May 21, 2021 pursuant to Section 7.07(c) of the Existing Credit Agreement or in reliance on this clause (c), shall not exceed an amount equal to the sum of (1) $950,000,000 plus (2) an aggregate amount equal to the sum of the following but in no event less than zero: (x) 50% of the positive Net Income of the Company and its Subsidiaries for each fiscal quarter ended after the Original Closing Date (commencing with the first fiscal quarter following the Original Closing Date) minus (y) 100% of the negative Net Income of the Company and its Subsidiaries for each fiscal quarter ended after the fiscal year ended on the Original Closing Date (commencing with the first fiscal quarter following the Original Closing Date) (which amount set forth in this clause (y) shall be expressed as a positive number for purposes of the calculation set forth in this clause (2)), (d) Restricted Payments not otherwise permitted under this Section 7.07 so long as with respect to any Restricted Payment made in reliance on this clause (d): (i) no Event of Default shall exist or result therefrom, (ii) the Company is in pro forma compliance with each of the Financial Covenants and (iii) the Company has received a Rating of greater than or equal to two of the following Ratings: BBB- (stable) or better from S&P, Baa3 (stable) or better from Moody’s or BBB-(stable) or better from Fitch, (e) Subsidiaries that are not Loan Parties may make Restricted Payments to any Subsidiaries and (f) Restricted Payments to any direct or indirect holder of Equity Interests of the Company or any Subsidiary in amounts required for such holder to pay consolidated, combined or similar foreign, U.S. federal, state, and/or local income and similar Taxes to the extent that such income and similar Taxes are attributable to the income of the Company and its Subsidiaries; provided, that in each case the amount of such payments with respect to any fiscal year does not exceed the amount that the Company and its Subsidiaries would have been required to pay in respect of such foreign, U.S. federal, state and/or local income and similar Taxes for such fiscal year had the Company and its Subsidiaries been a stand-alone taxpayer or stand-alone group (separate from any such holder) for all fiscal years ending after the Restatement Effective Date.
7.08 [Reserved].
7.09 [Reserved].
7.10 Consolidated Funded Debt to Consolidated Capitalization Ratio. The Company will not permit the ratio of (a) Consolidated Funded Debt to (b) Consolidated Capitalization to be greater than 0.50 to 1.00 on the last day of any fiscal quarter (such maximum ratio, the “Maximum Debt to Capitalization Ratio”); provided that, upon the consummation of any Material Acquisition and the written election of the Company to the Administrative Agent (which shall promptly notify the Lenders), the Maximum Debt to Capitalization Ratio set forth above shall increase to 0.55 to 1.00 with respect to the last day of the fiscal quarter during which such Material Acquisition shall have been consummated and the last day of each of the immediately following three consecutive fiscal quarters; provided, further, that, following the making of any election with respect to any such Material Acquisition, the Company shall not be permitted to make another such election until and unless, after the last day of the fiscal quarter in which such Material Acquisition shall have been consummated, there shall have been at least two consecutive fiscal quarters as of the last day of which the Maximum Debt to Capitalization Ratio shall have been no more than 0.50 to 1.00.
7.11 Consolidated EBITDA to Consolidated Interest Expense. The Company will not permit the ratio of (a) Consolidated EBITDA for any period of four trailing fiscal quarters ended on the last day of any fiscal quarter to (b) Consolidated Interest Expense for such period to be less than 3.50:1.00.
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
8.01 Events of Default. Any of the following shall constitute an “Event of Default”:
(a) any Borrower shall fail to pay, in the currency required hereunder, any principal of any Loan or any reimbursement obligations in respect of any L/C Obligation when and as the same shall become due and payable;
(b) any Borrower shall fail to pay, in the currency required hereunder, any interest on any Loan or any fee or any other amount (other than an amount referred to in paragraph (a) of this Article) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five Business Days or more;
(c) any representation, warranty or statement made or deemed made by or on behalf of any Loan Party in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder, shall prove to have been incorrect in any material respect (or, in the case of any representation, warranty or statement qualified by materiality, in any respect) when made or deemed made;
(d) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in Section 6.02(a), 6.03 (with respect to any Loan Party’s existence). 6.08 or Article VII of this Agreement;
(e) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraph (a), (b) or (d) of this Article), and, except as otherwise provided in such Loan Document, such failure shall continue unremedied for a period of 30 days after notice thereof from any Lender or the Administrative Agent to the Company;
(f) the Company or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness when and as the same shall become due and payable (or, if any grace periods shall be applicable, after the expiration of such grace periods);
(g) any event or condition occurs (including the triggering of any change in control or similar event with respect to the Company) that results in any Material Indebtedness (other than obligations in respect of Swap Agreements) becoming due prior to its scheduled maturity or the
effect of which default or other event or condition is to cause, or to permit the holder or holders of any Material Indebtedness (other than obligations in respect of Swap Agreements) (or a trustee or agent on behalf of such holder or holders) to cause such Indebtedness to become due prior to its scheduled maturity or to require, with the giving of notice if required, any Material Indebtedness (other than obligations in respect of Swap Agreements) to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), prior to its stated maturity, provided that this paragraph (g) shall not apply to secured Indebtedness that becomes due as a result of the sale, transfer or other disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness (to the extent such sale, transfer or other disposition is not prohibited under this Agreement); or there shall occur any event that constitutes a default, amortization event, event of termination or similar event under or in connection with any Securitization Transaction the obligations in respect of which constitute Material Indebtedness, or the Company or any Subsidiary shall fail to observe or perform any term, covenant, condition or agreement contained in or arising under any such Securitization Transaction, if, as a result of such event or failure, the lenders or purchasers thereunder or any agent acting on their behalf shall cause or be permitted to cause (with or without the giving of notice, the lapse of time or both) such Securitization Transaction or the commitments of the lenders or purchasers thereunder to terminate or cease to be fully available; or there occurs under any Swap Agreement an Early Termination Date (or similar term) (as defined in such Swap Agreement) resulting from any event of default under such Swap Agreement as to which the Company or any Subsidiary is the Defaulting Party (or similar term) (as defined in such Swap Agreement) and the Swap Termination Value owed by the Company or such Subsidiary as a result thereof is greater than $150,000,000;
(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) bankruptcy, liquidation, winding up, dissolution, reorganization, examination, suspension of general operations or other relief in respect of a Loan Party or any Material Subsidiary or its debts, or of a substantial part of their assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for a Loan Party or any Material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed or unstayed for 90 days or more or an order or decree approving or ordering any of the foregoing shall be entered;
(i) any Loan Party or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in paragraph (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or any Material Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;
(j) any Loan Party or any Material Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate amount in excess of $150,000,000 (to the extent not covered by insurance (other than deductibles); provided, that the insurer does not deny liability for the judgment) shall be rendered against any Loan Party, any Subsidiary or any combination thereof and the same shall remain unpaid or undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of any Loan Party or any Subsidiary to enforce any such judgment;
(l) (i) an ERISA Event with respect to a Plan or Multiemployer Plan or (ii) an event or condition with respect to a Foreign Plan shall have occurred that, either alone or when taken together with all other such ERISA Events or events that have occurred, is reasonably likely to have a Material Adverse Effect;
(m) Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations and termination of the Commitments, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or
(n) a Change of Control shall occur.
8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the Administrative Agent may, with the consent of, and shall, at the request of, the Required Lenders take any or all of the following actions:
(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers;
(c) require that the Company Cash Collateralize the L/C Obligations (in an amount equal to the Minimum Collateral Amount with respect thereto).
(d) exercise on behalf of itself, the Lenders and the L/C Issuer all rights and remedies available to it, the Lenders and the L/C Issuer under the Loan Documents;
provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to any Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Company to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.
8.03 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.16 and 2.17, be applied by the Administrative Agent in the following order:
First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;
Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the L/C Issuer (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuer (including fees and time charges for attorneys who may be employees of any Lender or the L/C Issuer) and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;
Third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations, ratably among the Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Third payable to them;
Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings, ratably among the Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Fourth held by them;
Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Company pursuant to Sections 2.03 and 2.16; and
Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Company or as otherwise required by Law.
Subject to Sections 2.03(c) and 2.16, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.
ARTICLE IX.
ADMINISTRATIVE AGENT
9.01 Appointment and Authority. Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article (other than Sections 9.06 and 9.10) are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuer, and neither the Company nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
9.02 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrowers or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative
Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and
(c) shall not have any duty or responsibility to disclose, and shall not be liable for the failure to disclose, to any Lender, any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their Affiliates, that is communicated to, obtained or in the possession of, the Administrative Agent or any of its Related Parties in any capacity, except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein.
The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and non-appealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Company, a Lender or the L/C Issuer.
The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions of this Agreement relating to Competitors. Without limiting the generality of the foregoing, the Administrative Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether any Lender or Participant or prospective Lender or Participant is a Competitor or (y) have any liability with respect to or arising out of any assignment or participation of Loans, or disclosure of confidential information, to any Competitor.
9.04 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have
been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Company), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
9.05 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
9.06 Resignation of Administrative Agent. (a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the L/C Issuer and the Company. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Company, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders and the L/C Issuer, appoint a successor Administrative Agent meeting the qualifications set forth above, provided that in no event shall any such successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.
(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Company and such Person remove such Person as Administrative Agent and, in consultation with the Company, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, (A) all payments and communications provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the L/C Issuer directly and (B) all determinations provided to be made by, to or through the Administrative Agent shall instead be made by the Required Lenders, in each case, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 3.01(g) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section) . The fees payable by the Company to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Company and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them (i) while the retiring or removed Administrative Agent was acting as Administrative Agent and (ii) after such resignation or removal for as long as any of them continues to act in any capacity hereunder or under the other Loan Documents, including (a) acting as collateral agent or otherwise holding any collateral security on behalf of any of the Lenders and (b) in respect of any actions taken in connection with transferring the agency to any successor Administrative Agent.
(d) Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as L/C Issuer and Swing Line Lender. If Bank of America resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto, including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right
to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c). Upon the appointment by the Company of a successor L/C Issuer or Swing Line Lender hereunder (which successor shall in all cases be a Lender other than a Defaulting Lender), (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as applicable, (b) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.
9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly acknowledges that the Administrative Agent has not made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any consent to, and acceptance of any assignment or review of the affairs of any Loan Party of any Affiliate thereof, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender as to any matter, including whether the Administrative Agent has disclosed material information in its (or their Related Parties’) possession. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent, any other Lender or any of their respective Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis of, appraisal of, and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Company hereunder. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, any other Lender or any of their respective Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties. Each Lender represents and warrants that (i) the Loan Documents set forth the terms of a commercial lending facility and (ii) it is engaged in making, acquiring or holding commercial loans in the ordinary course and is entering into this Agreement as a Lender for the purpose of making, acquiring or holding commercial loans and providing other facilities set forth herein as may be applicable to such Lender, and not for the purpose of purchasing, acquiring or holding any other type of financial instrument, and each Lender agrees not to assert a claim in contravention of the foregoing. Each Lender represents and warrants that it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Lender, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities.
9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the Bookrunners or Arrangers listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the L/C Issuer hereunder.
9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on any Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuer and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuer and the Administrative Agent under Sections 2.03(h) and (i), 2.09 and 10.04) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 10.04.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or the L/C Issuer in any such proceeding.
9.10 Guaranty Matters. (a) Any Subsidiary Guarantor that (i) (A) ceases to be a Subsidiary of the Company, (B) is an Excluded Subsidiary (other than a Subsidiary Guarantor that is an Excluded Subsidiary pursuant to clause (c) of the definition thereof and, in the case of a Subsidiary Guarantor that becomes an Excluded Subsidiary after the Restatement Effective Date, solely to the extent that such Subsidiary Guarantor becomes an Excluded Subsidiary as a result of a transaction permitted under the Loan Documents) or (C) is not required to meet the “Subsidiary Guarantee Requirement” as set forth in the proviso to the definition thereof and (ii) does not Guarantee the Senior Notes (or any replacement, refinancing, refunding, renewal or
extension thereof) or any Material Indebtedness of the Company or shall be released from any such Guarantee of the Senior Notes (or any replacement, refinancing, refunding, renewal or extension thereof) or any Material Indebtedness of the Company concurrently with the effectiveness of the release contemplated by this Section 9.10 shall, upon written notice to the Administrative Agent, automatically and without further action by any other Person be released from its obligations under the Guaranty Agreement and, in connection with the foregoing, the Administrative Agent shall (and the Lenders and the L/C Issuer hereby irrevocably authorize the Administrative Agent to) promptly execute, deliver and file, as applicable, such documents, filings and other similar instruments as the Company may reasonably request to reflect such release. Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release any Subsidiary Guarantor from its obligations under the Guaranty Agreement pursuant to this Section 9.10.
(b) Upon request by the Administrative Agent, the Company shall provide a certificate signed by a Responsible Officer confirming that the conditions to release of any Subsidiary Guarantor set forth in clause (a) above are satisfied, and the Administrative Agent shall be fully protected in relying upon such certification.
9.11 Certain ERISA Matters. (a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:
(i) such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement,
(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration
of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.
(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that none of the Administrative Agent, the Arrangers or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
9.12 Recovery of Erroneous Payments. Without limitation of any other provision in this Agreement, if at any time the Administrative Agent makes a payment hereunder in error to any Lender or the L/C Issuer (the “Credit Party”), whether or not in respect of an Obligation due and owing by the Borrower at such time, where such payment is a Rescindable Amount, then in any such event, each Credit Party receiving a Rescindable Amount severally agrees to repay to the Administrative Agent forthwith on demand the Rescindable Amount received by such Credit Party in immediately available funds in the currency so received, with interest thereon, for each day from and including the date such Rescindable Amount is received by it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. Each Credit Party irrevocably waives any and all defenses, including any “discharge for value” (under which a creditor might otherwise claim a right to retain funds mistakenly paid by a third party in respect of a debt owed by another) or similar defense to its obligation to return any Rescindable Amount. The Administrative Agent shall inform each Credit Party promptly upon determining that any payment made to such Credit Party comprised, in whole or in part, a Rescindable Amount.
MISCELLANEOUS
10.01 Amendments, Etc. Subject to Section 3.03(b), no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Company or any other Loan Party therefrom, shall be effective unless in writing signed by the
Required Lenders and the Company or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.01(a) without the written consent of each Lender;
(b) except as contemplated pursuant to Section 2.15 and Section 2.18, extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02) without the written consent of such Lender (it being understood and agreed that a waiver of any condition precedent set forth in Section 4.02 or of any Default is not considered an extension or increase in Commitments of any Lender);
(c) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender entitled to such payment; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Company to pay interest at the Default Rate;
(d) reduce the principal of, or the rate of interest specified herein on (subject to the last paragraph of this Section 10.01), any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of any Borrower to pay interest or Letter of Credit Fees at the Default Rate;
(e) change Section 2.13 or Section 8.03 or any provision hereof in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender adversely affected thereby;
(f) amend Section 1.06 or the definition of “Alternative Currency” without the written consent of each Multicurrency Revolving Credit Lender;
(g) change (i) any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder (other than the definition specified in clause (ii)) without the written consent of each Lender or (ii) the definition of “Required Lenders” or “Required Facility Lenders” without the written consent of each Lender under the applicable Facility;
(h) [reserved];
(i) release all or substantially all of the value of the Guarantee provided by the Company or any Subsidiary Guarantor under the Guaranty Agreement without the written consent of each Lender, except in accordance with the terms hereof; or
(j) subordinate, or have the effect of subordinating, the Obligations hereunder to any other Indebtedness or other obligation without the prior written consent of each Lender directly affected thereby;
and, provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; (iv) the Fee Letters may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto and (v) Section 10.06(g) may not be amended, waived or otherwise modified without the consent of each Granting Lender all or any part of whose Loans are being funded by an SPC at the time of such amendment, waiver or other modification. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.
Notwithstanding anything to the contrary herein, if the Administrative Agent and the Company have jointly identified any ambiguity, mistake, defect, inconsistency, obvious error, omission or any other error or omission of a technical nature or any necessary or desirable technical change on any Lender, in each case, in any provision of any Loan Document, the Company and the Administrative Agent shall be permitted to effect amendments to this Agreement or any other Loan Document, as applicable, solely to address such matter and such amendment shall become effective without the consent of any other party to this Agreement so long as, in each case, the Lenders shall have received at least five (5) Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five (5) Business Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating that the Required Lenders object to such amendment.
Notwithstanding anything to the contrary in this Section 10.01, the Administrative Agent and the Company may, without the consent of any Lender, (x) enter into amendments or modifications to this Agreement or any of the other Loan Documents or (y) enter into additional
Loan Documents, in each case, as the Administrative Agent reasonably deems appropriate in order to implement any LIBOR Successor Rate or otherwise effectuate the terms of Section 3.03 in accordance with the terms of Section 3.03.
10.02 Notices; Effectiveness; Electronic Communication. (a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(i) if to the Company or any other Loan Party, the Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 10.02; and
(ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Company).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).
(b) Electronic Communications. Notices and other communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail, FpML messaging, and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent, the Swing Line Lender, the L/C Issuer or the Company may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to any Borrower, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Company’s, any Loan Party’s or the Administrative Agent’s transmission of Borrower Materials or notices through the platform, any other electronic platform or electronic messaging service, or through the Internet.
(d) Change of Address, Etc. Each of the Borrowers, the Administrative Agent, the L/C Issuer and the Swing Line Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the Company, the Administrative Agent, the L/C Issuer and the Swing Line Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Company or its securities for purposes of United States Federal or state securities laws.
(e) Reliance by Administrative Agent, L/C Issuer and Lenders. The Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including telephonic notices, Committed Loan Notices, Letter of Credit Applications and Swing
Line Loan Notices) purportedly given by or on behalf of any Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Loan Parties shall indemnify the Administrative Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of any Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.
10.03 No Waiver; Cumulative Remedies; Enforcement. No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders and the L/C Issuer; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) the L/C Issuer or the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as L/C Issuer or Swing Line Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 10.08 (subject to the terms of Section 2.13), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.13, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
10.04 Expenses; Indemnity; Damage Waiver. (a) Costs and Expenses. The Company shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, the Arrangers and their respective Affiliates (but in the case of attorneys’ fees, limited to the reasonable fees, charges and disbursements of one counsel for the Administrative Agent and the Arrangers, taken as a whole, and of one local counsel for the
Administrative Agent and the Arrangers, taken as a whole, in each material local jurisdiction), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, the Arrangers, any Lender or the L/C Issuer (but in the case of attorneys’ fees, limited to the reasonable and documented fees, charges and disbursements of one counsel for the Administrative Agent, the Lenders and the L/C Issuer, taken as a whole, and of one local counsel in each material local jurisdiction (and, in the case of an actual conflict of interest, one additional counsel in each material jurisdiction to all affected persons, taken as a whole)) (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable and documented out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) Indemnification by the Company. The Company shall indemnify the Administrative Agent (and any sub-agent thereof), each Arranger, each Lender and the L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against (and reimburse each Indemnitee as the same are incurred for), and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and expenses (but in the case of attorneys’ fees, limited to the reasonable fees, charges and disbursements of one primary counsel for the Indemnitees (taken as a whole) (and, if necessary, one local counsel in each material jurisdiction for the Indemnitees (taken as a whole) and, solely in the case of a conflict of interest, one additional counsel as necessary to the Indemnitees actually affected by such conflict (taken as a whole))), and shall indemnify and hold harmless each Indemnitee from all reasonable fees and time charges and disbursements incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Company or any other Loan Party) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any subagent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), or (iii) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned, leased or operated by any Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to any Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Company or any other Loan Party, and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from (A) the bad faith, gross negligence or willful misconduct of such Indemnitee, (B) a material breach by such Indemnitee of its obligations under this Agreement or (C) any dispute among Indemnitees (or their respective Related Parties), excluding the Administrative Agent, the Arrangers or Persons acting in similar capacities, that does not involve an act or omission by the Company or any of its Subsidiaries. This Section 10.04(b) shall not apply with respect to Taxes, which shall be covered solely by Section 3.01.
(c) Reimbursement by Lenders. To the extent that the Company for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C Issuer, the Swing Line Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the L/C Issuer, the Swing Line Lender or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Total Revolving Credit Outstandings at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them based on such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), provided further that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), the L/C Issuer or the Swing Line Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), the L/C Issuer or the Swing Line Lender in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.12(d).
(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, no party shall assert, and each party hereby waives, and acknowledges that no other Person shall have, any claim against any other party, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages), including for contribution or any other rights of recover under or related to Environmental Laws, arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof; provided that nothing in this Section 10.04(d) shall limit the indemnification obligations of the Borrower under Section 10.04(b) to the extent such special, indirect, consequential or punitive damages are included in any third party claim in connection with which such Indemnitee is entitled to indemnification hereunder. No party referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such party through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby, except to the extent that such damages are determined by a court of competent jurisdiction by final and nonappealable judgment to have
resulted from the bad faith, gross negligence or willful misconduct of, or material breach of this Agreement by, such party.
(e) Payments. All amounts due under this Section shall be payable no later than ten (10) Business Days after demand therefor (or, on the Restatement Effective Date, as applicable).
(f) Survival. The agreements in this Section and the indemnity provisions of Section 10.02(e) shall survive the resignation of the Administrative Agent, the L/C Issuer and the Swing Line Lender, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.
10.05 Payments Set Aside. To the extent that any payment by or on behalf of any Borrower is made to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Overnight Rate from time to time in effect, in the applicable currency of such recovery or payment. The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.
10.06 Successors and Assigns. (a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Company nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section or (iv) to an SPC in accordance with the provisions of subsection (g) of this Section 10.06 (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that (in each case with respect to any Facility) any such assignment shall be subject to the following conditions:
(i) Minimum Amounts.
(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment (in each case with respect to any Facility) or contemporaneous assignments to related Approved Funds (determined after giving effect to such Assignments) that equal at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate and the Loans at the time owing to it under such Facility or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000, in the case of any assignment in respect of the Revolving Credit Facility, unless each of the Administrative Agent and, so long as no Event of Default under Section 8.01(a), (b), (h), (i) or (j) has occurred and is continuing, the Company otherwise consents (each such consent not to be unreasonably withheld or delayed).
(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not (A) apply to the Swing Line Lender’s rights and obligations in respect of Swing Line Loans or (B) prohibit any Lender from assigning all or a portion of its rights and obligations among the revolving credit facility provided hereunder and any separate revolving credit facilities provided pursuant to the last paragraph of Section 10.01 on a non-pro rata basis;
(iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:
(A) the consent of the Company (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default under Section 8.01(a), (b), (h), (i) or (j) has occurred and is continuing
at the time of such assignment or (2) such assignment is to (1) a Lender, (2) an Affiliate of a Lender or (3) an Approved Fund, unless such Approved Fund has a lower credit rating, or is otherwise less creditworthy than, the assigning Lender; provided that the Company shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten Business Days after having received notice thereof;
(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for any assignment in respect of any Revolving Credit Commitment if such assignment is to a Person that is not a Lender under the Revolving Credit Facility, respectively, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and
(C) the consent of the L/C Issuer and the consent of the Swing Line Lender (such consents not to be unreasonably withheld or delayed) shall be required for any assignment in respect of the US Dollar Revolving Credit Facility.
(iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(v) No Assignment to Certain Persons. No such assignment shall be made (A) to the Company or any of the Company’s Affiliates or Subsidiaries, (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), (C) to a natural Person (or to a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural Person) or (D) to a Competitor.
(vi) Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Company and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, the L/C Issuer or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swing Line
Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Upon request, each Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.
(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrowers (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrowers, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(d) Participations. Any Lender may at any time, without the consent of, or notice to, any Borrower, the Administrative Agent, the L/C Issuer or the Swing Line Lender, sell participations to any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural Person, a Defaulting Lender or the Company or any of the Company’s Affiliates or Subsidiaries or, to the extent the Competitor List has been posted on the Platform for all Lenders, a Competitor) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such
Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Lenders and the L/C Issuer shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 10.04(c) without regard to the existence of any participation.
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant. The Company agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section (it being understood that the documentation required under Section 3.01(e) shall be delivered to the Lender who sells the participation) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 3.06 and 10.13 as if it were an assignee under paragraph (b) of this Section and (B) shall not be entitled to receive any greater payment under Sections 3.01 or 3.04, with respect to any participation, than the Lender from whom it acquired the applicable participation would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Company’s request and expense, to use reasonable efforts to cooperate with the Company to effectuate the provisions of Section 3.06 with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.13 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Company, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
Notwithstanding anything in this paragraph to the contrary, any Farm Credit Lender that (a) has purchased a participation or subparticipation in the minimum amount of $10,000,000 on or after the Restatement Effective Date, (b) is, by written notice to the Company and the Administrative Agent (“Voting Participant Notification”), designated by the selling Lender as being entitled to be accorded the rights of a Voting Participant hereunder (any Farm Credit Lender so designated, a “Voting Participant”) and (c) receives the prior written consent of the Company (unless an Event of Default has occurred and is continuing) and the Administrative Agent to become a Voting Participant, shall be entitled to vote (and the voting rights of the selling Lender shall be correspondingly reduced), on a dollar for dollar basis, as if such participant were a Lender, on any matter requiring or allowing a Lender to provide or withhold its consent, or to otherwise vote on any proposed action. To be effective, each Voting Participant Notification shall, with respect to any Voting Participant, (i) state the full name, as well as all contact information required of an assignee as set forth in Exhibit E-1 hereto and (ii) state the dollar amount of the participation or sub-participation purchased. The selling Lender and the Voting Participant shall promptly notify the Administrative Agent and the Company of any termination of, or reduction or increase in the amount of, the participation interests held by a Voting Participant. Except as provided above in this paragraph, no sub-participants shall be entitled to become “Voting Participants.” The voting rights of a Voting Participant hereunder are solely for the benefit of the Voting Participant and shall not inure to any assignee or sub-participant of a Voting Participant.” The Company and the Administrative Agent shall be entitled to conclusively rely on information contained in notices delivered pursuant to this paragraph.
(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any other central banking authority having jurisdiction over such Lender; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(f) Resignation as L/C Issuer or Swing Line Lender after Assignment. Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Revolving Credit Commitment and Revolving Credit Loans pursuant to subsection (b) above, Bank of America may, (i) upon 30 days’ notice to the Company and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Company, resign as Swing Line Lender. In the event of any such resignation as L/C Issuer or Swing Line Lender, the Company shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however, that no failure by the Company to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Committed Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date
of such resignation, including the right to require the Lenders to make Base Rate Committed Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c). Upon the appointment of a successor L/C Issuer and/or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.
(g) Special Purpose Funding Vehicles. Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Company (an “SPC”) the option to provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof or, if it fails to do so, to make such payment to the Administrative Agent as is required under Section 2.12(b). Each party hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of any Borrower under this Agreement (including its obligations under Section 3.04), (ii) the Granting Lender (but not any SPC) shall remain liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the lender of record hereunder. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding anything to the contrary contained herein, any SPC may with notice to, but without prior consent of the Company and the Administrative Agent and with the payment of a processing fee in the amount of $3,500 (which processing fee may be waived by the Administrative Agent in its sole discretion), assign all or any portion of its right to receive payment with respect to any Loan to the Granting Lender.
(h) Assignments to Competitors. (i) If any assignment is made to any Competitor without the Company’s prior consent, the Company may, at its sole expense and effort, upon notice to the applicable Competitor and the Administrative Agent, (A) terminate any Commitment of such Competitor and repay all obligations of the Company owing to such Competitor in connection with such Commitment and/or (B) require such Competitor to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in this Section 10.06), all of its interest, rights and obligations under this Agreement and related
Loan Documents to an Eligible Assignee that shall assume such obligations at the lesser of (x) the committed amount thereof and (y) the amount that such Competitor paid to acquire such interests, rights and obligations, in each case plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to it hereunder and other the other Loan Documents; provided that (i) the Company shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 10.06(b) and (ii) such assignment does not conflict with Applicable Laws.
(ii) The Administrative Agent shall have the right, and the Company hereby expressly authorizes the Administrative Agent, to (A) post the list of Competitors provided by the Company and any updates thereto from time to time (collectively, the “Competitor List”) on the Platform, including that portion of the Platform that is designated for “public side” Lenders or (B) provide the Competitor List to each Lender requesting the same.
10.07 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent, the Arrangers, Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates, its auditors and its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal or administrative process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, including for purposes of establishing a “due diligence” defense, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement or any Eligible Assignee invited to be a Lender pursuant to Section 2.15(c) or Section 10.01 or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to any of the Borrowers and their obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating the Company or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the consent of the Company, (i) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than the Company, (j) to the extent such information was received by the Administrative Agent or the Arrangers from a third-party that is not to the Administrative Agent or the Arrangers’ knowledge subject to confidentiality restrictions to the Company or (k) to the extent that such Information is independently developed by Bank of America or the Arrangers. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement
and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Agents and the Lenders in connection with the administration of this Agreement, the other Loan Documents, and the Commitments.
For purposes of this Section, “Information” means all information received from the Company or any Subsidiary relating to the Company or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by the Company or any Subsidiary, provided that, in the case of information received from the Company or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include material non-public information concerning the Company or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.
10.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, after obtaining the prior written consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed), to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of the Company or any other Loan Party against any and all of the obligations of the Company or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer or their respective Affiliates, irrespective of whether or not such Lender, L/C Issuer or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Company or such Loan Party may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender or the L/C Issuer different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.17 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the L/C Issuer and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective
Affiliates may have. Each Lender and the L/C Issuer agrees to notify the Company and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.
10.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Company. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent or the L/C Issuer, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement.
10.11 Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.
10.12 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable,(a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or
impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 10.12, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, the L/C Issuer or the Swing Line Lender, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.
10.13 Replacement of Lenders. If the Company is entitled to replace a Lender pursuant to the provisions of Section 3.06, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Company may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06), all of its interests, rights (other than its existing rights to payments pursuant to Sections 3.01 and 3.04) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:
(a) the Company shall have paid (or caused a Designated Borrower to pay) to the Administrative Agent the assignment fee (if any) specified in Section 10.06(b);
(b) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Company or applicable Designated Borrower (in the case of all other amounts);
(c) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter;
(d) such assignment does not conflict with applicable Laws; and
(e) in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Company to require such assignment and delegation cease to apply.
Each party hereto agrees that (a) an assignment required pursuant to this Section 10.13 may be effected pursuant to an Assignment and Assumption executed by the Company, the
Administrative Agent and the assignee and (b) the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to and be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender; provided, further that any such documents shall be without recourse to or warranty by the parties thereto.
10.14 Governing Law; Jurisdiction; Etc. (a) GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) SUBMISSION TO JURISDICTION. THE COMPANY AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, THE L/C ISSUER, OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE COMPANY OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) WAIVER OF VENUE. THE COMPANY AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS; PROCESS AGENT. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Company and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Arrangers and the Lenders are arm’s-length commercial transactions between the Company, each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent, the Arrangers and the Lenders, on the other hand, (B) each of the Company and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Company and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent, the Arrangers and each Lender is and has been acting solely as a principal and, except as expressly agreed in
writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Company, any other Loan Party or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent, the Arrangers nor any Lender has any obligation to the Company, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Arrangers and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent, the Arrangers nor any Lender has any obligation to disclose any of such interests to the Company, any other Loan Party or any of their respective Affiliates. Each of the Company and the other Loan Parties hereby agrees that it will not claim that any of the Administrative Agent, the Arrangers, any Lender and any of their respective Affiliates has rendered advisory services of any nature or respect or owes a fiduciary duty or similar duty to it in connection with any aspect of any transaction contemplated hereby.
10.17 Electronic Execution of Agreement Communications. This Agreement and any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Agreement (each an “Agreement Communication”), including Agreement Communications required to be in writing, may be in the form of an Electronic Record and may be executed using Electronic Signatures. Each of the Loan Parties agrees that any Electronic Signature on or associated with any Agreement Communication shall be valid and binding on each of the Loan Parties to the same extent as a manual, original signature, and that any Agreement Communication entered into by Electronic Signature will constitute the legal, valid and binding obligation of each of the Loan Parties enforceable against such Loan Party in accordance with the terms thereof to the same extent as if a manually executed original signature was delivered. Any Agreement Communication may be executed in as many counterparts as necessary or convenient, including both paper and electronic counterparts, but all such counterparts are one and the same Agreement Communication. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Administrative Agent and each of the Lenders of a manually signed paper Agreement Communication which has been converted into electronic form (such as scanned into PDF format), or an electronically signed Agreement Communication converted into another format for transmission, delivery and/or retention. The Administrative Agent and each of the Lenders may, at its option, create one or more copies of any Agreement Communication in the form of an imaged Electronic Record (“Electronic Copy”), which shall be deemed created in the ordinary course of the such Person’s business, and destroy the original paper document. All Agreement Communications in the form of an Electronic Record, including an Electronic Copy, shall be considered an original for all purposes, and shall have the same legal effect, validity and enforceability as a paper record. Notwithstanding anything contained herein to the contrary, the Administrative Agent is under no obligation to accept an Electronic Signature in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it; provided, without limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept such Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on any such Electronic Signature purportedly given by or on behalf of any Loan party without further verification and (ii) upon the request of the
Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by such manually executed counterpart. For purposes hereof, “Electronic Record” and “Electronic Signature” shall have the meanings assigned to them, respectively, by 15 USC §7006, as it may be amended from time to time.
10.18 USA PATRIOT Act. Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of each Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify such Borrower in accordance with the Act. Each Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.
10.19 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of each Borrower in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any Lender from any Borrower in the Agreement Currency, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender in such currency, the Administrative Agent or such Lender, as the case may be, agrees to return the amount of any excess to such Borrower (or to any other Person who may be entitled thereto under applicable law). THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
10.21 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Solely to the extent any Lender or L/C Issuer that is an Affected Financial Institution is a party to this Agreement and notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender or L/C Issuer that is an Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender or L/C Issuer that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution Authority.
10.22 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any Swap Agreement or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(a) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support
(and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
(b) As used in this Section 10.22, the following terms have the following meanings:
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
10.23 Amendment and Restatement. On the Restatement Effective Date, this Agreement shall amend and restate the Existing Credit Agreement in its entirety, and the rights and obligations of the parties hereto evidenced by the Existing Credit Agreement shall be evidenced by this Agreement and the other Loan Documents. Substantially concurrently with the Restatement Effective Date, (i) all of the Commitments (as defined in the Existing Credit Agreement) of each Lender that is a party to the Existing Credit Agreement but is not a party to this Agreement (an “Exiting Lender”) will be terminated, all outstanding Obligations (as defined in the Existing Credit Agreement) owing to the Exiting Lenders shall be repaid in full and each Exiting Lender will cease to be a “Lender” under the Existing Credit Agreement and shall not be a Lender under this Agreement, (ii) each Person listed on Schedule 2.01 to this Agreement shall be a Lender under this Agreement with the Commitments set forth opposite its name on Schedule 2.01 and (iii) any Loans to be made on the Restatement Effective Date shall be made in accordance with the Commitments set forth on Schedule 2.01. The parties hereto acknowledge that pursuant to the Existing Credit Agreement, the Parent Guaranty Agreement, dated as of February 17, 2017, between WH Group and the Administrative Agent was terminated and is of
no further force and effect and WH Group was released from its obligations thereunder and under any other Loan Document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
| | | | | | | | | | | | | | |
| SMITHFIELD FOODS, INC. | |
| | | | |
| By: | /s/ Timothy P. Dykstra | |
| | | | |
| Name: | Timothy P. Dykstra | |
| | | | |
| Title: | Vice President and Corporate Treasurer |
[Signature Page to Second Amended and Restated Credit Agreement]
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| BANK OF AMERICA, N.A., as Administrative Agent | |
| | | | | | |
| By: | /s/ Melissa Mullis | | |
| | | | | | |
| Name: Melissa Mullis | | |
| | | | | | |
| Title: Vice President | | | |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | | | | |
| BANK OF AMERICA, N.A., as a Lender, L/C Issuer and Swing Line Lender |
| | | | |
| By: | /s/ Morgan Hess | |
| | | | |
| Name: | Morgan Hess | |
| | | | |
| Title: | Associate |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | |
| AGFIRST FARM CREDIT BANK, as a Lender |
| | | |
| By: | /s/ Steven J. O’Shea |
| | | |
| Name: Steven J. O’Shea | |
| | | |
| Title: Vice President |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | | | | |
| BANK OF CHINA, NEW YORK BRANCH, as a Lender |
| | | | |
| By: | /s/ Raymond Qiao |
| | | | |
| Name: | Raymond Qiao | |
| | | | |
| Title: | Executive Vice President |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | |
| INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED, NEW YORK BRANCH, as a Lender |
| | | |
| By: | /s/ Fei Wang | |
| | | |
| Name: Fei Wang | |
| | | |
| Title: VP, Relationship Manager |
| | | |
| | | |
| By: | /s/ Chao Liang | |
| | | |
| Name: Chao Liang | |
| | | |
| Title: ED, Team Leader |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | | | | |
| BARCLAYS BANK PLC, as a Lender |
| | | | |
| By: | /s/ Christopher M. Aitkin |
| | | | |
| Name: | Christopher M. Aitkin | |
| | | | |
| Title: | Vice President |
[Signature Page to Second Amended and Restated Credit Agreement]
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| COÖPERATIEVE RABOBANK U.A., NEW YORK BRANCH, as a Lender | |
| | | | | | |
| By: | /s/ Shane Bownds | |
| | | | | | |
| Name: | Shane Bownds | |
| | | | | | |
| Title: | Managing Director | |
| | | | | | |
| | | | | | |
| By: | /s/ Joshua Leonard | |
| | | | | | |
| Name: | Joshua Leonard | |
| | | | | | |
| Title: | Vice President | |
[Signature Page to Second Amended and Restated Credit Agreement]
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| GOLDMAN SACHS BANK USA, as a Lender |
| | | | |
| By: | /s/ Jacob Elder | |
| | | | |
| Name: | Jacob Elder | |
| | | | |
| Title: | Authorized Signatory | |
[Signature Page to Second Amended and Restated Credit Agreement]
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| MORGAN STANLEY BANK, N.A., as a Lender |
| | | |
| By: | /s/ Michael King |
| | | |
| Name: Michael King | |
| | | |
| Title: Authorized Signatory |
[Signature Page to Second Amended and Restated Credit Agreement]
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| U.S. BANK NATIONAL ASSOCIATION, as a Lender |
| | | |
| By: | /s/ Jason D. King |
| | | |
| Name: Jason D. King | |
| | | |
| Title: Vice President |
[Signature Page to Second Amended and Restated Credit Agreement]
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| COMPEER FINANCIAL, PCA, as a Lender |
| | | | | | |
| By: | /s/ Lee Fuchs | |
| | | | | | |
| Name: | Lee Fuchs | |
| | | | | | |
| Title: | Director, Capital Markets | |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | |
| TRUIST BANK, as a Lender |
| | | |
| By: | /s/ J. Carlos Navarrete |
| | | |
| Name: J. Carlos Navarrete | |
| | | |
| Title: Director |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | |
| CITIBANK, N.A., as a Lender |
| | | |
| By: | /s/ Anita Philip |
| | | |
| Name: Anita Philip | |
| | | |
| Title: Vice President |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | | | | | | | | | | |
| CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK, as a Lender | |
| | | | | | |
| By: | /s/ Jean-Michel Fatovic | |
| | | | | | |
| Name: | Jean-Michel Fatovic | |
| | | | | | |
| Title: | Managing Director | |
| | | | | | |
| | | | | | |
| By: | /s/ Myra Martinez | |
| | | | | | |
| Name: | Myra Martinez | |
| | | | | | |
| Title: | Director | |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | | | | | | | | | | |
| ING CAPITAL LLC, as a Lender | |
| | | | | | |
| By: | /s/ Dan Lamprecht | |
| | | | | | |
| Name: | Dan Lamprecht | |
| | | | | | |
| Title: | Managing Director | |
| | | | | | |
| | | | | | |
| By: | /s/ Jeff Geisbauer | |
| | | | | | |
| Name: | Jeff Geisbauer | |
| | | | | | |
| Title: | Director | |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | |
| JPMORGAN CHASE BANK, N.A. as a Lender |
| | | |
| By: | /s/ Ryan Baker |
| | | |
| Name: Ryan Baker | |
| | | |
| Title: Vice President |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | |
| PNC BANK NATIONAL ASSOCIATION, as a Lender |
| | | |
| By: | /s/ David Notaro |
| | | |
| Name: David Notaro | |
| | | |
| Title: Senior Vice President |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | |
| AGCOUNTRY FARM CREDIT SERVICES, PCA, as a Lender |
| | | |
| By: | /s/ Gustave Radcliffe |
| | | |
| Name: Gustave Radcliffe | |
| | | |
| Title: Vice President |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | |
| Greenstone Farm Credit Services, ACA, as a Lender |
| | | |
| By: | /s/ Bradley K. Hibbert |
| | | |
| Name: Bradley K. Hibbert | |
| | | |
| Title: VP-Capital Markets |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | | | | | | | | | | |
| AMERICAN AGCREDIT, PCA, as a Lender |
| | | | | | |
| By: | /s/ Kyle Lucas |
| | | | | | |
| Name: | Kyle Lucas |
| | | | | | |
| Title: | VP-Relationship Manager |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | | | | | | | | | | |
| FARM CREDIT MID-AMERICA, PCA, as a Lender |
| | | | | | |
| By: | /s/ Patrick Sauer |
| | | | | | |
| Name: | Patrick Sauer |
| | | | | | |
| Title: | Vice President Food & Agribusiness |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | | | | | | | | | | |
| FARM CREDIT WEST, PCA, as a Lender |
| | | | | | |
| By: | /s/ Rob Stornetta |
| | | | | | |
| Name: | Rob Stornetta |
| | | | | | |
| Title: | Senior Vice President, Capital Markets |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | | | | | | | | | | |
| NORTHWEST FARM CREDIT SERVICES, PCA, as a Lender |
| | | | | | |
| By: | /s/ Kaylee Semprimoznik |
| | | | | | |
| Name: | Kaylee Semprimoznik |
| | | | | | |
| Title: | Vice President |
[Signature Page to Second Amended and Restated Credit Agreement]
| | | | | | | | | | | | | | | | | | | | |
| FARM CREDIT EAST, ACA, as a Lender |
| | | | | | |
| By: | /s/ Justin A. Brown |
| | | | | | |
| Name: | Justin A. Brown |
| | | | | | |
| Title: | Vice President |
[Signature Page to Second Amended and Restated Credit Agreement]
Exhibit 10.2
Execution Version
AMENDMENT NO. 1 TO CREDIT AGREEMENT
This AMENDMENT NO. 1, dated as of May 19, 2023 (this “Amendment”), is entered into by and among SMITHFIELD FOODS, INC., a Virginia corporation (the “Company”), the other Loan Parties party hereto, the Consenting Lenders (as defined below), the other Lenders (as defined below) party hereto, and BANK OF AMERICA, N.A., as administrative agent (in such capacity and including any successors in such capacity, the “Administrative Agent”), Swing Line Lender and L/C Issuer.
RECITALS:
WHEREAS, reference is hereby made to the Second Amended and Restated Credit Agreement, dated as of May 21, 2021, among the Company, the lenders party thereto from time to time, the Administrative Agent and the other parties thereto (the “Credit Agreement”, capitalized terms used (including in the preamble and recitals hereto) but not defined herein shall have the meanings assigned to such terms in the Credit Agreement or as applicable, the Credit Agreement as amended hereby (the “Amended Credit Agreement”));
WHEREAS, each Lender under the Credit Agreement that executes and delivers an executed counterpart to this Amendment agrees to the terms of this Amendment upon the effectiveness of this Amendment on the Amendment No. 1 Effective Date (such lenders, the “ Consenting Lenders”), whereby the Maturity Date with respect to the Consenting Lenders will be extended from May 21, 2026 to May 21, 2027;
WHEREAS, the Company previously requested an extension of the Maturity Date pursuant to Section 2.18 of the Credit Agreement by notice to the Administrative Agent dated March 29, 2023; and
WHEREAS, the Lenders party hereto constitute all of the Lenders (after giving effect to Section B below) and agree to the other changes set forth herein;
NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged), the parties hereto hereby agree as follows:
A. Amendments to Credit Agreement. On the Amendment No. 1 Effective Date (as defined below):
(i) The Credit Agreement (other than the exhibits and schedules attached thereto) is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the pages of the Credit Agreement attached as Exhibit A hereto.
(ii) Exhibit A to the Credit Agreement is hereby amended in full to read as set forth in Exhibit B hereto.
(iii) Schedule 2.01 to the Credit Agreement is hereby amended in full to read as set forth in Schedule 2.01 hereto.
B. Assignments, Etc. On the Amendment No. 1 Effective Date and immediately preceding the effectiveness of this Amendment, (x) all Lenders under the Credit Agreement that are not Consenting Lenders shall be replaced with one or more Lenders party hereto pursuant to Section 10.13 of the Credit Agreement and (y) all applicable Lenders party hereto shall be deemed to have assigned or assumed certain amounts of Commitments pursuant to the Credit Agreement, in each case such that immediately after the effectiveness of this Amendment, the allocations of the Commitments are as set forth as Exhibit B hereto. From and after the Amendment No. 1 Effective Date, each Lender party hereto that is not a Consenting Lender (each, a “New Lender”) shall become party to the Amended Credit Agreement as a “Lender” and shall have all of the rights and obligations of a “Lender” under the Amended Credit Agreement and the other Loan Documents (as amended hereby).
Each New Lender hereby (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Amendment and to consummate the transactions contemplated hereby and to become a Lender under the Amended Credit Agreement, (ii) it meets all the requirements to be an assignee under the Credit Agreement, (iii) from and after the Amendment No. 1 Effective Date, it shall be bound by the provisions of the Amended Credit Agreement as a Lender thereunder and, to the extent of its Commitments set forth on Schedule 2.01 hereto, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the interest assigned hereby and either it, or the Person exercising discretion in making its decision to acquire such interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement and the Amended Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 6.01 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Amendment and to purchase such interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Amendment and to purchase such interest, and (vii) if it is a Foreign Lender, attached to its signature hereto is any documentation required to be delivered by it pursuant to the terms of the Amended Credit Agreement, duly completed and executed by such New Lender; and (b) agrees that (i) it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
C. Conditions Precedent. This Amendment shall become effective as of the date first above written when, and only when, each of the following conditions precedent shall have been satisfied or, to the extent permitted under the Credit Agreement, waived (the “Amendment No. 1 Effective Date”):
1.Executed Counterparts. The Administrative Agent shall have received a counterpart to this Amendment duly executed by the Borrower, the Consenting Lenders, the other Lenders party hereto and the Administrative Agent;
2.Organizational Documents; Certificates. The Administrative Agent shall have received (i) certificates of each Loan Party, dated the Amendment No. 1 Effective Date (with a recent good standing certificate), similar to the ones delivered pursuant to Section 4.01(a)(iii) of the Credit Agreement, with appropriate insertions and attachments and (ii) a certificate of a Responsible Officer of the Company, dated the Amendment No. 1 Effective Date, confirming the satisfaction of the conditions precedent set forth in clauses (3) and (4) below;
3.Representations and Warranties. Immediately before and after giving effect to this Amendment, (1) the representations and warranties contained in Article V of the Credit Agreement and the other Loan Documents are true and correct in all material respects (provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) on and as of the Amendment No. 1 Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects (provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) as of such earlier date, and except that the representations and warranties contained in subsection (a) of Section 5.04 of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01 of the Credit Agreement;
4.No Default. No Default or Event of Default shall have occurred and be continuing immediately prior to, and immediately after giving effect to, the Amendment No. 1 Effective Date;
5.Fees and Expenses. Without duplication of the fees required to be paid pursuant to the Fee Letter dated March 29, 2023 among the Company, the Administrative Agent and the Lead Arranger, on or prior to the Amendment No. 1 Effective Date, the Company shall have paid (i) an upfront fee to each Lender party hereto in an amount equal to 0.045% of such Lenders’ Commitments immediately after giving effect to this Amendment, (ii) all fees owing to the Administrative Agent and the joint lead arrangers in respect of this Amendment (the “Lead Arrangers”) required to be paid or reimbursed by the Borrowers in connection herewith and (iii) all reasonable and documented out-of-pocket costs and expenses of the Administrative Agent and the Lead Arrangers required to be paid or reimbursed by the Borrowers in connection with the preparation, negotiation, execution and delivery of this Amendment and related documentation (including, in each case, without limitation, the reasonable fees and disbursements of counsel for the Administrative Agent and the Lead Arrangers with respect thereto); and
6.KYC Information. (i) Upon the reasonable request of any Lender party hereto made at least 5 days prior to the Amendment No. 1 Effective Date, the Company shall have provided to such Lender, and such Lender shall be reasonably satisfied with, the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act, in each case at least 3 days prior to the Amendment No. 1 Effective Date and (ii) at least 5 days prior to the Amendment No. 1 Effective Date, any Loan Party that qualifies as a “legal entity
customer” under the Beneficial Ownership Regulation shall deliver to the Administrative Agent a Beneficial Ownership Certification in relation to such Loan Party.
D.Other Terms.
1. Reference to the Effect on the Loan Documents.
(i) As of the Amendment No. 1 Effective Date, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference in the other Loan Documents to the “Credit Agreement” (including, without limitation, by means of words like “thereunder,” “thereof” and words of like import), shall mean and be a reference to the Credit Agreement as amended hereby, and this Amendment and the Credit Agreement shall be read together and construed as a single instrument.
(ii) Except as expressly amended hereby or specifically waived or consented to above, all of the terms and provisions of the Credit Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed.
(iii) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Lenders, the Lead Arrangers or the Administrative Agent under any of the Loan Documents, nor constitute a waiver or amendment of any other provision of any of the Loan Documents or for any purpose except as expressly set forth herein.
(iv)This Amendment is a Loan Document.
2.Representations and Warranties. Each of the Loan Parties hereby represents and warrants that, immediately prior to and immediately after giving effect to the transactions contemplated by this Amendment:
(i)(w) Such Loan Party has all requisite power and authority, and has taken all necessary corporate or other action necessary, to execute and deliver this Amendment and to perform its obligations under each Loan Document (as amended hereby) to which it is a party; (x) this Amendment has been duly executed and delivered by such Loan Party, (y) this Amendment and each Loan Document (as amended hereby) to which it is a party each constitutes a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law; and (z) its execution and delivery of this Amendment and its performance of its obligations under each Loan Document (as amended hereby) to which it is a party (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (b) will not violate any material Requirement of Law applicable to any Loan Party or any Subsidiary to the extent failure to comply with which could reasonably be expected to have a Material Adverse Effect, (c) will not violate the charter, bylaws or other organizational documents of such Loan Party, (d) will not violate or result in a material default under any material indenture, agreement or other instrument binding
upon any Loan Party or any Subsidiary or their respective assets, or give rise to a right thereunder to require any material payment to be made by any Loan Party or any Subsidiary or give rise to a right of, or result in, termination, cancelation or acceleration of any material obligation thereunder and (e) will not result in the creation or imposition of any Lien (other than a Lien permitted under Section 7.02 of the Credit Agreement) on any asset of any Loan Party or any Subsidiary;
(ii)The representations and warranties contained in Article V of the Credit Agreement and the other Loan Documents are true and correct in all material respects ( provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) on and as of the Amendment No. 1 Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects (provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) as of such earlier date, and except that the representations and warranties contained in subsection (a) of Section 5.04 of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01 of the Credit Agreement; and
(iii)No Default or Event of Default shall have occurred and be continuing immediately prior to, and immediately after giving effect to, the Amendment No. 1 Effective Date.
3.Execution in Counterparts. This Amendment and any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Amendment (each an “Agreement Communication”), including Agreement Communications required to be in writing, may be in the form of an Electronic Record and may be executed using Electronic Signatures. Each of the Loan Parties agrees that any Electronic Signature on or associated with any Agreement Communication shall be valid and binding on each of the Loan Parties to the same extent as a manual, original signature, and that any Agreement Communication entered into by Electronic Signature will constitute the legal, valid and binding obligation of each of the Loan Parties enforceable against such Loan Party in accordance with the terms thereof to the same extent as if a manually executed original signature was delivered. Any Agreement Communication may be executed in as many counterparts as necessary or convenient, including both paper and electronic counterparts, but all such counterparts are one and the same Agreement Communication. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Administrative Agent and each of the Lenders of a manually signed paper Agreement Communication which has been converted into electronic form (such as scanned into PDF format), or an electronically signed Agreement Communication converted into another format for transmission, delivery and/or retention. The Administrative Agent and each of the Lenders may, at its option, create one or more copies of any Agreement Communication in the form of an imaged Electronic Record (“Electronic Copy”), which shall be deemed
created in the ordinary course of the such Person’s business, and destroy the original paper document. All Agreement Communications in the form of an Electronic Record, including an Electronic Copy, shall be considered an original for all purposes, and shall have the same legal effect, validity and enforceability as a paper record. Notwithstanding anything contained herein to the contrary, the Administrative Agent is under no obligation to accept an Electronic Signature in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it; provided, without limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept such Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on any such Electronic Signature purportedly given by or on behalf of any Loan party without further verification and (ii) upon the request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by such manually executed counterpart.
4.Ratification; Reaffirmation. This Amendment shall be effective pursuant to Section 10.01 of the Credit Agreement (and approved and ratified by the Lenders and Loan Parties party hereto and the Administrative Agent for all purposes under the Loan Documents). Except as expressly set forth herein, this Amendment shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the Lenders or the Administrative Agent under the Credit Agreement or under any other Loan Document and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement or any provision of any Loan Document, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Without limiting the foregoing, (i) each Loan Party acknowledges and agrees that each Loan Document to which it is a party is hereby confirmed and ratified and shall remain in full force and effect according to its respective terms (as amended pursuant to this Amendment) and (ii) each Subsidiary Guarantor hereby confirms and ratifies its continuing unconditional obligations as Guarantor under the Guaranty Agreement with respect to all of the Guaranteed Obligations (as defined therein).
5.Governing Law. THIS AMENDMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AMENDMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
6.Section Titles. The section titles contained in this Amendment are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto, except when used to reference a section.
7.Notices. All communications and notices hereunder shall be given as provided in the Credit Agreement.
8.Severability. The fact that any term or provision of this Amendment is held invalid, illegal or unenforceable as to any person in any situation in any jurisdiction shall not affect the validity, enforceability or legality of the remaining terms or provisions hereof or the
validity, enforceability or legality of such offending term or provision in any other situation or jurisdiction or as applied to any person.
9.Successors. The terms of this Amendment shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.
10.Jurisdiction; Waiver of Jury Trial. The jurisdiction and waiver of right to trial by jury provisions in Section 10.14(b) and Section 10.15, respectively, of the Credit Agreement are incorporated herein by reference mutatis mutandis.
11.Extension of Maturity Date. This Amendment extends the Maturity Date from May 21, 2026 to May 21, 2027 pursuant to Section 2.18 of the Credit Agreement. For the avoidance of doubt, after the Amendment No. 1 Effective Date, the Company shall only have the ability to extend the Maturity Date pursuant to Section 2.18 of the Credit Agreement on one (1) further occasion.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each of the undersigned has caused its duly authorized officer to execute and deliver this Amendment as of the date first set forth above.
| | | | | |
| SMITHFIELD FOODS, INC., |
| as the Borrower |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Corporate Treasurer |
| |
| SMITHFIELD FRESH MEATS SALES CORP., |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| SMITHFIELD PACKAGED MEATS SALES CORP., |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| SMITHFIELD PACKAGED MEATS CORP., |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| SMITHFIELD SUPPORT SERVICES CORP., |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| |
Signature Page to Amendment No. 1
| | | | | |
| SMITHFIELD STRATEGIC SOURCING & SERVICES CO., INC., |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| TAR HEEL TURKEY HATCHERY, INC., |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| SMITHFIELD FRESH HOLDINGS, INC., |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| SMITHFIELD FRESH MEATS CORP., |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| SMITHFIELD DISTRIBUTION, LLC, |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| |
Signature Page to Amendment No. 1
| | | | | |
| SF INVESTMENTS, INC., |
| as Guarantor |
| |
| By: | /s/ Jeffrey Porter |
| Name: | Jeffrey Porter |
| Title: | President, Assistant Treasurer, General Counsel, Assistant Secretary |
| |
| PATCUD INVESTMENTS, INC., |
| as Guarantor |
| |
| By: | /s/ Jeffrey Porter |
| Name: | Jeffrey Porter |
| Title: | President, Assistant Treasurer, General Counsel, Assistant Secretary |
| |
| JONMOR INVESTMENTS, INC., |
| as Guarantor |
| |
| By: | /s/ Jeffrey Porter |
| Name: | Jeffrey Porter |
| Title: | President, Assistant Treasurer, General Counsel, Assistant Secretary |
| |
| MURPHY-BROWN LLC, |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| SMITHFIELD DIRECT, LLC, |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| |
Signature Page to Amendment No. 1
| | | | | |
| SMITHFIELD-KINSTON LLC, |
| as Guarantor |
| |
| By: Smithfield Packaged Meats Corp., its Managaing Member |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| MB GRAIN LLC, |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| BROWN’S REALTY PARTNERSHIP |
| as Guarantor |
| |
| By: Murphy-Brown LLC, Partner |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| By: Smithfield Purchase Corporations, Partner |
|
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
Signature Page to Amendment No. 1
| | | | | |
| CARROLL’S REALTY PARTNERSHIP |
| as Guarantor |
| |
| By: Murphy-Brown LLC, Partner |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| By: Smithfield PurchaseCorporation, Partner |
| |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| DUPLIN MARKETING COMPANY, LLC, |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Manager |
| |
| SMITHFIELD-CARROLL’S FARMS, |
| as Guarantor |
| |
| Murphy-Brown LLC, Partner |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| |
| By: Smithfield Purchase Corporation, Partner |
|
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
Signature Page to Amendment No. 1
| | | | | |
| MURPHY-BROWN OF MISSOURI, LLC, |
| as Guarantor |
| |
| By: MB Missouri Holdings LLC, its sole Member |
| |
| By: Murphy-Brown LLC, its Manager |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| KC2 REAL ESTATE, LLC, |
| as Guarantor |
| |
| By: Murphy-Brown of Missouri LLC, its sole Member |
| |
| By: MB Missouri Holdings LLC, its sole Member |
| |
| By: Murphy-Brown LLC, its Manager |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
| |
| SMITHFIELD SPECIALTY FOODS GROUP, LLC, |
| as Guarantor |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Manager |
| |
| MB MISSOURI HOLDINGS, LLC, |
| as Guarantor |
| |
| By: Murphy-Brown LLC, its Manager |
| |
| By: | /s/ Jenifer Byrd |
| Name: | Jenifer Byrd |
| Title: | Vice President & Treasurer |
Signature Page to Amendment No. 1
| | | | | |
| BANK OF AMERICA, N.A. as a Lender, L/C Issuer and Swing Line Lender |
| |
| By: | /s/ Michelle L. Walker |
| Name: | Michelle L. Walker |
| Title: | Vice President |
Signature Page to Amendment No. 1
| | | | | |
AGFIRST FARM CREDIT BANK, as a Lender |
| |
| By: | /s/ Hampton Jones |
| Name: | Hampton Jones |
| Title: | Assistant Vice President |
Signature Page to Amendment No. 1
| | | | | |
| Bank of China, New York Branch, as a Lender |
| |
| By: | /s/ Raymond Qiao |
| Name: | Raymond Qiao |
| Title: | Executive Vice President |
Signature Page to Amendment No. 1
| | | | | |
INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED, NEW YORK BRANCH, as a Lender |
| |
| By: | /s/ Yuanyuan Peng |
| Name: | Yuanyuan Peng |
| Title: | Executive Director |
| |
| |
| By: | /s/ Yao Xiao |
| Name: | Yao Xiao |
| Title: | Assistant Vice President |
Signature Page to Amendment No. 1
| | | | | |
| BARCLAYS BANK PLC, as a Lender |
| |
| By: | /s/ Christopher M. Aitkin |
| Name: | Christopher M. Aitkin |
| Title: | Vice President |
Signature Page to Amendment No. 1
| | | | | |
COÖPERATIEVE RABOBANK U.A., NEW YORK BRANCH, as a Lender |
| |
| By: | /s/ Shane Bownds |
| Name: | Shane Bownds |
| Title: | Managing Director |
| |
| |
| By: | /s/ Hunter Odom |
| Name: | Hunter Odom |
| Title: | Vice President |
Signature Page to Amendment No. 1
| | | | | |
| GOLDMAN SACHS BANK USA, as a Lender |
| |
| By: | /s/ Amanda DeRoche |
| Name: | Amanda DeRoche |
| Title: | Authorized Signatory |
Signature Page to Amendment No. 1
| | | | | |
| MORGAN STANLEY BANK, N.A., as a Lender |
| |
| By: | /s/ Michael King |
| Name: | Michael King |
| Title: | Authorized Signatory |
Signature Page to Amendment No. 1
| | | | | |
| U.S. BANK NATIONAL ASSOCIATION, as a Lender |
| |
| By: | /s/ Jason D. King |
| Name: | Jason D. King |
| Title: | Vice President |
Signature Page to Amendment No. 1
| | | | | |
| Compeer Financial, PCA, as a Lender |
| |
| By: | /s/ Dan Terrill |
| Name: | Dan Terrill |
| Title: | Director, Capital Markets |
Signature Page to Amendment No. 1
| | | | | |
| CoBank, FCB, as a Lender |
| |
| By: | /s/ Jared A Greene |
| Name: | Jared A Greene |
| Title: | Assistant Corporate Secretary |
Signature Page to Amendment No. 1
| | | | | |
AgWest Farm Credit, PCA, as successor in
interest by merger of Northwest Farm Credit
Services, PCA and Farm Credit West, PCA, as a
Lender |
|
| |
| By: | /s/ Greg Reilly |
| Name: | Greg Reilly |
| Title: | Relationship Manager |
Signature Page to Amendment No. 1
| | | | | |
| TRUIST BANK, as a Lender |
| |
| By: | /s/ J. Carlos Navarrete |
| Name: | J. Carlos Navarrete |
| Title: | Director |
Signature Page to Amendment No. 1
| | | | | |
| CITIBANK, N.A., as a Lender |
| |
| By: | /s/ Robert J. Kane |
| Name: | Robert J. Kane |
| Title: | Vice President |
Signature Page to Amendment No. 1
| | | | | |
| ING CAPITAL LLC, as a Lender |
| |
| By: | /s/ Dan Lamprecht |
| Name: | Dan Lamprecht |
| Title: | Managing Director |
| |
| |
| By: | /s/ Jeff Geisbauer |
| Name: | Jeff Geisbauer |
| Title: | Director |
Signature Page to Amendment No. 1
| | | | | |
| JPMORGAN CHASE BANK, N.A., as a Lender |
| |
| By: | /s/ Sean Bodkin |
| Name: | Sean Bodkin |
| Title: | Executive Director |
Signature Page to Amendment No. 1
| | | | | |
| PNC BANK NATIONAL ASSOCIATION, as a Lender |
| |
| By: | /s/ David Notaro |
| Name: | David Notaro |
| Title: | Senior Vice President |
Signature Page to Amendment No. 1
| | | | | |
AGCOUNTRY FARM CREDIT SERVICES, PCA, as Lender |
| |
| By: | /s/ Gustave Radcliffe |
| Name: | Gustave Radcliffe |
| Title: | Vice President |
Signature Page to Amendment No. 1
| | | | | |
| GreenStone Farm Credit Services, ACA, as a Lender |
| |
| By: | /s/ Bradley Hibbert |
| Name: | Bradley Hibbert |
| Title: | VP of Capital Markets |
Signature Page to Amendment No. 1
| | | | | |
| American AgCredit, PCA, as a Lender |
| |
| By: | /s/ Ben Leonard |
| Name: | Ben Leonard |
| Title: | Vice President |
Signature Page to Amendment No. 1
| | | | | |
| FARM CREDIT MID-AMERICA, PCA, as a Lender |
| |
| By: | /s/ Patrick Sauer |
| Name: | Patrick Sauer |
| Title: | Vice President Food and Agribusiness |
Signature Page to Amendment No. 1
| | | | | |
| HSBC Bank USA, National Association, as a Lender |
| |
| By: | /s/ Fei Wang |
| Name: | Fei Wang |
| Title: | Senior Relationship Manager |
Signature Page to Amendment No. 1
| | | | | |
| Farm Credit East, ACA, as a Lender |
| |
| By: | /s/ Kerri B. Sears |
| Name: | Kerri B. Sears |
| Title: | Vice President |
Signature Page to Amendment No. 1
| | | | | |
| BMO Harris Bank N.A., as successor in interest to Bank of the West, as a Lender |
| |
| By: | /s/ Trevor Svoboda |
| Name: | Trevor Svoboda |
| Title: | Managing Director |
Signature Page to Amendment No.
EXHIBIT A
Attached.
Published Deal CUSIP Number: 83224VAQ0
Published US Dollar Revolving Credit Facility CUSIP Number: 83224VAR8
Published Multicurrency Revolving Credit Facility CUSIP Number: 83224VAS6
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 21, 2021
among
SMITHFIELD FOODS, INC.,
as Borrower,
CERTAIN SUBSIDIARIES,
as Borrowers,
BANK OF AMERICA, N.A.,
as Administrative Agent, Swing Line Lender
and
L/C Issuer
and
The Other Lenders Party Hereto
BOFA Securities, Inc.,
AGFIRST FARM CREDIT BANK
BANK OF CHINA, NEW YORK BRANCH
INDUSTRIAL AND COMMERCIAL BANK OF CHINA NEW YORK BRANCH
BARCLAYS BANK PLC
COÖPERATIEVE RABOBANK U.A., NEW YORK BRANCH
GOLDMAN SACHS BANK USA
MORGAN STANLEY SENIOR FUNDING, INC.
U.S. BANK NATIONAL ASSOCIATION,
a Joint Lead Arrangers and Joint Bookrunners
COBANK, FCB
COMPEER FINANCIAL
CITIBANK, N.A.
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
ING CAPITAL LLC
JPMORGAN CHASE BANK, N.A.
PNC BANK, NATIONAL ASSOCIATION
TRUIST BANK,
as Documentation Agents
as amended by Amendment No. 1 to Credit Agreement dated as of May 19, 2023
| | | | | | | | | | | |
| Section | | Page |
| | | |
| ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS | 1 |
| 1.01 | Defined Terms | 1 |
| 1.02 | Other Interpretive Provisions. | 45 |
| 1.03 | Accounting Terms | 46 |
| 1.04 | Rounding | 47 |
| 1.05 | Exchange Rates; Currency Equivalents | 47 |
| 1.06 | Additional Alternative Currencies | 47 |
| 1.07 | Change of Currency | 48 |
| 1.08 | Times of Day | 49 |
| 1.09 | Letter of Credit Amounts | 49 |
| | | |
| ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS | 49 |
| 2.01 | Committed Loans | 49 |
| 2.02 | Borrowings, Conversions and Continuations of Committed Loans | 4150 |
| 2.03 | Letters of Credit | 4353 |
| 2.04 | Swing Line Loans | 5264 |
| 2.05 | Prepayments | 68 |
| 2.06 | Termination or Reduction of Commitments | 5670 |
| 2.07 | Repayment of Loans | 5670 |
| 2.08 | Interest | 5671 |
| 2.09 | Fees | 5772 |
| 2.10 | Computation of Interest and Fees | 5873 |
| 2.11 | Evidence of Debt | 5873 |
| 2.12 | Payments Generally; Administrative Agent’s Clawback | 5974 |
| 2.13 | Sharing of Payments by Lenders | 6076 |
| 2.14 | Designated Borrowers | 6177 |
| 2.15 | Increase in Revolving Credit Commitments | 6278 |
| 2.16 | Cash Collateral | 6380 |
| 2.17 | Defaulting Lenders | 6481 |
| 2.18 | Extension of Maturity Date. | 6684 |
| | | |
| ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY | 6886 |
| 3.01 | Taxes | 6886 |
| 3.02 | Illegality | 7291 |
| 3.03 | Inability to Determine Rates | 7292 |
| 3.04 | Increased Costs; Reserves on Eurocurrency Rate Loans | 77104 |
| 3.05 | Compensation for Losses | 79106 |
| 3.06 | Mitigation Obligations: Replacement of Lenders | 80107 |
| 3.07 | Survival | 80107 |
| | | |
TABLE OF CONTENTS (continued)
| | | | | | | | | | | |
| Section | | Page |
| | | |
| ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS | 80107 |
| 4.01 | Conditions of Restatement Effective Date | 80107 |
| 4.02 | Conditions to all Credit Extensions | 82109 |
| | | |
| ARTICLE V. REPRESENTATIONS AND WARRANTIES | 83110 |
| 5.01 | Organization; Powers | 83110 |
| 5.02 | Authorization; Enforceability | 83111 |
| 5.03 | Governmental Approvals; No Conflicts | 83111 |
| 5.04 | Financial Statements; No Material Adverse Effect | 83111 |
| 5.05 | Properties | 84112 |
| 5.06 | Litigation Matters | 84112 |
| 5.07 | Compliance with Laws and Agreements. | 84112 |
| 5.08 | Investment Company Status | 84112 |
| 5.09 | Taxes | 84112 |
| 5.10 | ERISA | 84113 |
| 5.11 | Disclosure | 85113 |
| 5.12 | Insurance | 85113 |
| 5.13 | Use of Proceeds | 85113 |
| 5.14 | Subsidiaries | 85114 |
| 5.15 | Event of Default | 86114 |
| 5.16 | Sanctions; Anti-Corruption Laws | 86113 |
| 5.17 | Money Laundering and Counter-Terrorist Financing Laws. | 86114 |
| | | |
| ARTICLE VI. AFFIRMATIVE COVENANTS | 86114 |
| 6.01 | Financial Statements and Other Information | 86115 |
| 6.02 | Notices of Material Events. | 88118 |
| 6.03 | Existence; Conduct of Business | 89119 |
| 6.04 | Payment of Taxes | 89119 |
| 6.05 | Maintenance of Properties. | 89119 |
| 6.06 | Books and Records; Inspection Rights | 90119 |
| 6.07 | Compliance with Laws | 90120 |
| 6.08 | Use of Proceeds; Letters of Credit | 90120 |
| 6.09 | Insurance | 90120 |
| 6.10 | Further Assurances | 91121 |
| | | |
| ARTICLE VII. NEGATIVE COVENANTS | 91121 |
| 7.01 | Indebtedness | 91121 |
| 7.02 | Liens | 93123 |
| 7.03 | Fundamental Changes; Business Activities | 94125 |
| 7.04 | [Reserved] | 94126 |
| 7.05 | Swap Agreements | 95126 |
TABLE OF CONTENTS (continued)
| | | | | | | | | | | |
| Section | | Page |
| | | |
| 7.06 | Transactions with Affiliates | 95126 |
| 7.07 | Restricted Payments. | 95126 |
| 7.08 | [Reserved] | 96127 |
| 7.09 | [Reserved] | 96127 |
| 7.10 | Consolidated Funded Debt to Consolidated Capitalization Ratio | 96127 |
| 7.11 | Consolidated EBITDA to Consolidated Interest Expense | 96128 |
| | | |
| ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES | 96128 |
| 8.01 | Events of Default | 96128 |
| 8.02 | Remedies Upon Event of Default | 98131 |
| 8.03 | Application of Funds | 99131 |
| | | |
| ARTICLE IX. ADMINISTRATIVE AGENT | 99132 |
| 9.01 | Appointment and Authority | 99132 |
| 9.02 | Rights as a Lender | 100133 |
| 9.03 | Exculpatory Provisions | 100133 |
| 9.04 | Reliance by Administrative Agent | 101134 |
| 9.05 | Delegation of Duties | 101134 |
| 9.06 | Resignation of Administrative Agent | 102135 |
| 9.07 | Non-Reliance on Administrative Agent and Other Lenders | 103137 |
| 9.08 | No Other Duties, Etc | 104138 |
| 9.09 | Administrative Agent May File Proofs of Claim | 104138 |
| 9.10 | Guaranty Matters | 104138 |
| 9.11 | Certain ERISA Matters | 105139 |
| 9.12 | Recovery of Erroneous Payments | 106140 |
| | | |
| ARTICLE X. MISCELLANEOUS | 106141 |
| 10.01 | Amendments, Etc | 106141 |
| 10.02 | Notices; Effectiveness; Electronic Communication | 108143 |
| 10.03 | No Waiver; Cumulative Remedies; Enforcement | 110145 |
| 10.04 | Expenses; Indemnity; Damage Waiver | 110146 |
| 10.05 | Payments Set Aside | 112148 |
| 10.06 | Successors and Assigns | 112149 |
| 10.07 | Treatment of Certain Information; Confidentiality | 118156 |
| 10.08 | Right of Setoff | 119157 |
| 10.09 | Interest Rate Limitation | 119158 |
| 10.10 | Counterparts; Integration; Effectiveness | 119158 |
| 10.11 | Survival of Representations and Warranties | 120158 |
| 10.12 | Severability | 120159 |
| 10.13 | Replacement of Lenders | 120159 |
| 10.14 | Governing Law; Jurisdiction; Etc | 121160 |
TABLE OF CONTENTS (continued)
| | | | | | | | | | | |
| Section | | Page |
| | | |
| 10.15 | Waiver of Jury Trial | 122161 |
| 10.16 | No Advisory or Fiduciary Responsibility | 122162 |
| 10.17 | Electronic Execution of Agreement Communications | 123162 |
| 10.18 | USA PATRIOT Act | 123163 |
| 10.19 | Judgment Currency | 124163 |
| 10.20 | Entire Agreement | 124163 |
| 10.21 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | 124164 |
| 10.22 | Acknowledgement Regarding Any Supported QFCs | 125165 |
| 10.23 | Amendment and Restatement | 125166 |
| | | |
| | | |
| SIGNATURES | S-1 |
| | | | | | | | |
| SCHEDULES | |
| | |
| 2.01 | Commitments, L/C Fronting Sublimits and Applicable Percentages |
| 5.06 | Litigation |
| 5.14 | Loan Parties |
| 7.01 | Indebtedness |
| 7.02 | Liens |
| 10.02 | Administrative Agent's Office; Certain Addresses for Notices |
| | | | | | | | |
| EXHIBITS | |
| A | Form of Committed Loan Notice |
| B | Form of Swing Line Loan Notice |
| C-l | [Reserved] |
| C-2 | Form of Multicurrency Revolving Credit Note |
| C-3 | Form of US Dollar Revolving Credit Note |
| D-l | [Reserved] |
| D-2 | [Reserved] |
| E-l | Form of Assignment and Assumption |
| E-2 | Form of Administrative Questionnaire |
| F | Form of Compliance Certificate |
| G | Form of Designated Borrower Request and Assumption Agreement |
| H | Form of Designated Borrower Notice |
| I | Form of U.S. Tax Compliance Certificate |
| J | Form of Letter of Credit Report |
| K | Form of Extension Agreement |
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is entered into as of May 21, 2021, among Smithfield Foods, Inc., a corporation organized under the laws of the State of Virginia (the “Company”), certain Subsidiaries of the Company party hereto pursuant to Section 2.14 (each a “Designated Borrower” and, together with the Company, the “Borrowers” and, each a “Borrower”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.
WHEREAS, the Company, the lenders party thereto and the Administrative Agent are parties to that certain Amended and Restated Credit Agreement, dated as of March 13, 2018 (the “Existing Credit Agreement”), which amended and restated that certain Credit Agreement, dated as of the Original Closing Date (the “Original Credit Agreement”); and
WHEREAS, the Company has requested that the Lenders and the Administrative Agent amend and restate, in its entirety, the Existing Credit Agreement upon and subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree that the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:
“2015 Audited Financial Statements” Company and its Subsidiaries for the fiscal year ended January 3, 2016, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Company and its Subsidiaries, including the notes thereto.
“Act” has the meaning specified in Section 10.18.
“Additional Commitment Lender” has the meaning specified in Section 2.18.
“Adjusted Eurocurrency Rate” shall mean, subject to the implementation of a LIBOREurocurrency Successor Rate in accordance with Section 3.03(b), (a) with respect to any Eurocurrency Rate Loan denominated in Sterling, the Eurocurrency Rate for Sterling and (b) with respect to any other Eurocurrency Rate Loan for any Interest Period, an interest rate per annum equal to (i) the Eurocurrency Rate in effect for such Interest Period divided by (ii) 1 minus the Statutory Reserves (if any) for such Borrowing of Eurocurrency Rate Loans for such Interest Period; provided, that if the Adjusted Eurocurrency Rate shall be less than zero, such rate shall be deemed zero.
“Adjustment” has the meaning specified in Section 3.03.
“Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.
“Administrative Agent’s Office” means, with respect to any currency, the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02 with respect to such currency, or such other address or account with respect to such currency as the Administrative Agent may from time to time notify the Company and the Lenders.
“Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit E-2 or any other form approved by the Administrative Agent.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided, however, that for purposes of Section 7.06, the term “Affiliate” shall also mean any Person that is an executive officer or director of the Person specified, any Person that directly or indirectly beneficially owns Equity Interests in the Person specified representing 10% or more of the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding Equity Interests in the Person specified and any Person that would be an Affiliate of any such beneficial owner pursuant to this definition (but without giving effect to this proviso).
“Agent Parties” has the meaning set forth in Section 10.02(c).
“Aggregate Commitments” means, as of any date of determination, the aggregate amount of all of the Commitments of all of the Lenders at such time.
“Agreement” has the meaning specified in the introductory paragraph hereto.
“Agreement Currency” has the meaning specified in Section 10.19.
“Alternative Currency” means each of the following currencies: Euro, Sterling, Yen and Canadian Dollars, together with each other currency (other than Dollars) that is approved in accordance with Section 1.06.
“Alternative Currency Equivalent” means, at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Alternative Currency as determined by the Administrative Agent or the L/C Issuer, as the case may be, by reference to Bloomberg (or such other publicly available service for displaying exchange rates), to be the exchange rate for the purchase of such Alternative Currency with Dollars at approximately 11:00 a.m. on the date two (2) Business Days prior to the date as of which the foreign exchange computation is made; provided, however, that if no such rate is available, the “Alternative Currency Equivalent” shall be determined by the Administrative Agent or the L/C Issuer, as the
case may be, using any reasonable method of determination its deems appropriate in its sole discretion (and such determination shall be conclusive absent manifest error).
“Amendment No. 1” means the Amendment No. 1 to the Credit Agreement dated as of the Amendment No. 1 Effective Date among the Company, the other Loan Parties thereto, the Administrative Agent and the Lenders and other parties thereto.
“Amendment No. 1 Effective Date” means May 19. 2023.
“Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction applicable to any Loan Party or any Loan Party’s Subsidiaries from time to time concerning or relating to bribery or corruption.
“Applicable Currency” means Dollars or an Alternative Currency.
“Applicable Debt Rating” means, as of any date of determination, the ratings for the Company’s Index Debt from S&P, Moody’s and Fitch.
“Applicable Percentage” means (a) with respect to any Multicurrency Revolving Credit Lender at any time, the fraction, expressed as a percentage (carried out to the ninth decimal place), the numerator of which is the Multicurrency Revolving Credit Commitment of such Multicurrency Revolving Credit Lender and the denominator of which is the aggregate amount of the Multicurrency Revolving Credit Commitments and (b) with respect to any US Dollar Revolving Credit Lender at any time, the fraction, expressed as a percentage (carried out to the ninth decimal place), the numerator of which is the US Dollar Revolving Credit Commitment of such US Dollar Revolving Credit Lender and the denominator of which is the aggregate amount of the US Dollar Revolving Credit Commitments. If the commitment of each Revolving Credit Lender to make Revolving Credit Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the Revolving Credit Commitments have expired, then the Applicable Percentage of each Revolving Credit Lender shall be determined based on the Applicable Percentage of such Revolving Credit Lender most recently in effect, giving effect to any subsequent assignments and to any Lender' s status as a Defaulting Lender at the time of determination. The initial Applicable Percentage of each Lender in respect of each Facility is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable. The Applicable Percentage of any Lender is subject to adjustment as provided in Section 2.17.
“Applicable Rate” means, from time to time, the following percentages per annum, based upon the Applicable Debt Rating as set forth below:
| | | | | | | | | | | | | | | | | | | | |
| Applicable Rate |
| Pricing
Level | Applicable Debt
Ratings (S&P /
Moody’s / Fitch) | Commitment
Fee | Term SOFR / Daily SOFR / Eurocurrency Rate +/ Letters of Credit | Base
Rate | |
| | | | | | |
| 1 | > A- / A3 / A- | 0.090% | 0.875% | 0.000% | |
| 2 | BBB+/ Baal / BBB+ | 0.110% | 1.000% | 0.000% | |
| 3 | BBB / Baa2 / BBB | 0.150% | 1.125% | 0.125% | |
| 4 | BBB- / Baa3 / BBB- | 0.175% | 1.250% | 0.250% | |
| 5 | < BB+/ Bal / BB+ | 0.225% | 1.500% | 0.500% | |
If (a) the Company does not have any Applicable Debt Rating (other than by reason of the circumstances referred in the paragraph immediately below), then Pricing Level 5 shall apply, (b) the Company has only one Applicable Debt Rating, such Applicable Debt Rating shall apply, (c) the Company has Applicable Debt Ratings from only two Rating Agencies, then the higher of such Applicable Debt Ratings shall apply, unless there is a split in Applicable Debt Ratings of more than one ratings level, in which case the Applicable Debt Rating that is one level lower than the higher of the Company’s two Applicable Debt Ratings shall apply and (d) the Company has Applicable Debt Ratings from all three Rating Agencies, if (i) two Applicable Debt Ratings are equivalent and the third Applicable Debt Rating is lower, the higher Applicable Debt Rating shall apply, (ii) two Applicable Debt Ratings are equivalent and the third Applicable Debt Rating is higher, the lower Applicable Debt Rating shall apply and (iii) no Applicable Debt Ratings are equivalent, the Applicable Debt Rating that is neither the highest nor the lowest Applicable Debt Rating shall apply. Initially, the Applicable Rate shall be determined based upon the Applicable Debt Rating in effect on the Restatement Effective Date. Thereafter, each change in the Applicable Rate resulting from a publicly announced change in the Applicable Debt Rating (other than as a result of a change in the rating system of a Rating Agency) shall be effective during the period commencing on the date of delivery by the Company to the Administrative Agent of notice thereof pursuant to Section 6.01(f) and ending on the date immediately effective date of the next such change.
If the rating system of a Rating Agency shall change or if a Rating Agency shall cease to be in the business of rating corporate debt obligations, the Company and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such Rating Agency and, pending the effectiveness of any such amendment, the Applicable Rate shall be determined by reference to the Applicable Debt Rating most recently in effect prior to such change or cessation.
“Applicable Reference Rate” means, (a) for any Eurocurrency Rate Loan denominated in U.S. Dollars or any Alternative Currency not referenced in this definition, LIBOR, Term SOFR, (b) for any Eurocurrency Rate Loan denominated in Euro, EURIBOR, (c) for any Eurocurrency
Rate Load denominated in Sterling, SONIA, (d) for any Eurocurrency Rate Loan Denominated in Canadian Dollars, CDOR and (e) for any Eurocurrency Rate Loan Denominated in Yen, TIBOR.
“Applicable Time” means, with respect to any borrowings and payments in any Alternative Currency, the local time in the place of settlement for such Alternative Currency as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be necessary for timely settlement on the relevant date in accordance with normal banking procedures in the place of payment.
“Applicant Borrower” has the meaning specified in Section 2.14.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Arranger” or “Arrangers” means the Lead Arranger and AgFirst Farm Credit Bank, Bank of China, New York Branch, Industrial and Commercial Bank of China New York Branch, Barclays Bank PLC, Coöperatieve Rabobank U.A., New York Branch, Goldman Sachs Bank USA, Morgan Stanley Senior Funding, Inc. and U.S. Bank National Association, each in its capacity as a joint lead arranger and joint bookrunner.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit E-1 or any other form (including electronic documentation generated by use of an electronic platform) approved by the Administrative Agent.
“Auto-Extension Letter of Credit” has the meaning specified in Section 2.03(b)(iii).
“Availability Period” means, in respect of any Class of the Revolving Credit Facility, the period from and including the Restatement Effective Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Revolving Credit Commitments of such Class pursuant to Section 2.06, and (c) the date of termination of the Commitment of each Revolving Credit Lender of such Class to make Revolving Credit Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United
Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bank of America” means Bank of America, N.A. and its successors.
“Base Rate” means for any day a fluctuating rate of interest per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) the Adjusted Eurocurrency Rate for Dollar-denominated LoansTerm SOFR plus 1.00%. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change. If the Base Rate is being used as an alternate rate of interest pursuant to Section 3.03 hereof, then the Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above.
“Base Rate Committed Loan” means a Committed Loan that is a Base Rate Loan.
“Base Rate Loan” means a Loan that bears interest based on the Base Rate. All Base Rate Loans shall be denominated in Dollars.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“BHC Act Affiliate” has the meaning specified in Section 10.22(b).
“Board” means the Board of Governors of the Federal Reserve System of the United States (or any successor thereto).
“Borrower” and “Borrowers” each has the meaning specified in the introductory paragraph hereto.
“Borrower Materials” has the meaning specified in the last paragraph of Section 6.01.
“Borrowing” means a Multicurrency Revolving Credit Borrowing, a US Dollar Revolving Credit Borrowing or a Swing Line Borrowing, as the context may require.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office with respect to Obligations denominated in Dollars is located and:
(a) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in Dollars, any, fundings, disbursements, settlements and payments in Dollars in respect of any such Eurocurrency Rate Loan, or any other dealings in Dollars to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan, meanswith respect to a Term SOFR Loan or any other Loan referencing SOFR in its interest rate setting, any such day that is also a London Bankinga U.S. Government Securities Business Day;
(b) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in Euro, any fundings, disbursements, settlements and payments in Euro in respect of any such Eurocurrency Rate Loan, or any other dealings in Euro to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan, means a TARGET Day;
(c) if such day relates to any interest rate settings as to a Eurocurrency Loan denominated in (i) Sterling, means a day other than a day banks are closed for general business in London, or (ii) Yen, means a day other than when banks are closed for general business in Japan;
(d) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in a currency other than any Applicable Currency referred to above in this definition, means any such day on which dealings in deposits in the relevant currency are conducted by and between banks in the London or other applicable offshore interbank market for such currency; and
(e) if such day relates to any fundings, disbursements, settlements and payments in a currency other than any Applicable Currency referred to above in this definition in respect of a Eurocurrency Rate Loan denominated in a currency other than any Applicable Currency referred to above in this definition, or any other dealings in any currency other than any Applicable Currency referred to above in this definition to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan (other than any interest rate settings), means any such day on which banks are open for foreign exchange business in the principal financial center of the country of such currency.
“Canadian Dollars” means the lawful currency of Canada.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital or finance leases on a balance sheet of such Person under GAAP, and the
amount of such obligations shall be the capitalized amount thereof determined in accordance GAAP.
“Capital Stock” of any Person means (a) 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 Common Stock or Preferred Stock, and (b) 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.
“Cash Collateralize” means to deposit in a Controlled Account or to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the L/C Issuer or the US Dollar Revolving Credit Lenders, as collateral for L/C Obligations or obligations of the US Dollar Revolving Credit Lenders to fund participations in respect of L/C Obligations, cash or deposit account balances or, if the Administrative Agent and the L/C Issuer shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuer. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
“CFC” shall mean a Subsidiary of the Company that is a “controlled foreign corporation” within the meaning of Section 957 of the Code.
“CFC Holding Company” shall mean any Subsidiary of the Company that owns no material assets other than (a) equity interests (including, for this purpose, any debt or other instrument treated as equity for U.S. federal income tax purposes) in, or indebtedness of, one or more Subsidiaries that are CFCs or CFC Holding Companies or (b) incidental assets (including cash or cash equivalents) related thereto held on a temporary basis.
“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Change of Control” means 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 Securities Exchange Act
of 1934), directly or indirectly, of more than 50% of the Company’s Voting Stock (or its successor by merger, consolidation or purchase of all or substantially all of its assets).
“Class” (a) when used with respect to Lenders, refers to whether such Lenders are Multicurrency Revolving Credit Lenders or US Dollar Revolving Credit Lenders, (b) when used with respect to Commitments, refers to whether such Commitments are Multicurrency Revolving Credit Commitments or US Dollar Revolving Credit Commitments, (c) when used with respect to Loans or a Borrowing, refers to whether such Loans, or the Loans comprising such Borrowing, are Multicurrency Revolving Credit Loans or US Dollar Revolving Credit Loans and (d) when used with respect to any Facility, refers to whether such Facility is the Multicurrency Revolving Credit Facility or US Dollar Revolving Credit Facility.
“Code” means the Internal Revenue Code of 1986, as amended from time to time
“Commitment” means a Multicurrency Revolving Credit Commitment of a US Dollar Revolving Credit Commitment, as the context may require.
“Committed Borrowing” means a borrowing consisting of simultaneous Committed Loans of the same Type and Class in the same currency and, in the case of Term SOFR Loans and Eurocurrency Rate Loans not denominated in Sterling, having the same Interest Period made by each of the Lenders pursuant to Section 2.01.
“Committed Loan” means a Multicurrency Revolving Credit Loan or US Dollar Revolving Credit Loan, as the context may require.
“Committed Loan Notice” means a Committed Loans from one Type to the notice of (a) a Committed Borrowing, (b) a conversion of other, or (c) a continuation of Term SOFR Loans or Eurocurrency Rate Loans, pursuant to Section 2.02(a), which shall be substantially in the form of Exhibit A or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.
“Common Stock” means with respect to any Person, any and all shares, interest or other participation in, and other equivalents (however designated and whether voting or nonvoting) of such Person's common stock whether or not outstanding on the Restatement Effective Date, and includes, without limitation, all series and classes of such common stock.
“Company” has the meaning specified in the introductory paragraph hereto.
“Competitor” means any Person that is a competitor of the Company or its Subsidiaries, which has been designated by the Company as a competitor by written notice to the Administrative Agent on or prior to the Restatement Effective Date (or Affiliates of such Person that are either identified in writing by the Company on or prior to the Restatement Effective Date or readily identifiable on the basis of such Affiliate’s name).
“Competitor List” has the meaning specified in Section 10.06(h)(ii).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Capitalization” means, as of any date of determination, the sum of (i) Consolidated Funded Debt plus (ii) total shareholders’ equity for the Company and its consolidated Subsidiaries.
“Consolidated EBITDA” means, for any period, for the Company and its Subsidiaries on a consolidated basis, an amount equal to Net Income for such period plus, (a) without duplication and to the extent subtracted in determining such Net Income, provisions for (i) taxes based on income, (ii) Consolidated Interest Expense, (iii) depreciation and amortization expense, (iv) any other non-cash charges for such period (but excluding (x) any non-cash charge in respect of an item that was included in Net Income in a prior period and (y) any non-cash charge that relates to the write-down or write-off of inventory) and (v) fees and expenses incurred during such period in respect of acquisitions, dispositions, investments and debt or equity issuances contemplated or consummated during such period (including, for the avoidance of doubt, any such transactions that fail to close) minus (b) without duplication and to the extent otherwise included in such Net Income, (i) any cash payments made during such period in respect of non-cash charges described in clause (a)(iv) taken in a prior period and (ii) non-cash gains for such period (provided that any such cash received with respect to non-cash gains shall be added in computing Consolidated EBITDA during the period in which such cash is received) minus (c) without duplication and to the extent otherwise included in such Net Income, any cash distribution received from unconsolidated joint ventures to the extent such distributions were not made from operating earnings of such unconsolidated joint ventures. For purposes of calculating Consolidated EBITDA for any period, if during such period the Company or any Subsidiary shall have consummated a Material Transaction, Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto.
“Consolidated Funded Debt” means, at the time of determination for the Company and its Subsidiaries on a consolidated basis in accordance with GAAP (a) all Indebtedness of the Company and its Subsidiaries, limited in the case of clause (e) of the definition of Indebtedness to drawn and unreimbursed obligations and limited in the case of clause (g) of the definition of Indebtedness to the Guaranties by the Company or its Subsidiaries of Indebtedness of others that would constitute Consolidated Funded Debt if incurred directly by the Company or its Subsidiaries minus (b) the positive difference, if any, equal to (i) the amount of domestically held unrestricted cash of the Company and its consolidated Subsidiaries as set forth on the balance sheet of the Company most recently delivered to the Administrative Agent under Section 6.01 minus (ii) $50,000,000. The Indebtedness of any Person of the type included in Consolidated Funded Debt shall include the Indebtedness of any other entity (including any partnership in which such person is a general partner) to the extent such person is liable therefor as a result of such person's ownership interest in or other relationship with such entity, except to the extent the terms of such indebtedness provide that such person is not liable therefor.
“Consolidated Interest Expense” means, for any period, the interest expense of the Company and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. For purposes of calculating Consolidated Interest Expense for any period, if during such period the Company or any Subsidiary shall have consummated a Material Transaction, Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto.
“Consolidated Net Tangible Assets” means, at any date, total assets of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP minus (a) current liabilities (excluding short-term Indebtedness and the current portion of long-term Indebtedness) of the Company and its Subsidiaries and (b) goodwill and other intangible assets of the Company and its Subsidiaries, in each case determined on a consolidated basis in accordance with GAAP.
“Consolidated Total Assets” means, as to any Person on any date, the aggregate amount of assets of such Person and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, or the dismissal or appointment of the management, of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. Solely for purposes of the definition of “Affiliate”, “Control” shall also mean the possession, directly or indirectly, of the power to vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of a Person.
“Controlled Account” means each deposit account that is subject to an account control agreement in form and substance reasonably satisfactory to the Administrative Agent and the L/C Issuer.
“Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.
“Daily SOFR” with respect to any applicable determination date means the SOFR for the day that is five (5) U.S. Government Securities Business Days prior to (i) if such determination date is a U.S. Government Securities Business Day, such determination date or (ii) if such determination date is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such determination date, in each case, as such SOFR is published on the Federal Reserve Bank of New York’s website (or any successor source), plus the SOFR Adjustment. Any change in Daily SOFR shall be effective from and including the date of such change without further notice. If Daily SOFR as so determined would be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Daily SOFR Loan” means a Loan that bears interest at a rate based on Daily SOFR.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium,
rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.
“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
“Default Rate” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum; provided, however, that with respect to a Term SOFR Loan or Eurocurrency Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus 2% per annum.
“Defaulting Lender” means, subject to Section 2.17(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Company in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the L/C Issuer, the Swing Line Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swing Line Loans) within two Business Days of the date when due, (b) has notified the Company, the Administrative Agent, the L/C Issuer or the Swing Line Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Company, to confirm in writing to the Administrative Agent and the Company that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Company), or (d) has, or has a direct or indirect parent company that has (other than through an Undisclosed Administration), (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject,
repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.17(b)) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Company, the L/C Issuer, the Swing Line Lender and each other Lender promptly following such determination.
“Designated Borrower” has the meaning specified in the introductory paragraph hereto.
“Designated Borrower Notice” has the meaning specified in Section 2.14.
“Designated Borrower Request and Assumption Agreement” has the meaning specified in Section 2.14.
“Designated Jurisdiction” means any country, region or territory to the extent that such country, region or territory itself is the subject of any Sanction.
“Dollar” and “$” mean lawful money of the United States.
“Dollar Equivalent” means, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any Alternative Currency, the equivalent amount thereof in Dollars as determined by the Administrative Agent or the L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Dollars with such Alternative Currency.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Electronic Copy” has the meaning specified in Section 10.17.
“Electronic Record” has the meaning specified in Section 10.17.
“Electronic Signature” has the meaning specified in Section 10.17.
“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii) and (v) (subject to such consents, if any, as may be required under Section 10.06(b)(iii)).
“Environmental Laws” means all treaties, statutes, laws (including common law), rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, the preservation or reclamation of natural resources, the generation, management, use, presence, release or threatened release of, or exposure to, any Hazardous Material, or to health and safety matters.
“Environmental Liability” means all liabilities or obligations, including all claims, actions, suits, judgments, orders, damages, injunctive relief, losses, fines, penalties, fees, expenses (including reasonable fees and expenses of attorneys and consultants) or costs, whether contingent or otherwise, arising from or relating to (a) any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling, transportation, storage, treatment, disposal or arrangement for disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. For the avoidance of doubt, when any provision in this Agreement relates to a past event or period of time within the last six years, the term “ERISA Affiliate” includes any trade or business (whether or not incorporated) that was, as to the time of such past event or period of time, an ERISA Affiliate within the meaning of the preceding sentence.
“ERISA Event” means (a) “reportable event”, as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the complete or partial withdrawal of the Company or any ERISA Affiliate from any Plan or Multiemployer Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (c) the filing of a notice of intent to
terminate a Plan in a “distress termination” as defined in Section 4041(c) of ERISA, or the treatment of a Multiemployer Plan amendment as a termination under Section 4041A of ERISA; (d) the institution of proceedings to terminate a Plan or a Multiemployer Plan by the PBGC under Section 4041 or 4042 of ERISA; (e) the failure by the Company to make required contributions to any Plan; (f) the failure of the Company to satisfy the minimum funding standard (as defined in Section 412 of the Code or Section 302 of ERISA) applicable to any Plan; (g) a determination that any Plan is in “at risk” status (as defined in Section 430(i)(4) of the Code or Section 303(i)(4) of ERISA); (h) the incurrence by the Company or any ERISA Affiliate of any “withdrawal liability” (within the meaning of Section 4201 of ERISA), or any determination that a Multiemployer Plan is insolvent or in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA); (i) the occurrence of a non-exempt “prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA) with respect to which any Loan Party or ERISA Affiliate is held liable for an amount that would reasonably be expected to result in a Material Adverse Effect; and (j) any other event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan by the PBGC or the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Euro” and “€” mean the single currency of the Participating Member States.
“Eurocurrency Rate” means:
, (a) with respect to any Credit Extension:
(x) with respect to any Eurocurrency Rate Loan for any Interest Period:
(i) subject to the implementation of a LIBOR Successor Rate in accordance with Section 3.03(b), denominated in Dollars, the rate per annum equal to the London Interbank Offered Rate (“LIBOR”) or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, on the Rate Determination Date for deposits in the relevant currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period;
(i) [reserved];
(ii) denominated in Euro, the rate per annum equal to the Euro Interbank Offered Rate (“EURIBOR”) or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m. (Brussels, Belgium time) on the Rate Determination Date for
deposits in the relevant currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period;
(iii) denominated in Canadian dollars, the rate per annum equal to the Canadian Dealer Offered Rate (“CDOR”), or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at or about 10:00 a.m. (Toronto, Ontario time) on the Rate Determination Date with a term equivalent to such Interest Period;
(iv) denominated inn Yen, the rate per annum equal to the Japanese Yen Tokyo interbank offered rate administered by the Ippan Shadan Hojin JBA TIBOR Administration (“TIBOR”), or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at or about 11:00 a.m. (Japan time) on the Rate Determination Date with a term equivalent to such Interest Period;
(v) denominated in any Alternative Currency not otherwise set forth in this definition, the rate per annum as designated with respect to such Alternative Currency at the time such Alternative Currency is approved by the Administrative Agent and the Lenders pursuant to Section 1.06(a); and
(y) with respect to any Eurocurrency Rate Loan denominated in Sterling, SONIA Daily Rate; and
(b) subject to the implementation of a LIBOR Successor Rate in accordance with Section 3.03(b), for any rate calculation with respect to a Base Rate Loan on any date, the rate per annum equal to LIBOR, at or about 11:00 a.m., London time determined two Business Days prior to such date for U.S. Dollar deposits with a term of one month commencing that day;
provided that to the extent a comparable or successor rate is approved by the Administrative Agent in connection with any rate set forth in this definition, the approved rate shall be applied in a manner consistent with market practice; provided, further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent; and if the Eurocurrency .ate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.
“Eurocurrency Rate Loan” means a Committed Loan that bears interest at a rate based on the Adjusted Eurocurrency Rate. Eurocurrency Rate Loans may beare denominated in Dollars or in an Alternative Currency. All Committed Loans denominated in an Alternative Currency must be Eurocurrency Rate Loans.
“Eurocurrency Successor Rate” has the meaning specified in Section 3.03.
“Event of Default” has the meaning assigned to such term in Article VIII.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Excluded Subsidiary” means (a) each Subsidiary that is not a Material Guarantor Subsidiary, (b) any Foreign Subsidiary, (c) each joint venture and each Subsidiary that is not a wholly-owned Subsidiary on any date such Subsidiary would otherwise be required to become a Guarantor pursuant to the requirements of Section 6.10 (for so long as such Subsidiary remains a non-wholly-owned Subsidiary), (d) any CFC Holding Company, (e) any Domestic Subsidiary that is a Subsidiary of (i) a Foreign Subsidiary that is a CFC or (ii) a CFC Holding Company, (f) any Subsidiary for which Guarantees are (i) prohibited by law or require consent, approval, license or authorization of a Governmental Authority, unless such consent, approval, license or authorization has been received; provided, that there shall be no obligation to obtain such consent or (ii) contractually prohibited on the Restatement Effective Date or, following the Restatement Effective Date, the date of acquisition of such Subsidiary, so long as such prohibition is in effect on the date of such acquisition and was not created in contemplation of such acquisition, (g) any Subsidiary where the burden or cost of obtaining a Guarantee outweighs the benefit to the Lenders, as determined by the Administrative Agent and the Company, (h) any other Subsidiary with respect to which providing such a Guarantee could reasonably be expected to result in material adverse tax consequences to the Company and its Subsidiaries in the aggregate (including as a result of the operation of Section 956 of the Code) as reasonably determined by the Company in consultation with the Administrative Agent, (i) any captive insurance Subsidiary, (j) any special purpose entity, including Smithfield Receivables Funding LLC, any SPE Subsidiary and any obligor under the Receivables Securitization and (k) each not-for-profit Subsidiary.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender becomes a party to this Agreement (other than pursuant to an assignment request by the Company under Section 10.13) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01(a)(ii) or (c), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(e), (d) any backup withholding Taxes and (e) any Taxes imposed pursuant to FATCA.
“Existing Credit Agreement” has the meaning given to such term in the recitals to this Agreement.
“Exiting Lender” has the meaning specified in Section 10.23.
“Extending Lender” has the meaning specified in Section 2.18.
“Extension Agreement” means an extension agreement substantially in the form of Exhibit K or any other form approved by the Administrative Agent.
“Extension Effective Date” has the meaning set forth in Section 2.18.
“Facility” or “Facilities” means the Multicurrency Revolving Credit Facility or the US Dollar Revolving Credit Facility, as the context may require.
“Farm Credit Lender” means a lending institution organized and existing pursuant to the provisions of the Farm Credit Act of 1971, as amended, and under the regulation of the Farm Credit Administration.
“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement between a non-U.S. jurisdiction and the United States with respect to the foregoing and any law or regulation adopted pursuant to, or facilitating the implementation of, any such intergovernmental agreement.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.
“Fee Letters” means (a) the letter agreement, dated as of December 15, 2016, among the Company, the Administrative Agent and the Lead Arranger (the “Original Fee Letter”), and (b) the letter agreement, dated as of April 16, 2021, among the Company, the Administrative Agent and the Lead Arranger.
“Financial Covenants” means each of the financial covenants set forth in Section 7.10 and Section 7.11.
“Financial Officer” means the chief financial officer, principal accounting officer, vice president of finance, treasurer, controller or any other Person with equivalent responsibilities, in each case, of the Company.
“Fitch” means Fitch Ratings, Inc., and any successor to its rating agency business.
“Foreign Lender” means, with respect to any Borrower, (a) if such Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if such Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which such Borrower is resident for tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“Foreign Plan” means any employee benefit plan, program, policy, arrangement or agreement (other than a Plan or Multiemployer Plan) maintained or contributed to by any Loan Party or any Subsidiary thereof with respect to employees employed outside the United States.
“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States, a State thereof or the District of Columbia.
“Fronting Exposure” means, at any time there is a Defaulting Lender under the US Dollar Revolving Credit Facility, (a) with respect to the L/C Issuer, such Defaulting Lender’s Applicable Percentage of the Outstanding Amount of all outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender's participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Applicable Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders in accordance with the terms hereof.
“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.
“Governmental Authority” means the government of the U.S., any other nation or any political subdivision thereof, whether state, provisional, territorial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national body such as the European Union or the
European Central Bank) having jurisdiction over the Company, any Subsidiary or any Lender, as the context may require.
“Granting Lender” has the meaning specified in Section 10.06(g).
“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“Guaranty Agreement” means the Guaranty Agreement, dated as of February 17, 2017, among the Company, each of the Subsidiary Guarantors party thereto and the Administrative Agent, as amended by Guaranty Amendment No. 1 and Guaranty Amendment No. 2 and as otherwise amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Guaranty Amendment No. 1” means Amendment No. 1 to the Guaranty Agreement, dated as of March 13, 2018, by and among the Company, the Subsidiary Guarantors party thereto and the Administrative Agent.
“Guaranty Amendment No. 2” means Amendment No. 2 to the Guaranty Agreement, dated as of May 21, 2021, by and among the Company, the Subsidiary Guarantors party thereto and the Administrative Agent.
“Guaranty Joinder Agreement” means a guaranty joinder agreement signed by a joining party and the Administrative Agent substantially in the form of Exhibit A to the Guaranty Agreement.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including any petroleum products or
byproducts and all other hydrocarbons, radon gas, molds, asbestos or asbestos-containing materials, urea formaldehyde foam insulation, polychlorinated biphenyls, chlorofluorocarbons and all other ozone-depleting substances, per-and polyfluoroalkyl substances, infectious or medical wastes, odors or odor-causing substances and all other substances or wastes of any nature that are prohibited, limited or regulated pursuant to, or that could give rise to liability under, any Environmental Law.
“Honor Date” has the meaning specified in Section 2.03(c)(i).
“Impacted Loans” has the meaning specified in Section 3.03.
“Indebtedness” of any Person means, without duplication,
(a) all obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments,
(c) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable incurred in the ordinary course of business which are not past due by more than 90 days (unless being contested in good faith by appropriate proceedings)),
(d) all Capital Lease Obligations of such Person,
(e) all obligations, contingent; otherwise, of such Person as an account party in respect of letters of credit, letters of guaranty, bankers’ acceptances or other similar instruments (other than obligations with respect to letters of credit securing obligations (other than obligations that would otherwise constitute “Indebtedness”) entered into in the ordinary course of business of such Person to the extent 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 payment on the letter of credit),
(f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, the amount of such Indebtedness being deemed to be the lesser of the fair market value (as determined reasonably and in good faith by the Chief Financial Officer of the Company) of such property or assets and the amount of the Indebtedness so secured,
(g) all Guarantees by such Person of Indebtedness of others, and
(h) all obligations of such Person in respect of any Securitization Transaction (valued as set forth in the definition of Securitization Transaction).
Indebtedness shall not include obligations under any operating lease of property that is not capitalized on the balance sheet of the Company or any Subsidiary. The Indebtedness of any
Person shall include the Indebtedness of any other Person (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such other Person, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, in connection with the purchase by the Company or any Subsidiary of any business, the term "Indebtedness" will exclude post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 60 days thereafter. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all obligations as described above; provided, however, that, in the case of Indebtedness sold by the obligor at a discount, the amount of such Indebtedness at any time shall be the accreted value thereof at such time. Except as otherwise expressly provided herein, the term "Indebtedness" shall not include cash interest thereon.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“Indemnitees” has the meaning specified in Section 10.04(b).
“Index Debt” means senior, unsecured non-credit enhanced (other than by guarantees of subsidiaries that also guarantee the Obligations at such time) long-term debt for borrowed money.
“Information” has the meaning specified in Section 10.07.
“Interest Payment Date” means, (a) as to any Term SOFR Loan and any Eurocurrency Rate Loan not denominated in Sterling other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan, and the Maturity Date; provided, however, that if any Interest Period for a Eurocurrency Rate Loan not denominated in Sterling exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; (b) as to any Loan denominated in Sterling, the first Business Day after the end of each month and the Maturity Date and (c) as to any Base Rate Loan (including a Swing Line Loan) and Daily SOFR Loan, the last Business Day of each March, June, September and December and the Maturity Date.
“Interest Period” means as to each Term SOFR Loan and each Eurocurrency Rate Loan not denominated in Sterling, the period commencing on the date such Eurocurrency Rate Loan is disbursed or converted to or continued as a Term SOFR Loan or Eurocurrency Rate Loan and ending on the date one, three or six months thereafter (in each case, subject to availability), as selected by the Company in its Committed Loan Notice; provided that:
(a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless, in the case
of a Eurocurrency Rate Loan, such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;
(b) any Interest Period pertaining to a Eurocurrency Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Maturity Date.
“IRS” means the United States Internal Revenue Service.
“ISDA Definitions” means the 2006 ISDA Definitions (or successor definitional booklet for interest rate derivatives) published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time.
“ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).
“Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Company (or any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of Credit.
“Judgment Currency” has the meaning specified in Section 10.19.
“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
“Lead Arranger” means BofA Securities, Inc.
“L/C Advance” means, with respect to each US Dollar Revolving Credit Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage. All L/C Advances shall be denominated in Dollars.
“L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Committed Borrowing. All L/C Borrowings shall be denominated in Dollars.
“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.
“L/C Issuer” means (a) Bank of America, in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder, (b) each other Lender that agrees to act as an issuer of Letters of Credit appointed by the Company (with the consent of the Administrative Agent) as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder and (c) any Lender appointed by the Company (with the consent of the Administrative Agent) as such by notice to the Lenders as a replacement for any L/C Issuer who is at the time of such appointment a Defaulting Lender. In the event that there is more than one L/C Issuer any time, references herein and in the other Loan Documents to the L/C Issuer shall be deemed to refer to the L/C Issuer in respect of the applicable Letter of Credit or to all L/C Issuers, as the context requires.
“L/C Issuer Fronting Sublimit” means, with respect to each L/C Issuer, its Fronting Sublimit set forth on Schedule 2.01, or in the applicable documentation pursuant to which such L/C Issuer was appointed as the L/C Issuer hereunder.
“L/C Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.09. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“Lender” has the meaning specified in the introductory paragraph hereto and, unless the context requires otherwise, includes the Swing Line Lender.
“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Company and the Administrative Agent which office may include any Affiliate of such Lender or any domestic or foreign branch of such Lender or such Affiliate. Unless the context otherwise requires each reference to a Lender shall include its applicable Lending Office.
“Letter of Credit” means any standby letter of credit issued hereunder providing for the payment of cash upon the honoring of a presentation thereunder. Letters of Credit may be issued in Dollars or in an Alternative Currency.
“Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.
“Letter of Credit Expiration Date” means the day that is seven days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).
“Letter of Credit Fee” has the meaning specified in Section 2.03(h).
“Letter of Credit Report” means a certificate substantially in the form of Exhibit J or any other form approved by the Administrative Agent.
“Letter of Credit Sublimit” means an amount equal to $200,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the US Dollar Revolving Credit Commitment.
“LIBOR” has the meaning specified in the definition of Eurocurrency Rate.
“LIBOR Replacement Date” has the meaning specified in Section 3.03(b).
“LIBOR Successor Rate” has the meaning specified in Section 3.03(b).
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.
“Loan” means an extension of credit by a Lender to a Borrower under Article II in the form of a Committed Loan or a Swing Line Loan.
“Loan Documents” means this Agreement, each Designated Borrower Request and Assumption Agreement, each Note, each Issuer Document, any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.16, the Fee Letters, the Guaranty Agreement, any Guaranty Joinder Agreement and any other agreement, instrument or document executed and delivered by a Loan Party and designated by its terms as a “Loan Document”.
“Loan Parties” means, collectively, the Company, each of the Subsidiary Guarantors and each Designated Borrower.
“London Banking Day” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank Eurodollar market.
“Margin Stock” means “margin stock” within the meaning of Regulations T, U and X of the Board.
“Material Acquisition” means any acquisition or a series of related acquisitions (other than solely among the Company and its Subsidiaries) of (a) Equity Interests in any Person if, after giving effect thereto, such Person will become a Subsidiary or (b) assets comprising all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of) any Person; provided that the aggregate cash consideration therefor equals or exceeds $500,000,000.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect on, the operations, business, assets, properties, liabilities (actual or contingent) or financial condition of the Company and its Subsidiaries, taken as a whole; (b) a material impairment of the
rights and remedies of the Administrative Agent or any Lender under any Loan Document, or of the ability of the Loan Parties, taken as a whole, to perform their material obligations under the Loan Documents; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Company or any Subsidiary Guarantor under any material provision of any Loan Document to which it is a party.
“Material Guarantor Subsidiary” means each Subsidiary (other than a Foreign Subsidiary) of the Company that is to become a Subsidiary Guarantor hereunder in order to ensure that the Company and the Subsidiary Guarantors directly (a) own, on a consolidated basis, at least 90% of the Consolidated Total Assets of the Company (excluding the Consolidated Total Assets of Excluded Subsidiaries pursuant to any of clauses (b) through (k) of the definition of “Excluded Subsidiary”) (such Consolidated Total Assets, the “Non-Excluded Consolidated Total Assets”) and (b) generate at least 90% of the consolidated revenues of the Company (excluding the consolidated revenues of Excluded Subsidiaries pursuant to any of clauses (b) through (k) of the definition of “Excluded Subsidiary”) (such consolidated revenues, the “Non-Excluded Consolidated Revenues”), in each case of the foregoing clauses (a) and (b) as of the end of or for the most recent period of four consecutive fiscal quarters of the Company for which financial statements have been delivered pursuant to Section 6.01(a) or 6.01(b) (or, prior to the first delivery of any such financial statements, as of the end of or for the period of four consecutive fiscal quarters of the Company ended March 31, 2021); provided that in no event shall any Subsidiary of the Company that (x) owns 1.5% or less of the Non-Excluded Consolidated Total Assets and (y) generates 1.5% or less of the Non-Excluded Consolidated Revenues, in each case of the foregoing clauses (x) and (y) as of the end of or for the most recent period of four consecutive fiscal quarters of the Company for which financial statements have been delivered pursuant to Section 6.01(a) or 6.01(b), constitute a Material Guarantor Subsidiary (notwithstanding, for the avoidance of doubt, that the exclusion of such Subsidiary would cause the requirement set forth above to not be satisfied), except that, if at the end of or for any such most recent period of four consecutive fiscal quarters the combined Consolidated Total Assets or combined consolidated revenues of all such Subsidiaries that would not constitute Material Guarantor Subsidiaries pursuant to this proviso would exceed 10% of the Non-Excluded Assets or 10% of the Non-Excluded Revenues, as applicable, then one or more of such excluded Subsidiaries selected by the Company shall be deemed to be Material Guarantor Subsidiaries for all purposes of this Agreement (including, without limitation, the Subsidiary Guarantee Requirement) until such excess shall have been eliminated, in each case, as reasonably determined by the Company based on such financial statements and other information available to the Company.
“Material Indebtedness” means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of any Loan Party and its respective Subsidiaries in an aggregate outstanding principal amount exceeding $150,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Company or any Subsidiary in respect of any Swap Agreement at any time shall be the Swap Termination Value for such Swap Agreement at such time.
“Material Subsidiary” means each Subsidiary of the Company (a) the Consolidated Total Assets of which equal 3.75% or more of the Consolidated Total Assets of the Company or (b) the consolidated revenues of which equal 3.75% or more of the consolidated revenues of the Company, in each case as of the end of or for the most recent period of four consecutive fiscal quarters of the Company for which financial statements have been delivered pursuant to Section 6.01(a) or 6.01(b) (or, prior to the first delivery of any such financial statements, as of the end of or for the period of four consecutive fiscal quarters of the Company ended October 1, 2017); provided that if at the end of or for any such most recent period of four consecutive fiscal quarters the combined Consolidated Total Assets or combined consolidated revenues of all Subsidiaries that under clauses (a) and (b) above would not constitute Material Subsidiaries shall have exceeded 10% of the Consolidated Total Assets of the Company or 10% of the consolidated revenues of the Company (calculated without duplication of assets or revenues), then one or more of such excluded Subsidiaries shall for all purposes of this Agreement be deemed to be Material Subsidiaries in descending order based on the amounts of their Consolidated Total Assets or consolidated revenues, as the case may be, until such excess shall have been eliminated in each case, as reasonably determined by the Company based on such financial statements and other information available to the Company.
“Material Transaction” means any disposition or acquisition by the Company or by a Subsidiary of a Subsidiary, or a business unit, division, product line or line of business, for consideration in excess of $100,000,000.
“Maturity Date” means the date that is five years after the Restatement Effective DateMay 21, 2027 or such later date as may be extended from time to time pursuant to Section 2.18 (and, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day); provided, however, that the Maturity Date with respect to any Lender that is a Non-Extending Lender pursuant to Section 2.18(b) shall be the Maturity Date in effect immediately prior to the applicable Extension Effective Date for all purposes of this Agreement.
“Maximum Rate” has the meaning specified in Section 10.09.
“Minimum Collateral Amount” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances provided to reduce or eliminate Fronting Exposure during the existence of a Defaulting Lender under the US Dollar Revolving Credit Facility, an amount equal to 105% of the Fronting Exposure of the L/C Issuer with respect to Letters of Credit issued and outstanding at such time, (b) with respect to Cash Collateral consisting of cash or deposit account balances provided in accordance with the provisions of Section 2.16(a)(i), (a)(ii) or (a)(iii), an amount equal to 105% of the Outstanding Amount of all LC Obligations, and (c) otherwise, an amount determined by the Administrative Agent and the L/C Issuer in their sole discretion.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
“Multicurrency Revolving Credit Borrowing” means a borrowing consisting of one or more simultaneous Multicurrency Revolving Credit Loans of the same Type and, in the case of
Term SOFR Loans or Eurocurrency Rate Loans not denominated in Sterling, having the same Interest Period made pursuant to Section 2.01.
“Multicurrency Revolving Credit Commitment” means, as to each Multicurrency Revolving Credit Lender, its obligation to make Multicurrency Revolving Credit Loans to the Borrowers pursuant to Section 2.01 in an aggregate principal amount at any one time outstanding not to exceed the Dollar Equivalent of the amount set forth opposite such Lender’s name on Schedule 2.01 under the caption “Multicurrency Revolving Credit Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. On the RestatementAmendment No.l Effective Date, the aggregate Multicurrency Revolving Credit Commitment shall be $250,000,000.
“Multicurrency Revolving Credit Exposure” means, as to any Multicurrency Revolving Credit Lender at any time, the aggregate Outstanding Amount at such time of its Committed Loans.
“Multicurrency Revolving Credit Facility” means, at any time, the aggregate amount of the Multicurrency Revolving Credit Lenders’ Multicurrency Revolving Credit Commitments and Multicurrency Revolving Credit Loans at such time.
“Multicurrency Revolving Credit Lender” means, at any time, any Lender that has a Multicurrency Revolving Credit Commitment or holds a Multicurrency Revolving Credit Loan at such time.
“Multicurrency Revolving Credit Loan” has the meaning specified in Section 2.01.
“Multicurrency Revolving Credit Note” means a promissory note made by the Borrower in favor of a Multicurrency Revolving Credit Lender evidencing Multicurrency Revolving Credit Loans made by such Multicurrency Revolving Credit Lender, substantially in the form of Exhibit C-2.
“Multiemployer Plan” means, at any time, a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Loan Party or any ERISA Affiliate is then making or accruing an obligation to make contributions or has within the preceding six plan years made or had any obligation to make contributions.
“Net Income” means, for any period, without duplication, the consolidated net income (loss) of the Company and its Subsidiaries determined in accordance with GAAP.
“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 10.01 and (ii) has been approved by the Required Lenders.
“Non-Extending Lender” has the meaning specified in Section 2.18.
“Non-Extension Notice Date” has the meaning specified in Section 2.03(b)(iii).
“Note” means a Multicurrency Revolving Credit Note or a US Dollar Revolving Credit Note, as the context may require.
“Notice Date” has the meaning set forth in Section 2.18.
“Obligations” means (a) the due and punctual payment by any Borrower of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any Borrower in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of L/C Obligations, interest thereon (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) and obligations to provide cash collateral and (iii) all other monetary obligations of any Borrower to any of the Lenders or the Administrative Agent under any Loan Document, including obligations to pay fees, expense reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of any Borrower under or pursuant to any Loan Document and (c) the due and punctual payment and performance of all the obligations of each other Loan Party under or pursuant to each Loan Document (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding).
“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
“Original Closing Date” means February 17, 2017.
“Original Credit Agreement” has the meaning given to such term in the recitals to this Agreement.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or
perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.06).
“Outstanding Amount” means (i) with respect to Committed Loans on any date, the Dollar Equivalent of the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of such Committed Loans occurring on such date, (ii) with respect to Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of such Swing Line Loans occurring on such date; and (iii) with respect to any L/C Obligations on any date, the Dollar Equivalent amount of the aggregate outstanding amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the Company of Unreimbursed Amounts.
“Overnight Rate” means, for any day, (a) with respect to any amount denominated in Dollars, the greater of (i) the Federal Funds Rate and (ii) an overnight rate determined by the Administrative Agent, the L/C Issuer, or the Swing Line Lender, as the case may be, in accordance with banking industry rules on interbank compensation, and (b) with respect to any amount denominated in an Alternative Currency, the rate of interest per annum at which overnight deposits in the applicable Alternative Currency, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day by a branch or Affiliate of Bank of America in the applicable offshore interbank market for such currency to major banks in such interbank market.
“PACA” means the Perishable Agricultural Commodities Act, as amended.
“Participant” has the meaning specified in Section 10.06(d).
“Participating Member State” means any member state of the European Union that has the Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
“Participant Register” has the meaning specified in Section 10.06(d).
“Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended from time to time.
“PBGC” means the Pension Benefit Guaranty Corporation or any successor entity thereto.
“Permitted Encumbrances” means:
(a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance with Section 6.04;
(b) carriers’, warehousemen's, mechanics’, materialmen’s, repairmen’s, landlord’s and other Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 60 days or are being contested in compliance with Section 6.04;
(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute an Event of Default;
(f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not interfere with the ordinary conduct of business of the Company or any of its Subsidiaries;
(g) banker’s liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with depository institutions; provided that, except with respect to any deposit account or funds subject to the Lien of a Loan Document, such deposit accounts or funds are not established or deposited for the purpose of providing collateral for any Indebtedness and are not subject to restrictions on access by the Company or any of its Subsidiaries in excess of those required by applicable banking regulations;
(h) Liens in favor of, or claims or rights of any producer, grower or seller of livestock, poultry or agricultural commodities under PACA, PSA or any similar state or federal laws or regulations;
(i) any Lien, claim or right of any Governmental Authority arising under any law or regulation in any inventory or farm products allocable to any procurement contract with such Governmental Authority;
(j) Liens arising by virtue of Uniform Commercial Code financing statement filings (or similar filings under applicable law) regarding operating leases entered into by the Company and its Subsidiaries in the ordinary course of business;
provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.
“Permitted Holders” means WH Group or any of its Affiliates (but without giving effect to the third sentence of the definition of “Control”) and any “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members; provided that, in the case of such group and without giving effect to the existence of such group or any other group, such Persons, collectively, have direct or indirect beneficial ownership of more than 50% of the Voting Stock of the Company.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA (other than a Multiemployer Plan or Foreign Plan), that is subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and that (i) is sponsored, maintained or contributed to, by any Loan Party or any ERISA Affiliate or (ii) has at any time within the preceding six years been maintained, or contributed to by any Loan Party or any ERISA Affiliate.
“Platform” has the meaning specified in Section 6.01.
“Pre-Adjustment Successor Rate” has the meaning specified in Section 3.03(b).
“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.
“PSA” means the Packers and Stockyards Act, as amended.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public Lender” has the meaning specified in Section 6.01.
“QFC” has the meaning specified in Section 10.22(b).
“QFC Credit Support” has the meaning specified in Section 10.22.
“Rabobank” means Coöperatieve Rabobank U.A., New York Branch.
“Rate Determination Date” means two (2) Business Days prior to the commencement of such Interest Period (or such other day as is generally treated as the rate fixing day by market practice in such interbank market, as determined by the Administrative Agent; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, such other day as otherwise reasonably determined by the Administrative Agent).
“Rating” means the public ratings from time to time established by Moody’s, S&P and Fitch for the Index Debt (or, at any time when no Index Debt shall be outstanding, (a) the Company’s corporate credit rating then in effect from S&P, (b) the Company’s corporate family rating then in effect from Moody’s and (c) the Company's issuer default rating then in effect from Fitch).
“Rating Agency” means any of S&P, Moody’s and Fitch.
“Recipient” means the Administrative Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.
“Receivables Securitization” means the Securitization Transaction pursuant to that certain Fourth Amended and Restated Credit and Security Agreement dated as of November 21, 2018 among Rabobank as the administrative agent, Smithfield Receivables Funding LLC, the Company and the lenders party thereto (as amended, amended and restated, replaced, increased, supplemented or otherwise modified from time to time).
"Refinancing" means the repayment in full by the Company of all outstanding Indebtedness, and the termination of all Commitments (as defined in the Existing Credit Agreement), under the Existing Credit Agreement.
“Refinancing Indebtedness” means, in respect of any Indebtedness (the “Original Indebtedness”), any Indebtedness that extends, renews or refinances such Original Indebtedness (or any Refinancing Indebtedness in respect thereof); provided that (a) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of such Original Indebtedness (except to the extent used to finance accrued interest and premium (including tender or make-whole premiums) thereon and underwriting discounts, defeasance costs, fees, commissions and expenses), (b) the maturity of such Refinancing Indebtedness shall not be earlier, and the weighted average life to maturity of such Refinancing Indebtedness shall not be shorter, than that of such Original Indebtedness; (c) such Refinancing Indebtedness shall not be required to be repaid, prepaid, redeemed, repurchased or defeased upon the occurrence of one or more events or at the option of any holder thereof (except, in each case, upon the occurrence of an event of default or a change in control or as and to the extent such repayment, prepayment, redemption, repurchase or defeasance would have been required pursuant to the terms of such Original Indebtedness) prior to the earlier of (i) the maturity of such Original Indebtedness and (ii) the date that is six months after the Maturity Date; provided that this clause (c) shall not apply to the final maturity or regularly scheduled amortization of any Indebtedness, (d) such Refinancing Indebtedness shall not constitute an obligation of the Company or any Subsidiary that shall not have been (or, in the case of after-acquired Subsidiaries, shall not have been required to become) an obligor in respect of such Original Indebtedness and shall constitute an obligation of such Subsidiary or of the Company only to the extent of their obligations in respect of such Original Indebtedness; (e) if such Original Indebtedness shall have been expressly subordinated to the Obligations, such Refinancing Indebtedness shall also be expressly subordinated to the Obligations on terms not less favorable in any material respect to the Lenders; and (f) such Refinancing Indebtedness shall not be secured by any Lien on any asset
other than the assets that secured such Original Indebtedness (or would have been required to secure such Original Indebtedness pursuant to the terms thereof).
“Register” has the meaning specified in Section 10.06(c).
“Related Adjustment” means, in determining any LIBOR Successor Rate, the first relevant available alternative set forth in the order below that can be determined by the Administrative Agent applicable to such LIBOR Successor Rate:
(A) with respect to Term SOFR, (x) 0.11448% (11.448 basis points) for an Interest Period of one-month’s duration, (y) 0.26161% (26.161 basis points) for an Interest Period of three-month’s duration and (z) 0.42826% (42.826 basis points) for an Interest Period of six-month’s duration;
(B) with respect to SOFR, 0.11448% (11.448 basis points);
(C) the spread adjustment, or method for calculating or determining such spread adjustment, that has been selected or recommended by the Relevant Governmental Body for the relevant Pre Adjustment Successor Rate (taking into account the interest period, interest payment date or payment period for interest calculated and/or tenor thereto) and which adjustment or method is published on an information service as selected by the Administrative Agent from time to time in its discretion; or
(D) the spread adjustment that would apply (or has previously been applied) to the fallback rate for a derivative transaction referencing the ISDA Definitions (taking into account the interest period, interest payment date or payment period for interest calculated and/or tenor thereto).
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.
“Relevant Governmental Body”means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York.
“Removal Effective Date” has the meaning specified in Section 9.06(b).
“Report” means reports prepared by the Administrative Agent or another Person showing the results of inspections with respect to the assets of any Loan Party from information furnished by or on behalf of any Loan Party, after the Administrative Agent has exercised its rights of inspection pursuant to this Agreement, which Reports may be distributed to the Lenders by the Administrative Agent.
“Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Committed Loans, a Committed Loan Notice, (b) with respect to an L/C Credit
Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.
“Required Facility Lenders” means, with respect to any Facility as of any date of determination, Lenders holding more than 50% of the sum of the (a) Total Outstandings under such Facility (with the aggregate amount of each US Dollar Revolving Credit Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such US Dollar Revolving Credit Lender for purposes of this definition) and (b) aggregate unused Commitments under such Facility; provided that the unused Commitments under such Facility of, and the portion of the Total Outstandings under such Facility held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Facility Lenders.
“Required Lenders” means, at any time, Lenders holding more than 50% of the sum of the (a) Total Outstandings (with the aggregate amount of each US Dollar Revolving Credit Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such US Dollar Revolving Credit Lender for purposes of this definition) and (b) aggregate unused Commitments. The Total Outstandings and undrawn Commitments of any Defaulting Lender shall be disregarded in determining Required Lenders at any time; provided that the amount of any participation in any Swing Line Loan and Unreimbursed Amounts that such Defaulting Lender has failed to fund that have not been reallocated to and funded by another Lender shall be deemed to be held by the Lender that is the Swing Line Lender or L/C Issuer, as the case may be, in making such determination.
“Requirement of Law” means, with respect to any Person, (a) the charter, articles or certificate of organization or incorporation and bylaws or other organizational or governing documents of such Person and (b) any Law, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Rescindable Amount” means any payment that the Administrative Agent makes for the account of the Lenders or the L/C Issuer hereunder as to which the Administrative Agent determines (which determination shall be conclusive absent manifest error) that any of the following applies: (a) the Borrower has not in fact made such payment; (b) the Administrative Agent has made a payment in excess of the amount so paid by the Borrower (whether or not then owed); or (c) the Administrative Agent has for any reason otherwise erroneously made such payment.
“Resignation Effective Date” has the meaning specified in Section 9.06(a).
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer, controller or assistant controller of a Loan Party and, solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01, the secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to
Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“Restatement Effective Date” means the date on which all of the conditions specified in Section 4.01 shall first be satisfied (or waived).
“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in any Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancelation or termination of any Equity Interests in a Borrower or any Subsidiary, whether now or hereafter outstanding, or any option, warrant, or other right to acquire any such Equity Interests in a Borrower or any Subsidiary, or any other payment that has a substantially similar effect to any of the foregoing.
“Revaluation Date” means (a) with respect to any Loan, each of the following: (i) each date of a Borrowing of a Eurocurrency Rate Loan denominated in an Alternative Currency, (ii) each date of a continuation of a Eurocurrency Rate Loan denominated in an Alternative Currency pursuant to Section 2.02, and (iii) such additional dates as the Administrative Agent shall determine or the Required Lenders shall require; and (b) with respect to any Letter of Credit, each of the following: (i) each date of issuance of a Letter of Credit denominated in an Alternative Currency, (ii) each date of an amendment of any such Letter of Credit having the effect of increasing the amount thereof, (iii) each date of any payment by the L/C Issuer under any Letter of Credit denominated in an Alternative Currency, and (iv) such additional dates as the Administrative Agent or the L/C Issuer shall determine or the Required Lenders shall require.
“Revolving Credit Borrowing” means a Multicurrency Revolving Credit Borrowing or a US Dollar Revolving Credit Borrowing, as the context may require.
“Revolving Credit Commitment” means a Multicurrency Revolving Credit Borrowing or a US Dollar Revolving Credit Borrowing, as the context may require.
“Revolving Credit Facility” means collectively, the Multicurrency Revolving Credit Facility and the US Dollar Revolving Credit Facility.
“Revolving Credit Increase Effective Date” has the meaning specified in Section 2.15(d).
“Revolving Credit Lender” means a Multicurrency Revolving Credit Lender or a US Dollar Revolving Credit Lender, as the context may require.
“Revolving Credit Loans” has the meaning specified in Section 2.01.
“Sanction(s)” means economic or financial sanctions imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or HerHis Majesty’s Treasury of the United Kingdom.
“S&P” means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. (or any successor providing ratings).
“Same Day Funds” means (a) with respect to disbursements and payments in Dollars, immediately available funds, and (b) with respect to disbursements and payments in an Alternative Currency, same day or other funds as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be customary in the place of disbursement or payment for the settlement of international banking transactions in the relevant Alternative Currency.
"Scheduled Unavailability Date" has the meaning set forth in Section 3.03(b)(ii).
“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“SEC Filings” has the meaning assigned to such term in Section 5.11.
“Securitization Transaction” means any arrangement under which the Company or any Subsidiary transfers accounts receivable and/or payment intangibles, interests therein and/or related assets and rights (a) to a trust, partnership, corporation, limited liability company or other entity (which may be an SPE Subsidiary), which transfer is funded in whole or in part, directly or indirectly, by the incurrence or issuance by the transferee or successor transferee (which may be an SPE Subsidiary) of Indebtedness, other securities or interests that are to receive payments from, or that represent interests in, the cash flow derived from such accounts receivable and/or payment intangibles, interests therein or related assets and rights, or (b) directly to one or more investors or other purchasers. The “amount” or “principal amount” of any Securitization Transaction shall be deemed at any time to be the aggregate principal, capital or stated amount (or the substantive equivalent of any of the foregoing) of the Indebtedness, other securities or interests referred to in the first sentence of this definition or, if there shall be no such principal, capital or stated amount (or the substantive equivalent of any of the foregoing), the uncollected amount of the accounts receivable or interests therein transferred pursuant to such Securitization Transaction, net of any such accounts receivables or interests therein that have been written off as uncollectible. Such “amount” or “principal amount” shall not include any amount of Indebtedness owing by any SPE Subsidiary to the Company or any Subsidiary to the extent that such intercompany Indebtedness has been incurred to finance, in part, the transfers of accounts receivable and/or payment intangibles, interests therein and/or related assets and rights to such SPE Subsidiary. For the avoidance of doubt, the Receivables Securitization in effect as of the date hereof constitutes a Securitization Transaction.
“Senior Notes” means (i) the 3.350% Senior Notes due 2022, issued by the Company on February 1, 2017, (ii) the 4.250% Senior Notes due 2027, issued by the Company on February 1, 2017, (iii) the 2.650% Senior Notes due 2021, issued by the Company on October 3, 2017, (iv) the 5.200% Senior Notes due 2029, issued by the Company on April 1, 2019 and (v) the 3.000% Senior Notes due 2030 issued by the Company on September 15, 2020.
“SOFR” with respect to any Business Day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New York, as the administrator of the benchmark (or a successor administrator) on the Federal Reserve Bank of New York’s website (or any successor source) at approximately 8:00 a.m. (New York City time) on the immediately succeeding Business Day and, in each case, that has been selected or recommended by the Relevant Governmental Body.
“SOFR” means the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (or a successor administrator).
“SOFR Adjustment” means 0.10% per annum.
“SOFR Scheduled Unavailability Date” has the meaning specified in Section 3.03(c).
“SONIA” means, for each day with respect to any Credit Extension denominated in Sterling, the Sterling Overnight Index Average as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) on the fifth Business Day preceding such day; provided that if such day is not a Business Day, then SONIA means such rate published on the Business Day immediately prior thereto; provided, further, that SONIA as determined hereunder shall not have the same date of determination for any outstanding Loan based on SONIA for more than four consecutive days.
“SONIA Adjustment” means 0.0326% per annum.
“SONIA Daily Rate” means, for any day, with respect to any Credit Extension denominated in Sterling, the rate per annum equal to SONIA determined pursuant to the definition thereof plus the SONIA Adjustment; provided that, if any SONIA Daily Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement. Any change in an SONIA Daily Rate shall be effective from and including the date of such change without further notice.
“SONIA Daily Rate Loan” means a Eurocurrency Rate Loan denominated in Sterling that bears interest at a rate based on the definition of “SONIA Daily Rate”.
“SONIA Rate Conforming Changes” means, with respect to the use, administration of or any conventions associated with the SONIA Daily Rate, any conforming changes, including changes to the definitions of SONIA and Interest Period, and any related definitions, the timing and frequency of determining rates and making payments of interest and other technical, administrative or operative matters (including, for the avoidance of doubt, the definition of
Business Day, timing of borrowing requests or prepayment, conversion or continuation notices and length of look-back periods), as determined in the Administrative Agent’s reasonable discretion, as may be appropriate to reflect the adoption and implementation of the SONIA Daily Rate, and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of the SONIA Daily Rate exists, in such other manner of administration as the Administrative Agent determines is reasonably necessary in connection with the administration of this Agreement and any other Loan Document).
“SPC” has the meaning specified in Section 10.06(g).
“SPE Subsidiary” means any Subsidiary formed solely for the purpose of, and that engages only in, one or more Securitization Transactions and transactions related or incidental thereto.
“Special Notice Currency” means at any time an Alternative Currency, other than the currency of a country that is a member of the Organization for Economic Cooperation and Development at such time located in North America or Europe.
“Spot Rate” for a currency means the rate determined by the Administrative Agent or the L/C Issuer, as applicable, to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the Administrative Agent or the L/C Issuer may obtain such spot rate from another financial institution designated by the Administrative Agent or the L/C Issuer if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency; and provided further that the L/C Issuer may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Letter of Credit denominated in an Alternative Currency.
“Statutory Reserves” shall mean, without duplication of any amounts paid pursuant to Section 3.04(e), for any Interest Period for any Borrowing of Eurocurrency Rate Loans, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the United States Federal Reserve System in New York City with deposits exceeding one billion dollar against “Eurocurrency liabilities” (as such term is used in Regulation D). Eurodollar Borrowings shall be deemed to constitute Eurodollar liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Lender under Regulation D.
“Sterling” and “£” mean the lawful currency of the United Kingdom.
“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests
having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Company.
“Subsidiary Guarantee Requirement” means the requirement that:
(a) the Administrative Agent shall have received on the Restatement Effective Date from the Company and each of the Subsidiary Guarantors a counterpart of Guaranty Amendment No. 2 duly executed and delivered on behalf of such Person, together with any documents, certificates and opinions required by Section 4.01(a)(iii) through (vi);
(b) promptly and in any event within one Business Day of a Person (i) becoming a Subsidiary of the Company (other than an Excluded Subsidiary) after the Restatement Effective Date or (ii) that is a Subsidiary of the Company providing a Guarantee of the Senior Notes (or any replacement, refinancing, refunding, renewal or extension thereof) or any Material Indebtedness of the Company after the Restatement Effective Date, the Company shall deliver notice thereof in writing to the Administrative Agent; and
(c) promptly (and in any event within 30 days of such Person (i) becoming a Subsidiary of the Company (other than an Excluded Subsidiary) or (ii) providing a Guarantee of the Senior Notes (or any replacement, refinancing, refunding, renewal or extension thereof)) or any Material Indebtedness of the Company cause such Person to (x) become a Subsidiary Guarantor by executing and delivering to the Administrative Agent a Guaranty Joinder Agreement or such other document as the Administrative Agent shall reasonably deem appropriate for such purpose, and (y) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent the documents, certificates and opinions of the types referred to in Section 4.01(a)(iii) through (vi), in each case in form substantially consistent with those delivered on the Restatement Effective Date to the extent applicable to the transactions contemplated by the foregoing clause (i) and subject to modifications reasonably acceptable to the Administrative Agent (in the case of legal opinions, taking into account any Change in Law after the Restatement Effective Date);
provided that the requirements set forth above in clauses (a), (b)(i) and (c)(i) (but not, for the avoidance of doubt, clause (b)(ii) or (c)(ii)) shall be suspended upon and solely for so long as the Applicable Debt Ratings (i) are Baa3, BBB- and BBB-, from each of Moody’s, S&P and Fitch, respectively, or better, (ii) from at least two of the three Ratings Agencies are Baa2, BBB and BBB, from Moody’s, S&P and Fitch, respectively, or better and (iii) from each of the Ratings Agencies has a stable outlook, except, in the case of any Applicable Debt Rating with respect to this clause (iii), to the extent such Applicable Debt Rating is higher than Baa2, BBB or BBB, as applicable; provided, further, that at any time that the requirements in the foregoing proviso are not met, each of the requirements under clause (a), (b)(i) and (c)(i) above shall automatically be reinstated and each such applicable Subsidiary shall be required to provide a Guaranty Joinder Agreement in accordance with the above.
“Subsidiary Guarantors” means, collectively, each (a) existing and future direct or indirect Subsidiary of the Company (other than an Excluded Subsidiary) and (b) existing and future direct or indirect Subsidiary of the Company that provides a Guarantee of the Senior Notes (or any replacement, refinancing, refunding, renewal or extension thereof) or any Material Indebtedness of the Company, in each case to the extent such Subsidiary is a party to the Guaranty Agreement or a Guaranty Joinder Agreement.
“Successor Rate” has the meaning specified in Section 3.03(b)means a Eurocurrency Successor Rate or a Term SOFR Successor Rate.
“Successor Rate Conforming Changes” means, with respect to the use, administration of or any conventions associated with SOFR or any proposed LIBOR Successor Rate or Eurocurrency Successor Rate for an Applicable Currency, any conforming changes, including changes to the definitions of Base Rate and Interest Period, and any related definitions, the timing and frequency of determining rates and making payments of interest and other technical, administrative or operative matters (including, for the avoidance of doubt, the definition of Business Day, timing of borrowing requests or prepayment, conversion or continuation notices and length of look-back periods), as determined in the Administrative Agent's reasonable discretion in consultation with the Company, as may be appropriate to reflect the adoption and implementation of such LIBOR Successor Rate or Eurocurrency Successor Rate, as applicable rate(s), and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice for such Applicable Currency (or, if the Administrative Agent determines that adoption of any portion of such market practice for such Applicable Currency is not administratively feasible or that no market practice for the administration of such LIBOR Successor Rate or Eurocurrency Successor Raterate for such Applicable Currency exists, in such other manner of administration as the Administrative Agent determines in consultation with the Company is reasonably necessary in connection with the administration of this Agreement and any other Loan Document).
“Supported QFC” has the meaning specified in Section 10.22.
“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions, provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Company or the Subsidiaries shall be a Swap Agreement.
“Swap Termination Value” means, in respect of any one or more Swap Agreements, after taking into account the effect of any netting agreement relating to such Swap Agreements, (a) for any date on or after the date such Swap Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Agreements, as determined based upon one or more mid-market or other readily
available quotations provided by any recognized dealer in such Swap Agreements (which may include a Lender or any Affiliate of a Lender).
“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04.
“Swing Line Lender” means Bank of America in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.
“Swing Line Loan” has the meaning specified in Section 2.04(a).
“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b), which shall be substantially in the form of Exhibit B or such other form as approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approve by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.
“Swing Line Sublimit” means an amount equal to the lesser of (a) $50,000,000 and (b) the US Dollar Revolving Credit Commitments. The Swing Line Sublimit is part of, and not in addition to, the US Dollar Revolving Credit Commitment.
“TARGET2” means the Trans European Automated Real time Gross Settlement Express Transfer payment system which utilizes a single shared platform and which was launched on November 19, 2007.
“T2” means the real time gross settlement system operated by the Eurosystem, or any successor system.
“TARGET Day” means any day on which TARGET2 (or, if such payment system ceases to be operative, such other payment system, if any, determined by the Administrative Agent to be a suitable replacement)T2 is open for the settlement of payments in Euroeuro.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority including any interest, additions to tax or penalties applicable thereto.
“Term SOFR” means:
(a) for any Interest Period with respect to a Term SOFR Loan, the rate per annum equal to the Term SOFR Screen Rate two U.S. Government Securities Business Days prior to the commencement of such Interest Period with a term equivalent to such Interest Period; provided that if the rate is not published prior to 11:00 a.m. on such determination date then Term SOFR means the Term SOFR Screen Rate on the first U.S. Government Securities Business Day immediately prior thereto, in each case, plus the SOFR Adjustment for such Interest Period; and
(b) for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to the Term SOFR Screen Rate two U.S. Government Securities Business Days
prior to such date with a term of one month commencing that day; provided that if the rate is not published prior to 11:00 a.m. on such determination date then Term SOFR means the Term SOFR Screen Rate on the first U.S. Government Securities Business Day immediately prior thereto, in each case, plus the SOFR Adjustment for such term;
provided that if Term SOFR determined in accordance with either of the foregoing provisions (a) or (b) of this definition would otherwise be less than zero, Term SOFR shall be deemed zero for purposes of this Agreement.
“Term SOFR Loan” means a Loan that bears interest at a rate based on clause (a) of the definition of Term SOFR.
“Term SOFR Replacement Date” has the meaning specified in Section 3.03(b).
“Term SOFR Screen Rate” means the forward-looking SOFR term rate for any period that is approximately (as determined byadministered by CME (or any successor administrator satisfactory to the Administrative Agent) as long as any of the Interest Period options set forth in the definition of “Interest Period” and that is based on SOFR and that has been selected or recommended for use by the Relevant Governmental Body, in each case as published on an information service as selected and published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time in its discretion).
“Term SOFR Successor Rate” has the meaning specified in Section 3.03(b).
“Total Multicurrency Revolving Credit Outstandings” means the aggregate Outstanding Amount of all Multicurrency Revolving Credit Loans.
“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C Obligations.
“Total Revolving Credit Outstandings” means, collectively, the Total Multicurrency Revolving Credit Outstandings and the Total US Dollar Revolving Credit Outstandings.
“Total US Dollar Revolving Credit Outstandings” means the aggregate Outstanding Amount of all US Dollar Revolving Credit Loans, Swing Line Loans and L/C Obligations.
“Transactions” means the execution, delivery and performance by the Loan Parties of this Agreement and the other Loan Documents to which they are a party, the borrowing of Loans and other credit extensions (in each case, on the Restatement Effective Date), the use of the proceeds thereof, the Refinancing, the continuation or issuance of Letters of Credit hereunder and the creation and perfection of any Liens created by the Loan Documents.
“Type” means, with respect to a Committed Loan, its character as a Base Rate Loan, a Term SOFR Loan or a Eurocurrency Rate Loan.
“UCP” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce (“ICC”) Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Undisclosed Administration” means, with respect to any Lender or its direct or indirect parent company, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender or such parent company is subject to home jurisdiction supervision if applicable law requires that such appointment is not to be publicly disclosed.
“United States” and “U.S.” mean the United States of America.
“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).
“US Dollar Revolving Credit Borrowing” means a borrowing consisting of one or more simultaneous US Dollar Revolving Credit Loans of the same Type and, in the case of Eurocurrency RateTerm SOFR Loans, having the same Interest Period made pursuant to Section 2.01.
“US Dollar Revolving Credit Commitment” means, as to each US Dollar Revolving Credit Lender, its obligation to (a) make US Dollar Revolving Credit Loans to the Borrowers pursuant to Section 2.01, (b) purchase participations in L/C Obligations and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender's name on Schedule 2.01 under the caption “US Dollar Revolving Credit Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. On the RestatementAmendment No. 1 Effective Date, the aggregate US Dollar Revolving Credit Commitment shall be $1,850,000,000.
“US Dollar Revolving Credit Exposure” means, as to any US Dollar Revolving Credit Lender at any time, the aggregate Outstanding Amount at such time of its Committed Loans and the aggregate Outstanding Amount of such US Dollar Revolving Credit Lender’s participation in L/C Obligations and Swing Line Loans at such time
“US Dollar Revolving Credit Facility” means, at any time, the aggregate amount of the US Dollar Revolving Credit Lenders’ US Dollar Revolving Credit Commitments and (without duplication) US Dollar Revolving Credit Loans at such time.
“US Dollar Revolving Credit Lender” means, at any time, any Lender that has a US Dollar Revolving Credit Commitment or holds a US Dollar Revolving Credit Loan at such time.
“US Dollar Revolving Credit Loan” has the meaning specified in Section 2.01.
“US Dollar Revolving Credit Note” means a promissory note made by the Borrower in favor of a US Dollar Revolving Credit Lender evidencing US Dollar Revolving Credit Loans or Swing Line Loans, as the case may be, made by such US Dollar Revolving Credit Lender, substantially in the form of Exhibit C-3.
“U.S. Government Securities Business Day” means any Business Day, except any Business Day on which any of the Securities Industry and Financial Markets Association, the New York Stock Exchange or the Federal Reserve Bank of New York is not open for business because such day is a legal holiday under the federal laws of the United States or the laws of the State of New York, as applicable.
“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
“U.S. Special Resolution Regimes” has the meaning specified in Section 10.22.
“U.S. Tax Compliance Certificate” has the meaning specified in Section 3.01 (e)(ii)(B)(III).
“WH Group” means WH Group Ltd., an exempted company incorporated with limited liability status under the laws of Cayman Islands.
“Withholding Agent” means any Loan Party and the Administrative Agent.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
“Voting Participant” has the meaning specified in Section 10.06(d).
“Voting Participant Notification” has the meaning specified in Section 10.06(d).
“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.
“Yen” and “¥” mean the lawful currency of Japan.
1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof’ and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
(b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”
(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
(d) Any reference herein to a merger, transfer, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any division of a limited liability company shall constitute a separate Person hereunder (and each division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).
1.03 Accounting Terms. (a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, as in effect from time to time, applied on a consistent basis throughout the periods reflected therein, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Company and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.
(b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Company or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Company shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (A) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (B) if a request for such an amendment has been made, the Company shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
(c) All pro forma computations required to be made hereunder shall be calculated on a pro forma basis after giving pro forma effect to any Material Transaction consummated during the period covered by any component of such pro forma computation or, other than with respect to compliance with the Financial Covenants, and without duplication, following such period and on or prior to the date of such computation, and, to the extent applicable, to the historical earnings and cash flows associated with the assets acquired or disposed of in such Material Transaction and any related incurrence or reduction of Indebtedness, all in accordance with Article 11 of Regulation S-X under the Securities Act. If any
Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest 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 Swap Agreement applicable to such Indebtedness if such Swap Agreement has a remaining term in excess of 12 months).
1.04 Rounding. Any financial ratios required to be maintained by the Company pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
1.05 Exchange Rates; Currency Equivalents. (a) The Administrative Agent or the L/C Issuer, as applicable, shall determine the Spot Rates as of each Revaluation Date to be used for calculating Dollar Equivalent amounts of Credit Extensions and Outstanding Amounts denominated in Alternative Currencies. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except for purposes of financial statements delivered by Loan Parties hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be such Dollar Equivalent amount as so determined by the Administrative Agent or the L/C Issuer, as applicable.
(b) Wherever in this Agreement in connection with a Committed Borrowing, conversion, continuation or prepayment of a Eurocurrency Rate Loan or the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Committed Borrowing, Eurocurrency Rate Loan or Letter of Credit is denominated in an Alternative Currency, such amount shall be the relevant Alternative Currency Equivalent of such Dollar amount (rounded to the nearest unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent or the L/C Issuer, as the case may be.
(c) The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “Eurocurrency Rate”, “Daily SOFR”, “Term SOFR” or with respect to any comparable or successor rate thereto.
1.06 Additional Alternative Currencies. (a) The Company may from time to time request that Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility be made and/or Letters of Credit be issued in a currency other than those specifically listed in the definition of “Alternative Currency;” provided that such requested currency is a lawful currency (other than Dollars) that is readily available and freely transferable and convertible into Dollars. In the case of any such request with respect to the making of Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility, such request shall be subject to the approval of the
Administrative Agent and the Multicurrency Revolving Credit Lenders; and in the case of any such request with respect to the issuance of Letters of Credit, such request shall be subject to the approval of the Administrative Agent and the L/C Issuer.
(b) Any such request shall be made to the Administrative Agent not later than 11:00 a.m., 20 Business Days prior to the date of the desired Credit Extension (or such other time or date as may be agreed by the Administrative Agent and, in the case of any such request pertaining to Letters of Credit, the L/C Issuer, in its or their sole discretion). In the case of any such request pertaining to Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility, the Administrative Agent shall promptly notify each Multicurrency Revolving Credit Lender thereof; and in the case of any such request pertaining to Letters of Credit, the Administrative Agent shall promptly notify the L/C Issuer thereof. Each Multicurrency Revolving Credit Lender (in the case of any such request pertaining to Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility) or the L/C Issuer (in the case of a request pertaining to Letters of Credit) shall notify the Administrative Agent, not later than 11:00 a.m., ten Business Days after receipt of such request whether it consents, in its sole discretion, to the making of Eurocurrency Rate Loans or the issuance of Letters of Credit, as the case may be, in such requested currency.
(c) Any failure by a Multicurrency Revolving Credit Lender or the L/C Issuer, as the case may be, to respond to such request within the time period specified in the preceding sentence shall be deemed to be a refusal by such Multicurrency Revolving Credit Lender or the L/C Issuer, as the case may be, to permit Eurocurrency Rate Loans to be made under the Multicurrency Revolving Credit Facility or Letters of Credit to be issued in such requested currency. If the Administrative Agent and all the Multicurrency Revolving Credit Lenders consent to making Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility in such requested currency, the Administrative Agent shall so notify the Company and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Committed Borrowings of Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility; and if the Administrative Agent and the L/C Issuer consent to the issuance of Letters of Credit in such requested currency, the Administrative Agent shall so notify the Company and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Letter of Credit issuances. If the Administrative Agent shall fail to obtain consent to any request for an additional currency under this Section 1.06, the Administrative Agent shall promptly so notify the Company.
1.07 Change of Currency. (a) Each obligation of the Borrowers to make a payment denominated in the national currency unit of any member state of the European Union that adopts the Euro as its lawful currency after the date hereof shall be redenominated into Euro at the time of such adoption. If, in relation to the currency of any such member state, the basis of
accrual of interest expressed in this Agreement in respect of that currency shall be inconsistent with any convention or practice in the London interbank market for the basis of accrual of interest in respect of the Euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which such member state adopts the Euro as its lawful currency; provided that if any Committed Borrowing in the currency of such member state is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Committed Borrowing, at the end of the then current Interest Period.
(b) Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect the adoption of the Euro by any member state of the European Union and any relevant market conventions or practices relating to the Euro.
(c) Each provision of this Agreement also shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect a change in currency of any other country and any relevant market conventions or practices relating to the change in currency.
1.08 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
1.09 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the Dollar Equivalent of the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the Dollar Equivalent of the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.
ARTICLE II.
THE COMMITMENTS AND CREDIT EXTENSIONS
2.01 Committed Loans. Subject to the terms and conditions set forth herein, (i) each Multicurrency Revolving Credit Lender severally agrees to make loans (each such loan, a “Multicurrency Revolving Credit Loan”) to the Borrowers in Dollars or in one or more Alternative Currencies from time to time, on any Business Day during the Availability Period for the Multicurrency Revolving Credit Facility, in an aggregate amount not to exceed at any time outstanding such Multicurrency Revolving Credit Lender’s Multicurrency Revolving Credit Commitment and (ii) each US Dollar Revolving Credit Lender severally agrees to make loans (each such loan, a “US Dollar Revolving Credit Loan” and, together with the Multicurrency Revolving Credit Loans, the “Revolving Credit Loans”) to the Borrowers in Dollars from time to time, on any Business Day during the Availability Period for the US Dollar Revolving Credit Facility, in an aggregate amount not to exceed at any time outstanding the amount of such US Dollar Revolving Credit Lender's US Dollar Revolving Credit Commitment; provided, however,
that after giving effect to any Committed Borrowing of Revolving Credit Loans, (i) the Total Revolving Credit Outstandings shall not exceed the Revolving Credit Commitments, (ii) the Multicurrency Revolving Credit Exposure of any Multicurrency Revolving Credit Lender shall not exceed such Multicurrency Revolving Credit Lender's Multicurrency Revolving Credit Commitment and (iii) the US Dollar Revolving Credit Exposure of any US Dollar Revolving Credit Lender shall not exceed such US Dollar Revolving Credit Lender's US Dollar Revolving Credit Commitment. Within the limits of each Revolving Credit Lender’s Revolving Credit Commitment, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.01, prepay under Section 2.05, and reborrow under this Section 2.01. Revolving Credit Loans may be Base Rate Loans, Term SOFR Loans or Eurocurrency Rate Loans, as further provided herein.
2.02 Borrowings, Conversions and Continuations of Committed Loans. (a) Each Committed Borrowing, each conversion of Committed Loans from one Type to the other, and each continuation of Term SOFR Loans and Eurocurrency Rate Loans shall be made upon the Company’s irrevocable notice to the Administrative Agent, which may be given by (A) telephone or (B) a Committed Loan Notice; provided that any telephonic notice must be confirmed immediately by delivery to the Administrative Agent of a committed Loan Notice. Each such Committed Loan Notice must be received by the Administrative Agent not later than 12:00 p.m. (noon) (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Eurocurrency RateTerm SOFR Loans denominated in Dollars or of any conversion of Eurocurrency RateTerm SOFR Loans denominated in Dollars to Base Rate Committed Loans, (ii) four Business Days (or five Business Days in the case of a Special Notice Currency) prior to the requested date of any Borrowing or continuation of Eurocurrency Rate Loans denominated in Alternative Currencies and (iii) on the requested date of any Borrowing of Base Rate Committed Loans. Each Borrowing of, conversion to or continuation of Term SOFR Loans or Eurocurrency Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Except as provided in Sections 2.03(c) and 2.04(c), each Committed Borrowing of or conversion to Base Rate Committed Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan Notice shall specify (i) whether the Company is requesting a Committed Borrowing, a conversion of Committed Loans from one Type to the other, or a continuation of Term SOFR Loans or Eurocurrency Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of the Committed Loans to be borrowed, converted or continued, (iv) the Class and Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted (it being understood that in the case of Revolving Credit Loans to be denominated in Dollars, the applicable Revolving Credit Loans shall be allocated, first, to the US Dollar Revolving Credit Facility to the full extent of the then unused US Dollar Revolving Credit Commitment, and- second, to the Multicurrency Revolving Credit Facility to the full extent of the then unused Multicurrency Revolving Credit Commitments), (v) if applicable, the duration of the Interest Period with respect thereto, (vi) in the case of Multicurrency Revolving Credit Borrowings or Multicurrency Revolving Credit Loans, the currency of the Committed Loans to be borrowed or continued and (vii) if applicable, the Designated Borrower. If the Company fails to specify a currency in a Committed Loan Notice requesting a Borrowing, then the Committed
Loans so requested shall be made in Dollars (allocated as described in clause (iv) of the preceding sentence). If the Company fails to specify a Type of Committed Loan in a Committed Loan Notice or if the Company fails to give a timely notice requesting a conversion or continuation, then the applicable Committed Loans shall be made as, or converted to, Base Rate Loans; provided, however, that in the case of a failure to timely request a continuation of Committed Loans denominated in an Alternative Currency, such Loans shall be continued as Eurocurrency Rate Loans in their original currency with an Interest Period of one month, as applicable. Any automatic conversion to Base Rate Loans shall be effective as of the last c ay of the Interest Period then in effect with respect to the applicable Term SOFR Loans or Eurocurrency Rate Loans. If the Company requests a Borrowing of, conversion to, or continuation of Term SOFR Loans or Eurocurrency Rate Loans not denominated in Sterling in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. No Committed Loan may be converted into or continued as a Committed Loan denominated in a different currency, but instead must be prepaid in the original currency of such Committed Loan and reborrowed in the other currency.
(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount (and currency) of its Applicable Percentage under the applicable Facility of the applicable Committed Loans, and if no timely notice of a conversion or continuation is provided by the Company, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans or continuation of Committed Loans denominated in a currency other than Dollars, in each case as described in the preceding subsection. In the case of a Committed Borrowing, each Lender shall make the amount of its Committed Loan available to the Administrative Agent in Same Day Funds at the Administrative Agent’s Office for the applicable currency not later than 1:00 p.m., in the case of any Committed Loan denominated in Dollars, and not later than the Applicable Time specified by the Administrative Agent in the case of any Committed Loan in an Alternative Currency, in each case on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received available to the Company or the other applicable Borrower in like funds as received by the Administrative Agent either by (i) crediting the account of such Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Company; provided, however, that if, on the date the Committed Loan Notice with respect to such Revolving Credit Borrowing denominated in Dollars is given by the Company, there are L/C Borrowings outstanding, then the proceeds of such Borrowing, first, shall be applied to the payment in full of any such L/C Borrowings, and,
second, shall be made available to the applicable Borrower as provided above.
(c) Except as otherwise provided herein, a Term SOFR Loan and a Eurocurrency Rate Loan not denominated in Sterling may be continued or converted only on the last day of an Interest Period for such Eurocurrency Rate Loan not denominated in Sterling. Eurocurrency Loans denominated in Sterling shall automatically continue each day as SONIA Daily Rate Loans. During the existence of a Default, (i) no Loans may be requested as, converted to or continued as Term SOFR Loans or Eurocurrency Rate Loans (whether in Dollars or any Alternative Currency) without the consent of the Required Facility Lenders with respect to the Facility for which such borrowing, conversion or continuation is requested,— and (ii) the Required Facility Lenders with respect to the Multicurrency Revolving Credit Facility may demand that any or all of the then outstanding Eurocurrency Rate Loans denominated in an Alternative Currency be prepaid, or redenominated into Dollars in the amount of the Dollar Equivalent thereof, on the last day of the then current Interest Period with respect thereto, as applicable.
(d) The Administrative Agent shall promptly notify the Company and the Lenders of the interest rate applicable to any Interest Period for Term SOFR Loans and Eurocurrency Rate Loans not denominated in Sterling or the interest rate applicable to any Daily SOFR Loans or any Eurocurrency Rate Loans denominated in Sterling, upon determination of such interest rate. The determination of the Term SOFR, Daily SOFR, Eurocurrency Rate and the SONIA Daily Rate, as applicable, by the Administrative Agent shall be conclusive in the absence of manifest error.
(e) After giving effect to all Committed Borrowings of Revolving Credit Loans, all conversions of Revolving Credit Loans from one Type to the other and all continuations of Revolving Credit Loans as the same Type, there shall not be more than ten Interest Periods in effect with respect to all Loans.
(f) With respect to SONIA Daily Rate, the Administrative Agent will have the right to make SONIA Rate Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such SONIA Rate Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document; provided that, with respect to any such amendment effected, the Administrative Agent shall post each such amendment implementing such SONIA Rate Conforming Changes to the Company and the Lenders reasonably promptly after such amendment becomes effective.
2.03 Letters of Credit. (a) The Letter of Credit Commitment.
(i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the US Dollar Revolving Credit Lenders set forth in this Section 2.03, (1) from time to time on any Business Day during the period from the Restatement Effective Date until the Letter of Credit Expiration Date, to issue Letters of Credit denominated in Dollars or in one or more Alternative Currencies for the account of the Company or its Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the US Dollar Revolving Credit Lenders severally agree to participate in Letters of Credit issued for the account of the Company or its Subsidiaries and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (w) the Total Revolving Credit Outstandings shall not exceed the Revolving Credit Commitment, (x) the US Dollar Revolving Credit Exposure of any US Dollar Revolving Credit Lender shall not exceed such US Dollar Revolving Credit Lender’s Commitment, (y) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit and (z) the Outstanding Amount of L/C Obligations under Letters of Credit issued by any L/C Issuer shall not exceed such L/C Issuer’s L/C Issuer Fronting Sublimit. Each request by the Company for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Company that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Company’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Company may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.
(ii) The L/C Issuer shall not issue any Letter of Credit, if:
(A) subject to Section 2.03(b)(iii), the expiry date of the requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Facility Lenders with respect to the US Dollar Revolving Credit Facility have approved such expiry date; or
(B) the expiry date of the requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the US Dollar Revolving Credit Lenders have approved such expiry date.
(iii) The L/C Issuer shall not be under any obligation to issue any Letter of Credit if:
(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing the Letter of Credit, or any Law applicable to the L/C Issuer or
any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon the L/C Issuer with respect to the Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Restatement Effective Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Restatement Effective Date and which the L/C Issuer in good faith deems material to it;
(B) the issuance of the Letter of Credit would violate one or more policies of the L/C Issuer applicable to letters of credit generally;
(C) except as otherwise agreed by the Administrative Agent and the L/C Issuer, the Letter of Credit is to be denominated in a currency other than Dollars or an Alternative Currency;
(D) the L/C Issuer does not as of the issuance date of the requested Letter of Credit issue Letters of Credit in the requested currency;
(E) any US Dollar Revolving Credit Lender is at that time a Defaulting Lender, unless the L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to the L/C Issuer (in its sole discretion) with the Company or such US Dollar Revolving Credit Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.17(a)(iv)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which the L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion; or
(F) the Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder
(iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue the Letter of Credit in its amended form under the terms hereof.
(v) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue the Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does not accept the proposed amendment to the Letter of Credit.
(vi) The L/C Issuer shall act on behalf of the US Dollar Revolving Credit Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.
(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit.
(i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Company delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Company. Such Letter of Credit Application may be sent by facsimile, by United States mail, by overnight courier, by electronic transmission using the system provided by the L/C Issuer, by personal delivery or by any other means acceptable to the L/C Issuer. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of Credit (which shall be a Business Day); (B) the amount and currency thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and (H) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. Additionally, the Company shall furnish to the L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or the Administrative Agent may require
(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Company and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Unless the L/C Issuer has received written notice from any US Dollar Revolving Credit Lender, the Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Company (or the applicable Subsidiary) or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each US Dollar Revolving Credit Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such US Dollar Revolving Credit Lender’s Applicable Percentage times the amount of such Letter of Credit.
(iii) If the Company so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Company shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the US Dollar Revolving Credit Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (l)from the Administrative Agent that the Required Facility Lenders with respect to the US Dollar Revolving Credit Facility have elected not to permit such extension or (2) from the Administrative Agent, any US Dollar Revolving Credit Lender or the Company that one or
more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.
(iv) Promptly after its delivery of any Letter of Credit or any amendment to a letter of credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Company and the Administrative Agent a true and complete copy of such letter credit or amendment.
(c) Drawings and Reimbursements; Funding of participation.
(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the Company and the Administrative Agent thereof. In the case of a Letter of Credit denominated in an Alternative Currency, the Company shall reimburse the L/C Issuer in such Alternative Currency, unless (A) the L/C Issuer (at its option) shall have specified in such notice that it will require reimbursement in Dollars, or (B) in the absence of any such requirement for reimbursement in Dollars, the Company shall have notified the L/C Issuer promptly following receipt of the notice of drawing that the Company will reimburse the L/C Issuer in Dollars. In the case of any such reimbursement in Dollars of a drawing under a Letter of Credit denominated in an Alternative Currency, the L/C Issuer shall notify the Company of the Dollar Equivalent of the amount of the drawing promptly following the determination thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit to be reimbursed in Dollars, or the Applicable Time on the date of any payment by the L/C Issuer under a Letter of Credit to be reimbursed in an Alternative Currency (each such date, an “Honor Date”), the Company shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing and in the applicable currency. In the event that (A) a drawing denominated in an Alternative Currency is to be reimbursed in Dollars pursuant to the second sentence in this Section 2.03(c)(i) and (B) the Dollar amount paid by the Company, whether on or after the Honor Date, shall not be adequate on the date of that payment to purchase in accordance with normal banking procedures a sum denominated in the Alternative Currency equal to the drawing, the Company agrees, as a separate and independent obligation, to indemnify the L/C Issuer for the loss resulting from its inability on that date to purchase the Alternative Currency in the full amount of the drawing. If the Company fails to timely reimburse the L/C Issuer on the Honor Date, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (expressed in Dollars in the amount of the Dollar Equivalent thereof in the case of a Letter of Credit denominated in an Alternative Currency) (the “Unreimbursed Amount”), and the amount of such Lender's Applicable Percentage thereof. In such event, the Company shall be deemed to have requested a Committed Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount,
without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
(ii) Each US Dollar Revolving Credit Lender shall upon any notice pursuant to Section 2.03(c)(i) make funds available (and the Administrative Agent may apply Cash Collateral provided for this purpose) for the account of the L/C Issuer, in Dollars, at the Administrative Agent’s Office for Dollar-denominated payments in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each US Dollar Revolving Credit Lender that so makes funds available shall be deemed to have made a Base Rate Committed Loan to the Company in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer in Dollars.
(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Committed Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Company shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each US Dollar Revolving Credit Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such US Dollar Revolving Credit Lender in satisfaction of its participation obligation under this Section 2.03.
(iv) Until each US Dollar Re edit Lender funds its Committed Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such US Dollar Revolving Credit Lender’s Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.
(v) Each US Dollar Revolving Credit Lender’s obligation to make Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may
have against the L/C Issuer, the Company, any Subsidiary or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each US Dollar Revolving Credit Lender’s obligation to make Committed Loans pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the Company of a Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Company to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.
(vi) If any US Dollar Revolving Credit Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such US Dollar Revolving Credit Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), then, without limiting the other provisions of this Agreement, the L/C Issuer shall be entitled to recover from such US Dollar Revolving Credit Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the applicable Overnight Rate from time to time in effect, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. If such US Dollar Revolving Credit Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such US Dollar Revolving Credit Lender’s Committed Loan included in the relevant Committed Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the L/C Issuer submitted to any US Dollar Revolving Credit Lender (through the Administrative Agent) with respect to any amounts owing (vi) shall be conclusive absent manifest error.
(d) Repayment of Participations.
(i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any US Dollar Revolving Credit Lender such US Dollar Revolving Credit Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c), if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Company or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distributed to such US Dollar Revolving Credit Lender its Applicable Percentage thereof in Dollars and in the same funds as those received by the Administrative Agent.
(ii) If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each US Dollar Revolving Credit Lender shall pay to the Administrative Agent for the account of the L/C issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such US Dollar Revolving Credit Lender, at a rate per annum equal to the applicable Overnight Rate from time to time in effect. The obligations of the US Dollar Revolving Credit Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e) Obligations Absolute. The obligation of the Company to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:
(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;
(ii) the existence of any claim, counterclaim, setoff, defense or other right that the Company or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;
(iv) waiver by the L/C Issuer of any requirement that exists for the L/C Issuer’s protection and not the protection of the Company or any waiver by the L/C Issue which does not in fact materially prejudice the Company;
(v) honor of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft;
(vi) any payment made by the L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which
documents must be received under, such Letter of Credit if presentation after such date is authorized by the UCC, the ISP or the UCP, as applicable;
(vii) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;
(viii) any adverse change in the relevant exchange rates or in the availability of the relevant Alternative Currency to the Company or any Subsidiary or in the relevant currency markets generally; or
(ix) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or any Subsidiary.
The Company shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Company’s instructions or other irregularity, the Company will immediately notify the L/C Issuer. The Company shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.
(f) Role of L/C Issuer. Each Lender and the Company agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the US Dollar Revolving Credit Lenders or the Required Facility Lenders with respect to the US Dollar Revolving Credit Facility, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Company hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and
shall not, preclude the Company’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (viii) of Section 2.03(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Company may have a claim against the L/C Issuer, and the L/C Issuer may be liable to the Company, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Company which the Company proves were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. The L/C Issuer may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary.
(g) Applicability of ISP and UCP; Limitation of Liability. Unless otherwise expressly agreed by the L/C Issuer and the Company when a Letter of Credit is issued, the rules of the ISP shall apply to each standby Letter of Credit. Notwithstanding the foregoing, the L/C Issuer shall not be responsible to the Company for, and the L/C Issuer’s rights and remedies against the Company shall not be impaired by, any action or inaction of the L/C Issuer required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the Law or any order of a jurisdiction where the L/C Issuer or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.
(h) Letter of Credit Fees. The Company shall pay to the Administrative Agent for the account of each US Dollar Revolving Credit Lender in accordance, subject to adjustment as provided in Section 2.17, with its Applicable Percentage, in Dollars, a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter of Credit equal to the Applicable Rate times the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.09. Letter of Credit Fees shall be (i) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears. If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary contained herein, upon the request of the Required Facility Lenders with respect to the US Dollar Revolving Credit Facility, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Rate.
(i) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The Company shall pay directly to the L/C Issuer for its own account, in Dollars, a fronting fee with respect to each Letter of Credit, at a rate per annum of 0.125%, computed on the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting fee shall be due and payable on the tenth Business Day after the end of each March, June, September and December in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.09. In addition, the Company shall pay directly to the L/C Issuer for its own account, in Dollars, the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.
(j) Conflict with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.
(k) L/C Issuer Reports to the Administrative Agent. Unless otherwise agreed by the Administrative Agent, each L/C Issuer shall, in addition to its notification obligations set forth elsewhere in this Section, provide the Administrative Agent a Letter of Credit Report, as set forth below:
(i) reasonably prior to the time that such L/C Issuer issues, amends, renews, increases or extends a Letter of Credit, the date of such issuance, amendment, renewal, increase or extension and the stated amount of the applicable Letters of Credit after giving effect to such issuance, amendment, renewal or extension (and whether the amounts thereof shall have changed);
(ii) on each Business Day on which such L/C Issuer makes a payment pursuant to a Letter of Credit, the date and amount of such payment;
(iii) on any Business Day on which the Borrower fails to reimburse a payment made pursuant to a Letter of Credit required to be reimbursed to such L/C Issuer on such day, the date of such failure and the amount of such payment;
(iv) on any other Business Day, such other information as the Administrative Agent shall reasonably request as to the Letters of Credit issued by such L/C Issuer; and
(v) for so long as any Letter of Credit issued by an L/C Issuer is outstanding, such L/C Issuer shall deliver to the Administrative Agent (A) on the last Business Day of each calendar month, (B) at all other times a Letter of Credit Report is required to be delivered pursuant to this Agreement, and (C) on each date that (1) an L/C Credit Extension occurs or (2) there is any expiration, cancellation and/or disbursement, in each case, with respect to any such Letter of Credit, a Letter of Credit Report appropriately completed with the information for every outstanding Letter of Credit issued by such L/C Issuer.
(l) Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Company shall be obligated to reimburse the L/C Issuer hereunder for any and all drawings under such Letter of Credit. The Company hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Company, and that the Company’s business derives substantial benefits from the businesses of such Subsidiaries.
2.04 Swing Line Loans.
(a) The Swing Line. Subject to the terms and conditions set forth herein, the Swing Line agreements of the other Lenders set forth in this Section 2.04, shall make loans in Dollars (each such loan, a “Swing Line Loan”) to the Company from time to time on any Business Day during the Availability
Period with respect to the US Dollar Revolving Credit Facility in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of US Dollar Revolving Credit Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s US Dollar Revolving Credit Commitment; provided, however, that (x) after giving effect to any Swing Line Loan, (i) the Total Revolving Credit Outstandings shall not exceed the Revolving Credit Commitments, and (ii) the US Dollar Revolving Credit Exposure of any US Dollar Revolving Credit Lender shall not exceed such US Dollar Revolving Credit Lender’s US Dollar Revolving Credit Commitment, (y) the Company shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan, and (z) the Swing Line Lender shall not be under any obligation to make any Swing Line Loan if it shall determine (which determination shall be conclusive and binding absent manifest error) that it has, or by such Credit Extension may have, Fronting Exposure. Within the foregoing limits, and subject to the other terms and conditions hereof, the Company may borrow under this Section 2.04, prepay under Section 2.05, and reborrow under this Section 2.04. Each Swing Line Loan shall be a Base Rate Loan. Immediately upon the making of a Swing Line Loan, each US Dollar Revolving Credit Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such US Dollar Revolving Credit Lender’s Applicable Percentage times the amount of such Swing Line Loan.
(b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the Company’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by (A) telephone or (B) by a Swing Line Loan Notice; provided that any telephonic notice must be confirmed promptly by delivery to the Swing line Lender and the Administrative Agent of a Swing Line Loan Notice. Each such Swing Line Loan Notice must be received by the Swing Line Lender and the Administrative Agent not later than 3:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $500,000, and (ii) the requested borrowing date, which shall be a Business Day. Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at
the request of any US Dollar Revolving Credit Lender) prior to 5:00 p.m. on the date of the proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.04(a), or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 5:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Company at its office by crediting the account of the Company on the books of the Swing Line Lender in Same Day Funds.
(c) Refinancing of Swing Line Loans.
(i) The Swing Line Lender at any time in its sole discretion may request, on behalf of the Company (which hereby irrevocably authorizes the Swing Line Lender to so request on its behalf), that each US Dollar Revolving Credit Lender make a Base Rate Committed Loan in an amount equal to such US Dollar Revolving Credit Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the US Dollar Revolving Credit Commitments and the conditions set forth in Section 4.02. The Swing Line Lender shall furnish the Company with a copy of the applicable Committed Loan Notice promptly after delivering such notice to the Administrative Agent. Each US Dollar Revolving Credit Lender shall make an amount equal to its Applicable Percentage of the amount specified in such Committed Loan Notice available to the Administrative Agent in Same Day Funds (and the Administrative Agent may apply Cash Collateral available with respect to the applicable Swing Line Loan) for the account of the Swing Line Lender at the Administrative Agent’s Office for Dollar-denominated payments not later than 1:00 p.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii), each US Dollar Revolving Credit Lender that so makes funds available shall be deemed to have made a Base Rate Committed Loan to the Company in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender.
(ii) If for any reason any Swing Line Loan cannot be refinanced by such a Committed Borrowing in accordance with Section 2.04(c)(i), the request for Base Rate Committed Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the US Dollar Revolving Credit Lenders fund its risk participation in the relevant Swing Line Loan and each US Dollar Revolving Credit Lender's
payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.
(iii) If any US Dollar Revolving Credit Lender fails to make available to the Administrative for the account of the Swing Line Lender any amount required to be paid by such US Dollar Revolving Credit Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled to recover from such US Dollar Revolving Credit Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the applicable Overnight Rate from time to time in effect, plus any administrative, processing or similar fees customarily charged by the Swing Line Lender in connection with the foregoing. If such US Dollar Revolving Credit Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such US Dollar Revolving Credit Lender’s Committed Loan included in the relevant Committed Borrowing of US Dollar Revolving Credit Loans or funded participation in the relevant Swing Line Loan, as the case may be. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.
(iv) Each US Dollar Revolving Credit Lender’s obligation to make Committed Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such US Dollar Revolving Credit Lender may have against the Swing Line Lender, the Company or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each US Dollar Revolving Credit Lender’s obligation to make Committed Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 4.02. No such funding of risk participations shall relieve or otherwise impair the obligation of the Company to repay Swing Line Loans, together with interest as provided herein.
(d) Repayment of Participations.
(i) At any time after any US Dollar Revolving Credit Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such US Dollar Revolving Credit Lender its Applicable
Percentage thereof in the same funds as those received by the Swing Line Lender.
(ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each US Dollar Revolving Credit Lender shall pay to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the applicable Overnight Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be responsible for invoicing the Company for interest on the Swing Line Loans. Until each US Dollar Revolving Credit Lender funds its Base Rate Committed Loan or risk participation pursuant to this Section 2.04 to refinance such US Dollar Revolving Credit Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be solely for the account of the Swing Line Lender.
(f) Payments Directly to Swing Line Lender. The Company shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.
2.05 Prepayments. (a) Each Borrower may, upon notice from the Company to the Administrative Agent, at any time or from time to time voluntarily prepay Committed Loans of any Class in whole or in part without premium or penalty; provided that (i) such notice must be in a form acceptable to the Administrative Agent and be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Eurocurrency RateTerm SOFR Loans denominated in Dollars, (B) four Business Days (or five, in the case of prepayment of Loans denominated in Special Notice Currencies) prior to any date of prepayment of Eurocurrency Rate Loans denominated in Alternative Currencies and (C) on the date of prepayment of Base Rate Committed Loans; (ii) any prepayment of Eurocurrency RateTerm SOFR Loans enominated in Dollars shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; (iii) any prepayment of Eurocurrency Rate Loans denominated in Alternative Currencies shall be in a minimum principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iv) any prepayment of Base Rate Committed Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding; provided, further that such notice may be revocable if the Company specifies therein that such prepayment is contingent upon the consummation of an anticipated transaction.
Each such notice shall specify the date and amount of such prepayment, the Type(s), Class(es) and currency or currencies of Committed Loans to be prepaid and, ifin the case of Term SOFR Loans and Eurocurrency Rate Loans not denominated in Sterling are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of the applicable Class its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given by the Company, the applicable Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Term SOFR Loan or Eurocurrency Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05. Subject to Section 2.17, each such prepayment shall be applied to the Committed Loans of the Lenders of the applicable Class in accordance with their respective Applicable Percentages.
(b) The Company may, upon notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $100,000. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.
(c) If the Administrative Agent notifies the Company at any time that the Total Revolving Credit Outstandings for the US Dollar Revolving Credit Facility at such time exceed an amount equal to 100% of the US Dollar Revolving Credit Commitments then in effect, then, within two Business Days after receipt of such notice, the Borrowers shall prepay US Dollar Revolving Credit Loans and/or the Company shall Cash Collateralize the L/C Obligations in an aggregate amount at least equal to such excess; provided, however, that, subject to the provisions of Section 2.16(a), the Company shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(c) unless after the prepayment in full of the US Dollar Revolving Credit Loans the Total Revolving Credit Outstandings under the US Dollar Revolving Credit Facility exceed the US Dollar Revolving Credit Commitments then in effect. If the Administrative Agent notifies the Company at any time that the Total Revolving Credit Outstandings for the Multicurrency Revolving Credit Facility at such time exceed an amount equal to 105% of the Multicurrency Revolving Credit Commitments then in effect, then, within two Business Days after receipt of such notice, the Borrowers shall prepay Multicurrency Revolving Credit Loans and/or the Company shall Cash Collateralize the L/C Obligations in an aggregate amount at least equal to such excess over the Multicurrency Revolving Credit Commitments;
provided, however, that, subject to the provisions of Section 2.16(a), the Company shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(c) unless after the prepayment in full of the Multicurrency Revolving Credit Loans the Total Revolving Credit Outstandings under the Multicurrency Revolving Credit Facility exceed the Multicurrency Revolving Credit Commitments then in effect.
2.06 Termination or Reduction of Commitments. The Company may, upon notice to the Administrative Agent, terminate the Revolving Credit Commitments of either Class, or from time to time permanently reduce the Revolving Credit Commitments of either Class; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. three Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the Company shall not terminate or reduce (x) the Revolving Credit Commitments of either Class if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Revolving Credit Outstandings would exceed the Revolving Credit Commitments, (y) the Multicurrency Revolving Credit Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Multicurrency Revolving Credit Outstandings would exceed the Multicurrency Revolving Credit Commitments, or (z) the US Dollar Revolving Credit Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total US Dollar Revolving Credit Outstandings would exceed the US Dollar Revolving Credit Commitments and (iv) if, after giving effect to any reduction of the Revolving Credit Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the Revolving Credit Commitments, such Sublimit shall be automatically reduced by the amount of such excess provided, further that such notice may be revocable if the Company specifies therein that such reduction or termination is contingent upon the consummation of an anticipated transaction. The Administrative Agent will promptly notify the Revolving Credit Lenders of the applicable Class of any such notice of termination or reduction of the Revolving Credit Commitments. The amount of any such Revolving Credit Commitment reduction shall not be applied to the Letter of Credit Sublimit unless otherwise specified by the Company or otherwise required by the preceding sentence. Any reduction of the Revolving Credit Commitments of any Class shall be applied to the Commitment of each Revolving Credit Lender of such Class according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Revolving Credit Commitments of any Class shall be paid on the effective date of such termination.
2.07 Repayment of Loans. (a) Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of Committed Loans made to such Borrower outstanding on such date.
(b) The Company shall repay each Swing Line Loan on the earlier to occur of (i) the date ten Business Days after such Loan is made and (ii) the Maturity Date.
2.08 Interest. (a) Subject to the provisions of subsection (b) below, (i) each Term SOFR Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Term SOFR for such Interest Period plus the Applicable Rate; (ii) each Eurocurrency Rate Loan not denominated in Sterling shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Adjusted Eurocurrency Rate for such Interest Period plus the Applicable Rate; (ii) each Eurocurrency Rate Loan denominated in Sterling shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Adjusted Eurocurrency Rate plus the Applicable Rate; (iii) each Base Rate Committed Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate and, (iv) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate and (v) each Daily SOFR Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at 4 rate per annum equal to the Daily SOFR plus the Applicable Rate.
(b) While any Event of Default under Section 8.01(a), (b), (h) or (i) shall be continuing,
(i) if any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws; and
(ii) if any amount (other than principal of any Loan) payable by any Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.
(iii) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
(d) For the purposes of the Interest Act (Canada), (i) whenever a rate of interest or fee rate hereunder is calculated on the basis of a year (the “deemed year”) that contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest or fee rate shall be expressed as a yearly rate by multiplying such rate of interest or fee rate
by the actual number of days in the calendar year of calculation and dividing it by the number of days in the deemed year, (ii) the principle of deemed reinvestment of interest shall not apply to any interest calculation hereunder and (iii) the rates of interest stipulated herein are intended to be nominal rates and not effective rates or yields.
2.09 Fees. In addition to certain fees described in subsections (h) and (i) of Section 2.03:
(a) Commitment Fee. The Company shall pay to the Administrative Agent (x) for the account of each US Dollar Revolving Credit Lender in accordance with its Applicable Percentage, a commitment fee in Dollars equal to the Applicable Rate times the actual daily amount by which the US Dollar Revolving Credit Commitments exceed the sum of (i) the Outstanding Amount of Committed Loans that are US Dollar Revolving Credit Loans and (ii) the Outstanding Amount of L/C Obligations, subject to adjustment as provided in Section 2.17 and (y) for the account of each Multicurrency Revolving Credit Lender in accordance with its Applicable Percentage, a commitment fee in Dollars equal to the Applicable Rate times the actual daily amount by which the Multicurrency Revolving Credit Commitments exceed the Outstanding Amount of Committed Loans that are Multicurrency Revolving Credit Loans, subject to adjustment as provided in Section 2.17. For the avoidance of doubt, the Outstanding Amount of Swing Line Loans shall not be counted towards or considered usage of the Revolving Credit Commitments for purposes of determining the commitment fee. The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Restatement Effective Date, and on the last day of the Availability Period. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.
(b) Other Fees. (i) The Company shall pay to the Lead Arranger and the Administrative Agent for their own respective accounts, in Dollars, fees in the amounts and at the times specified in the Fee Letter (including, without limitation, the Administrative Agency Fee and the Letter of Credit Fronting Fee set forth in the Original Fee Letter). Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.
(ii) The Company shall pay to the Lenders, in Dollars, such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.
2.10 Computation of Interest and Fees. All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the Eurocurrency RateTerm SOFR) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year), or, in the case of interest in respect of Committed Loans denominated in Alternative Currencies as to which market practice differs from the foregoing, in accordance with such market practice. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a), bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error. With respect to any Alternative Currency not set forth in the definition of “Eurocurrency Rate”, the calculation of the applicable interest rate shall be determined in accordance with market practice.
2.11 Evidence of Debt. (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrowers and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender to a Borrower made through the Administrative Agent, such Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender's Loans to such Borrower in addition to such accounts or records. Each Lender may attach schedules to a Note and endorse thereon the date, Class, Type (if applicable), amount, currency and maturity of its Loans and payments with respect thereto.
(b) In addition to the accounts and records referred to in subsection (a) above, each Revolving Credit Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Revolving Credit Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the Administrative Agent and the accounts and records of any Lender in
respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
2.12 Payments Generally; Administrative Agent’s Clawback. (a) General. All payments to be made by the Borrowers shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein and except with respect to principal of and interest on Loans denominated in an Alternative Currency, all payments by the Borrowers hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in Dollars and in Same Day Funds not later than 2:00 p.m. on the date specified herein. Except as otherwise expressly provided herein, all payments by the Borrowers hereunder with respect to principal and interest on Loans denominated in an Alternative Currency shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in such Alternative Currency and in Same Day Funds not later than the Applicable Time specified by the Administrative Agent on the dates specified herein. Without limiting the generality of the foregoing, the Administrative Agent may require that any payments due under this Agreement be made in the United States. If, for any reason, any Borrower is prohibited by any Law from making any required payment hereunder in an Alternative Currency, such Borrower shall make such payment in Dollars in the Dollar Equivalent of the Alternative Currency payment amount. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent (i) after 2:00 p.m., in the case of payments in Dollars, or (ii) after the Applicable Time specified by the Administrative Agent in the case of payments in an Alternative Currency, shall in each case be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by any Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.
(b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Committed Borrowing of Term SOFR Loans or Eurocurrency Rate Loans (or, in the case of any Committed Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Committed Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Committed Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Committed Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Committed
Borrowing available to the Administrative Agent, then the applicable Lender and the applicable Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in Same Day Funds with interest thereon, for each day from and including the date such amount is made available to such Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the Overnight Rate, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by such Borrower, the interest rate applicable to Base Rate Loans. If such Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to such Borrower the amount of such interest paid by such Borrower for such period. If such Lender pays its share of the applicable Committed Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender's Committed Loan included in such Committed Borrowing. Any payment by such Borrower shall be without prejudice to any claim such Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
(ii) Payments by Borrowers; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from a Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the L/C Issuer hereunder that such Borrower will not make such payment, the Administrative Agent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if such Borrower has not in fact made such payment, then each of the Lenders or the L/C Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in Same Day Funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Overnight Rate.
A notice of the Administrative Agent to any Lender or Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.
(c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender to any Borrower as provided in the foregoing provisions of this Article II, and such funds are not made available to such Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance
with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.
(d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make Committed Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Section 10.04(c) are several and not joint. The failure of any Lender to make any Committed Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan, to purchase its participation or to make its payment under Section 10.04(c).
(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.
2.13 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Committed Loans made by it, or the participations in L/C Obligations or in Swing Line Loans held by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Committed Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and i) purchase (for cash at face value) participations in the Committed Loans and subparticipations in L/C Obligations and Swing Line Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Committed Loans and other amounts owing them, provided that:
(i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and
(ii) the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of any Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender or Competitor), (y) the application of Cash Collateral provided for in Section 2.16, or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Committed Loans or subparticipations in L/C Obligations or Swing Line Loans to any assignee or participant, other than an assignment to the Company or any Subsidiary thereof (as to which the provisions of this Section shall apply).
Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.
2.14 Designated Borrowers. (a) The Company may at any time, upon not less than 15 Business Days’ notice from the Company to the Administrative Agent (or such shorter period as may be agreed by the Administrative Agent in its sole discretion), designate any Subsidiary of the Company (other than an Excluded Subsidiary) (an “Applicant Borrower”) as a Designated Borrower to receive Revolving Credit Loans hereunder by delivering to the Administrative Agent (which shall promptly deliver counterparts thereof to each Lender) a duly executed notice and agreement in substantially the form of Exhibit G (a “Designated Borrower Request and Assumption Agreement”). The parties hereto acknowledge and agree that prior to any Applicant Borrower becoming entitled to utilize the Revolving Credit Facilities provided for herein the Administrative Agent and the Lenders shall have received such supporting resolutions, incumbency certificates, opinions of counsel and other documents or information (including documents and other information required by regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Patriot Act), in form, content and scope reasonably satisfactory to the Administrative Agent, as may be reasonably requested by the Administrative Agent or any Revolving Credit Lender in its reasonable discretion, and Notes signed by such new Borrowers to the extent any Revolving Credit Lenders so request. Promptly following receipt of all such requested resolutions, incumbency certificates, opinions of counsel and other documents or information, the Administrative Agent shall send a notice in substantially the form of Exhibit H (a “Designated Borrower Notice”) to the Company and the Revolving Credit Lenders specifying the effective date upon which the Applicant Borrower shall constitute a Designated Borrower for purposes hereof, whereupon each of the Lenders agrees to permit such Designated Borrower to receive Revolving Credit Loans hereunder, on the terms and conditions set forth herein, and each of the parties agrees that such Designated Borrower otherwise shall be a Borrower for all purposes of this Agreement; provided, that no Committed Loan Notice or Letter of Credit Application may be submitted by or on behalf of such Designated Borrower until the date five Business Days after such effective date.
(b) The Obligations of the Company and each Designated Borrower shall be joint and several in nature.
(c) Each Subsidiary of the Company that is or becomes a “Designated Borrower” pursuant to this Section 2.14 hereby irrevocably appoints the Company as its agent for all purposes relevant to this Agreement and each of the other Loan Documents, including (i) the giving and receipt of notices, (ii) the execution and delivery of all documents, instruments and certificates contemplated herein and all modifications hereto, and (iii) the receipt of the proceeds of any Loans made by the Lenders to any such Designated Borrower hereunder. Any acknowledgment, consent, direction,
certification or other action which might otherwise be valid or effective only if given or taken by all Borrowers, or by each Borrower acting singly, shall be valid and effective if given or taken only by the Company, whether or not any such other Borrower joins therein. Any notice, demand, consent, acknowledgement, direction, certification or other communication delivered to the Company in accordance with the terms of this Agreement shall be deemed to have been delivered to each Designated Borrower.
(d) The Company may from time to time, upon not less than 15 Business Days’ notice from the Company to the Administrative Agent (or such shorter period as may be agreed by the Administrative Agent in its sole discretion), terminate a Designated Borrower’s status as such, provided that there are no outstanding Loans payable by such Designated Borrower, or other amounts payable by such Designated Borrower on account of any Loans made to it, as of the effective date of such termination. The Administrative Agent will promptly notify the Lenders of any such termination of a Designated Borrower’s status..
2.15 Increase in Revolving Credit Commitments. (a) Request for Increase. Provided there exists no Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Company may from time to time, request an increase in the Revolving Credit Commitments of any Class by an amount (for all such requests) not exceeding $500,000,000; provided that any such request for an increase shall be in a minimum amount of $5,000,000. At the time of sending such notice, the Company (in consultation with the Administrative Agent) shall specify the time period within which each Revolving Credit Lender of the applicable Class is requested to respond (which shall in no event be less than ten Business Days from the date of delivery of such notice to the Lenders).
(b) Lender Elections to Increase. Each Revolving Credit Lender of the applicable Class shall notify the Administrative Agent within such time period whether or not it agrees to increase its Revolving Credit Commitment of such Class and, if so, whether by an amount equal to, greater than, or less than its Applicable Percentage of such requested increase. Any Revolving Credit Lender of the applicable Class not responding within such time period shall be deemed to have declined to increase its Revolving Credit Commitment of such Class.
(c) Notification by Administrative Agent; Additional Lenders. The Administrative Agent shall notify the Company and each Lender of the Revolving Credit Lenders’ responses to each request made hereunder. To achieve the full amount of a requested increase and subject to the approval of the Administrative Agent, the L/C Issuer and the Swing Line Lender (in each case, not to be unreasonably withheld or delayed), the Company may also invite additional Eligible Assignees to become Revolving Credit
Lenders of the applicable Class pursuant to a joinder agreement in form and substance reasonably satisfactory to the Administrative Agent and its counsel.
(d) Effective Date and Allocations. If the Revolving Credit Commitments of the applicable Class are increased in accordance with this Section, the Administrative Agent and the Company shall determine the effective date (the “Revolving Credit Increase Effective Date”) and the final allocation of such increase. The Administrative Agent shall promptly notify the Company and the Revolving Credit Lenders of the applicable Class of the final allocation of such increase and the Revolving Credit Increase Effective Date.
(e) Conditions to Effectiveness of Increase. As a condition precedent to such increase, the Company shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Revolving Credit Increase Effective Date signed by a Responsible Officer of such Loan Party (x) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (y) in the case of the Company, certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Article V and the other Loan Documents are true and correct in all material respects (provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) on and as of the Revolving Credit Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section 2.15, the representations and warranties contained in subsection (a) of Section 5.04 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01, and (B) no Default or Event of Default exists. The Borrowers shall prepay any Revolving Credit Loans of the applicable Class outstanding on the Revolving Credit Increase Effective Date (and pay any additional amounts required pursuant to Section 3.05) to the extent necessary to keep the outstanding Revolving Credit Loans of the applicable Class ratable with any revised Applicable Percentages arising from any nonratable increase in the Revolving Credit Commitments of the applicable Class under this Section. If the US Dollar Revolving Credit Commitments are increased in accordance with this Section, then the participations of the US Dollar Revolving Credit Lenders in Letters of Credit issued for the account of the Company or its Subsidiaries and any drawings thereunder and in Swing Line Loans shall be automatically reallocated as of the Revolving Credit Increase Effective
Date in accordance with each US Dollar Revolving Credit Lender’s Applicable Percentage (giving effect to such increase).
(f) Conflicting Provisions. This Section shall supersede any provisions in Section 2.13 or 10.01 to the contrary.
2.16 Cash Collateral. (a) Certain Credit Support Events. If (i) the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, (ii) as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, (iii) the Company shall be required to provide Cash Collateral pursuant to Section 8.02(c), or (iv) there shall exist a Defaulting Lender, the Company shall immediately (in the case of clause (iii) above) or within one Business Day (in all other cases) following any request by the Administrative Agent or the L/C Issuer, provide Cash Collateral in an amount not less than the applicable Minimum Collateral Amount (determined in the case of Cash Collateral provided pursuant to clause (iv) above, after giving effect to Section 2.17(a)(iv) and any Cash Collateral provided by the Defaulting Lender). Additionally, if the Administrative Agent notifies the Company at any time that the Outstanding Amount of all L/C Obligations at such time exceeds 105% of the Letter of Credit Sublimit then in effect, then, within two Business Days after receipt of such notice, the Company shall provide Cash Collateral for the Outstanding Amount of the L/C Obligations in an amount not less than the amount by which the Outstanding Amount of all L/C Obligations exceeds the Letter of Credit Sublimit.
(b) Grant of Security Interest. The Company, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuer and the Lenders, and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.16(c). If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent or the L/C Issuer as herein provided, other than non-consensual Liens permitted pursuant to Section 7.02, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Company will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency. All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in one or more Controlled Accounts at Bank of America. The Company shall pay on demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral.
(c) Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.16 or Sections 2.03, 2.05, 2.17 or 8.02 in respect of Letters of Credit shall be held and applied to the satisfaction of the specific L/C Obligations, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.
(d) Release. Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or to secure other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 10.06(b)(vi))) or (ii) the determination by the Administrative Agent and the L/C Issuer that there exists excess Cash Collateral; provided, however, (x) any such release shall be without prejudice to, and any disbursement or other transfer of Cash Collateral shall be and remain subject to, any other Lien conferred under the Loan Documents and the other applicable provisions of the Loan Documents, and (y) the Person providing Cash Collateral and the L/C Issuer may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.
2.17 Defaulting Lenders. (a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 10.01.
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 10.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the L/C Issuer or Swing Line Lender hereunder; third, to Cash Collateralize the L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender in accordance with
Section 2.16; fourth, as the Company may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Company, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the L/C Issuer’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.16; sixth, to the payment of any amounts owing to the Lenders, the L/C Issuer or Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or the Swing Line Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default exists, to the payment of any amounts owing to the Company as a result of any judgment of a court of competent jurisdiction obtained by the Company against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Revolving Credit Loans of any Class or, with respect to the US Dollar Revolving Credit Facility, L/C Borrowings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Revolving Credit Loans of, and L/C Obligations owed to, all Lenders of the applicable Class who are not Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Revolving Credit Loans of, or L/C Obligations owed to, such Defaulting Lender until such time as all Revolving Credit Loans and funded and unfunded participations in L/C Obligations and Swing Line Loans are held by the Revolving Credit Lenders of the applicable Class pro rata in accordance with the Revolving Credit Commitments of such Class hereunder without giving effect to Section 2.17(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.17(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii) Certain Fees.
(A) No Defaulting Lender shall be entitled to receive any fee payable under Section 2.09(a) for any period during which that Lender is a Defaulting Lender (and the Company shall not be required to pay any such fee that
otherwise would have been required to have been paid to that Defaulting Lender).
(B) Each Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.16.
(C) With respect to any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Company shall (x) pay to each US Dollar Revolving Credit Lender who is not a Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations or that has been reallocated to such US Dollar Revolving Credit Lender who is not a Defaulting Lender pursuant to clause (iv) below, (y) pay to the L/C Issuer the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.
(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in L/C Obligations and Swing Line Loans shall, subject to there being no Event of Default then in existence, be reallocated among the US Dollar Revolving Credit Lenders who are not Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation does not cause the aggregate US Dollar Revolving Credit Exposure of any US Dollar Revolving Credit Lender who is not a Defaulting Lender to exceed such Lender’s US Dollar Revolving Credit Commitment. Subject to Section 10.21, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a US Dollar Revolving Credit Lender who is not Defaulting Lender as a result of such Lender’s increased exposure following such reallocation.
(v) Cash Collateral, Repayment of Swing Line Loans. If the reallocation described in clause (a)(iv) above cannot, or can only partially, be effected, the Company shall, without prejudice to any right or remedy available to it hereunder or under applicable Law, (x) first, prepay Swing Line Loans in an amount equal to the Swing Line Lenders’ Fronting Exposure and (y) second, Cash Collateralize the L/C Issuers’ Fronting Exposure in accordance with the procedures set forth in Section 2.16.
(b) Defaulting Lender Cure. If the Company, the Administrative Agent, Swing Line Lender and the L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the
parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders of the applicable Class or Classes or take such other actions as the Administrative Agent may determine to be necessary to cause the Committed Loans and funded and unfunded participations in Letters of Credit and Swing Line Loans to be held on a pro rata basis by the Lenders of the applicable Class or Classes in accordance with their Applicable Percentages (without giving effect to Section 2.17(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Company while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
2.18 Extension of Maturity Date.
(a) Requests for Extension. The Company may, on up to twoone (21) occasionsoccasion following the Amendment No. 1 Effective Date and by notice to the Administrative Agent (who shall promptly notify the Lenders) not earlier than sixty (60) days and not later than thirty (30) days prior to any anniversary of the Restatement Effective Date (the “Extension Effective Date”), request that each Lender extend such Lender’s Maturity Date then in effect for an additional year from the Maturity Date then in effect with respect to such Lender. For the avoidance of doubt, any such request to extend the Maturity Date shall constitute a request to extend the Maturity Date with respect to both the US Dollar Revolving Credit Commitment and the Multicurrency Revolving Credit Commitment.
(b) Lender Elections to Extend. Each Lender, acting in its sole and individual discretion, shall, by notice to the Administrative Agent, given not earlier than thirty (30) days prior to the Extension Effective Date and not later than the date (the “Notice Date”) that is fifteen (15) days prior to the Extension Effective Date, advise the Administrative Agent whether or not such Lender agrees to such extension (and each Lender that determines not to so extend its Maturity Date (a “Non-Extending Lender”) shall notify the Administrative Agent of such fact promptly after such determination (but in any event no later than the Notice Date) and any Lender that does not so advise the Administrative Agent on or before the Notice Date shall be deemed to be a Non-Extending Lender. The election of any Lender to agree to such extension shall not obligate any other Lender to so agree.
(c) Notification by Administrative Agent. The Administrative Agent shall notify the Company of each Lender’s determination under this Section no later than the date fifteen (15) days prior to the Extension Effective Date (or, if such date is not a Business Day, on the next preceding Business Day).
(d) Additional Commitment Lenders. The Company shall have the right to replace each Non-Extending Lender with, and add as “Lenders” under this Agreement in place thereof, one or more Eligible Assignees (each, an “Additional Commitment Lender”) as provided in Section 10.13; provided that each of such Additional Commitment Lenders shall enter into an Assignment and Assumption pursuant to which such Additional Commitment Lender shall, effective as of the Extension Effective Date, undertake a Commitment (and, if any such Additional Commitment Lender is already a Lender, its Commitment shall be in addition to such Lender’s Commitment hereunder on such date).
(e) Minimum Extension Requirement. If (and only if) the total of all of the Commitments of the Lenders (excluding any Additional Commitment Lender) with respect to the Multicurrency Revolving Credit Facility and the US Dollar Revolving Credit Facility that have agreed so to extend their Maturity Date (each, an “Extending Lender”) shall be more than 50% of the aggregate amount of all of the Commitments of all of the Lenders (excluding any Additional Commitment Lender) with respect to the Multicurrency Revolving Credit Facility and the US Dollar Revolving Credit Facility in effect immediately prior to the Extension Effective Date, the Maturity Date of each Extending Lender and each Additional Commitment Lender shall be extended to the date falling one year after the then applicable Maturity Date for such Lenders (except that, if such date is not a Business Day, such Maturity Date as so extended shall be the next preceding Business Day) and each Additional Commitment Lender shall thereupon become a “Lender” for all purposes of this Agreement.
(f) Conditions to Effectiveness of Extensions. As conditions precedent to such extension, (i) the Company shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Extension Effective Date signed by a Responsible Officer of such Loan Party (A) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such extension and (B) in the case of the Company, certifying that, immediately before and after giving effect to such extension, (1) the representations and warranties contained in Article V and the other Loan Documents are true and correct in all material respects (provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) on and as of the Extension Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects (provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) as of such earlier date, and except that for purposes of this Section 2.18, the representations and warranties contained
in subsection (a) of Section 5.04 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01, and (2) no Default or Event of Default exists, (ii) the Administrative Agent shall have received an Extension Agreement duly completed and signed by the Company and all of the Extending Lenders as required by Section 2.18(e) and (iii) the Company shall have paid (A) to the Arrangers and the Administrative Agent, for their own respective accounts, fees in the amounts and at the times specified as set forth in any fee letter related to the extension, (B) to the Lenders, for their respective own accounts, such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified and (C) any other fees and expenses required to be paid in accordance with the Loan Documents. In addition, on the Maturity Date of each Non-Extending Lender, the Borrowers shall prepay any Committed Loans outstanding on such date (and pay any additional amounts required pursuant to Section 3.05) to the extent necessary to keep outstanding Committed Loans ratable with any revised Applicable Percentages of the respective Lenders effective as of such date.
(g) Conflicting Provisions. This Section shall supersede any provisions in Section 2.13 or 10.01 to the contrary.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes. (a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes. (i) Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable Laws. If any applicable Laws (as determined in the good faith discretion of the applicable Withholding Agent) require the deduction or withholding of any Tax from any such payment by the Withholding Agent, then the Withholding Agent shall be entitled to make such deduction or withholding, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.
(i) If any Withholding Agent shall be required by the Code to withhold or deduct any Taxes, including both United States federal backup withholding and withholding taxes, from any payment, then (A) the Withholding Agent shall withhold or make such deductions as are determined by the Withholding Agent to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Withholding Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction of Indemnified Taxes been made.
(ii) If any Withholding Agent shall be required by any applicable Laws other than the Code to withhold or deduct any Taxes from any payment, then (A) such Withholding Agent, as required by such Laws, shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) such Withholding Agent, to the extent required by such Laws, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with such Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction of Indemnified Taxes been made.
(b) Payment of Other Taxes by the Loan Parties. Without limiting the provisions of subsection (a) above, the Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable Laws, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(c) Tax Indemnifications. (i) Each of the Loan Parties shall, and does hereby, jointly and severally indemnity each Recipient, and shall make payment in respect thereof within 10 days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient, and any penalties, interest and reasonable out-of-pocket expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority (other than interest and penalties imposed as a result of the gross negligence or willful misconduct of such Recipient); provided, however, that if such Recipient does not notify the Loan Parties and the Administrative Agent, if applicable, of any indemnification required under this Section 3.01 within 180 days after such Recipient has received actual notice of the specific assessment or deficiency from the relevant Governmental Authority giving rise to such indemnification claim, the Loan Parties shall not be required to indemnify such Recipient for any incremental interest, penalties or cost resulting from such Recipient’s failure to so notify the Loan Parties measured from and after the end of such 180 day period. A certificate as to the amount of such payment or liability delivered to the Company by a Lender or the L/C Issuer (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error.
(ii) Each Lender and the L/C Issuer shall, and does hereby, severally indemnify, and shall make payment in respect thereof within 10 days after demand therefor, (x) the Administrative Agent against any Indemnified Taxes attributable to such Lender or the L/C Issuer (but only to the extent that any Loan Party has not
already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Party to do so), (y) the Administrative Agent and the Loan Party, as applicable, against any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.06(d) relating to the maintenance of a Participant Register and (z) the Administrative Agent and the Loan Party, as applicable, against any Excluded Taxes attributable to such Lender or the L/C Issuer, in each case, that are payable or paid by the Administrative Agent or a Loan Party in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender and the L/C Issuer hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender or the L/C Issuer, as the case may be, under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (ii).
(d) Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority as provided in this Section 3.01, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(e) Status of Lenders; Tax Documentation. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Company and the Administrative Agent, at the time or times reasonably requested by the Company or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Company or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Company or the Administrative Agent, shall deliver such other documentation prescribed by applicable Laws or reasonably requested by the Company or the Administrative Agent as will enable the Company or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation either set forth in Section 3.01(e)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing, in the event that a Borrower is a U.S. Person,
(A) any Lender that is a U.S. Person shall deliver to the Company and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Administrative Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding;
(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Company and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Administrative Agent), whichever of the following is applicable:
(I) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN-E (or W-8BEN, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E (or W-8BEN, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(II) executed copies of IRS Form W-8ECI;
(III) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit 1-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Company within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN-E (or W-8BEN, as applicable); or
(IV) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E (or W-8BEN, as applicable), a U.S. Tax Compliance Certificate substantially in the form of Exhibit 1-2 or Exhibit 1-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender
may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-4 on behalf of each such direct and indirect partner;
(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Company and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Administrative Agent), executed copies of any other form prescribed by applicable Laws as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Company or the Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender or shall deliver to the Company and, when applicable, the Administrative Agent at the time or times prescribed by Laws and at such time or times reasonably requested by the Company or the Administrative Agent such documentation prescribed by applicable Laws (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Company or the Administrative Agent as may be necessary for the Company and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), FATCA” shall include any amendments made to FACTA after the date of this Amendment.
(iii) On or before the date it becomes a party to this Agreement, any Administrative Agent that is a U.S. Person shall deliver to the Company two duly completed copies of IRS Form W-9, or any subsequent versions or successors to such form, certifying that such Administrative Agent is exempt from U.S. federal backup withholding. Any Administrative Agent, and any successor or supplemental Administrative Agent, that is not a U.S. Person for U.S. federal income tax purposes, shall deliver to the Company (i) two duly completed copies of IRS Form W-8IMY certifying that, with respect to such payments received by it (on behalf of the Lenders) from the Loan Parties, it is a “U.S. branch,” the payments are not effectively connected with the conduct of a trade or business in the United States, and it is using such form as evidence of its agreement with the Loan Parties to be treated as a U.S. Person with respect to such payment and (ii) with respect to payments received for its own account, two duly completed copies of IRS Form W-8ECI.
Each Recipient agrees that if any form or certification it previously delivered pursuant to this Section 3.01 expires or becomes obsolete or inaccurate in any respect, or at the time or times reasonably requested by the Company or Administrative Agent, it shall update such form or certification or promptly notify the Company and the Administrative Agent in writing of its legal inability to do so.
(f) Treatment of Certain Refunds. Unless required by applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender or the L/C Issuer, or have any obligation to pay to any Lender or the L/C Issuer, any refund of Taxes withheld or deducted from funds paid for the account of such Lender or the L/C Issuer, as the case may be. If any Recipient determines, in its sole discretion that it has received a refund of any Taxes to which it has been indemnified pursuant to this Section 3.01 (including paid additional amounts pursuant to this Section 3.01), it shall pay to such Loan Party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 3.01 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that each Loan Party, upon the request of the Recipient, agrees to repay the amount paid over to such Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection, in no event will the applicable Recipient be required to pay any amount to such Loan Party pursuant to this subsection the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any Recipient to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to any Loan Party or any other Person.
(g) Survival. Each party’s obligations under this Section 3.01 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender or the L/C Issuer, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.
3.02 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to perform any of its obligations hereunder or make, maintain or fund or charge interest with respect to any Credit Extension or to determine or charge interest rates based upon SOFR, Term SOFR or the Eurocurrency Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars or any Alternative Currency in the applicable interbank market, then, on notice thereof by such Lender to the Company through the Administrative Agent, (i) any obligation of such
Lender to issue, make, maintain, fund or charge interest with respect to any such Credit Extension or to make or continue Term SOFR Loans or Eurocurrency Rate Loans in the affected currency or currencies or, in the case of Eurocurrency RateTerm SOFR Loans in Dollars, to convert Base Rate Committed Loans to Eurocurrency RateTerm SOFR Loans, shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the Eurocurrency RateTerm SOFR component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurocurrency RateTerm SOFR component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Company that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrowers shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable and such Loans are denominated in Dollars, convert all Eurocurrency RateTerm SOFR Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Eurocurrency RateTerm SOFR component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Eurocurrency RateTerm SOFR Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Loans or if such Loans are Eurocurrency Rate Loans denominated in Sterling and (y) if such notice asserts the illegality of such Lender determining or Charging interest rates based upon the Eurocurrency RateTerm SOFR, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Eurocurrency RateTerm SOFR component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Eurocurrency RateTerm SOFR. Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or converted.
3.03 Inability to Determine Rates. (a) Except in the case of circumstances described in Section 3.03(b), if in connection with any request for a Term SOFR Loan, a Eurocurrency Rate Loan or a conversion to or continuation thereof, (i) the Administrative Agent determines that (A) deposits (whether denominated in Dollars or an Alternative Currency) (I) in the case of Term SOFR Loans, no Term SOFR Successor Rate has been determined in accordance with Section 3.03(b), and the circumstances under clause (i) of Section 3.03(b) or the Scheduled Unavailability Date has occurred or (II) in the case of Eurocurrency Rate Loans, deposits denominated in the applicable currency are not being offered to banks in the applicable offshore interbank market for such currency for (x) the applicable amount and Interest Period of such Eurocurrency Rate Loan not denominated in Sterling or (y) the applicable amount of such Eurocurrency Rate Loan denominated in Sterling, or (B)(x) adequate and reasonable means do not exist for determining (1) in the case of a Term SOFR Loan or a Eurocurrency Rate Loan not denominated in Sterling, the Term SOFR or the Eurocurrency Rate for any requested Interest Period with respect to such proposed Eurocurrency Rate Loan or (2) in the case of a Eurocurrency Rate Loan denominated in Sterling, the Eurocurrency Rate with respect to such proposed Eurocurrency Rate Loan or in connection with an existing or proposed Base Rate Loan and (y) the circumstances described in Section 3.03(b) do not apply (in each case with respect to
this clause (a)(i), “Impacted Loans”), or (ii) the Administrative Agent or the Required Lenders determine that for any reason (1) in the case of a Eurocurrency Rate Loan not denominated in Sterling, the Term SOFR or the Eurocurrency Rate for any requested Interest Period with respect to such proposed Eurocurrency Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Eurocurrency Rate Loan or (2) in the case of a Eurocurrency Rate Loan denominated in Sterling, the Eurocurrency Rate with respect to such proposed Eurocurrency Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Eurocurrency Rate Loan, the Administrative Agent will promptly so notify the Company and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Term SOFR Loans or the Eurocurrency Rate Loans in the affected currency or currencies, as applicable, shall be suspended (to the extent of the affected Term SOFR Loans, Eurocurrency Rate Loans or Interest Periods), and (y) in the event of a determination described in the preceding sentence with respect to the Eurocurrency RateTerm SOFR component of the Base Rate, the utilization of the Eurocurrency RateTerm SOFR component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (or, in the case of any determination by the Required Lenders described in clause (a)(ii) above, until the Administrative Agent, upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, (x) the Company may revoke any pending request for a Borrowing of, conversion to or continuation of Term SOFR Loans or Eurocurrency Rate Loans in the affected currency or currencies, as applicable (to the extent of the affected Term SOFR Loans, Eurocurrency Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Committed Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount specified therein and (y)(A) any outstanding affected Eurocurrency RateTerm SOFR Loans denominated in Dollars will be deemed to have been converted into Base Rate Loans at the end of the applicable Interest Period and (B) any outstanding affected Eurocurrency Rate Loans, at the Company’s election, shall either (1) be converted into a Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount of such outstanding Eurocurrency Rate Loans denominated in Sterling (immediately) or Eurocurrency Rate Loans not denominated in Sterling (at the end of the applicable Interest Period) or (2) be prepaid in full (immediately, or at the end of the applicable Interest Period with respect to Eurocurrency Rate Loans not denominated in Sterling, as applicable); provided that if no election is made by the Company by the earlier of (X) the date that is three Business Days after receipt by the Company of such notice and (Y) the last day of the current Interest Period for the applicable Eurocurrency Rate Loan not denominated in Sterling, the Company shall be deemed to have elected clause (1) above.
Notwithstanding the foregoing, if the Administrative Agent has made the determination described in clause (a)(i)(II) of this section, the Administrative Agent, in consultation with the Company and the affected Lenders, may establish an alternative interest rate for the Impacted Loans, in which case, such alternative rate of interest shall apply with respect to the Impacted Loans until (1) the Administrative Agent revokes the notice delivered with respect to the Impacted Loans under clause (a)(i) of the first sentence of this section, (2) the Administrative Agent or the affected Lenders notify the Administrative Agent and the Company that such alternative interest rate does not adequately and fairly reflect the cost to such Lenders of funding the Impacted Loans, or (3) any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its applicable
Lending Office to make, maintain or fund Loans whose interest is determined by reference to such alternative rate of interest or to determine or charge interest rates based upon such rate or any Governmental Authority has imposed material restrictions on the authority of such Lender to do any of the foregoing and provides the Administrative Agent and the Company written notice thereof. The Administrative Agent will promptly (in one or more notices) notify the Company and each Lender of the establishment of an alternative interest rate pursuant to this paragraph.
(b) Notwithstanding anything to the contrary in this Agreement or any other Loan Documents, if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Company or Required Lenders notify the Administrative Agent (with, in the case of the Required Lenders, a copy to the Company) that the Company or Required Lenders (as applicable) have determined, that:
(i) adequate and reasonable means do not exist for ascertaining (A) in the case of a Term SOFR Loan or Eurocurrency Rate Loan not denominated in Sterling, the Applicable Reference Rate for an Applicable Currency for any requested Interest Period or any other tenors of the Term SOFR or the Eurocurrency Rate or (B) in the case of a Eurocurrency Rate Loan denominated in Sterling, the Applicable Reference Rate therefor, including, in each case, without limitation, because the Applicable Reference Rate for such Applicable Currency is not available or published on a current basis and such circumstances are unlikely to be temporary, or
(ii) the administrator of the Applicable Reference Rate for an Applicable Currency or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which the Applicable Reference Rate for such Applicable Currency shall no longer be made available, or used for determining the interest rate of loans denominated in such Applicable Currency (provided that, at the time of such statement, there is no successor administrator that is satisfactory to the Administrative Agent that will continue to provide the Applicable Reference Rate for such Applicable Currency) (such specific date, the “Scheduled Unavailability Date”), or
(iii) the administrator of the Applicable Reference Rate for an Applicable Currency or a Governmental Authority having jurisdiction over such administrator has made a public statement announcing that all Interest Periods and other tenors of such Applicable Reference Rate are no longer representative, or
(iv) solely in the case of Eurocurrency Rate Loans, syndicated loans currently being executed, or that include language similar to that contained in this Section, are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace the Applicable Reference Rate for such Applicable Currency,
then, (A) in the case of a Eurocurrency RateTerm SOFR Loan denominated in Dollars:
in the case of clauses (i)-(iii) above, on a date and time determined by the Administrative Agent (any such date, the “LIBORTerm SOFR Replacement Date”), which date shall be at the end of an Interest Period or on the relevant interest payment date, as applicable, for interest calculated and shall occur within a reasonable period of
time after the occurrence of any of the events or circumstances under clause (i), (ii) or (iii) above and, solely with respect to clause (ii) above, no later than the Scheduled Unavailability Date, LIBORTerm SOFR will be replaced hereunder and under the other Loan Documents with, subject to the proviso below, the first available alternative set forth in the order below for any payment period for interest calculated that can be determined by the Administrative Agent Daily SOFR, in each case, without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document (the “LIBORTerm SOFR Successor Rate”; and any such rate before giving effect to the Related Adjustment, the “Pre-Adjustment Successor Rate”); provided that (i) if the Administrative Agent determines that Daily SOFR is not available on or prior to the Term SOFR Replacement Date, or (ii) if the events or circumstances of the type described in Section 3.03(b):
((x) Term SOFR plus the Related Adjustment; and
(y) SOFR plus the Related Adjustment;
and in the ease of clause (iv) above, the Company and Administrative Agent may amend this Agreement solely for the purpose of replacing LIBOR under this Agreement and under any other Loan Document (1) in accordance with the definition of “LIBOR Successor Rate” or (2) if the Administrative Agent and the Company elect to replace LIBOR with a LIBOR Successor Rate other than a SOFR-based rate, with the sum of (a) the alternate benchmark rate plus (b) the Related Adjustment, in each case of the foregoing clauses (a) and (b), that has been selected by the Administrative Agent and the Company giving due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by a Relevant Governmental Body, for U.S. dollar denominated syndicated credit facilities at such time (and, for the avoidance of doubt, any such proposed rate and adjustment shall constitute a LIBOR Successor Rate), and, in each case of the foregoing clauses (1) and (2), such amendment will become effective at 5:00 p.m., New York City time on the fifth Business Day after the Administrative Agent shall have notified all Lenders and the Company of the occurrence of the circumstances described in clause (iv) above unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to the implementation of a LIBOR Successor Rate pursuant to such clause;
provided that, if the Administrative Agent determines that Term SOFR has become available, is administratively feasible for the Administrative Agent and would have been identified as the Pre-Adjustment Successor Rate in accordance with the foregoing if it had been so available at the time that the LIBOR Successor Rate then in effect was so identified, and the Administrative Agent notifies the Company and Lenders of such availability, then from and after the beginning of the Interest Period, relevant interest payment date or payment period for interest calculated, in each case, commencing no less than thirty (30) days after the date of such notice, the Pre-
Adjustment Successor Rate shall be Term SOFR and the LIBOR Successor Rate shall be Term SOFR plus the relevant Related Adjustment.
The Administrative Agent will promptly (in one or more notices) notify the Company and Lenders of (x) any occurrence of any of the events, periods or circumstances under clauses (i) through (iii) above, (y) a LIBOR Replacement Date and (z) the LIBOR Successor Rate.
Notwithstanding anything else herein, if at any time any LIBOR Successor Rate as so determined would otherwise be less than 0%, the LIBOR Successor Rate will be deemed to be 0% for the purposes of this Agreement and the other Loan Documents.
If the events or circumstances of the type described in clauses (i) through (iii) above have occurred with respect to the LIBOR Successor Rate then in effect, then the successor rate thereto shall be determined in accordance with the definition of “LIBOR Successor Rate”.
Notwithstanding anything to the contrary herein, (i) after any such determination by the Administrative Agent or receipt by the Administrative Agent of any such notice described under clauses (i) through (iii) above, as applicable, if the Administrative Agent determines that none of the LIBOR Successor Rates is available on or prior to the LIBOR Replacement Date, (ii) if the events or circumstances described in clause (iv) above have occurred but none of the LIBOR Successor Rates is available, or (iii) if the events or circumstances of the type described in clauses (i) through (iii) abovei), (ii) or (iii) have occurred with respect to the LIBORTerm SOFR Successor Rate then in effect and the Administrative Agent determines that none of the LIBOR Successor Rates is available, then in each case, the Administrative Agent and the Company Borrowers may amend this Agreement solely for the purpose of replacing LIBORTerm SOFR or any then current LIBORTerm SOFR Successor Rate in accordance with this Section 3.03 at the end of any Interest Period, relevant interest payment date or payment period for interest calculated, as applicable, with another alternatealternative benchmark rate giving due consideration to any evolving or the then existing convention for similar Dollar-denominated syndicated credit facilities syndicated and agented in the United States for such alternative benchmarksbenchmark. and, in each case, including any Related Adjustments and any other mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar Dollar-denominated syndicated credit facilities syndicated and agented in the United States for such benchmarksbenchmark, which adjustment or method for calculating such adjustment shall be published on one or more information services as selected by the Administrative Agent from time to time in its discretion and may be periodically updated. For the avoidance of doubt, any such proposed rate and adjustmentadjustments, shall constitute a LIBOR“Term SOFR Successor Rate”. Any such amendment shall become effective at 5:00 p.m. (New York time) on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Company unless, prior to such time, Lenders comprising the Required Lenders have delivered to the
Administrative Agent written notice that such Required Lenders object to such amendment. The Administrative Agent will promptly (in one or more notices) notify the Company and Lenders of (x) any occurrence of any of the events, periods or circumstances under clauses (i) through (iii) above, (y) a Term SOFR Replacement Date and (z) the Term SOFR Successor Rate. Notwithstanding anything else herein, if at any time any Term SOFR Successor Rate as so determined would otherwise be less than 0%, the Term SOFR Successor Rate will be deemed to be 0% for the purposes of this Agreement and the other Loan Documents.
If, at the end of any Interest Period, relevant interest payment date or payment period for interest calculated, no LIBOR Successor Rate has been determined in accordance with the foregoing provisions of this Section 3.03(b) and the circumstances under clause (i) or (iii) above exist or the Scheduled Unavailability Date has occurred (as applicable), the Administrative Agent will promptly so notify the Company and Lenders. Thereafter, (x) the obligation of the Lenders to make or maintain Eurocurrency Rate Loans denominated in Dollars (to the extent of the affected Eurocurrency Rate Loans denominated in Dollars, Interest Periods, interest payment dates or payment periods) shall be suspended and (y) the Eurocurrency component shall no longer be utilized in determining the Base Rate, until the LIBOR Successor Rate has been determined in accordance with the foregoing provisions of this Section 3.03(b). Upon receipt of such notice, the Company may revoke any pending request for a Borrowing of, conversion to or continuation of, Eurocurrency Rate Loans denominated in Dollars (to the extent of the affected Loans, Interest Periods, interest payment dates or payment periods) or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans (subject to the foregoing clause (y)). If the LIBOR Successor Rate is SOFR plus the relevant Related Adjustment, all interest payments will be payable on a monthly basis.
and (B) in the case of a Eurocurrency Rate Loan denominated in an Alternative Currency:
reasonably promptly after such determination by the Administrative Agent or receipt by the Administrative Agent of such notice, as applicable, the Administrative Agent and the Company may amend this Agreement to replace the Applicable Reference Rate for such Alternative Currency in accordance with this Section 3.03 with an alternate benchmark rate giving due consideration to any evolving or the then existing convention for similar syndicated credit facilities syndicated in the U.S. and denominated in such Alternative Currency for such alternative benchmarks and, in each case, including any mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar syndicated credit facilities syndicated in the U.S. and denominated in such Alternative Currency for such benchmarks, each of which adjustments or methods for calculating such adjustments shall be published on one or more information services as selected by the Administrative Agent from time to time in its discretion and may be periodically updated (each, an “Adjustment”; and any such proposed rate, a “Eurocurrency Successor Rate”), and any such amendment shall become effective at 5:00 p.m. (New York time) on the fifth Business Day after the Administrative
Agent shall have posted such proposed amendment to all Lenders and the Company unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to such amendment. Such Eurocurrency Successor Rate for such Alternative Currency shall be applied in a manner consistent with market practice; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, such Eurocurrency Successor Rate for such Alternative Currency shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.
If no Eurocurrency Successor Rate has been determined for any Alternative Currency and the circumstances under clause (i) or (iii) above exist or the Scheduled Unavailability Date has occurred (as applicable), the Administrative Agent will promptly so notify the Company and each Lender. Thereafter, the obligation of the Lenders to make or maintain Eurocurrency Rate Loans in each such Alternative Currency shall be suspended (to the extent of the affected Eurocurrency Rate Loans or Interest Periods). Upon receipt of such notice, (i) the Company may revoke any pending request for a Borrowing of, conversion to or continuation of Eurocurrency Rate Loans in each such affected Alternative Currency (to the extent of the affected Eurocurrency Rate Loans or Interest Periods) or, failing that, will be deemed to have converted each such request into a request for a Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount specified therein and (ii) any outstanding affected Eurocurrency Rate Loans denominated in an Alternative Currency, at the Company’s election, shall either (1) be converted into a Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount of such outstanding Eurocurrency Rate Loan at the end of the applicable Interest Period (or immediately in the case of a Eurocurrency Rate Loan denominated in Sterling) or (2) be prepaid at the end of the applicable Interest Period (or immediately in the case of a Eurocurrency Rate Loan denominated in Sterling) in full; provided that if no election is made by the Company by the earlier of (x) the date that is three Business Days after receipt by the Company of such notice and (y) the last day of the current Interest Period for the applicable Eurocurrency Rate Loan (or on the same day in the case of a Eurocurrency Rate Loan denominated in Sterling), the Company shall be deemed to have elected clause (1) above.
Notwithstanding anything else herein, any definition of Eurocurrency Successor Rate shall provide that in no event shall such Eurocurrency Successor Rate be less than zero for purposes of this Agreement.
In connection with the implementation of a LIBORTerm SOFR Successor Rate or Eurocurrency Successor Rate for any currency, the Administrative Agent will have the right to make Successor Rate Conforming Changes with respect to such currency from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Successor Rate Conforming Changes will become effective without any further action or consent of any other party to this Agreement; provided that, with respect to any such amendment effected, the Administrative Agent shall post each such amendment implementing such Successor Rate Conforming Changes for the Applicable
Currency to the Company and the Lenders reasonably promptly after such amendment becomes effective.
(c) Canadian Benchmark Replacement Setting. Notwithstanding anything to the contrary herein or in any other Loan Document:
(i) Replacing CDOR. On May 16, 2022 Refinitiv Benchmark Services (UK) Limited (“RBSL”), the administrator of CDOR, announced in a public statement that the calculation and publication of all tenors of CDOR will permanently cease immediately following a final publication on Friday, June 28, 2024. On the earlier of (A) the date that all Available Tenors of CDOR have either permanently or indefinitely ceased to be provided by RBSL and (B) June 28, 2024 (the “CDOR Cessation Date”), if the then-current Canadian Benchmark is CDOR, the Canadian Benchmark Replacement will replace such Canadian Benchmark for all purposes hereunder and under any Loan Document in respect of any setting of such Canadian Benchmark on such day and all subsequent settings without any amendment to, or further action or consent of any other party to this Agreement or any other Loan Document. If the Canadian Benchmark Replacement is Daily Compounded CORRA, all interest payments will be payable on a quarterly basis.
(ii) Replacing Future Canadian Benchmarks. Upon the occurrence of a Canadian Benchmark Transition Event, the Canadian Benchmark Replacement will replace the then-current Canadian Benchmark for all purposes hereunder and under any Loan Document in respect of any Canadian Benchmark setting at or after 5:00 p.m. on the fifth (5th) Business Day after the date notice of such Canadian Benchmark Replacement is provided to the Lenders and the Company without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Canadian Benchmark Replacement from Lenders comprising the Required Lenders. At any time that the administrator of the then-current Canadian Benchmark has permanently or indefinitely ceased to provide such Canadian Benchmark or such Canadian Benchmark has been announced by the administrator or the regulatory supervisor for the administrator of such Canadian Benchmark pursuant to public statement or publication of information to be no longer representative of the underlying market and economic reality that such Canadian Benchmark is intended to measure and that representativeness will not be restored, a Borrower may revoke any request for a Borrowing of, conversion to or continuation of Loans denominated in Canadian Dollars to be made, converted or continued that would bear interest by reference to such Canadian Benchmark until such Borrower’s receipt of notice from the Administrative Agent that a Canadian Benchmark Replacement has replaced such Canadian Benchmark, and, failing that, will be deemed to have converted each such request into a request for a Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount specified therein.
(iii) Canadian Benchmark Replacement Conforming Changes. In connection with the implementation and administration of a Canadian Benchmark Replacement, the Administrative Agent will have the right to make Canadian Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Canadian Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement, other than the consultation rights of the Company contemplated in this Section 3.03(c).
(iv) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Company and the Lenders of (i) the implementation of any Canadian Benchmark Replacement, (ii) any occurrence of a Term CORRA Transition Event, and (iii) the effectiveness of any Canadian Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by the Administrative Agent pursuant to this Section, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 3.03(c).
(v) Unavailability of Tenor of Canadian Benchmark. At any time (including in connection with the implementation of a Canadian Benchmark Replacement), if the then-current Canadian Benchmark is a term rate (including Term CORRA or CDOR), then (i) the Administrative Agent may remove any tenor of such Canadian Benchmark that is unavailable or non-representative for Canadian Benchmark (including Canadian Benchmark Replacement) settings and (ii) the Administrative Agent may reinstate any such previously removed tenor for Canadian Benchmark (including Canadian Benchmark Replacement) settings.
(vi) Secondary Term CORRA Conversion. Notwithstanding anything to the contrary herein or in any Loan Document and subject to the proviso below in this clause, if a Term CORRA Transition Event and its related Term CORRA Transition Date have occurred, then on and after such Term CORRA Transition Date (i) the Canadian Benchmark Replacement described in clause (a)(i) of such definition will replace the then-current Canadian Benchmark for all purposes hereunder or under any Loan Document in respect of any setting of such Canadian Benchmark on such day and all subsequent settings, without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document; and (ii) each Loan outstanding on the Term CORRA Transition Date bearing interest based on the then-current Canadian Benchmark shall convert, at the last day of the then current interest payment period, into a Loan bearing interest at the Canadian Benchmark Replacement described in clause (a)(i) of such definition for the respective Available Tenor as selected by the applicable Borrower as is available for the then-current Canadian Benchmark; provided that, this clause (vi) shall not be effective unless the Administrative Agent has delivered to the
Lenders and the Borrower a Term CORRA Notice, and so long as the Administrative Agent has not received, by 5:00 p.m. (Toronto time) on the fifth (5th) Business Day after the date of the Term CORRA Notice, written notice of objection to such conversion to Term CORRA from Lenders comprising the Required Lenders or the Company.
(vii) Required Lenders. For the purposes of this Section 3.03(c), those Lenders that either have not made, or do not have an obligation under this Agreement to make, the relevant Loans in Canadian Dollars shall be excluded from any determination of Required Lenders.
(viii) Definitions. For purposes of this Section 3.03(c):
“Available Tenor” means, as of any date of determination and with respect to the then-current Canadian Benchmark, as applicable, (a) if the then-current Canadian Benchmark is a term rate, any tenor for such Canadian Benchmark that is or may be used for determining the length of an Interest Period or (b) otherwise, any payment period for interest calculated with reference to such Canadian Benchmark, as applicable, pursuant to this Agreement as of such date.
“Canadian Benchmark” means, initially, CDOR; provided that if a replacement of the Canadian Benchmark has occurred pursuant to this Section 3.03(c), then “Canadian Benchmark” means the applicable Canadian Benchmark Replacement to the extent that such Canadian Benchmark Replacement has replaced such prior benchmark rate. Any reference to “Canadian Benchmark” shall include, as applicable, the published component used in the calculation thereof.
“Canadian Benchmark Replacement” means, for any Available Tenor:
(a) For purposes of Section 3.03(c)(i), the first alternative set forth below that can be determined by the Administrative Agent:
(i) the sum of: (i) Term CORRA and (ii) 0.29547% (29.547 basis points) for an Available Tenor of one-month’s duration, and 0.32138% (32.138 basis points) for an Available Tenor of three-months’ duration, or
(ii) the sum of: (i) Daily Compounded CORRA and (ii) 0.29547% (29.547 basis points) for an Available Tenor of one-month’s duration, and 0.32138% (32.138 basis points) for an Available Tenor of three-months’ duration; and
(b) For purposes of Section 3.03(c)(ii), the sum of (i) the alternate benchmark rate and (ii) an adjustment (which may be a positive or negative value or zero), in each case, that has been selected by the Administrative Agent and the Borrower as the replacement for such Available Tenor of such Canadian Benchmark giving due consideration to
any evolving or then-prevailing market convention, including any applicable recommendations made by the Relevant Governmental Body, for Canadian dollar-denominated syndicated credit facilities at such time;
provided that, if the Canadian Benchmark Replacement as determined pursuant to clause (a) or (b) above would be less than the Floor, the Canadian Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
Any Canadian Benchmark Replacement shall be applied in a manner consistent with market practice; provided, that, to the extent such market practice is not administratively feasible for the Administrative Agent, such Canadian Benchmark Replacement shall be applied in a manner as otherwise reasonably determined by the Administrative Agent in consultation with the Company.
“Canadian Benchmark Replacement Conforming Changes” means, with respect to any Canadian Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Business Day”, the definition of “Interest Period”, the definition of “Alternative Currency Daily Rate”, the definition of “Alternative Currency Term Rate”, timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent in consultation with the Company decides may be appropriate to reflect the adoption and implementation of such Canadian Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Canadian Benchmark Replacement exists, in such other manner of administration as the Administrative Agent in consultation with the Company decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Canadian Benchmark Transition Event” means, with respect to any then-current Canadian Benchmark other than CDOR, the occurrence of a public statement or publication of information by or on behalf of the administrator of the then-current Canadian Benchmark, the regulatory supervisor for the administrator of such Canadian Benchmark, any Governmental Authority with jurisdiction over such administrator for such Canadian Benchmark, or the Bank of Canada, announcing or stating that (a) such administrator has ceased or will cease on a specified date to provide all Available Tenors of such Canadian Benchmark, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any
Available Tenor of such Canadian Benchmark or (b) all Available Tenors of such Canadian Benchmark are or will no longer be representative of the underlying market and economic reality that such Canadian Benchmark is intended to measure and that representativeness will not be restored.
“CORRA” means the Canadian Overnight Repo Rate Average administered and published by the Bank of Canada (or any successor administrator).
“Daily Compounded CORRA” means, for any day, CORRA with interest accruing on a compounded daily basis, with the methodology and conventions for this rate (which will include compounding in arrears with a lookback) being established by the Administrative Agent in accordance with the methodology and conventions for this rate selected or recommended by the Relevant Governmental Body for determining compounded CORRA for business loans; provided that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may, in consultation with the Company, establish another convention in its reasonable discretion; and provided that if the administrator has not provided or published CORRA and a Benchmark Transition Event with respect to CORRA has not occurred, then, in respect of any day for which CORRA is required, references to CORRA will be deemed to be references to the last provided or published CORRA.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to CDOR.
“Relevant Governmental Body” means the Bank of Canada, or a committee officially endorsed or convened by the Bank of Canada, or any successor thereto.
“Term CORRA” means, for the applicable corresponding tenor, the forward-looking term rate based on CORRA that has been selected or recommended by the Relevant Governmental Body, and that is published by an authorized benchmark administrator and is displayed on a screen or other information service, as identified or selected by the Administrative Agent in its reasonable discretion at approximately a time and as of a date prior to the commencement of an Interest Period determined by the Administrative Agent in its reasonable discretion in a manner substantially consistent with market practice.
“Term CORRA Notice” means the notification by the Administrative Agent to the Lenders and the Borrower of the occurrence of a Term CORRA Transition Event.
“Term CORRA Transition Date” means, in the case of a Term CORRA Transition Event, the date that is set forth in the Term CORRA Notice provided to the Lenders and the Borrower, for the replacement of the then-current Canadian Benchmark with the Canadian Benchmark Replacement described in clause (a)(i) of
such definition, which date shall be at least thirty (30) Business Days from the date of the Term CORRA Notice.
“Term CORRA Transition Event” means the determination by the Administrative Agent that (a) Term CORRA has been recommended for use by the Relevant Governmental Body, and is determinable for any Available Tenor, (b) the administration of Term CORRA is administratively feasible for the Administrative Agent, (c) a Canadian Benchmark Replacement, other than Term CORRA, has replaced CDOR in accordance with this Section 3.03(c) and (d) Borrower has provided a written request to Administrative Agent to transition to Term CORRA.
3.04 Increased Costs; Reserves on Eurocurrency Rate Loans. (a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurocurrency Rate, other than as set forth below) or the L/C Issuer;
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (e) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or Term SOFR Loans or Eurocurrency Rate Loans made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer, the Company will pay (or cause the applicable Designated Borrower to pay) to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate
of return on such Lender’s or the L/C Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swing Line Loans held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Company will pay (or cause the applicable Designated Borrower to pay) to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of a Lender or the L/C Issuer (i) setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Company, and (ii) certifying that such Lender or L/C Issuer is generally charging such amounts to similarly situated borrowers, shall be conclusive absent manifest error. The Company shall pay (or cause the applicable Designated Borrower to pay) such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation, provided that no Borrower shall be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies the Company of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
(e) Additional Reserve Requirements. The Company shall pay (or cause the applicable Designated Borrower to pay) to each Lender, as long as such Lender shall be required to comply with any reserve ratio requirement or analogous requirement of any central banking or financial regulatory authority imposed in respect of the maintenance of the Commitments or the funding of the Eurocurrency Rate Loans, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Commitment or Loan by such Lender (as determined by such Lender in
good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Company shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional costs from such Lender. If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest or costs shall be due and payable 10 days from receipt of such notice.
3.05 Compensation for Losses. Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Company shall promptly compensate (or cause the applicable Designated Borrower to compensate) such Lender for and hold such Lender harmless from any loss (other than the loss of anticipated profits), cost or expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);
(b) any failure by any Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Company or the applicable Designated Borrower;
(c) any failure by any Borrower to make payment of any Loan or drawing under any Letter of Credit (or interest due thereon) denominated in an Alternative Currency on its scheduled due date or any payment thereof in a different currency; or
(d) any assignment of a Term SOFR Loan or a Eurocurrency Rate Loan not denominated in Sterling on a day other than the last day of the Interest Period therefor as a result of a request by the Company pursuant to Section 10.13;
including any foreign exchange losses and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan, from fees payable to terminate the deposits from which such funds were obtained or from the performance of any foreign exchange contract. The Company shall also pay (or cause the applicable Designated Borrower to pay) any customary administrative fees charged by such Lender in connection with the foregoing.
For purposes of calculating amounts payable by the Company (or the applicable Designated Borrower) to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurocurrency Rate Loan made by it at the Eurocurrency base rate used in determining the Eurocurrency Rate for such Loan by a matching deposit or other borrowing in the offshore interbank market for such currency for a comparable amount and for a comparable period, whether or not such Eurocurrency Rate Loan was in fact so funded. Each Lender claiming any payment pursuant to this Section 3.05 shall do so by giving notice thereof to the Company and the Administrative Agent (showing calculation of the amount claimed in reasonable detail) within 60 Business Days after a failure to borrow, convert or continue Term SOFR Loans or
Eurocurrency Rate Loans not denominated in Sterling, or to prepay, after notice or after a prepayment of Term SOFR Loans or Eurocurrency Rate Loans not denominated in Sterling on a day which is not the last day of an Interest Period therefor.
3.06 Mitigation Obligations; Replacement of Lenders. (a) Designation of a Different Lending Office. Each Lender may make any Credit Extension to the Borrower through any Lending Office, provided that the exercise of this option shall not affect the obligation of the Borrower to repay the Credit Extension in accordance with the terms of this Agreement. If any Lender requests compensation under Section 3.04, or requires any Borrower to pay any Indemnified Taxes or additional amounts to any Lender, the L/C Issuer, or any Governmental Authority for the account of any Lender or the L/C Issuer pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then at the request of the Company such Lender or the L/C Issuer shall, as applicable, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender or the L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender or the L/C Issuer, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or the L/C Issuer, as the case may be. The Company hereby agrees to pay (or cause the applicable Designated Borrower to pay) all reasonable costs and expenses incurred by any Lender or the L/C Issuer in connection with any such designation or assignment.
(b) Replacement of Lenders. If any Lender gives notice under Section 3.02, requests compensation under Section 3.04, or if any Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.06(a), the Company may replace such Lender in accordance with Section 10.13.
3.07 Survival. All obligations of the Loan Parties under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.
ARTICLE IV.
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01 Conditions of Restatement Effective Date. The occurrence of the Restatement Effective Date is subject to satisfaction (or waiver in accordance with Section 10.01) of the following conditions precedent:
(a) The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing
Loan Party, each dated the Restatement Effective Date (or, in the case of certificates of governmental officials, a recent date before the Restatement Effective Date) and each in form and substance reasonably satisfactory to the Administrative Agent and each of the Lenders:
(i) executed counterparts of this Agreement and Guaranty Amendment No. 2;
(ii) Notes executed by the applicable Borrowers in favor of each Lender requesting Notes at least three Business Days prior to the Restatement Effective Date;
(iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party;
(iv) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing, in good standing and qualified to engage in business in its jurisdiction of organization;
(v) (A) a favorable opinion of Hogan Lovells US LLP, New York and Virginia counsel to the Loan Parties, addressed to the Administrative Agent and each Lender and (B) a favorable opinion of McGuire Woods LLP, North Carolina counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, in each case in a customary form and reasonably satisfactory to the Administrative Agent and its counsel;
(vi) a certificate signed by a Responsible Officer of the Company certifying that (A) the conditions specified in Sections 4.02(a) and (b) have been satisfied, (B) there has been no event or circumstance since January 3, 2021 that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect, (C) there is no action, suit, investigation or proceeding pending or, to the knowledge of the Company, threatened in any court or before any Governmental Authority that could reasonably be expected to have a Material Adverse Effect and (D) the value of the consolidated assets of the Company and its Subsidiaries at present fair saleable value is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of the Company and its Subsidiaries on a consolidated basis, and the Company and its Subsidiaries on a consolidated basis are able to pay all their liabilities as such liabilities mature and do not have unreasonably small capital with which to carry on their business.
(b) The Refinancing shall have been consummated substantially concurrently with the Restatement Effective Date, and the Administrative Agent shall have received reasonably satisfactory evidence thereof.
(c) The Company shall have paid (i) all fees owed pursuant to the Fee Letters, (ii) without duplication of any fees paid pursuant to Section 4.02(b), all fees owed to the Lenders pursuant to the Existing Credit Agreement and (ii) all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced at least three (3) Business Days prior to the Restatement Effective Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Company and the Administrative Agent).
(d) (i) Upon the reasonable request of any Lender made at least 5 days prior to the Restatement Effective Date, the Company shall have provided to such Lender, and such Lender shall be reasonably satisfied with, the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act, in each case at least 3 days prior to the Restatement Effective Date and (ii) at least 5 days prior to the Restatement Effective Date, any Loan Party that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall deliver a Beneficial Ownership Certification in relation to such Loan Party.
Without limiting the generality of the provisions of the last paragraph of Section 9.03, for purposes of determining compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Restatement Effective Date specifying its objection thereto.
4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the 4ther Type, or a continuation of Term SOFR Loans or Eurocurrency Rate Loans) is subject to the following conditions precedent:
(a) The representations and warranties of (i) the Borrowers contained in Article V and (ii) each Loan Party contained in each other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects (provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) on and as of the date of
such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 4.02, the representations and warranties contained in subsection (a) of Section 5.04 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01; provided, however, that for so long as the Borrower maintains a customary commercial paper lending facility, the representations set forth in Section 5.04(b) and Section 5.06 shall be excluded from this clause (a).
(b) No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.
(c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.
(d) If the applicable Borrower is a Designated Borrower, then the conditions of Section 2.14 to the designation of such Borrower as a Designated Borrower shall have been met to the satisfaction of the Administrative Agent.
(e) In the case of a Credit Extension to be denominated in an Alternative Currency, there shall not have occurred any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which in the reasonable opinion of the Administrative Agent, the Required Lenders (in the case of any Loans to be denominated in an Alternative Currency) or the L/C Issuer (in the case of any Letter of Credit to be denominated in an Alternative Currency) would make it impracticable for such Credit Extension to be denominated in the relevant Alternative Currency.
Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type or a continuation of Term SOFR Loans or Eurocurrency Rate Loans) submitted by the Company shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Administrative Agent and the Lenders on the Restatement Effective Date, on each Extension Effective Date, on each Revolving Credit Increase Effective Date and on each date required pursuant to Section 4.02 that (subject to any exceptions set forth in Section 4.02):
5.01 Organization; Powers. Each Loan Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and as proposed to be conducted, to execute, deliver and perform its obligations under each Loan Document to which it is a party and to effect the Transactions, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure to so qualify, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
5.02 Authorization; Enforceability. The Transactions to be entered into by each Loan Party and the execution, delivery and performance by each Loan Party of the Loan Documents have been duly authorized by all necessary corporate or other action and, if required, action by the holders of such Loan Party’s Equity Interests. This Agreement has been duly executed and delivered by each Borrower and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of such Borrower or such Loan Party (as the case may be), enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
5.03 Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, ii) will not violate any material Requirement of Law applicable to any Loan Party or any Subsidiary to the extent failure to comply with which could reasonably be expected to have a Material Adverse Effect, iii) will not violate the charter, by-laws or other organizational documents of any Loan Party, iv) will not violate or result in a material default under any material indenture, agreement or other instrument binding upon any Loan Party or any Subsidiary or their respective assets, or give rise to a right thereunder to require any material payment to be made by any Loan Party or any Subsidiary or give rise to a right of, or result in, termination, cancelation or acceleration of any material obligation thereunder and v) will not result in the creation or imposition of any Lien (other than a Lien permitted under Section 7.02) on any asset of the Loan Party or any Subsidiary.
5.04 Financial Statements; No Material Adverse Effect. (a) The Company has heretofore furnished to the Lenders (i) its consolidated balance sheet and consolidated statements of income, stockholders’ equity and cash flows as of and for the fiscal year ended January 3, 2021, reported on by Ernst & Young LLP, independent public accountants and (ii) its consolidated condensed balance sheet and statement of income and cash flows as of and for the fiscal quarter and the portion of the fiscal year ended April 4, 2021. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Company and the Subsidiaries as of such dates and for such periods in accordance with GAAP consistently applied, subject to year-end audit adjustments and the absence of
footnotes and consolidated statements of stockholders’ equity in the case of the statements referred to in clause (ii) above.
(b) Since January 3, 2021, there has not occurred any event, change or condition that has had, or could reasonably be expected to have, a Material Adverse Effect.
5.05 Properties. (a) Each Borrower and each of the Subsidiaries has good title to, or valid leasehold interests in, all the real and personal property that is material to its business, free of all Liens other than Liens permitted by Section 7.02.
(b) Each Borrower and each of the Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrowers and the Subsidiaries does not infringe upon the rights of any other Person, except for such infringements that could not reasonably be expected to result in a Material Adverse Effect.
5.06 Litigation Matters. There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of any Responsible Officer of the Company, threatened against or affecting any Borrower or any Subsidiary (i) which could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (except as set forth on Schedule 5.06) or (ii) that involve any of the Loan Documents or the Transactions.
5.07 Compliance with Laws and Agreements. Each Borrower and each of the Subsidiaries is in compliance with (a) all Requirements of Law applicable to it or its property except with respect to any noncompliance therewith which could not reasonably be expected to result in a Material Adverse Effect and (b) all indentures and agreements and other instruments binding upon it or its property except with respect to any noncompliance therewith which could not reasonably be expected to result in a Material Adverse Effect.
5.08 Investment Company Status. No Loan Party nor any of its Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, or is subject to registration under, such Act.
5.09 Taxes. The Company and each of the Subsidiaries (a)(a) has timely filed or caused to be filed all Tax returns and reports required to have been filed, except to the extent that failure to do so could not reasonably be expected to result in a Material Adverse Effect, and (b)(b) except to the extent that failure to do so could not reasonably be expected to result in a Material Adverse Effect, has paid or caused to be paid all Taxes required to have been paid by it, except any Taxes that are being contested in good faith by appropriate proceedings, provided that the Company or such Subsidiary, as the case may be, has set aside on its books adequate reserves therefor in accordance with GAAP, and the failure to pay such Taxes could not reasonably be expected to result in a Material Adverse Effect. No material Tax liens have been filed (other than a Lien permitted under Section 7.02) and no material claims are being asserted with respect to
any Taxes, except for such claims that could not reasonably be expected to result in a Material Adverse Effect.
5.10 ERISA. (a) Except as could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (i) each Loan Party and each of their respective ERISA Affiliates is in compliance with the applicable provisions of ERISA and of the Code relating to Plans and the regulations and published interpretations thereunder, (ii) no ERISA Event has occurred or is reasonably expected to occur, and (iii) (A) each Foreign Plan has been maintained in compliance with its terms and with the requirements of any and all applicable Laws, (B) no Loan Party has incurred any obligation or liability in connection with the termination of or withdrawal from any Foreign Plan, (C) the present value of the accrued benefit liabilities (whether or not vested) under each Foreign Plan that is required to be funded by any Loan Party does not exceed the current value of the assets of such Foreign Plan and (D) for each Foreign Plan which is not required to be funded, the obligations or liabilities of such Foreign Plan are properly accrued.
(b) The Company represents and warrants that the Company is not and will not be using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments.
5.11 Disclosure. None of (a) the Company’s Quarterly Report on Form 10-Q for the period ended October 2, 2016, and the other filings of the Company made with the SEC since October 2, 2016 and prior to the Restatement Effective Date (collectively, the “SEC Filings”) or vi) any of the other reports, financial statements, certificates or other information furnished by or on behalf of the Company to the Administrative Agent or any Lender pursuant to any Loan Document or delivered thereunder (as modified or supplemented by other information then or theretofore furnished by or on behalf of the Borrowers to the Administrative Agent in connection herewith), as of the date such disclosures are delivered, contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, provided that, with respect to projected financial information, each Loan Party represents only that such information was prepared in good faith based upon assumptions believed by them to be reasonable at the time delivered (unless otherwise updated subsequent thereto, in which case such information was prepared in good faith based upon assumptions believed by it to be reasonable at the time updated). As of the Restatement Effective Date, the information included in the Beneficial Ownership Certification, if applicable, is true and correct in all respects.
5.12 Insurance. As of the Restatement Effective Date, all premiums due in respect of all insurance (including self-insurance) maintained by or on behalf of the Loan Parties have been paid. The properties of the Company and its Subsidiaries are insured with financially sound and reputable insurance companies or through self-insurance and the Company believes that such insurance maintained by or on behalf of the Loan Parties and their subsidiaries is adequate.
5.13 Use of Proceeds. (a) Neither the Company nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock. Following the application of the proceeds of each Borrowing or drawing under each Letter of Credit, not more than 25% of the value of the assets (either of the applicable Borrower or of the Company and its Subsidiaries on a consolidated basis) subject to the provisions of Section 7.02 or any other provision restricting the disposition or pledge of such assets, or subject to any restriction on the disposition or pledge of such assets contained in any agreement or instrument between any Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of clauses (f) or (g) of Article VIII, will be Margin Stock.
(b) Each Borrower shall use the proceeds of the Loans for working capital and other general corporate purposes, including to consummate the Refinancing. No part of the proceeds of any Loan will be used to purchase or carry Margin Stock or to extend credit to others for the purpose of purchasing or carrying Margin Stock.
5.14 Subsidiaries. Schedule 5.14 sets forth, as of the Restatement Effective Date, a correct and complete list of the name and type of entity of each Loan Party. All of the issued and outstanding Equity Interests owned by any Loan Party in its Subsidiaries have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid and nonassessable.
5.15 Event of Default. No Default or Event of Default has occurred and is continuing.
5.16 Sanctions; Anti-Corruption Laws. (i) None of the Company or any of its Subsidiaries, nor to the knowledge of any Responsible Officer of the Company, any director, officer, employee, agent or Affiliate thereof is a Person that is, or is owned or controlled by one or more Persons that are: (i) the subject of any Sanctions; or (ii) located, organized or resident in a Designated Jurisdiction, including, without limitation, Cuba, Iran, North Korea, Crimea and Syria. Each Loan Party, their respective Subsidiaries and, to the knowledge of each Responsible Officer of such Loan Party, their respective directors, officers, employees, agents and Affiliates are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. Each Loan Party has implemented and maintains in effect policies and procedures designed to ensure compliance by such Loan Party, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws.
5.17 Money Laundering and Counter-Terrorist Financing Laws. Each Loan Party is in compliance, in all material respects, with the Bank Secrecy Act, as amended by Title III of the Patriot Act, and all other applicable anti-money laundering and counter terrorist financing laws and regulations.
ARTICLE VI.
AFFIRMATIVE COVENANTS
Until the Commitments shall have expired or been terminated, the principal of and interest on each Loan and all fees, expenses and other amounts payable under any Loan Document (other than contingent amounts not yet due) shall have been paid in full, all Letters of
Credit shall have expired or been terminated or cash collateralized as provided in Section 2.16 and all L/C Obligations shall have been reimbursed, each Borrower covenants and agrees with the Lenders that:
6.01 Financial Statements and Other Information. The Borrowers, or the Company on behalf of the Borrowers, will furnish to the Administrative Agent for prompt delivery to each Lender:
(a) as soon as possible, but in any event within 90 days after the end of each fiscal year of the Company, the Company’s audited consolidated balance sheet and audited consolidated condensed statements of income, stockholders’ equity and cash flows as of the end of and for such year, and related notes thereto, setting forth in each case in comparative form the corresponding figures for (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all reported on by Ernst & Young LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception (other than a “going concern” qualification or exception solely as a result of the upcoming maturity of the Loans on the Maturity Date and except for qualifications solely relating to changes in accounting principles or practices reflecting changes in GAAP and required or approved by the Company’s independent certified public accountant) and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
(b) as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Company, the Company’s unaudited consolidated balance sheet and unaudited consolidated condensed statements of income and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by a Financial Officer of the Company as presenting fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery or deemed delivery of financial statements under paragraph (a) or (b) above (or, in the case of any such delivery under paragraph (a) above, within 90 days after the end of the applicable fiscal year of the Company) a certificate of a Financial Officer of the Company substantially in the form of Exhibit F certifying (i) (solely in the case of
financial statements delivered pursuant to paragraph (b) above) such financial statements as presenting fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes, (ii) as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (iii) setting forth reasonably detailed calculations demonstrating compliance with the covenants contained in Sections 7.10 and 7.11 and (iv) stating whether any change in GAAP or in the application thereof that applies to the Company or any of its consolidated Subsidiaries has occurred since the later of the date of the Company’s most recent audited financial statements referred to in Section 5.04 and the date of the most recent prior certificate delivered pursuant to this paragraph (c) indicating such a change and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under paragraph (a) of this Section, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their audit of such financial statements of any failure of the Company to comply with the terms, covenants, provisions or conditions of Section 7.10 or Section 7.11 insofar as they relate to accounting matters and, if such accounting firm has obtained such knowledge of any failure to comply, a statement as to the nature thereof (which certificate may be limited to the extent required by accounting rules or guidelines);
(e) concurrently with any delivery of financial statements under paragraph (a) of this Section, a certificate signed by a Responsible Officer of the Company setting forth the names, jurisdictions of incorporation and consolidated revenues and Consolidated Total Assets for the Subsidiary Guarantors as of the end of the fiscal year to which such financial statements apply;
(f) promptly after Moody’s, S&P or Fitch shall have announced (i) a change in its Rating, (ii) that it shall no longer maintain a Rating or (iii) that it shall cease to be in the business of issuing corporate debt ratings, written notice of such development or rating change;
(g) promptly following any reasonable request therefor from the Administrative Agent, copies of any documents described in Sections 101 (k) or 101(1) of ERISA that any Loan Party or any ERISA Affiliate may request with respect to any Multiemployer Plan; provided that if the Loan Parties or any of the ERISA Affiliates have not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Administrative Agent, the Loan Parties and/or the
ERISA Affiliates shall promptly make a request for such documents or notices from such administrator or sponsor and the Loan Parties shall provide copies of such documents and notices promptly after receipt thereof;
(h) promptly following any reasonable request therefor, such other information regarding the operations, business affairs and financial condition of any Borrower or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent (on behalf of any Lender) may reasonably request; and
(i) promptly following any request therefor, information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act and the Beneficial Ownership Regulation.
(j) Information required to be delivered pursuant to Sections 6.01(a) and (b) deemed to have been delivered on the date on which such information has been posted on the SEC website on the Internet at www.sec.gov, or, to the extent the Company provides notice to the Administrative Agent, at another website identified in such notice and accessible by the Lenders without charge, provided that such notice may be included in a certificate delivered pursuant to Section 6.01(c).
Each Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers may, but shall not be obligated to, make available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf of such Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks, Syndtrak, ClearPar, or a substantially similar electronic transmission system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to any of the Borrowers or their respective Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities; provided, however, that each Public Lender shall in any event designate one or more persons who are entitled to view material non-public information to the same extent as Lenders who are not Public Lenders. Each Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrowers shall be deemed to have authorized the Administrative Agent, the Arrangers, the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrowers or their respective securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side
Information;” and (z) the Administrative Agent and the Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.” Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC.”
In no event shall the requirements set forth in Section 6.01(h) or any other Loan Document require the Company or any Subsidiary to provide any such information which (i) constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by Law, fiduciary duty or third-party contractual obligations (not created in contemplation thereof) or (iii) is subject to attorney-client or similar privilege or constitutes attorney work-product; provided that the Company shall notify the Administrative Agent promptly upon obtaining knowledge that such information is being withheld in reliance on this paragraph and, solely with respect to information being withheld due to third-party contractual obligations, use commercially reasonable efforts to secure the requisite consent to disclose such information.
6.02 Notices of Material Events. The Company will furnish to the Administrative Agent (for prompt distribution to each Lender through the Administrative Agent) written notice promptly, but in any event within five Business Days of, any of the Chief Executive Officer, the President, the General Counsel or the Chief Financial Officer of any Borrower obtaining actual knowledge of the following:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or, to the knowledge of the Chief Financial Officer or another executive officer of the Company or any Subsidiary, affecting the Company or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that alone or together with any other ERISA Events that have occurred or are reasonably expected to occur, could reasonably be expected to result in a liability in excess of $50,000,000;
(d) with respect to a funded Foreign Plan, a termination, withdrawal or noncompliance with applicable law or plan terms that would reasonably be expected to result in a liability in excess of $50,000,000;
(e) any event, notice or circumstance or any correspondence with any Governmental Authority (including with respect to any release into the indoor or outdoor environment of any Hazardous Material that is required by any applicable Environmental Law to be reported to a Governmental Authority) which could reasonably be expected to lead to any Material Adverse Effect; and
(f) any other development (including notice of any Environmental Liability) that results in, or could reasonably be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a written statement of the Chief Financial Officer or other executive officer of the Company setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
6.03 Existence; Conduct of Business. Each Borrower will, and will cause its Subsidiaries to, do or cause to be done all things necessary to obtain, preserve, renew and keep in full force and effect its legal existence and, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect, the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business, provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 7.03 or other disposition permitted hereunder.
6.04 Payment of Taxes. Each Borrower will, and will cause its Subsidiaries to, pay or discharge all material Taxes, before such Taxes shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, vii) the Company or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, viii) no attempt is being made to effect collection, or such contest effectively suspends collection, of the contested obligation and the enforcement of any Lien securing such obligation and ix) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.
6.05 Maintenance of Properties. Each Borrower will, and will cause its Subsidiaries to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear and casualty and condemnation events excepted.
6.06 Books and Records; Inspection Rights. Each Borrower will, and will cause each Subsidiary to, (a) keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities and x) in the case of each Loan Party, permit any representatives designated by the Administrative Agent or any Lender (including employees of the Administrative Agent, any Lender or any consultants, accountants, lawyers and appraisers retained by the Administrative Agent or any Lender), upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records (including environmental assessment reports and Phase I or Phase II studies, and other environmental documents, in each case, that are not protected by attorney-client privilege) and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times during normal business hours and as often as reasonably requested (but no more frequently than annually unless an Event of Default exists) and all with a representative of the Company present; provided, however, that absent the existence of an Event of Default, the Company shall not be required to pay for more than one such inspection and visit by the Administrative Agent and the Lenders (taken as a whole) in any fiscal year of the Company. The Borrowers acknowledge that the Administrative Agent, after exercising its rights
of inspection, may prepare and distribute to the Lenders certain Reports pertaining to the Loan Parties’ and their respective Subsidiaries’ assets for internal use by the Administrative Agent and the Lenders. The employees, consultants, accountants, lawyers and appraisers of the Administrative Agent and each Lender shall comply with the Company’s applicable safety and biosecurity procedures during any such visit or inspection to the extent the same are made available to the Administrative Agent or such Lender.
6.07 Compliance with Laws. (a) Each Borrower will, and will cause each of its Subsidiaries to, comply with all Requirements of Law with respect to it or its property, except where non-compliance could not reasonably be expected to result in a Material Adverse Effect or where the necessity of compliance therewith is contested in good faith by appropriate proceedings.
(b) Each Borrower will, and will cause each of its Subsidiaries to, (i) comply with all applicable Environmental Laws and (ii) generate, use, treat, store, release, transport, dispose of and otherwise manage all Hazardous Materials in a manner that would not reasonably be expected to result in a liability to any Loan Party or Subsidiary, except in the case of (i) and (ii) as could not reasonably be expected to result in a Material Adverse Effect.
6.08 Use of Proceeds; Letters of Credit. (a) The proceeds of the Loans will be used, and Letters of Credit will be issued, to finance general working capital needs and for other general corporate purposes, including to consummate the Refinancing, in each case of the Company and the Subsidiaries. No part of the proceeds of any Loan will be used, whether directly or indirectly, to purchase or carry Margin Stock, to extend credit to others for the purpose of purchasing or carrying Margin Stock or for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X or for the purpose of financing any unsolicited offer for the Equity Interests of any Person or any hostile acquisition.
(b) The Company will not directly or indirectly use the proceeds of the Loans, or lend, contribute or otherwise make available such proceeds of the Loans to any Person, for the purpose of financing activities or business of or with any Person, or in any country or territory that, at the time of such financing, is the subject of any Sanctions.
(c) No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of any Anti-Corruption Laws.
6.09 Insurance. The Company will, and will cause each Subsidiary to, maintain with financially sound and reputable insurance companies or through self-insurance, (a) insurance or self-insurance in such amounts (with no greater risk retention) and against such risks as is considered adequate by the Company, in its good faith judgment, and xi) all other insurance as may be required by law. The Company will furnish to the Administrative Agent, upon the
reasonable request of the Administrative Agent, information in reasonable detail as to the insurance so maintained.
6.10 Further Assurances. (a) The Company will, and will cause each Subsidiary to, execute any and all further documents, agreements and instruments, and take all such further actions that may be required under any applicable law, or that the Administrative Agent or the Required Lenders may reasonably request, to cause the Subsidiary Guarantee Requirement to be and remain satisfied at all times or otherwise to give effect to the provisions of the Loan Documents, all at expense of the Loan Parties.
(b) The Company will any and all further documents, agreements and instruments, and take all such further actions that may be required under any applicable law, or that the Administrative Agent or the Required Lenders may reasonably request, to give effect to the provisions of the Loan Documents, all at the expense of the Loan Parties.
ARTICLE VII.
NEGATIVE COVENANTS
Until the Commitments shall have expired or been terminated, the principal of and interest on each Loan and all fees, expenses and other amounts payable under any Loan Document (other than contingent amounts not yet due) shall have been paid in full, all Letters of Credit shall have expired or been terminated or cash collateralized as provided in Section 2.16 and all L/C Obligations shall have been reimbursed, each Borrower covenants and agrees with the Lenders that:
7.01 Indebtedness. (a) The Company will not permit any Subsidiary that is not a Loan Party to directly or indirectly, create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) Indebtedness existing on the Restatement Effective Date and set forth on Schedule 7.01 and Refinancing Indebtedness in respect thereof;
(iii) Indebtedness of any Subsidiary to the Company or any other Subsidiary; provided that such Indebtedness shall not have been transferred or pledged to any other Person (other than the Company or any Subsidiary);
(iv) Guarantees by any Subsidiary that is not a Loan Party of Indebtedness of any other Subsidiary that is not a Loan Party; provided that the Indebtedness so guaranteed shall not be prohibited by this Section;
(v) Indebtedness of any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets, and Refinancing Indebtedness in respect
thereof; provided that such Indebtedness is incurred prior to or within 180 days after such acquisition or the completion of such construction or improvement;
(vi) Indebtedness of any Person that becomes a Subsidiary (or of any Person not previously a Subsidiary that is merged or consolidated with or into a Subsidiary in a transaction permitted hereunder) after the Restatement Effective Date, or Indebtedness of any Person that is assumed by any Subsidiary in connection with an acquisition of assets by such Subsidiary, and Refinancing Indebtedness in respect thereof; provided that (A) such original Indebtedness exists at the time such Person becomes a Subsidiary (or is so merged or consolidated) or such assets are acquired and is not created in contemplation of or in connection with such Person becoming a Subsidiary (or such merger or consolidation) or such assets being acquired and (B) neither the Company nor any Subsidiary (other than such Person or the Subsidiary with which such Person is merged or consolidated or that so assumes such Person’s Indebtedness) shall Guarantee or otherwise become liable for the payment of such Indebtedness;
(vii) performance bonds, bid bonds, surety bonds, appeal bonds, completion Guarantees and similar obligations, in each case provided in the ordinary course of business or in connection with the enforcement of rights or claims of the Company or its Subsidiaries or in connection with judgments that do not result in a Default or an Event of Default;
(viii) Indebtedness owed to any Person providing workers' compensation, health, disability or other employee benefits or property, casualty or liability insurance, pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business;
(ix) Indebtedness under Swap Agreements permitted under Section 7.05;
(x) Indebtedness owed in respect of overdrafts and related liabilities arising from treasury, depository and cash management services or in connection with any automated clearinghouse transfers of funds;
(xi) Indebtedness consisting of indemnification, adjustment of purchase price, earnout or similar obligations (and Guarantees of such Indebtedness), in each case, incurred in connection with the disposition of any business, assets or a Subsidiary of the Company, other than Guarantees of Indebtedness incurred or assumed by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing or otherwise in connection with such acquisition; provided, however, that (A) such Indebtedness is not reflected on the balance sheet of the Company or any Subsidiary prepared in accordance with GAAP (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be
deemed to be reflected on such balance sheet for purposes of this clause (A)) and (B) the maximum aggregate liability in respect of all such Indebtedness shall not exceed the gross proceeds, including the fair market value of non-cash proceeds (the fair market value of such non-cash proceeds being measured at the time such proceeds are received and without giving effect to any subsequent changes in value), actually received by the Company and the Subsidiaries in connection with such disposition;
(xii) customer deposits and advance payments received in the ordinary course of business and consistent with past practices from customers business; for goods purchased in the ordinary course of business;
(xiii) Indebtedness of Foreign Subsidiaries not to exceed $750,000,000 at any time outstanding;
(xiv) other Indebtedness (including Indebtedness with respect to any trade financing facility and any Securitization Transaction); provided that the aggregate principal amount of Indebtedness of Subsidiaries outstanding under this clause (xiv), plus, without duplication, the aggregate principal amount of Indebtedness of the Company or any Subsidiary secured by Liens permitted under Section 7.02(k) (including, without duplication, obligations with respect to any trade financing facility and any Securitization Transaction) at any time shall not exceed 12.5% of Consolidated Net Tangible Assets; and Assets; and
(xv) Guarantees by any Subsidiary of third party grower obligations incurred in the ordinary course of business in an aggregate amount outstanding at any time not to exceed $250,000,000.
(b) Notwithstanding the provisions of paragraph (a) of this Section 7.01, no Subsidiary shall be liable for any Material Indebtedness of the Company under any Guarantee or otherwise, unless it shall also Guarantee the Obligations on terms and under documentation reasonably satisfactory to the Administrative Agent.
7.02 Liens. The Company will not, nor will it permit any Subsidiary to, create, incur, assume or or hereafter acquired by it, except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
(c) any Lien on any asset of the Company or any Subsidiary existing on the Restatement Effective Date and set forth on Schedule 7.02 (including any Lien that attaches by law to the proceeds thereof); provided that (i) such Lien shall not apply to any other property or asset of the Company or any Subsidiary and (ii) such Lien shall secure only those obligations
that it secures on the Restatement Effective Date or Refinancing Indebtedness in respect thereof;
(d) any Lien existing on any asset, including any Lien that attaches by law to the proceeds thereof, prior to the acquisition thereof by the Company or any Subsidiary or existing on any property or asset, including any Lien that attaches by law to the proceeds thereof, of any Person that becomes a Subsidiary or is merged or consolidated with the Company or any Subsidiary after the Restatement Effective Date prior to the time such Person becomes a Subsidiary or is so merged or consolidated securing Indebtedness of a type that would be permitted under Section 7.01(a)(vi) if incurred by a non-Loan Party Subsidiary of the Company; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition, merger or consolidation or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other asset of the Company or any Subsidiary and (iii) such Lien shall secure only those obligations that it secures on the date of such acquisition, merger or consolidation or the date such Person becomes a Subsidiary, as the case may be, or Refinancing Indebtedness in respect thereof;
(e) Liens on fixed or capital assets acquired, constructed improved by the Company or any Subsidiary, including any Lien that attaches by law to the proceeds thereof; provided that (i) such Liens secure Indebtedness of a type that would be permitted by clause (a)(v) of Section 7.01 if incurred by a non-Loan Party Subsidiary of the Company, (ii) such Liens and the Indebtedness secured thereby are incurred prior to or within 180 days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does not exceed the cost of acquiring, constructing or improving such fixed or capital assets and any financing costs associated therewith and (iv) such Liens shall not apply to any other property or asset of the Company or any Subsidiary;
(f) in connection with the sale or transfer of all the Equity Interests in a Subsidiary in a transaction permitted hereunder, customary rights and restrictions contained in agreements relating to such sale or transfer pending the completion thereof;
(g) in the case of any Subsidiary that is not a wholly-owned Subsidiary, any put and call arrangements, drag-along and tag-along rights and obligations, and transfer restrictions related to its Equity Interests set forth in its organizational documents or any related joint venture or similar agreement;
(h) any Lien on assets of any Foreign Subsidiary; provided that such Lien shall secure only Indebtedness or other obligations of such Foreign Subsidiary, or any other Foreign Subsidiary organized under the laws of the same nation as such Foreign Subsidiary, permitted hereunder;
(i) Liens on cash, cash equivalents or marketable securities of the Company or any Subsidiary securing obligations of the Company or any Subsidiary under Swap Agreements permitted under Section 7.05;
(j) Liens in favor of Smithfield Insurance Co. Ltd. on assets of the Company and its Subsidiaries securing extensions of credit from Smithfield Insurance Co. Ltd. to the Company and its Subsidiaries in an aggregate principal amount not to exceed $150,000,000 at any time outstanding; and
(k) other Liens on assets securing Indebtedness or other obligations (including obligations with respect to any trade financing facility and any Securitization Transaction); provided that the aggregate amount of such Indebtedness and other obligations, plus, without duplication, the aggregate principal amount of Indebtedness of Subsidiaries that are not Loan Parties outstanding under Section 7.01(a)(xiv) at any time shall not exceed 12.5% of Consolidated Net Tangible Assets.
7.03 Fundamental Changes; Business Activities. (a) The Company will not, nor will it permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or transfer all or substantially all its assets to any Person, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing, (i) any Subsidiary may merge into or transfer all or substantially all its assets to another Subsidiary, (ii) any Person acquired in a transaction not otherwise prohibited by this Agreement may merge into or consolidate with, or transfer all or substantially all its assets to, (x) any Subsidiary in a transaction in which the surviving or acquiring entity is a Subsidiary and (y) the Company in a transaction in which the surviving or acquiring entity is the Company, (iii) any special purpose Subsidiary formed for the purpose of effecting an acquisition and not conducting any business or holding assets other than de minimis assets may merge into or consolidate with any Person to be acquired in a transaction not otherwise prohibited by this Agreement, (iv) any Subsidiary may merge into or consolidate with or transfer all or substantially all its assets to any Person in a transaction permitted hereunder in which the surviving or acquiring entity is not a Subsidiary, (v) any Subsidiary may merge into or consolidate with or transfer all or substantially all its assets to the Company in a transaction in which the surviving or acquiring entity is the Company, and (vi) any Subsidiary may liquidate or dissolve if the Company determines in good faith that such liquidation or dissolution is in the best interests of the Company and is not materially disadvantageous to the Lenders.
(b) The Company will not, nor will it permit any Subsidiary to, engage, to any material extent, in any business other than (i) the production,
marketing and distribution of food products, any related food or agricultural products, processes or business, the production, marketing and distribution of renewable fuels, neutraceuticals, biotech products and other renewable products (or by-products), any other business in which the Company or any Subsidiary was engaged on the Restatement Effective Date, and any business related, ancillary or complementary to the foregoing, (ii) transfers to and agreements with SPE Subsidiaries relating to Securitization Transactions and (iii) in the case of SPE Subsidiaries, Securitization Transactions and transactions incidental or related thereto.
7.04 [Reserved].
7.05 Swap Agreements. The Company will not, nor will it permit any Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which the Company or a Subsidiary has actual exposure and xii) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any current or anticipated interest-bearing liability, Indebtedness or investment of the Company or any Subsidiary; provided, that the Company may enter into put and call option agreements in order effectively to fix price ranges for the purchases of shares of the Company’s capital stock to be made pursuant to share repurchase programs approved by its board of directors.
7.06 Transactions with Affiliates. The Company will not, nor will it permit any Subsidiary to, sell, lease, license or otherwise transfer any assets to, or purchase, lease, license or otherwise acquire any assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) transactions in the ordinary course of business that are at prices and on terms and conditions not less favorable to the Company or such Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, xiii) transactions between or among the Company and the Subsidiaries not involving any other Affiliate, xiv) any Restricted Payment, (d) investments in joint ventures pursuant to transactions otherwise permitted by this Agreement or (e) compensation and indemnification of, and other employment arrangements with, directors, officers and employees of the Company or such Subsidiary entered in the ordinary course of business.
7.07 Restricted Payments. The Company will not, nor will it permit any of its Subsidiaries to, declare or make, directly or indirectly, any Restricted Payment except (a) the Company may declare and pay dividends with respect to its common stock payable solely in additional shares of its common stock, and, with respect to its Preferred Stock, payable solely in additional shares of such Preferred Stock or in shares of its common stock, (b) Subsidiaries may declare and pay dividends ratably with respect to their Equity Interests, (c) Restricted Payments not otherwise permitted under this Section 7.07 as long as with respect to any Restricted Payment made in reliance on this clause (c): (i) no Event of Default shall exist or result therefrom and (ii) the Dollar Equivalent amount of such Restricted Payment, together with the aggregate amount of all Restricted Payments made between the Original Closing Date and March
12, 2018 pursuant to Section 7.07(c) of the Original Credit Agreement, made between March 13, 2018 and May 21, 2021 pursuant to Section 7.07(c) of the Existing Credit Agreement or in reliance on this clause (c), shall not exceed an amount equal to the sum of (1) $950,000,000 plus (2) an aggregate amount equal to the sum of the following but in no event less than zero: (x) 50% of the positive Net Income of the Company and its Subsidiaries for each fiscal quarter ended after the Original Closing Date (commencing with the first fiscal quarter following the Original Closing Date) minus (y) 100% of the negative Net Income of the Company and its Subsidiaries for each fiscal quarter ended after the fiscal year ended on the Original Closing Date (commencing with the first fiscal quarter following the Original Closing Date) (which amount set forth in this clause (y) shall be expressed as a positive number for purposes of the calculation set forth in this clause (2)), (d) Restricted Payments not otherwise permitted under this Section 7.07 so long as with respect to any Restricted Payment made in reliance on this clause (d): (i) no Event of Default shall exist or result therefrom, (ii) the Company is in pro forma compliance with each of the Financial Covenants and (iii) the Company has received a Rating of greater than or equal to two of the following Ratings: BBB- (stable) or better from S&P, Baa3 (stable) or better from Moody’s or BBB- (stable) or better from Fitch, (e) Subsidiaries that are not Loan Parties may make Restricted Payments to any Subsidiaries and (f) Restricted Payments to any direct or indirect holder of Equity Interests of the Company or any Subsidiary in amounts required for such holder to pay consolidated, combined or similar foreign, U.S. federal, state, and/or local income and similar Taxes to the extent that such income and similar Taxes are attributable to the income of the Company and its Subsidiaries; provided, that in each case the amount of such payments with respect to any fiscal year does not exceed the amount that the Company and its Subsidiaries would have been required to pay in respect of such foreign, U.S. federal, state and/or local income and similar Taxes for such fiscal year had the Company and its Subsidiaries been a stand-alone taxpayer or stand-alone group (separate from any such holder) for all fiscal years ending after the Restatement Effective Date.
7.08 [Reserved].
7.09 [Reserved].
7.10 Consolidated Funded Debt to Consolidated Capitalization Ratio. The Company will not permit the ratio of (a) Consolidated Funded Debt to xv) Consolidated Capitalization to be greater than 0.50 to 1.00 on the last day of any fiscal quarter (such maximum ratio, the “Maximum Debt to Capitalization Ratio”); provided that, upon the consummation of any Material Acquisition and the written election of the Company to the Administrative Agent (which shall promptly notify the Lenders), the Maximum Debt to Capitalization Ratio set forth above shall increase to 0.55 to 1.00 with respect to the last day of the fiscal quarter during which such Material Acquisition shall have been consummated and the last day of each of the immediately following three consecutive fiscal quarters; provided, further, that, following the making of any election with respect to any such Material Acquisition, the Company shall not be permitted to make another such election until and unless, after the last day of the fiscal quarter in which such Material Acquisition shall have been consummated, there shall have been at least two consecutive fiscal quarters as of the last day of which the Maximum Debt to Capitalization Ratio shall have been no more than 0.50 to 1.00.
7.11 Consolidated EBITDA to Consolidated Interest Expense. The Company will not permit the ratio of (a) Consolidated EBITDA for any period of four trailing fiscal quarters ended on the last day of any fiscal quarter to xvi) Consolidated Interest Expense for such period to be less than 3.50:1.00.
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
8.01 Events of Default. Any of the following shall constitute an “Event of Default”:
(a) any Borrower shall fail to pay, in the currency required hereunder, any principal of any Loan or any reimbursement obligations in respect of any L/C Obligation when and as the same shall become due and payable;
(b) any Borrower shall fail to pay, in the currency required hereunder, any interest on any Loan or any fee or any other amount (other than an amount referred to in paragraph (a) of this Article) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five Business Days or more;
(c) any representation, warranty or statement made or deemed made by or on behalf of any Loan Party in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder, shall prove to have been incorrect in any material respect (or, in the case of any representation, warranty or statement qualified by materiality, in any respect) when made or deemed made;
(d) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in Section 6.02(a), 6.03 (with respect to any Loan Party’s existence), 6.08 or Article VII of this Agreement;
(e) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraph (a), (b) or (d) of this Article), and, except as otherwise provided in such Loan Document, such failure shall continue unremedied for a period of 30 days after notice thereof from any Lender or the Administrative Agent to the Company;
(f) the Company or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness when and as the same shall become due and payable (or, if
any grace periods shall be applicable, after the expiration of such grace periods);
(g) any event or condition occurs (including the triggering of any change in control or similar event with respect to the Company) that results in any Material Indebtedness (other than obligations in respect of Swap Agreements) becoming due prior to its scheduled maturity or the effect of which default or other event or condition is to cause, or to permit the holder or holders of any Material Indebtedness (other than obligations in respect of Swap Agreements) (or a trustee or agent on behalf of such holder or holders) to cause such Indebtedness to become due prior to its scheduled maturity or to require, with the giving of notice if required, any Material Indebtedness (other than obligations in respect of Swap Agreements) to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), prior to its stated maturity, provided that this paragraph (g) shall not apply to secured Indebtedness that becomes due as a result of the sale, transfer or other disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness (to the extent such sale, transfer or other disposition is not prohibited under this Agreement); or there shall occur any event that constitutes a default, amortization event, event of termination or similar event under or in connection with any Securitization Transaction the obligations in respect of which constitute Material Indebtedness, or the Company or any Subsidiary shall fail to observe or perform any term, covenant, condition or agreement contained in or arising under any such Securitization Transaction, if, as a result of such event or failure, the lenders or purchasers thereunder or any agent acting on their behalf shall cause or be permitted to cause (with or without the giving of notice, the lapse of time or both) such Securitization Transaction or the commitments of the lenders or purchasers thereunder to terminate or cease to be fully available; or there occurs under any Swap Agreement an Early Termination Date (or similar term) (as defined in such Swap Agreement) resulting from any event of default under such Swap Agreement as to which the Company or any Subsidiary is the Defaulting Party (or similar term) (as defined in such Swap Agreement) and the Swap Termination Value owed by the Company or such Subsidiary as a result thereof is greater than $150,000,000;
(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) bankruptcy, liquidation, winding up, dissolution, reorganization, examination, suspension of general operations or other relief in respect of a Loan Party or any Material Subsidiary or its debts, or of a substantial part of their assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for a Loan Party or any Material Subsidiary
or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed or unstayed for 90 days or more or an order or decree approving or ordering any of the foregoing shall be entered;
(i) any Loan Party or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in paragraph (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or any Material Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;
(j) any Loan Party or any Material Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate amount in excess of $150,000,000 (to the extent not covered by insurance (other than deductibles); provided, that the insurer does not deny liability for the judgment) shall be rendered against any Loan Party, any Subsidiary or any combination thereof and the same shall remain unpaid or undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of any Loan Party or any Subsidiary to enforce any such judgment;
(1) (i) an ERISA Event with respect to a Plan or Multiemployer Plan or (ii) an event or condition with respect to a Foreign Plan shall have occurred that, either alone or when taken together with all other such ERISA Events or events that have occurred, is reasonably likely to have a Material Adverse Effect;
(m) Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations and termination of the Commitments, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or
(n) a Change of Control shall occur.
8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the Administrative Agent may, with the consent of, and shall, at the request of, the Required Lenders take any or all of the following actions:
(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers;
(c) require that the Company Cash Collateralize the L/C Obligations (in an amount equal to the Minimum Collateral Amount with respect thereto).
(d) exercise on behalf of itself, the Lenders and the L/C Issuer all rights and remedies available to it, the Lenders and the L/C Issuer under the Loan Documents;
provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to any Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Company to Cash Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.
8.03 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.16 and 2.17, be applied by the Administrative Agent in the following order:
First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;
Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders
and the L/C Issuer (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuer (including fees and time charges for attorneys who may be employees of any Lender or the L/C Issuer) and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;
Third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations, ratably among the Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Third payable to them;
Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings, ratably among the Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Fourth held by them;
Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Company pursuant to Sections 2.03 and 2.16; and
Last, the balance, if any, after all of the Obligations have been indefensibly paid in full, to the Company or as otherwise required by Law.
Subject to Sections 2.03(c) and 2.16, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.
ARTICLE IX.
ADMINISTRATIVE AGENT
9.01 Appointment and Authority. Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article (other than Sections 9.06 and 9.10) are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuer, and neither the Company nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
9.02 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrowers or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and
(c) shall not have any duty or responsibility to disclose, and shall not be liable for the failure to disclose, to any Lender, any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their Affiliates, that is communicated to, obtained or in the possession of, the Administrative Agent or any of its Related Parties in any capacity, except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein.
The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction by final and non-appealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Company, a Lender or the L/C Issuer.
The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions of this Agreement relating to Competitors. Without limiting the generality of the foregoing, the Administrative Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether any Lender or Participant or prospective Lender or Participant is a Competitor or (y) have any liability with respect to or arising out of any assignment or participation of Loans, or disclosure of confidential information, to any Competitor.
9.04 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Company), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
9.05 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative
Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
9.06 Resignation of Administrative Agent. (a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the L/C Issuer and the Company. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Company, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders and the L/C Issuer, appoint a successor Administrative Agent meeting the qualifications set forth above, provided that in no event shall any such successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.
(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Company and such Person remove such Person as Administrative Agent and, in consultation with the Company, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, (A) all payments and communications provided to be
made by, to or through the Administrative Agent shall instead be made by or to each Lender and the L/C Issuer directly and (B) all determinations provided to be made by, to or through the Administrative Agent shall instead be made by the Required Lenders, in each case, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 3.01(g) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section) . The fees payable by the Company to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Company and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them (i) while the retiring or removed Administrative Agent was acting as Administrative Agent and (ii) after such resignation or removal for as long as any of them continues to act in any capacity hereunder or under the other Loan Documents, including (a) acting as collateral agent or otherwise holding any collateral security on behalf of any of the Lenders and (b) in respect of any actions taken in connection with transferring the agency to any successor Administrative Agent.
(d) Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as L/C Issuer and Swing Line Lender. If Bank of America resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto, including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c). Upon the appointment by the Company of a successor L/C Issuer or Swing Line Lender hereunder (which successor shall in all cases be a Lender other
than a Defaulting Lender), (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as applicable, (b) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.
9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly acknowledges that the Administrative Agent has not made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any consent to, and acceptance of any assignment or review of the affairs of any Loan Party of any Affiliate thereof, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender as to any matter, including whether the Administrative Agent has disclosed material information in its (or their Related Parties’) possession. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent, any other Lender or any of their respective Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis of, appraisal of, and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Company hereunder. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, any other Lender or any of their respective Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties. Each Lender represents and warrants that (i) the Loan Documents set forth the terms of a commercial lending facility and (ii) it is engaged in making, acquiring or holding commercial loans in the ordinary course and is entering into this Agreement as a Lender for the purpose of making, acquiring or holding commercial loans and providing other facilities set forth herein as may be applicable to such Lender, and not for the purpose of purchasing, acquiring or holding any other type of financial instrument, and each Lender agrees not to assert a claim in contravention of the foregoing. Each Lender represents and warrants that it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Lender, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities.
9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the Bookrunners or Arrangers listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the L/C Issuer hereunder.
9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on any Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuer and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuer and the Administrative Agent under Sections 2.03(h) and (i), 2.09 and 10.04) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 10.04.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or the L/C Issuer in any such proceeding.
9.10 Guaranty Matters. (a) Any Subsidiary Guarantor that (i) (A) ceases to be a Subsidiary of the Company, (B) is an Excluded Subsidiary (other than a Subsidiary Guarantor that is an Excluded Subsidiary pursuant to clause (c) of the definition thereof and, in the case of a Subsidiary Guarantor that becomes an Excluded Subsidiary after the Restatement Effective Date,
solely to the extent that such Subsidiary Guarantor becomes an Excluded Subsidiary as a result of a transaction permitted under the Loan Documents) or (C) is not required to meet the “Subsidiary Guarantee Requirement” as set forth in the proviso to the definition thereof and (ii) does not Guarantee the Senior Notes (or any replacement, refinancing, refunding, renewal or extension thereof) or any Material Indebtedness of the Company or shall be released from any such Guarantee of the Senior Notes (or any replacement, refinancing, refunding, renewal or extension thereof) or any Material Indebtedness of the Company concurrently with the effectiveness of the release contemplated by this Section 9.10 shall, upon written notice to the Administrative Agent, automatically and without further action by any other Person be released from its obligations under the Guaranty Agreement and, in connection with the foregoing, the Administrative Agent shall (and the Lenders and the L/C Issuer hereby irrevocably authorize the Administrative Agent to) promptly execute, deliver and file, as applicable, such documents, filings and other similar instruments as the Company may reasonably request to reflect such release. Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release any Subsidiary Guarantor from its obligations under the Guaranty Agreement pursuant to this Section 9.10.
(b) Upon request by the Administrative Agent, the Company shall provide a certificate signed by a Responsible Officer confirming that the conditions to release of any Subsidiary Guarantor set forth in clause (a) above are satisfied, and the Administrative Agent shall be fully protected in relying upon such certification.
9.11 Certain ERISA Matters. (a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:
(i) such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement,
(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.
(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that none of the Administrative Agent, the Arrangers or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender involved in such Lender's entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
9.12 Recovery of Erroneous Payments. Without limitation of any other provision in this Agreement, if at any time the Administrative Agent makes a payment hereunder in error to any Lender or the L/C Issuer (the “Credit Party”), whether or not in respect of an Obligation due and owing by the Borrower at such time, where such payment is a Rescindable Amount, then in any such event, each Credit Party receiving a Rescindable Amount severally agrees to repay to the Administrative Agent forthwith on demand the Rescindable Amount received by such Credit Party in immediately available funds in the currency so received, with interest thereon, for each day from and including the date such Rescindable Amount is received by it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. Each Credit Party irrevocably waives any and all defenses, including any “discharge for value” (under which a creditor might otherwise claim a right to retain funds mistakenly paid by a third party in respect of a debt owed by another) or similar defense to its
obligation to return any Rescindable Amount. The Administrative Agent shall inform each Credit Party promptly upon determining that any payment made to such Credit Party comprised, in whole or in part, a Rescindable Amount.
MISCELLANEOUS
10.01 Amendments, Etc. Subject to Section 3.03(b), no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Company or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Company or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.01(a) without the written consent of each Lender;
(b) except as contemplated pursuant to Section 2.15 and Section 2.18, extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02) without the written consent of such Lender (it being understood and agreed that a waiver of any condition precedent set forth in Section 4.02 or of any Default is not considered an extension or increase in Commitments of any Lender);
(c) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender entitled to such payment; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Company to pay interest at the Default Rate;
(d) reduce the principal of, or the rate of interest specified herein on (subject to the last paragraph of this Section 10.01), any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of any Borrower to pay interest or Letter of Credit Fees at the Default Rate;
(e) change Section 2.13 or Section 8.03 or any provision hereof in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender adversely affected thereby;
(f) amend Section 1.06 or the definition of “Alternative Currency” without the written consent of each Multicurrency Revolving Credit Lender;
(g) change (i) any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder (other than the definition specified in clause (ii)) without the written consent of each Lender or (ii) the definition of “Required Lenders” or “Required Facility Lenders” without the written consent of each Lender under the applicable Facility;
(h) [reserved];
(i) release all or substantially all of the value of the Guarantee provided by the Company or any Subsidiary Guarantor under the Guaranty Agreement without the written consent of each Lender, except in accordance with the terms hereof; or
(j) subordinate, or have the effect of subordinating, the Obligations hereunder to any other Indebtedness or other obligation without the prior written consent of each Lender directly affected thereby;
and, provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; (iv) the Fee Letters may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto and (v) Section 10.06(g) may not be amended, waived or otherwise modified without the consent of each Granting Lender all or any part of whose Loans are being funded by an SPC at the time of such amendment, waiver or other modification. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.
Notwithstanding anything to the contrary herein, if the Administrative Agent and the Company have jointly identified any ambiguity, mistake, defect, inconsistency, obvious error, omission or any other error or omission of a technical nature or any necessary or desirable technical change on any Lender, in each case, in any provision of any Loan Document, the Company and the Administrative Agent shall be permitted to effect amendments to this Agreement or any other Loan Document, as applicable, solely to address such matter and such
amendment shall become effective without the consent of any other party to this Agreement so long as, in each case, the Lenders shall have received at least five (5) Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five (5) Business Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating that the Required Lenders object to such amendment.
Notwithstanding anything to the contrary in this Section 10.01, the Administrative Agent and the Company may, without the consent of any Lender, (x) enter into amendments or modifications to this Agreement or any of the other Loan Documents or (y) enter into additional Loan Documents, in each case, as the Administrative Agent reasonably deems appropriate in order to implement any LIBOR Term SOFR Successor Rate or Eurocurrency Successor Rate or otherwise effectuate the terms of Section 3.03 in accordance with the terms of Section 3.03.
10.02 Notices; Effectiveness; Electronic Communication. (a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(i) if to the Company or any other Loan Party, the Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 10.02; and
(ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Company).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).
(b) Electronic Communications. Notices and other communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail, FpML messaging, and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or the L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The
Administrative Agent, the Swing Line Lender, the L/C Issuer or the Company may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to any Borrower, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Company’s, any Loan Party’s or the Administrative Agent’s transmission of Borrower Materials or notices through the platform, any other electronic platform or electronic messaging service, or through the Internet.
(d) Change of Address, Etc. Each of the Borrowers, the Administrative Agent, the L/C Issuer and the Swing Line Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the Company, the Administrative Agent, the L/C Issuer and the Swing Line Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other
communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender's compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Company or its securities for purposes of United States Federal or state securities laws.
(e) Reliance by Administrative Agent, L/C Issuer and Lenders. The Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including telephonic notices, Committed Loan Notices, Letter of Credit Applications and Swing Line Loan Notices) purportedly given by or on behalf of any Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Loan Parties shall indemnify the Administrative Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of any Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.
10.03 No Waiver; Cumulative Remedies; Enforcement. No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders and the L/C Issuer; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, xvii) the L/C Issuer or the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as L/C Issuer
or Swing Line Lender, as the case may be) hereunder and under the other Loan Documents, xviii) any Lender from exercising setoff rights in accordance with Section 10.08 (subject to the terms of Section 2.13), or xix) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.13, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
10.04 Expenses; Indemnity; Damage Waiver. (a) Costs and Expenses. The Company shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, the Arrangers and their respective Affiliates (but in the case of attorneys’ fees, limited to the reasonable fees, charges and disbursements of one counsel for the Administrative Agent and the Arrangers, taken as a whole, and of one local counsel for the Administrative Agent and the Arrangers, taken as a whole, in each material local jurisdiction), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, the Arrangers, any Lender or the L/C Issuer (but in the case of attorneys’ fees, limited to the reasonable and documented fees, charges and disbursements of one counsel for the Administrative Agent, the Lenders and the L/C Issuer, taken as a whole, and of one local counsel in each material local jurisdiction (and, in the case of an actual conflict of interest, one additional counsel in each material jurisdiction to all affected persons, taken as a whole)) (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable and documented out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) Indemnification by the Company. The Company shall indemnify the Administrative Agent (and any sub-agent thereof), each Arranger, each Lender and the L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against (and reimburse each Indemnitee as the same are incurred for), and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and expenses (but in the case of attorneys’ fees, limited to the reasonable fees, charges and disbursements of one primary counsel for the Indemnitees (taken as a whole) (and, if necessary, one local counsel in each material jurisdiction for the Indemnitees (taken as a whole) and, solely in the case of a conflict
of interest, one additional counsel as necessary to the Indemnitees actually affected by such conflict (taken as a whole))), and shall indemnify and hold harmless each Indemnitee from all reasonable fees and time charges and disbursements incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Company or any other Loan Party) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), or (iii) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned, leased or operated by any Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to any Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Company or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from (A) the bad faith, gross negligence or willful misconduct of such Indemnitee, (B) a material breach by such Indemnitee of its obligations under this Agreement or (C) any dispute among Indemnitees (or their respective Related Parties), excluding the Administrative Agent, the Arrangers or Persons acting in similar capacities, that does not involve an act or omission by the Company or any of its Subsidiaries. This Section 10.04(b) shall not apply with respect to Taxes, which shall be covered solely by Section 3.01.
(c) Reimbursement by Lenders. To the extent that the Company for any reason fails to indefensibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C Issuer, the Swing Line Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the L/C Issuer, the Swing Line Lender or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Total Revolving Credit Outstandings at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them based on such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), provided further that the unreimbursed expense or indemnified
loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), the L/C Issuer or the Swing Line Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), the L/C Issuer or the Swing Line Lender in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.12(d).
(d) Waiver of Consequential Damages, Etc. no party shall assert, and each party To the fullest extent permitted by applicable law, hereby waives, and acknowledges that no other Person shall have, any claim against any other party, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages), including for contribution or any other rights of recover under or related to Environmental Laws, arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof; provided that nothing in this Section 10.04(d) shall limit the indemnification obligations of the Borrower under Section 10.04(b) to the extent such special, indirect, consequential or punitive damages are included in any third party claim in connection with which such Indemnitee is entitled to indemnification hereunder. No party referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such party through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby, except to the extent that such damages are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the bad faith, gross negligence or willful misconduct of, or material breach of this Agreement by, such party.
(e) Payments. All amounts due under this Section shall be payable no later than ten (10) Business Days after demand therefor (or, on the Restatement Effective Date, as applicable).
(f) Survival. The agreements in this Section and the indemnity provisions of Section 10.02(e) shall survive the resignation of the Administrative Agent, the L/C Issuer and the Swing Line Lender, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.
10.05 Payments Set Aside. To the extent that any payment by or on behalf of any Borrower is made to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, the L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Overnight Rate from time to time in effect, in the applicable currency of such recovery or payment. The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.
10.06 Successors and Assigns. (a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Company nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section or (iv) to an SPC in accordance with the provisions of subsection (g) of this Section 10.06 (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that (in each case with respect to any Facility) any such assignment shall be subject to the following conditions:
(i) Minimum Amounts.
(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment (in each case with respect to any Facility) or contemporaneous assignments to related Approved Funds (determined after giving effect to such Assignments) that equal at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate and the Loans at the time owing to it under such Facility or in the case of an assignment to a Lender, an
Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000, in the case of any assignment in respect of the Revolving Credit Facility, unless each of the Administrative Agent and, so long as no Event of Default under Section 8.01(a), (b), (h), (i) or (j) has occurred and is continuing, the Company otherwise consents (each such consent not to be unreasonably withheld or delayed).
(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not (A) apply to the Swing Line Lender's rights and obligations in respect of Swing Line Loans or (B) prohibit any Lender from assigning all or a portion of its rights and obligations among the revolving credit facility provided hereunder and any separate revolving credit facilities provided pursuant to the last paragraph of Section 10.01 on a non-pro rata basis;
(iii) Required Consents. No consent shall be required required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:
(A) the consent of the Company (such consent not to be unreasonably withheld or delayed) shall be required unless (l)an Event of Default under Section 8.01(a), (b), (h), (i) or (j) has occurred and is continuing at the time of such assignment or (2) such assignment is to (1) a Lender, (2) an Affiliate of a Lender or (3) an Approved Fund, unless such Approved Fund has a lower credit rating, or is otherwise less creditworthy than, the assigning Lender; provided that the Company shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten Business Days after having received notice thereof;
(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for any assignment in respect of any Revolving Credit Commitment if such assignment is to a Person that is not a Lender under the Revolving Credit Facility, respectively, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and
(C) the consent of the L/C Issuer and the consent of the Swing Line Lender (such consents not to be unreasonably withheld or delayed) shall be required for any assignment in respect of the US Dollar Revolving Credit Facility.
(iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(v) No Assignment to Certain Persons. No such assignment shall be made (A) to the Company or any of the Company’s Affiliates or Subsidiaries, (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), (C) to a natural Person (or to a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural Person) or (D) to a Competitor.
(vi) Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Company and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, the L/C Issuer or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swing Line Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Upon request, each Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.
(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrowers (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrowers, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(d) Participations. Any Lender may at any time, without the consent of, or notice to, any Borrower, the Administrative Agent, the L/C Issuer or the Swing Line Lender, sell participations to any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural Person, a Defaulting Lender or the Company or any of the Company’s Affiliates or Subsidiaries or, to the extent the Competitor List has been posted on the Platform for all Lenders, a Competitor) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Lenders and the L/C Issuer shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall
be responsible for the indemnity under Section 10.04(c) without regard to the existence of any participation.
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant. The Company agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section (it being understood that the documentation required under Section 3.01(e) shall be delivered to the Lender who sells the participation) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 3.06 and 10.13 as if it were an assignee under paragraph (b) of this Section and (B) shall not be entitled to receive any greater payment under Sections 3.01 or 3.04, with respect to any participation, than the Lender from whom it acquired the applicable participation would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Company’s request and expense, to use reasonable efforts to cooperate with the Company to effectuate the provisions of Section 3.06 with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.13 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Company, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant's interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.lO3-l(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
Notwithstanding anything in this paragraph to the contrary, any Farm Credit Lender that (a) has purchased a participation or subparticipation in the minimum amount of $10,000,000 on or after the Restatement Effective Date, (b) is, by written notice to the Company and the Administrative Agent (“Voting Participant Notification”), designated by the selling Lender as being entitled to be accorded the rights of a Voting Participant hereunder (any Farm Credit
Lender so designated, a “Voting Participant”) and (c) receives the prior written consent of the Company (unless an Event of Default has occurred and is continuing) and the Administrative Agent to become a Voting Participant, shall be entitled to vote (and the voting rights of the selling Lender shall be correspondingly reduced), on a dollar for dollar basis, as if such participant were a Lender, on any matter requiring or allowing a Lender to provide or withhold its consent, or to otherwise vote on any proposed action. To be effective, each Voting Participant Notification shall, with respect to any Voting Participant, (i) state the full name, as well as all contact information required of an assignee as set forth in Exhibit E-l hereto and (ii) state the dollar amount of the participation or sub-participation purchased. The selling Lender and the Voting Participant shall promptly notify the Administrative Agent and the Company of any termination of, or reduction or increase in the amount of, the participation interests held by a Voting Participant. Except as provided above in this paragraph, no sub-participants shall be entitled to become “Voting Participants.” The voting rights of a Voting Participant hereunder are solely for the benefit of the Voting Participant and shall not inure to any assignee or sub-participant of a Voting Participant.” The Company and the Administrative Agent shall be entitled to conclusively rely on information contained in notices delivered pursuant to this paragraph.
(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any other central banking authority having jurisdiction over such Lender; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(f) Resignation as L/C Issuer or Swing Line Lender after Assignment. Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Revolving Credit Commitment and Revolving Credit Loans pursuant to subsection (b) above. Bank of America may, (i) upon 30 days’ notice to the Company and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Company, resign as Swing Line Lender. In the event of any such resignation as L/C Issuer or Swing Line Lender, the Company shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however, that no failure by the Company to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Committed Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Committed Loans or fund risk
participations in outstanding Swing Line Loans pursuant to Section 2.04(c). Upon the appointment of a successor L/C Issuer and/or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.
(g) Special Purpose Funding Vehicles. Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Company (an “SPC”) the option to provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof or, if it fails to do so, to make such payment to the Administrative Agent as is required under Section 2.12(b). Each party hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of any Borrower under this Agreement (including its obligations under Section 3.04), (ii) the Granting Lender (but not any SPC) shall remain liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the lender of record hereunder. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding anything to the contrary contained herein, any SPC may with notice to, but without prior consent of the Company and the Administrative Agent and with the payment of a processing fee in the amount of $3,500 (which processing fee may be waived by the Administrative Agent in its sole discretion), assign all or any portion of its right to receive payment with respect to any Loan to the Granting Lender.
(h) Assignments to Competitors. (i) If any assignment is made to any Competitor without the Company’s prior consent, the Company may, at its sole expense and
effort, upon notice to the applicable Competitor and the Administrative Agent, (A) terminate any Commitment of such Competitor and repay all obligations of the Company owing to such Competitor in connection with such Commitment and/or (B) require such Competitor to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in this Section 10.06), all of its interest, rights and obligations under this Agreement and related Loan Documents to an Eligible Assignee that shall assume such obligations at the lesser of (x) the committed amount thereof and (y) the amount that such Competitor paid to acquire such interests, rights and obligations, in each case plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to it hereunder and other the other Loan Documents; provided that (i) the Company shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 10.06(b) and (ii) such assignment does not conflict with Applicable Laws.
(ii) The Administrative Agent shall have the right, and the Company hereby expressly authorizes the Administrative Agent, to (A) post the list of Competitors provided by the Company and any updates thereto from time to time (collectively, the "Competitor List”) on the Platform, including that portion of the Platform that is designated for "public side” Lenders or (B) provide the Competitor List to each Lender requesting the same.
10.07 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent, the Arrangers, Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates, its auditors and its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal or administrative process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, including for purposes of establishing a “due diligence” defense, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement or any Eligible Assignee invited to be a Lender pursuant to Section 2.15(c) or Section 10.01 or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to any of the Borrowers and their obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating the Company or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the consent of
the Company, (i) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than the Company, (j) to the extent such information was received by the Administrative Agent or the Arrangers from a third-party that is not to the Administrative Agent or the Arrangers’ knowledge subject to confidentiality restrictions to the Company or (k) to the extent that such Information is independently developed by Bank of America or the Arrangers. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Agents and the Lenders in connection with the administration of this Agreement, the other Loan Documents, and the Commitments.
For purposes of this Section, “Information” means all information received from the Company or any Subsidiary relating to the Company or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the L/C Issuer on a nonconfidential basis prior to disclosure by the Company or any Subsidiary, provided that, in the case of information received from the Company or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person accord to its own confidential information.
Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include material non-public information concerning the Company or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.
10.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, after obtaining the prior written consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed), to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of the Company or any other Loan Party against any and all of the obligations of the Company or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer or their respective Affiliates, irrespective of whether or not such Lender, L/C Issuer or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Company or such Loan Party may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender or the L/C Issuer different from the branch, office or Affiliate holding
such deposit or obligated on such indebtedness; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.17 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the L/C Issuer and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective Affiliates may have. Each Lender and the L/C Issuer agrees to notify the Company and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.
10.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Company. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent or the L/C Issuer, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (e.g. “pdf’ or “tif’) shall be effective as delivery of a manually executed counterpart of this Agreement.
10.11 Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.
10.12 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable,(a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 10.12, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, the L/C Issuer or the Swing Line Lender, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.
10.13 Replacement of Lenders. If the Company is entitled to replace a Lender pursuant to the provisions of Section 3.06, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Company may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06), all of its interests, rights (other than its existing rights to payments pursuant to Sections 3.01 and 3.04) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:
(a) the Company shall have paid (or caused a Designated Borrower to pay) to the Administrative Agent the assignment fee (if any) specified in Section 10.06(b);
(b) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Company or applicable Designated Borrower (in the case of all other amounts);
(c) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter;
(d) such assignment does not conflict with applicable Laws; and
(e) in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Company to require such assignment and delegation cease to apply.
Each party hereto agrees that (a) an assignment required pursuant to this Section 10.13 may be effected pursuant to an Assignment and Assumption executed by the Company, the Administrative Agent and the assignee and (b) the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to and be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender; provided, further that any such documents shall be without recourse to or warranty by the parties thereto.
10.14 Governing Law; Jurisdiction; Etc. (a) GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) SUBMISSION TO JURISDICTION. THE COMPANY AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, THE L/C ISSUER, OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW | YORK SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE COMPANY OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) WAIVER OF VENUE. THE COMPANY AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS; PROCESS AGENT. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Company and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Arrangers and the Lenders are arm’s-length commercial transactions between the Company, each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent, the Arrangers and the Lenders, on the other hand, (B) each of the Company and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Company and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent, the Arrangers and each Lender is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Company, any other Loan Party or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent, the Arrangers nor any Lender has any obligation to the Company, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Arrangers and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent, the Arrangers nor any Lender has any obligation to disclose any of such interests to the Company, any other Loan Party or any of their respective Affiliates. Each of the Company and the other Loan Parties hereby agrees that it will not claim that any of the Administrative Agent, the Arrangers, any Lender and any of their respective Affiliates has rendered advisory services of any nature or respect or owes a fiduciary duty or similar duty to it in connection with any aspect of any transaction contemplated hereby.
10.17 Electronic Execution of Agreement Communications. This Agreement and any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Agreement (each an “Agreement Communication”), including Agreement Communications required to be in writing, may be in the form of an Electronic Record and may be executed using Electronic Signatures. Each of the Loan Parties agrees that any Electronic Signature on or associated with any Agreement Communication shall be valid and binding on each of the Loan Parties to the same extent as a manual, original signature, and that any Agreement Communication entered into by Electronic Signature will constitute the legal, valid and binding obligation of each of the Loan Parties enforceable against
such Loan Party in accordance with the terms thereof to the same extent as if a manually executed original signature was delivered. Any Agreement Communication may be executed in as many counterparts as necessary or convenient, including both paper and electronic counterparts, but all such counterparts are one and the same Agreement Communication. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Administrative Agent and each of the Lenders of a manually signed paper Agreement Communication which has been converted into electronic form (such as scanned into PDF format), or an electronically signed Agreement Communication converted into another format for transmission, delivery and/or retention. The Administrative Agent and each of the Lenders may, at its option, create one or more copies of any Agreement Communication in the form of an imaged Electronic Record (“Electronic Copy”), which shall be deemed created in the ordinary course of the such Person’s business, and destroy the original paper document. All Agreement Communications in the form of an Electronic Record, including an Electronic Copy, shall be considered an original for all purposes, and shall have the same legal effect, validity and enforceability as a paper record. Notwithstanding anything contained herein to the contrary, the Administrative Agent is under no obligation to accept an Electronic Signature in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it; provided, without limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept such Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on any such Electronic Signature purportedly given by or on behalf of any Loan party without further verification and (ii) upon the request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by such manually executed counterpart. For purposes hereof, “Electronic Record” and “Electronic Signature” shall have the meanings assigned to them, respectively, by 15 USC §7006, as it may be amended from time to time.
10.18 USA PATRIOT Act. Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of each Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify such Borrower in accordance with the Act. Each Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.
10.19 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of each Borrower in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency
(the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any Lender from any Borrower in the Agreement Currency, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender in such currency, the Administrative Agent or such Lender, as the case may be, agrees to return the amount of any excess to such Borrower (or to any other Person who may be entitled thereto under applicable law).Entire Agreement. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
10.21 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Solely to the extent any Lender or L/C Issuer that is an Affected Financial Institution is a party to this Agreement and notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender or L/C Issuer that is an Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender or L/C Issuer that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms W such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution Authority.
10.22 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any Swap Agreement or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(a) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
(b) As used in this Section 10.22, the following terms have the following meanings:
“BHC Act Affiliate” of means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841 (k)) of such party.
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 3 82.1, as applicable.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
10.23 Amendment and Restatement. On the Restatement Effective Date, this Agreement shall amend and restate the Existing Credit Agreement in its entirety, and the rights and obligations of the parties hereto evidenced by the Existing Credit Agreement shall be evidenced by this Agreement and the other Loan Documents. Substantially concurrently with the Restatement Effective Date, (i) all of the Commitments (as defined in the Existing Credit Agreement) of each Lender that is a party to the Existing Credit Agreement but is not a party to this Agreement (an “Exiting Lender”) will be terminated, all outstanding Obligations (as defined in the Existing Credit Agreement) owing to the Exiting Lenders shall be repaid in full and each Exiting Lender will cease to be a “Lender” under the Existing Credit Agreement and shall not be a Lender under this Agreement, (ii) each Person listed on Schedule 2.01 to this Agreement shall be a Lender under this Agreement with the Commitments set forth opposite its name on Schedule 2.01 and (iii) any Loans to be made on the Restatement Effective Date shall be made in accordance with the Commitments set forth on Schedule 2.01. The parties hereto acknowledge that pursuant to the Existing Credit Agreement, the Parent Guaranty Agreement, dated as of February 17, 2017, between WH Group and the Administrative Agent was terminated and is of no further force and effect and WH Group was released from its obligations thereunder and under any other Loan Document.
Exhibit 10.3
Execution Version
AMENDMENT NO. 2 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 2 (this “Agreement”), dated as of June 28, 2024, is entered into by BANK OF AMERICA, N.A., as administrative agent (the “Administrative Agent”).
RECITALS
WHEREAS, SMITHFIELD FOODS, INC., a Virginia corporation (the “Company”) has entered into the Second Amended and Restated Credit Agreement, dated as of May 21, 2021, with the lenders party thereto from time to time, BANK OF AMERICA, N.A., as administrative agent (in such capacity and including any successors in such capacity, the “Administrative Agent”) and the other parties thereto (as heretofore amended, the “Credit Agreement”; the Credit Agreement as amended hereby (the “Amended Credit Agreement”));
WHEREAS, certain loans and/or other extensions of credit under the Credit Agreement denominated in Canadian Dollars incur or are permitted to incur interest, fees, commissions or other amounts based on the Canadian Dollar Offered Rate (“CDOR”) in accordance with the terms of the Credit Agreement; and
WHEREAS, CDOR has been or will be replaced with the benchmark set forth in the Amended Credit Agreement and, in connection therewith, the Administrative Agent is exercising its right to make certain conforming changes in connection with the implementation of the applicable benchmark replacement as set forth herein.
NOW, THEREFORE, in accordance with the terms of the Credit Agreement, this Agreement is entered into by the Administrative Agent:
1. Defined Terms. Capitalized terms used herein but not otherwise defined herein shall have the meanings provided to such terms in the Amended Credit Agreement.
2. Agreement. On the Amendment Effective Date, the Credit Agreement (other than the exhibits and schedules attached thereto) is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the pages of the Credit Agreement attached as Exhibit A hereto.
4. Conflict with Loan Documents. In the event of any conflict between the terms of this Agreement and the terms of the Credit Agreement or the other Loan Documents, the terms hereof shall control.
5. Conditions Precedent. This Agreement shall become effective on June 28, 2024 (such date, the “Amendment Effective Date”), upon proper execution by the Administrative Agent of a counterpart of this Agreement.
6. Notice. As of the Amendment Effective Date, the Administrative Agent hereby notifies the Borrower and the Lenders of (i) the implementation of the Canadian Benchmark Replacement (as defined in the Credit Agreement) and (ii) the effectiveness of the Canadian Benchmark Replacement Conforming Changes (as defined in the Credit Agreement), in each case, pursuant to this Agreement. To the extent the Credit Agreement requires the Administrative Agent to provide notice that any of the foregoing events has occurred, this Agreement constitutes such notice.
7. Miscellaneous.
(a) This Agreement is a Loan Document.
(b) This Agreement may be in the form of an electronic record (in “.pdf” form or otherwise) and may be executed using electronic signatures, which shall be considered as originals and shall have the same legal effect, validity and enforceability as a paper record. This Agreement may be executed in as many counterparts as necessary or convenient, including both paper and electronic counterparts, but all such counterparts shall be one and the same Agreement. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Administrative Agent of a manually signed Agreement which has been converted into electronic form (such as scanned into “.pdf” format), or an electronically signed Agreement converted into another format, for transmission, delivery and/or retention.
(c) Any provision of this Agreement held to be illegal, invalid or unenforceable in any jurisdiction, shall, as to such jurisdiction, be ineffective to the extent of such illegality, invalidity or unenforceability without affecting the legality, validity or enforceability of the remaining provisions hereof and the illegality, invalidity or unenforceability of a particular provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
(d) The terms of the Credit Agreement with respect to governing law, submission to jurisdiction, waiver of venue and waiver of jury trial are incorporated herein by reference, mutatis mutandis.
[remainder of page intentionally left blank]
The Administrative Agent has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.
| | | | | | | | | | | |
ADMINISTRATIVE AGENT: | BANK OF AMERICA, N.A., |
| as Administrative Agent |
| | | |
| | | |
| By: | /s/ Melanie Brichant | |
| Name: Melanie Brichant |
| Title: Assistant Vice President |
[Signature Page to Amendment No. 2]
Exhibit A
[Attached]
Conformed to Amendment No. 2
Published Deal CUSIP Number: 83224VAQ0
Published US Dollar Revolving Credit Facility CUSIP Number: 83224VAR8
Published Multicurrency Revolving Credit Facility CUSIP Number: 83224VAS6
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 21, 2021
among
SMITHFIELD FOODS, INC.,
as Borrower,
CERTAIN SUBSIDIARIES,
as Borrowers,
BANK OF AMERICA, N.A.,
as Administrative Agent, Swing Line Lender
and
L/C Issuer,
and
The Other Lenders Party Hereto
BOFA SECURITIES, INC.,
AGFIRST FARM CREDIT BANK
BANK OF CHINA, NEW YORK BRANCH
INDUSTRIAL AND COMMERCIAL BANK OF CHINA NEW YORK BRANCH
BARCLAYS BANK PLC
COÖPERATIEVE RABOBANK U.A., NEW YORK BRANCH
GOLDMAN SACHS BANK USA
MORGAN STANLEY SENIOR FUNDING, INC.
U.S. BANK NATIONAL ASSOCIATION,
as Joint Lead Arrangers and Joint Bookrunners
COBANK, FCB
COMPEER FINANCIAL
CITIBANK, N.A.
CREDIT AGRICOLE CORPORATE AND INVESTMENT BANK
ING CAPITAL LLC
JPMORGAN CHASE BANK, N.A.
PNC BANK, NATIONAL ASSOCIATION
TRUIST BANK,
as Documentation Agents
as amended by Amendment No. 1 to Credit Agreement dated as of May 19, 2023
TABLE OF CONTENTS
| | | | | | | | | | | |
| Section | | Page |
| | | |
| ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS | 1 |
| 1.01 | Defined Terms | 1 |
| 1.02 | Other Interpretive Provisions | 37 |
| 1.03 | Accounting Terms | 38 |
| 1.04 | Rounding | 39 |
| 1.05 | Exchange Rates; Currency Equivalents | 39 |
| 1.06 | Additional Alternative Currencies | 39 |
| 1.07 | Change of Currency | 40 |
| 1.08 | Times of Day | 41 |
| 1.09 | Letter of Credit Amounts | 41 |
| | | |
| ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS | 41 |
| 2.01 | Committed Loans | 41 |
| 2.02 | Borrowings, Conversions and Continuations of Committed Loans | 41 |
| 2.03 | Letters of Credit | 44 |
| 2.04 | Swing Line Loans | 53 |
| 2.05 | Prepayments | 56 |
| 2.06 | Termination or Reduction of Commitments | 57 |
| 2.07 | Repayment of Loans | 57 |
| 2.08 | Interest | 58 |
| 2.09 | Fees | 58 |
| 2.10 | Computation of Interest and Fees | 59 |
| 2.11 | Evidence of Debt | 59 |
| 2.12 | Payments Generally; Administrative Agent’s Clawback | 60 |
| 2.13 | Sharing of Payments by Lenders | 62 |
| 2.14 | Designated Borrowers | 62 |
| 2.15 | Increase in Revolving Credit Commitments | 63 |
| 2.16 | Cash Collateral | 65 |
| 2.17 | Defaulting Lenders | 66 |
| 2.18 | Extension of Maturity Date. | 68 |
| | | |
| ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY | 70 |
| 3.01 | Taxes | 70 |
| 3.02 | Illegality | 74 |
| 3.03 | Inability to Determine Rates | 74 |
| 3.04 | Increased Costs; Reserves on Eurocurrency Rate Loans | 78 |
| 3.05 | Compensation for Losses | 80 |
| 3.06 | Mitigation Obligations; Replacement of Lenders | 81 |
| 3.07 | Survival | 81 |
| | | |
| ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS | 81 |
| 4.01 | Conditions of Restatement Effective Date | 81 |
| 4.02 | Conditions to all Credit Extensions | 83 |
| | | |
TABLE OF CONTENTS (continued)
| | | | | | | | | | | |
| Section | | Page |
| | | |
| ARTICLE V. REPRESENTATIONS AND WARRANTIES | 84 |
| 5.01 | Organization; Powers | 84 |
| 5.02 | Authorization; Enforceability | 84 |
| 5.03 | Governmental Approvals; No Conflicts | 84 |
| 5.04 | Financial Statements; No Material Adverse Effect | 84 |
| 5.05 | Properties | 85 |
| 5.06 | Litigation Matters | 85 |
| 5.07 | Compliance with Laws and Agreements | 85 |
| 5.08 | Investment Company Status | 85 |
| 5.09 | Taxes | 85 |
| 5.10 | ERISA | 86 |
| 5.11 | Disclosure | 86 |
| 5.12 | Insurance | 86 |
| 5.13 | Use of Proceeds | 86 |
| 5.14 | Subsidiaries | 87 |
| 5.15 | Event of Default | 87 |
| 5.16 | Sanctions; Anti-Corruption Laws | 87 |
| 5.17 | Money Laundering and Counter-Terrorist Financing Laws | 87 |
| | | |
| ARTICLE VI. AFFIRMATIVE COVENANTS | 87 |
| 6.01 | Financial Statements and Other Information | 87 |
| 6.02 | Notices of Material Events | 90 |
| 6.03 | Existence; Conduct of Business | 91 |
| 6.04 | Payment of Taxes | 91 |
| 6.05 | Maintenance of Properties | 91 |
| 6.06 | Books and Records; Inspection Rights | 91 |
| 6.07 | Compliance with Laws | 91 |
| 6.08 | Use of Proceeds; Letters of Credit | 92 |
| 6.09 | Insurance | 92 |
| 6.10 | Further Assurances | 92 |
| | | |
| ARTICLE VII. NEGATIVE COVENANTS | 93 |
| 7.01 | Indebtedness | 93 |
| 7.02 | Liens | 94 |
| 7.03 | Fundamental Changes; Business Activities | 96 |
| 7.04 | [Reserved] | 96 |
| 7.05 | Swap Agreements | 97 |
| 7.06 | Transactions with Affiliates | 97 |
| 7.07 | Restricted Payments | 97 |
| 7.08 | [Reserved] | 97 |
| 7.09 | [Reserved] | 98 |
| 7.10 | Consolidated Funded Debt to Consolidated Capitalization Ratio | 98 |
| 7.11 | Consolidated EBITDA to Consolidated Interest Expense | 98 |
| | | |
TABLE OF CONTENTS (continued)
| | | | | | | | | | | |
| Section | | Page |
| | | |
| ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES | 98 |
| 8.01 | Events of Default | 98 |
| 8.02 | Remedies Upon Event of Default | 100 |
| 8.03 | Application of Funds | 101 |
| | | |
| ARTICLE IX. ADMINISTRATIVE AGENT | 102 |
| 9.01 | Appointment and Authority | 102 |
| 9.02 | Rights as a Lender | 102 |
| 9.03 | Exculpatory Provisions | 102 |
| 9.04 | Reliance by Administrative Agent | 103 |
| 9.05 | Delegation of Duties | 103 |
| 9.06 | Resignation of Administrative Agent | 104 |
| 9.07 | Non-Reliance on Administrative Agent and Other Lenders | 105 |
| 9.08 | No Other Duties, Etc | 106 |
| 9.09 | Administrative Agent May File Proofs of Claim | 106 |
| 9.10 | Guaranty Matters | 107 |
| 9.11 | Certain ERISA Matters | 107 |
| 9.12 | Recovery of Erroneous Payments | 108 |
| | | |
| ARTICLE X. MISCELLANEOUS | 108 |
| 10.01 | Amendments, Etc | 108 |
| 10.02 | Notices; Effectiveness; Electronic Communication | 110 |
| 10.03 | No Waiver; Cumulative Remedies; Enforcement | 112 |
| 10.04 | Expenses; Indemnity; Damage Waiver | 113 |
| 10.05 | Payments Set Aside | 115 |
| 10.06 | Successors and Assigns | 115 |
| 10.07 | Treatment of Certain Information; Confidentiality | 121 |
| 10.08 | Right of Setoff | 122 |
| 10.09 | Interest Rate Limitation | 123 |
| 10.10 | Counterparts; Integration; Effectiveness | 123 |
| 10.11 | Survival of Representations and Warranties | 123 |
| 10.12 | Severability | 124 |
| 10.13 | Replacement of Lenders | 124 |
| 10.14 | Governing Law; Jurisdiction; Etc | 125 |
| 10.15 | Waiver of Jury Trial | 126 |
| 10.16 | No Advisory or Fiduciary Responsibility | 126 |
| 10.17 | Electronic Execution of Agreement Communications | 127 |
| 10.18 | USA PATRIOT Act | 127 |
| 10.19 | Judgment Currency | 127 |
| 10.20 | Entire Agreement | 128 |
| 10.21 | Acknowledgement and Consent to Bail-In of Affected Financial Institutions | 128 |
| 10.22 | Acknowledgement Regarding Any Supported QFCs | 128 |
| 10.23 | Amendment and Restatement | 129 |
| | | |
| | | |
| SIGNATURES | S-1 |
| | | | | | | | |
| SCHEDULES |
| | |
| 2.01 | Commitments, L/C Fronting Sublimits and Applicable Percentages |
| 5.06 | Litigation |
| 5.14 | Loan Parties |
| 7.01 | Indebtedness |
| 7.02 | Liens |
| 10.02 | Administrative Agent’s Office; Certain Addresses for Notices |
| | | | | | | | |
| EXHIBITS |
| A | Form of Committed Loan Notice |
| B | Form of Swing Line Loan Notice |
| C-1 | [Reserved] |
| C-2 | Form of Multicurrency Revolving Credit Note |
| C-3 | Form of US Dollar Revolving Credit Note |
| D-1 | [Reserved] |
| D-2 | [Reserved] |
| E-1 | Form of Assignment and Assumption |
| E-2 | Form of Administrative Questionnaire |
| F | Form of Compliance Certificate |
| G | Form of Designated Borrower Request and Assumption Agreement |
| H | Form of Designated Borrower Notice |
| I | Form of U.S. Tax Compliance Certificate |
| J | Form of Letter of Credit Report |
| K | Form of Extension Agreement |
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is entered into as of May 21, 2021, among Smithfield Foods, Inc., a corporation organized under the laws of the State of Virginia (the “Company”), certain Subsidiaries of the Company party hereto pursuant to Section 2.14 (each a “Designated Borrower” and, together with the Company, the “Borrowers” and, each a “Borrower”), each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.
WHEREAS, the Company, the lenders party thereto and the Administrative Agent are parties to that certain Amended and Restated Credit Agreement, dated as of March 13, 2018 (the “Existing Credit Agreement”), which amended and restated that certain Credit Agreement, dated as of the Original Closing Date (the “Original Credit Agreement”); and
WHEREAS, the Company has requested that the Lenders and the Administrative Agent amend and restate, in its entirety, the Existing Credit Agreement upon and subject to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree that the Existing Credit Agreement is hereby amended and restated in its entirety to read as follows:
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:
“2015 Audited Financial Statements” means the audited consolidated balance sheet of the Company and its Subsidiaries for the fiscal year ended January 3, 2016, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Company and its Subsidiaries, including the notes thereto.
“Act” has the meaning specified in Section 10.18.
“Additional Commitment Lender” has the meaning specified in Section 2.18.
“Adjusted Eurocurrency Rate” shall mean, subject to the implementation of a Eurocurrency Successor Rate in accordance with Section 3.03(b), (a) with respect to any Eurocurrency Rate Loan denominated in Sterling, the Eurocurrency Rate for Sterling and (b) with respect to any other Eurocurrency Rate Loan for any Interest Period, an interest rate per annum equal to (i) the Eurocurrency Rate in effect for such Interest Period divided by (ii) 1 minus the Statutory Reserves (if any) for such Borrowing of Eurocurrency Rate Loans for such Interest Period; provided, that if the Adjusted Eurocurrency Rate shall be less than zero, such rate shall be deemed zero.
“Adjustment” has the meaning specified in Section 3.03.
“Administrative Agent” means Bank of America in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.
“Administrative Agent’s Office” means, with respect to any currency, the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 10.02 with respect to such currency, or such other address or account with respect to such currency as the Administrative Agent may from time to time notify the Company and the Lenders.
“Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit E-2 or any other form approved by the Administrative Agent.
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified; provided, however, that for purposes of Section 7.06, the term “Affiliate” shall also mean any Person that is an executive officer or director of the Person specified, any Person that directly or indirectly beneficially owns Equity Interests in the Person specified representing 10% or more of the aggregate ordinary voting power or the aggregate equity value represented by the issued and outstanding Equity Interests in the Person specified and any Person that would be an Affiliate of any such beneficial owner pursuant to this definition (but without giving effect to this proviso).
“Agent Parties” has the meaning set forth in Section 10.02(c).
“Aggregate Commitments” means, as of any date of determination, the aggregate amount of all of the Commitments of all of the Lenders at such time.
“Agreement” has the meaning specified in the introductory paragraph hereto.
“Agreement Currency” has the meaning specified in Section 10.19.
“Alternative Currency” means each of the following currencies: Euro, Sterling, Yen and Canadian Dollars, together with each other currency (other than Dollars) that is approved in accordance with Section 1.06.
“Alternative Currency Equivalent” means, at any time, with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Alternative Currency as determined by the Administrative Agent or the L/C Issuer, as the case may be, by reference to Bloomberg (or such other publicly available service for displaying exchange rates), to be the exchange rate for the purchase of such Alternative Currency with Dollars at approximately 11:00 a.m. on the date two (2) Business Days prior to the date as of which the foreign exchange computation is made; provided, however, that if no such rate is available, the “Alternative Currency Equivalent” shall be determined by the Administrative Agent or the L/C Issuer, as the case may be, using any reasonable method of determination its deems appropriate in its sole discretion (and such determination shall be conclusive absent manifest error).
“Amendment No. 1” means the Amendment No. 1 to the Credit Agreement dated as of the Amendment No. 1 Effective Date among the Company, the other Loan Parties thereto, the Administrative Agent and the Lenders and other parties thereto.
“Amendment No. 1 Effective Date” means May 19, 2023.
“Anti-Corruption Laws” means all laws, rules and regulations of any jurisdiction applicable to any Loan Party or any Loan Party’s Subsidiaries from time to time concerning or relating to bribery or corruption.
“Applicable Currency” means Dollars or an Alternative Currency.
“Applicable Debt Rating” means, as of any date of determination, the ratings for the Company’s Index Debt from S&P, Moody’s and Fitch.
“Applicable Percentage” means (a) with respect to any Multicurrency Revolving Credit Lender at any time, the fraction, expressed as a percentage (carried out to the ninth decimal place), the numerator of which is the Multicurrency Revolving Credit Commitment of such Multicurrency Revolving Credit Lender and the denominator of which is the aggregate amount of the Multicurrency Revolving Credit Commitments and (b) with respect to any US Dollar Revolving Credit Lender at any time, the fraction, expressed as a percentage (carried out to the ninth decimal place), the numerator of which is the US Dollar Revolving Credit Commitment of such US Dollar Revolving Credit Lender and the denominator of which is the aggregate amount of the US Dollar Revolving Credit Commitments. If the commitment of each Revolving Credit Lender to make Revolving Credit Loans and the obligation of the L/C Issuer to make L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the Revolving Credit Commitments have expired, then the Applicable Percentage of each Revolving Credit Lender shall be determined based on the Applicable Percentage of such Revolving Credit Lender most recently in effect, giving effect to any subsequent assignments and to any Lender’s status as a Defaulting Lender at the time of determination. The initial Applicable Percentage of each Lender in respect of each Facility is set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable. The Applicable Percentage of any Lender is subject to adjustment as provided in Section 2.17.
“Applicable Rate” means, from time to time, the following percentages per annum, based upon the Applicable Debt Rating as set forth below:
Applicable Rate
| | | | | | | | | | | | | | | | | | | | |
| Pricing Level | Applicable Debt
Ratings (S&P / Moody’s / Fitch) | Commitment Fee | Term SOFR / Daily SOFR / Eurocurrency Rate / Letters of Credit | Base Rate | |
| | | | | | |
| 1 | ≥ A- / A3 / A- | 0.090% | 0.875% | 0.000% | |
| 2 | BBB+ / Baa1 / BBB+ | 0.110% | 1.000% | 0.000% | |
| 3 | BBB / Baa2 / BBB | 0.150% | 1.125% | 0.125% | |
| 4 | BBB- / Baa3 / BBB- | 0.175% | 1.250% | 0.250% | |
| 5 | ≤ BB+ / Ba1 / BB+ | 0.225% | 1.500% | 0.500% | |
If (a) the Company does not have any Applicable Debt Rating (other than by reason of the circumstances referred in the paragraph immediately below), then Pricing Level 5 shall apply, (b) the Company has only one Applicable Debt Rating, such Applicable Debt Rating shall apply, (c) the Company has Applicable Debt Ratings from only two Rating Agencies, then the higher of such Applicable Debt Ratings shall apply, unless there is a split in Applicable Debt Ratings of more than one ratings level, in which case the Applicable Debt Rating that is one level lower than the higher of the Company’s two Applicable Debt Ratings shall apply and (d) the Company has Applicable Debt Ratings from all three Rating Agencies, if (i) two Applicable Debt Ratings are equivalent and the third Applicable Debt Rating is lower, the higher Applicable Debt Rating shall apply, (ii) two Applicable Debt Ratings are
equivalent and the third Applicable Debt Rating is higher, the lower Applicable Debt Rating shall apply and (iii) no Applicable Debt Ratings are equivalent, the Applicable Debt Rating that is neither the highest nor the lowest Applicable Debt Rating shall apply. Initially, the Applicable Rate shall be determined based upon the Applicable Debt Rating in effect on the Restatement Effective Date. Thereafter, each change in the Applicable Rate resulting from a publicly announced change in the Applicable Debt Rating (other than as a result of a change in the rating system of a Rating Agency) shall be effective during the period commencing on the date of delivery by the Company to the Administrative Agent of notice thereof pursuant to Section 6.01(f) and ending on the date immediately preceding the effective date of the next such change.
If the rating system of a Rating Agency shall change or if a Rating Agency shall cease to be in the business of rating corporate debt obligations, the Company and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating system or the unavailability of ratings from such Rating Agency and, pending the effectiveness of any such amendment, the Applicable Rate shall be determined by reference to the Applicable Debt Rating most recently in effect prior to such change or cessation.
“Applicable Reference Rate” means, (a) for any Loan denominated in U.S. Dollars, Term SOFR, (b) for any Eurocurrency Rate Loan denominated in Euro, EURIBOR, (c) for any Eurocurrency Rate Loan denominated in Sterling, SONIA, (d) for any Eurocurrency Rate Loan denominated in Canadian Dollars, CDORTerm CORRA Rate and (e) for any Eurocurrency Rate Loan denominated in Yen, TIBOR.
“Applicable Time” means, with respect to any borrowings and payments in any Alternative Currency, the local time in the place of settlement for such Alternative Currency as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be necessary for timely settlement on the relevant date in accordance with normal banking procedures in the place of payment.
“Applicant Borrower” has the meaning specified in Section 2.14.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Arranger” or “Arrangers” means the Lead Arranger and AgFirst Farm Credit Bank, Bank of China, New York Branch, Industrial and Commercial Bank of China New York Branch, Barclays Bank PLC, Coöperatieve Rabobank U.A., New York Branch, Goldman Sachs Bank USA, Morgan Stanley Senior Funding, Inc. and U.S. Bank National Association, each in its capacity as a joint lead arranger and joint bookrunner.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit E-1 or any other form (including electronic documentation generated by use of an electronic platform) approved by the Administrative Agent.
“Auto-Extension Letter of Credit” has the meaning specified in Section 2.03(b)(iii).
“Availability Period” means, in respect of any Class of the Revolving Credit Facility, the period from and including the Restatement Effective Date to the earliest of (a) the Maturity Date, (b) the date of termination of the Revolving Credit Commitments of such Class pursuant to Section 2.06, and (c) the date of termination of the Commitment of each Revolving Credit Lender of such Class to make Revolving
Credit Loans and of the obligation of the L/C Issuer to make L/C Credit Extensions pursuant to Section 8.02.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” means (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bank of America” means Bank of America, N.A. and its successors.
“Base Rate” means for any day a fluctuating rate of interest per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate,” and (c) Term SOFR plus 1.00%. The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change. If the Base Rate is being used as an alternate rate of interest pursuant to Section 3.03 hereof, then the Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above.
“Base Rate Committed Loan” means a Committed Loan that is a Base Rate Loan.
“Base Rate Loan” means a Loan that bears interest based on the Base Rate. All Base Rate Loans shall be denominated in Dollars.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230.
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“BHC Act Affiliate” has the meaning specified in Section 10.22(b).
“Board” means the Board of Governors of the Federal Reserve System of the United States (or any successor thereto).
“Borrower” and “Borrowers” each has the meaning specified in the introductory paragraph hereto.
“Borrower Materials” has the meaning specified in the last paragraph of Section 6.01.
“Borrowing” means a Multicurrency Revolving Credit Borrowing, a US Dollar Revolving Credit Borrowing or a Swing Line Borrowing, as the context may require.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state where the Administrative Agent’s Office with respect to Obligations denominated in Dollars is located and:
(a) if such day relates to any interest rate settings, fundings, disbursements, settlements and payments with respect to a Term SOFR Loan or any other Loan referencing SOFR in its interest rate setting, any such day that is a U.S. Government Securities Business Day;
(b) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in Euro, any fundings, disbursements, settlements and payments in Euro in respect of any such Eurocurrency Rate Loan, or any other dealings in Euro to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan, means a TARGET Day;
(c) if such day relates to any interest rate settings as to a Eurocurrency Loan denominated in (i) Sterling, means a day other than a day banks are closed for general business in London, or (ii) Yen, means a day other than when banks are closed for general business in Japan;
(d) if such day relates to any interest rate settings as to a Eurocurrency Rate Loan denominated in a currency other than any Applicable Currency referred to above in this definition, means any such day on which dealings in deposits in the relevant currency are conducted by and between banks in the London or other applicable offshore interbank market for such currency; and
(e) if such day relates to any fundings, disbursements, settlements and payments in a currency other than any Applicable Currency referred to above in this definition in respect of a Eurocurrency Rate Loan denominated in a currency other than any Applicable Currency referred to above in this definition, or any other dealings in any currency other than any Applicable Currency referred to above in this definition to be carried out pursuant to this Agreement in respect of any such Eurocurrency Rate Loan (other than any interest rate settings), means any such day on which banks are open for foreign exchange business in the principal financial center of the country of such currency.
“Canadian Dollars” means the lawful currency of Canada.
“Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital or finance leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.
“Capital Stock” of any Person means (a) 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 Common Stock or Preferred Stock, and (b) 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.
“Cash Collateralize” means to deposit in a Controlled Account or to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the L/C Issuer or the US Dollar
Revolving Credit Lenders, as collateral for L/C Obligations or obligations of the US Dollar Revolving Credit Lenders to fund participations in respect of L/C Obligations, cash or deposit account balances or, if the Administrative Agent and the L/C Issuer shall agree in their sole discretion, other credit support, in each case pursuant to documentation in form and substance satisfactory to the Administrative Agent and the L/C Issuer. “Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
“CFC” shall mean a Subsidiary of the Company that is a “controlled foreign corporation” within the meaning of Section 957 of the Code.
“CFC Holding Company” shall mean any Subsidiary of the Company that owns no material assets other than (a) equity interests (including, for this purpose, any debt or other instrument treated as equity for U.S. federal income tax purposes) in, or indebtedness of, one or more Subsidiaries that are CFCs or CFC Holding Companies or (b) incidental assets (including cash or cash equivalents) related thereto held on a temporary basis.
“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Change of Control” means 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 Securities Exchange Act of 1934), directly or indirectly, of more than 50% of the Company’s Voting Stock (or its successor by merger, consolidation or purchase of all or substantially all of its assets).
“Class” (a) when used with respect to Lenders, refers to whether such Lenders are Multicurrency Revolving Credit Lenders or US Dollar Revolving Credit Lenders, (b) when used with respect to Commitments, refers to whether such Commitments are Multicurrency Revolving Credit Commitments or US Dollar Revolving Credit Commitments, (c) when used with respect to Loans or a Borrowing, refers to whether such Loans, or the Loans comprising such Borrowing, are Multicurrency Revolving Credit Loans or US Dollar Revolving Credit Loans and (d) when used with respect to any Facility, refers to whether such Facility is the Multicurrency Revolving Credit Facility or US Dollar Revolving Credit Facility.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Commitment” means a Multicurrency Revolving Credit Commitment or a US Dollar Revolving Credit Commitment, as the context may require.
“Committed Borrowing” means a borrowing consisting of simultaneous Committed Loans of the same Type and Class in the same currency and, in the case of Term SOFR Loans and Eurocurrency Rate Loans not denominated in Sterling, having the same Interest Period made by each of the Lenders pursuant to Section 2.01.
“Committed Loan” means a Multicurrency Revolving Credit Loan or US Dollar Revolving Credit Loan, as the context may require.
“Committed Loan Notice” means a notice of (a) a Committed Borrowing, (b) a conversion of Committed Loans from one Type to the other, or (c) a continuation of Term SOFR Loans or Eurocurrency Rate Loans, pursuant to Section 2.02(a), which shall be substantially in the form of Exhibit A or such other form as may be approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approved by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.
“Common Stock” means with respect to any Person, any and all shares, interest or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Restatement Effective Date, and includes, without limitation, all series and classes of such common stock.
“Company” has the meaning specified in the introductory paragraph hereto.
“Competitor” means any Person that is a competitor of the Company or its Subsidiaries, which has been designated by the Company as a competitor by written notice to the Administrative Agent on or prior to the Restatement Effective Date (or Affiliates of such Person that are either identified in writing by the Company on or prior to the Restatement Effective Date or readily identifiable on the basis of such Affiliate’s name).
“Competitor List” has the meaning specified in Section 10.06(h)(ii).
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated Capitalization” means, as of any date of determination, the sum of (i) Consolidated Funded Debt plus (ii) total shareholders’ equity for the Company and its consolidated Subsidiaries.
“Consolidated EBITDA” means, for any period, for the Company and its Subsidiaries on a consolidated basis, an amount equal to Net Income for such period plus, (a) without duplication and to the extent subtracted in determining such Net Income, provisions for (i) taxes based on income, (ii) Consolidated Interest Expense, (iii) depreciation and amortization expense, (iv) any other non-cash charges for such period (but excluding (x) any non-cash charge in respect of an item that was included in Net Income in a prior period and (y) any non-cash charge that relates to the write-down or write-off of inventory) and (v) fees and expenses incurred during such period in respect of acquisitions, dispositions, investments and debt or equity issuances contemplated or consummated during such period (including, for the avoidance of doubt, any such transactions that fail to close) minus (b) without duplication and to the extent otherwise included in such Net Income, (i) any cash payments made during such period in respect of non-cash charges described in clause (a)(iv) taken in a prior period and (ii) non-cash gains for such period (provided that any such cash received with respect to non-cash gains shall be added in computing Consolidated EBITDA during the period in which such cash is received) minus (c) without duplication and to the extent otherwise included in such Net Income, any cash distribution received from unconsolidated joint ventures to the extent such distributions were not made from operating earnings of such unconsolidated joint ventures. For purposes of calculating Consolidated EBITDA for any period, if during such period the Company or any Subsidiary shall have consummated a Material Transaction, Consolidated EBITDA for such period shall be calculated after giving pro forma effect thereto.
“Consolidated Funded Debt” means, at the time of determination for the Company and its Subsidiaries on a consolidated basis in accordance with GAAP (a) all Indebtedness of the Company and its Subsidiaries, limited in the case of clause (e) of the definition of Indebtedness to drawn and unreimbursed obligations and limited in the case of clause (g) of the definition of Indebtedness to the Guaranties by the Company or its Subsidiaries of Indebtedness of others that would constitute Consolidated Funded Debt if incurred directly by the Company or its Subsidiaries minus (b) the positive difference, if any, equal to (i) the amount of domestically held unrestricted cash of the Company and its consolidated Subsidiaries as set forth on the balance sheet of the Company most recently delivered to the Administrative Agent under Section 6.01 minus (ii) $50,000,000. The Indebtedness of any Person of the type included in Consolidated Funded Debt shall include the Indebtedness of any other entity (including any partnership in which such person is a general partner) to the extent such person is liable therefor as a result of such person's ownership interest in or other relationship with such entity, except to the extent the terms of such indebtedness provide that such person is not liable therefor.
“Consolidated Interest Expense” means, for any period, the interest expense of the Company and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. For purposes of calculating Consolidated Interest Expense for any period, if during such period the Company or any Subsidiary shall have consummated a Material Transaction, Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto.
“Consolidated Net Tangible Assets” means, at any date, total assets of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP minus (a) current liabilities (excluding short-term Indebtedness and the current portion of long-term Indebtedness) of the Company and its Subsidiaries and (b) goodwill and other intangible assets of the Company and its Subsidiaries, in each case determined on a consolidated basis in accordance with GAAP.
“Consolidated Total Assets” means, as to any Person on any date, the aggregate amount of assets of such Person and its Subsidiaries determined on a consolidated basis in accordance with GAAP.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, or the dismissal or appointment of the management, of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. Solely for purposes of the definition of “Affiliate”, “Control” shall also mean the possession, directly or indirectly, of the power to vote 10% or more of the securities having ordinary voting power for the election of directors (or persons performing similar functions) of a Person.
“Controlled Account” means each deposit account that is subject to an account control agreement in form and substance reasonably satisfactory to the Administrative Agent and the L/C Issuer.
“CORRA” means the Canadian Overnight Repo Rate Average administered and published by the Bank of Canada (or any successor administrator).
“Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C Credit Extension.
“Daily SOFR” with respect to any applicable determination date means the SOFR for the day that is five (5) U.S. Government Securities Business Days prior to (i) if such determination date is a U.S. Government Securities Business Day, such determination date or (ii) if such determination date is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such determination date, in each case, as such SOFR is published on the Federal Reserve Bank
of New York’s website (or any successor source), plus the SOFR Adjustment. Any change in Daily SOFR shall be effective from and including the date of such change without further notice. If Daily SOFR as so determined would be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“Daily SOFR Loan” means a Loan that bears interest at a rate based on Daily SOFR.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.
“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
“Default Rate” means (a) when used with respect to Obligations other than Letter of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum; provided, however, that with respect to a Term SOFR Loan or Eurocurrency Rate Loan, the Default Rate shall be an interest rate equal to the interest rate (including any Applicable Rate) otherwise applicable to such Loan plus 2% per annum, and (b) when used with respect to Letter of Credit Fees, a rate equal to the Applicable Rate plus 2% per annum.
“Defaulting Lender” means, subject to Section 2.17(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Company in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent, the L/C Issuer, the Swing Line Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swing Line Loans) within two Business Days of the date when due, (b) has notified the Company, the Administrative Agent, the L/C Issuer or the Swing Line Lender in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Company, to confirm in writing to the Administrative Agent and the Company that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Company), or (d) has, or has a direct or indirect parent company that has (other than through an Undisclosed Administration), (i) become the subject of a proceeding under any Debtor Relief Law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a Bail-In Action; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made
with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.17(b)) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Company, the L/C Issuer, the Swing Line Lender and each other Lender promptly following such determination.
“Designated Borrower” has the meaning specified in the introductory paragraph hereto.
“Designated Borrower Notice” has the meaning specified in Section 2.14.
“Designated Borrower Request and Assumption Agreement” has the meaning specified in Section 2.14.
“Designated Jurisdiction” means any country, region or territory to the extent that such country, region or territory itself is the subject of any Sanction.
“Dollar” and “$” mean lawful money of the United States.
“Dollar Equivalent” means, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any Alternative Currency, the equivalent amount thereof in Dollars as determined by the Administrative Agent or the L/C Issuer, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Dollars with such Alternative Currency.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States.
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a Subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Electronic Copy” has the meaning specified in Section 10.17.
“Electronic Record” has the meaning specified in Section 10.17.
“Electronic Signature” has the meaning specified in Section 10.17.
“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii) and (v) (subject to such consents, if any, as may be required under Section 10.06(b)(iii)).
“Environmental Laws” means all treaties, statutes, laws (including common law), rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, the preservation or reclamation of natural resources, the generation, management, use, presence, release or threatened release of, or exposure to, any Hazardous Material, or to health and safety matters.
“Environmental Liability” means all liabilities or obligations, including all claims, actions, suits, judgments, orders, damages, injunctive relief, losses, fines, penalties, fees, expenses (including reasonable fees and expenses of attorneys and consultants) or costs, whether contingent or otherwise, arising from or relating to (a) any Environmental Law or permit, license or approval issued thereunder, (b) the generation, use, handling, transportation, storage, treatment, disposal or arrangement for disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any Loan Party, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. For the avoidance of doubt, when any provision in this Agreement relates to a past event or period of time within the last six years, the term “ERISA Affiliate” includes any trade or business (whether or not incorporated) that was, as to the time of such past event or period of time, an ERISA Affiliate within the meaning of the preceding sentence.
“ERISA Event” means (a) any “reportable event”, as defined in Section 4043(c) of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the complete or partial withdrawal of the Company or any ERISA Affiliate from any Plan or Multiemployer Plan during a plan year in which it was a “substantial employer” as defined in Section 4001(a)(2) of ERISA; (c) the filing of a notice of intent to terminate a Plan in a “distress termination” as defined in Section 4041(c) of ERISA, or the treatment of a Multiemployer Plan amendment as a termination under Section 4041A of ERISA; (d) the institution of proceedings to terminate a Plan or a Multiemployer Plan by the PBGC under Section 4041 or 4042 of ERISA; (e) the failure by the Company to make required contributions to any Plan; (f) the failure of the Company to satisfy the minimum funding standard (as defined in Section 412 of the Code or Section 302 of ERISA) applicable to any Plan; (g) a determination that any Plan is in “at risk” status (as defined in Section 430(i)(4) of the Code or Section 303(i)(4) of ERISA); (h) the incurrence by the Company or any ERISA Affiliate of any “withdrawal liability” (within the meaning of Section 4201 of ERISA), or any determination that a Multiemployer Plan is insolvent or in “endangered” or “critical” status (within the meaning of Section 432 of the Code or Section 305 of ERISA); (i) the occurrence of a non-exempt “prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA) with respect to which any Loan Party or ERISA Affiliate is held liable for an amount that would reasonably be expected to result in a Material Adverse Effect; and (j) any other event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any
Plan by the PBGC or the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“Euro” and “€” mean the single currency of the Participating Member States.
“Eurocurrency Rate” means, with respect to any Credit Extension:
(x) with respect to any Eurocurrency Rate Loan for any Interest Period:
(i) [reserved];
(ii) denominated in Euro, the rate per annum equal to the Euro Interbank Offered Rate (“EURIBOR”) or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at approximately 11:00 a.m. (Brussels, Belgium time) on the Rate Determination Date for deposits in the relevant currency (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period;
(iii) denominated in Canadian dollars, the rate per annum equal to the Canadian Dealer Offered Rate (“CDOR”), or a comparable or successor rate which rate is approved by the Administrative Agent, forward-looking term rate based on CORRA as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at or about 10:00 a.m. (Toronto, Ontario time(the “Term CORRA Rate”) on the Rate Determination Date with a term equivalent to such Interest Period plus the Term CORRA Adjustment for such Interest Period;
(iv) denominated in Yen, the rate per annum equal to the Japanese Yen Tokyo interbank offered rate administered by the Ippan Shadan Hojin JBA TIBOR Administration (“TIBOR”), or a comparable or successor rate which rate is approved by the Administrative Agent, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) at or about 11:00 a.m. (Japan time) on the Rate Determination Date with a term equivalent to such Interest Period;
(v) denominated in any Alternative Currency not otherwise set forth in this definition, the rate per annum as designated with respect to such Alternative Currency at the time such Alternative Currency is approved by the Administrative Agent and the Lenders pursuant to Section 1.06(a); and
(y) with respect to any Eurocurrency Rate Loan denominated in Sterling, SONIA Daily Rate;
provided that to the extent a comparable or successor rate is approved by the Administrative Agent in connection with any rate set forth in this definition, the approved rate shall be applied in a manner consistent with market practice; provided, further that to the extent such market practice is not administratively feasible for the Administrative Agent, such approved rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent; and if the Eurocurrency Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement.
“Eurocurrency Rate Loan” means a Committed Loan that bears interest at a rate based on the Adjusted Eurocurrency Rate. Eurocurrency Rate Loans are denominated in an Alternative Currency. All Committed Loans denominated in an Alternative Currency must be Eurocurrency Rate Loans.
“Eurocurrency Successor Rate” has the meaning specified in Section 3.03.
“Event of Default” has the meaning assigned to such term in Article VIII.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Excluded Subsidiary” means (a) each Subsidiary that is not a Material Guarantor Subsidiary, (b) any Foreign Subsidiary, (c) each joint venture and each Subsidiary that is not a wholly-owned Subsidiary on any date such Subsidiary would otherwise be required to become a Guarantor pursuant to the requirements of Section 6.10 (for so long as such Subsidiary remains a non-wholly-owned Subsidiary), (d) any CFC Holding Company, (e) any Domestic Subsidiary that is a Subsidiary of (i) a Foreign Subsidiary that is a CFC or (ii) a CFC Holding Company, (f) any Subsidiary for which Guarantees are (i) prohibited by law or require consent, approval, license or authorization of a Governmental Authority, unless such consent, approval, license or authorization has been received; provided, that there shall be no obligation to obtain such consent or (ii) contractually prohibited on the Restatement Effective Date or, following the Restatement Effective Date, the date of acquisition of such Subsidiary, so long as such prohibition is in effect on the date of such acquisition and was not created in contemplation of such acquisition, (g) any Subsidiary where the burden or cost of obtaining a Guarantee outweighs the benefit to the Lenders, as determined by the Administrative Agent and the Company, (h) any other Subsidiary with respect to which providing such a Guarantee could reasonably be expected to result in material adverse tax consequences to the Company and its Subsidiaries in the aggregate (including as a result of the operation of Section 956 of the Code) as reasonably determined by the Company in consultation with the Administrative Agent, (i) any captive insurance Subsidiary, (j) any special purpose entity, including Smithfield Receivables Funding LLC, any SPE Subsidiary and any obligor under the Receivables Securitization and (k) each not-for-profit Subsidiary.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender becomes a party to this Agreement (other than pursuant to an assignment request by the Company under Section 10.13) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01(a)(ii) or (c), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office, (c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(e), (d) any backup withholding Taxes and (e) any Taxes imposed pursuant to FATCA.
“Existing Credit Agreement” has the meaning given to such term in the recitals to this Agreement.
“Exiting Lender” has the meaning specified in Section 10.23.
“Extending Lender” has the meaning specified in Section 2.18.
“Extension Agreement” means an extension agreement substantially in the form of Exhibit K or any other form approved by the Administrative Agent.
“Extension Effective Date” has the meaning set forth in Section 2.18.
“Facility” or “Facilities” means the Multicurrency Revolving Credit Facility or the US Dollar Revolving Credit Facility, as the context may require.
“Farm Credit Lender” means a lending institution organized and existing pursuant to the provisions of the Farm Credit Act of 1971, as amended, and under the regulation of the Farm Credit Administration.
“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement between a non-U.S. jurisdiction and the United States with respect to the foregoing and any law or regulation adopted pursuant to, or facilitating the implementation of, any such intergovernmental agreement.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent.
“Fee Letters” means (a) the letter agreement, dated as of December 15, 2016, among the Company, the Administrative Agent and the Lead Arranger (the “Original Fee Letter”), and (b) the letter agreement, dated as of April 16, 2021, among the Company, the Administrative Agent and the Lead Arranger.
“Financial Covenants” means each of the financial covenants set forth in Section 7.10 and Section 7.11.
“Financial Officer” means the chief financial officer, principal accounting officer, vice president of finance, treasurer, controller or any other Person with equivalent responsibilities, in each case, of the Company.
“Fitch” means Fitch Ratings, Inc., and any successor to its rating agency business.
“Foreign Lender” means, with respect to any Borrower, (a) if such Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if such Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which such Borrower is resident for tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“Foreign Plan” means any employee benefit plan, program, policy, arrangement or agreement (other than a Plan or Multiemployer Plan) maintained or contributed to by any Loan Party or any Subsidiary thereof with respect to employees employed outside the United States.
“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States, a State thereof or the District of Columbia.
“Fronting Exposure” means, at any time there is a Defaulting Lender under the US Dollar Revolving Credit Facility, (a) with respect to the L/C Issuer, such Defaulting Lender’s Applicable Percentage of the Outstanding Amount of all outstanding L/C Obligations other than L/C Obligations as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders or Cash Collateralized in accordance with the terms hereof, and (b) with respect to the Swing Line Lender, such Defaulting Lender’s Applicable Percentage of Swing Line Loans other than Swing Line Loans as to which such Defaulting Lender’s participation obligation has been reallocated to other Lenders in accordance with the terms hereof.
“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.
“Governmental Authority” means the government of the U.S., any other nation or any political subdivision thereof, whether state, provisional, territorial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national body such as the European Union or the European Central Bank) having jurisdiction over the Company, any Subsidiary or any Lender, as the context may require.
“Granting Lender” has the meaning specified in Section 10.06(g).
“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment thereof, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“Guaranty Agreement” means the Guaranty Agreement, dated as of February 17, 2017, among the Company, each of the Subsidiary Guarantors party thereto and the Administrative Agent, as amended by Guaranty Amendment No. 1 and Guaranty Amendment No. 2 and as otherwise amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“Guaranty Amendment No. 1” means Amendment No. 1 to the Guaranty Agreement, dated as of March 13, 2018, by and among the Company, the Subsidiary Guarantors party thereto and the Administrative Agent.
“Guaranty Amendment No. 2” means Amendment No. 2 to the Guaranty Agreement, dated as of May 21, 2021, by and among the Company, the Subsidiary Guarantors party thereto and the Administrative Agent.
“Guaranty Joinder Agreement” means a guaranty joinder agreement signed by a joining party and the Administrative Agent substantially in the form of Exhibit A to the Guaranty Agreement.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including any petroleum products or byproducts and all other hydrocarbons, radon gas, molds, asbestos or asbestos-containing materials, urea formaldehyde foam insulation, polychlorinated biphenyls, chlorofluorocarbons and all other ozone-depleting substances, per- and polyfluoroalkyl substances, infectious or medical wastes, odors or odor-causing substances and all other substances or wastes of any nature that are prohibited, limited or regulated pursuant to, or that could give rise to liability under, any Environmental Law.
“Honor Date” has the meaning specified in Section 2.03(c)(i).
“Impacted Loans” has the meaning specified in Section 3.03.
“Indebtedness” of any Person means, without duplication,
(a) all obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments,
(c) all obligations of such Person in respect of the deferred purchase price of property or services (excluding accounts payable incurred in the ordinary course of business which are not past due by more than 90 days (unless being contested in good faith by appropriate proceedings)),
(d) all Capital Lease Obligations of such Person,
(e) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit, letters of guaranty, bankers’ acceptances or other similar instruments (other than obligations with respect to letters of credit securing obligations (other than obligations that would otherwise constitute “Indebtedness”) entered into in the ordinary course of business of such Person to the extent 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 payment on the letter of credit),
(f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed, the amount of such Indebtedness being deemed to be the lesser of the fair market value (as determined reasonably and in
good faith by the Chief Financial Officer of the Company) of such property or assets and the amount of the Indebtedness so secured,
(g) all Guarantees by such Person of Indebtedness of others, and
(h) all obligations of such Person in respect of any Securitization Transaction (valued as set forth in the definition of Securitization Transaction).
Indebtedness shall not include obligations under any operating lease of property that is not capitalized on the balance sheet of the Company or any Subsidiary. The Indebtedness of any Person shall include the Indebtedness of any other Person (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such other Person, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, in connection with the purchase by the Company or any Subsidiary of any business, the term “Indebtedness” will exclude post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 60 days thereafter. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all obligations as described above; provided, however, that, in the case of Indebtedness sold by the obligor at a discount, the amount of such Indebtedness at any time shall be the accreted value thereof at such time. Except as otherwise expressly provided herein, the term “Indebtedness” shall not include cash interest thereon.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes.
“Indemnitees” has the meaning specified in Section 10.04(b).
“Index Debt” means senior, unsecured non-credit enhanced (other than by guarantees of subsidiaries that also guarantee the Obligations at such time) long-term debt for borrowed money.
“Information” has the meaning specified in Section 10.07.
“Interest Payment Date” means, (a) as to any Term SOFR Loan and any Eurocurrency Rate Loan not denominated in Sterling other than a Base Rate Loan, the last day of each Interest Period applicable to such Loan, and the Maturity Date; provided, however, that if any Interest Period for a Eurocurrency Rate Loan not denominated in Sterling exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period shall also be Interest Payment Dates; (b) as to any Loan denominated in Sterling, the first Business Day after the end of each month and the Maturity Date and (c) as to any Base Rate Loan (including a Swing Line Loan) and Daily SOFR Loan, the last Business Day of each March, June, September and December and the Maturity Date.
“Interest Period” means (i) as to each Eurocurrency Rate Loan denominated in Canadian Dollars, the period commencing on the date such Loan is disbursed or converted to or continued as an Eurocurrency Rate Loan and ending on the date one or three months thereafter and (ii) as to each Term SOFR Loan and each Eurocurrency Rate Loan not denominated in Canadian Dollars or Sterling, the period commencing on the date such Loan is disbursed or converted to or continued as a Term SOFR
Loan or Eurocurrency Rate Loan and ending on the date one, three or six months thereafter, in each case, subject to availability and as selected by the Company in its Committed Loan Notice; provided that:
(a) any Interest Period that would otherwise end on a day that is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period shall extend beyond the Maturity Date.
“IRS” means the United States Internal Revenue Service.
“ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).
“Issuer Documents” means with respect to any Letter of Credit, the Letter of Credit Application, and any other document, agreement and instrument entered into by the L/C Issuer and the Company (or any Subsidiary) or in favor of the L/C Issuer and relating to such Letter of Credit.
“Judgment Currency” has the meaning specified in Section 10.19.
“Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
“Lead Arranger” means BofA Securities, Inc.
“L/C Advance” means, with respect to each US Dollar Revolving Credit Lender, such Lender’s funding of its participation in any L/C Borrowing in accordance with its Applicable Percentage. All L/C Advances shall be denominated in Dollars.
“L/C Borrowing” means an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Committed Borrowing. All L/C Borrowings shall be denominated in Dollars.
“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.
“L/C Issuer” means (a) Bank of America, in its capacity as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder, (b) each other Lender that agrees to act as an issuer of Letters of Credit appointed by the Company (with the consent of the Administrative Agent) as issuer of Letters of Credit hereunder, or any successor issuer of Letters of Credit hereunder and (c) any Lender appointed by the Company (with the consent of the Administrative Agent) as such by notice to the Lenders as a replacement for any L/C Issuer who is at the time of such appointment a Defaulting Lender.
In the event that there is more than one L/C Issuer any time, references herein and in the other Loan Documents to the L/C Issuer shall be deemed to refer to the L/C Issuer in respect of the applicable Letter of Credit or to all L/C Issuers, as the context requires.
“L/C Issuer Fronting Sublimit” means, with respect to each L/C Issuer, its Fronting Sublimit set forth on Schedule 2.01, or in the applicable documentation pursuant to which such L/C Issuer was appointed as the L/C Issuer hereunder.
“L/C Obligations” means, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.09. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“Lender” has the meaning specified in the introductory paragraph hereto and, unless the context requires otherwise, includes the Swing Line Lender.
“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Company and the Administrative Agent which office may include any Affiliate of such Lender or any domestic or foreign branch of such Lender or such Affiliate. Unless the context otherwise requires each reference to a Lender shall include its applicable Lending Office.
“Letter of Credit” means any standby letter of credit issued hereunder providing for the payment of cash upon the honoring of a presentation thereunder. Letters of Credit may be issued in Dollars or in an Alternative Currency.
“Letter of Credit Application” means an application and agreement for the issuance or amendment of a Letter of Credit in the form from time to time in use by the L/C Issuer.
“Letter of Credit Expiration Date” means the day that is seven days prior to the Maturity Date then in effect (or, if such day is not a Business Day, the next preceding Business Day).
“Letter of Credit Fee” has the meaning specified in Section 2.03(h).
“Letter of Credit Report” means a certificate substantially in the form of Exhibit J or any other form approved by the Administrative Agent.
“Letter of Credit Sublimit” means an amount equal to $200,000,000. The Letter of Credit Sublimit is part of, and not in addition to, the US Dollar Revolving Credit Commitment.
“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.
“Loan” means an extension of credit by a Lender to a Borrower under Article II in the form of a Committed Loan or a Swing Line Loan.
“Loan Documents” means this Agreement, each Designated Borrower Request and Assumption Agreement, each Note, each Issuer Document, any agreement creating or perfecting rights in Cash Collateral pursuant to the provisions of Section 2.16, the Fee Letters, the Guaranty Agreement, any Guaranty Joinder Agreement and any other agreement, instrument or document executed and delivered by a Loan Party and designated by its terms as a “Loan Document”.
“Loan Parties” means, collectively, the Company, each of the Subsidiary Guarantors and each Designated Borrower.
“London Banking Day” means any day on which dealings in Dollar deposits are conducted by and between banks in the London interbank Eurodollar market.
“Margin Stock” means “margin stock” within the meaning of Regulations T, U and X of the Board.
“Material Acquisition” means any acquisition or a series of related acquisitions (other than solely among the Company and its Subsidiaries) of (a) Equity Interests in any Person if, after giving effect thereto, such Person will become a Subsidiary or (b) assets comprising all or substantially all the assets of (or all or substantially all the assets constituting a business unit, division, product line or line of business of) any Person; provided that the aggregate cash consideration therefor equals or exceeds $500,000,000.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect on, the operations, business, assets, properties, liabilities (actual or contingent) or financial condition of the Company and its Subsidiaries, taken as a whole; (b) a material impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan Document, or of the ability of the Loan Parties, taken as a whole, to perform their material obligations under the Loan Documents; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the Company or any Subsidiary Guarantor under any material provision of any Loan Document to which it is a party.
“Material Guarantor Subsidiary” means each Subsidiary (other than a Foreign Subsidiary) of the Company that is to become a Subsidiary Guarantor hereunder in order to ensure that the Company and the Subsidiary Guarantors directly (a) own, on a consolidated basis, at least 90% of the Consolidated Total Assets of the Company (excluding the Consolidated Total Assets of Excluded Subsidiaries pursuant to any of clauses (b) through (k) of the definition of “Excluded Subsidiary”) (such Consolidated Total Assets, the “Non-Excluded Consolidated Total Assets”) and (b) generate at least 90% of the consolidated revenues of the Company (excluding the consolidated revenues of Excluded Subsidiaries pursuant to any of clauses (b) through (k) of the definition of “Excluded Subsidiary”) (such consolidated revenues, the “Non-Excluded Consolidated Revenues”), in each case of the foregoing clauses (a) and (b) as of the end of or for the most recent period of four consecutive fiscal quarters of the Company for which financial statements have been delivered pursuant to Section 6.01(a) or 6.01(b) (or, prior to the first delivery of any such financial statements, as of the end of or for the period of four consecutive fiscal quarters of the Company ended March 31, 2021); provided that in no event shall any Subsidiary of the Company that (x) owns 1.5% or less of the Non-Excluded Consolidated Total Assets and (y) generates 1.5% or less of the Non-Excluded Consolidated Revenues, in each case of the foregoing clauses (x) and (y) as of the end of or for the most recent period of four consecutive fiscal quarters of the Company for which financial statements have been delivered pursuant to Section 6.01(a) or 6.01(b), constitute a Material Guarantor Subsidiary (notwithstanding, for the avoidance of doubt, that the exclusion of such Subsidiary would cause the requirement set forth above to not be satisfied), except that, if at the end of or for any such most recent period of four consecutive fiscal quarters the combined Consolidated Total Assets or combined consolidated revenues of all such Subsidiaries that would not constitute Material Guarantor Subsidiaries
pursuant to this proviso would exceed 10% of the Non-Excluded Assets or 10% of the Non-Excluded Revenues, as applicable, then one or more of such excluded Subsidiaries selected by the Company shall be deemed to be Material Guarantor Subsidiaries for all purposes of this Agreement (including, without limitation, the Subsidiary Guarantee Requirement) until such excess shall have been eliminated, in each case, as reasonably determined by the Company based on such financial statements and other information available to the Company.
“Material Indebtedness” means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of any Loan Party and its respective Subsidiaries in an aggregate outstanding principal amount exceeding $150,000,000. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Company or any Subsidiary in respect of any Swap Agreement at any time shall be the Swap Termination Value for such Swap Agreement at such time.
“Material Subsidiary” means each Subsidiary of the Company (a) the Consolidated Total Assets of which equal 3.75% or more of the Consolidated Total Assets of the Company or (b) the consolidated revenues of which equal 3.75% or more of the consolidated revenues of the Company, in each case as of the end of or for the most recent period of four consecutive fiscal quarters of the Company for which financial statements have been delivered pursuant to Section 6.01(a) or 6.01(b) (or, prior to the first delivery of any such financial statements, as of the end of or for the period of four consecutive fiscal quarters of the Company ended October 1, 2017); provided that if at the end of or for any such most recent period of four consecutive fiscal quarters the combined Consolidated Total Assets or combined consolidated revenues of all Subsidiaries that under clauses (a) and (b) above would not constitute Material Subsidiaries shall have exceeded 10% of the Consolidated Total Assets of the Company or 10% of the consolidated revenues of the Company (calculated without duplication of assets or revenues), then one or more of such excluded Subsidiaries shall for all purposes of this Agreement be deemed to be Material Subsidiaries in descending order based on the amounts of their Consolidated Total Assets or consolidated revenues, as the case may be, until such excess shall have been eliminated in each case, as reasonably determined by the Company based on such financial statements and other information available to the Company.
“Material Transaction” means any disposition or acquisition by the Company or by a Subsidiary of a Subsidiary, or a business unit, division, product line or line of business, for consideration in excess of $100,000,000.
“Maturity Date” means May 21, 2027 or such later date as may be extended from time to time pursuant to Section 2.18 (and, if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day); provided, however, that the Maturity Date with respect to any Lender that is a Non-Extending Lender pursuant to Section 2.18(b) shall be the Maturity Date in effect immediately prior to the applicable Extension Effective Date for all purposes of this Agreement.
“Maximum Rate” has the meaning specified in Section 10.09.
“Minimum Collateral Amount” means, at any time, (a) with respect to Cash Collateral consisting of cash or deposit account balances provided to reduce or eliminate Fronting Exposure during the existence of a Defaulting Lender under the US Dollar Revolving Credit Facility, an amount equal to 105% of the Fronting Exposure of the L/C Issuer with respect to Letters of Credit issued and outstanding at such time, (b) with respect to Cash Collateral consisting of cash or deposit account balances provided in accordance with the provisions of Section 2.16(a)(i), (a)(ii) or (a)(iii), an amount equal to 105% of the
Outstanding Amount of all LC Obligations, and (c) otherwise, an amount determined by the Administrative Agent and the L/C Issuer in their sole discretion.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
“Multicurrency Revolving Credit Borrowing” means a borrowing consisting of one or more simultaneous Multicurrency Revolving Credit Loans of the same Type and, in the case of Term SOFR Loans or Eurocurrency Rate Loans not denominated in Sterling, having the same Interest Period made pursuant to Section 2.01.
“Multicurrency Revolving Credit Commitment” means, as to each Multicurrency Revolving Credit Lender, its obligation to make Multicurrency Revolving Credit Loans to the Borrowers pursuant to Section 2.01 in an aggregate principal amount at any one time outstanding not to exceed the Dollar Equivalent of the amount set forth opposite such Lender’s name on Schedule 2.01 under the caption “Multicurrency Revolving Credit Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. On the Amendment No.1 Effective Date, the aggregate Multicurrency Revolving Credit Commitment shall be $250,000,000.
“Multicurrency Revolving Credit Exposure” means, as to any Multicurrency Revolving Credit Lender at any time, the aggregate Outstanding Amount at such time of its Committed Loans.
“Multicurrency Revolving Credit Facility” means, at any time, the aggregate amount of the Multicurrency Revolving Credit Lenders’ Multicurrency Revolving Credit Commitments and Multicurrency Revolving Credit Loans at such time.
“Multicurrency Revolving Credit Lender” means, at any time, any Lender that has a Multicurrency Revolving Credit Commitment or holds a Multicurrency Revolving Credit Loan at such time.
“Multicurrency Revolving Credit Loan” has the meaning specified in Section 2.01.
“Multicurrency Revolving Credit Note” means a promissory note made by the Borrower in favor of a Multicurrency Revolving Credit Lender evidencing Multicurrency Revolving Credit Loans made by such Multicurrency Revolving Credit Lender, substantially in the form of Exhibit C-2.
“Multiemployer Plan” means, at any time, a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which any Loan Party or any ERISA Affiliate is then making or accruing an obligation to make contributions or has within the preceding six plan years made or had any obligation to make contributions.
“Net Income” means, for any period, without duplication, the consolidated net income (loss) of the Company and its Subsidiaries determined in accordance with GAAP.
“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (i) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 10.01 and (ii) has been approved by the Required Lenders.
“Non-Extending Lender” has the meaning specified in Section 2.18.
“Non-Extension Notice Date” has the meaning specified in Section 2.03(b)(iii).
“Note” means a Multicurrency Revolving Credit Note or a US Dollar Revolving Credit Note, as the context may require.
“Notice Date” has the meaning set forth in Section 2.18.
“Obligations” means (a) the due and punctual payment by any Borrower of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any Borrower in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of L/C Obligations, interest thereon (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) and obligations to provide cash collateral and (iii) all other monetary obligations of any Borrower to any of the Lenders or the Administrative Agent under any Loan Document, including obligations to pay fees, expense reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of any Borrower under or pursuant to any Loan Document and (c) the due and punctual payment and performance of all the obligations of each other Loan Party under or pursuant to each Loan Document (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding).
“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.
“Original Closing Date” means February 17, 2017.
“Original Credit Agreement” has the meaning given to such term in the recitals to this Agreement.
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.06).
“Outstanding Amount” means (i) with respect to Committed Loans on any date, the Dollar Equivalent of the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of such Committed Loans occurring on such date, (ii) with respect to Swing Line Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of such Swing Line Loans occurring on such date; and (iii) with respect to any L/C Obligations on any date, the Dollar Equivalent amount of the aggregate outstanding amount of such L/C Obligations on such date after giving effect to any L/C Credit Extension occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements by the Company of Unreimbursed Amounts.
“Overnight Rate” means, for any day, (a) with respect to any amount denominated in Dollars, the greater of (i) the Federal Funds Rate and (ii) an overnight rate determined by the Administrative Agent, the L/C Issuer, or the Swing Line Lender, as the case may be, in accordance with banking industry rules on interbank compensation, and (b) with respect to any amount denominated in an Alternative Currency, the rate of interest per annum at which overnight deposits in the applicable Alternative Currency, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day by a branch or Affiliate of Bank of America in the applicable offshore interbank market for such currency to major banks in such interbank market.
“PACA” means the Perishable Agricultural Commodities Act, as amended.
“Participant” has the meaning specified in Section 10.06(d).
“Participating Member State” means any member state of the European Union that has the Euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
“Participant Register” has the meaning specified in Section 10.06(d).
“Patriot Act” means the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended from time to time.
“PBGC” means the Pension Benefit Guaranty Corporation or any successor entity thereto.
“Permitted Encumbrances” means:
(a) Liens imposed by law for Taxes that are not yet due or are being contested in compliance with Section 6.04;
(b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlord’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than 60 days or are being contested in compliance with Section 6.04;
(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute an Event of Default;
(f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not interfere with the ordinary conduct of business of the Company or any of its Subsidiaries;
(g) banker’s liens, rights of setoff or similar rights and remedies as to deposit accounts or other funds maintained with depository institutions; provided that, except with respect to any deposit account or funds subject to the Lien of a Loan Document, such deposit accounts or funds are not established or deposited for the purpose of providing collateral for any Indebtedness and are not subject to restrictions on access by the Company or any of its Subsidiaries in excess of those required by applicable banking regulations;
(h) Liens in favor of, or claims or rights of any producer, grower or seller of livestock, poultry or agricultural commodities under PACA, PSA or any similar state or federal laws or regulations;
(i) any Lien, claim or right of any Governmental Authority arising under any law or regulation in any inventory or farm products allocable to any procurement contract with such Governmental Authority;
(j) Liens arising by virtue of Uniform Commercial Code financing statement filings (or similar filings under applicable law) regarding operating leases entered into by the Company and its Subsidiaries in the ordinary course of business;
provided that the term “Permitted Encumbrances” shall not include any Lien securing Indebtedness.
“Permitted Holders” means WH Group or any of its Affiliates (but without giving effect to the third sentence of the definition of “Control”) and any “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members; provided that, in the case of such group and without giving effect to the existence of such group or any other group, such Persons, collectively, have direct or indirect beneficial ownership of more than 50% of the Voting Stock of the Company.
“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA (other than a Multiemployer Plan or Foreign Plan), that is subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and that (i) is sponsored, maintained or contributed to, by any Loan Party or any ERISA Affiliate or (ii) has at any time within the preceding six years been maintained, or contributed to by any Loan Party or any ERISA Affiliate.
“Platform” has the meaning specified in Section 6.01.
“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.
“PSA” means the Packers and Stockyards Act, as amended.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public Lender” has the meaning specified in Section 6.01.
“QFC” has the meaning specified in Section 10.22(b).
“QFC Credit Support” has the meaning specified in Section 10.22.
“Rabobank” means Coöperatieve Rabobank U.A., New York Branch.
“Rate Determination Date” means two (2) Business Days prior to the commencement of such Interest Period (or such other day as is generally treated as the rate fixing day by market practice in such interbank market, as determined by the Administrative Agent; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, such other day as otherwise reasonably determined by the Administrative Agent).
“Rating” means the public ratings from time to time established by Moody’s, S&P and Fitch for the Index Debt (or, at any time when no Index Debt shall be outstanding, (a) the Company’s corporate credit rating then in effect from S&P, (b) the Company’s corporate family rating then in effect from Moody’s and (c) the Company’s issuer default rating then in effect from Fitch).
“Rating Agency” means any of S&P, Moody’s and Fitch.
“Recipient” means the Administrative Agent, any Lender, the L/C Issuer or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.
“Receivables Securitization” means the Securitization Transaction pursuant to that certain Fourth Amended and Restated Credit and Security Agreement dated as of November 21, 2018 among Rabobank as the administrative agent, Smithfield Receivables Funding LLC, the Company and the lenders party thereto (as amended, amended and restated, replaced, increased, supplemented or otherwise modified from time to time).
“Refinancing” means the repayment in full by the Company of all outstanding Indebtedness, and the termination of all Commitments (as defined in the Existing Credit Agreement), under the Existing Credit Agreement.
“Refinancing Indebtedness” means, in respect of any Indebtedness (the “Original Indebtedness”), any Indebtedness that extends, renews or refinances such Original Indebtedness (or any Refinancing Indebtedness in respect thereof); provided that (a) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of such Original Indebtedness (except to the extent used to finance accrued interest and premium (including tender or make-whole premiums) thereon and underwriting discounts, defeasance costs, fees, commissions and expenses), (b) the maturity of such Refinancing Indebtedness shall not be earlier, and the weighted average life to maturity of such Refinancing Indebtedness shall not be shorter, than that of such Original Indebtedness; (c) such Refinancing Indebtedness shall not be required to be repaid, prepaid, redeemed, repurchased or defeased upon the occurrence of one or more events or at the option of any holder thereof (except, in each case, upon the occurrence of an event of default or a change in control or as and to the extent such repayment, prepayment, redemption, repurchase or defeasance would have been required pursuant to the terms of such Original Indebtedness) prior to the earlier of (i) the maturity of such Original Indebtedness and (ii) the date that is six months after the Maturity Date; provided that this clause (c) shall not apply to the final maturity or regularly scheduled amortization of any Indebtedness, (d) such Refinancing Indebtedness shall not constitute an obligation of the Company or any Subsidiary that shall not have been (or, in the case of after-acquired Subsidiaries, shall not have been required to become) an obligor in respect of such
Original Indebtedness and shall constitute an obligation of such Subsidiary or of the Company only to the extent of their obligations in respect of such Original Indebtedness; (e) if such Original Indebtedness shall have been expressly subordinated to the Obligations, such Refinancing Indebtedness shall also be expressly subordinated to the Obligations on terms not less favorable in any material respect to the Lenders; and (f) such Refinancing Indebtedness shall not be secured by any Lien on any asset other than the assets that secured such Original Indebtedness (or would have been required to secure such Original Indebtedness pursuant to the terms thereof).
“Register” has the meaning specified in Section 10.06(c).
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.
“Removal Effective Date” has the meaning specified in Section 9.06(b).
“Report” means reports prepared by the Administrative Agent or another Person showing the results of inspections with respect to the assets of any Loan Party from information furnished by or on behalf of any Loan Party, after the Administrative Agent has exercised its rights of inspection pursuant to this Agreement, which Reports may be distributed to the Lenders by the Administrative Agent.
“Request for Credit Extension” means (a) with respect to a Borrowing, conversion or continuation of Committed Loans, a Committed Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan Notice.
“Required Facility Lenders” means, with respect to any Facility as of any date of determination, Lenders holding more than 50% of the sum of the (a) Total Outstandings under such Facility (with the aggregate amount of each US Dollar Revolving Credit Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such US Dollar Revolving Credit Lender for purposes of this definition) and (b) aggregate unused Commitments under such Facility; provided that the unused Commitments under such Facility of, and the portion of the Total Outstandings under such Facility held or deemed held by, any Defaulting Lender shall be excluded for purposes of making a determination of Required Facility Lenders.
“Required Lenders” means, at any time, Lenders holding more than 50% of the sum of the (a) Total Outstandings (with the aggregate amount of each US Dollar Revolving Credit Lender’s risk participation and funded participation in L/C Obligations and Swing Line Loans being deemed “held” by such US Dollar Revolving Credit Lender for purposes of this definition) and (b) aggregate unused Commitments. The Total Outstandings and undrawn Commitments of any Defaulting Lender shall be disregarded in determining Required Lenders at any time; provided that the amount of any participation in any Swing Line Loan and Unreimbursed Amounts that such Defaulting Lender has failed to fund that have not been reallocated to and funded by another Lender shall be deemed to be held by the Lender that is the Swing Line Lender or L/C Issuer, as the case may be, in making such determination.
“Requirement of Law” means, with respect to any Person, (a) the charter, articles or certificate of organization or incorporation and bylaws or other organizational or governing documents of such Person and (b) any Law, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Rescindable Amount” means any payment that the Administrative Agent makes for the account of the Lenders or the L/C Issuer hereunder as to which the Administrative Agent determines (which
determination shall be conclusive absent manifest error) that any of the following applies: (a) the Borrower has not in fact made such payment; (b) the Administrative Agent has made a payment in excess of the amount so paid by the Borrower (whether or not then owed); or (c) the Administrative Agent has for any reason otherwise erroneously made such payment.
“Resignation Effective Date” has the meaning specified in Section 9.06(a).
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer, controller or assistant controller of a Loan Party and, solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01, the secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II, any other officer or employee of the applicable Loan Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Loan Party designated in or pursuant to an agreement between the applicable Loan Party and the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.
“Restatement Effective Date” means the date on which all of the conditions specified in Section 4.01 shall first be satisfied (or waived).
“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interests in any Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancelation or termination of any Equity Interests in a Borrower or any Subsidiary, whether now or hereafter outstanding, or any option, warrant, or other right to acquire any such Equity Interests in a Borrower or any Subsidiary, or any other payment that has a substantially similar effect to any of the foregoing.
“Revaluation Date” means (a) with respect to any Loan, each of the following: (i) each date of a Borrowing of a Eurocurrency Rate Loan denominated in an Alternative Currency, (ii) each date of a continuation of a Eurocurrency Rate Loan denominated in an Alternative Currency pursuant to Section 2.02, and (iii) such additional dates as the Administrative Agent shall determine or the Required Lenders shall require; and (b) with respect to any Letter of Credit, each of the following: (i) each date of issuance of a Letter of Credit denominated in an Alternative Currency, (ii) each date of an amendment of any such Letter of Credit having the effect of increasing the amount thereof, (iii) each date of any payment by the L/C Issuer under any Letter of Credit denominated in an Alternative Currency, and (iv) such additional dates as the Administrative Agent or the L/C Issuer shall determine or the Required Lenders shall require.
“Revolving Credit Borrowing” means a Multicurrency Revolving Credit Borrowing or a US Dollar Revolving Credit Borrowing, as the context may require.
“Revolving Credit Commitment” means a Multicurrency Revolving Credit Commitment or a US Dollar Revolving Credit Commitment, as the context may require.
“Revolving Credit Facility” means, collectively, the Multicurrency Revolving Credit Facility and the US Dollar Revolving Credit Facility.
“Revolving Credit Increase Effective Date” has the meaning specified in Section 2.15(d).
“Revolving Credit Lender” means a Multicurrency Revolving Credit Lender or a US Dollar Revolving Credit Lender, as the context may require.
“Revolving Credit Loans” has the meaning specified in Section 2.01.
“Sanction(s)” means economic or financial sanctions imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or His Majesty’s Treasury of the United Kingdom.
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. (or any successor providing ratings).
“Same Day Funds” means (a) with respect to disbursements and payments in Dollars, immediately available funds, and (b) with respect to disbursements and payments in an Alternative Currency, same day or other funds as may be determined by the Administrative Agent or the L/C Issuer, as the case may be, to be customary in the place of disbursement or payment for the settlement of international banking transactions in the relevant Alternative Currency.
“Scheduled Unavailability Date” has the meaning set forth in Section 3.03(b)(ii).
“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“SEC Filings” has the meaning assigned to such term in Section 5.11.
“Securitization Transaction” means any arrangement under which the Company or any Subsidiary transfers accounts receivable and/or payment intangibles, interests therein and/or related assets and rights (a) to a trust, partnership, corporation, limited liability company or other entity (which may be an SPE Subsidiary), which transfer is funded in whole or in part, directly or indirectly, by the incurrence or issuance by the transferee or successor transferee (which may be an SPE Subsidiary) of Indebtedness, other securities or interests that are to receive payments from, or that represent interests in, the cash flow derived from such accounts receivable and/or payment intangibles, interests therein or related assets and rights, or (b) directly to one or more investors or other purchasers. The “amount” or “principal amount” of any Securitization Transaction shall be deemed at any time to be the aggregate principal, capital or stated amount (or the substantive equivalent of any of the foregoing) of the Indebtedness, other securities or interests referred to in the first sentence of this definition or, if there shall be no such principal, capital or stated amount (or the substantive equivalent of any of the foregoing), the uncollected amount of the accounts receivable or interests therein transferred pursuant to such Securitization Transaction, net of any such accounts receivables or interests therein that have been written off as uncollectible. Such “amount” or “principal amount” shall not include any amount of Indebtedness owing by any SPE Subsidiary to the Company or any Subsidiary to the extent that such intercompany Indebtedness has been incurred to finance, in part, the transfers of accounts receivable and/or payment intangibles, interests therein and/or related assets and rights to such SPE Subsidiary. For the avoidance of doubt, the Receivables Securitization in effect as of the date hereof constitutes a Securitization Transaction.
“Senior Notes” means (i) the 3.350% Senior Notes due 2022, issued by the Company on February 1, 2017, (ii) the 4.250% Senior Notes due 2027, issued by the Company on February 1, 2017, (iii) the 2.650% Senior Notes due 2021, issued by the Company on October 3, 2017, (iv) the 5.200% Senior Notes due 2029, issued by the Company on April 1, 2019 and (v) the 3.000% Senior Notes due 2030 issued by the Company on September 15, 2020.
“SOFR” means the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (or a successor administrator).
“SOFR Adjustment” means 0.10% per annum.
“SOFR Scheduled Unavailability Date” has the meaning specified in Section 3.03(c).
“SONIA” means, for each day with respect to any Credit Extension denominated in Sterling, the Sterling Overnight Index Average as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) on the fifth Business Day preceding such day; provided that if such day is not a Business Day, then SONIA means such rate published on the Business Day immediately prior thereto; provided, further, that SONIA as determined hereunder shall not have the same date of determination for any outstanding Loan based on SONIA for more than four consecutive days.
“SONIA Adjustment” means 0.0326% per annum.
“SONIA Daily Rate” means, for any day, with respect to any Credit Extension denominated in Sterling, the rate per annum equal to SONIA determined pursuant to the definition thereof plus the SONIA Adjustment; provided that, if any SONIA Daily Rate shall be less than zero, such rate shall be deemed zero for purposes of this Agreement. Any change in an SONIA Daily Rate shall be effective from and including the date of such change without further notice.
“SONIA Daily Rate Loan” means a Eurocurrency Rate Loan denominated in Sterling that bears interest at a rate based on the definition of “SONIA Daily Rate”.
“SONIA Rate Conforming Changes” means, with respect to the use, administration of or any conventions associated with the SONIA Daily Rate, any conforming changes, including changes to the definitions of SONIA and Interest Period, and any related definitions, the timing and frequency of determining rates and making payments of interest and other technical, administrative or operative matters (including, for the avoidance of doubt, the definition of Business Day, timing of borrowing requests or prepayment, conversion or continuation notices and length of look-back periods), as determined in the Administrative Agent’s reasonable discretion, as may be appropriate to reflect the adoption and implementation of the SONIA Daily Rate, and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of the SONIA Daily Rate exists, in such other manner of administration as the Administrative Agent determines is reasonably necessary in connection with the administration of this Agreement and any other Loan Document).
“SPC” has the meaning specified in Section 10.06(g).
“SPE Subsidiary” means any Subsidiary formed solely for the purpose of, and that engages only in, one or more Securitization Transactions and transactions related or incidental thereto.
“Special Notice Currency” means at any time an Alternative Currency, other than the currency of a country that is a member of the Organization for Economic Cooperation and Development at such time located in North America or Europe.
“Spot Rate” for a currency means the rate determined by the Administrative Agent or the L/C Issuer, as applicable, to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date as of which the foreign exchange computation is made; provided that the Administrative Agent or the L/C Issuer may obtain such spot rate from another financial institution designated by the Administrative Agent or the L/C Issuer if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency; and provided further that the L/C Issuer may use such spot rate quoted on the date as of which the foreign exchange computation is made in the case of any Letter of Credit denominated in an Alternative Currency.
“Statutory Reserves” shall mean, without duplication of any amounts paid pursuant to Section 3.04(e), for any Interest Period for any Borrowing of Eurocurrency Rate Loans, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the United States Federal Reserve System in New York City with deposits exceeding one billion dollar against “Eurocurrency liabilities” (as such term is used in Regulation D). Eurodollar Borrowings shall be deemed to constitute Eurodollar liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Lender under Regulation D.
“Sterling” and “£” mean the lawful currency of the United Kingdom.
“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Company.
“Subsidiary Guarantee Requirement” means the requirement that:
(a) the Administrative Agent shall have received on the Restatement Effective Date from the Company and each of the Subsidiary Guarantors a counterpart of Guaranty Amendment No. 2 duly executed and delivered on behalf of such Person, together with any documents, certificates and opinions required by Section 4.01(a)(iii) through (vi);
(b) promptly and in any event within one Business Day of a Person (i) becoming a Subsidiary of the Company (other than an Excluded Subsidiary) after the Restatement Effective Date or (ii) that is a Subsidiary of the Company providing a Guarantee of the Senior Notes (or any replacement, refinancing, refunding, renewal or extension thereof) or any Material Indebtedness of the Company after the Restatement Effective Date, the Company shall deliver notice thereof in writing to the Administrative Agent; and
(c) promptly (and in any event within 30 days of such Person (i) becoming a Subsidiary of the Company (other than an Excluded Subsidiary) or (ii) providing a Guarantee of the Senior Notes (or
any replacement, refinancing, refunding, renewal or extension thereof)) or any Material Indebtedness of the Company cause such Person to (x) become a Subsidiary Guarantor by executing and delivering to the Administrative Agent a Guaranty Joinder Agreement or such other document as the Administrative Agent shall reasonably deem appropriate for such purpose, and (y) if reasonably requested by the Administrative Agent, deliver to the Administrative Agent the documents, certificates and opinions of the types referred to in Section 4.01(a)(iii) through (vi), in each case in form substantially consistent with those delivered on the Restatement Effective Date to the extent applicable to the transactions contemplated by the foregoing clause (i) and subject to modifications reasonably acceptable to the Administrative Agent (in the case of legal opinions, taking into account any Change in Law after the Restatement Effective Date);
provided that the requirements set forth above in clauses (a), (b)(i) and (c)(i) (but not, for the avoidance of doubt, clause (b)(ii) or (c)(ii)) shall be suspended upon and solely for so long as the Applicable Debt Ratings (i) are Baa3, BBB- and BBB-, from each of Moody’s, S&P and Fitch, respectively, or better, (ii) from at least two of the three Ratings Agencies are Baa2, BBB and BBB, from Moody’s, S&P and Fitch, respectively, or better and (iii) from each of the Ratings Agencies has a stable outlook, except, in the case of any Applicable Debt Rating with respect to this clause (iii), to the extent such Applicable Debt Rating is higher than Baa2, BBB or BBB, as applicable; provided, further, that at any time that the requirements in the foregoing proviso are not met, each of the requirements under clause (a), (b)(i) and (c)(i) above shall automatically be reinstated and each such applicable Subsidiary shall be required to provide a Guaranty Joinder Agreement in accordance with the above.
“Subsidiary Guarantors” means, collectively, each (a) existing and future direct or indirect Subsidiary of the Company (other than an Excluded Subsidiary) and (b) existing and future direct or indirect Subsidiary of the Company that provides a Guarantee of the Senior Notes (or any replacement, refinancing, refunding, renewal or extension thereof) or any Material Indebtedness of the Company, in each case to the extent such Subsidiary is a party to the Guaranty Agreement or a Guaranty Joinder Agreement.
“Successor Rate” means a Eurocurrency Successor Rate or a Term SOFR Successor Rate.
“Successor Rate Conforming Changes” means, with respect to the use, administration of or any conventions associated with SOFR or any proposed Successor Rate for an Applicable Currency, any conforming changes, including changes to the definitions of Base Rate and Interest Period, and any related definitions, the timing and frequency of determining rates and making payments of interest and other technical, administrative or operative matters (including, for the avoidance of doubt, the definition of Business Day, timing of borrowing requests or prepayment, conversion or continuation notices and length of look-back periods), as determined in the Administrative Agent’s reasonable discretion in consultation with the Company, as may be appropriate to reflect the adoption and implementation of such applicable rate(s), and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice for such Applicable Currency (or, if the Administrative Agent determines that adoption of any portion of such market practice for such Applicable Currency is not administratively feasible or that no market practice for the administration of such rate for such Applicable Currency exists, in such other manner of administration as the Administrative Agent determines in consultation with the Company is reasonably necessary in connection with the administration of this Agreement and any other Loan Document).
“Supported QFC” has the meaning specified in Section 10.22.
“Swap Agreement” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates,
currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions, provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Company or the Subsidiaries shall be a Swap Agreement.
“Swap Termination Value” means, in respect of any one or more Swap Agreements, after taking into account the effect of any netting agreement relating to such Swap Agreements, (a) for any date on or after the date such Swap Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Agreements (which may include a Lender or any Affiliate of a Lender).
“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to Section 2.04.
“Swing Line Lender” means Bank of America in its capacity as provider of Swing Line Loans, or any successor swing line lender hereunder.
“Swing Line Loan” has the meaning specified in Section 2.04(a).
“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to Section 2.04(b), which shall be substantially in the form of Exhibit B or such other form as approved by the Administrative Agent (including any form on an electronic platform or electronic transmission system as shall be approve by the Administrative Agent), appropriately completed and signed by a Responsible Officer of the Borrower.
“Swing Line Sublimit” means an amount equal to the lesser of (a) $50,000,000 and (b) the US Dollar Revolving Credit Commitments. The Swing Line Sublimit is part of, and not in addition to, the US Dollar Revolving Credit Commitment.
“T2” means the real time gross settlement system operated by the Eurosystem, or any successor system.
“TARGET Day” means any day on which T2 is open for the settlement of payments in euro.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority including any interest, additions to tax or penalties applicable thereto.
“Term CORRA Adjustment” means (i) 0.29547% (29.547 basis points) for an Interest Period of one-month’s duration and (ii) 0.32138% (32.138 basis points) for an Interest Period of three-months’ duration.
“Term SOFR” means:
(a) for any Interest Period with respect to a Term SOFR Loan, the rate per annum equal to the Term SOFR Screen Rate two U.S. Government Securities Business Days prior to the commencement of such Interest Period with a term equivalent to such Interest Period; provided that if the rate is not published prior to 11:00 a.m. on such determination date then Term SOFR means the Term SOFR Screen Rate on the first U.S. Government Securities Business Day immediately prior thereto, in each case, plus the SOFR Adjustment for such Interest Period; and
(b) for any interest calculation with respect to a Base Rate Loan on any date, the rate per annum equal to the Term SOFR Screen Rate two U.S. Government Securities Business Days prior to such date with a term of one month commencing that day; provided that if the rate is not published prior to 11:00 a.m. on such determination date then Term SOFR means the Term SOFR Screen Rate on the first U.S. Government Securities Business Day immediately prior thereto, in each case, plus the SOFR Adjustment for such term;
provided that if Term SOFR determined in accordance with either of the foregoing provisions (a) or (b) of this definition would otherwise be less than zero, Term SOFR shall be deemed zero for purposes of this Agreement.
“Term SOFR Loan” means a Loan that bears interest at a rate based on clause (a) of the definition of Term SOFR.
“Term SOFR Replacement Date” has the meaning specified in Section 3.03(b).
“Term SOFR Screen Rate” means the forward-looking SOFR term rate administered by CME (or any successor administrator satisfactory to the Administrative Agent) and published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time in its discretion).
“Term SOFR Successor Rate” has the meaning specified in Section 3.03(b).
“Total Multicurrency Revolving Credit Outstandings” means the aggregate Outstanding Amount of all Multicurrency Revolving Credit Loans.
“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all L/C Obligations.
“Total Revolving Credit Outstandings” means, collectively, the Total Multicurrency Revolving Credit Outstandings and the Total US Dollar Revolving Credit Outstandings.
“Total US Dollar Revolving Credit Outstandings” means the aggregate Outstanding Amount of all US Dollar Revolving Credit Loans, Swing Line Loans and L/C Obligations.
“Transactions” means the execution, delivery and performance by the Loan Parties of this Agreement and the other Loan Documents to which they are a party, the borrowing of Loans and other credit extensions (in each case, on the Restatement Effective Date), the use of the proceeds thereof, the Refinancing, the continuation or issuance of Letters of Credit hereunder and the creation and perfection of any Liens created by the Loan Documents.
“Type” means, with respect to a Committed Loan, its character as a Base Rate Loan, a Term SOFR Loan or a Eurocurrency Rate Loan.
“UCP” means, with respect to any Letter of Credit, the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce (“ICC”) Publication No. 600 (or such later version thereof as may be in effect at the time of issuance).
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain
credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Undisclosed Administration” means, with respect to any Lender or its direct or indirect parent company, the appointment of an administrator, provisional liquidator, conservator, receiver, trustee, custodian or other similar official by a supervisory authority or regulator under or based on the law in the country where such Lender or such parent company is subject to home jurisdiction supervision if applicable law requires that such appointment is not to be publicly disclosed.
“United States” and “U.S.” mean the United States of America.
“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).
“US Dollar Revolving Credit Borrowing” means a borrowing consisting of one or more simultaneous US Dollar Revolving Credit Loans of the same Type and, in the case of Term SOFR Loans, having the same Interest Period made pursuant to Section 2.01.
“US Dollar Revolving Credit Commitment” means, as to each US Dollar Revolving Credit Lender, its obligation to (a) make US Dollar Revolving Credit Loans to the Borrowers pursuant to Section 2.01, (b) purchase participations in L/C Obligations and (c) purchase participations in Swing Line Loans, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 under the caption “US Dollar Revolving Credit Commitment” or opposite such caption in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as such amount may be adjusted from time to time in accordance with this Agreement. On the Amendment No. 1 Effective Date, the aggregate US Dollar Revolving Credit Commitment shall be $1,850,000,000.
“US Dollar Revolving Credit Exposure” means, as to any US Dollar Revolving Credit Lender at any time, the aggregate Outstanding Amount at such time of its Committed Loans and the aggregate Outstanding Amount of such US Dollar Revolving Credit Lender’s participation in L/C Obligations and Swing Line Loans at such time
“US Dollar Revolving Credit Facility” means, at any time, the aggregate amount of the US Dollar Revolving Credit Lenders’ US Dollar Revolving Credit Commitments and (without duplication) US Dollar Revolving Credit Loans at such time.
“US Dollar Revolving Credit Lender” means, at any time, any Lender that has a US Dollar Revolving Credit Commitment or holds a US Dollar Revolving Credit Loan at such time.
“US Dollar Revolving Credit Loan” has the meaning specified in Section 2.01.
“US Dollar Revolving Credit Note” means a promissory note made by the Borrower in favor of a US Dollar Revolving Credit Lender evidencing US Dollar Revolving Credit Loans or Swing Line Loans, as the case may be, made by such US Dollar Revolving Credit Lender, substantially in the form of Exhibit C-3.
“U.S. Government Securities Business Day” means any Business Day, except any Business Day on which any of the Securities Industry and Financial Markets Association, the New York Stock
Exchange or the Federal Reserve Bank of New York is not open for business because such day is a legal holiday under the federal laws of the United States or the laws of the State of New York, as applicable.
“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
“U.S. Special Resolution Regimes” has the meaning specified in Section 10.22.
“U.S. Tax Compliance Certificate” has the meaning specified in Section 3.01(e)(ii)(B)(III).
“WH Group” means WH Group Ltd., an exempted company incorporated with limited liability status under the laws of Cayman Islands.
“Withholding Agent” means any Loan Party and the Administrative Agent.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
“Voting Participant” has the meaning specified in Section 10.06(d).
“Voting Participant Notification” has the meaning specified in Section 10.06(d).
“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.
“Yen” and “¥” mean the lawful currency of Japan.
1.02 Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be
construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
(b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”
(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
(d) Any reference herein to a merger, transfer, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any division of a limited liability company shall constitute a separate Person hereunder (and each division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).
1.03 Accounting Terms. (a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, as in effect from time to time, applied on a consistent basis throughout the periods reflected therein, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant) contained herein, Indebtedness of the Company and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded.
(b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Company or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Company shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (A) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (B) if a request for such an amendment has been made, the Company shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.
(c) All pro forma computations required to be made hereunder shall be calculated on a pro forma basis after giving pro forma effect to any Material Transaction consummated during the period covered by any component of such pro forma computation or, other than with respect to compliance with the Financial Covenants, and without duplication, following such period and on or prior to the date of such computation, and, to the extent applicable, to the historical earnings and cash flows associated with the assets acquired or disposed of in such Material Transaction and any related incurrence or reduction of Indebtedness, all in accordance with Article 11 of Regulation S-X under the Securities Act. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest 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 Swap Agreement applicable to such Indebtedness if such Swap Agreement has a remaining term in excess of 12 months).
1.04 Rounding. Any financial ratios required to be maintained by the Company pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
1.05 Exchange Rates; Currency Equivalents. (a) The Administrative Agent or the L/C Issuer, as applicable, shall determine the Spot Rates as of each Revaluation Date to be used for calculating Dollar Equivalent amounts of Credit Extensions and Outstanding Amounts denominated in Alternative Currencies. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except for purposes of financial statements delivered by Loan Parties hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency (other than Dollars) for purposes of the Loan Documents shall be such Dollar Equivalent amount as so determined by the Administrative Agent or the L/C Issuer, as applicable.
(b) Wherever in this Agreement in connection with a Committed Borrowing, conversion, continuation or prepayment of a Eurocurrency Rate Loan or the issuance, amendment or extension of a Letter of Credit, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Committed Borrowing, Eurocurrency Rate Loan or Letter of Credit is denominated in an Alternative Currency, such amount shall be the relevant Alternative Currency Equivalent of such Dollar amount (rounded to the nearest unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as determined by the Administrative Agent or the L/C Issuer, as the case may be.
(c) The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “Eurocurrency Rate”, “Daily SOFR”, “Term SOFR” or with respect to any comparable or successor rate thereto.
1.06 Additional Alternative Currencies. (a) The Company may from time to time request that Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility be made and/or Letters of Credit be issued in a currency other than those specifically listed in the definition of “Alternative Currency;” provided that such requested currency is a lawful currency (other than Dollars) that is readily available and freely transferable and convertible into Dollars. In the case of any such request with respect to the making of Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility, such request shall be subject to the approval of the Administrative Agent and the Multicurrency Revolving Credit Lenders; and in the case of any such request with
respect to the issuance of Letters of Credit, such request shall be subject to the approval of the Administrative Agent and the L/C Issuer.
(b) Any such request shall be made to the Administrative Agent not later than 11:00 a.m., 20 Business Days prior to the date of the desired Credit Extension (or such other time or date as may be agreed by the Administrative Agent and, in the case of any such request pertaining to Letters of Credit, the L/C Issuer, in its or their sole discretion). In the case of any such request pertaining to Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility, the Administrative Agent shall promptly notify each Multicurrency Revolving Credit Lender thereof; and in the case of any such request pertaining to Letters of Credit, the Administrative Agent shall promptly notify the L/C Issuer thereof. Each Multicurrency Revolving Credit Lender (in the case of any such request pertaining to Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility) or the L/C Issuer (in the case of a request pertaining to Letters of Credit) shall notify the Administrative Agent, not later than 11:00 a.m., ten Business Days after receipt of such request whether it consents, in its sole discretion, to the making of Eurocurrency Rate Loans or the issuance of Letters of Credit, as the case may be, in such requested currency.
(c) Any failure by a Multicurrency Revolving Credit Lender or the L/C Issuer, as the case may be, to respond to such request within the time period specified in the preceding sentence shall be deemed to be a refusal by such Multicurrency Revolving Credit Lender or the L/C Issuer, as the case may be, to permit Eurocurrency Rate Loans to be made under the Multicurrency Revolving Credit Facility or Letters of Credit to be issued in such requested currency. If the Administrative Agent and all the Multicurrency Revolving Credit Lenders consent to making Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility in such requested currency, the Administrative Agent shall so notify the Company and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Committed Borrowings of Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility; and if the Administrative Agent and the L/C Issuer consent to the issuance of Letters of Credit in such requested currency, the Administrative Agent shall so notify the Company and such currency shall thereupon be deemed for all purposes to be an Alternative Currency hereunder for purposes of any Letter of Credit issuances. If the Administrative Agent shall fail to obtain consent to any request for an additional currency under this Section 1.06, the Administrative Agent shall promptly so notify the Company.
1.07 Change of Currency. (a) Each obligation of the Borrowers to make a payment denominated in the national currency unit of any member state of the European Union that adopts the Euro as its lawful currency after the date hereof shall be redenominated into Euro at the time of such adoption. If, in relation to the currency of any such member state, the basis of accrual of interest expressed in this Agreement in respect of that currency shall be inconsistent with any convention or practice in the London interbank market for the basis of accrual of interest in respect of the Euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which such member state adopts the Euro as its lawful currency; provided that if any Committed Borrowing in the currency of such member state is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Committed Borrowing, at the end of the then current Interest Period.
(b) Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate
to reflect the adoption of the Euro by any member state of the European Union and any relevant market conventions or practices relating to the Euro.
(c) Each provision of this Agreement also shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect a change in currency of any other country and any relevant market conventions or practices relating to the change in currency.
1.08 Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).
1.09 Letter of Credit Amounts. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the Dollar Equivalent of the stated amount of such Letter of Credit in effect at such time; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any Issuer Document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the Dollar Equivalent of the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.
ARTICLE II.
THE COMMITMENTS AND CREDIT EXTENSIONS
2.01 Committed Loans. Subject to the terms and conditions set forth herein, (i) each Multicurrency Revolving Credit Lender severally agrees to make loans (each such loan, a “Multicurrency Revolving Credit Loan”) to the Borrowers in Dollars or in one or more Alternative Currencies from time to time, on any Business Day during the Availability Period for the Multicurrency Revolving Credit Facility, in an aggregate amount not to exceed at any time outstanding such Multicurrency Revolving Credit Lender’s Multicurrency Revolving Credit Commitment and (ii) each US Dollar Revolving Credit Lender severally agrees to make loans (each such loan, a “US Dollar Revolving Credit Loan” and, together with the Multicurrency Revolving Credit Loans, the “Revolving Credit Loans”) to the Borrowers in Dollars from time to time, on any Business Day during the Availability Period for the US Dollar Revolving Credit Facility, in an aggregate amount not to exceed at any time outstanding the amount of such US Dollar Revolving Credit Lender’s US Dollar Revolving Credit Commitment; provided, however, that after giving effect to any Committed Borrowing of Revolving Credit Loans, (i) the Total Revolving Credit Outstandings shall not exceed the Revolving Credit Commitments, (ii) the Multicurrency Revolving Credit Exposure of any Multicurrency Revolving Credit Lender shall not exceed such Multicurrency Revolving Credit Lender’s Multicurrency Revolving Credit Commitment and (iii) the US Dollar Revolving Credit Exposure of any US Dollar Revolving Credit Lender shall not exceed such US Dollar Revolving Credit Lender’s US Dollar Revolving Credit Commitment. Within the limits of each Revolving Credit Lender’s Revolving Credit Commitment, and subject to the other terms and conditions hereof, the Borrowers may borrow under this Section 2.01, prepay under Section 2.05, and reborrow under this Section 2.01. Revolving Credit Loans may be Base Rate Loans, Term SOFR Loans or Eurocurrency Rate Loans, as further provided herein.
2.02 Borrowings, Conversions and Continuations of Committed Loans. (a) Each Committed Borrowing, each conversion of Committed Loans from one Type to the other, and each continuation of Term SOFR Loans and Eurocurrency Rate Loans shall be made upon the Company’s irrevocable notice to the Administrative Agent, which may be given by (A) telephone or (B) a Committed Loan Notice; provided that any telephonic notice must be confirmed immediately by delivery to the Administrative Agent of a committed Loan Notice. Each such Committed Loan Notice must be received by the Administrative Agent not later than 12:00 p.m. (noon) (i) three Business Days prior to the requested date of any Borrowing of, conversion to or continuation of Term SOFR Loans or of any conversion of Term SOFR Loans to Base Rate Committed Loans, (ii) four
Business Days (or five Business Days in the case of a Special Notice Currency) prior to the requested date of any Borrowing or continuation of Eurocurrency Rate Loans denominated in Alternative Currencies and (iii) on the requested date of any Borrowing of Base Rate Committed Loans. Each Borrowing of, conversion to or continuation of Term SOFR Loans or Eurocurrency Rate Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Except as provided in Sections 2.03(c) and 2.04(c), each Committed Borrowing of or conversion to Base Rate Committed Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Committed Loan Notice shall specify (i) whether the Company is requesting a Committed Borrowing, a conversion of Committed Loans from one Type to the other, or a continuation of Term SOFR Loans or Eurocurrency Rate Loans, (ii) the requested date of the Borrowing, conversion or continuation, as the case may be (which shall be a Business Day), (iii) the principal amount of the Committed Loans to be borrowed, converted or continued, (iv) the Class and Type of Committed Loans to be borrowed or to which existing Committed Loans are to be converted (it being understood that in the case of Revolving Credit Loans to be denominated in Dollars, the applicable Revolving Credit Loans shall be allocated, first, to the US Dollar Revolving Credit Facility to the full extent of the then unused US Dollar Revolving Credit Commitment, and second, to the Multicurrency Revolving Credit Facility to the full extent of the then unused Multicurrency Revolving Credit Commitments), (v) if applicable, the duration of the Interest Period with respect thereto, (vi) in the case of Multicurrency Revolving Credit Borrowings or Multicurrency Revolving Credit Loans, the currency of the Committed Loans to be borrowed or continued and (vii) if applicable, the Designated Borrower. If the Company fails to specify a currency in a Committed Loan Notice requesting a Borrowing, then the Committed Loans so requested shall be made in Dollars (allocated as described in clause (iv) of the preceding sentence). If the Company fails to specify a Type of Committed Loan in a Committed Loan Notice or if the Company fails to give a timely notice requesting a conversion or continuation, then the applicable Committed Loans shall be made as, or converted to, Base Rate Loans; provided, however, that in the case of a failure to timely request a continuation of Committed Loans denominated in an Alternative Currency, such Loans shall be continued as Eurocurrency Rate Loans in their original currency with an Interest Period of one month, as applicable. Any automatic conversion to Base Rate Loans shall be effective as of the last day of the Interest Period then in effect with respect to the applicable Term SOFR Loans or Eurocurrency Rate Loans. If the Company requests a Borrowing of, conversion to, or continuation of Term SOFR Loans or Eurocurrency Rate Loans not denominated in Sterling in any such Committed Loan Notice, but fails to specify an Interest Period, it will be deemed to have specified an Interest Period of one month. No Committed Loan may be converted into or continued as a Committed Loan denominated in a different currency, but instead must be prepaid in the original currency of such Committed Loan and reborrowed in the other currency.
(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall promptly notify each Lender of the amount (and currency) of its Applicable Percentage under the applicable Facility of the applicable Committed Loans, and if no timely notice of a conversion or continuation is provided by the Company, the Administrative Agent shall notify each Lender of the details of any automatic conversion to Base Rate Loans or continuation of Committed Loans denominated in a currency other than Dollars, in each case as described in the preceding subsection. In the case of a Committed Borrowing, each Lender shall make the amount of its Committed Loan available to the Administrative Agent in Same Day Funds at the Administrative Agent’s Office for the applicable currency not later than 1:00 p.m., in the case of any Committed Loan denominated in Dollars, and not later than the Applicable Time specified by the Administrative Agent in the case of any Committed Loan in an Alternative Currency, in each case on the Business Day specified in the applicable Committed Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 4.02 (and, if such Borrowing is the initial Credit Extension, Section 4.01), the Administrative Agent shall make all funds so received available to the Company or the other applicable Borrower in like
funds as received by the Administrative Agent either by (i) crediting the account of such Borrower on the books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Administrative Agent by the Company; provided, however, that if, on the date the Committed Loan Notice with respect to such Revolving Credit Borrowing denominated in Dollars is given by the Company, there are L/C Borrowings outstanding, then the proceeds of such Borrowing, first, shall be applied to the payment in full of any such L/C Borrowings, and, second, shall be made available to the applicable Borrower as provided above.
(c) Except as otherwise provided herein, a Term SOFR Loan and a Eurocurrency Rate Loan not denominated in Sterling may be continued or converted only on the last day of an Interest Period for such Loan. Eurocurrency Loans denominated in Sterling shall automatically continue each day as SONIA Daily Rate Loans. During the existence of a Default, (i) no Loans may be requested as, converted to or continued as Term SOFR Loans or Eurocurrency Rate Loans without the consent of the Required Facility Lenders with respect to the Facility for which such borrowing, conversion or continuation is requested and (ii) the Required Facility Lenders with respect to the Multicurrency Revolving Credit Facility may demand that any or all of the then outstanding Eurocurrency Rate Loans denominated in an Alternative Currency be prepaid, or redenominated into Dollars in the amount of the Dollar Equivalent thereof, on the last day of the then current Interest Period with respect thereto, as applicable.
(d) The Administrative Agent shall promptly notify the Company and the Lenders of the interest rate applicable to any Interest Period for Term SOFR Loans and Eurocurrency Rate Loans not denominated in Sterling or the interest rate applicable to any Daily SOFR Loans or any Eurocurrency Rate Loans denominated in Sterling, upon determination of such interest rate.
The determination of the Term SOFR, Daily SOFR, Eurocurrency Rate and the SONIA Daily Rate, as applicable, by the Administrative Agent shall be conclusive in the absence of manifest error.
(e) After giving effect to all Committed Borrowings of Revolving Credit Loans, all conversions of Revolving Credit Loans from one Type to the other and all continuations of Revolving Credit Loans as the same Type, there shall not be more than ten Interest Periods in effect with respect to all Loans.
(f) With respect to SONIA Daily Rate, the Administrative Agent will have the right to make SONIA Rate Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such SONIA Rate Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document; provided that, with respect to any such amendment effected, the Administrative Agent shall post each such amendment implementing such SONIA Rate Conforming Changes to the Company and the Lenders reasonably promptly after such amendment becomes effective.
2.03 Letters of Credit. (a) The Letter of Credit Commitment.
(i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer agrees, in reliance upon the agreements of the US Dollar Revolving Credit Lenders set forth in this Section 2.03, (1)
from time to time on any Business Day during the period from the Restatement Effective Date until the Letter of Credit Expiration Date, to issue Letters of Credit denominated in Dollars or in one or more Alternative Currencies for the account of the Company or its Subsidiaries, and to amend or extend Letters of Credit previously issued by it, in accordance with subsection (b) below, and (2) to honor drawings under the Letters of Credit; and (B) the US Dollar Revolving Credit Lenders severally agree to participate in Letters of Credit issued for the account of the Company or its Subsidiaries and any drawings thereunder; provided that after giving effect to any L/C Credit Extension with respect to any Letter of Credit, (w) the Total Revolving Credit Outstandings shall not exceed the Revolving Credit Commitment, (x) the US Dollar Revolving Credit Exposure of any US Dollar Revolving Credit Lender shall not exceed such US Dollar Revolving Credit Lender’s Commitment, (y) the Outstanding Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit and (z) the Outstanding Amount of L/C Obligations under Letters of Credit issued by any L/C Issuer shall not exceed such L/C Issuer’s L/C Issuer Fronting Sublimit. Each request by the Company for the issuance or amendment of a Letter of Credit shall be deemed to be a representation by the Company that the L/C Credit Extension so requested complies with the conditions set forth in the proviso to the preceding sentence. Within the foregoing limits, and subject to the terms and conditions hereof, the Company’s ability to obtain Letters of Credit shall be fully revolving, and accordingly the Company may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that have been drawn upon and reimbursed.
(ii) The L/C Issuer shall not issue any Letter of Credit, if:
(A) subject to Section 2.03(b)(iii), the expiry date of the requested Letter of Credit would occur more than twelve months after the date of issuance or last extension, unless the Required Facility Lenders with respect to the US Dollar Revolving Credit Facility have approved such expiry date; or
(B) the expiry date of the requested Letter of Credit would occur after the Letter of Credit Expiration Date, unless all the US Dollar Revolving Credit Lenders have approved such expiry date.
(iii) The L/C Issuer shall not be under any obligation to issue any Letter of Credit if:
(A) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the L/C Issuer from issuing the Letter of Credit, or any Law applicable to the L/C Issuer or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the issuance of letters of credit generally or the Letter of Credit in particular or shall impose upon the L/C Issuer with respect to the Letter of Credit any restriction, reserve or capital requirement (for which the L/C Issuer is not otherwise compensated hereunder) not in effect on the Restatement Effective Date, or shall impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not applicable on the Restatement Effective Date and which the L/C Issuer in good faith deems material to it;
(B) the issuance of the Letter of Credit would violate one or more policies of the L/C Issuer applicable to letters of credit generally;
(C) except as otherwise agreed by the Administrative Agent and the L/C Issuer, the Letter of Credit is to be denominated in a currency other than Dollars or an Alternative Currency;
(D) the L/C Issuer does not as of the issuance date of the requested Letter of Credit issue Letters of Credit in the requested currency;
(E) any US Dollar Revolving Credit Lender is at that time a Defaulting Lender, unless the L/C Issuer has entered into arrangements, including the delivery of Cash Collateral, satisfactory to the L/C Issuer (in its sole discretion) with the Company or such US Dollar Revolving Credit Lender to eliminate the L/C Issuer’s actual or potential Fronting Exposure (after giving effect to Section 2.17(a)(iv)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Obligations as to which the L/C Issuer has actual or potential Fronting Exposure, as it may elect in its sole discretion; or
(F) the Letter of Credit contains any provisions for automatic reinstatement of the stated amount after any drawing thereunder;(ii)
(iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would not be permitted at such time to issue the Letter of Credit in its amended form under the terms hereof.
(v) The L/C Issuer shall be under no obligation to amend any Letter of Credit if (A) the L/C Issuer would have no obligation at such time to issue the Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of the Letter of Credit does not accept the proposed amendment to the Letter of Credit.
(vi) The L/C Issuer shall act on behalf of the US Dollar Revolving Credit Lenders with respect to any Letters of Credit issued by it and the documents associated therewith, and the L/C Issuer shall have all of the benefits and immunities (A) provided to the Administrative Agent in Article IX with respect to any acts taken or omissions suffered by the L/C Issuer in connection with Letters of Credit issued by it or proposed to be issued by it and Issuer Documents pertaining to such Letters of Credit as fully as if the term “Administrative Agent” as used in Article IX included the L/C Issuer with respect to such acts or omissions, and (B) as additionally provided herein with respect to the L/C Issuer.
(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension Letters of Credit.
(i) Each Letter of Credit shall be issued or amended, as the case may be, upon the request of the Company delivered to the L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of Credit Application, appropriately completed and signed by a Responsible Officer of the Company. Such Letter of Credit Application may be sent by facsimile, by United States mail, by overnight courier, by electronic transmission using the system provided by the L/C Issuer, by personal delivery or by any other means acceptable to the L/C Issuer. Such Letter of Credit Application must be received by the L/C Issuer and the Administrative Agent not later than 11:00 a.m. at least two Business Days (or such later date and time as the Administrative Agent and the L/C Issuer may agree in a particular instance in their sole discretion) prior to the proposed issuance date or date of amendment, as the case may be. In the case of a request for an initial issuance of a Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer: (A) the proposed issuance date of the requested Letter of
Credit (which shall be a Business Day); (B) the amount and currency thereof; (C) the expiry date thereof; (D) the name and address of the beneficiary thereof; (E) the documents to be presented by such beneficiary in case of any drawing thereunder; (F) the full text of any certificate to be presented by such beneficiary in case of any drawing thereunder; (G) the purpose and nature of the requested Letter of Credit; and (H) such other matters as the L/C Issuer may require. In the case of a request for an amendment of any outstanding Letter of Credit, such Letter of Credit Application shall specify in form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be amended; (B) the proposed date of amendment thereof (which shall be a Business Day); (C) the nature of the proposed amendment; and (D) such other matters as the L/C Issuer may require. Additionally, the Company shall furnish to the L/C Issuer and the Administrative Agent such other documents and information pertaining to such requested Letter of Credit issuance or amendment, including any Issuer Documents, as the L/C Issuer or the Administrative Agent may require.
(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has received a copy of such Letter of Credit Application from the Company and, if not, the L/C Issuer will provide the Administrative Agent with a copy thereof. Unless the L/C Issuer has received written notice from any US Dollar Revolving Credit Lender, the Administrative Agent or any Loan Party, at least one Business Day prior to the requested date of issuance or amendment of the applicable Letter of Credit, that one or more applicable conditions contained in Article IV shall not then be satisfied, then, subject to the terms and conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter of Credit for the account of the Company (or the applicable Subsidiary) or enter into the applicable amendment, as the case may be, in each case in accordance with the L/C Issuer’s usual and customary business practices. Immediately upon the issuance of each Letter of Credit, each US Dollar Revolving Credit Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the L/C Issuer a risk participation in such Letter of Credit in an amount equal to the product of such US Dollar Revolving Credit Lender’s Applicable Percentage times the amount of such Letter of Credit.
(iii) If the Company so requests in any applicable Letter of Credit Application, the L/C Issuer may, in its sole discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the L/C Issuer to prevent any such extension at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the L/C Issuer, the Company shall not be required to make a specific request to the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the US Dollar Revolving Credit Lenders shall be deemed to have authorized (but may not require) the L/C Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the Letter of Credit Expiration Date; provided, however, that the L/C Issuer shall not permit any such extension if (A) the L/C Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of clause (ii) or (iii) of Section 2.03(a) or otherwise), or (B) it has received notice (which may be by telephone or in writing) on or before the day that is seven Business Days before the Non-Extension Notice Date (1) from the Administrative Agent that the Required Facility Lenders with respect to the US Dollar Revolving Credit Facility have elected not to permit such extension or (2) from the
Administrative Agent, any US Dollar Revolving Credit Lender or the Company that one or more of the applicable conditions specified in Section 4.02 is not then satisfied, and in each such case directing the L/C Issuer not to permit such extension.
(iv) Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to an advising bank with respect thereto or to the beneficiary thereof, the L/C Issuer will also deliver to the Company and the Administrative Agent a true and complete copy of such Letter of Credit or amendment.
(c) Drawings and Reimbursements; Funding of Participations.
(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a drawing under such Letter of Credit, the L/C Issuer shall notify the Company and the Administrative Agent thereof. In the case of a Letter of Credit denominated in an Alternative Currency, the Company shall reimburse the L/C Issuer in such Alternative Currency, unless (A) the L/C Issuer (at its option) shall have specified in such notice that it will require reimbursement in Dollars, or (B) in the absence of any such requirement for reimbursement in Dollars, the Company shall have notified the L/C Issuer promptly following receipt of the notice of drawing that the Company will reimburse the L/C Issuer in Dollars. In the case of any such reimbursement in Dollars of a drawing under a Letter of Credit denominated in an Alternative Currency, the L/C Issuer shall notify the Company of the Dollar Equivalent of the amount of the drawing promptly following the determination thereof. Not later than 11:00 a.m. on the date of any payment by the L/C Issuer under a Letter of Credit to be reimbursed in Dollars, or the Applicable Time on the date of any payment by the L/C Issuer under a Letter of Credit to be reimbursed in an Alternative Currency (each such date, an “Honor Date”), the Company shall reimburse the L/C Issuer through the Administrative Agent in an amount equal to the amount of such drawing and in the applicable currency. In the event that (A) a drawing denominated in an Alternative Currency is to be reimbursed in Dollars pursuant to the second sentence in this Section 2.03(c)(i) and (B) the Dollar amount paid by the Company, whether on or after the Honor Date, shall not be adequate on the date of that payment to purchase in accordance with normal banking procedures a sum denominated in the Alternative Currency equal to the drawing, the Company agrees, as a separate and independent obligation, to indemnify the L/C Issuer for the loss resulting from its inability on that date to purchase the Alternative Currency in the full amount of the drawing. If the Company fails to timely reimburse the L/C Issuer on the Honor Date, the Administrative Agent shall promptly notify each Lender of the Honor Date, the amount of the unreimbursed drawing (expressed in Dollars in the amount of the Dollar Equivalent thereof in the case of a Letter of Credit denominated in an Alternative Currency) (the “Unreimbursed Amount”), and the amount of such Lender’s Applicable Percentage thereof. In such event, the Company shall be deemed to have requested a Committed Borrowing of Base Rate Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02 for the principal amount of Base Rate Loans, but subject to the amount of the unutilized portion of the Aggregate Commitments and the conditions set forth in Section 4.02 (other than the delivery of a Committed Loan Notice). Any notice given by the L/C Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i) may be given by telephone if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.
(ii) Each US Dollar Revolving Credit Lender shall upon any notice pursuant to Section 2.03(c)(i) make funds available (and the Administrative Agent may apply Cash Collateral provided for
this purpose) for the account of the L/C Issuer, in Dollars, at the Administrative Agent’s Office for Dollar-denominated payments in an amount equal to its Applicable Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in such notice by the Administrative Agent, whereupon, subject to the provisions of Section 2.03(c)(iii), each US Dollar Revolving Credit Lender that so makes funds available shall be deemed to have made a Base Rate Committed Loan to the Company in such amount. The Administrative Agent shall remit the funds so received to the L/C Issuer in Dollars.
(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a Committed Borrowing of Base Rate Loans because the conditions set forth in Section 4.02 cannot be satisfied or for any other reason, the Company shall be deemed to have incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the Default Rate. In such event, each US Dollar Revolving Credit Lender’s payment to the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such US Dollar Revolving Credit Lender in satisfaction of its participation obligation under this Section 2.03.
(iv) Until each US Dollar Revolving Credit Lender funds its Committed Loan or L/C Advance pursuant to this Section 2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter of Credit, interest in respect of such US Dollar Revolving Credit Lender’s Applicable Percentage of such amount shall be solely for the account of the L/C Issuer.
(v) Each US Dollar Revolving Credit Lender’s obligation to make Committed Loans or L/C Advances to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such Lender may have against the L/C Issuer, the Company, any Subsidiary or any other Person for any reason whatsoever; (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each US Dollar Revolving Credit Lender’s obligation to make Committed Loans pursuant to this Section 2.03(c) is subject to the conditions set forth in Section 4.02 (other than delivery by the Company of a Committed Loan Notice). No such making of an L/C Advance shall relieve or otherwise impair the obligation of the Company to reimburse the L/C Issuer for the amount of any payment made by the L/C Issuer under any Letter of Credit, together with interest as provided herein.
(vi) If any US Dollar Revolving Credit Lender fails to make available to the Administrative Agent for the account of the L/C Issuer any amount required to be paid by such US Dollar Revolving Credit Lender pursuant to the foregoing provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii), then, without limiting the other provisions of this Agreement, the L/C Issuer shall be entitled to recover from such US Dollar Revolving Credit Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the L/C Issuer at a rate per annum equal to the applicable Overnight Rate from time to time in effect, plus any administrative, processing or similar fees customarily charged by the L/C Issuer in connection with the foregoing. If such US Dollar Revolving Credit Lender pays such amount (with interest and fees as aforesaid), the amount so paid shall constitute such US Dollar Revolving Credit Lender’s Committed Loan included in the relevant Committed Borrowing or
L/C Advance in respect of the relevant L/C Borrowing, as the case may be. A certificate of the L/C Issuer submitted to any US Dollar Revolving Credit Lender (through the Administrative Agent) with respect to any amounts owing under this clause (vi) shall be conclusive absent manifest error.
(d) Repayment of Participations.
(i) At any time after the L/C Issuer has made a payment under any Letter of Credit and has received from any US Dollar Revolving Credit Lender such US Dollar Revolving Credit Lender’s L/C Advance in respect of such payment in accordance with Section 2.03(c), if the Administrative Agent receives for the account of the L/C Issuer any payment in respect of the related Unreimbursed Amount or interest thereon (whether directly from the Company or otherwise, including proceeds of Cash Collateral applied thereto by the Administrative Agent), the Administrative Agent will distribute to such US Dollar Revolving Credit Lender its Applicable Percentage thereof in Dollars and in the same funds as those received by the Administrative Agent.
(ii) If any payment received by the Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the L/C Issuer in its discretion), each US Dollar Revolving Credit Lender shall pay to the Administrative Agent for the account of the L/C Issuer its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned by such US Dollar Revolving Credit Lender, at a rate per annum equal to the applicable Overnight Rate from time to time in effect. The obligations of the US Dollar Revolving Credit Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e) Obligations Absolute. The obligation of the Company to reimburse the L/C Issuer for each drawing under each Letter of Credit and to repay each L/C Borrowing shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following:
(i) any lack of validity or enforceability of such Letter of Credit, this Agreement, or any other Loan Document;
(ii) the existence of any claim, counterclaim, setoff, defense or other right that the Company or any Subsidiary may have at any time against any beneficiary or any transferee of such Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the L/C Issuer or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by such Letter of Credit or any agreement or instrument relating thereto, or any unrelated transaction;
(iii) any draft, demand, certificate or other document presented under such Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under such Letter of Credit;
(iv) waiver by the L/C Issuer of any requirement that exists for the L/C Issuer’s protection and not the protection of the Company or any waiver by the L/C Issuer which does not in fact materially prejudice the Company;
(v) honor of a demand for payment presented electronically even if such Letter of Credit requires that demand be in the form of a draft;
(vi) any payment made by the L/C Issuer in respect of an otherwise complying item presented after the date specified as the expiration date of, or the date by which documents must be received under, such Letter of Credit if presentation after such date is authorized by the UCC, the ISP or the UCP, as applicable;
(vii) any payment by the L/C Issuer under such Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; or any payment made by the L/C Issuer under such Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of such Letter of Credit, including any arising in connection with any proceeding under any Debtor Relief Law;
(viii) any adverse change in the relevant exchange rates or in the availability of the relevant Alternative Currency to the Company or any Subsidiary or in the relevant currency markets generally; or
(ix) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or any Subsidiary.
The Company shall promptly examine a copy of each Letter of Credit and each amendment thereto that is delivered to it and, in the event of any claim of noncompliance with the Company’s instructions or other irregularity, the Company will immediately notify the L/C Issuer. The Company shall be conclusively deemed to have waived any such claim against the L/C Issuer and its correspondents unless such notice is given as aforesaid.
(f) Role of L/C Issuer. Each Lender and the Company agree that, in paying any drawing under a Letter of Credit, the L/C Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable to any Lender for (i) any action taken or omitted in connection herewith at the request or with the approval of the US Dollar Revolving Credit Lenders or the Required Facility Lenders with respect to the US Dollar Revolving Credit Facility, as applicable; (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Company hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Company’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the L/C Issuer, the Administrative Agent, any of their respective Related Parties nor any correspondent, participant or assignee of the L/C Issuer shall be liable or responsible for any of the matters described in clauses (i) through (viii) of Section 2.03(e); provided, however, that anything in such clauses to the contrary notwithstanding, the Company may have a claim
against the L/C Issuer, and the L/C Issuer may be liable to the Company, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Company which the Company proves were caused by the L/C Issuer’s willful misconduct or gross negligence or the L/C Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, the L/C Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the L/C Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. The L/C Issuer may send a Letter of Credit or conduct any communication to or from the beneficiary via the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) message or overnight courier, or any other commercially reasonable means of communicating with a beneficiary.
(g) Applicability of ISP and UCP; Limitation of Liability. Unless otherwise expressly agreed by the L/C Issuer and the Company when a Letter of Credit is issued, the rules of the ISP shall apply to each standby Letter of Credit. Notwithstanding the foregoing, the L/C Issuer shall not be responsible to the Company for, and the L/C Issuer’s rights and remedies against the Company shall not be impaired by, any action or inaction of the L/C Issuer required or permitted under any law, order, or practice that is required or permitted to be applied to any Letter of Credit or this Agreement, including the Law or any order of a jurisdiction where the L/C Issuer or the beneficiary is located, the practice stated in the ISP or UCP, as applicable, or in the decisions, opinions, practice statements, or official commentary of the ICC Banking Commission, the Bankers Association for Finance and Trade - International Financial Services Association (BAFT-IFSA), or the Institute of International Banking Law & Practice, whether or not any Letter of Credit chooses such law or practice.
(h) Letter of Credit Fees. The Company shall pay to the Administrative Agent for the account of each US Dollar Revolving Credit Lender in accordance, subject to adjustment as provided in Section 2.17, with its Applicable Percentage, in Dollars, a Letter of Credit fee (the “Letter of Credit Fee”) for each Letter of Credit equal to the Applicable Rate times the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.09. Letter of Credit Fees shall be (i) due and payable on the first Business Day after the end of each March, June, September and December, commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand and (ii) computed on a quarterly basis in arrears. If there is any change in the Applicable Rate during any quarter, the daily amount available to be drawn under each Letter of Credit shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect. Notwithstanding anything to the contrary contained herein, upon the request of the Required Facility Lenders with respect to the US Dollar Revolving Credit Facility, while any Event of Default exists, all Letter of Credit Fees shall accrue at the Default Rate.
(i) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer. The Company shall pay directly to the L/C Issuer for its own account, in Dollars, a fronting fee with respect to each Letter of Credit, at a rate per annum of 0.125%, computed on the Dollar Equivalent of the daily amount available to be drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting fee shall be due and payable on the tenth Business Day after the end of each March, June, September and December in respect of the most recently-ended quarterly period (or portion thereof, in the case of the first payment), commencing with the first such date to occur after the issuance of such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For purposes of computing the daily amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.09. In addition, the Company shall pay directly to the L/C Issuer for its own account, in Dollars, the customary issuance, presentation, amendment and other processing fees, and other standard costs and charges, of the L/C Issuer relating to letters of credit as from time to time in effect. Such customary fees and standard costs and charges are due and payable on demand and are nonrefundable.
(j) Conflict with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.
(k) L/C Issuer Reports to the Administrative Agent. Unless otherwise agreed by the Administrative Agent, each L/C Issuer shall, in addition to its notification obligations set forth elsewhere in this Section, provide the Administrative Agent a Letter of Credit Report, as set forth below:
(i) reasonably prior to the time that such L/C Issuer issues, amends, renews, increases or extends a Letter of Credit, the date of such issuance, amendment, renewal, increase or extension and the stated amount of the applicable Letters of Credit after giving effect to such issuance, amendment, renewal or extension (and whether the amounts thereof shall have changed);
(ii) on each Business Day on which such L/C Issuer makes a payment pursuant to a Letter of Credit, the date and amount of such payment;
(iii) on any Business Day on which the Borrower fails to reimburse a payment made pursuant to a Letter of Credit required to be reimbursed to such L/C Issuer on such day, the date of such failure and the amount of such payment;
(iv) on any other Business Day, such other information as the Administrative Agent shall reasonably request as to the Letters of Credit issued by such L/C Issuer; and
(v) for so long as any Letter of Credit issued by an L/C Issuer is outstanding, such L/C Issuer shall deliver to the Administrative Agent (A) on the last Business Day of each calendar month, (B) at all other times a Letter of Credit Report is required to be delivered pursuant to this Agreement, and (C) on each date that (1) an L/C Credit Extension occurs or (2) there is any expiration, cancellation and/or disbursement, in each case, with respect to any such Letter of Credit, a Letter of Credit Report appropriately completed with the information for every outstanding Letter of Credit issued by such L/C Issuer.
(1) Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Subsidiary, the Company shall be obligated to reimburse the L/C Issuer hereunder for any
and all drawings under such Letter of Credit. The Company hereby acknowledges that the issuance of Letters of Credit for the account of Subsidiaries inures to the benefit of the Company, and that the Company’s business derives substantial benefits from the businesses of such Subsidiaries.
2.04 Swing Line Loans.
(a) The Swing Line. Subject to the terms and conditions set forth herein, the Swing Line Lender, in reliance upon the agreements of the other Lenders set forth in this Section 2.04, shall make loans in Dollars (each such loan, a “Swing Line Loan”) to the Company from time to time on any Business Day during the Availability Period with respect to the US Dollar Revolving Credit Facility in an aggregate amount not to exceed at any time outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that such Swing Line Loans, when aggregated with the Applicable Percentage of the Outstanding Amount of US Dollar Revolving Credit Loans and L/C Obligations of the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s US Dollar Revolving Credit Commitment; provided, however, that (x) after giving effect to any Swing Line Loan, (i) the Total Revolving Credit Outstandings shall not exceed the Revolving Credit Commitments, and (ii) the US Dollar Revolving Credit Exposure of any US Dollar Revolving Credit Lender shall not exceed such US Dollar Revolving Credit Lender’s US Dollar Revolving Credit Commitment, (y) the Company shall not use the proceeds of any Swing Line Loan to refinance any outstanding Swing Line Loan, and (z) the Swing Line Lender shall not be under any obligation to make any Swing Line Loan if it shall determine (which determination shall be conclusive and binding absent manifest error) that it has, or by such Credit Extension may have, Fronting Exposure. Within the foregoing limits, and subject to the other terms and conditions hereof, the Company may borrow under this Section 2.04, prepay under Section 2.05, and reborrow under this Section 2.04. Each Swing Line Loan shall be a Base Rate Loan. Immediately upon the making of a Swing Line Loan, each US Dollar Revolving Credit Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Swing Line Lender a risk participation in such Swing Line Loan in an amount equal to the product of such US Dollar Revolving Credit Lender’s Applicable Percentage times the amount of such Swing Line Loan.
(b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the Company’s irrevocable notice to the Swing Line Lender and the Administrative Agent, which may be given by (A) telephone or (B) by a Swing Line Loan Notice; provided that any telephonic notice must be confirmed promptly by delivery to the Swing line Lender and the Administrative Agent of a Swing Line Loan Notice. Each such Swing Line Loan Notice must be received by the Swing Line Lender and the Administrative Agent not later than 3:00 p.m. on the requested borrowing date, and shall specify (i) the amount to be borrowed, which shall be a minimum of $500,000, and (ii) the requested borrowing date, which shall be a Business Day. Promptly after receipt by the Swing Line Lender of any telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the Administrative Agent (by telephone or in writing) that the Administrative Agent has also received such Swing Line Loan Notice and, if not, the Swing Line Lender will notify the Administrative Agent of the contents thereof. Unless the Swing Line Lender has received notice (by telephone or in writing) from the Administrative Agent (including at the request of any US Dollar Revolving Credit Lender) prior to 5:00 p.m. on the date of the
proposed Swing Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan as a result of the limitations set forth in the first proviso to the first sentence of Section 2.04(a), or (B) that one or more of the applicable conditions specified in Article IV is not then satisfied, then, subject to the terms and conditions hereof, the Swing Line Lender will, not later than 5:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make the amount of its Swing Line Loan available to the Company at its office by crediting the account of the Company on the books of the Swing Line Lender in Same Day Funds.
(c) Refinancing of Swing Line Loans.
(i) The Swing Line Lender at any time in its sole discretion may request, on behalf of the Company (which hereby irrevocably authorizes the Swing Line Lender to so request on its behalf), that each US Dollar Revolving Credit Lender make a Base Rate Committed Loan in an amount equal to such US Dollar Revolving Credit Lender’s Applicable Percentage of the amount of Swing Line Loans then outstanding. Such request shall be made in writing (which written request shall be deemed to be a Committed Loan Notice for purposes hereof) and in accordance with the requirements of Section 2.02, without regard to the minimum and multiples specified therein for the principal amount of Base Rate Loans, but subject to the unutilized portion of the US Dollar Revolving Credit Commitments and the conditions set forth in Section 4.02. The Swing Line Lender shall furnish the Company with a copy of the applicable Committed Loan Notice promptly after delivering such notice to the Administrative Agent. Each US Dollar Revolving Credit Lender shall make an amount equal to its Applicable Percentage of the amount specified in such Committed Loan Notice available to the Administrative Agent in Same Day Funds (and the Administrative Agent may apply Cash Collateral available with respect to the applicable Swing Line Loan) for the account of the Swing Line Lender at the Administrative Agent’s Office for Dollar-denominated payments not later than 1:00 p.m. on the day specified in such Committed Loan Notice, whereupon, subject to Section 2.04(c)(ii), each US Dollar Revolving Credit Lender that so makes funds available shall be deemed to have made a Base Rate Committed Loan to the Company in such amount. The Administrative Agent shall remit the funds so received to the Swing Line Lender.
(ii) If for any reason any Swing Line Loan cannot be refinanced by such a Committed Borrowing in accordance with Section 2.04(c)(i), the request for Base Rate Committed Loans submitted by the Swing Line Lender as set forth herein shall be deemed to be a request by the Swing Line Lender that each of the US Dollar Revolving Credit Lenders fund its risk participation in the relevant Swing Line Loan and each US Dollar Revolving Credit Lender’s payment to the Administrative Agent for the account of the Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed payment in respect of such participation.
(iii) If any US Dollar Revolving Credit Lender fails to make available to the Administrative Agent for the account of the Swing Line Lender any amount required to be paid by such US Dollar Revolving Credit Lender pursuant to the foregoing provisions of this Section 2.04(c) by the time specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled to recover from such US Dollar Revolving Credit Lender (acting through the Administrative Agent), on demand, such amount with interest thereon for the period from the date such payment is required to the date on which such payment is immediately available to the Swing Line Lender at a rate per annum equal to the applicable Overnight Rate from time to time in effect, plus any administrative, processing or similar fees customarily charged by the Swing Line Lender in connection with the foregoing. If such US Dollar Revolving Credit Lender pays such amount
(with interest and fees as aforesaid), the amount so paid shall constitute such US Dollar Revolving Credit Lender’s Committed Loan included in the relevant Committed Borrowing of US Dollar Revolving Credit Loans or funded participation in the relevant Swing Line Loan, as the case may be. A certificate of the Swing Line Lender submitted to any Lender (through the Administrative Agent) with respect to any amounts owing under this clause (iii) shall be conclusive absent manifest error.
(iv) Each US Dollar Revolving Credit Lender’s obligation to make Committed Loans or to purchase and fund risk participations in Swing Line Loans pursuant to this Section 2.04(c) shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any setoff, counterclaim, recoupment, defense or other right which such US Dollar Revolving Credit Lender may have against the Swing Line Lender, the Company or any other Person for any reason whatsoever, (B) the occurrence or continuance of a Default, or (C) any other occurrence, event or condition, whether or not similar to any of the foregoing; provided, however, that each US Dollar Revolving Credit Lender’s obligation to make Committed Loans pursuant to this Section 2.04(c) is subject to the conditions set forth in Section 4.02. No such funding of risk participations shall relieve or otherwise impair the obligation of the Company to repay Swing Line Loans, together with interest as provided herein.
(d) Repayment of Participations.
(i) At any time after any US Dollar Revolving Credit Lender has purchased and funded a risk participation in a Swing Line Loan, if the Swing Line Lender receives any payment on account of such Swing Line Loan, the Swing Line Lender will distribute to such US Dollar Revolving Credit Lender its Applicable Percentage thereof in the same funds as those received by the Swing Line Lender.
(ii) If any payment received by the Swing Line Lender in respect of principal or interest on any Swing Line Loan is required to be returned by the Swing Line Lender under any of the circumstances described in Section 10.05 (including pursuant to any settlement entered into by the Swing Line Lender in its discretion), each US Dollar Revolving Credit Lender shall pay to the Swing Line Lender its Applicable Percentage thereof on demand of the Administrative Agent, plus interest thereon from the date of such demand to the date such amount is returned, at a rate per annum equal to the applicable Overnight Rate. The Administrative Agent will make such demand upon the request of the Swing Line Lender. The obligations of the Lenders under this clause shall survive the payment in full of the Obligations and the termination of this Agreement.
(e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be responsible for invoicing the Company for interest on the Swing Line Loans. Until each US Dollar Revolving Credit Lender funds its Base Rate Committed Loan or risk participation pursuant to this Section 2.04 to refinance such US Dollar Revolving Credit Lender’s Applicable Percentage of any Swing Line Loan, interest in respect of such Applicable Percentage shall be solely for the account of the Swing Line Lender.
(f) Payments Directly to Swing Line Lender. The Company shall make all payments of principal and interest in respect of the Swing Line Loans directly to the Swing Line Lender.
2.05 Prepayments. (a) Each Borrower may, upon notice from the Company to the Administrative Agent, at any time or from time to time voluntarily prepay Committed Loans of any Class in whole or in part
without premium or penalty; provided that (i) such notice must be in a form acceptable to the Administrative Agent and be received by the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior to any date of prepayment of Term SOFR Loans, (B) four Business Days (or five, in the case of prepayment of Loans denominated in Special Notice Currencies) prior to any date of prepayment of Eurocurrency Rate Loans denominated in Alternative Currencies and (C) on the date of prepayment of Base Rate Committed Loans; (ii) any prepayment of Term SOFR Loans shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; (iii) any prepayment of Eurocurrency Rate Loans denominated in Alternative Currencies shall be in a minimum principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iv) any prepayment of Base Rate Committed Loans shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof or, in each case, if less, the entire principal amount thereof then outstanding; provided, further that such notice may be revocable if the Company specifies therein that such prepayment is contingent upon the consummation of an anticipated transaction. Each such notice shall specify the date and amount of such prepayment, the Type(s), Class(es) and currency or currencies of Committed Loans to be prepaid and, in the case of Term SOFR Loans and Eurocurrency Rate Loans not denominated in Sterling are to be prepaid, the Interest Period(s) of such Loans. The Administrative Agent will promptly notify each Lender of the applicable Class its receipt of each such notice, and of the amount of such Lender’s Applicable Percentage of such prepayment. If such notice is given by the Company, the applicable Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of a Term SOFR Loan or Eurocurrency Rate Loan shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05. Subject to Section 2.17, each such prepayment shall be applied to the Committed Loans of the Lenders of the applicable Class in accordance with their respective Applicable Percentages.
(b) The Company may, upon notice to the Swing Line Lender (with a copy to the Administrative Agent), at any time or from time to time, voluntarily prepay Swing Line Loans in whole or in part without premium or penalty; provided that (i) such notice must be received by the Swing Line Lender and the Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and (ii) any such prepayment shall be in a minimum principal amount of $100,000. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein.
(c) If the Administrative Agent notifies the Company at any time that the Total Revolving Credit Outstandings for the US Dollar Revolving Credit Facility at such time exceed an amount equal to 100% of the US Dollar Revolving Credit Commitments then in effect, then, within two Business Days after receipt of such notice, the Borrowers shall prepay US Dollar Revolving Credit Loans and/or the Company shall Cash Collateralize the L/C Obligations in an aggregate amount at least equal to such excess; provided, however, that, subject to the provisions of Section 2.16(a), the Company shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(c) unless after the prepayment in full of the US Dollar Revolving Credit Loans the Total Revolving Credit Outstandings under the US Dollar Revolving Credit Facility exceed the US Dollar Revolving Credit Commitments then in effect. If the Administrative Agent notifies the Company at any time that the Total Revolving Credit Outstandings for the Multicurrency Revolving Credit Facility at such time exceed an amount equal to 105% of the Multicurrency Revolving Credit Commitments then in effect, then, within two Business Days after receipt of such notice, the Borrowers shall prepay Multicurrency Revolving Credit Loans and/or the Company shall Cash Collateralize the L/C Obligations in an
aggregate amount at least equal to such excess over the Multicurrency Revolving Credit Commitments; provided, however, that, subject to the provisions of Section 2.16(a), the Company shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.05(c) unless after the prepayment in full of the Multicurrency Revolving Credit Loans the Total Revolving Credit Outstandings under the Multicurrency Revolving Credit Facility exceed the Multicurrency Revolving Credit Commitments then in effect.
2.06 Termination or Reduction of Commitments. The Company may, upon notice to the Administrative Agent, terminate the Revolving Credit Commitments of either Class, or from time to time permanently reduce the Revolving Credit Commitments of either Class; provided that (i) any such notice shall be received by the Administrative Agent not later than 11:00 a.m. three Business Days prior to the date of termination or reduction, (ii) any such partial reduction shall be in an aggregate amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the Company shall not terminate or reduce (x) the Revolving Credit Commitments of either Class if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Revolving Credit Outstandings would exceed the Revolving Credit Commitments, (y) the Multicurrency Revolving Credit Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total Multicurrency Revolving Credit Outstandings would exceed the Multicurrency Revolving Credit Commitments or (z) the US Dollar Revolving Credit Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Total US Dollar Revolving Credit Outstandings would exceed the US Dollar Revolving Credit Commitments and (iv) if, after giving effect to any reduction of the Revolving Credit Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit exceeds the amount of the Revolving Credit Commitments, such Sublimit shall be automatically reduced by the amount of such excess provided, further that such notice may be revocable if the Company specifies therein that such reduction or termination is contingent upon the consummation of an anticipated transaction. The Administrative Agent will promptly notify the Revolving Credit Lenders of the applicable Class of any such notice of termination or reduction of the Revolving Credit Commitments. The amount of any such Revolving Credit Commitment reduction shall not be applied to the Letter of Credit Sublimit unless otherwise specified by the Company or otherwise required by the preceding sentence. Any reduction of the Revolving Credit Commitments of any Class shall be applied to the Commitment of each Revolving Credit Lender of such Class according to its Applicable Percentage. All fees accrued until the effective date of any termination of the Revolving Credit Commitments of any Class shall be paid on the effective date of such termination.
2.07 Repayment of Loans. (a) Borrower shall repay to the Lenders on the Maturity Date the aggregate principal amount of Committed Loans made to such Borrower outstanding on such date.
(b) The Company shall repay each Swing Line Loan on the earlier to occur of (i) the date ten Business Days after such Loan is made and (ii) the Maturity Date.
2.08 Interest. (a) Subject to the provisions of subsection (b) below, (i) each Term SOFR Loan shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Term SOFR for such Interest Period plus the Applicable Rate; (ii) each Eurocurrency Rate Loan not denominated in Sterling shall bear interest on the outstanding principal amount thereof for each Interest Period at a rate per annum equal to the Adjusted Eurocurrency Rate for such Interest Period plus the Applicable Rate; (ii) each Eurocurrency Rate Loan denominated in Sterling shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Adjusted Eurocurrency Rate plus the Applicable Rate; (iii) each Base Rate Committed Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate, (iv) each Swing Line Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate and (v) each Daily SOFR
Loan shall bear interest on the outstanding principal amount thereof from the applicable borrowing date at a rate per annum equal to the Daily SOFR plus the Applicable Rate.
(b) While any Event of Default under Section 8.01(a), (b), (h) or (i) shall be continuing,
(i) if any amount of principal of any Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws; and
(ii) if any amount (other than principal of any Loan) payable by any Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.
(iii) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.
(c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
(d) For the purposes of the Interest Act (Canada), (i) whenever a rate of interest or fee rate hereunder is calculated on the basis of a year (the “deemed year”) that contains fewer days than the actual number of days in the calendar year of calculation, such rate of interest or fee rate shall be expressed as a yearly rate by multiplying such rate of interest or fee rate by the actual number of days in the calendar year of calculation and dividing it by the number of days in the deemed year, (ii) the principle of deemed reinvestment of interest shall not apply to any interest calculation hereunder and (iii) the rates of interest stipulated herein are intended to be nominal rates and not effective rates or yields.
2.09 Fees. In addition to certain fees described in subsections (h) and (i) of Section 2.03:
(a) Commitment Fee. The Company shall pay to the Administrative Agent (x) for the account of each US Dollar Revolving Credit Lender in accordance with its Applicable Percentage, a commitment fee in Dollars equal to the Applicable Rate times the actual daily amount by which the US Dollar Revolving Credit Commitments exceed the sum of (i) the Outstanding Amount of Committed Loans that are US Dollar Revolving Credit Loans and (ii) the Outstanding Amount of L/C Obligations, subject to adjustment as provided in Section 2.17 and (y) for the account of each Multicurrency Revolving Credit Lender in accordance with its Applicable Percentage, a commitment fee in Dollars equal to the Applicable Rate times the actual daily amount by which the Multicurrency Revolving Credit Commitments exceed the Outstanding Amount of Committed Loans that are Multicurrency Revolving Credit Loans, subject to adjustment as provided in Section 2.17. For the avoidance of doubt, the Outstanding Amount of Swing Line Loans shall not be counted towards or considered usage of the Revolving Credit Commitments for purposes of determining the commitment fee. The commitment fee shall accrue at all times during the Availability Period, including at any time during which one or more of the conditions in Article IV is not met, and shall be due and payable quarterly in arrears
on the last Business Day of each March, June, September and December, commencing with the first such date to occur after the Restatement Effective Date, and on the last day of the Availability Period. The commitment fee shall be calculated quarterly in arrears, and if there is any change in the Applicable Rate during any quarter, the actual daily amount shall be computed and multiplied by the Applicable Rate separately for each period during such quarter that such Applicable Rate was in effect.
(b) Other Fees. (i) The Company shall pay to the Lead Arranger and the Administrative Agent for their own respective accounts, in Dollars, fees in the amounts and at the times specified in the Fee Letter (including, without limitation, the Administrative Agency Fee and the Letter of Credit Fronting Fee set forth in the Original Fee Letter). Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.
(ii) The Company shall pay to the Lenders, in Dollars, such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.
2.10 Computation of Interest and Fees. All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the Term SOFR) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year), or, in the case of interest in respect of Committed Loans denominated in Alternative Currencies as to which market practice differs from the foregoing, in accordance with such market practice. Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.12(a), bear interest for one day. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error. With respect to any Alternative Currency not set forth in the definition of “Eurocurrency Rate”, the calculation of the applicable interest rate shall be determined in accordance with market practice.
2.11 Evidence of Debt. (a) The Credit Extensions made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Credit Extensions made by the Lenders to the Borrowers and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrowers hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender to a Borrower made through the Administrative Agent, such Borrower shall execute and deliver to such Lender (through the Administrative Agent) a Note, which shall evidence such Lender’s Loans to such Borrower in addition to such accounts or records. Each Lender may attach schedules to a Note and endorse thereon the date, Class, Type (if applicable), amount, currency and maturity of its Loans and payments with respect thereto.
(b) In addition to the accounts and records referred to in subsection (a) above, each Revolving Credit Lender and the Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Revolving Credit Lender of participations in Letters of Credit and Swing Line Loans. In the event of any conflict between the accounts and records maintained by the
Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
2.12 Payments Generally; Administrative Agent’s Clawback. (a) General. All payments to be made by the Borrowers shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein and except with respect to principal of and interest on Loans denominated in an Alternative Currency, all payments by the Borrowers hereunder shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in Dollars and in Same Day Funds not later than 2:00 p.m. on the date specified herein. Except as otherwise expressly provided herein, all payments by the Borrowers hereunder with respect to principal and interest on Loans denominated in an Alternative Currency shall be made to the Administrative Agent, for the account of the respective Lenders to which such payment is owed, at the applicable Administrative Agent’s Office in such Alternative Currency and in Same Day Funds not later than the Applicable Time specified by the Administrative Agent on the dates specified herein. Without limiting the generality of the foregoing, the Administrative Agent may require that any payments due under this Agreement be made in the United States. If, for any reason, any Borrower is prohibited by any Law from making any required payment hereunder in an Alternative Currency, such Borrower shall make such payment in Dollars in the Dollar Equivalent of the Alternative Currency payment amount. The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent (i) after 2:00 p.m., in the case of payments in Dollars, or (ii) after the Applicable Time specified by the Administrative Agent in the case of payments in an Alternative Currency, shall in each case be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by any Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.
(b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Committed Borrowing of Term SOFR Loans or Eurocurrency Rate Loans (or, in the case of any Committed Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Committed Borrowing) that such Lender will not make available to the Administrative Agent such Lender’s share of such Committed Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.02 (or, in the case of a Committed Borrowing of Base Rate Loans, that such Lender has made such share available in accordance with and at the time required by Section 2.02) and may, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Committed Borrowing available to the Administrative Agent, then the applicable Lender and the applicable Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in Same Day Funds with interest thereon, for each day from and including the date such amount is made available to such Borrower to but excluding the date of payment to the Administrative Agent, at (A) in the case of a payment to be made by such Lender, the Overnight Rate, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be made by such Borrower, the interest rate applicable to Base Rate Loans. If such Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to such
Borrower the amount of such interest paid by such Borrower for such period. If such Lender pays its share of the applicable Committed Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Committed Loan included in such Committed Borrowing. Any payment by such Borrower shall be without prejudice to any claim such Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.
(ii) Payments by Borrowers; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from a Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the L/C Issuer hereunder that such Borrower will not make such payment, the Administrative Agent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the amount due. In such event, if such Borrower has not in fact made such payment, then each of the Lenders or the L/C Issuer, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the L/C Issuer, in Same Day Funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the Overnight Rate.
A notice of the Administrative Agent to any Lender or Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.
(c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the Administrative Agent funds for any Loan to be made by such Lender to any Borrower as provided in the foregoing provisions of this Article II, and such funds are not made available to such Borrower by the Administrative Agent because the conditions to the applicable Credit Extension set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.
(d) Obligations of Lenders Several. The obligations of the Lenders hereunder to make Committed Loans, to fund participations in Letters of Credit and Swing Line Loans and to make payments pursuant to Section 10.04(c) are several and not joint. The failure of any Lender to make any Committed Loan, to fund any such participation or to make any payment under Section 10.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Committed Loan, to purchase its participation or to make its payment under Section 10.04(c).
(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner.
2.13 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of the Committed Loans made by it, or the participations in L/C Obligations or in Swing Line Loans held by it resulting in such Lender’s receiving payment of a proportion of the aggregate amount of such Committed Loans or participations and accrued interest thereon greater than its pro rata share thereof as provided herein, then the Lender receiving
such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Committed Loans and subparticipations in L/C Obligations and Swing Line Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Committed Loans and other amounts owing them, provided that:
(i) if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and
(ii) the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of any Borrower pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a Defaulting Lender or Competitor), (y) the application of Cash Collateral provided for in Section 2.16, or (z) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Committed Loans or subparticipations in L/C Obligations or Swing Line Loans to any assignee or participant, other than an assignment to the Company or any Subsidiary thereof (as to which the provisions of this Section shall apply).
Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.
2.14 Designated Borrowers. (a) The Company may at any time, upon not less than 15 Business Days’ notice from the Company to the Administrative Agent (or such shorter period as may be agreed by the Administrative Agent in its sole discretion), designate any Subsidiary of the Company (other than an Excluded Subsidiary) (an “Applicant Borrower”) as a Designated Borrower to receive Revolving Credit Loans hereunder by delivering to the Administrative Agent (which shall promptly deliver counterparts thereof to each Lender) a duly executed notice and agreement in substantially the form of Exhibit G (a “Designated Borrower Request and Assumption Agreement”). The parties hereto acknowledge and agree that prior to any Applicant Borrower becoming entitled to utilize the Revolving Credit Facilities provided for herein the Administrative Agent and the Lenders shall have received such supporting resolutions, incumbency certificates, opinions of counsel and other documents or information (including documents and other information required by regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the Patriot Act), in form, content and scope reasonably satisfactory to the Administrative Agent, as may be reasonably requested by the Administrative Agent or any Revolving Credit Lender in its reasonable discretion, and Notes signed by such new Borrowers to the extent any Revolving Credit Lenders so request. Promptly following receipt of all such requested resolutions, incumbency certificates, opinions of counsel and other documents or information, the Administrative Agent shall send a notice in substantially the form of Exhibit H (a “Designated Borrower Notice”) to the Company and the Revolving Credit Lenders specifying the effective date upon which the Applicant Borrower shall constitute a Designated Borrower for purposes hereof, whereupon each of the Lenders agrees to permit such Designated Borrower to receive Revolving Credit Loans hereunder, on the terms and conditions set forth herein, and each of the parties agrees that such Designated Borrower otherwise shall be a Borrower for all purposes of this Agreement; provided, that no Committed Loan Notice or Letter of Credit Application may be submitted by or on behalf of such Designated Borrower until the date five Business Days after such effective date.
(b) The Obligations of the Company and each Designated Borrower shall be joint and several in nature.
(c) Each Subsidiary of the Company that is or becomes a “Designated Borrower” pursuant to this Section 2.14 hereby irrevocably appoints the Company as its agent for all purposes relevant to this Agreement and each of the other Loan Documents, including (i) the giving and receipt of notices, (ii) the execution and delivery of all documents, instruments and certificates contemplated herein and all modifications hereto, and (iii) the receipt of the proceeds of any Loans made by the Lenders to any such Designated Borrower hereunder. Any acknowledgment, consent, direction, certification or other action which might otherwise be valid or effective only if given or taken by all Borrowers, or by each Borrower acting singly, shall be valid and effective if given or taken only by the Company, whether or not any such other Borrower joins therein. Any notice, demand, consent, acknowledgement, direction, certification or other communication delivered to the Company in accordance with the terms of this Agreement shall be deemed to have been delivered to each Designated Borrower.
(d) The Company may from time to time, upon not less than 15 Business Days’ notice from the Company to the Administrative Agent (or such shorter period as may be agreed by the Administrative Agent in its sole discretion), terminate a Designated Borrower’s status as such, provided that there are no outstanding Loans payable by such Designated Borrower, or other amounts payable by such Designated Borrower on account of any Loans made to it, as of the effective date of such termination. The Administrative Agent will promptly notify the Lenders of any such termination of a Designated Borrower’s status.
2.15 Increase in Revolving Credit Commitments. (a) Request for Increase. Provided there exists no Default, upon notice to the Administrative Agent (which shall promptly notify the Lenders), the Company may from time to time, request an increase in the Revolving Credit Commitments of any Class by an amount (for all such requests) not exceeding $500,000,000; provided that any such request for an increase shall be in a minimum amount of $5,000,000. At the time of sending such notice, the Company (in consultation with the Administrative Agent) shall specify the time period within which each Revolving Credit Lender of the applicable Class is requested to respond (which shall in no event be less than ten Business Days from the date of delivery of such notice to the Lenders).
(b) Lender Elections to Increase. Each Revolving Credit Lender of the applicable Class shall notify the Administrative Agent within such time period whether or not it agrees to increase its Revolving Credit Commitment of such Class and, if so, whether by an amount equal to, greater than, or less than its Applicable Percentage of such requested increase. Any Revolving Credit Lender of the applicable Class not responding within such time period shall be deemed to have declined to increase its Revolving Credit Commitment of such Class.
(c) Notification by Administrative Agent; Additional Lenders. The Administrative Agent shall notify the Company and each Lender of the Revolving Credit Lenders’ responses to each request made hereunder. To achieve the full amount of a requested increase and subject to the approval of the Administrative Agent, the L/C Issuer and the Swing Line Lender (in each case, not to be unreasonably withheld or delayed), the Company may also invite additional Eligible Assignees to become Revolving Credit Lenders of the
applicable Class pursuant to a joinder agreement in form and substance reasonably satisfactory to the Administrative Agent and its counsel.
(d) Effective Date and Allocations. If the Revolving Credit Commitments of the applicable Class are increased in accordance with this Section, the Administrative Agent and the Company shall determine the effective date (the “Revolving Credit Increase Effective Date”) and the final allocation of such increase. The Administrative Agent shall promptly notify the Company and the Revolving Credit Lenders of the applicable Class of the final allocation of such increase and the Revolving Credit Increase Effective Date.
(e) Conditions to Effectiveness of Increase. As a condition precedent to such increase, the Company shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Revolving Credit Increase Effective Date signed by a Responsible Officer of such Loan Party (x) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such increase, and (y) in the case of the Company, certifying that, before and after giving effect to such increase, (A) the representations and warranties contained in Article V and the other Loan Documents are true and correct in all material respects (provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) on and as of the Revolving Credit Increase Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section 2.15, the representations and warranties contained in subsection (a) of Section 5.04 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01, and (B) no Default or Event of Default exists. The Borrowers shall prepay any Revolving Credit Loans of the applicable Class outstanding on the Revolving Credit Increase Effective Date (and pay any additional amounts required pursuant to Section 3.05) to the extent necessary to keep the outstanding Revolving Credit Loans of the applicable Class ratable with any revised Applicable Percentages arising from any nonratable increase in the Revolving Credit Commitments of the applicable Class under this Section. If the US Dollar Revolving Credit Commitments are increased in accordance with this Section, then the participations of the US Dollar Revolving Credit Lenders in Letters of Credit issued for the account of the Company or its Subsidiaries and any drawings thereunder and in Swing Line Loans shall be automatically reallocated as of the Revolving Credit Increase Effective Date in accordance with each US Dollar Revolving Credit Lender’s Applicable Percentage (giving effect to such increase).
(f) Conflicting Provisions. This Section shall supersede any provisions in Section 2.13 or 10.01 to the contrary.
2.16 Cash Collateral. (a) Certain Credit Support Events. If (i) the L/C Issuer has honored any full or partial drawing request under any Letter of Credit and such drawing has resulted in an L/C Borrowing, (ii) as of the Letter of Credit Expiration Date, any L/C Obligation for any reason remains outstanding, (iii) the Company shall be required to provide Cash Collateral pursuant to Section 8.02(c), or (iv) there shall exist a Defaulting Lender, the Company shall immediately (in the case of clause (iii) above) or within one Business Day (in all other cases) following any request by the Administrative Agent or the L/C Issuer, provide Cash Collateral in an amount not less than the applicable Minimum Collateral Amount (determined in the case of Cash Collateral provided pursuant to clause (iv) above, after giving effect to Section 2.17(a)(iv) and any Cash Collateral provided by the Defaulting Lender). Additionally, if the Administrative Agent notifies the Company at any time that the
Outstanding Amount of all L/C Obligations at such time exceeds 105% of the Letter of Credit Sublimit then in effect, then, within two Business Days after receipt of such notice, the Company shall provide Cash Collateral for the Outstanding Amount of the L/C Obligations in an amount not less than the amount by which the Outstanding Amount of all L/C Obligations exceeds the Letter of Credit Sublimit.
(b) Grant of Security Interest. The Company, and to the extent provided by any Defaulting Lender, such Defaulting Lender, hereby grants to (and subjects to the control of) the Administrative Agent, for the benefit of the Administrative Agent, the L/C Issuer and the Lenders, and agrees to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the obligations to which such Cash Collateral may be applied pursuant to Section 2.16(c). If at any time the Administrative Agent determines that Cash Collateral is subject to any right or claim of any Person other than the Administrative Agent or the L/C Issuer as herein provided, other than non-consensual Liens permitted pursuant to Section 7.02, or that the total amount of such Cash Collateral is less than the Minimum Collateral Amount, the Company will, promptly upon demand by the Administrative Agent, pay or provide to the Administrative Agent additional Cash Collateral in an amount sufficient to eliminate such deficiency. All Cash Collateral (other than credit support not constituting funds subject to deposit) shall be maintained in one or more Controlled Accounts at Bank of America. The Company shall pay on demand therefor from time to time all customary account opening, activity and other administrative fees and charges in connection with the maintenance and disbursement of Cash Collateral.
(c) Application. Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.16 or Sections 2.03, 2.05, 2.17 or 8.02 in respect of Letters of Credit shall be held and applied to the satisfaction of the specific L/C Obligations, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may otherwise be provided for herein.
(d) Release. Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or to secure other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as appropriate, its assignee following compliance with Section 10.06(b)(vi))) or (ii) the determination by the Administrative Agent and the L/C Issuer that there exists excess Cash Collateral; provided, however, (x) any such release shall be without prejudice to, and any disbursement or other transfer of Cash Collateral shall be and remain subject to, any other Lien conferred under the Loan Documents and the other applicable provisions of the Loan Documents, and (y) the Person providing Cash Collateral and the L/C Issuer may agree that Cash Collateral shall not be released but instead held to support future anticipated Fronting Exposure or other obligations.
2.17 Defaulting Lenders. (a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:
(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 10.01.
(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 10.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the L/C Issuer or Swing Line Lender hereunder; third, to Cash Collateralize the L/C Issuer’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.16; fourth, as the Company may request (so long as no Default exists), to the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Company, to be held in a deposit account and released pro rata in order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Loans under this Agreement and (y) Cash Collateralize the L/C Issuer’s future Fronting Exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 2.16; sixth, to the payment of any amounts owing to the Lenders, the L/C Issuer or Swing Line Lender as a result of any judgment of a court of competent jurisdiction obtained by any Lender, the L/C Issuer or the Swing Line Lender against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default exists, to the payment of any amounts owing to the Company as a result of any judgment of a court of competent jurisdiction obtained by the Company against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Revolving Credit Loans of any Class or, with respect to the US Dollar Revolving Credit Facility, L/C Borrowings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Revolving Credit Loans of, and L/C Obligations owed to, all Lenders of the applicable Class who are not Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Revolving Credit Loans of, or L/C Obligations owed to, such Defaulting Lender until such time as all Revolving Credit Loans and funded and unfunded participations in L/C Obligations and Swing Line Loans are held by the Revolving Credit Lenders of the applicable Class pro rata in accordance with the Revolving Credit Commitments of such Class hereunder without giving effect to Section 2.17(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.17(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii) Certain Fees.
(A) No Defaulting Lender shall be entitled to receive any fee payable under Section 2.09(a) for any period during which that Lender is a Defaulting Lender (and the Company shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).
(B) Each Defaulting Lender shall be entitled to receive Letter of Credit Fees for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.16.
(C) With respect to any Letter of Credit Fee not required to be paid to any Defaulting Lender pursuant to clause (B) above, the Company shall (x) pay to each US Dollar Revolving Credit Lender who is not a Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in L/C Obligations or that has been reallocated to such US Dollar Revolving Credit Lender who is not a Defaulting Lender pursuant to clause (iv) below, (y) pay to the L/C Issuer the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such L/C Issuer’s Fronting Exposure to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.
(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure. All or any part of such Defaulting Lender’s participation in L/C Obligations and Swing Line Loans shall, subject to there being no Event of Default then in existence, be reallocated among the US Dollar Revolving Credit Lenders who are not Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that such reallocation does not cause the aggregate US Dollar Revolving Credit Exposure of any US Dollar Revolving Credit Lender who is not a Defaulting Lender to exceed such Lender’s US Dollar Revolving Credit Commitment. Subject to Section 10.21, no reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a US Dollar Revolving Credit Lender who is not Defaulting Lender as a result of such Lender’s increased exposure following such reallocation.
(v) Cash Collateral, Repayment of Swing Line Loans. If the reallocation described in clause (a)(iv) above cannot, or can only partially, be effected, the Company shall, without prejudice to any right or remedy available to it hereunder or under applicable Law, (x) first, prepay Swing Line Loans in an amount equal to the Swing Line Lenders’ Fronting Exposure and (y) second, Cash Collateralize the L/C Issuers’ Fronting Exposure in accordance with the procedures set forth in Section 2.16.
(b) Defaulting Lender Cure. If the Company, the Administrative Agent, Swing Line Lender and the L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Loans of the other Lenders of the applicable Class or Classes or take such other actions as the Administrative Agent may determine to be necessary to cause the Committed Loans and funded and unfunded
participations in Letters of Credit and Swing Line Loans to be held on a pro rata basis by the Lenders of the applicable Class or Classes in accordance with their Applicable Percentages (without giving effect to Section 2.17(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender;
provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Company while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
2.18 Extension of Maturity Date.
(a) Requests for Extension. The Company may, on one (1) occasion following the Amendment No. 1 Effective Date and by notice to the Administrative Agent (who shall promptly notify the Lenders) not earlier than sixty (60) days and not later than thirty (30) days prior to any anniversary of the Restatement Effective Date (the “Extension Effective Date”), request that each Lender extend such Lender’s Maturity Date then in effect for an additional year from the Maturity Date then in effect with respect to such Lender. For the avoidance of doubt, any such request to extend the Maturity Date shall constitute a request to extend the Maturity Date with respect to both the US Dollar Revolving Credit Commitment and the Multicurrency Revolving Credit Commitment.
(b) Lender Elections to Extend. Each Lender, acting in its sole and individual discretion, shall, by notice to the Administrative Agent, given not earlier than thirty (30) days prior to the Extension Effective Date and not later than the date (the “Notice Date”) that is fifteen (15) days prior to the Extension Effective Date, advise the Administrative Agent whether or not such Lender agrees to such extension (and each Lender that determines not to so extend its Maturity Date (a “Non-Extending Lender”) shall notify the Administrative Agent of such fact promptly after such determination (but in any event no later than the Notice Date) and any Lender that does not so advise the Administrative Agent on or before the Notice Date shall be deemed to be a Non-Extending Lender. The election of any Lender to agree to such extension shall not obligate any other Lender to so agree.
(c) Notification by Administrative Agent. The Administrative Agent shall notify the Company of each Lender’s determination under this Section no later than the date fifteen (15) days prior to the Extension Effective Date (or, if such date is not a Business Day, on the next preceding Business Day).
(d) Additional Commitment Lenders. The Company shall have the right to replace each Non-Extending Lender with, and add as “Lenders” under this Agreement in place thereof, one or more Eligible Assignees (each, an “Additional Commitment Lender”) as provided in Section 10.13; provided that each of such Additional Commitment Lenders shall enter into an Assignment and Assumption pursuant to which such Additional Commitment Lender shall, effective as of the Extension Effective Date, undertake a Commitment (and, if any such Additional Commitment Lender is already a Lender, its Commitment shall be in addition to such Lender’s Commitment hereunder on such date).
(e) Minimum Extension Requirement. If (and only if) the total of all of the Commitments of the Lenders (excluding any Additional Commitment Lender) with respect to the Multicurrency Revolving Credit Facility and the US Dollar Revolving Credit Facility that have agreed so to extend their Maturity Date (each, an “Extending Lender”) shall be more than 50% of the aggregate amount of all of the
Commitments of all of the Lenders (excluding any Additional Commitment Lender) with respect to the Multicurrency Revolving Credit Facility and the US Dollar Revolving Credit Facility in effect immediately prior to the Extension Effective Date, the Maturity Date of each Extending Lender and each Additional Commitment Lender shall be extended to the date falling one year after the then applicable Maturity Date for such Lenders (except that, if such date is not a Business Day, such Maturity Date as so extended shall be the next preceding Business Day) and each Additional Commitment Lender shall thereupon become a “Lender” for all purposes of this Agreement.
(f) Conditions to Effectiveness of Extensions. As conditions precedent to such extension, (i) the Company shall deliver to the Administrative Agent a certificate of each Loan Party dated as of the Extension Effective Date signed by a Responsible Officer of such Loan Party (A) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such extension and (B) in the case of the Company, certifying that, immediately before and after giving effect to such extension, (1) the representations and warranties contained in Article V and the other Loan Documents are true and correct in all material respects (provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) on and as of the Extension Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct in all material respects (provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) as of such earlier date, and except that for purposes of this Section 2.18, the representations and warranties contained in subsection (a) of Section 5.04 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01, and (2) no Default or Event of Default exists, (ii) the Administrative Agent shall have received an Extension Agreement duly completed and signed by the Company and all of the Extending Lenders as required by Section 2.18(e) and (iii) the Company shall have paid (A) to the Arrangers and the Administrative Agent, for their own respective accounts, fees in the amounts and at the times specified as set forth in any fee letter related to the extension, (B) to the Lenders, for their respective own accounts, such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified and (C) any other fees and expenses required to be paid in accordance with the Loan Documents. In addition, on the Maturity Date of each Non-Extending Lender, the Borrowers shall prepay any Committed Loans outstanding on such date (and pay any additional amounts required pursuant to Section 3.05) to the extent necessary to keep outstanding Committed Loans ratable with any revised Applicable Percentages of the respective Lenders effective as of such date.
(g) Conflicting Provisions. This Section shall supersede any provisions in Section 2.13 or 10.01 to the contrary.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 Taxes. (a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable Laws. If any applicable Laws (as determined in the good faith discretion of the applicable Withholding Agent) require the deduction or withholding of any Tax from any such payment by the Withholding Agent, then the Withholding Agent shall be
entitled to make such deduction or withholding, upon the basis of the information and documentation to be delivered pursuant to subsection (e) below.
(i) If any Withholding Agent shall be required by the Code to withhold or deduct any Taxes, including both United States federal backup withholding and withholding taxes, from any payment, then (A) the Withholding Agent shall withhold or make such deductions as are determined by the Withholding Agent to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Withholding Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction of Indemnified Taxes been made.
(ii) If any Withholding Agent shall be required by any applicable Laws other than the Code to withhold or deduct any Taxes from any payment, then (A) such Withholding Agent, as required by such Laws, shall withhold or make such deductions as are determined by it to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) such Withholding Agent, to the extent required by such Laws, shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with such Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction of Indemnified Taxes been made.
(b) Payment of Other Taxes by the Loan Parties. Without limiting the provisions of subsection (a) above, the Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable Laws, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
(c) Tax Indemnifications. (i) Each of the Loan Parties shall, and does hereby, jointly and severally indemnify each Recipient, and shall make payment in respect thereof within 10 days after written demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient, and any penalties, interest and reasonable out-of-pocket expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority (other than interest and penalties imposed as a result of the gross negligence or willful misconduct of such Recipient); provided, however, that if such Recipient does not notify the Loan Parties and the Administrative Agent, if applicable, of any indemnification required under this Section 3.01 within 180 days after such Recipient has received actual notice of the specific assessment or deficiency from the relevant Governmental Authority giving rise to such indemnification claim, the Loan Parties shall not be required to indemnify such Recipient for any incremental interest, penalties or cost resulting from such Recipient’s failure to so notify the Loan Parties measured from and after the end of such 180 day period. A certificate as to the amount of such payment or liability delivered to the Company
by a Lender or the L/C Issuer (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive absent manifest error.
(ii) Each Lender and the L/C Issuer shall, and does hereby, severally indemnify, and shall make payment in respect thereof within 10 days after demand therefor, (x) the Administrative Agent against any Indemnified Taxes attributable to such Lender or the L/C Issuer (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Party to do so), (y) the Administrative Agent and the Loan Party, as applicable, against any Taxes attributable to such Lender’s failure to comply with the provisions of Section 10.06(d) relating to the maintenance of a Participant Register and (z) the Administrative Agent and the Loan Party, as applicable, against any Excluded Taxes attributable to such Lender or the L/C Issuer, in each case, that are payable or paid by the Administrative Agent or a Loan Party in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender and the L/C Issuer hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender or the L/C Issuer, as the case may be, under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (ii).
(d) Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority as provided in this Section 3.01, such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.
(e) Status of Lenders; Tax Documentation. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Company and the Administrative Agent, at the time or times reasonably requested by the Company or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Company or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Company or the Administrative Agent, shall deliver such other documentation prescribed by applicable Laws or reasonably requested by the Company or the Administrative Agent as will enable the Company or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation either set forth in Section 3.01(e)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii) Without limiting the generality of the foregoing, in the event that a Borrower is a U.S. Person,
(A) any Lender that is a U.S. Person shall deliver to the Company and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Administrative
Agent), executed copies of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding;
(B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Company and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Administrative Agent), whichever of the following is applicable:
(I) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-8BEN-E (or W-8BEN, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E (or W-8BEN, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(II) executed copies of IRS Form W-8ECI;
(III) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit I-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of the Company within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN-E (or W-8BEN, as applicable); or
(IV) to the extent a Foreign Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E (or W- 8BEN, as applicable), a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-2 or Exhibit I-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit I-4 on behalf of each such direct and indirect partner;
(C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Company and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Administrative Agent), executed copies of any other form prescribed by applicable Laws as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Company or the Administrative Agent to determine the withholding or deduction required to be made; and
(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable
reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender or shall deliver to the Company and, when applicable, the Administrative Agent at the time or times prescribed by Laws and at such time or times reasonably requested by the Company or the Administrative Agent such documentation prescribed by applicable Laws (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Company or the Administrative Agent as may be necessary for the Company and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(iii) On or before the date it becomes a party to this Agreement, any Administrative Agent that is a U.S. Person shall deliver to the Company two duly completed copies of IRS Form W-9, or any subsequent versions or successors to such form, certifying that such Administrative Agent is exempt from U.S. federal backup withholding. Any Administrative Agent, and any successor or supplemental Administrative Agent, that is not a U.S. Person for U.S. federal income tax purposes, shall deliver to the Company (i) two duly completed copies of IRS Form W-8IMY certifying that, with respect to such payments received by it (on behalf of the Lenders) from the Loan Parties, it is a “U.S. branch,” the payments are not effectively connected with the conduct of a trade or business in the United States, and it is using such form as evidence of its agreement with the Loan Parties to be treated as a U.S. Person with respect to such payment and (ii) with respect to payments received for its own account, two duly completed copies of IRS Form W-8ECI.
Each Recipient agrees that if any form or certification it previously delivered pursuant to this Section 3.01 expires or becomes obsolete or inaccurate in any respect, or at the time or times reasonably requested by the Company or Administrative Agent, it shall update such form or certification or promptly notify the Company and the Administrative Agent in writing of its legal inability to do so.
(f) Treatment of Certain Refunds. Unless required by applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender or the L/C Issuer, or have any obligation to pay to any Lender or the L/C Issuer, any refund of Taxes withheld or deducted from funds paid for the account of such Lender or the L/C Issuer, as the case may be. If any Recipient determines, in its sole discretion that it has received a refund of any Taxes to which it has been indemnified pursuant to this Section 3.01 (including paid additional amounts pursuant to this Section 3.01), it shall pay to such Loan Party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 3.01 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that each Loan Party, upon the request of the Recipient, agrees to repay the amount paid over to such Loan Party (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection, in no event will the applicable Recipient be required to pay any amount to such Loan Party pursuant to this subsection the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any Recipient to make available its Tax
returns (or any other information relating to its Taxes that it deems confidential) to any Loan Party or any other Person.
(g) Survival. Each party’s obligations under this Section 3.01 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender or the L/C Issuer, the termination of the Commitments and the repayment, satisfaction or discharge of all other Obligations.
3.02 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to perform any of its obligations hereunder or make, maintain or fund or charge interest with respect to any Credit Extension or to determine or charge interest rates based upon SOFR, Term SOFR or the Eurocurrency Rate, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars or any Alternative Currency in the applicable interbank market, then, on notice thereof by such Lender to the Company through the Administrative Agent, (i) any obligation of such Lender to issue, make, maintain, fund or charge interest with respect to any such Credit Extension or to make or continue Term SOFR Loans or Eurocurrency Rate Loans in the affected currency or currencies or, in the case of Term SOFR Loans, to convert Base Rate Committed Loans to Term SOFR Loans, shall be suspended, and (ii) if such notice asserts the illegality of such Lender making or maintaining Base Rate Loans the interest rate on which is determined by reference to the Term SOFR component of the Base Rate, the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Term SOFR component of the Base Rate, in each case until such Lender notifies the Administrative Agent and the Company that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (x) the Borrowers shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable and such Loans are denominated in Dollars, convert all Term SOFR Loans of such Lender to Base Rate Loans (the interest rate on which Base Rate Loans of such Lender shall, if necessary to avoid such illegality, be determined by the Administrative Agent without reference to the Term SOFR component of the Base Rate), either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such Term SOFR Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Loans or if such Loans are Eurocurrency Rate Loans denominated in Sterling and (y) if such notice asserts the illegality of such Lender determining or charging interest rates based upon the Term SOFR, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender without reference to the Term SOFR component thereof until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon the Term SOFR. Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or converted.
3.03 Inability to Determine Rates. (a) Except in the case of circumstances described in Section 3.03(b), if in connection with any request for a Term SOFR Loan, a Eurocurrency Rate Loan or a conversion to or continuation thereof, (i) the Administrative Agent determines that (A) (I) in the case of Term SOFR Loans, no Term SOFR Successor Rate has been determined in accordance with Section 3.03(b), and the circumstances under clause (i) of Section 3.03(b) or the Scheduled Unavailability Date has occurred or (II) in the case of Eurocurrency Rate Loans, deposits denominated in the applicable currency are not being offered to banks in the applicable offshore interbank market for such currency for (x) the applicable amount and Interest Period of such Eurocurrency Rate Loan not denominated in Sterling or (y) the applicable amount of such Eurocurrency Rate Loan denominated in Sterling, or (B)(x) adequate and reasonable means do not exist for determining (1) in the case of a Term SOFR Loan or a Eurocurrency Rate Loan not denominated in Sterling, the Term SOFR or the Eurocurrency Rate for any requested Interest Period with respect to such proposed Loan or (2) in the case of a Eurocurrency Rate Loan denominated in Sterling, the Eurocurrency Rate with respect to such proposed Eurocurrency Rate Loan or in connection with an existing or proposed Base Rate Loan and (y) the circumstances described in Section 3.03(b) do not apply (in each case with respect to this clause (a)(i), “Impacted Loans”), or (ii)
the Administrative Agent or the Required Lenders determine that for any reason (1) in the case of a Loan not denominated in Sterling, the Term SOFR or the Eurocurrency Rate for any requested Interest Period with respect to such proposed Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan or (2) in the case of a Eurocurrency Rate Loan denominated in Sterling, the Eurocurrency Rate with respect to such proposed Eurocurrency Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Eurocurrency Rate Loan, the Administrative Agent will promptly so notify the Company and each Lender. Thereafter, (x) the obligation of the Lenders to make or maintain Term SOFR Loans or the Eurocurrency Rate Loans in the affected currency or currencies, as applicable, shall be suspended (to the extent of the affected Term SOFR Loans, Eurocurrency Rate Loans or Interest Periods), and (y) in the event of a determination described in the preceding sentence with respect to the Term SOFR component of the Base Rate, the utilization of the Term SOFR component in determining the Base Rate shall be suspended, in each case until the Administrative Agent (or, in the case of any determination by the Required Lenders described in clause (a)(ii) above, until the Administrative Agent, upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, (x) the Company may revoke any pending request for a Borrowing of, conversion to or continuation of Term SOFR Loans or Eurocurrency Rate Loans in the affected currency or currencies, as applicable (to the extent of the affected Term SOFR Loans, Eurocurrency Rate Loans or Interest Periods) or, failing that, will be deemed to have converted such request into a request for a Committed Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount specified therein and (y)(A) any outstanding affected Term SOFR Loans will be deemed to have been converted into Base Rate Loans at the end of the applicable Interest Period and (B) any outstanding affected Eurocurrency Rate Loans, at the Company’s election, shall either (1) be converted into a Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount of such outstanding Eurocurrency Rate Loans denominated in Sterling (immediately) or Eurocurrency Rate Loans not denominated in Sterling (at the end of the applicable Interest Period) or (2) be prepaid in full (immediately, or at the end of the applicable Interest Period with respect to Eurocurrency Rate Loans not denominated in Sterling, as applicable); provided that if no election is made by the Company by the earlier of (X) the date that is three Business Days after receipt by the Company of such notice and (Y) the last day of the current Interest Period for the applicable Eurocurrency Rate Loan not denominated in Sterling, the Company shall be deemed to have elected clause (1) above.
Notwithstanding the foregoing, if the Administrative Agent has made the determination described in clause (a)(i)(II) of this section, the Administrative Agent, in consultation with the Company and the affected Lenders, may establish an alternative interest rate for the Impacted Loans, in which case, such alternative rate of interest shall apply with respect to the Impacted Loans until (1) the Administrative Agent revokes the notice delivered with respect to the Impacted Loans under clause (a)(i) of the first sentence of this section, (2) the Administrative Agent or the affected Lenders notify the Administrative Agent and the Company that such alternative interest rate does not adequately and fairly reflect the cost to such Lenders of funding the Impacted Loans, or (3) any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for such Lender or its applicable Lending Office to make, maintain or fund Loans whose interest is determined by reference to such alternative rate of interest or to determine or charge interest rates based upon such rate or any Governmental Authority has imposed material restrictions on the authority of such Lender to do any of the foregoing and provides the Administrative Agent and the Company written notice thereof. The Administrative Agent will promptly (in one or more notices) notify the Company and each Lender of the establishment of an alternative interest rate pursuant to this paragraph.
(b) Notwithstanding anything to the contrary in this Agreement or any other Loan Documents, if the Administrative Agent determines (which determination shall be conclusive absent manifest error), or the Company or Required Lenders notify the Administrative Agent (with, in the case
of the Required Lenders, a copy to the Company) that the Company or Required Lenders (as applicable) have determined, that:
(i) adequate and reasonable means do not exist for ascertaining (A) in the case of a Term SOFR Loan or Eurocurrency Rate Loan not denominated in Sterling, the Applicable Reference Rate for an Applicable Currency for any requested Interest Period or any other tenors of the Term SOFR or the Eurocurrency Rate or (B) in the case of a Eurocurrency Rate Loan denominated in Sterling, the Applicable Reference Rate therefor, including, in each case, without limitation, because the Applicable Reference Rate for such Applicable Currency is not available or published on a current basis and such circumstances are unlikely to be temporary, or
(ii) the administrator of the Applicable Reference Rate for an Applicable Currency or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which the Applicable Reference Rate for such Applicable Currency shall no longer be made available, or used for determining the interest rate of loans denominated in such Applicable Currency (provided that, at the time of such statement, there is no successor administrator that is satisfactory to the Administrative Agent that will continue to provide the Applicable Reference Rate for such Applicable Currency) (such specific date, the “Scheduled Unavailability Date”), or
(iii) the administrator of the Applicable Reference Rate for an Applicable Currency or a Governmental Authority having jurisdiction over such administrator has made a public statement announcing that all Interest Periods and other tenors of such Applicable Reference Rate are no longer representative, or
(iv) solely in the case of Eurocurrency Rate Loans, syndicated loans currently being executed, or that include language similar to that contained in this Section, are being executed or amended (as applicable) to incorporate or adopt a new benchmark interest rate to replace the Applicable Reference Rate for such Applicable Currency,
then, (A) in the case of a Term SOFR Loan:
in the case of clauses (i)-(iii) above, on a date and time determined by the Administrative Agent (any such date, the “Term SOFR Replacement Date”), which date shall be at the end of an Interest Period or on the relevant interest payment date, as applicable, for interest calculated and shall occur within a reasonable period of time after the occurrence of any of the events or circumstances under clause (i), (ii) or (iii) above and, solely with respect to clause (ii) above, no later than the Scheduled Unavailability Date, Term SOFR will be replaced hereunder and under the other Loan Documents with Daily SOFR, in each case, without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document (the “Term SOFR Successor Rate”); provided that (i) if the Administrative Agent determines that Daily SOFR is not available on or prior to the Term SOFR Replacement Date, or (ii) if the events or circumstances of the type described in Section 3.03(b)(i), (ii) or (iii) have occurred with respect to the Term SOFR Successor Rate then in effect, then in each case, the Administrative Agent and the Borrowers may amend this Agreement solely for the purpose of replacing Term SOFR or any then current Term SOFR Successor Rate in accordance with this Section 3.03 at the end of any Interest Period, relevant interest payment date or payment period for interest calculated, as applicable, with another alternative benchmark rate giving due consideration to any evolving or then existing convention for similar Dollar-denominated credit facilities syndicated and agented
in the United States for such alternative benchmark. and, in each case, including any mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar Dollar- denominated credit facilities syndicated and agented in the United States for such benchmark, which adjustment or method for calculating such adjustment shall be published on one or more information services as selected by the Administrative Agent from time to time in its discretion and may be periodically updated. For the avoidance of doubt, any such proposed rate and adjustments, shall constitute a “Term SOFR Successor Rate”. Any such amendment shall become effective at 5:00 p.m. (New York time) on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Company unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to such amendment. The Administrative Agent will promptly (in one or more notices) notify the Company and Lenders of (x) any occurrence of any of the events, periods or circumstances under clauses (i) through (iii) above, (y) a Term SOFR Replacement Date and (z) the Term SOFR Successor Rate. Notwithstanding anything else herein, if at any time any Term SOFR Successor Rate as so determined would otherwise be less than 0%, the Term SOFR Successor Rate will be deemed to be 0% for the purposes of this Agreement and the other Loan Documents.
and (B) in the case of a Eurocurrency Rate Loan denominated in an Alternative Currency:
reasonably promptly after such determination by the Administrative Agent or receipt by the Administrative Agent of such notice, as applicable, the Administrative Agent and the Company may amend this Agreement to replace the Applicable Reference Rate for such Alternative Currency in accordance with this Section 3.03 with an alternate benchmark rate giving due consideration to any evolving or the then existing convention for similar syndicated credit facilities syndicated in the U.S. and denominated in such Alternative Currency for such alternative benchmarks and, in each case, including any mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar syndicated credit facilities syndicated in the U.S. and denominated in such Alternative Currency for such benchmarks, each of which adjustments or methods for calculating such adjustments shall be published on one or more information services as selected by the Administrative Agent from time to time in its discretion and may be periodically updated (each, an “Adjustment”; and any such proposed rate, a “Eurocurrency Successor Rate”), and any such amendment shall become effective at 5:00 p.m. (New York time) on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Company unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to such amendment. Such Eurocurrency Successor Rate for such Alternative Currency shall be applied in a manner consistent with market practice; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, such Eurocurrency Successor Rate for such Alternative Currency shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.
If no Eurocurrency Successor Rate has been determined for any Alternative Currency and the circumstances under clause (i) or (iii) above exist or the Scheduled Unavailability Date has occurred (as applicable), the Administrative Agent will promptly so notify the Company and each Lender. Thereafter, the obligation of the Lenders to make or maintain Eurocurrency Rate Loans in each such Alternative Currency shall be suspended (to the extent of the affected Eurocurrency Rate Loans or Interest Periods). Upon receipt of such notice, (i) the Company may revoke any pending request for a Borrowing of, conversion to or continuation of Eurocurrency Rate Loans in
each such affected Alternative Currency (to the extent of the affected Eurocurrency Rate Loans or Interest Periods) or, failing that, will be deemed to have converted each such request into a request for a Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount specified therein and (ii) any outstanding affected Eurocurrency Rate Loans denominated in an Alternative Currency, at the Company’s election, shall either (1) be converted into a Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount of such outstanding Eurocurrency Rate Loan at the end of the applicable Interest Period (or immediately in the case of a Eurocurrency Rate Loan denominated in Sterling) or (2) be prepaid at the end of the applicable Interest Period (or immediately in the case of a Eurocurrency Rate Loan denominated in Sterling) in full; provided that if no election is made by the Company by the earlier of (x) the date that is three Business Days after receipt by the Company of such notice and (y) the last day of the current Interest Period for the applicable Eurocurrency Rate Loan (or on the same day in the case of a Eurocurrency Rate Loan denominated in Sterling), the Company shall be deemed to have elected clause (1) above.
Notwithstanding anything else herein, any definition of Eurocurrency Successor Rate shall provide that in no event shall such Eurocurrency Successor Rate be less than zero for purposes of this Agreement.
In connection with the implementation of a Term SOFR Successor Rate or Eurocurrency Successor Rate for any currency, the Administrative Agent will have the right to make Successor Rate Conforming Changes with respect to such currency from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Successor Rate Conforming Changes will become effective without any further action or consent of any other party to this Agreement; provided that, with respect to any such amendment effected, the Administrative Agent shall post each such amendment implementing such Successor Rate Conforming Changes for the Applicable Currency to the Company and the Lenders reasonably promptly after such amendment becomes effective.
(c) Canadian Benchmark Replacement Setting. Notwithstanding anything to the contrary herein or in any other Loan Document:
(i) Replacing CDOR. On May 16, 2022 Refinitiv Benchmark Services (UK) Limited (“RBSL”), the administrator of CDOR, announced in a public statement that the calculation and publication of all tenors of CDOR will permanently cease immediately following a final publication on Friday, June 28, 2024. On the earlier of (A) the date that all Available Tenors of CDOR have either permanently or indefinitely ceased to be provided by RBSL and (B) June 28, 2024 (the “CDOR Cessation Date”), if the then-current Canadian Benchmark is CDOR, the Canadian Benchmark Replacement will replace such Canadian Benchmark for all purposes hereunder and under any Loan Document in respect of any setting of such Canadian Benchmark on such day and all subsequent settings without any amendment to, or further action or consent of any other party to this Agreement or any other Loan Document. If the Canadian Benchmark Replacement is Daily Compounded CORRA, all interest payments will be payable on a quarterly basis.
(ii) Replacing Future Canadian Benchmarks. Upon the occurrence of a Canadian Benchmark Transition Event, the Canadian Benchmark Replacement will replace the then-current Canadian Benchmark for all purposes hereunder and under any Loan Document in respect of any Canadian Benchmark setting at or after 5:00 p.m. on the fifth (5th) Business Day after the date notice of such Canadian Benchmark Replacement is provided to the Lenders and the Company
without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Canadian Benchmark Replacement from Lenders comprising the Required Lenders. At any time that the administrator of the then-current Canadian Benchmark has permanently or indefinitely ceased to provide such Canadian Benchmark or such Canadian Benchmark has been announced by the administrator or the regulatory supervisor for the administrator of such Canadian Benchmark pursuant to public statement or publication of information to be no longer representative of the underlying market and economic reality that such Canadian Benchmark is intended to measure and that representativeness will not be restored, a Borrower may revoke any request for a Borrowing of, conversion to or continuation of Loans denominated in Canadian Dollars to be made, converted or continued that would bear interest by reference to such Canadian Benchmark until such Borrower’s receipt of notice from the Administrative Agent that a Canadian Benchmark Replacement has replaced such Canadian Benchmark, and, failing that, will be deemed to have converted each such request into a request for a Borrowing of Base Rate Loans denominated in Dollars in the Dollar Equivalent of the amount specified therein.
(iii) Canadian Benchmark Replacement Conforming Changes. In connection with the implementation and administration of a Canadian Benchmark Replacement, the Administrative Agent will have the right to make Canadian Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Canadian Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement, other than the consultation rights of the Company contemplated in this Section 3.03(c).
(iv) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Company and the Lenders of (i) the implementation of any Canadian Benchmark Replacement, (ii) any occurrence of a Term CORRA Transition Event, and (iii) the effectiveness of any Canadian Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made by the Administrative Agent pursuant to this Section, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 3.03(c).
(v) Unavailability of Tenor of Canadian Benchmark. At any time (including in connection with the implementation of a Canadian Benchmark Replacement), if the then-current Canadian Benchmark is a term rate (including Term CORRA or CDOR), then (i) the Administrative Agent may remove any tenor of such Canadian Benchmark that is unavailable or non-representative for Canadian Benchmark (including Canadian Benchmark Replacement) settings and (ii) the Administrative Agent may reinstate any such previously removed tenor for Canadian Benchmark (including Canadian Benchmark Replacement) settings.
(vi) Secondary Term CORRA Conversion. Notwithstanding anything to the contrary herein or in any Loan Document and subject to the proviso below in this clause, if a Term CORRA Transition Event and its related Term CORRA Transition Date have occurred, then on and after such Term CORRA Transition Date (i) the Canadian Benchmark Replacement described in clause (a)(i) of such definition will replace the then-current Canadian Benchmark for
all purposes hereunder or under any Loan Document in respect of any setting of such Canadian Benchmark on such day and all subsequent settings, without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document; and (ii) each Loan outstanding on the Term CORRA Transition Date bearing interest based on the then-current Canadian Benchmark shall convert, at the last day of the then current interest payment period, into a Loan bearing interest at the Canadian Benchmark Replacement described in clause (a)(i) of such definition for the respective Available Tenor as selected by the applicable Borrower as is available for the then-current Canadian Benchmark; provided that, this clause (vi) shall not be effective unless the Administrative Agent has delivered to the Lenders and the Borrower a Term CORRA Notice, and so long as the Administrative Agent has not received, by 5:00 p.m. (Toronto time) on the fifth (5th) Business Day after the date of the Term CORRA Notice, written notice of objection to such conversion to Term CORRA from Lenders comprising the Required Lenders or the Company.
(vii) Required Lenders. For the purposes of this Section 3.03(c), those Lenders that either have not made, or do not have an obligation under this Agreement to make, the relevant Loans in Canadian Dollars shall be excluded from any determination of Required Lenders.
(viii) Definitions. For purposes of this Section 3.03(c):
“Available Tenor” means, as of any date of determination and with respect to the then-current Canadian Benchmark, as applicable, (a) if the then-current Canadian Benchmark is a term rate, any tenor for such Canadian Benchmark that is or may be used for determining the length of an Interest Period or (b) otherwise, any payment period for interest calculated with reference to such Canadian Benchmark, as applicable, pursuant to this Agreement as of such date.
“Canadian Benchmark” means, initially, CDOR; provided that if a replacement of the Canadian Benchmark has occurred pursuant to this Section 3.03(c), then “Canadian Benchmark” means the applicable Canadian Benchmark Replacement to the extent that such Canadian Benchmark Replacement has replaced such prior benchmark rate. Any reference to “Canadian Benchmark” shall include, as applicable, the published component used in the calculation thereof.
“Canadian Benchmark Replacement” means, for any Available Tenor:
(a) For purposes of Section 3.03(c)(i), the first alternative set forth below that can be determined by the Administrative Agent:
(i) the sum of: (i) Term CORRA and (ii) 0.29547% (29.547 basis points) for an Available Tenor of one-month’s duration, and 0.32138% (32.138 basis points) for an Available Tenor of three-months’ duration, or
(ii) the sum of: (i) Daily Compounded CORRA and (ii) 0.29547% (29.547 basis points) for an Available Tenor of one-month’s duration, and 0.32138% (32.138 basis points) for an Available Tenor of three-months’ duration; and
(b) For purposes of Section 3.03(c)(ii), the sum of (i) the alternate benchmark rate and (ii) an adjustment (which may be a positive or negative value or zero), in each case, that has been selected by the Administrative Agent and the Borrower as the replacement for such Available Tenor of such Canadian Benchmark giving due consideration to any evolving or then-prevailing market convention, including any applicable recommendations made by the Relevant Governmental Body, for Canadian dollar-denominated syndicated credit facilities at such time;
provided that, if the Canadian Benchmark Replacement as determined pursuant to clause (a) or (b) above would be less than the Floor, the Canadian Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan Documents.
Any Canadian Benchmark Replacement shall be applied in a manner consistent with market practice; provided, that, to the extent such market practice is not administratively feasible for the Administrative Agent, such Canadian Benchmark Replacement shall be applied in a manner as otherwise reasonably determined by the Administrative Agent in consultation with the Company.
“Canadian Benchmark Replacement Conforming Changes” means, with respect to any Canadian Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Business Day”, the definition of “Interest Period”, the definition of “Alternative Currency Daily Rate”, the definition of “Alternative Currency Term Rate”, timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent in consultation with the Company decides may be appropriate to reflect the adoption and implementation of such Canadian Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Canadian Benchmark Replacement exists, in such other manner of administration as the Administrative Agent in consultation with the Company decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
“Canadian Benchmark Transition Event” means, with respect to any then-current Canadian Benchmark other than CDOR, the occurrence of a public statement or publication of information by or on behalf of the administrator of the then-current Canadian Benchmark, the regulatory supervisor for the administrator of such Canadian Benchmark, any Governmental Authority with jurisdiction over such administrator for such Canadian Benchmark, or the Bank of Canada, announcing or stating that (a) such administrator has ceased or will cease on a specified date to provide all Available Tenors of such Canadian Benchmark, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Canadian Benchmark or (b) all Available Tenors of such Canadian Benchmark are or will no longer be representative of the underlying market and economic
reality that such Canadian Benchmark is intended to measure and that representativeness will not be restored.
“CORRA” means the Canadian Overnight Repo Rate Average administered and published by the Bank of Canada (or any successor administrator).
“Daily Compounded CORRA” means, for any day, CORRA with interest accruing on a compounded daily basis, with the methodology and conventions for this rate (which will include compounding in arrears with a lookback) being established by the Administrative Agent in accordance with the methodology and conventions for this rate selected or recommended by the Relevant Governmental Body for determining compounded CORRA for business loans; provided that if the Administrative Agent decides that any such convention is not administratively feasible for the Administrative Agent, then the Administrative Agent may, in consultation with the Company, establish another convention in its reasonable discretion; and provided that if the administrator has not provided or published CORRA and a Benchmark Transition Event with respect to CORRA has not occurred, then, in respect of any day for which CORRA is required, references to CORRA will be deemed to be references to the last provided or published CORRA.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to CDOR.
“Relevant Governmental Body” means the Bank of Canada, or a committee officially endorsed or convened by the Bank of Canada, or any successor thereto.
“Term CORRA” means, for the applicable corresponding tenor, the forward-looking term rate based on CORRA that has been selected or recommended by the Relevant Governmental Body, and that is published by an authorized benchmark administrator and is displayed on a screen or other information service, as identified or selected by the Administrative Agent in its reasonable discretion at approximately a time and as of a date prior to the commencement of an Interest Period determined by the Administrative Agent in its reasonable discretion in a manner substantially consistent with market practice.
“Term CORRA Notice” means the notification by the Administrative Agent to the Lenders and the Borrower of the occurrence of a Term CORRA Transition Event.
“Term CORRA Transition Date” means, in the case of a Term CORRA Transition Event, the date that is set forth in the Term CORRA Notice provided to the Lenders and the Borrower, for the replacement of the then-current Canadian Benchmark with the Canadian Benchmark Replacement described in clause (a)(i) of such definition, which date shall be at least thirty (30) Business Days from the date of the Term CORRA Notice.
“Term CORRA Transition Event” means the determination by the Administrative Agent that (a) Term CORRA has been recommended for use by the Relevant Governmental Body, and is determinable for any Available Tenor, (b) the administration of Term CORRA is administratively feasible for the Administrative Agent, (c) a Canadian Benchmark Replacement, other than Term CORRA, has replaced CDOR in accordance with this Section 3.03(c) and (d) Borrower has provided a written request to Administrative Agent to transition to Term CORRA.
3.04 Increased Costs; Reserves on Eurocurrency Rate Loans. (a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Eurocurrency Rate, other than as set forth below) or the L/C Issuer;
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (e) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender or the L/C Issuer or the London interbank market any other condition, cost or expense affecting this Agreement or Term SOFR Loans or Eurocurrency Rate Loans made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such Lender of making, converting to, continuing or maintaining any Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Lender or the L/C Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or the L/C Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or the L/C Issuer, the Company will pay (or cause the applicable Designated Borrower to pay) to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer, as the case may be, for such additional costs incurred or reduction suffered.
(b) Capital Requirements. If any Lender or the L/C Issuer determines that any Change in Law affecting such Lender or the L/C Issuer or any Lending Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the L/C Issuer’s capital or on the capital of such Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swing Line Loans held by, such Lender, or the Letters of Credit issued by the L/C Issuer, to a level below that which such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s holding company with respect to capital adequacy), then from time to time the Company will pay (or cause the applicable Designated Borrower to pay) to such Lender or the L/C Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of a Lender or the L/C Issuer (i) setting forth the amount or amounts necessary to compensate such Lender or the L/C Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Company, and (ii) certifying that such Lender or L/C Issuer is generally charging such amounts to similarly situated borrowers, shall be conclusive absent manifest error. The Company shall pay (or cause the applicable Designated
Borrower to pay) such Lender or the L/C Issuer, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender or the L/C Issuer to demand compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such compensation, provided that no Borrower shall be required to compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the L/C Issuer, as the case may be, notifies the Company of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the L/C Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
(e) Additional Reserve Requirements. The Company shall pay (or cause the applicable Designated Borrower to pay) to each Lender, as long as such Lender shall be required to comply with any reserve ratio requirement or analogous requirement of any central banking or financial regulatory authority imposed in respect of the maintenance of the Commitments or the funding of the Eurocurrency Rate Loans, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Commitment or Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive), which shall be due and payable on each date on which interest is payable on such Loan, provided the Company shall have received at least 10 days’ prior notice (with a copy to the Administrative Agent) of such additional costs from such Lender. If a Lender fails to give notice 10 days prior to the relevant Interest Payment Date, such additional interest or costs shall be due and payable 10 days from receipt of such notice.
3.05 Compensation for Losses. Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Company shall promptly compensate (or cause the applicable Designated Borrower to compensate) such Lender for and hold such Lender harmless from any loss (other than the loss of anticipated profits), cost or expense incurred by it as a result of:
(a) any continuation, conversion, payment or prepayment of any Loan other than a Base Rate Loan on a day other than the last day of the Interest Period for such Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);
(b) any failure by any Borrower (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Loan other than a Base Rate Loan on the date or in the amount notified by the Company or the applicable Designated Borrower;
(c) any failure by any Borrower to make payment of any Loan or drawing under any Letter of Credit (or interest due thereon) denominated in an Alternative Currency on its scheduled due date or any payment thereof in a different currency; or
(d) any assignment of a Term SOFR Loan or a Eurocurrency Rate Loan not denominated in Sterling on a day other than the last day of the Interest Period therefor as a result of a request by the Company pursuant to Section 10.13;
including any foreign exchange losses and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan, from fees payable to terminate the deposits from which such funds were obtained or from the performance of any foreign exchange contract. The Company shall also pay (or cause the applicable Designated Borrower to pay) any customary administrative fees charged by such Lender in connection with the foregoing.
For purposes of calculating amounts payable by the Company (or the applicable Designated Borrower) to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each Eurocurrency Rate Loan made by it at the Eurocurrency base rate used in determining the Eurocurrency Rate for such Loan by a matching deposit or other borrowing in the offshore interbank market for such currency for a comparable amount and for a comparable period, whether or not such Eurocurrency Rate Loan was in fact so funded. Each Lender claiming any payment pursuant to this Section 3.05 shall do so by giving notice thereof to the Company and the Administrative Agent (showing calculation of the amount claimed in reasonable detail) within 60 Business Days after a failure to borrow, convert or continue Term SOFR Loans or Eurocurrency Rate Loans not denominated in Sterling, or to prepay, after notice or after a prepayment of Term SOFR Loans or Eurocurrency Rate Loans not denominated in Sterling on a day which is not the last day of an Interest Period therefor.
3.06 Mitigation Obligations; Replacement of Lenders. (a) Designation of a Different Lending Office. Each Lender may make any Credit Extension to the Borrower through any Lending Office, provided that the exercise of this option shall not affect the obligation of the Borrower to repay the Credit Extension in accordance with the terms of this Agreement. If any Lender requests compensation under Section 3.04, or requires any Borrower to pay any Indemnified Taxes or additional amounts to any Lender, the L/C Issuer, or any Governmental Authority for the account of any Lender or the L/C Issuer pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then at the request of the Company such Lender or the L/C Issuer shall, as applicable, use reasonable efforts to designate a different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender or the L/C Issuer, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender or the L/C Issuer, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or the L/C Issuer, as the case may be. The Company hereby agrees to pay (or cause the applicable Designated Borrower to pay) all reasonable costs and expenses incurred by any Lender or the L/C Issuer in connection with any such designation or assignment.
(b) Replacement of Lenders. If any Lender gives notice under Section 3.02, requests compensation under Section 3.04, or if any Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 and, in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 3.06(a), the Company may replace such Lender in accordance with Section 10.13.
3.07 Survival. All obligations of the Loan Parties under this Article III shall survive termination of the Aggregate Commitments, repayment of all other Obligations hereunder, and resignation of the Administrative Agent.
ARTICLE IV.
CONDITIONS PRECEDENT TO CREDIT EXTENSIONS
4.01 Conditions of Restatement Effective Date. The occurrence of the Restatement Effective Date is subject to satisfaction (or waiver in accordance with Section 10.01) of the following conditions precedent:
(a) The Administrative Agent’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Restatement Effective Date (or, in the case of certificates of governmental officials, a recent date before the Restatement Effective Date) and each in form and substance reasonably satisfactory to the Administrative Agent and each of the Lenders:
(i) executed counterparts of this Agreement and Guaranty Amendment No. 2;
(ii) Notes executed by the applicable Borrowers in favor of each Lender requesting Notes at least three Business Days prior to the Restatement Effective Date;
(iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party;
(iv) such documents and certifications as the Administrative Agent may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing, in good standing and qualified to engage in business in its jurisdiction of organization;
(v) (A) a favorable opinion of Hogan Lovells US LLP, New York and Virginia counsel to the Loan Parties, addressed to the Administrative Agent and each Lender and (B) a favorable opinion of McGuireWoods LLP, North Carolina counsel to the Loan Parties, addressed to the Administrative Agent and each Lender, in each case in a customary form and reasonably satisfactory to the Administrative Agent and its counsel;
(vi) a certificate signed by a Responsible Officer of the Company certifying that (A) the conditions specified in Sections 4.02(a) and (b) have been satisfied, (B) there has been no event or circumstance since January 3, 2021 that has had or could be reasonably expected to have, either individually or in the aggregate, a Material Adverse Effect, (C) there is no action, suit, investigation or proceeding pending or, to the knowledge of the Company, threatened in any court or before any Governmental Authority that could reasonably be expected to have a Material Adverse Effect and (D) the value of the consolidated assets of the Company and its Subsidiaries at present fair saleable value is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of the Company and its Subsidiaries on a consolidated basis, and the Company and its Subsidiaries on a consolidated basis are able to pay all their liabilities as such liabilities mature and do not have unreasonably small capital with which to carry on their business.
(b) The Refinancing shall have been consummated substantially concurrently with the Restatement Effective Date, and the Administrative Agent shall have received reasonably satisfactory evidence thereof.
(c) The Company shall have paid (i) all fees owed pursuant to the Fee Letters, (ii) without duplication of any fees paid pursuant to Section 4.02(b), all fees owed to the Lenders pursuant to the Existing Credit Agreement and (ii) all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced at least three (3) Business Days prior to the Restatement Effective Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Company and the Administrative Agent).
(d) (i) Upon the reasonable request of any Lender made at least 5 days prior to the Restatement Effective Date, the Company shall have provided to such Lender, and such Lender shall be reasonably satisfied with, the documentation and other information so requested in connection with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act, in each case at least 3 days prior to the Restatement Effective Date and (ii) at least 5 days prior to the Restatement Effective Date, any Loan Party that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall deliver a Beneficial Ownership Certification in relation to such Loan Party.
Without limiting the generality of the provisions of the last paragraph of Section 9.03, for purposes of determining compliance with the conditions specified in this Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Restatement Effective Date specifying its objection thereto.
4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor any Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type, or a continuation of Term SOFR Loans or Eurocurrency Rate Loans) is subject to the following conditions precedent:
(a) The representations and warranties of (i) the Borrowers contained in Article V and (ii) each Loan Party contained in each other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects (provided that any representation or warranty that is qualified as to “materiality”, “Material Adverse Effect” or similar language shall be true and correct (after giving effect to any qualification therein) in all respects) on and as of the date of such Credit Extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date, and except that for purposes of this Section 4.02, the representations and warranties contained in subsection (a) of Section 5.04 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), respectively, of Section 6.01; provided, however, that for so long as the Borrower maintains a customary commercial paper lending facility, the representations set forth in Section 5.04(b) and Section 5.06 shall be excluded from this clause (a).
(b) No Default shall exist, or would result from such proposed Credit Extension or from the application of the proceeds thereof.
(c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing Line Lender shall have received a Request for Credit Extension in accordance with the requirements hereof.
(d) If the applicable Borrower is a Designated Borrower, then the conditions of Section 2.14 to the designation of such Borrower as a Designated Borrower shall have been met to the satisfaction of the Administrative Agent.
(e) In the case of a Credit Extension to be denominated in an Alternative Currency, there shall not have occurred any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which in the reasonable opinion of the Administrative Agent, the Required Lenders (in the case of any Loans to be denominated in an Alternative Currency) or the L/C Issuer (in the case of any Letter of Credit to be denominated in an Alternative Currency) would make it impracticable for such Credit Extension to be denominated in the relevant Alternative Currency.
Each Request for Credit Extension (other than a Committed Loan Notice requesting only a conversion of Committed Loans to the other Type or a continuation of Term SOFR Loans or Eurocurrency Rate Loans) submitted by the Company shall be deemed to be a representation and warranty that the conditions specified in Sections 4.02(a) and (b) have been satisfied on and as of the date of the applicable Credit Extension.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Administrative Agent and the Lenders on the Restatement Effective Date, on each Extension Effective Date, on each Revolving Credit Increase Effective Date and on each date required pursuant to Section 4.02 that (subject to any exceptions set forth in Section 4.02):
5.01 Organization; Powers. Each Loan Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and as proposed to be conducted, to execute, deliver and perform its obligations under each Loan Document to which it is a party and to effect the Transactions, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where the failure to so qualify, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.
5.02 Authorization; Enforceability. The Transactions to be entered into by each Loan Party and the execution, delivery and performance by each Loan Party of the Loan Documents have been duly authorized by all necessary corporate or other action and, if required, action by the holders of such Loan Party’s Equity Interests. This Agreement has been duly executed and delivered by each Borrower and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of such Borrower or such Loan Party (as the case may be), enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
5.03 Governmental Approvals; No Conflicts. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect, (b) will not violate any material Requirement of Law
applicable to any Loan Party or any Subsidiary to the extent failure to comply with which could reasonably be expected to have a Material Adverse Effect, (c) will not violate the charter, by-laws or other organizational documents of any Loan Party, (d) will not violate or result in a material default under any material indenture, agreement or other instrument binding upon any Loan Party or any Subsidiary or their respective assets, or give rise to a right thereunder to require any material payment to be made by any Loan Party or any Subsidiary or give rise to a right of, or result in, termination, cancelation or acceleration of any material obligation thereunder and (e) will not result in the creation or imposition of any Lien (other than a Lien permitted under Section 7.02) on any asset of the Loan Party or any Subsidiary.
5.04 Financial Statements; No Material Adverse Effect. (a) The Company has heretofore furnished to the Lenders (i) its consolidated balance sheet and consolidated statements of income, stockholders’ equity and cash flows as of and for the fiscal year ended January 3, 2021, reported on by Ernst & Young LLP, independent public accountants and (ii) its consolidated condensed balance sheet and statement of income and cash flows as of and for the fiscal quarter and the portion of the fiscal year ended April 4, 2021. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of the Company and the Subsidiaries as of such dates and for such periods in accordance with GAAP consistently applied, subject to year-end audit adjustments and the absence of footnotes and consolidated statements of stockholders’ equity in the case of the statements referred to in clause (ii) above.
(b) Since January 3, 2021, there has not occurred any event, change or condition that has had, or could reasonably be expected to have, a Material Adverse Effect.
5.05 Properties. (a) Each Borrower and each of the Subsidiaries has good title to, or valid leasehold interests in, all the real and personal property that is material to its business, free of all Liens other than Liens permitted by Section 7.02.
(b) Each Borrower and each of the Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by the Borrowers and the Subsidiaries does not infringe upon the rights of any other Person, except for such infringements that could not reasonably be expected to result in a Material Adverse Effect.
5.06 Litigation Matters. There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of any Responsible Officer of the Company, threatened against or affecting any Borrower or any Subsidiary (i) which could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (except as set forth on Schedule 5.06) or (ii) that involve any of the Loan Documents or the Transactions.
5.07 Compliance with Laws and Agreements. Each Borrower and each of the Subsidiaries is in compliance with (a) all Requirements of Law applicable to it or its property except with respect to any noncompliance therewith which could not reasonably be expected to result in a Material Adverse Effect and (b) all indentures and agreements and other instruments binding upon it or its property except with respect to any noncompliance therewith which could not reasonably be expected to result in a Material Adverse Effect.
5.08 Investment Company Status. No Loan Party nor any of its Subsidiaries is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, or is subject to registration under such Act.
5.09 Taxes. The Company and each of the Subsidiaries (a) has timely filed or caused to be filed all Tax returns and reports required to have been filed, except to the extent that failure to do so could not reasonably be expected to result in a Material Adverse Effect, and (b) except to the extent that failure to do so could not
reasonably be expected to result in a Material Adverse Effect, has paid or caused to be paid all Taxes required to have been paid by it, except any Taxes that are being contested in good faith by appropriate proceedings, provided that the Company or such Subsidiary, as the case may be, has set aside on its books adequate reserves therefor in accordance with GAAP, and the failure to pay such Taxes could not reasonably be expected to result in a Material Adverse Effect. No material Tax liens have been filed (other than a Lien permitted under Section 7.02) and no material claims are being asserted with respect to any Taxes, except for such claims that could not reasonably be expected to result in a Material Adverse Effect.
5.10 ERISA. (a) Except as could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (i) each Loan Party and each of their respective ERISA Affiliates is in compliance with the applicable provisions of ERISA and of the Code relating to Plans and the regulations and published interpretations thereunder, (ii) no ERISA Event has occurred or is reasonably expected to occur, and (iii) (A) each Foreign Plan has been maintained in compliance with its terms and with the requirements of any and all applicable Laws, (B) no Loan Party has incurred any obligation or liability in connection with the termination of or withdrawal from any Foreign Plan, (C) the present value of the accrued benefit liabilities (whether or not vested) under each Foreign Plan that is required to be funded by any Loan Party does not exceed the current value of the assets of such Foreign Plan and (D) for each Foreign Plan which is not required to be funded, the obligations or liabilities of such Foreign Plan are properly accrued.
(b) The Company represents and warrants that the Company is not and will not be using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments.
5.11 Disclosure. None of (a) the Company’s Quarterly Report on Form 10-Q for the period ended October 2, 2016, and the other filings of the Company made with the SEC since October 2, 2016 and prior to the Restatement Effective Date (collectively, the “SEC Filings”) or (b) any of the other reports, financial statements, certificates or other information furnished by or on behalf of the Company to the Administrative Agent or any Lender pursuant to any Loan Document or delivered thereunder (as modified or supplemented by other information then or theretofore furnished by or on behalf of the Borrowers to the Administrative Agent in connection herewith), as of the date such disclosures are delivered, contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, provided that, with respect to projected financial information, each Loan Party represents only that such information was prepared in good faith based upon assumptions believed by them to be reasonable at the time delivered (unless otherwise updated subsequent thereto, in which case such information was prepared in good faith based upon assumptions believed by it to be reasonable at the time updated). As of the Restatement Effective Date, the information included in the Beneficial Ownership Certification, if applicable, is true and correct in all respects.
5.12 Insurance. As of the Restatement Effective Date, all premiums due in respect of all insurance (including self-insurance) maintained by or on behalf of the Loan Parties have been paid. The properties of the Company and its Subsidiaries are insured with financially sound and reputable insurance companies or through self-insurance and the Company believes that such insurance maintained by or on behalf of the Loan Parties and their subsidiaries is adequate.
5.13 Use of Proceeds. (a) Neither the Company nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying Margin Stock. Following the application of the proceeds of each Borrowing or drawing under each Letter of Credit, not more than 25% of the value of the assets (either of the applicable Borrower or of the Company and its Subsidiaries on a consolidated basis) subject to the provisions of
Section 7.02 or any other provision restricting the disposition or pledge of such assets, or subject to any restriction on the disposition or pledge of such assets contained in any agreement or instrument between any Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of clauses (f) or (g) of Article VIII, will be Margin Stock.
(b) Each Borrower shall use the proceeds of the Loans for working capital and other general corporate purposes, including to consummate the Refinancing. No part of the proceeds of any Loan will be used to purchase or carry Margin Stock or to extend credit to others for the purpose of purchasing or carrying Margin Stock.
5.14 Subsidiaries. Schedule 5.14 sets forth, as of the Restatement Effective Date, a correct and complete list of the name and type of entity of each Loan Party. All of the issued and outstanding Equity Interests owned by any Loan Party in its Subsidiaries have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid and nonassessable.
5.15 Event of Default. No Default or Event of Default has occurred and is continuing.
5.16 Sanctions; Anti-Corruption Laws. (i) None of the Company or any of its Subsidiaries, nor to the knowledge of any Responsible Officer of the Company, any director, officer, employee, agent or Affiliate thereof is a Person that is, or is owned or controlled by one or more Persons that are: (i) the subject of any Sanctions; or (ii) located, organized or resident in a Designated Jurisdiction, including, without limitation, Cuba, Iran, North Korea, Crimea and Syria. Each Loan Party, their respective Subsidiaries and, to the knowledge of each Responsible Officer of such Loan Party, their respective directors, officers, employees, agents and Affiliates are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. Each Loan Party has implemented and maintains in effect policies and procedures designed to ensure compliance by such Loan Party, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws.
5.17 Money Laundering and Counter-Terrorist Financing Laws. Each Loan Party is in compliance, in all material respects, with the Bank Secrecy Act, as amended by Title III of the Patriot Act, and all other applicable anti-money laundering and counter terrorist financing laws and regulations.
ARTICLE VI.
AFFIRMATIVE COVENANTS
Until the Commitments shall have expired or been terminated, the principal of and interest on each Loan and all fees, expenses and other amounts payable under any Loan Document (other than contingent amounts not yet due) shall have been paid in full, all Letters of Credit shall have expired or been terminated or cash collateralized as provided in Section 2.16 and all L/C Obligations shall have been reimbursed, each Borrower covenants and agrees with the Lenders that:
6.01 Financial Statements and Other Information. The Borrowers, or the Company on behalf of the Borrowers, will furnish to the Administrative Agent for prompt delivery to each Lender:
(a) as soon as possible, but in any event within 90 days after the end of each fiscal year of the Company, the Company’s audited consolidated balance sheet and audited consolidated condensed statements of income, stockholders’ equity and cash flows as of the end of and for such year, and related notes thereto, setting forth in each case in comparative form the corresponding figures for (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all reported on by Ernst & Young LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception (other than a “going concern” qualification or exception solely
as a result of the upcoming maturity of the Loans on the Maturity Date and except for qualifications solely relating to changes in accounting principles or practices reflecting changes in GAAP and required or approved by the Company’s independent certified public accountant) and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied;
(b) as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Company, the Company’s unaudited consolidated balance sheet and unaudited consolidated condensed statements of income and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by a Financial Officer of the Company as presenting fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery or deemed delivery of financial statements under paragraph (a) or (b) above (or, in the case of any such delivery under paragraph (a) above, within 90 days after the end of the applicable fiscal year of the Company) a certificate of a Financial Officer of the Company substantially in the form of Exhibit F certifying (i) (solely in the case of financial statements delivered pursuant to paragraph (b) above) such financial statements as presenting fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes, (ii) as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (iii) setting forth reasonably detailed calculations demonstrating compliance with the covenants contained in Sections 7.10 and 7.11 and (iv) stating whether any change in GAAP or in the application thereof that applies to the Company or any of its consolidated Subsidiaries has occurred since the later of the date of the Company’s most recent audited financial statements referred to in Section 5.04 and the date of the most recent prior certificate delivered pursuant to this paragraph (c) indicating such a change and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under paragraph (a) of this Section, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their audit of such financial statements of any failure of the Company to comply with the terms, covenants, provisions or conditions of Section 7.10 or Section 7.11 insofar as they relate to accounting matters and, if such accounting firm has obtained such knowledge of any failure to comply, a statement as to the nature thereof (which certificate may be limited to the extent required by accounting rules or guidelines);
(e) concurrently with any delivery of financial statements under paragraph (a) of this Section, a certificate signed by a Responsible Officer of the Company setting forth the names, jurisdictions of incorporation and consolidated revenues and Consolidated Total Assets for the Subsidiary Guarantors as of the end of the fiscal year to which such financial statements apply;
(f) promptly after Moody’s, S&P or Fitch shall have announced (i) a change in its Rating, (ii) that it shall no longer maintain a Rating or (iii) that it shall cease to be in the business of issuing corporate debt ratings, written notice of such development or rating change;
(g) promptly following any reasonable request therefor from the Administrative Agent, copies of any documents described in Sections 101(k) or 101(l) of ERISA that any Loan Party or any ERISA Affiliate may request with respect to any Multiemployer Plan; provided that if the Loan Parties or any of the ERISA Affiliates have not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Administrative Agent, the Loan Parties and/or the ERISA Affiliates shall promptly make a request for such documents or notices from such administrator or sponsor and the Loan Parties shall provide copies of such documents and notices promptly after receipt thereof;
(h) promptly following any reasonable request therefor, such other information regarding the operations, business affairs and financial condition of any Borrower or any Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent (on behalf of any Lender) may reasonably request; and
(i) promptly following any request therefor, information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the PATRIOT Act and the Beneficial Ownership Regulation.
(j) Information required to be delivered pursuant to Sections 6.01(a) and (b) shall be deemed to have been delivered on the date on which such information has been posted on the SEC website on the Internet at www.sec.gov, or, to the extent the Company provides notice to the Administrative Agent, at another website identified in such notice and accessible by the Lenders without charge, provided that such notice may be included in a certificate delivered pursuant to Section 6.01(c).
Each Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers may, but shall not be obligated to, make available to the Lenders and the L/C Issuer materials and/or information provided by or on behalf of such Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks, Syndtrak, ClearPar, or a substantially similar electronic transmission system (the “Platform”) and (b) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to any of the Borrowers or their respective Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities; provided, however, that each Public Lender shall in any event designate one or more persons who are entitled to view material non-public information to the same extent as Lenders who are not Public Lenders. Each Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean
that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrowers shall be deemed to have authorized the Administrative Agent, the Arrangers, the L/C Issuer and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrowers or their respective securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 10.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent and the Arrangers shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.” Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC.”
In no event shall the requirements set forth in Section 6.01(h) or any other Loan Document require the Company or any Subsidiary to provide any such information which (i) constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by Law, fiduciary duty or third-party contractual obligations (not created in contemplation thereof) or (iii) is subject to attorney-client or similar privilege or constitutes attorney work-product; provided that the Company shall notify the Administrative Agent promptly upon obtaining knowledge that such information is being withheld in reliance on this paragraph and, solely with respect to information being withheld due to third-party contractual obligations, use commercially reasonable efforts to secure the requisite consent to disclose such information.
6.02 Notices of Material Events. The Company will furnish to the Administrative Agent (for prompt distribution to each Lender through the Administrative Agent) written notice promptly, but in any event within five Business Days of, any of the Chief Executive Officer, the President, the General Counsel or the Chief Financial Officer of any Borrower obtaining actual knowledge of the following:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or, to the knowledge of the Chief Financial Officer or another executive officer of the Company or any Subsidiary, affecting the Company or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that alone or together with any other ERISA Events that have occurred or are reasonably expected to occur, could reasonably be expected to result in a liability in excess of $50,000,000;
(d) with respect to a funded Foreign Plan, a termination, withdrawal or noncompliance with applicable law or plan terms that would reasonably be expected to result in a liability in excess of $50,000,000;
(e) any event, notice or circumstance or any correspondence with any Governmental Authority (including with respect to any release into the indoor or outdoor environment of any Hazardous Material that is required by any applicable Environmental Law to be reported to a Governmental Authority) which could reasonably be expected to lead to any Material Adverse Effect; and
(f) any other development (including notice of any Environmental Liability) that results in, or could reasonably be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a written statement of the Chief Financial Officer or other executive officer of the Company setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.
6.03 Existence; Conduct of Business. Each Borrower will, and will cause its Subsidiaries to, do or cause to be done all things necessary to obtain, preserve, renew and keep in full force and effect its legal existence and, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect, the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of its business, provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 7.03 or other disposition permitted hereunder.
6.04 Payment of Taxes. Each Borrower will, and will cause its Subsidiaries to, pay or discharge all material Taxes, before such Taxes shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Company or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (c) no attempt is being made to effect collection, or such contest effectively suspends collection, of the contested obligation and the enforcement of any Lien securing such obligation and (d) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect.
6.05 Maintenance of Properties. Each Borrower will, and will cause its Subsidiaries to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear and casualty and condemnation events excepted.
6.06 Books and Records; Inspection Rights. Each Borrower will, and will cause each Subsidiary to, (a) keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities and (b) in the case of each Loan Party, permit any representatives designated by the Administrative Agent or any Lender (including employees of the Administrative Agent, any Lender or any consultants, accountants, lawyers and appraisers retained by the Administrative Agent or any Lender), upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records (including environmental assessment reports and Phase I or Phase II studies, and other environmental documents, in each case, that are not protected by attorney-client privilege) and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times during normal business hours and as often as reasonably requested (but no more frequently than annually unless an Event of Default exists) and all with a representative of the Company present; provided, however, that absent the existence of an Event of Default, the Company shall not be required to pay for more than one such inspection and visit by the Administrative Agent and the Lenders (taken as a whole) in any fiscal year of the Company. The Borrowers acknowledge that the Administrative Agent, after exercising its rights of inspection, may prepare and distribute to the Lenders certain Reports pertaining to the Loan Parties’ and their respective Subsidiaries’ assets for internal use by the Administrative Agent and the Lenders. The employees, consultants, accountants, lawyers and appraisers of the Administrative Agent and each Lender shall comply with the Company’s applicable safety and biosecurity procedures during any such visit or inspection to the extent the same are made available to the Administrative Agent or such Lender.
6.07 Compliance with Laws. (a) Each Borrower will, and will cause each of its Subsidiaries to, comply with all Requirements of Law with respect to it or its property, except where non-compliance could not
reasonably be expected to result in a Material Adverse Effect or where the necessity of compliance therewith is contested in good faith by appropriate proceedings.
(b) Each Borrower will, and will cause each of its Subsidiaries to, (i) comply with all applicable Environmental Laws and (ii) generate, use, treat, store, release, transport, dispose of and otherwise manage all Hazardous Materials in a manner that would not reasonably be expected to result in a liability to any Loan Party or Subsidiary, except in the case of (i) and (ii) as could not reasonably be expected to result in a Material Adverse Effect.
6.08 Use of Proceeds; Letters of Credit. (a) The proceeds of the Loans will be used, and Letters of Credit will be issued, to finance general working capital needs and for other general corporate purposes, including to consummate the Refinancing, in each case of the Company and the Subsidiaries. No part of the proceeds of any Loan will be used, whether directly or indirectly, to purchase or carry Margin Stock, to extend credit to others for the purpose of purchasing or carrying Margin Stock or for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X or for the purpose of financing any unsolicited offer for the Equity Interests of any Person or any hostile acquisition.
(b) The Company will not directly or indirectly use the proceeds of the Loans, or lend, contribute or otherwise make available such proceeds of the Loans to any Person, for the purpose of financing activities or business of or with any Person, or in any country or territory that, at the time of such financing, is the subject of any Sanctions.
(c) No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of any Anti-Corruption Laws.
6.09 Insurance. The Company will, and will cause each Subsidiary to, maintain with financially sound and reputable insurance companies or through self-insurance, (a) insurance or self-insurance in such amounts (with no greater risk retention) and against such risks as is considered adequate by the Company, in its good faith judgment, and (b) all other insurance as may be required by law. The Company will furnish to the Administrative Agent, upon the reasonable request of the Administrative Agent, information in reasonable detail as to the insurance so maintained.
6.10 Further Assurances. (a) The Company will, and will cause each Subsidiary to, execute any and all further documents, agreements and instruments, and take all such further actions that may be required under any applicable law, or that the Administrative Agent or the Required Lenders may reasonably request, to cause the Subsidiary Guarantee Requirement to be and remain satisfied at all times or otherwise to give effect to the provisions of the Loan Documents, all at the expense of the Loan Parties.
(b) The Company will execute any and all further documents, agreements and instruments, and take all such further actions that may be required under any applicable law, or that the Administrative Agent or the Required Lenders may reasonably request, to give effect to the provisions of the Loan Documents, all at the expense of the Loan Parties.
ARTICLE VII.
NEGATIVE COVENANTS
Until the Commitments shall have expired or been terminated, the principal of and interest on each Loan and all fees, expenses and other amounts payable under any Loan Document (other than
contingent amounts not yet due) shall have been paid in full, all Letters of Credit shall have expired or been terminated or cash collateralized as provided in Section 2.16 and all L/C Obligations shall have been reimbursed, each Borrower covenants and agrees with the Lenders that:
7.01 Indebtedness. (a) The Company will not permit any Subsidiary that is not a Loan Party to directly or indirectly, create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) Indebtedness existing on the Restatement Effective Date and set forth on Schedule 7.01 and Refinancing Indebtedness in respect thereof;
(iii) Indebtedness of any Subsidiary to the Company or any other Subsidiary; provided that such Indebtedness shall not have been transferred or pledged to any other Person (other than the Company or any Subsidiary);
(iv) Guarantees by any Subsidiary that is not a Loan Party of Indebtedness of any other Subsidiary that is not a Loan Party; provided that the Indebtedness so guaranteed shall not be prohibited by this Section;
(v) Indebtedness of any Subsidiary incurred to finance the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease Obligations and any Indebtedness assumed in connection with the acquisition of any such assets, and Refinancing Indebtedness in respect thereof; provided that such Indebtedness is incurred prior to or within 180 days after such acquisition or the completion of such construction or improvement;
(vi) Indebtedness of any Person that becomes a Subsidiary (or of any Person not previously a Subsidiary that is merged or consolidated with or into a Subsidiary in a transaction permitted hereunder) after the Restatement Effective Date, or Indebtedness of any Person that is assumed by any Subsidiary in connection with an acquisition of assets by such Subsidiary, and Refinancing Indebtedness in respect thereof; provided that (A) such original Indebtedness exists at the time such Person becomes a Subsidiary (or is so merged or consolidated) or such assets are acquired and is not created in contemplation of or in connection with such Person becoming a Subsidiary (or such merger or consolidation) or such assets being acquired and (B) neither the Company nor any Subsidiary (other than such Person or the Subsidiary with which such Person is merged or consolidated or that so assumes such Person’s Indebtedness) shall Guarantee or otherwise become liable for the payment of such Indebtedness;
(vii) performance bonds, bid bonds, surety bonds, appeal bonds, completion Guarantees and similar obligations, in each case provided in the ordinary course of business or in connection with the enforcement of rights or claims of the Company or its Subsidiaries or in connection with judgments that do not result in a Default or an Event of Default;
(viii) Indebtedness owed to any Person providing workers’ compensation, health, disability or other employee benefits or property, casualty or liability insurance, pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business;
(ix) Indebtedness under Swap Agreements permitted under Section 7.05;
(x) Indebtedness owed in respect of overdrafts and related liabilities arising from treasury, depository and cash management services or in connection with any automated clearinghouse transfers of funds;
(xi) Indebtedness consisting of indemnification, adjustment of purchase price, earnout or similar obligations (and Guarantees of such Indebtedness), in each case, incurred in connection with the disposition of any business, assets or a Subsidiary of the Company, other than Guarantees of Indebtedness incurred or assumed by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing or otherwise in connection with such acquisition; provided, however, that (A) such Indebtedness is not reflected on the balance sheet of the Company or any Subsidiary prepared in accordance with GAAP (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (A)) and (B) the maximum aggregate liability in respect of all such Indebtedness shall not exceed the gross proceeds, including the fair market value of non-cash proceeds (the fair market value of such non-cash proceeds being measured at the time such proceeds are received and without giving effect to any subsequent changes in value), actually received by the Company and the Subsidiaries in connection with such disposition;
(xii) customer deposits and advance payments received in the ordinary course of business and consistent with past practices from customers for goods purchased in the ordinary course of business;
(xiii) Indebtedness of Foreign Subsidiaries not to exceed $750,000,000 at any time outstanding;
(xiv) other Indebtedness (including Indebtedness with respect to any trade financing facility and any Securitization Transaction); provided that the aggregate principal amount of Indebtedness of Subsidiaries outstanding under this clause (xiv), plus, without duplication, the aggregate principal amount of Indebtedness of the Company or any Subsidiary secured by Liens permitted under Section 7.02(k) (including, without duplication, obligations with respect to any trade financing facility and any Securitization Transaction) at any time shall not exceed 12.5% of Consolidated Net Tangible Assets; and
(xv) Guarantees by any Subsidiary of third party grower obligations incurred in the ordinary course of business in an aggregate amount outstanding at any time not to exceed $250,000,000.
(b) Notwithstanding the provisions of paragraph (a) of this Section 7.01, no Subsidiary shall be liable for any Material Indebtedness of the Company under any Guarantee or otherwise, unless it shall also Guarantee the Obligations on terms and under documentation reasonably satisfactory to the Administrative Agent.
7.02 Liens. The Company will not, nor will it permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any asset now owned or hereafter acquired by it, except:
(a) Liens created under the Loan Documents;
(b) Permitted Encumbrances;
(c) any Lien on any asset of the Company or any Subsidiary existing on the Restatement Effective Date and set forth on Schedule 7.02 (including any Lien that attaches by law to the proceeds thereof); provided that (i) such Lien shall not apply to any other property or
asset of the Company or any Subsidiary and (ii) such Lien shall secure only those obligations that it secures on the Restatement Effective Date or Refinancing Indebtedness in respect thereof;
(d) any Lien existing on any asset, including any Lien that attaches by law to the proceeds thereof, prior to the acquisition thereof by the Company or any Subsidiary or existing on any property or asset, including any Lien that attaches by law to the proceeds thereof, of any Person that becomes a Subsidiary or is merged or consolidated with the Company or any Subsidiary after the Restatement Effective Date prior to the time such Person becomes a Subsidiary or is so merged or consolidated securing Indebtedness of a type that would be permitted under Section 7.01(a)(vi) if incurred by a non-Loan Party Subsidiary of the Company; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition, merger or consolidation or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other asset of the Company or any Subsidiary and (iii) such Lien shall secure only those obligations that it secures on the date of such acquisition, merger or consolidation or the date such Person becomes a Subsidiary, as the case may be, or Refinancing Indebtedness in respect thereof;
(e) Liens on fixed or capital assets acquired, constructed or improved by the Company or any Subsidiary, including any Lien that attaches by law to the proceeds thereof; provided that (i) such Liens secure Indebtedness of a type that would be permitted by clause (a)(v) of Section 7.01 if incurred by a non-Loan Party Subsidiary of the Company, (ii) such Liens and the Indebtedness secured thereby are incurred prior to or within 180 days after such acquisition or the completion of such construction or improvement, (iii) the Indebtedness secured thereby does not exceed the cost of acquiring, constructing or improving such fixed or capital assets and any financing costs associated therewith and (iv) such Liens shall not apply to any other property or asset of the Company or any Subsidiary;
(f) in connection with the sale or transfer of all the Equity Interests in a Subsidiary in a transaction permitted hereunder, customary rights and restrictions contained in agreements relating to such sale or transfer pending the completion thereof;
(g) in the case of any Subsidiary that is not a wholly-owned Subsidiary, any put and call arrangements, drag-along and tag-along rights and obligations, and transfer restrictions related to its Equity Interests set forth in its organizational documents or any related joint venture or similar agreement;
(h) any Lien on assets of any Foreign Subsidiary; provided that such Lien shall secure only Indebtedness or other obligations of such Foreign Subsidiary, or any other Foreign Subsidiary organized under the laws of the same nation as such Foreign Subsidiary, permitted hereunder;
(i) Liens on cash, cash equivalents or marketable securities of the Company or any Subsidiary securing obligations of the Company or any Subsidiary under Swap Agreements permitted under Section 7.05;
(j) Liens in favor of Smithfield Insurance Co. Ltd. on assets of the Company and its Subsidiaries securing extensions of credit from Smithfield Insurance Co. Ltd. to the Company and its Subsidiaries in an aggregate principal amount not to exceed $150,000,000 at any time outstanding; and
(k) other Liens on assets securing Indebtedness or other obligations (including obligations with respect to any trade financing facility and any Securitization Transaction); provided that the aggregate amount of such Indebtedness and other obligations, plus, without duplication, the aggregate principal amount of Indebtedness of Subsidiaries that are not Loan Parties outstanding under Section 7.01(a)(xiv) at any time shall not exceed 12.5% of Consolidated Net Tangible Assets.
7.03 Fundamental Changes; Business Activities. (a) The Company will not, nor will it permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or transfer all or substantially all its assets to any Person, or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing, (i) any Subsidiary may merge into or transfer all or substantially all its assets to another Subsidiary, (ii) any Person acquired in a transaction not otherwise prohibited by this Agreement may merge into or consolidate with, or transfer all or substantially all its assets to, (x) any Subsidiary in a transaction in which the surviving or acquiring entity is a Subsidiary and (y) the Company in a transaction in which the surviving or acquiring entity is the Company, (iii) any special purpose Subsidiary formed for the purpose of effecting an acquisition and not conducting any business or holding assets other than de minimis assets may merge into or consolidate with any Person to be acquired in a transaction not otherwise prohibited by this Agreement, (iv) any Subsidiary may merge into or consolidate with or transfer all or substantially all its assets to any Person in a transaction permitted hereunder in which the surviving or acquiring entity is not a Subsidiary, (v) any Subsidiary may merge into or consolidate with or transfer all or substantially all its assets to the Company in a transaction in which the surviving or acquiring entity is the Company, and (vi) any Subsidiary may liquidate or dissolve if the Company determines in good faith that such liquidation or dissolution is in the best interests of the Company and is not materially disadvantageous to the Lenders.
(b) The Company will not, nor will it permit any Subsidiary to, engage, to any material extent, in any business other than (i) the production, marketing and distribution of food products, any related food or agricultural products, processes or business, the production, marketing and distribution of renewable fuels, neutraceuticals, biotech products and other renewable products (or by-products), any other business in which the Company or any Subsidiary was engaged on the Restatement Effective Date, and any business related, ancillary or complementary to the foregoing, (ii) transfers to and agreements with SPE Subsidiaries relating to Securitization Transactions and (iii) in the case of SPE Subsidiaries, Securitization Transactions and transactions incidental or related thereto.
7.04 [Reserved].
7.05 Swap Agreements. The Company will not, nor will it permit any Subsidiary to, enter into any Swap Agreement, except (a) Swap Agreements entered into to hedge or mitigate risks to which the Company or a Subsidiary has actual exposure and (b) Swap Agreements entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any current or anticipated interest-bearing liability, Indebtedness or investment of the Company or any Subsidiary; provided, that the Company may enter into put and call option agreements in order effectively to fix price ranges for the purchases of shares of the Company’s capital stock to be made pursuant to share repurchase programs approved by its board of directors.
7.06 Transactions with Affiliates. The Company will not, nor will it permit any Subsidiary to, sell, lease, license or otherwise transfer any assets to, or purchase, lease, license or otherwise acquire any assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) transactions in the ordinary course of business that are at prices and on terms and conditions not less favorable to the Company or such
Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among the Company and the Subsidiaries not involving any other Affiliate, (c) any Restricted Payment, (d) investments in joint ventures pursuant to transactions otherwise permitted by this Agreement or (e) compensation and indemnification of, and other employment arrangements with, directors, officers and employees of the Company or such Subsidiary entered in the ordinary course of business.
7.07 Restricted Payments. The Company will not, nor will it permit any of its Subsidiaries to, declare or make, directly or indirectly, any Restricted Payment except (a) the Company may declare and pay dividends with respect to its common stock payable solely in additional shares of its common stock, and, with respect to its Preferred Stock, payable solely in additional shares of such Preferred Stock or in shares of its common stock, (b) Subsidiaries may declare and pay dividends ratably with respect to their Equity Interests, (c) Restricted Payments not otherwise permitted under this Section 7.07 as long as with respect to any Restricted Payment made in reliance on this clause (c): (i) no Event of Default shall exist or result therefrom and (ii) the Dollar Equivalent amount of such Restricted Payment, together with the aggregate amount of all Restricted Payments made between the Original Closing Date and March 12, 2018 pursuant to Section 7.07(c) of the Original Credit Agreement, made between March 13, 2018 and May 21, 2021 pursuant to Section 7.07(c) of the Existing Credit Agreement or in reliance on this clause (c), shall not exceed an amount equal to the sum of (1) $950,000,000 plus (2) an aggregate amount equal to the sum of the following but in no event less than zero: (x) 50% of the positive Net Income of the Company and its Subsidiaries for each fiscal quarter ended after the Original Closing Date (commencing with the first fiscal quarter following the Original Closing Date) minus (y) 100% of the negative Net Income of the Company and its Subsidiaries for each fiscal quarter ended after the fiscal year ended on the Original Closing Date (commencing with the first fiscal quarter following the Original Closing Date) (which amount set forth in this clause (y) shall be expressed as a positive number for purposes of the calculation set forth in this clause (2)), (d) Restricted Payments not otherwise permitted under this Section 7.07 so long as with respect to any Restricted Payment made in reliance on this clause (d): (i) no Event of Default shall exist or result therefrom, (ii) the Company is in pro forma compliance with each of the Financial Covenants and (iii) the Company has received a Rating of greater than or equal to two of the following Ratings: BBB- (stable) or better from S&P, Baa3 (stable) or better from Moody’s or BBB- (stable) or better from Fitch, (e) Subsidiaries that are not Loan Parties may make Restricted Payments to any Subsidiaries and (f) Restricted Payments to any direct or indirect holder of Equity Interests of the Company or any Subsidiary in amounts required for such holder to pay consolidated, combined or similar foreign, U.S. federal, state, and/or local income and similar Taxes to the extent that such income and similar Taxes are attributable to the income of the Company and its Subsidiaries; provided, that in each case the amount of such payments with respect to any fiscal year does not exceed the amount that the Company and its Subsidiaries would have been required to pay in respect of such foreign, U.S. federal, state and/or local income and similar Taxes for such fiscal year had the Company and its Subsidiaries been a stand-alone taxpayer or stand-alone group (separate from any such holder) for all fiscal years ending after the Restatement Effective Date.
7.08 [Reserved].
7.09 [Reserved].
7.10 Consolidated Funded Debt to Consolidated Capitalization Ratio. The Company will not permit the ratio of (a) Consolidated Funded Debt to (b) Consolidated Capitalization to be greater than 0.50 to 1.00 on the last day of any fiscal quarter (such maximum ratio, the “Maximum Debt to Capitalization Ratio”); provided that, upon the consummation of any Material Acquisition and the written election of the Company to the Administrative Agent (which shall promptly notify the Lenders), the Maximum Debt to Capitalization Ratio set forth above shall increase to 0.55 to 1.00 with respect to the last day of the fiscal quarter during which such Material Acquisition shall have been consummated and the last day of each of the immediately following three consecutive fiscal quarters; provided, further, that, following the making of any election with respect to any such
Material Acquisition, the Company shall not be permitted to make another such election until and unless, after the last day of the fiscal quarter in which such Material Acquisition shall have been consummated, there shall have been at least two consecutive fiscal quarters as of the last day of which the Maximum Debt to Capitalization Ratio shall have been no more than 0.50 to 1.00.
7.11 Consolidated EBITDA to Consolidated Interest Expense. The Company will not permit the ratio of (a) Consolidated EBITDA for any period of four trailing fiscal quarters ended on the last day of any fiscal quarter to (b) Consolidated Interest Expense for such period to be less than 3.50:1.00.
ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES
8.01 Events of Default. Any of the following shall constitute an “Event of Default”:
(a) any Borrower shall fail to pay, in the currency required hereunder, any principal of any Loan or any reimbursement obligations in respect of any L/C Obligation when and as the same shall become due and payable;
(b) any Borrower shall fail to pay, in the currency required hereunder, any interest on any Loan or any fee or any other amount (other than an amount referred to in paragraph (a) of this Article) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five Business Days or more;
(c) any representation, warranty or statement made or deemed made by or on behalf of any Loan Party in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder, shall prove to have been incorrect in any material respect (or, in the case of any representation, warranty or statement qualified by materiality, in any respect) when made or deemed made;
(d) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in Section 6.02(a), 6.03 (with respect to any Loan Party’s existence), 6.08 or Article VII of this Agreement;
(e) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in paragraph (a), (b) or (d) of this Article), and, except as otherwise provided in such Loan Document, such failure shall continue unremedied for a period of 30 days after notice thereof from any Lender or the Administrative Agent to the Company;
(f) the Company or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness when and as the same shall become due and payable (or, if any grace periods shall be applicable, after the expiration of such grace periods);
(g) any event or condition occurs (including the triggering of any change in control or similar event with respect to the Company) that results in any Material Indebtedness (other than obligations in respect of Swap Agreements) becoming due prior to its scheduled maturity
or the effect of which default or other event or condition is to cause, or to permit the holder or holders of any Material Indebtedness (other than obligations in respect of Swap Agreements) (or a trustee or agent on behalf of such holder or holders) to cause such Indebtedness to become due prior to its scheduled maturity or to require, with the giving of notice if required, any Material Indebtedness (other than obligations in respect of Swap Agreements) to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), prior to its stated maturity, provided that this paragraph (g) shall not apply to secured Indebtedness that becomes due as a result of the sale, transfer or other disposition (including as a result of a casualty or condemnation event) of the property or assets securing such Indebtedness (to the extent such sale, transfer or other disposition is not prohibited under this Agreement); or there shall occur any event that constitutes a default, amortization event, event of termination or similar event under or in connection with any Securitization Transaction the obligations in respect of which constitute Material Indebtedness, or the Company or any Subsidiary shall fail to observe or perform any term, covenant, condition or agreement contained in or arising under any such Securitization Transaction, if, as a result of such event or failure, the lenders or purchasers thereunder or any agent acting on their behalf shall cause or be permitted to cause (with or without the giving of notice, the lapse of time or both) such Securitization Transaction or the commitments of the lenders or purchasers thereunder to terminate or cease to be fully available; or there occurs under any Swap Agreement an Early Termination Date (or similar term) (as defined in such Swap Agreement) resulting from any event of default under such Swap Agreement as to which the Company or any Subsidiary is the Defaulting Party (or similar term) (as defined in such Swap Agreement) and the Swap Termination Value owed by the Company or such Subsidiary as a result thereof is greater than $150,000,000;
(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) bankruptcy, liquidation, winding up, dissolution, reorganization, examination, suspension of general operations or other relief in respect of a Loan Party or any Material Subsidiary or its debts, or of a substantial part of their assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for a Loan Party or any Material Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed or unstayed for 90 days or more or an order or decree approving or ordering any of the foregoing shall be entered;
(i) any Loan Party or any Material Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in paragraph (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Loan Party or any Material Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;
(j) any Loan Party or any Material Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;
(k) one or more judgments for the payment of money in an aggregate amount in excess of $150,000,000 (to the extent not covered by insurance (other than deductibles); provided, that the insurer does not deny liability for the judgment) shall be rendered against any Loan Party, any Subsidiary or any combination thereof and the same shall remain unpaid or undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of any Loan Party or any Subsidiary to enforce any such judgment;
(l) (i) an ERISA Event with respect to a Plan or Multiemployer Plan or (ii) an event or condition with respect to a Foreign Plan shall have occurred that, either alone or when taken together with all other such ERISA Events or events that have occurred, is reasonably likely to have a Material Adverse Effect;
(m) Any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations and termination of the Commitments, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or
(n) a Change of Control shall occur.
8.02 Remedies Upon Event of Default. If any Event of Default occurs and is continuing, the Administrative Agent may, with the consent of, and shall, at the request of, the Required Lenders take any or all of the following actions:
(a) declare the commitment of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such commitments and obligation shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers;
(c) require that the Company Cash Collateralize the L/C Obligations (in an amount equal to the Minimum Collateral Amount with respect thereto).
(d) exercise on behalf of itself, the Lenders and the L/C Issuer all rights and remedies available to it, the Lenders and the L/C Issuer under the Loan Documents;
provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to any Borrower under the Bankruptcy Code of the United States, the obligation of each Lender to make Loans and any obligation of the L/C Issuer to make L/C Credit Extensions shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable, and the obligation of the Company to Cash
Collateralize the L/C Obligations as aforesaid shall automatically become effective, in each case without further act of the Administrative Agent or any Lender.
8.03 Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable and the L/C Obligations have automatically been required to be Cash Collateralized as set forth in the proviso to Section 8.02), any amounts received on account of the Obligations shall, subject to the provisions of Sections 2.16 and 2.17, be applied by the Administrative Agent in the following order:
First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;
Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders and the L/C Issuer (including fees, charges and disbursements of counsel to the respective Lenders and the L/C Issuer (including fees and time charges for attorneys who may be employees of any Lender or the L/C Issuer) and amounts payable under Article III), ratably among them in proportion to the respective amounts described in this clause Second payable to them;
Third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other Obligations, ratably among the Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Third payable to them;
Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans and L/C Borrowings, ratably among the Lenders and the L/C Issuer in proportion to the respective amounts described in this clause Fourth held by them;
Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations comprised of the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Company pursuant to Sections 2.03 and 2.16; and
Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Company or as otherwise required by Law.
Subject to Sections 2.03(c) and 2.16, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Fifth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.
ARTICLE IX.
ADMINISTRATIVE AGENT
9.01 Appointment and Authority. Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article (other than Sections 9.06 and 9.10) are solely for the benefit of the Administrative Agent, the Lenders and the L/C Issuer, and neither the Company nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions. It is understood and
agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.
9.02 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrowers or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders.
9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and
(c) shall not have any duty or responsibility to disclose, and shall not be liable for the failure to disclose, to any Lender, any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their Affiliates, that is communicated to, obtained or in the possession of, the Administrative Agent or any of its Related Parties in any capacity, except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent herein.
The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and non-appealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Company, a Lender or the L/C Issuer.
The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions of this Agreement relating to Competitors. Without limiting the generality of the foregoing, the Administrative Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether any Lender or Participant or prospective Lender or Participant is a Competitor or (y) have any liability with respect to or arising out of any assignment or participation of Loans, or disclosure of confidential information, to any Competitor.
9.04 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the Administrative Agent may presume that such condition is satisfactory to such Lender or the L/C Issuer unless the Administrative Agent shall have received notice to the contrary from such Lender or the L/C Issuer prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Company), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.
9.05 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
9.06 Resignation of Administrative Agent. (a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the L/C Issuer and the Company. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Company, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring
Administrative Agent may (but shall not be obligated to) on behalf of the Lenders and the L/C Issuer, appoint a successor Administrative Agent meeting the qualifications set forth above, provided that in no event shall any such successor Administrative Agent be a Defaulting Lender. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.
(b) If the Person serving as Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Company and such Person remove such Person as Administrative Agent and, in consultation with the Company, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date.
(c) With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the retiring or removed Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, (A) all payments and communications provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the L/C Issuer directly and (B) all determinations provided to be made by, to or through the Administrative Agent shall instead be made by the Required Lenders, in each case, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or removed) Administrative Agent (other than as provided in Section 3.01(g) and other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section) . The fees payable by the Company to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Company and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them (i) while the retiring or removed Administrative Agent was acting as Administrative Agent and (ii) after such resignation or removal for as long as any of them continues to act in any capacity hereunder or under the other Loan Documents, including (a) acting as collateral agent or otherwise holding any collateral security on behalf of any of the Lenders and (b) in respect of any actions taken in connection with transferring the agency to any successor Administrative Agent.
(d) Any resignation by Bank of America as Administrative Agent pursuant to this Section shall also constitute its resignation as L/C Issuer and Swing Line Lender. If Bank of America resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto, including the right to require the Lenders to make Base Rate Loans or fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c). Upon the appointment by the Company of a successor L/C Issuer or Swing Line Lender hereunder (which successor shall in all cases be a Lender other than a Defaulting Lender), (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as applicable, (b) the retiring L/C Issuer and Swing Line Lender shall be discharged from all of their respective duties and obligations hereunder or under the other Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.
9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender expressly acknowledges that the Administrative Agent has not made any representation or warranty to it, and that no act by the Administrative Agent hereafter taken, including any consent to, and acceptance of any assignment or review of the affairs of any Loan Party of any Affiliate thereof, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender as to any matter, including whether the Administrative Agent has disclosed material information in its (or their Related Parties’) possession. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent, any other Lender or any of their respective Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis of, appraisal of, and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Company hereunder. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, any other Lender or any of their respective Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties. Each Lender represents and warrants that (i) the Loan Documents set forth the terms of a commercial lending facility and (ii) it is engaged in making, acquiring or holding commercial loans in the ordinary course and is entering into this Agreement as a Lender for the purpose of making, acquiring or holding commercial loans and providing other facilities set forth herein as may be applicable to such Lender, and not for the purpose of purchasing, acquiring or holding any other type of financial instrument, and each Lender agrees not to assert a claim in contravention of the foregoing. Each Lender represents and warrants that it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Lender, and either it, or the Person exercising discretion in making its decision to make,
acquire and/or hold such commercial loans or to provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities.
9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the Bookrunners or Arrangers listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the L/C Issuer hereunder.
9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on any Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders, the L/C Issuer and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the L/C Issuer and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the L/C Issuer and the Administrative Agent under Sections 2.03(h) and (i), 2.09 and 10.04) allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender and the L/C Issuer to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders and the L/C Issuer, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.09 and 10.04.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or the L/C Issuer to authorize the Administrative Agent to vote in respect of the claim of any Lender or the L/C Issuer in any such proceeding.
9.10 Guaranty Matters. (a) Any Subsidiary Guarantor that (i) (A) ceases to be a Subsidiary of the Company, (B) is an Excluded Subsidiary (other than a Subsidiary Guarantor that is an Excluded Subsidiary pursuant to clause (c) of the definition thereof and, in the case of a Subsidiary Guarantor that becomes an Excluded Subsidiary after the Restatement Effective Date, solely to the extent that such Subsidiary Guarantor becomes an Excluded Subsidiary as a result of a transaction permitted under the Loan Documents) or (C) is not required to meet the “Subsidiary Guarantee Requirement” as set forth in the proviso to the definition thereof and (ii) does not Guarantee the Senior Notes (or any replacement, refinancing, refunding, renewal or extension thereof) or any Material Indebtedness of the Company or shall be released from any such Guarantee of the Senior Notes (or any replacement, refinancing, refunding, renewal or extension thereof) or any Material Indebtedness of
the Company concurrently with the effectiveness of the release contemplated by this Section 9.10 shall, upon written notice to the Administrative Agent, automatically and without further action by any other Person be released from its obligations under the Guaranty Agreement and, in connection with the foregoing, the Administrative Agent shall (and the Lenders and the L/C Issuer hereby irrevocably authorize the Administrative Agent to) promptly execute, deliver and file, as applicable, such documents, filings and other similar instruments as the Company may reasonably request to reflect such release. Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release any Subsidiary Guarantor from its obligations under the Guaranty Agreement pursuant to this Section 9.10.
(b) Upon request by the Administrative Agent, the Company shall provide a certificate signed by a Responsible Officer confirming that the conditions to release of any Subsidiary Guarantor set forth in clause (a) above are satisfied, and the Administrative Agent shall be fully protected in relying upon such certification.
9.11 Certain ERISA Matters. (a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is and will be true:
(i) such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement,
(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement,
(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or
(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.
(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in
accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent, the Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that none of the Administrative Agent, the Arrangers or any of their respective Affiliates is a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto).
9.12 Recovery of Erroneous Payments. Without limitation of any other provision in this Agreement, if at any time the Administrative Agent makes a payment hereunder in error to any Lender or the L/C Issuer (the “Credit Party”), whether or not in respect of an Obligation due and owing by the Borrower at such time, where such payment is a Rescindable Amount, then in any such event, each Credit Party receiving a Rescindable Amount severally agrees to repay to the Administrative Agent forthwith on demand the Rescindable Amount received by such Credit Party in immediately available funds in the currency so received, with interest thereon, for each day from and including the date such Rescindable Amount is received by it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. Each Credit Party irrevocably waives any and all defenses, including any “discharge for value” (under which a creditor might otherwise claim a right to retain funds mistakenly paid by a third party in respect of a debt owed by another) or similar defense to its obligation to return any Rescindable Amount. The Administrative Agent shall inform each Credit Party promptly upon determining that any payment made to such Credit Party comprised, in whole or in part, a Rescindable Amount. MISCELLANEOUS
10.01 Amendments, Etc. Subject to Section 3.03(b), no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Company or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Company or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:
(a) waive any condition set forth in Section 4.01(a) without the written consent of each Lender;
(b) except as contemplated pursuant to Section 2.15 and Section 2.18, extend or increase the Commitment of any Lender (or reinstate any Commitment terminated pursuant to Section 8.02) without the written consent of such Lender (it being understood and agreed that a waiver of any condition precedent set forth in Section 4.02 or of any Default is not considered an extension or increase in Commitments of any Lender);
(c) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document without the written consent of each Lender entitled to such payment; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Company to pay interest at the Default Rate;
(d) reduce the principal of, or the rate of interest specified herein on (subject to the last paragraph of this Section 10.01), any Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each Lender directly affected thereby; provided, however, that only the consent of the Required Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of any Borrower to pay interest or Letter of Credit Fees at the Default Rate;
(e) change Section 2.13 or Section 8.03 or any provision hereof in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender adversely affected thereby;
(f) amend Section 1.06 or the definition of “Alternative Currency” without the written consent of each Multicurrency Revolving Credit Lender;
(g) change (i) any provision of this Section or the definition of “Required Lenders” or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder (other than the definition specified in clause (ii)) without the written consent of each Lender or (ii) the definition of “Required Lenders” or “Required Facility Lenders” without the written consent of each Lender under the applicable Facility;
(h) [reserved];
(i) release all or substantially all of the value of the Guarantee provided by the Company or any Subsidiary Guarantor under the Guaranty Agreement without the written consent of each Lender, except in accordance with the terms hereof; or
(j) subordinate, or have the effect of subordinating, the Obligations hereunder to any other Indebtedness or other obligation without the prior written consent of each Lender directly affected thereby;
and, provided further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the L/C Issuer in addition to the Lenders required above, affect the rights or duties of the L/C Issuer under this Agreement or any Issuer Document relating to any Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless in writing and signed by the Swing Line Lender in addition to the Lenders required above, affect the rights or duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; (iv) the Fee Letters may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto and (v) Section 10.06(g) may not be amended, waived or otherwise modified without the consent of each Granting Lender all or any part of whose Loans are being funded by an SPC at the time of such amendment, waiver or other modification. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by
its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.
Notwithstanding anything to the contrary herein, if the Administrative Agent and the Company have jointly identified any ambiguity, mistake, defect, inconsistency, obvious error, omission or any other error or omission of a technical nature or any necessary or desirable technical change on any Lender, in each case, in any provision of any Loan Document, the Company and the Administrative Agent shall be permitted to effect amendments to this Agreement or any other Loan Document, as applicable, solely to address such matter and such amendment shall become effective without the consent of any other party to this Agreement so long as, in each case, the Lenders shall have received at least five (5) Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five (5) Business Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating that the Required Lenders object to such amendment.
Notwithstanding anything to the contrary in this Section 10.01, the Administrative Agent and the Company may, without the consent of any Lender, (x) enter into amendments or modifications to this Agreement or any of the other Loan Documents or (y) enter into additional Loan Documents, in each case, as the Administrative Agent reasonably deems appropriate in order to implement any Term SOFR Successor Rate or Eurocurrency Successor Rate or otherwise effectuate the terms of Section 3.03 in accordance with the terms of Section 3.03.
10.02 Notices; Effectiveness; Electronic Communication. (a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(i) if to the Company or any other Loan Party, the Administrative Agent, the L/C Issuer or the Swing Line Lender, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 10.02; and
(ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Company).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b).
(b) Electronic Communications. Notices and other communications to the Lenders and the L/C Issuer hereunder may be delivered or furnished by electronic communication (including e-mail, FpML messaging, and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the L/C Issuer pursuant to Article II if such Lender or
the L/C Issuer, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent, the Swing Line Lender, the L/C Issuer or the Company may each, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to any Borrower, any Lender, the L/C Issuer or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Company’s, any Loan Party’s or the Administrative Agent’s transmission of Borrower Materials or notices through the platform, any other electronic platform or electronic messaging service, or through the Internet.
(d) Change of Address, Etc. Each of the Borrowers, the Administrative Agent, the L/C Issuer and the Swing Line Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, facsimile or telephone number for notices and other communications hereunder by notice to the Company, the Administrative Agent, the L/C Issuer and the Swing Line Lender. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United
States Federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Company or its securities for purposes of United States Federal or state securities laws.
(e) Reliance by Administrative Agent, L/C Issuer and Lenders. The Administrative Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any notices (including telephonic notices, Committed Loan Notices, Letter of Credit Applications and Swing Line Loan Notices) purportedly given by or on behalf of any Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Loan Parties shall indemnify the Administrative Agent, the L/C Issuer, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of any Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.
10.03 No Waiver; Cumulative Remedies; Enforcement. No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders and the L/C Issuer; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) the L/C Issuer or the Swing Line Lender from exercising the rights and remedies that inure to its benefit (solely in its capacity as L/C Issuer or Swing Line Lender, as the case may be) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 10.08 (subject to the terms of Section 2.13), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 2.13, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
10.04 Expenses; Indemnity; Damage Waiver. (a) Costs and Expenses. The Company shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, the Arrangers and their respective Affiliates (but in the case of attorneys’ fees, limited to the reasonable fees, charges and disbursements of one counsel for the Administrative Agent and the Arrangers, taken as a whole, and of one local counsel for the
Administrative Agent and the Arrangers, taken as a whole, in each material local jurisdiction), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, the Arrangers, any Lender or the L/C Issuer (but in the case of attorneys’ fees, limited to the reasonable and documented fees, charges and disbursements of one counsel for the Administrative Agent, the Lenders and the L/C Issuer, taken as a whole, and of one local counsel in each material local jurisdiction (and, in the case of an actual conflict of interest, one additional counsel in each material jurisdiction to all affected persons, taken as a whole)) (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such reasonable and documented out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.
(b) Indemnification by the Company. The Company shall indemnify the Administrative Agent (and any sub-agent thereof), each Arranger, each Lender and the L/C Issuer, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against (and reimburse each Indemnitee as the same are incurred for), and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and expenses (but in the case of attorneys’ fees, limited to the reasonable fees, charges and disbursements of one primary counsel for the Indemnitees (taken as a whole) (and, if necessary, one local counsel in each material jurisdiction for the Indemnitees (taken as a whole) and, solely in the case of a conflict of interest, one additional counsel as necessary to the Indemnitees actually affected by such conflict (taken as a whole))), and shall indemnify and hold harmless each Indemnitee from all reasonable fees and time charges and disbursements incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Company or any other Loan Party) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder, the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), or (iii) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned, leased or operated by any Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to any Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Company or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from (A) the bad faith, gross negligence or willful misconduct of such Indemnitee, (B) a material breach by such
Indemnitee of its obligations under this Agreement or (C) any dispute among Indemnitees (or their respective Related Parties), excluding the Administrative Agent, the Arrangers or Persons acting in similar capacities, that does not involve an act or omission by the Company or any of its Subsidiaries. This Section 10.04(b) shall not apply with respect to Taxes, which shall be covered solely by Section 3.01.
(c) Reimbursement by Lenders. To the extent that the Company for any reason fails to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof), the L/C Issuer, the Swing Line Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the L/C Issuer, the Swing Line Lender or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Total Revolving Credit Outstandings at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them based on such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), provided further that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), the L/C Issuer or the Swing Line Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent), the L/C Issuer or the Swing Line Lender in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.12(d).
(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, no party shall assert, and each party hereby waives, and acknowledges that no other Person shall have, any claim against any other party, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages), including for contribution or any other rights of recover under or related to Environmental Laws, arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof; provided that nothing in this Section 10.04(d) shall limit the indemnification obligations of the Borrower under Section 10.04(b) to the extent such special, indirect, consequential or punitive damages are included in any third party claim in connection with which such Indemnitee is entitled to indemnification hereunder. No party referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such party through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby, except to the extent that such damages are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the bad faith, gross negligence or willful misconduct of, or material breach of this Agreement by, such party.
(e) Payments. All amounts due under this Section shall be payable no later than ten (10) Business Days after demand therefor (or, on the Restatement Effective Date, as applicable).
(f) Survival. The agreements in this Section and the indemnity provisions of Section 10.02(e) shall survive the resignation of the Administrative Agent, the L/C Issuer and the Swing Line Lender, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.
10.05 Payments Set Aside. To the extent that any payment by or on behalf of any Borrower is made to the Administrative Agent, the L/C Issuer or any Lender, or the Administrative Agent, the L/C Issuer or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent, the L/C Issuer or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender and the L/C Issuer severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Overnight Rate from time to time in effect, in the applicable currency of such recovery or payment. The obligations of the Lenders and the L/C Issuer under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.
10.06 Successors and Assigns. (a) Successors and Assigns Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that neither the Company nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (e) of this Section or (iv) to an SPC in accordance with the provisions of subsection (g) of this Section 10.06 (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans (including for purposes of this subsection (b), participations in L/C Obligations and in Swing Line Loans) at the time owing to it); provided that (in each case with respect to any Facility) any such assignment shall be subject to the following conditions:
(i) Minimum Amounts.
(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment (in each case with respect to any Facility) or contemporaneous assignments to related Approved Funds (determined after giving effect to such Assignments) that equal at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate and the Loans
at the time owing to it under such Facility or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(B) in any case not described in subsection (b)(i)(A) of this Section, the aggregate amount of the Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000, in the case of any assignment in respect of the Revolving Credit Facility, unless each of the Administrative Agent and, so long as no Event of Default under Section 8.01(a), (b), (h), (i) or (j) has occurred and is continuing, the Company otherwise consents (each such consent not to be unreasonably withheld or delayed).
(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned, except that this clause (ii) shall not (A) apply to the Swing Line Lender’s rights and obligations in respect of Swing Line Loans or (B) prohibit any Lender from assigning all or a portion of its rights and obligations among the revolving credit facility provided hereunder and any separate revolving credit facilities provided pursuant to the last paragraph of Section 10.01 on a non-pro rata basis;
(iii) Required Consents. No consent shall be required for any assignment except to the extent required by subsection (b)(i)(B) of this Section and, in addition:
(A) the consent of the Company (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default under Section 8.01(a), (b), (h), (i) or (j) has occurred and is continuing at the time of such assignment or (2) such assignment is to (1) a Lender, (2) an Affiliate of a Lender or (3) an Approved Fund, unless such Approved Fund has a lower credit rating, or is otherwise less creditworthy than, the assigning Lender; provided that the Company shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within ten Business Days after having received notice thereof;
(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for any assignment in respect of any Revolving Credit Commitment if such assignment is to a Person that is not a Lender under the Revolving Credit Facility, respectively, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and
(C) the consent of the L/C Issuer and the consent of the Swing Line Lender (such consents not to be unreasonably withheld or delayed) shall be required for any assignment in respect of the US Dollar Revolving Credit Facility.
(iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(v) No Assignment to Certain Persons. No such assignment shall be made (A) to the Company or any of the Company’s Affiliates or Subsidiaries, (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B), (C) to a natural Person (or to a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural Person) or (D) to a Competitor.
(vi) Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Company and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent, the L/C Issuer or any Lender hereunder (and interest accrued thereon) and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit and Swing Line Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Upon request, each Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.
(c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrowers (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrowers, the Administrative Agent and the
Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(d) Participations. Any Lender may at any time, without the consent of, or notice to, any Borrower, the Administrative Agent, the L/C Issuer or the Swing Line Lender, sell participations to any Person (other than a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural Person, a Defaulting Lender or the Company or any of the Company’s Affiliates or Subsidiaries or, to the extent the Competitor List has been posted on the Platform for all Lenders, a Competitor) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans (including such Lender’s participations in L/C Obligations and/or Swing Line Loans) owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Lenders and the L/C Issuer shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 10.04(c) without regard to the existence of any participation.
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 10.01 that affects such Participant. The Company agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to subsection (b) of this Section (it being understood that the documentation required under Section 3.01(e) shall be delivered to the Lender who sells the participation) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 3.06 and 10.13 as if it were an assignee under paragraph (b) of this Section and (B) shall not be entitled to receive any greater payment under Sections 3.01 or 3.04, with respect to any participation, than the Lender from whom it acquired the applicable participation would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Company’s request and expense, to use reasonable efforts to cooperate with the Company to effectuate the provisions of Section 3.06 with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.13 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Company, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such
commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
Notwithstanding anything in this paragraph to the contrary, any Farm Credit Lender that (a) has purchased a participation or subparticipation in the minimum amount of $10,000,000 on or after the Restatement Effective Date, (b) is, by written notice to the Company and the Administrative Agent (“Voting Participant Notification”), designated by the selling Lender as being entitled to be accorded the rights of a Voting Participant hereunder (any Farm Credit Lender so designated, a “Voting Participant”) and (c) receives the prior written consent of the Company (unless an Event of Default has occurred and is continuing) and the Administrative Agent to become a Voting Participant, shall be entitled to vote (and the voting rights of the selling Lender shall be correspondingly reduced), on a dollar for dollar basis, as if such participant were a Lender, on any matter requiring or allowing a Lender to provide or withhold its consent, or to otherwise vote on any proposed action. To be effective, each Voting Participant Notification shall, with respect to any Voting Participant, (i) state the full name, as well as all contact information required of an assignee as set forth in Exhibit E-1 hereto and (ii) state the dollar amount of the participation or sub-participation purchased. The selling Lender and the Voting Participant shall promptly notify the Administrative Agent and the Company of any termination of, or reduction or increase in the amount of, the participation interests held by a Voting Participant. Except as provided above in this paragraph, no sub-participants shall be entitled to become “Voting Participants.” The voting rights of a Voting Participant hereunder are solely for the benefit of the Voting Participant and shall not inure to any assignee or sub-participant of a Voting Participant.” The Company and the Administrative Agent shall be entitled to conclusively rely on information contained in notices delivered pursuant to this paragraph.
(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any other central banking authority having jurisdiction over such Lender; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
(f) Resignation as L/C Issuer or Swing Line Lender after Assignment. Notwithstanding anything to the contrary contained herein, if at any time Bank of America assigns all of its Revolving Credit Commitment and Revolving Credit Loans pursuant to subsection (b) above, Bank of America may, (i) upon 30 days’ notice to the Company and the Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Company, resign as Swing Line Lender. In the event of any such resignation as L/C Issuer or Swing Line Lender, the Company shall be entitled to appoint from among the Lenders a successor L/C Issuer or Swing Line Lender hereunder; provided, however, that no failure by the Company to appoint any such successor shall affect the resignation of Bank of America as L/C Issuer or Swing Line Lender, as the case may be. If Bank of America resigns as L/C Issuer, it shall retain all the rights, powers, privileges and duties of the L/C Issuer hereunder with respect to all Letters of Credit outstanding as of the effective date of its resignation as L/C Issuer and all L/C Obligations with respect thereto (including the right to require the Lenders to make Base Rate Committed Loans or fund risk participations in Unreimbursed
Amounts pursuant to Section 2.03(c)). If Bank of America resigns as Swing Line Lender, it shall retain all the rights of the Swing Line Lender provided for hereunder with respect to Swing Line Loans made by it and outstanding as of the effective date of such resignation, including the right to require the Lenders to make Base Rate Committed Loans or fund risk participations in outstanding Swing Line Loans pursuant to Section 2.04(c). Upon the appointment of a successor L/C Issuer and/or Swing Line Lender, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring L/C Issuer or Swing Line Lender, as the case may be, and (b) the successor L/C Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to Bank of America to effectively assume the obligations of Bank of America with respect to such Letters of Credit.
(g) Special Purpose Funding Vehicles. Notwithstanding anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to the Administrative Agent and the Company (an “SPC”) the option to provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof or, if it fails to do so, to make such payment to the Administrative Agent as is required under Section 2.12(b). Each party hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise increase or change the obligations of any Borrower under this Agreement (including its obligations under Section 3.04), (ii) the Granting Lender (but not any SPC) shall remain liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Loan Document, remain the lender of record hereunder. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not institute against, or join any other Person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding anything to the contrary contained herein, any SPC may with notice to, but without prior consent of the Company and the Administrative Agent and with the payment of a processing fee in the amount of $3,500 (which processing fee may be waived by the Administrative Agent in its sole discretion), assign all or any portion of its right to receive payment with respect to any Loan to the Granting Lender.
(h) Assignments to Competitors. (i) If any assignment is made to any Competitor without the Company’s prior consent, the Company may, at its sole expense and effort, upon notice to the applicable Competitor and the Administrative Agent, (A) terminate any Commitment of such Competitor and repay all obligations of the Company owing to such Competitor in connection with such Commitment and/or (B) require such Competitor to
assign and delegate, without recourse (in accordance with and subject to the restrictions contained in this Section 10.06), all of its interest, rights and obligations under this Agreement and related Loan Documents to an Eligible Assignee that shall assume such obligations at the lesser of (x) the committed amount thereof and (y) the amount that such Competitor paid to acquire such interests, rights and obligations, in each case plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to it hereunder and other the other Loan Documents; provided that (i) the Company shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 10.06(b) and (ii) such assignment does not conflict with Applicable Laws.
(ii) The Administrative Agent shall have the right, and the Company hereby expressly authorizes the Administrative Agent, to (A) post the list of Competitors provided by the Company and any updates thereto from time to time (collectively, the “Competitor List”) on the Platform, including that portion of the Platform that is designated for “public side” Lenders or (B) provide the Competitor List to each Lender requesting the same.
10.07 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent, the Arrangers, Lenders and the L/C Issuer agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates, its auditors and its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal or administrative process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, including for purposes of establishing a “due diligence” defense, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement or any Eligible Assignee invited to be a Lender pursuant to Section 2.15(c) or Section 10.01 or (ii) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to any of the Borrowers and their obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating the Company or its Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the consent of the Company, (i) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, any Lender, the L/C Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than the Company, (j) to the extent such information was received by the Administrative Agent or the Arrangers from a third-party that is not to the Administrative Agent or the Arrangers’ knowledge subject to confidentiality restrictions to the Company or (k) to the extent that such Information is independently developed by Bank of America or the Arrangers. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Agents and the Lenders in connection with the administration of this Agreement, the other Loan Documents, and the Commitments.
For purposes of this Section, “Information” means all information received from the Company or any Subsidiary relating to the Company or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the L/C Issuer on a
nonconfidential basis prior to disclosure by the Company or any Subsidiary, provided that, in the case of information received from the Company or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges that (a) the Information may include material non-public information concerning the Company or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable Law, including United States Federal and state securities Laws.
10.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each Lender, the L/C Issuer and each of their respective Affiliates is hereby authorized at any time and from time to time, after obtaining the prior written consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed), to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the L/C Issuer or any such Affiliate to or for the credit or the account of the Company or any other Loan Party against any and all of the obligations of the Company or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender or the L/C Issuer or their respective Affiliates, irrespective of whether or not such Lender, L/C Issuer or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Company or such Loan Party may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender or the L/C Issuer different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.17 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the L/C Issuer and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, the L/C Issuer and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the L/C Issuer or their respective Affiliates may have. Each Lender and the L/C Issuer agrees to notify the Company and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.
10.09 Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Company. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement, the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent or the L/C Issuer, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement.
10.11 Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Credit Extension, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.
10.12 Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable,(a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section 10.12, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, the L/C Issuer or the Swing Line Lender, as applicable, then such provisions shall be deemed to be in effect only to the extent not so limited.
10.13 Replacement of Lenders. If the Company is entitled to replace a Lender pursuant to the provisions of Section 3.06, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, then the Company may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06), all of its interests, rights (other than its existing rights to payments pursuant to Sections 3.01 and 3.04) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:
(a) the Company shall have paid (or caused a Designated Borrower to pay) to the Administrative Agent the assignment fee (if any) specified in Section 10.06(b);
(b) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and L/C Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Company or applicable Designated Borrower (in the case of all other amounts);
(c) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter;
(d) such assignment does not conflict with applicable Laws; and
(e) in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Company to require such assignment and delegation cease to apply.
Each party hereto agrees that (a) an assignment required pursuant to this Section 10.13 may be effected pursuant to an Assignment and Assumption executed by the Company, the Administrative Agent and the assignee and (b) the Lender required to make such assignment need not be a party thereto in order for such assignment to be effective and shall be deemed to have consented to and be bound by the terms thereof; provided that, following the effectiveness of any such assignment, the other parties to such assignment agree to execute and deliver such documents necessary to evidence such assignment as reasonably requested by the applicable Lender; provided, further that any such documents shall be without recourse to or warranty by the parties thereto.
10.14 Governing Law; Jurisdiction; Etc. (a) GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b) SUBMISSION TO JURISDICTION. THE COMPANY AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT WILL NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER, THE L/C ISSUER, OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT
IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE COMPANY OR ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c) WAIVER OF VENUE. THE COMPANY AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS; PROCESS AGENT. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Company and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Arrangers and the Lenders are arm’s-length commercial transactions between the Company, each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent, the Arrangers and the Lenders, on the other hand, (B) each of the Company and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Company and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent, the Arrangers and each Lender is and has been acting solely as a principal and, except as
expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Company, any other Loan Party or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent, the Arrangers nor any Lender has any obligation to the Company, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Arrangers and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent, the Arrangers nor any Lender has any obligation to disclose any of such interests to the Company, any other Loan Party or any of their respective Affiliates. Each of the Company and the other Loan Parties hereby agrees that it will not claim that any of the Administrative Agent, the Arrangers, any Lender and any of their respective Affiliates has rendered advisory services of any nature or respect or owes a fiduciary duty or similar duty to it in connection with any aspect of any transaction contemplated hereby.
10.17 Electronic Execution of Agreement Communications. This Agreement and any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization related to this Agreement (each an “Agreement Communication”), including Agreement Communications required to be in writing, may be in the form of an Electronic Record and may be executed using Electronic Signatures. Each of the Loan Parties agrees that any Electronic Signature on or associated with any Agreement Communication shall be valid and binding on each of the Loan Parties to the same extent as a manual, original signature, and that any Agreement Communication entered into by Electronic Signature will constitute the legal, valid and binding obligation of each of the Loan Parties enforceable against such Loan Party in accordance with the terms thereof to the same extent as if a manually executed original signature was delivered. Any Agreement Communication may be executed in as many counterparts as necessary or convenient, including both paper and electronic counterparts, but all such counterparts are one and the same Agreement Communication. For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the Administrative Agent and each of the Lenders of a manually signed paper Agreement Communication which has been converted into electronic form (such as scanned into PDF format), or an electronically signed Agreement Communication converted into another format for transmission, delivery and/or retention. The Administrative Agent and each of the Lenders may, at its option, create one or more copies of any Agreement Communication in the form of an imaged Electronic Record (“Electronic Copy”), which shall be deemed created in the ordinary course of the such Person’s business, and destroy the original paper document. All Agreement Communications in the form of an Electronic Record, including an Electronic Copy, shall be considered an original for all purposes, and shall have the same legal effect, validity and enforceability as a paper record. Notwithstanding anything contained herein to the contrary, the Administrative Agent is under no obligation to accept an Electronic Signature in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it; provided, without limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept such Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on any such Electronic Signature purportedly given by or on behalf of any Loan party without further verification and (ii) upon the request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by such manually executed counterpart. For purposes hereof, “Electronic Record” and “Electronic Signature” shall have the meanings assigned to them, respectively, by 15 USC §7006, as it may be amended from time to time.
10.18 USA PATRIOT Act. Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of each Borrower and other information that will allow such Lender or the Administrative Agent, as applicable, to identify such Borrower in accordance with the Act. Each Borrower shall,
promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.
10.19 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of each Borrower in respect of any such sum due from it to the Administrative Agent or any Lender hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than that in which such sum is denominated in accordance with the applicable provisions of this Agreement (the “Agreement Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Lender, as the case may be, of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Lender, as the case may be, may in accordance with normal banking procedures purchase the Agreement Currency with the Judgment Currency. If the amount of the Agreement Currency so purchased is less than the sum originally due to the Administrative Agent or any Lender from any Borrower in the Agreement Currency, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Lender, as the case may be, against such loss. If the amount of the Agreement Currency so purchased is greater than the sum originally due to the Administrative Agent or any Lender in such currency, the Administrative Agent or such Lender, as the case may be, agrees to return the amount of any excess to such Borrower (or to any other Person who may be entitled thereto under applicable law).Entire Agreement. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
10.21 Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Solely to the extent any Lender or L/C Issuer that is an Affected Financial Institution is a party to this Agreement and notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender or L/C Issuer that is an Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender or L/C Issuer that is an Affected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution Authority.
10.22 Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any Swap Agreement or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(a) In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
(b) As used in this Section 10.22, the following terms have the following meanings:
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
10.23 Amendment and Restatement. On the Restatement Effective Date, this Agreement shall amend and restate the Existing Credit Agreement in its entirety, and the rights and obligations of the parties hereto evidenced by the Existing Credit Agreement shall be evidenced by this Agreement and the other Loan Documents. Substantially concurrently with the Restatement Effective Date, (i) all of the Commitments (as defined in the Existing Credit Agreement) of each Lender that is a party to the Existing Credit Agreement but is
not a party to this Agreement (an “Exiting Lender”) will be terminated, all outstanding Obligations (as defined in the Existing Credit Agreement) owing to the Exiting Lenders shall be repaid in full and each Exiting Lender will cease to be a “Lender” under the Existing Credit Agreement and shall not be a Lender under this Agreement, (ii) each Person listed on Schedule 2.01 to this Agreement shall be a Lender under this Agreement with the Commitments set forth opposite its name on Schedule 2.01 and (iii) any Loans to be made on the Restatement Effective Date shall be made in accordance with the Commitments set forth on Schedule 2.01. The parties hereto acknowledge that pursuant to the Existing Credit Agreement, the Parent Guaranty Agreement, dated as of February 17, 2017, between WH Group and the Administrative Agent was terminated and is of no further force and effect and WH Group was released from its obligations thereunder and under any other Loan Document.
Exhibit 10.4
Execution Version
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FIFTH AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT DATED AS OF DECEMBER 22, 2022 AMONG SMITHFIELD RECEIVABLES FUNDING LLC, AS BORROWER, SMITHFIELD FOODS, INC., AS SERVICER, THE LENDERS, L/C PARTICIPANTS AND CO-AGENTS FROM TIME TO TIME PARTY HERETO, COÖPERATIEVE RABOBANK U.A., NEW YORK BRANCH, AS A LETTER OF CREDIT ISSUER, PNC BANK, NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT AND A LETTER OF CREDIT ISSUER, AND PNC CAPITAL MARKETS LLC, AS STRUCTURING AGENT |
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| ARTICLE I. THE ADVANCES | 2 |
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| Section 1.1. | Credit Facility. | 2 |
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| Section 1.2. | Increases | 3 |
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| Section 1.3. | Decreases | 4 |
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| Section 1.4. | Deemed Collections; Borrowing Limit. | 4 |
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| Section 1.5. | Payment Requirements | 5 |
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| Section 1.6. | Advances; Ratable Loans; Funding Mechanics; Liquidity Fundings. | 5 |
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| Section 1.7. | Letters of Credit | 6 |
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| Section 1.8. | Issuance of Letters of Credit. | 6 |
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| Section 1.9. | Requirements For Issuance of Letters of Credit | 7 |
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| Section 1.10. | Disbursements, Reimbursement. | 7 |
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| Section 1.11. | Repayment of Participation Advances. | 9 |
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| Section 1.12. | Documentation. | 10 |
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| Section 1.13. | Determination to Honor Drawing Request. | 10 |
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| Section 1.14. | Nature of Participation and Reimbursement Obligations. | 10 |
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| Section 1.15. | Indemnity. | 12 |
| | | |
| Section 1.16. | Liability for Acts and Omissions. | 13 |
| | | |
| Section 1.17. | Letter of Credit Fees. | 14 |
| | | |
| Section 1.18. | Benchmark Replacement Notification | 14 |
| | | |
| ARTICLE II. PAYMENTS AND COLLECTIONS | 15 |
| | | |
| Section 2.1. | Payments | 15 |
| | | |
| Section 2.2. | Collections Prior to the Commitment Termination Date | 15 |
| | | |
| Section 2.3. | Collections Following the Commitment Termination Date | 16 |
| | | |
| Section 2.4. | Payment Rescission | 17 |
| | | |
| ARTICLE III. CONDUIT FUNDING | 17 |
| | | |
| Section 3.1. | CP Costs | 17 |
| | | |
| Section 3.2. | Calculation of CP Costs | 17 |
| | | |
| Section 3.3. | CP Costs Payments | 17 |
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TABLE OF CONTENTS
(continued)
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| | | Page |
| | | |
| Section 3.4. | Default Rate | 17 |
| | | |
| ARTICLE IV. COMMITTED LENDER FUNDING | 17 |
| | | |
| Section 4.1. | Committed Lender Funding | 17 |
| | | |
| Section 4.2. | Interest Payments | 18 |
| | | |
| Section 4.3. | Committed Lender Interest Rates. | 18 |
| | | |
| Section 4.4. | Daily 1M SOFR, Term SOFR Rate or Adjusted Federal Funds Rate Unascertainable; Increased Costs; Illegality. | 19 |
| | | |
| Section 4.5. | Benchmark Replacement Setting. | 20 |
| | | |
| Section 4.6. | Default Rate. From and after the occurrence of an Event of Default, all Liquidity Fundings shall accrue Interest at the Default Rate. | 25 |
| | | |
| ARTICLE V. REPRESENTATIONS AND WARRANTIES | 25 |
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| Section 5.1. | Representations and Warranties of the Loan Parties | 25 |
| | | |
| ARTICLE VI. CONDITIONS OF ADVANCES | 31 |
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| Section 6.1. | Conditions Precedent to Initial Advance | 31 |
| | | |
| Section 6.2. | Conditions Precedent to All Advances and L/C Credit Extensions | 31 |
| | | |
| ARTICLE VII. COVENANTS | 32 |
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| Section 7.1. | Affirmative Covenants of the Loan Parties | 32 |
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| Section 7.2. | Negative Covenants of the Loan Parties | 42 |
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| Section 7.3. | Restructuring Transactions. | 45 |
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| ARTICLE VIII. ADMINISTRATION AND COLLECTION | 45 |
| | | |
| Section 8.1. | Designation of Servicer. | 45 |
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| Section 8.2. | Duties of Servicer. | 45 |
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| Section 8.3. | Collection Notices | 47 |
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| Section 8.4. | Responsibilities of Borrower | 47 |
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| Section 8.5. | Pool Reports | 47 |
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| Section 8.6. | Servicing Fee | 48 |
| | | |
| ARTICLE IX. EVENTS OF DEFAULT | 48 |
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| Section 9.1. | Events of Default | 48 |
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| Section 9.2. | Remedies | 51 |
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TABLE OF CONTENTS
(continued)
| | | | | | | | | | | |
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| | | |
| ARTICLE X. INDEMNIFICATION | 52 |
| | | |
| Section 10.1. | Indemnities by the Loan Parties | 52 |
| | | |
| Section 10.2. | Increased Cost and Reduced Return | 55 |
| | | |
| Section 10.3. | Other Costs and Expenses | 58 |
| | | |
| ARTICLE XI. THE AGENTS | 58 |
| | | |
| Section 11.1. | Authorization and Action. | 58 |
| | | |
| Section 11.2. | Delegation of Duties | 59 |
| | | |
| Section 11.3. | Exculpatory Provisions | 59 |
| | | |
| Section 11.4. | Reliance by Agents. | 60 |
| | | |
| Section 11.5. | Non-Reliance on Other Agents and Other Lenders | 61 |
| | | |
| Section 11.6. | Reimbursement and Indemnification | 61 |
| | | |
| Section 11.7. | Agents in their Individual Capacities | 61 |
| | | |
| Section 11.8. | Conflict Waivers | 61 |
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| Section 11.9. | UCC Filings | 62 |
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| Section 11.10. | Successor Administrative Agent and Letter of Credit Issuer | 62 |
| | | |
| ARTICLE XII. ASSIGNMENTS; PARTICIPATIONS | 65 |
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| Section 12.1. | Assignments. | 65 |
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| Section 12.2. | Participations | 69 |
| | | |
| Section 12.3. | Register | 70 |
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| Section 12.4. | Federal Reserve and Security Trustee | 70 |
| | | |
| ARTICLE XIII. SECURITY INTEREST | 70 |
| | | |
| Section 13.1. | Grant of Security Interest | 70 |
| | | |
| Section 13.2. | Termination after Final Payout Date | 71 |
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| ARTICLE XIV. MISCELLANEOUS | 71 |
| | | |
| Section 14.1. | Waivers and Amendments. | 71 |
| | | |
| Section 14.2. | Notices | 72 |
| | | |
| Section 14.3. | Ratable Payments | 73 |
| | | |
| Section 14.4. | Protection of Administrative Agent’s Security Interest. | 73 |
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| Section 14.5. | Confidentiality. | 74 |
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TABLE OF CONTENTS
(continued)
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| Section 14.6. | Bankruptcy Petition | 75 |
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| Section 14.7. | Limitation of Liability | 75 |
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| Section 14.8. | Choice of Law | 76 |
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| Section 14.9. | Consent to Jurisdiction | 76 |
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| Section 14.10. | Waiver of Jury Trial | 77 |
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| Section 14.11. | Integration; Binding Effect; Survival of Terms. | 77 |
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| Section 14.12. | Counterparts; Severability; Section References | 77 |
| | | |
| Section 14.13. | Acknowledgement and Consent to Bail-In of EEA Financial Institutions | 78 |
| | | |
| Section 14.14. | Patriot Act | 78 |
| | | |
| Section 14.15. | Amendment and Restatement | 78 |
EXHIBITS AND SCHEDULES
| | | | | |
| Exhibit I | Definitions |
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| Exhibit II-A | Form of Borrowing Notice |
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| Exhibit II-B | Form of Reduction Notice |
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| Exhibit III | Places of Business of the Loan Parties and the Performance Guarantor; Locations of Records; Federal Employer Identification Number(s) |
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| Exhibit IV | Form of Compliance Certificate |
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| Exhibit V | Form of Assignment Agreement |
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| Exhibit VI-A | Form of Monthly Report |
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| Exhibit VI-B | Form of Weekly Report |
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| Exhibit VII | Form of Performance Undertaking |
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| Exhibit VIII-A | Form of Letter of Credit Application (PNC) |
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| Exhibit VIII-B | Form of Letter of Credit Application (Rabobank) |
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| Exhibit IX | Existing Letters of Credit |
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| Schedule A | Commitments |
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| Schedule B | Closing Documents |
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| Schedule C | Lender Supplement |
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| Schedule D | Account Details |
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| Schedule E | Permitted Monetization Obligors |
FIFTH AMENDED AND RESTATED
CREDIT AND SECURITY AGREEMENT
THIS FIFTH AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT, dated as of December 22, 2022 is entered into by and among Smithfield Receivables Funding LLC, a Delaware limited liability company (“Borrower”), Smithfield Foods, Inc., a Virginia corporation (“Smithfield”), as initial servicer (the “Servicer” together with Borrower, the “Loan Parties” and each, a “Loan Party”), PNC Bank, National Association (“PNC”), in its capacity as administrative agent for the Lenders hereunder or any successor administrative agent hereunder (the “Administrative Agent” collectively with the Administrative Agent and Co-Agents, the “Agents”) and in its capacity as a letter of credit issuer hereunder, Coöperatieve Rabobank U.A., New York Branch (“Rabobank”), in its capacity as a letter of credit issuer (together with PNC in such capacity, the “Letter of Credit Issuers” and each, a “Letter of Credit Issuer”), PNC Capital Markets LLC, a Pennsylvania limited liability company, as Structuring Agent, and the Lenders, the L/C Participants and the Co-Agents from time to time party hereto, and amends and restates in its entirety that certain Fourth Amended and Restated Credit and Security Agreement, dated as of November 21, 2018, by and among the Loan Parties, PNC, as administrative agent, Rabobank, as letter of credit issuer and the Lenders and Co-Agents from time to time party thereto, as amended through the date hereof (the “Original Agreement”).
Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
WHEREAS, Borrower desires to borrow from the Lenders from time to time, which borrowings may take the form of an Advance or Letter of Credit Extension.
WHEREAS, subject to the terms and conditions hereof, the Letter of Credit Issuers shall, at the request of Borrower, issue Letters of Credit.
WHEREAS, subject to the terms and conditions hereof, each Lender Group shall, at the request of Borrower, make its Percentage of such Advance.
WHEREAS, PNC has been requested and is willing to act as Administrative Agent on behalf of the Lenders in accordance with the terms hereof.
NOW THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows.
5th A&R Credit and Security Agreement (Smithfield)
ARTICLE I.
THE ADVANCES
Section 1.1. Credit Facility.
(a) Upon the terms and subject to the conditions hereof, from time to time prior to the Facility Termination Date:
(i) Borrower may request Advances in an aggregate principal amount at any one time outstanding not to exceed the Borrowing Limit; and
(ii) in connection with each such requested Advance, each Lender Group shall make Loans to the Borrower in an amount equal to the lesser of (x) such Lender Group’s Lender Group Commitment and (y) such Lender Group’s Percentage of the requested Advance as follows:
(A) with respect to a Lender Group with a Conduit: (i) the Conduit in such Lender Group may, in its sole discretion, make a Loan to the Borrower in a principal amount equal to its Lender Group’s Percentage of such requested Advance; it being understood and agreed that, at no time will a Conduit have any obligation to make any Loan, and (ii) if such Conduit declines to make any such Loan, the Committed Lenders in such Lender Group shall make Loans in an aggregate principal amount equal to the related Lender Group’s Percentage of such requested Advance; and
(B) with respect to a Lender Group with an Unaffiliated Committed Lender, the Unaffiliated Committed Lenders in such Lender Group shall make Loans in an aggregate principal amount equal to the related Lender Group’s Percentage of such requested Advance.
(b) Borrower may, at any time upon at least ten (10) days’ prior written notice to the Administrative Agent, terminate the Aggregate Commitment in whole or ratably reduce the Aggregate Commitment in part. Each partial reduction in the Aggregate Commitment shall be in a minimum aggregate amount of $10,000,000 or integral multiples of $1,000,000 in excess thereof, and no such partial reduction shall reduce the Aggregate Commitment to an amount less than $100,000,000. In connection with any partial reduction in the Aggregate Commitment, the Commitment of each Committed Lender shall be ratably reduced. If the Aggregate Commitment is terminated in whole, the Commitment of each Committed Lender shall be reduced to zero.
(c) In connection with any reduction of the Aggregate Commitment, the Borrower shall remit to the Administrative Agent (i) instructions regarding such reduction and (ii) for payment to the Lenders, cash in an amount sufficient to pay (A) the aggregate outstanding principal amount of all Loans of each Lender in excess of the Commitment of such Lender and (B) all other outstanding Obligations with respect to such reduction (determined based on the ratio of the reduction of the Commitments being effected to the amount of the Commitments prior to such reduction or, if the Administrative Agent reasonably determines that any portion of
the outstanding Obligations is allocable solely to that portion of the Commitments being reduced or has arisen solely as a result of such reduction, all of such portion). Upon receipt of any such amounts, the Administrative Agent shall apply such amounts first to the reduction of the outstanding Aggregate Principal, and second to the payment of the remaining outstanding Obligations with respect to such reduction by paying such amounts to the Lenders.
(d) On each Business Day, the Borrower shall sell certain Permitted Monetization Receivables to the Receivables Agent (on behalf of the Receivables Buyers) pursuant to the Monetization Documents. Any Permitted Monetization Receivable sold to the Receivables Buyer (on behalf of the Receivables Buyers) in accordance with the Monetization Documents shall constitute a “Monetized Receivable”. On the related Purchase Date therefor, a Monetized Receivable shall cease to constitute a Receivable and the Administrative Agent’s security interest under this Agreement in such Monetized Receivable and Related Monetized Assets (but not in any other Receivable or any other Collateral) shall automatically and without any further action be released and of no further force or effect; provided that if such Monetized Receivable and Related Monetized Assets is transferred, reconveyed or returned to the Borrower by the Receivables Agent (on behalf of the Receivables Buyers) (including in connection with an “Repurchase Event” pursuant to the Monetization Documents with respect to such Receivable), then (x) such Receivable shall cease to constitute a Monetized Receivable and shall thereafter constitute a Receivable and (y) the security interest granted herein shall immediately be reinstated with respect to such Receivable.
Section 1.2. Increases. Not later than 10:00 a.m. (New York City time) on the date of a proposed borrowing (which date shall be a Business Day), Borrower shall provide the Agents with written notice of each Advance in the form set forth as Exhibit II-A hereto (each, a “Borrowing Notice”). Each Borrowing Notice shall be subject to Section 6.2 hereof and, except as otherwise provided in this Section 1.2 and Section 4.5(e), shall be irrevocable and shall specify the requested increase in Aggregate Principal (which shall not be less than $5,000,000 or a larger integral multiple of $100,000) and the Borrowing Date and the requested Interest Rate Option and Interest Period (if applicable) for any portion to be funded by any Committed Lender. Upon receipt of a Borrowing Notice, (a) each Unaffiliated Committed Lender severally agrees to fund a Loan in an amount equal to its Percentage of the requested Advance specified in such Borrowing Notice, and (b) each Co-Agent shall determine whether its Conduit will fund a Loan in an amount equal to its Lender Group’s Percentage of the requested Advance specified in such Borrowing Notice. If a Conduit declines to make its Percentage of a proposed Advance, Borrower may cancel the Borrowing Notice as to all Lenders or, in the absence of such a cancellation, the Advance will be made by each Unaffiliated Committed Lender, each other Conduit and such Conduit’s Committed Lenders. On the date of each Advance, upon satisfaction of the applicable conditions precedent set forth in Article VI, each applicable Lender will cause the proceeds of its Loan comprising a portion of such Advance to be deposited to the account set forth in the related Borrowing Notice, in immediately available funds, no later than 3:00 p.m. (New York City time), an amount equal to (i) in the case of a Conduit or an Unaffiliated Committed Lender, its Percentage of the principal amount of the requested Advance or (ii) in the case of a Conduit’s Committed Lender, each such Committed Lender’s Pro Rata Share of its Lender Group’s Percentage of the principal amount of the requested Advance.
Section 1.3. Decreases. Except as provided in Section 1.4, not later than 10:00 a.m. (New York City time) on the date of a proposed reduction of Aggregate Principal (which date shall be a Business Day), Borrower shall provide the Co-Agents with written notice of such proposed reduction in the form of Exhibit II-B hereto (each, a “Reduction Notice”). Such Reduction Notice shall designate (i) the date (the “Proposed Reduction Date”) upon which any such reduction of Aggregate Principal shall occur, and (ii) the amount of Aggregate Principal to be reduced which shall be applied ratably to the Loans of each of the Lenders in accordance with the principal amount (if any) thereof (the “Aggregate Reduction”). Subject to the other terms and conditions hereof, the Borrower may from time to time borrow under Section 1.2, prepay under Section 1.3, and reborrow under Section 1.2.
Section 1.4. Deemed Collections; Borrowing Limit.
(a) If on any day:
(i) the Outstanding Balance of any Receivable is reduced as a result of any defective or rejected goods or services (including any In-Transit Collateral that is returned or not accepted by the relevant Obligor), any cash discount or any other adjustment by the applicable Originator or any Affiliate thereof, or
(ii) the Outstanding Balance of any Receivable is reduced or canceled as a result of a setoff in respect of any claim by the applicable Obligor thereof (whether such claim arises out of the same or a related or an unrelated transaction), or
(iii) the Outstanding Balance of any Receivable is reduced on account of the obligation of any Originator or any Affiliate thereof to pay to the related Obligor any rebate or refund, or
(iv) the Outstanding Balance of any Receivable is less than the amount included in calculating the Net Pool Balance for purposes of any Pool Report (for any reason other than receipt of Collections thereon or such Receivable becoming a Defaulted Receivable), or
(v) any of the representations or warranties of Borrower set forth in Section 5.1(i), (j), (r), (s), (t) or (u) were not true when made with respect to any Receivable,
then, on such day, Borrower shall be deemed to have received a Collection of such Receivable in the following amounts: (A) in the case of clauses (i)-(iv) above, in the amount of such reduction or cancellation or the difference between the actual Outstanding Balance of such Receivable and the amount included with respect to such Receivable in calculating the then applicable Net Pool Balance, as applicable; and (B) in the case of clause (v) above, in the amount of the Outstanding Balance of such Receivable and, effective as of the date on which the next succeeding Pool Report is required to be delivered, the Borrowing Base shall be reduced by the amount of such Deemed Collection.
(b) The Borrower shall ensure that the Aggregate Principal at no time exceeds the Borrowing Limit. If at any time the Aggregate Principal does exceed the Borrowing Limit, the Borrower shall, not later than 12:00 noon (New York City time) on the next succeeding Settlement Date in an amount sufficient to eliminate such excess, first, prepay the Loans, if any, then outstanding and second, make deposits to the L/C Collateral Account (up to the amount, if any, necessary to reduce the Adjusted Letter of Credit Liability to zero ($0)), such that after giving effect to such prepayments and/or deposits to the L/C Collateral Account, the Aggregate Principal is less than or equal to the Borrowing Limit. Any such prepayment of the Loans shall be (i) allocated ratably among the Lenders based upon the aggregate outstanding principal balance of their respective Loans and (ii) made by the Borrower by wire transfer to the applicable Co-Agent of an amount equal to the principal amount of its Lender Group’s Loans being repaid plus all accrued and unpaid interest thereon. Upon receipt of such funds, each Co-Agent shall apply such funds to the Loans of the Lenders in its Lender Group as determined by such Co-Agent.
Section 1.5. Payment Requirements. All amounts to be paid or deposited by any Loan Party pursuant to any provision of this Agreement shall be paid or deposited in accordance with the terms hereof no later than 12:00 noon (New York City time) on the day when due in immediately available funds, and if not received before 12:00 noon (New York City time) shall be deemed to be received on the next succeeding Business Day. For the avoidance of doubt, the delivery times referenced in the preceding sentence shall only apply to the payment of amounts due and payable by the Loan Parties. If such amounts are payable to a Lender they shall be paid to the applicable Payment Account, for the account of such Lender, until otherwise notified by such Lender. The fees of the Lenders shall be invoiced and paid on a monthly basis pursuant to Article II hereof. All computations of CP Costs, Interest at SOFR, per annum fees calculated as part of any CP Costs, per annum fees hereunder and per annum fees under the Fee Letter shall be made on the basis of a year of 360 days for the actual number of days elapsed. All computations of Interest at the Alternate Base Rate, the Adjusted Federal Funds Rate or the Default Rate shall be made on the basis of a year of 365 days (or 366 days, when appropriate) for the actual number of days elapsed. If any amount hereunder shall be payable on a day which is not a Business Day, such amount shall be payable on the next succeeding Business Day.
Section 1.6. Advances; Ratable Loans; Funding Mechanics; Liquidity Fundings.
(a) Each Advance hereunder shall be made ratably by the Lender Groups, collectively, in accordance with their respective Percentages.
(b) Each Advance hereunder shall consist of one or more Loans made by the Conduits and/or the Committed Lenders in each Lender Group.
(c) Each Lender funding any Loan shall cause the principal amount thereof to be wire transferred to the account set forth in the related Borrowing Notice in immediately available funds as soon as possible but in no event later than 3:00 p.m. (New York City time) on the applicable Borrowing Date.
(d) While it is the intent of each Conduit (but not of any Committed Lender) to fund and maintain its Percentage of each requested Advance through the issuance of Commercial Paper, the parties acknowledge that if any Conduit is unable, or determines that it is undesirable, to issue Commercial Paper to fund all or any portion of its Loans, or is unable to repay such Commercial Paper upon the maturity thereof, such Conduit shall put all or any portion of its Loans to the Committed Lenders in its Lender Group at any time pursuant to its applicable Liquidity Agreement to finance or refinance the necessary portion of its Loans through a Liquidity Funding to the extent available. Regardless of whether a Liquidity Funding constitutes the direct funding of a Loan, an assignment of a Loan made by a Conduit or the sale of one or more participations in a Loan made by a Conduit, each Committed Lender in such Conduit’s Lender Group participating in a Liquidity Funding shall have the rights of a “Lender” hereunder with the same force and effect as if it had directly made a Loan to Borrower in the amount of its Liquidity Funding.
(e) Nothing herein shall be deemed to commit any Conduit to make Loans.
Section 1.7. Letters of Credit. Subject to the terms and conditions hereof (including, without limitation, Article VI), the Letter of Credit Issuers shall issue or cause the issuance of standby Letters of Credit (“Letters of Credit”) on behalf of the Borrower (and, if applicable, on behalf of, or for the account of, any Affiliate of the Borrower designated by the Borrower); provided, however, that the Letter of Credit Issuers will not be required to issue or cause to be issued any Letters of Credit to the extent that the issuance of such Letters of Credit would then cause the Aggregate Principal to exceed the Aggregate Commitment, (b) the Aggregate Principal to exceed the Borrowing Limit or (c) the Letter of Credit Liability to exceed the aggregate of the Commitments of the applicable Letter of Credit Issuer and the L/C Participants. All amounts drawn upon Letters of Credit shall accrue CP Costs and/or Interest (and any associated fees under the Fee Letter) to the same extent as if such amounts had been borrowed by the Borrower through Loans. Letters of Credit that have not been drawn upon shall not accrue CP Costs or Interest but shall accrue fees to the extent set forth in the Fee Letter.
Section 1.8. Issuance of Letters of Credit.
(a) The Borrower may request any Letter of Credit Issuer, upon five (5) Business Days’ prior written notice submitted on or before 11:00 a.m. (New York City time) to issue a Letter of Credit by delivering to the Agents a Borrowing Notice substantially in the form of Exhibit II-A attached hereto and the applicable Letter of Credit Issuer’s form of Letter of Credit Application (the “Letter of Credit Application”), substantially in the form of Exhibit VIII-A or Exhibit VIII-B, as applicable, attached hereto completed to the satisfaction of the Administrative Agent and such Letter of Credit Issuer; and, such other certificates, documents and other papers and information as the Administrative Agent may reasonably request. The Borrower also has the right to give instructions and make agreements with respect to any Letter of Credit Application and the disposition of documents, and to agree with the Administrative Agent upon any amendment, extension or renewal of any Letter of Credit.
(b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts or other written demands for payment when presented for honor
thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twelve (12) months after such Letter of Credit’s date of issuance, extension or renewal, as the case may be, and in no event later than the Facility Termination Date. The terms of each Letter of Credit may include customary “evergreen” provisions providing that such Letter of Credit’s expiry date shall automatically be extended for additional periods not to exceed twelve (12) months unless, not less than thirty (30) days (or such longer period as may be specified in such Letter of Credit) (the “Notice Date”) prior to the applicable expiry date, the applicable Letter of Credit Issuer delivers written notice to the beneficiary thereof declining such extension; provided, however, that if (x) any such extension would cause the expiry date of such Letter of Credit to occur after the Facility Termination Date or (y) the applicable Letter of Credit Issuer determines that any condition precedent (including, without limitation, those set forth in Article VI) to issuing such Letter of Credit hereunder (as if such Letter of Credit were then being first issued) are not satisfied (other than any such condition requiring the Borrower to submit a Borrowing Notice or Letter of Credit Application in respect thereof), then such Letter of Credit Issuer, in the case of clause (x) above, may (or, at the written direction of any L/C Participant, shall) or, in the case of clause (y) above, shall, use reasonable efforts in accordance with (and to the extent permitted by) the terms of such Letter of Credit to prevent the extension of such expiry date (including notifying the Borrower and the beneficiary of such Letter of Credit in writing prior to the Notice Date that such expiry date will not be so extended). Each Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600, and any amendments or revisions thereof adhered to by the applicable Letter of Credit Issuer or the International Standby Practices (ISP98 - International Chamber of Commerce Publication Number 590), and any amendments or revisions thereof adhered to by such Letter of Credit Issuer, as determined by such Letter of Credit Issuer.
(c) The Administrative Agent shall promptly notify the applicable Letter of Credit Issuer and the L/C Participants, at such Person’s address for notices hereunder, of the request by the Borrower for a Letter of Credit hereunder, and shall provide such Letter of Credit Issuer and the L/C Participants with the Borrowing Notice and Letter of Credit Application delivered to the Administrative Agent by the Borrower pursuant to clause (a), above, by the close of business on the day received or if received on a day that is not a Business Day or on any Business Day after 11:00 a.m. (New York time) on such day, on the next Business Day.
Section 1.9. Requirements For Issuance of Letters of Credit. The Borrower shall authorize and direct the applicable Letter of Credit Issuer to name the Borrower or Affiliate thereof (as determined pursuant to Section 1.7 above) as the “Applicant” or “Account Party” of each Letter of Credit; provided in no event shall any Person other than the Borrower have any obligation to reimburse such Letter of Credit Issuer under the terms of any Letter of Credit.
Section 1.10. Disbursements, Reimbursement.
(a) Immediately upon the issuance of each Letter of Credit, each L/C Participant shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable Letter of Credit Issuer a participation in such Letter of Credit and each
drawing thereunder in an amount equal to such L/C Participant’s Ratable LC Share of the face amount of such Letter of Credit and the amount of such drawing, respectively.
(b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the applicable Letter of Credit Issuer will promptly notify each Agent and the Borrower of such request. The Borrower shall reimburse (such obligation to reimburse the applicable Letter of Credit Issuer shall sometimes be referred to as a “Reimbursement Obligation”) the applicable Letter of Credit Issuer prior to 12:00 noon (New York City time) on each date that an amount is paid by such Letter of Credit Issuer under any Letter of Credit (each such date, a “Drawing Date”) in an amount equal to the amount so paid by such Letter of Credit Issuer. In the event the Borrower fails to reimburse the applicable Letter of Credit Issuer for the full amount of any drawing under any Letter of Credit by 12:00 noon (New York City time) on the Drawing Date, such Letter of Credit Issuer will promptly notify each L/C Participant thereof, and the Borrower shall be deemed to have requested that an Advance be made by the Lenders in the Lender Groups for such Letter of Credit Issuer and the L/C Participants to be disbursed on the Drawing Date under such Letter of Credit in accordance with clause (c) below. Any notice given by any Letter of Credit Issuer pursuant to this Section may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such oral notice. The Borrower’s obligations to reimburse any such drawing under a Letter of Credit shall be deemed satisfied in the event such amount is fully refinanced by an Advance.
(c) Each L/C Participant shall, upon any notice pursuant to clause (b) above and (without limiting the generality of Section 1.14 below) without regard to whether any condition precedent to any Loan hereunder is satisfied or unsatisfied at such time, make available as a participation advance to the applicable Letter of Credit Issuer by no later than 2:00 p.m., New York time on the Drawing Date an amount in immediately available funds equal to its Ratable LC Share of the amount of the related drawing under a Letter of Credit; provided, however, that if any L/C Participant that is a Defaulting Lender fails to fund its portion of any such participation advance pursuant to this clause (c), then, the L/C Participants that are not Defaulting Lenders shall make available to the applicable Letter of Credit Issuer such Defaulting Lender’s portion of such participation advance pro rata in proportion to their relative Commitments (determined without regard to the Defaulting Lender’s Commitment); provided, further, however, that no L/C Participant shall be required to make any portion of any participation advance available to the applicable Letter of Credit Issuer under this clause (c) solely to the extent that such after giving effect thereto:
(i) such L/C Participant’s Ratable LC Share of the Letter of Credit Liability plus the aggregate outstanding principal balance of such L/C Participant’s Loans would exceed such L/C Participant’s Commitment; or
(ii) the Lender Group Exposure of such L/C Participant’s Lender Group would exceed its Lender Group Commitment.
Upon any L/C Participant making any such participation advance to a Letter of Credit Issuer, and whether or not any condition precedent to any Loan hereunder is satisfied or
unsatisfied, such L/C Participant shall be deemed to have made a Loan to the Borrower in the amount of such participation advance; provided that, if for any reason (including, without limitation, an L/C Participant being a Defaulting Lender), any portion of the amount of any such drawing is not so made available to such Letter of Credit Issuer by the L/C Participants in accordance with this clause (c), such Letter of Credit Issuer shall be deemed to have made a Loan to the Borrower for all purposes of this Agreement in an amount equal to the excess of (x) the amount of such drawing over (y) the aggregate amount made available by the L/C Participants to such Letter of Credit Issuer in respect of such drawing.
If any L/C Participant so notified fails to make available to the applicable Letter of Credit Issuer the amount of such L/C Participant’s Ratable LC Share of such amount by no later than 2:00 p.m., New York time on the Drawing Date, then interest shall accrue on such L/C Participant’s obligation to make such payment, from the Drawing Date to the date on which such L/C Participant makes such payment (i) at a rate per annum equal to the Federal Funds Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to interest accruing on Loans funded or maintained by such Letter of Credit Issuer on and after the fourth day following the Drawing Date. The applicable Letter of Credit Issuer will promptly give notice of the occurrence of the Drawing Date, but failure of such Letter of Credit Issuer to give any such notice on the Drawing Date or in sufficient time to enable any L/C Participant to effect such payment on such date shall not relieve such L/C Participant from its obligation under this clause (c); provided that such L/C Participant shall not be obligated to pay interest as provided in subclauses (i) and (ii) above in this paragraph until and commencing from the date of receipt of notice from such Letter of Credit Issuer or the Administrative Agent of a drawing.
Each L/C Participant’s Commitment shall continue until the last to occur of any of the following events: (A) each Letter of Credit Issuer ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (B) no Letter of Credit issued hereunder remains outstanding and uncancelled or (C) all Persons (other than the Loan Parties and any Originator) have been fully reimbursed for all payments made under or relating to Letters of Credit.
Section 1.11. Repayment of Participation Advances.
(a) Upon (and only upon) receipt by the applicable Letter of Credit Issuer for its account of immediately available funds from the Borrower (i) in reimbursement of any payment made by such Letter of Credit Issuer under a Letter of Credit with respect to which any L/C Participant has made a participation advance to such Letter of Credit Issuer, or (ii) in payment of Interest or CP Costs on the Advances made or deemed to have been made in connection with any such draw, such Letter of Credit Issuer will pay to each L/C Participant, ratably (based on the outstanding drawn amounts funded by each such L/C Participant in respect of such Letter of Credit), in the same funds as those received by such Letter of Credit Issuer; it being understood, that such Letter of Credit Issuer shall retain a ratable amount of such funds that were not the subject of any payment in respect of such Letter of Credit by any L/C Participant.
(b) If any Letter of Credit Issuer is required at any time to return to the Borrower or Affiliate of the Borrower, or to a trustee, receiver, liquidator, custodian, or any official in any
insolvency proceeding, any portion of the payments made by or on behalf of the Borrower to such Letter of Credit Issuer pursuant to this Agreement in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each L/C Participant shall, on demand of such Letter of Credit Issuer, forthwith return to such Letter of Credit Issuer the amount of its Ratable LC Share of any amounts so returned by such Letter of Credit Issuer plus interest at the Federal Funds Rate from the date the payment was first made to such L/C Participant to, but not including, the date the payment is returned by such L/C Participant.
Section 1.12. Documentation.
The Borrower (on behalf of itself and any account party or applicant named on any Letter of Credit issued hereunder) agrees to be bound by the terms of the Letter of Credit Application and by the applicable Letter of Credit Issuer’s written regulations and customary practices relating to letters of credit, though such interpretation may be different from such Loan Party’s own. In the event of a conflict or inconsistency (including as to any representation, covenant or default or event of default) between the Letter of Credit Application and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct by a Letter of Credit Issuer, such Letter of Credit Issuer shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following the Borrower’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.
Section 1.13. Determination to Honor Drawing Request.
In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the applicable Letter of Credit Issuer shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth.
Section 1.14. Nature of Participation and Reimbursement Obligations.
Each L/C Participant’s obligation in accordance with this Agreement to make participation advances as a result of a drawing under a Letter of Credit, and the obligation of the Borrower to reimburse the applicable Letter of Credit Issuer upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Article I under all circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or other right which such L/C Participant may have against such Letter of Credit Issuer, the Administrative Agent, any Co-Agent, any Lender, any Loan Party, any Originator or any other Person for any reason whatsoever;
(ii) the failure of any Loan Party or any other Person to comply with the conditions set forth in this Agreement for the making of Advances, requests for Letters of Credit or otherwise, it being acknowledged that such conditions are not required for the making of participation advances hereunder;
(iii) any lack of validity or enforceability of any Letter of Credit;
(iv) any claim of breach of warranty that might be made by any Loan Party, any Originator, any Letter of Credit Issuer, any L/C Participant or any of their respective Affiliates against the beneficiary of a Letter of Credit, or the existence of any claim, set-off, defense or other right which any Loan Party, any Originator, any Letter of Credit Issuer, any L/C Participant or any of their respective Affiliates may have at any time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), any Letter of Credit Issuer, any L/C Participant, any Co-Agent, any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between or among any Loan Party, any Originator, the beneficiary for which any Letter of Credit was procured or any of their respective Affiliates);
(v) the lack of power or authority of any signer of, or lack of validity, sufficiency, accuracy, enforceability or genuineness of, any draft, demand, instrument, certificate or other document presented under any Letter of Credit, or any such draft, demand, instrument, certificate or other document proving to be forged, fraudulent, invalid, defective or insufficient in any respect or any statement therein being untrue or inaccurate in any respect, even if the Administrative Agent or the applicable Letter of Credit Issuer has been notified thereof prior;
(vi) payment by the applicable Letter of Credit Issuer under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit other than as a result of the gross negligence or willful misconduct of such Letter of Credit Issuer;
(vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;
(viii) any failure by any Letter of Credit Issuer or any of such Letter of Credit Issuer’s Affiliates to issue any Letter of Credit in the form requested by the Borrower, unless such Letter of Credit Issuer has received written notice from the Borrower of such failure within three Business Days after such Letter of Credit Issuer shall have furnished the Borrower a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;
(ix) any Material Adverse Effect on any Loan Party, any Originator or any Affiliates thereof;
(x) any breach of this Agreement or any Transaction Document by any party thereto;
(xi) the occurrence or continuance of an Event of Bankruptcy with respect to any Loan Party, any Originator or any of their respective Affiliates;
(xii) the fact that an Event of Default or an Unmatured Event of Default shall have occurred and be continuing;
(xiii) the fact that this Agreement or the obligations of any Loan Party hereunder shall have been terminated; and
(xiv) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
Nothing in this Section 1.14 shall relieve any Letter of Credit Issuer from liability for its gross negligence or willful misconduct, as determined by a final non-appealable judgment of a court of competent jurisdiction.
Section 1.15. Indemnity.
In addition to other amounts payable hereunder (including, without limitation, pursuant to Article X), the Borrower hereby agrees to protect, indemnify, pay and save harmless the Administrative Agent, each Letter of Credit Issuer, each L/C Participant and any Letter of Credit Issuer’s Affiliates that have issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (but in the case of attorneys’ fees, limited to reasonable attorneys’ fees actually incurred and disbursements of one primary counsel for the Administrative Agent, the Letter of Credit Issuers and the L/C Participants (taken as a whole) (and, if necessary, one local counsel in each material jurisdiction for such parties (taken as a whole) and, solely in the case of a conflict of interest, one additional counsel as necessary to such parties actually affected by such conflict (taken as a whole))) which the Administrative Agent, any Letter of Credit Issuer, any L/C Participant or any of their respective Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of (a) the gross negligence or willful misconduct of the party to be indemnified as determined by a final non-appealable judgment of a court of competent jurisdiction or (b) the wrongful dishonor by the applicable Letter of Credit Issuer of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto governmental authority (all such acts or omissions herein called “Governmental Acts”).
Section 1.16. Liability for Acts and Omissions.
As between the Borrower, on the one hand, and the Administrative Agent, the Letter of Credit Issuers, the L/C Participants, the Co-Agents and the Lenders, on the other, the Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit and by the respective account parties or applicants named on such Letters of Credit. In furtherance and not in limitation of the respective foregoing, none of the Administrative Agent, the Letter of Credit Issuers, the L/C Participants, the Co-Agents or the Lenders shall be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if the applicable Letter of Credit Issuer shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Loan Party, any Originator or any of their respective Affiliates against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Loan Party, any Originator or any of their respective Affiliates and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Administrative Agent, the Letter of Credit Issuers, the L/C Participants, the Co-Agents and the Lenders, including any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any of any Letter of Credit Issuer’s rights or powers hereunder. Nothing in the preceding sentence shall relieve any Letter of Credit Issuer from liability for its gross negligence or willful misconduct, as determined by a final non-appealable judgment of a court of competent jurisdiction, in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall the Administrative Agent, the Letter of Credit Issuers, the L/C Participants, the Co-Agents, the Lenders or their respective Affiliates, be liable to any Loan Party, any Originator or any other Person for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.
Without limiting the generality of the foregoing, the Administrative Agent, the Letter of Credit Issuers, the L/C Participants, the Co-Agents, the Lenders and each of their respective Affiliates (i) may rely on any written communication believed in good faith by such Person to have been authorized or given by or on behalf of the applicant for a Letter of Credit; (ii) may honor any presentation if the documents presented appear on their face to comply with
the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by the applicable Letter of Credit Issuer or its Affiliates; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on the Administrative Agent, the Letter of Credit Issuers, the L/C Participants, the Co-Agents, the Lenders or their respective Affiliates, in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.
In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by the applicable Letter of Credit Issuer under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith and without gross negligence or willful misconduct, as determined by a final non-appealable judgment of a court of competent jurisdiction, shall not put such Letter of Credit Issuer under any resulting liability to any Loan Party, any Originator, any L/C Participant or any other Person.
Section 1.17. Letter of Credit Fees. The Borrower shall pay: (a) to each Co-Agent for the account of each Committed Lender, in consideration for the issuance of Letters of Credit hereunder, a fee (as defined in the Fee Letter) per annum on the aggregate available undrawn amount of the outstanding Letters of Credit; and (b) to each Letter of Credit Issuer for its own account the fees specified in the Fee Letter (collectively, the “Letter of Credit Fees”). The Letter of Credit Fees shall be payable monthly in arrears on each Settlement Date for the Calculation Period preceding such Settlement Date, commencing on the first such Settlement Date to occur after the issuance of any Letter of Credit, and continuing for so long as any Letter of Credit remains outstanding.
Section 1.18. Benchmark Replacement Notification. Section 4.6 provides a mechanism for determining an alternative rate of interest in the event that Daily 1M SOFR or the Term SOFR Rate is no longer available or in certain other circumstances. The Administrative Agent does not warrant or accept any responsibility for and shall not have any liability with respect to, the administration, submission or any other matter related to Daily 1M SOFR or the Term SOFR Rate, or with respect to any alternative or successor rate thereto, or replacement rate therefor.
ARTICLE II.
PAYMENTS AND COLLECTIONS
Section 2.1. Payments. Borrower hereby promises to pay:
(a) subject to Section 9.2, the Aggregate Principal on and after the Facility Termination Date as and when Collections are received;
(b) the fees set forth in the Fee Letter and the Agent Fee Letter on the dates specified therein or herein;
(c) all accrued and unpaid Interest and CP Costs on the Loans on each Settlement Date applicable thereto;
(d) all Broken Funding Costs and Indemnified Amounts within 15 days of demand and receipt of a reasonably detailed invoice therefor; and
(e) any amounts required to paid by the Borrower pursuant to Section 1.4(b) to cash collateralize Letter of Credit Liability on the dates specified herein.
Section 2.2. Collections Prior to the Commitment Termination Date. On each Settlement Date prior to the Commitment Termination Date, the Borrower shall deposit to each applicable Payment Account, for distribution to the applicable Lenders, a portion of the Collections received by it during the preceding Settlement Period (after deduction of the Servicing Fee) equal to the sum of the following amounts for application to the Obligations in the order specified:
first, ratably to the payment of (i) all accrued and unpaid CP Costs, Interest and Broken Funding Costs (if any) that are then due and owing and (ii) all accrued and unpaid fees under the Fee Letter and/or the Agent Fee Letter,
second, if required under Section 1.3 or 1.4, (i) first, to the ratable reduction of the Aggregate Principal (ratably among the Lenders based upon the outstanding principal balances of their respective Loans) and (ii) second, into the L/C Collateral Account for the benefit of the Letter of Credit Issuers and the L/C Participants (it being understood and agreed that any amount so distributed to the L/C Collateral Account shall be deposited directly therein, rather than to the applicable Co-Agent Account),
third, for the ratable payment of all other unpaid Obligations of Borrower, if any, that are then due and owing, and
fourth, to the extent that the Borrower has failed to make any payment or deposit required to be made under the Monetization Documents and such failure has remained unremedied for one (1) or more Business Days, the balance, if any, to a separate account designated by the Administrative Agent or, if so instructed by the Administrative Agent, transferred to the Receivables Agent in an amount equal to the amounts then due and owing to the Receivables Agent and the Receivables Buyers under the Monetization Documents.
The balance, if any, shall be paid to Borrower or otherwise in accordance with Borrower’s instructions. Collections applied to the payment of Obligations of Borrower shall be distributed in accordance with the aforementioned provisions, and, giving effect to each of the priorities set forth above in this Section 2.2, shall be shared ratably (within each priority) among the applicable payees in accordance with the amount of such Obligations owing to each of them in respect of each such priority.
Section 2.3. Collections Following the Commitment Termination Date. On the Commitment Termination Date and on each day thereafter, the Borrower (and the Servicer, to the extent the Servicer comes into possession of Collections on any such day) shall set aside and hold in trust, for the Secured Parties, all Collections received on such day. On and after the Commitment Termination Date, the Borrower shall, on each Settlement Date and on each other Business Day specified by the Administrative Agent (as directed by any Co-Agent) (after payment or deduction of any accrued and unpaid Servicing Fee as of such date): (i) remit to the applicable Payment Account the applicable Percentage of the amounts set aside and held in trust pursuant to the preceding sentence, and (ii) apply such amounts to reduce the Obligations of Borrower as follows:
first, to the reimbursement of each Lender Group’s Percentage of the costs of collection and enforcement of this Agreement incurred by the Administrative Agent,
second, ratably to the payment of (i) all accrued and unpaid CP Costs, Interest and Broken Funding Costs (if any), and (ii) all accrued and unpaid fees under the Fee Letter and/or the Agent Fee Letter,
third, to the ratable reduction of each Lender Group’s Percentage of the Aggregate Principal,
fourth, to the L/C Collateral Account for the benefit of the Letter of Credit Issuers and the L/C Participants, the amount (if any) necessary to cause the amount of cash collateral held in the L/C Collateral Account to equal the Letter of Credit Liability,
fifth, for the ratable payment of all other unpaid Obligations of Borrower,
sixth, to the extent that the Borrower has failed to make any payment or deposit required to be made under the Monetization Documents and such failure has remained unremedied for one (1) or more Business Days, the balance, if any, to a separate account designated by the Administrative Agent or, if so instructed by the Administrative Agent, transferred to the Receivables Agent in an amount equal to the amounts then due and owing to the Receivables Agent and the Receivables Buyers under the Monetization Documents, and
seventh, after the Final Payout Date, to Borrower.
Collections applied to the payment of Obligations of Borrower shall be distributed in accordance with the aforementioned provisions, and, giving effect to each of the priorities set forth above in this Section 2.3, shall be shared ratably (within each priority) among the Co-Agents and the
Lenders in accordance with the amount of such Obligations owing to each of them in respect of each such priority.
Section 2.4. Payment Rescission. No payment of any of the Obligations shall be considered paid or applied hereunder to the extent that, at any time, all or any portion of such payment or application is rescinded by application of law or judicial authority, or must otherwise be returned or refunded for any reason. Borrower shall remain obligated for the amount of any payment or application so rescinded, returned or refunded, and shall promptly pay to the applicable Payment Account (for application to the Person or Persons who suffered such rescission, return or refund) the full amount thereof, plus Interest on such amount at the Default Rate from the date of any such rescission, return or refunding.
ARTICLE III.
CONDUIT FUNDING
Section 3.1. CP Costs. Borrower shall pay CP Costs with respect to the principal balance of each Conduit’s Loans from time to time outstanding.
Section 3.2. Calculation of CP Costs. Not later than the 3rd Business Day immediately preceding each Monthly Reporting Date, each Conduit shall calculate the aggregate amount of CP Costs applicable to its CP Rate Loans for the Calculation Period then most recently ended and shall notify the Administrative Agent, who shall promptly notify the Borrower of such aggregate amount, not later than the 2nd Business Day immediately preceding such Monthly Reporting Date.
Section 3.3. CP Costs Payments. (a) With respect to CP Rate Loans made by a Pooled Fund Conduit, on each Settlement Date, Borrower shall pay to each of the Co-Agents (for the benefit of its respective Conduit) an aggregate amount equal to all accrued and unpaid CP Costs in respect of the principal associated with all such CP Rate Loans of such Conduit for the calendar month then most recently ended and (b) with respect to CP Rate Loans made by a Conduit that is not a Pooled Fund Conduit, on each Settlement Date, the Borrower shall pay to each of the Co-Agents (for the benefit of its respective Conduit) an aggregate amount equal to all accrued and unpaid CP Costs in respect of the principal associated with all such CP Rate Loans of such Conduit, in each case in accordance with Article II.
Section 3.4. Default Rate. From and after the occurrence of an Event of Default, all Loans of the Conduits shall accrue Interest at the Default Rate and shall cease to be CP Rate Loans.
ARTICLE IV.
COMMITTED LENDER FUNDING
Section 4.1. Committed Lender Funding.
(a) Prior to the occurrence of an Event of Default, the outstanding principal balance of each Liquidity Funding shall accrue interest for each day during its Interest Accrual
Period at either the Term SOFR Rate, Daily 1M SOFR, the Adjusted Federal Funds Rate or the Alternate Base Rate in accordance with the terms and conditions hereof. Until Borrower gives notice to the applicable Co-Agent of another Interest Rate Option in accordance with Section 4.3, the initial Interest Rate Option for any Loan transferred to the Committed Lenders in its Lender Group by the applicable Conduit pursuant to its Liquidity Agreement shall be the Adjusted Federal Funds Rate Option (unless the Default Rate is then applicable). If the applicable Committed Lenders in a Lender Group acquire by assignment from the applicable Conduit any Loan pursuant to a Liquidity Agreement, each Loan so assigned shall each be deemed to have an Interest Accrual Period commencing on the date of any such assignment.
(b) The Borrower may call the Administrative Agent on or before the date on which a Borrowing Notice is to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding on the Administrative Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made.
Section 4.2. Interest Payments. On the Settlement Date for each Liquidity Funding, Borrower shall pay to the applicable Co-Agent (for the benefit of the Committed Lenders in its Lender Group) an aggregate amount equal to the accrued and unpaid Interest on each such Liquidity Funding in accordance with Article II.
Section 4.3. Committed Lender Interest Rates.
(a) So long as no Event of Default is continuing, the Borrower may, by written notice to the Administrative Agent, elect for all or any portion of the Aggregate Principal funded by the Committed Lenders to accrue interest by reference to the Term SOFR Rate (rather than Daily 1M SOFR) or any other Interest Rate Option (including Daily 1M SOFR) during any Interest Accrual Period. Any such notice must specify the amount of the Aggregate Principal subject of such election and must be delivered not later than two (2) Business Days prior to the first day of the affected Interest Accrual Period. Any such portion of the Aggregate Principal that is subject to such an election shall be apportioned among the respective Lenders’ Principal ratably. Notwithstanding the foregoing, (x) the Borrower shall not make such an election if, as a result thereof, more than ten Borrowing Tranches would exist and (y) each Borrowing Tranche for Loans accruing interest by reference to the Term SOFR Rate shall be not be less than $1,000,000 and shall be an integral multiple of $100,000. For the avoidance of doubt, if an Event of Default is then continuing, the Interest for any Loan (and any portion thereof) shall calculated by reference to the Default Rate notwithstanding any otherwise applicable election by the Borrower.
(b) The Borrower may call the Administrative Agent on or before the date on which a notice under clause (a) above is to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding on the Administrative Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made.
Section 4.4. Daily 1M SOFR, Term SOFR Rate or Adjusted Federal Funds Rate Unascertainable; Increased Costs; Illegality.
(a) If, on or prior to the first day of an Interest Period:
(i) the Administrative Agent shall have determined (which determination shall be conclusive and binding absent manifest error) that (x) Daily 1M SOFR, the Term SOFR Rate or the Adjusted Federal Funds Rate cannot be determined pursuant to the definition thereof; or (y) a fundamental change has occurred with respect to Daily 1M SOFR, the Term SOFR Rate or the Adjusted Federal Funds Rate (including, without limitation, changes in national or international financial, political or economic conditions); or
(ii) any Lender determines that for any reason that Daily 1M SOFR, the Term SOFR Rate or the Adjusted Federal Funds Rate for any requested Interest Period does not adequately and fairly reflect the cost to such Lender of funding such Lender’s Loans, and such Lender has provided notice of such determination to the Administrative Agent;
then the Administrative Agent shall have the rights specified in Section 4.4(c).
(b) If at any time any Lender shall have determined that the making, maintenance or funding of any Loan accruing interest by reference to Daily 1M SOFR, the Term SOFR Rate or the Adjusted Federal Funds Rate has been made impracticable or unlawful, by compliance by such Lender in good faith with any Law or any interpretation or application thereof by any Governmental Authority or with any request or directive of any such Governmental Authority (whether or not having the force of Law), then the Administrative Agent shall have the rights specified in Section 4.4(c).
(c) In the case of any event specified in Section 4.4(a), the Administrative Agent shall promptly so notify the Lenders and the Borrower thereof, and in the case of an event specified in Section 4.4(b), such Lender shall promptly so notify the Administrative Agent and endorse a certificate to such notice as to the specific circumstances of such notice, and the Administrative Agent shall promptly send copies of such notice and certificate to the other Lenders and the Borrower.
Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of (i) the Lenders, in the case of such notice given by the Administrative Agent, or (ii) such Lender, in the case of such notice given by such Lender, to allow the Borrower to select, convert to or renew a Loan accruing interest by reference to Daily 1M SOFR, the Term SOFR Rate or the Adjusted Federal Funds Rate shall be suspended (to the extent of the affected Interest Rate Option or the applicable Interest Periods) until the Administrative Agent shall have later notified the Borrower, or such Lender shall have later notified the Administrative Agent, of the Administrative Agent’s or such Lender’s, as the case may be, determination that the circumstances giving rise to such previous determination no longer exist.
If at any time the Administrative Agent makes a determination under Section 4.4(a), (A) if the Borrower has delivered a Borrowing Notice for an affected Loan that has not yet been made, such Borrowing Notice shall be deemed to request an Alternate Base Rate Loan, (B) any outstanding affected Loans shall be deemed to have been converted into Alternate Base Rate Loans at the end of the applicable Interest Period.
If any Lender notifies the Administrative Agent of a determination under Section 4.4(b) above, the Borrower shall, as to any outstanding affected Loans, convert such Loans to an Alternate Base Rate Loan or prepay such Loan at the end of the applicable Interest Period. Absent due notice from the Borrower of conversion or prepayment, such Loan shall automatically be converted to an Alternate Base Rate Loan at the end of the applicable Interest Period.
(d) With respect to Daily 1M SOFR and the Term SOFR Rate, the Administrative Agent, in consultation with the Borrower, may make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Transaction Document; provided that, with respect to any such amendment effected, the Administrative Agent shall provide notice to the Borrower and the Lenders each such amendment implementing such Conforming Changes reasonably promptly after such amendment becomes effective.
Section 4.5. Benchmark Replacement Setting.
(a) Notwithstanding anything to the contrary herein or in any other Transaction Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to any setting of the then-current Benchmark, then (A) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Transaction Document and (B) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of any Benchmark setting at or after 5:00 p.m. Eastern Time on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Transaction Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Committed Lenders.
(b) In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Administrative Agent, in consultation with the Borrower, may make Conforming Changes from time to time and, notwithstanding anything to the contrary
herein or in any other Transaction Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Transaction Document.
(c) The Administrative Agent will promptly notify the Borrower and the Lenders of (A) the implementation of any Benchmark Replacement, and (B) the effectiveness of any Conforming Changes in connection with the use, administration, adoption, or implementation of a Benchmark Replacement. The Administrative Agent will notify the Borrower of (x) the removal or reinstatement of any tenor of a Benchmark pursuant to paragraph (iv) below and (y) the commencement of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 4.5, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Transaction Document except, in each case, as expressly required pursuant to this Section 4.5.
(d) Notwithstanding anything to the contrary herein or in any other Transaction Document, at any time (including in connection with the implementation of a Benchmark Replacement), (A) if the then-current Benchmark is a term rate and either (I) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (II) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor; and (B) if a tenor that was removed pursuant to clause (A) above either (I) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (II) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent shall modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(e) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any pending Borrowing Notice bearing interest based on Daily 1M SOFR or the Term SOFR Rate, conversion to or continuation of Loans bearing interest based on Daily 1M SOFR or the Term SOFR Rate to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for an Alternate Base Rate Loan. During a Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Alternate Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Alternate Base Rate.
(f) As used in this Section 4.5:
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate or is based on a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor of such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (d) of this Section 4.5.
“Benchmark” means, initially, Daily 1M SOFR and the Term SOFR Rate; provided that if a Benchmark Transition Event has occurred with respect to Daily 1M SOFR, the Term SOFR Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to this Section 4.5.
“Benchmark Replacement” means, with respect to any Benchmark Transition Event, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
(1) the sum of: (A) Daily Simple SOFR and (B) the SOFR Adjustment; and
(2) the sum of (A) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower, giving due consideration to (x) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (y) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities at such time and (B) the related Benchmark Replacement Adjustment;
provided, that if the Benchmark Replacement as determined pursuant to clause (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Transaction Documents; and provided further, that any Benchmark Replacement shall be administratively feasible as determined by the Administrative Agent in its sole discretion.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower, giving due consideration to (A) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Date” means a date and time determined by the Administrative Agent, which date shall be no later than the earliest to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (A) the date of the public statement or publication of information referenced therein and (B) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date determined by the Administrative Agent, which date shall promptly follow the date of the public statement or publication of information referenced therein;
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means, the occurrence of one or more of the following events, with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by a Relevant Governmental Body having jurisdiction over the Administrative Agent, the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) or a Relevant Governmental Body having jurisdiction over the Administrative Agent announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in accordance with this Section 4.5 titled “Benchmark Replacement Setting” and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in accordance with this Section 4.5 titled “Benchmark Replacement Setting.”
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Term SOFR Rate or, if no floor is specified, zero.
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the
Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
Section 4.6. Default Rate. From and after the occurrence of an Event of Default, all Liquidity Fundings shall accrue Interest at the Default Rate.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Section 5.1. Representations and Warranties of the Loan Parties. Each Loan Party hereby represents and warrants to the Agents and the Lenders, as to itself, as of the Closing Date, as of the date hereof, as of the date of each Advance and each L/C Credit Extension and as of each Settlement Date that:
(a) Existence and Power. Such Loan Party’s jurisdiction of organization is correctly set forth in the preamble to this Agreement unless notice of a change in its jurisdiction of organization has been provided in accordance with Section 7.2(a). Such Loan Party is duly organized under the laws of that jurisdiction and no other state or jurisdiction, and such jurisdiction must maintain a public record showing the organization to have been organized. Such Loan Party is validly existing and in good standing under the laws of its state of organization. Such Loan Party is duly qualified to do business and is in good standing as a foreign entity, and has and holds all organizational power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except, in the case of Smithfield, where the failure to so qualify or so hold would not reasonably be expected to have a Material Adverse Effect.
(b) Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by such Loan Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, in the case of Borrower, Borrower’s use of the proceeds of Advances made hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which such Loan Party is a party have been duly executed and delivered by such Loan Party.
(c) No Conflict. The execution and delivery by such Loan Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Loan Party or its Subsidiaries (except as created hereunder) except, in any case, where such contravention or violation would not reasonably be expected to have a Material
Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law.
(d) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any Person or any Governmental Authority is required for the due execution and delivery by such Loan Party of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder.
(e) Actions, Suits. Except as disclosed in the filings made by the Servicer with the Securities and Exchange Commission, there are no actions, suits or proceedings pending, or to the best of such Loan Party’s knowledge, threatened, against or affecting such Loan Party, or any of its properties, in or before any court, arbitrator or other body, that would reasonably be expected to have a Material Adverse Effect. Such Loan Party is not in default with respect to any order of any court, arbitrator or Governmental Authority.
(f) Binding Effect. This Agreement and each other Transaction Document to which such Loan Party is a party constitute the legal, valid and binding obligations of such Loan Party enforceable against such Loan Party in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore furnished by such Loan Party or any of its Affiliates to the Agents or the Lenders for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Loan Party or any of its Affiliates to the Agents or the Lenders will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain, when furnished, any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein, in light of the circumstances in which they were made, not materially misleading; provided, that with respect to projected financial information, such Loan Party represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time delivered.
(h) Use of Proceeds. Borrower represents and warrants that no proceeds of any Advance or Letter of Credit hereunder will be used (i) for a purpose that violates, or would be inconsistent with, (A) Section 7.2(e) of this Agreement or (B) Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time or (ii) to acquire any security in any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.
(i) Good Title. Borrower represents and warrants that: (i) immediately after the contribution of the Initial Contributed Assets by SFFC in accordance with the Receivables Sale Agreement, and immediately after the transfer by each Originator of the Initial Purchased Assets and each subsequent Receivable under the Receivables Sale Agreement, Borrower is the
legal and beneficial owner of all of the right, title and interest in the Receivables and Related Security with respect thereto, free and clear of any Adverse Claim, except an Adverse Claim in favor of the Administrative Agent for the benefit of the Secured Parties or, with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents, and (ii) there have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Borrower’s ownership interest in each Receivable, its Collections and the Related Security.
(j) Perfection. Borrower represents and warrants that: (i) this Agreement is effective to create a valid security interest in favor of the Administrative Agent for the benefit of the Secured Parties in the Collateral to secure payment of the Obligations, free and clear of any Adverse Claim, except an Adverse Claim in favor of the Administrative Agent for the benefit of the Secured Parties or, with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents, and (ii) there have been or (within 2 Business Days after the date of any Advance) will be duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Administrative Agent’s (on behalf of the Secured Parties) first priority security interest in the Collateral. Each of the Loan Parties represents and warrants that such Loan Party’s jurisdiction of organization is a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a filing, record or registration system as a condition or result of such a security interest’s obtaining priority over the rights of a lien creditor which respect to collateral.
(k) Places of Business and Locations of Records. The principal places of business and chief executive office of such Loan Party and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit III or such other locations of which the Administrative Agent has been notified in accordance with Section 7.2(a) in jurisdictions where all action required by Section 14.4(a) has been taken and completed. Borrower’s Federal Employer Identification Number is correctly set forth on Exhibit III.
(l) Collections. The conditions and requirements set forth in Section 7.1(j) and Section 8.2 have at all times been satisfied and duly performed.
(i) Subject to such changes permitted by clauses (ii) and (iii) below and Section 7.2(b), the names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts at each Collection Bank and the post office box number of each Lock-Box, are listed on Schedule D to this Agreement. While Borrower has granted Servicer access to the Lock-Boxes and Collection Accounts prior to delivery of a Collection Notice, Borrower has not granted any Person, other than the Administrative Agent as contemplated by this Agreement, dominion and control of any Lock-Box or Collection Account, or the right to take dominion and control of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future event.
(ii) On or prior to the Post-Closing Date, the Collection Accounts will be novated from each of Smithfield Direct, LLC and Smithfield Support to, in both cases, the Borrower
(iii) Borrower shall be permitted to close the Collection Account appearing opposite its name that is marked with an asterisk on Schedule D and any Lock-Box related thereto, so long as Borrower, has given the Lenders and the Administrative Agent not less than ten (10) days’ prior written notice thereof, certifying that (x) it has instructed all each relevant Originator, SFFC and Smithfield to make payments relating to Receivables originated by such Originators, SFFC and Smithfield to another existing Collection Account, and (y) payments relating to Receivables originated by it are no longer being deposited in such Collection Account.
(m) Material Adverse Effect. (i) The Servicer represents and warrants that since January 2, 2022, no event has occurred that would have a material adverse effect on the financial condition or operations of the Servicer or the ability of the Servicer to perform its obligations under this Agreement, and (ii) Borrower represents and warrants that since the date of its formation, no event has occurred that would have a material adverse effect on (A) the financial condition or operations of Borrower, (B) the ability of Borrower to perform its obligations under the Transaction Documents, or (C) the collectability of the Receivables generally or any material portion of the Receivables.
(n) Names. Borrower represents and warrants that: (i) the name in which Borrower has executed this Agreement is identical to the name of Borrower as indicated on the public record of its state of organization which shows Borrower to have been organized, and (ii) in the past five (5) years, Borrower has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement.
(o) Ownership of Borrower. After giving effect to the transactions on the Closing Date, Smithfield owns, directly or indirectly, 100% of the issued and outstanding Equity Interest of Borrower, free and clear of any Adverse Claim. Such Equity Interests are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Borrower.
(p) Not an Investment Company. Such Loan Party is not, and after giving effect to the transactions contemplated hereby, will not be required to register as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or any successor statute. The Borrower is not a “covered fund” under the Volker Rule and in determining that the Borrower is not a covered fund, the Borrower, among other things, either (x) is entitled to rely on the exemption from the definition of “investment company” set forth in Section 3(c)(5) of the Investment Company Act of 1940, as amended or (y) is entitled to the benefit of the exclusion for loan securitizations in the Volcker Rule under 10 C.F.R. 248.10(c)(8).
(q) Compliance with Law. Such Loan Party has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. Borrower represents and warrants that each Receivable, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation would not reasonably be expected to have a Material Adverse Effect.
(r) Compliance with Credit and Collection Policy. Such Loan Party has complied in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract, and has not made any material change to such Credit and Collection Policy (other than any change expressly permitted pursuant to the Receivables Sale Agreement).
(s) Payments to Applicable Originator. Borrower represents and warrants that: (i) with respect to each Receivable purchased by Borrower under the Receivables Sale Agreement, Borrower has given reasonably equivalent value (constituting the approximate fair market value) to the applicable Originator in consideration therefor and such transfer was not made for or on account of an antecedent debt, and (ii) no transfer by any Originator of any Receivable under the Receivables Sale Agreement is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101 et seq.), as amended.
(t) Enforceability of Contracts. Borrower represents and warrants that each Contract with respect to each Receivable is effective to create, and has created (or with respect to In-Transit Receivables will create), a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the Net Pool Balance as an Eligible Receivable on the date of any Pool Report was an Eligible Receivable on such date.
(v) Borrowing Limit. Immediately after giving effect to each Advance, each L/C Credit Extension and each settlement on any Settlement Date hereunder, the Aggregate Principal is less than or equal to the Borrowing Limit.
(w) Accounting. The manner in which such Loan Party accounts for the transactions contemplated by this Agreement and the Receivables Sale Agreement does not jeopardize the true sale analysis.
(x) Sanctions and other Anti-Terrorism Laws. No: (a) Covered Entity, nor any employees, officers, directors, or to the knowledge of a Covered Entity, any affiliates or
agents acting on a Covered Entity’s behalf in connection with this Agreement: (i) is a Sanctioned Person; (ii) directly, or indirectly through any third party, is engaged in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, or any transactions or other dealings that otherwise are prohibited by any Anti-Terrorism Laws; (b) Collateral is Embargoed Property.
(y) Solvency. Immediately after the consummation of the transactions to occur on the applicable Commencement Date, (a) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured and (d) no Loan Party will have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted after the applicable Commencement Date. No Loan Party intends to, and no Loan Party believes that it or any of its Non-Excluded Subsidiaries (other than Non-Material Subsidiaries) will, incur debts beyond its ability to pay such debts as they mature, taking into account the timing of and amounts of cash to be received by it or any such Non-Excluded Subsidiary (whether from anticipated refinancings, asset sales, capital contributions or otherwise) and the timing of the amounts of cash to be payable on or in respect of its Debt or the Debt of any such Non-Excluded Subsidiary.
(z) Taxes.
(i) Each Loan Party and its Non-Excluded Subsidiaries have timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid all Taxes required to be paid by it except (x) Taxes that are being contested in good faith by appropriate proceedings and for which such Loan Party or such Non-Excluded Subsidiary has set aside on its books adequate reserves or (y) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
(ii) The Borrower is and has always been treated as an entity that is disregarded as separate entity from a “United States person” (within the meaning of Section 7701(a)(30) of the Tax Code) for U.S. federal income tax purposes and is not, and has not elected under Treasury regulations Section 301.7701-3(c) to be, classified as an association (or publicly traded partnership) taxable as a corporation for U.S. federal income tax purposes.
(aa) ERISA. Except as could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (a) each Loan Party and each of their respective ERISA Affiliates is in compliance with the applicable provisions of ERISA and of the Tax Code relating to Plans and the regulations and published interpretations thereunder, and (b) no ERISA Event has occurred or is reasonably expected to occur. The minimum funding standards of ERISA and the Tax Code with respect to each Plan have been satisfied, except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
(bb) Anti-Corruption Laws. Each Covered Entity has (a) conducted its business in compliance with all Anti-Corruption Laws and (b) has instituted and maintains policies and procedures reasonably designed to ensure compliance with such Laws.
(cc) Beneficial Ownership Certification. As of December 22, 2022, the information included in the Beneficial Ownership Certification is true and correct in all respects.
(dd) Liquidity Coverage Ratio. The Borrower has not, does not and will not during this Agreement issue any LCR Security. The Borrower further represents and warrants that its assets and liabilities are consolidated with the assets and liabilities of the Smithfield for purposes of GAAP.
ARTICLE VI.
CONDITIONS OF ADVANCES
Section 6.1. Conditions Precedent to Initial Advance. No Lender shall be obligated to make any Advance hereunder on the occasion of the initial Advance nor shall any Letter of Credit Issuer be obligated to issue any Letter of Credit, nor shall any Lender, the Administrative Agent or any other party hereto be obligated to take, fulfill or perform any other action hereunder, until all of the following conditions, after giving effect to the proposed Advance or Letter of Credit Extension, in each case, have been satisfied, in the sole discretion of the Administrative Agent:
(a) Each Transaction Document shall have been duly executed by, and delivered to, the parties hereto and thereto and the Administrative Agent shall have received such other documents, instruments, agreements and legal opinions as the Administrative Agent shall request in connection with the transactions contemplated by this Agreement, including all those documents listed on Schedule B to this Agreement, each in form and substance satisfactory to the Administrative Agent;
(b) The Borrower shall have paid all fees required to be paid by it, including all fees required hereunder, and shall have reimbursed each Lender and each Agent for all fees, costs and expenses of closing the transaction contemplated hereunder and under the other Transaction Documents, including the attorney fees and any other legal and document preparation costs incurred by any Lender and/or any Agent pursuant to the terms of this Agreement, the Agent Fee Letter and the Fee Letter;
(c) the applicable Commencement Date shall have occurred; and
(d) the Rating Agency Condition shall have been satisfied.
Section 6.2. Conditions Precedent to All Advances and L/C Credit Extensions. Each Advance (including the initial Advance), each L/C Credit Extension and each rollover or continuation of the foregoing shall be subject to the further conditions precedent that (a) the Servicer shall have delivered to the Agents on or prior to the date thereof, in form and substance satisfactory to the Agents, all Pool Reports as and when due under Section 8.5; (b) the Facility
Termination Date shall not have occurred; (c) the Borrower shall have delivered the Borrowing Notice in accordance with Section 1.2 or Section 1.8(a), as applicable; (d) [reserved]; and (e) on the date thereof, the following statements shall be true (and acceptance of the proceeds of such Advance shall be deemed a representation and warranty by Borrower that such statements are then true):
(i) the representations and warranties set forth in Section 5.1 are true and correct on and as of the date of such Advance or L/C Credit Extension (or such Settlement Date, as the case may be) as though made on and as of such date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date;
(ii) no event has occurred and is continuing, or would result from such Advance or L/C Credit Extension (or the continuation thereof), that will constitute (A) an Event of Default or (B) an Unmatured Event of Default;
(iii) after giving effect to such Advance or L/C Credit Extension (or the continuation thereof), the Aggregate Principal will not exceed the Borrowing Limit; and
(iv) the Borrower has not failed to make any payment or deposit required to be made under the Monetization Documents, which failure has remained unremedied for one (1) or more Business Days.
ARTICLE VII.
COVENANTS
Section 7.1. Affirmative Covenants of the Loan Parties. Until the Final Payout Date, each Loan Party hereby covenants, as to itself, as set forth below:
(a) Financial Reporting. Such Loan Party will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish or cause to be furnished to the Agents:
(i) Annual Reporting. Within 90 days after the end of each fiscal year of Servicer or Borrower, as applicable, (1) Servicer’s audited consolidated balance sheet and audited consolidated condensed statements of income, stockholders' equity and cash flows as of the end of and for such year, and related notes thereto setting forth in each case in comparative form the corresponding figures for (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all reported on by Ernst & Young LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception (other than a “going concern” qualification or exception in the case of the Servicer solely as a result of the upcoming maturity of the Debt outstanding under the Parent Credit Agreement and except for qualifications solely relating to changes in accounting principles or practices reflecting changes in GAAP and required or
approved by the Servicer’s or Borrower’s independent certified public accountant) and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of Servicer and its consolidated Subsidiaries or Borrower, as applicable, on a consolidated basis in accordance with GAAP consistently applied, and (2) Borrower’s unaudited balance sheet and unaudited statement of income as of the end of and for such year, and related notes thereto setting forth in each case in comparative form the corresponding figures for (or, in the case of the balance sheet, as of the end of) the previous fiscal year.
(ii) Quarterly Reporting. Within 45 days after the end of each of the first three (3) fiscal quarters of each fiscal year of Servicer, Servicer’s unaudited consolidated balance sheet and unaudited consolidated condensed statements of income and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by the Financial Officer of Servicer as presenting fairly in all material respects the financial condition and results of operations of Servicer and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes.
(iii) Compliance Certificate. Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit IV signed by such Loan Party’s Authorized Officer and dated the date of execution thereof.
(iv) [Reserved].
(v) Copies of Notices. Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than the Administrative Agent or any Lender, copies of the same.
(vi) Change in Credit and Collection Policy. At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such change or amendment, and (B) if such proposed change or amendment would pursuant to the Receivables Sale Agreement require the consent of the Agent, requesting the Agents’ consent thereto.
(vii) Other Information. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of such Loan Party as any Agent may from time to time reasonably request in order to protect the interests of the
Administrative Agent and the Lenders under or as contemplated by this Agreement.
(b) Notices. Such Loan Party will notify the Agents in writing of any of the following promptly upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto:
(i) Events of Default or Unmatured Events of Default. The occurrence of each Event of Default and each Unmatured Event of Default, by a statement of an Authorized Officer of such Loan Party.
(ii) Termination Date. The occurrence of the Termination Date under the Receivables Sale Agreement.
(iii) Notices under Receivables Sale Agreement. Copies of all notices delivered under the Receivables Sale Agreement.
(iv) Downgrade of Performance Guarantor. Any downgrade in the rating of any Debt of Performance Guarantor by S&P or Moody’s, setting forth the Debt affected and the nature of such change.
(v) Material Events. (i) With respect to Borrower, the occurrence of any other event or condition that has had, or would reasonably be expected to have, a Material Adverse Effect and (ii) with respect to Servicer, a copy of each notice delivered pursuant to Section 6.02 of the Parent Credit Agreement as and when such notice is delivered thereunder.
(vi) Independent Director. The decision to appoint a new director of the Borrower as the “Independent Director” for purposes of this Agreement, such notice to be issued not less than ten (10) Business Days prior to the effective date of such appointment and to certify that the designated Person satisfies the criteria set forth in the definition herein of “Independent Director.”
(vii) ERISA. Promptly following receipt thereof, copies of any documents described in Sections 101(k) or 101(l) of ERISA that any Loan Party or any ERISA Affiliate may request with respect to any Multiemployer Plan; provided that if the Loan Parties or any of the ERISA Affiliates have not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Administrative Agent, the Loan Parties and/or the ERISA Affiliates shall promptly make a request for such documents or notices from such administrator or sponsor and the Borrower shall provide copies of such documents and notices promptly to the Administrative Agent after receipt thereof, and further provided that the rights granted to the Administrative Agent in this section shall be exercised not more than once during a 12-month period.
(c) Compliance with Laws and Preservation of Corporate Existence. Such Loan Party will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. Such Loan Party will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where its business is conducted, except where the failure to so preserve and maintain or qualify would not reasonably be expected to have a Material Adverse Effect.
(d) Audits. Such Loan Party will furnish to each of the Co-Agents from time to time such information with respect to it and the Receivables such Co-Agent may reasonably request. Such Loan Party will, from time to time during regular business hours as requested by any Co-Agent upon reasonable notice and at the sole cost of such Loan Party, permit such Co-Agent, or their agents or representatives (and shall cause each Originator to permit such Co-Agent or their agents or representatives): (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Person relating to the Collateral, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Person for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Person’s financial condition or the Collateral or any Person’s performance under any of the Transaction Documents or the Monetization Documents or any Person’s performance under the Contracts and, in each case, with any of the officers or employees of Borrower or the Servicer having knowledge of such matters (each of the foregoing examinations and visits, a “Review”); provided, however, that, so long as no Event of Default has occurred and is continuing, the Loan Parties shall only be responsible for the costs and expenses of one (1) Review collectively conducted by the Co-Agents in the aggregate in any one calendar year.
(e) Keeping and Marking of Records and Books.
(i) The Servicer will (and will cause each Originator to) maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable). The Servicer will (and will cause each Originator to) give the Agents notice of any material change in the administrative and operating procedures referred to in the previous sentence.
(ii) Such Loan Party will (and the Servicer will cause each Originator to): (A) on or prior to the Closing Date, mark its master data processing records and other books and records relating to the Loans with a legend, acceptable to the Agents, describing the Administrative Agent’s security interest in the Collateral and (B)
upon the request of the Agents following the occurrence of an Event of Default: (x) mark each Contract with a legend describing the Administrative Agent’s security interest and (y) deliver to the Administrative Agent all Contracts (including, without limitation, all multiple originals of any such Contract constituting an instrument, a certificated security or chattel paper) relating to the Receivables.
(f) Compliance with Contracts and Credit and Collection Policy. Such Loan Party will (and will cause each Originator to) timely and fully (i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and (ii) comply in all respects with the Credit and Collection Policy in regard to each Receivable and the related Contract.
(g) Maintenance and Enforcement of Receivables Sale Agreement and Performance Undertaking. Borrower will maintain the effectiveness of, and continue to perform under the Receivables Sale Agreement and the Performance Undertaking, such that it does not amend, restate, supplement, cancel, terminate or otherwise modify the Receivables Sale Agreement or the Performance Undertaking, or give any consent, waiver, directive or approval thereunder or waive any default, action, omission or breach under the Receivables Sale Agreement or the Performance Undertaking or otherwise grant any indulgence thereunder, without (in each case) the prior written consent of the Required Committed Lenders. Borrower will, and will require each Originator to, perform each of their respective obligations and undertakings under and pursuant to the Receivables Sale Agreement, will purchase Receivables thereunder in strict compliance with the terms thereof and will vigorously enforce the rights and remedies accorded to Borrower under the Receivables Sale Agreement and the Performance Undertaking. Borrower will take all actions to perfect and enforce its rights and interests (and the rights and interests of the Agents and the Lenders as assignees of Borrower) under the Receivables Sale Agreement as any of the Agents may from time to time reasonably request, including, without limitation, making claims to which it may be entitled under any indemnity, reimbursement or similar provision contained in the Receivables Sale Agreement.
(h) Ownership. Borrower will (or will cause each Originator to) take all necessary action to (i) vest legal and equitable title to the Collateral purchased under the Receivables Sale Agreement irrevocably in Borrower, free and clear of any Adverse Claims (other than Adverse Claims (A) in favor of the Administrative Agent, for the benefit of the Secured Parties or, (B) with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents) including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Borrower’s interest in such Collateral and such other action to perfect, protect or more fully evidence the interest of Borrower therein as any of the Agents may reasonably request, and (ii) establish and maintain, in favor of the Administrative Agent, for the benefit of the Secured Parties, a valid and perfected first priority security interest in all Collateral, free and clear of any Adverse Claims (other than, with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of
the Receivables Buyers pursuant to the Monetization Documents), including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Administrative Agent’s (for the benefit of the Secured Parties) security interest in the Collateral and such other action to perfect, protect or more fully evidence the interest of the Administrative Agent for the benefit of the Secured Parties as any of the Agents may reasonably request.
(i) Lenders’ Reliance. Borrower acknowledges that the Agents and the Lenders are entering into the transactions contemplated by this Agreement in reliance upon Borrower’s identity as a legal entity that is separate from each Originator. Therefore, from and after the date of execution and delivery of this Agreement, Borrower shall take all reasonable steps, including, without limitation, all steps that any Agent or any Lender may from time to time reasonably request, to maintain Borrower’s identity as a separate legal entity and to make it manifest to third parties that Borrower is an entity with assets and liabilities distinct from those of each Originator and any Affiliates thereof (other than Borrower) and not just a division of any Originator or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, Borrower will:
(i) maintain books, financial records and bank accounts in a manner so that it will not be difficult or costly to segregate, ascertain and otherwise identify the assets and liabilities of Borrower;
(ii) not commingle any of its assets, funds, liabilities or business functions with the assets, funds, liabilities or business functions of any other person or entity except for payments that may be received in any Lock-Box prior to 30 days after the date of this Agreement;
(iii) observe all appropriate limited liability company procedures and formalities;
(iv) pay its own liabilities, losses and expenses only out of its own funds;
(v) maintain separate annual and quarterly financial statements prepared in accordance with generally accepted accounting principles, consistently applied, showing its assets and liabilities separate and distinct from those of any other person or entity;
(vi) pay or bear the cost (or if such statements are consolidated, the pro-rata cost) of the preparation of its financial statements;
(vii) not guarantee or become obligated for the debts or obligations of any other entity or person;
(viii) not hold out its credit as being available to satisfy the debts or obligations of any other person or entity;
(ix) hold itself out as an entity separate and distinct from any other person or entity (including its Affiliates);
(x) correct any known misunderstanding regarding its separate identity;
(xi) use separate stationery, invoices, checks and the like bearing its own name;
(xii) compensate all consultants, independent contractors and agents from its own funds for services provided to it by such consultants, independent contractors and agents;
(xiii) to the extent that Borrower and any of its Affiliates occupy any premises in the same location, allocate fairly, appropriately and nonarbitrarily any rent and overhead expenses among and between such entities with the result that the Borrower bears its fair share of all such rent and expenses;
(xiv) to the extent that Borrower and any of its Affiliates share the same officers, allocate fairly, appropriately and nonarbitrarily any salaries and expenses related to providing benefits to such officers between or among such entities, with the result that the Borrower will bear its fair share of the salary and benefit costs associated with all such common or shared officers;
(xv) to the extent that Borrower and any of its Affiliates jointly contract or do business with vendors or service providers or share overhead expenses, allocate fairly, appropriately and nonarbitrarily any costs and expenses incurred in so doing between or among such entities, with the result that the Borrower bears its fair share of all such costs and expenses;
(xvi) to the extent Borrower contracts or does business with vendors or service providers where the goods or services are wholly or partially for the benefit of its Affiliates, allocate fairly, appropriately and nonarbitrarily any costs incurred in so doing to the entity for whose benefit such goods or services are provided, with the result that the Borrower bears its fair share of all such costs;
(xvii) not make any loans to any person or entity (other than such intercompany loans between Borrower and each Originator contemplated by this Agreement) or buy or hold any indebtedness issued by any other person or entity (except for cash and investment-grade securities);
(xviii) conduct its own business in its own name;
(xix) hold all of its assets in its own name;
(xx) maintain an arm’s-length relationship with its Affiliates and enter into transactions with Affiliates only on a commercially reasonable basis;
(xxi) not pledge its assets for the benefit of any other Person;
(xxii) not identify itself as a division or department of any other entity;
(xxiii) maintain adequate capital in light of its contemplated business operations and in no event less than the Required Capital Amount (as defined in the Receivables Sale Agreement) and refrain from making any dividend, distribution, redemption of capital stock or payment of any subordinated indebtedness which would cause the Required Capital Amount to cease to be so maintained;
(xxiv) conduct transactions between Borrower and third parties in the name of Borrower and as an entity separate and independent from each of its Affiliates;
(xxv) cause representatives and agents of Borrower to hold themselves out to third parties as being representatives or agents, as the case may be, of Borrower;
(xxvi) not enter into or be a party to, any transaction with its members or Affiliates except in the ordinary course of its business and on terms which are intrinsically fair and are substantially similar to those which would be obtained in a comparable arm’s-length transaction with an unrelated third party;
(xxvii) not acquire or assume the obligations or acquire the securities of its Affiliates or owners, including partners of its Affiliates; provided, however, that notwithstanding the foregoing, Borrower is authorized to engage in and consummate each of the transactions contemplated by each Transaction Document and each Monetization Document and Borrower is authorized to perform its obligations under each Transaction Document; (xxviii) maintain its limited liability company status in conformity with this Agreement, such that (A) it does not amend, restate, supplement or otherwise modify its Certificate of Formation or Limited Liability Company Agreement in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents, including, without limitation, Section 7.1(i) of this Agreement; and (B) its corporate charter requires that the Board of Directors of the Borrower shall at all times include at least one “Independent Director” as such term is defined herein.
(xxix) maintain its corporate separateness such that it does not merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions, and except as otherwise contemplated herein) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, nor at any time create, have, acquire, maintain or hold any interest in any Subsidiary; and
(xxx) take such other actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinion issued by Hogan Lovells US LLP, as
counsel for Borrower, issued as of the date hereof and relating to substantive consolidation issues, and in the certificates accompanying such opinion, remain true and correct in all material respects at all times.
(j) Collections. Such Loan Party will cause (1) all proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection Account and (2) each Lock-Box and Collection Account (other than any FX Collection Account and the related Lock-Boxes) to be subject at all times to a Collection Account Agreement that is in full force and effect; provided, that amounts received in respect of any Excluded Receivables shall not be deposited in any Lock-Box or Collection Account. In the event any payments relating to the Collateral are remitted directly to Borrower or any Affiliate of Borrower, Borrower will remit (or will cause all such payments to be remitted) directly to a Collection Bank and deposit into a Collection Account within two (2) Business Days following receipt thereof, and, at all times prior to such remittance, Borrower will itself hold or, if applicable, will cause such payments to be held in trust for the exclusive benefit of the Agents and the Lenders. Borrower or, solely (i) on and prior to the Post-Closing Date, Smithfield Support or Smithfield Direct, LLC or (ii) with respect to each FX Collection Account and the related Lock-Boxes, Smithfield Support, will maintain exclusive ownership, dominion and control (subject to the terms of this Agreement) of each Lock-Box and Collection Account and shall not grant the right to take dominion and control of any Lock-Box or Collection Account at a future time or upon the occurrence of a future event to any Person, except to the Administrative Agent as contemplated by this Agreement, and except for access granted to Servicer prior to delivery of Collection Notices. Notwithstanding anything to the contrary in this Agreement, Monetized Receivable Collections may be deposited in a Lock-Box or a Collection Account so long as the Monetization Intercreditor Agreement is in full force and effect.
(k) Taxes. Such Loan Party will file all Tax returns and reports required by law to be filed by it and will promptly pay all Taxes and governmental charges at any time owing, except any such Taxes which are not yet delinquent or are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Borrower will pay when due any and all present and future stamp, documentary, and other similar Taxes and governmental charges payable in connection with the Receivables, and hold each of the Indemnified Parties harmless from and against any and all liabilities (including penalties, interest and expenses) with respect to or resulting from any delay or omission to pay such Taxes and governmental charges.
(l) Payment to Applicable Originator. With respect to any Receivable purchased by Borrower from any Originator, such sale shall be effected under, and in strict compliance with the terms of, the Receivables Sale Agreement, including, without limitation, the terms relating to the amount and timing of payments to be made to such Originator in respect of the purchase price for such Receivable.
(m) Notice of Ratio of Consolidated Funded Debt to Consolidated Capitalization. Concurrently with the delivery of a certificate of Smithfield pursuant to Section 6.01(c) of the Parent Credit Agreement, the Servicer shall provide to the Administrative Agent
written notice of the ratio of Consolidated Funded Debt to Consolidated Capitalization as calculated pursuant to the terms of the Parent Credit Agreement as amended, restated or otherwise modified from time to time.
(n) Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws. Such Loan Party covenants and agrees that:
(i) it shall immediately notify each of the Agents in writing upon the occurrence of a Reportable Compliance Event;
(ii) if, at any time, any Collateral becomes Embargoed Property, then, in addition to all other rights and remedies available to each of the Agents, upon request by any of the Agents, such Loan Party shall (or shall cause the Borrower to) provide substitute Collateral acceptable to the Administrative Agent that is not Embargoed Property; and
(iii) it shall, and shall require each other Covered Entity to, conduct its business in compliance with all Anti-Corruption Laws and maintain policies and procedures reasonably designed to ensure compliance with such Laws.
(o) Notice of Certain Amendments to the Parent Credit Agreement. Regardless of whether the Administrative Agent is also a party to the Parent Credit Agreement, Smithfield or the Borrower shall provide the Administrative Agent with notice of (i) any change to the definition of “Event of Default” pursuant to the Parent Credit Agreement and (ii) any amendment, restatement, waiver or other modification to the Parent Credit Agreement given effect pursuant to the definition of “Parent Credit Agreement” within ten (10) calendar days of such amendment, restatement, waiver or other modification.
(p) Beneficial Ownership Rule. Promptly following any change in the information included in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners or control parties identified in parts (c) or (d) of such certification, the Borrower shall execute and deliver to the Administrative Agent an updated Beneficial Ownership Certification.
Promptly following any request therefor, the Borrower shall deliver to the Administrative Agent all documentation and other information required by bank regulatory authorities requested by a Committed Lender for purposes of compliance with applicable “know your customer” requirements under the Patriot Act, the Beneficial Ownership Rule or other applicable anti-money laundering laws, rules and regulations.
(q) Monetization Documents. Promptly following the amendment, restatement, modification, waiver or termination of any Monetization Document, the Borrower shall provide (or cause the Servicer to provide) a copy thereof to each Agent.
Section 7.2. Negative Covenants of the Loan Parties. Until the Final Payout Date, each Loan Party hereby covenants, as to itself, that:
(a) Name Change, Offices and Records. Such Loan Party will not change its name, identity or structure (within the meaning of any applicable enactment of the UCC) or jurisdiction of organization, unless it shall have: (i) given the Agents at least ten (10) Business Days’ prior written notice thereof and (ii) delivered to the Administrative Agent all financing statements, instruments and other documents requested by any Agent in connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. Except as may be required by the Administrative Agent pursuant to Section 8.2(b), such Loan Party will not add or terminate any bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box or Collection Account, unless the Administrative Agent shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Collection Bank or a Collection Account (other than any FX Collection Account) or Lock-Box (other than any Lock-Box associated with an FX Collection Account), an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box; provided, however, that the Servicer may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account, including any Collection Account relating to Smithfield Support.
(c) Modifications to Contracts and Credit and Collection Policy. Such Loan Party will not, and will not permit any Originator to, make any change to the Credit and Collection Policy (other than any change expressly permitted by the Receivables Sale Agreement). Except as provided in Section 8.2(d), the Servicer will not, and will not permit any Originator to, extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy.
(d) Sales, Liens. Borrower will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any of the Collateral, or assign any right to receive income with respect thereto (other than, in each case, (i) the creation of a security interest therein in favor of the Administrative Agent as provided for herein or, (ii) with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents), and Borrower will defend the right, title and interest of the Secured Parties in, to and under any of the foregoing property, against all claims of third parties claiming through or under Borrower or any Originator.
(e) Use of Proceeds. Borrower will not use the proceeds of the Advances for any purpose other than (i) paying for Receivables and Related Security under and in accordance with the Receivables Sale Agreement, including without limitation, making payments on the Subordinated Notes to the extent permitted thereunder and under the Receivables Sale
Agreement, (ii) paying its ordinary and necessary operating expenses when and as due, and (iii) making Restricted Junior Payments to the extent permitted under this Agreement.
(f) Termination Date Determination. Borrower will not designate the Termination Date, or send any written notice to any Originator in respect thereof, without the prior written consent of the Agents, except with respect to the occurrence of a Termination Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement.
(g) Restricted Junior Payments. Borrower will not make any Restricted Junior Payment if after giving effect thereto, Borrower’s Net Worth (as defined in the Receivables Sale Agreement) would be less than the Required Capital Amount (as defined in the Receivables Sale Agreement).
(h) Borrower Debt. Borrower will not incur or permit to exist any Debt or liability on account of deposits except: (i) the Obligations, (ii) the Subordinated Loans, and (iii) other current accounts payable arising in the ordinary course of business and not overdue.
(i) Merger; Consolidation. Subject to the limitations of Section 7.1(i), no Loan Party will, nor will it permit any of its Non-Excluded Subsidiaries to, merge into, amalgamate with or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Non-Excluded Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing:
(i) any Subsidiary (other than the Borrower) may merge, consolidate or amalgamate with the Servicer in a transaction in which the Servicer is the surviving entity pursuant to documentation reasonably satisfactory to the Administrative Agent;
(ii) any other Person (other than the Borrower) may merge into or amalgamate or consolidate with the Servicer in a transaction in which the Servicer is the surviving corporation, or, concurrently with the consummation of such transaction, the surviving entity becomes the Servicer;
(iii) any Non-Excluded Subsidiary that is not a Loan Party may merge into or amalgamate or consolidate with any of the following: (A) any other Non-Excluded Subsidiary that is not a Loan Party and (B) any other Person (other than a Loan Party) if permitted under Section 7.03(a) of the Parent Credit Agreement;
(iv) any Non-Excluded Subsidiary may sell, transfer, lease or otherwise dispose of its assets, including all or substantially all of the stock of any of its Non-Excluded Subsidiaries, to the Servicer or another Non-Excluded Subsidiary; provided that if any such transferor is a Loan Party, such transferee shall be a Loan Party;
(v) any Non-Excluded Subsidiary may liquidate or dissolve if the Servicer determines in good faith that such liquidation or dissolution is in the best interests of the Servicer and is not materially disadvantageous to the Lenders; and
(vi) the Servicer or any Non-Excluded Subsidiary may sell, transfer, lease or otherwise dispose of (including pursuant to any merger, amalgamation or consolidation) its assets (including for the avoidance of doubt any Excluded Receivable and all or substantially all of the stock of any of its Non-Excluded Subsidiaries) in any manner expressly permitted by any Transaction Document or if permitted under Section 7.06 or Section 7.07 of the Parent Credit Agreement.
(j) Excluded Originators. The Borrower shall not designate any Originator as an Excluded Originator pursuant to Section 1.8 of the Receivables Sale Agreement unless and until (i) the Servicer shall have prepared and forwarded to the Administrative Agent and the Lenders a restated Monthly Report for each of the twelve (12) prior Monthly Reporting Dates occurring since the date hereof, which such restated Monthly Report shall be prepared on the basis of the exclusion from the Collateral of the Receivables relating to such Originator and (ii) the Administrative Agent shall have provided its prior written consent to such designation; provided, however, that neither restated Monthly Reports nor consent of the Administrative Agent shall be required in the case of an Originator that had originated Receivables with an aggregate Outstanding Balance as the Calculation Period immediately preceding the Calculation Period in which the Effective Date occurs that is less than 2.5% of Outstanding Balance of all Receivables as of the Calculation Period immediately preceding the Calculation Period in which the Effective Date occurs. Any restated Monthly Report provided pursuant to this Section 7.2(j) shall be subject to the representations and warranties contained in Section 5.1(g).
(k) Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws. Such Loan Party covenants and agrees that:
(i) it and its Subsidiaries will not: (A) take any action that could reasonably be expected to result in it becoming a Sanctioned Person or allow any employees, officers, directors, affiliates or agents acting on its behalf in connection with this Agreement to become a Sanctioned Person; (B) directly, or indirectly through a third party, engage in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, including any use of the proceeds of the Advances to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws; (C) pay or repay any Obligations with Embargoed Property or funds derived from any unlawful activity; (D) permit any Collateral to become Embargoed Property; or (E) cause any Agent, Conduit or Committed Lender to violate any Anti-Terrorism Law; and
(ii) it will not, and will not permit any its Subsidiaries to, directly or indirectly, use the Advances or any proceeds thereof for any purpose which would breach any Anti-Corruption Laws in any jurisdiction in which any Covered Entity conducts business.
(l) Liquidity Coverage Ratio. The Borrower shall not issue any LCR Security.
(m) Tax Status. The Loan Parties shall ensure that the Borrower does not (i) become treated other than as a “disregarded entity” within the meaning of U.S. Treasury Regulation § 301.7701-3 that is wholly owned by a “United States person” within the meaning of Section 7701(a)(30) of the Tax Code for U.S. federal income tax purposes or (ii) become an association taxable as a corporation or a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes.
Section 7.3. Restructuring Transactions.
(a) The parties acknowledge that Smithfield and certain of its Affiliates undertook, or caused to be undertaken, prior to the date hereof, the Restructuring Transactions.
(b) Notwithstanding any other provision contained herein to the contrary, the parties agree that the undertaking by Smithfield or its Affiliates of the Restructuring Transaction, and the consummation thereof, did not cause and shall not be deemed to have constituted (i) a breach of any representation, warranty or covenant contained herein, (ii) a Material Adverse Effect, (iii) an Event of Default, or (iv) an Unmatured Event of Default.
ARTICLE VIII.
ADMINISTRATION AND COLLECTION
Section 8.1. Designation of Servicer.
(a) The servicing, administration and collection of the Receivables shall be conducted by such Person (the “Servicer”) so designated from time to time in accordance with this Section 8.1. Smithfield is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms of this Agreement. After the occurrence of an Event of Default, the Administrative Agent, at the direction of the Required Committed Lenders, may at any time designate as Servicer any Person domiciled in the United States to succeed Smithfield or any successor Servicer; provided that the Rating Agency Condition (if applicable) is satisfied.
(b) Smithfield may at any time and from time to time delegate any or all of its duties and obligations as Servicer hereunder to one or more Persons domiciled in the United States. Notwithstanding the foregoing, so long as Smithfield remains the Servicer hereunder: (i) Smithfield shall be and remain liable to the Agents and the Lenders for the full and prompt performance of all duties and responsibilities of the Servicer hereunder and (ii) the Agents and the Lenders shall be entitled to deal exclusively with Smithfield in matters relating to the discharge by the Servicer of its duties and responsibilities hereunder.
Section 8.2. Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect each Receivable from time to time, all in accordance with
applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy.
(b) The Servicer will instruct (i) all Obligors in respect of Receivables other than Excluded Receivables to pay all Collections directly to a Lock-Box or Collection Account and (ii) all Obligors in respect of Excluded Receivables to pay all Collections to a designated account that is not a Lock-Box or Collection Account. The Servicer shall effect a Collection Account Agreement with each bank party to a Collection Account (other than any FX Collection Account) at any time. In the case of any remittances received in any Lock-Box or Collection Account that shall have been identified, to the satisfaction of the Servicer, to not constitute either Collections or other proceeds of the Receivables or the Related Security or the Monetized Receivables Collections or other proceeds of the Monetized Receivables, the Servicer shall promptly remit such items to the Person identified to it as being the owner of such remittances. From and after the date the Administrative Agent delivers to any Collection Bank a Collection Notice pursuant to Section 8.3, the Administrative Agent may request that the Servicer, and the Servicer thereupon promptly shall instruct all Obligors with respect to the Receivables, to remit all payments thereon to a new depositary account specified by the Administrative Agent and, at all times thereafter, Borrower and the Servicer shall not deposit or otherwise credit, and shall not permit any other Person to deposit or otherwise credit to such new depositary account any cash or payment item other than Collections.
(c) The Servicer shall administer the Collections in accordance with the procedures described herein and in Article II. The Servicer shall set aside and hold in trust for the account of Borrower and the Lenders their respective shares of the Collections in accordance with Article II. The Servicer shall, upon the request of any Agent, segregate, in a manner acceptable to the Agents, all cash, checks and other instruments received by it from time to time constituting Collections from the general funds of the Servicer or Borrower prior to the remittance thereof in accordance with Article II. If the Servicer shall be required to segregate Collections pursuant to the preceding sentence, the Servicer shall segregate and deposit with a bank designated by the Administrative Agent such allocable share of Collections of Receivables set aside for the Lenders on the first Business Day following receipt by the Servicer of such Collections, duly endorsed or with duly executed instruments of transfer.
(d) The Servicer may, in accordance with the Credit and Collection Policy, extend the maturity of any Receivable or adjust the Outstanding Balance of any Receivable as the Servicer determines to be appropriate to maximize Collections thereof; provided, however, that such extension or adjustment shall not alter the status of such Receivable as a Delinquent Receivable or Defaulted Receivable or limit the rights of the Agents or the Lenders under this Agreement. Notwithstanding anything to the contrary contained herein, from and after the occurrence of an Event of Default, the Administrative Agent shall have the absolute and unlimited right to direct the Servicer to commence or settle any legal action with respect to any Receivable or to foreclose upon or repossess any Related Security.
(e) The Servicer shall hold in trust for Borrower and the Lenders all Records that (i) evidence or relate to the Receivables, the related Contracts and Related Security or (ii) are
otherwise necessary or desirable to collect the Receivables and shall, as soon as practicable upon demand of the Administrative Agent following the occurrence of an Event of Default, deliver or make available to the Administrative Agent all such Records, at a place selected by the Administrative Agent. The Servicer shall, as soon as practicable following receipt thereof turn over to Borrower any cash collections or other cash proceeds received with respect to Debt not constituting Receivables or proceeds of Collateral. The Servicer shall, from time to time at the request of any Lender, furnish to the Lenders (promptly after any such request) a calculation of the amounts set aside for the Lenders pursuant to Article II.
(f) Any payment by an Obligor in respect of any indebtedness owed by it to Originator or Borrower shall, except as otherwise specified by such Obligor or otherwise required by contract or law and unless otherwise instructed by the Administrative Agent, be applied as a Collection of any Receivable of such Obligor (starting with the oldest such Receivable) to the extent of any amounts then due and payable thereunder before being applied to any other receivable or other obligation of such Obligor.
Section 8.3. Collection Notices. The Administrative Agent is authorized at any time after the occurrence of an Event of Default to date and to deliver to the Collection Banks the Collection Notices. Borrower hereby transfers to the Administrative Agent for the benefit of the Secured Parties, the exclusive ownership and control of each Lock-Box and Collection Account; provided, however, that Borrower shall retain the right to direct the disposition of funds from each such Collection Account until the Administrative Agent (at the direction of any Co-Agent) delivers the applicable Collection Notice. In case any authorized signatory of Borrower whose signature appears on a Collection Account Agreement shall cease to have such authority before the delivery of such notice, such Collection Notice shall nevertheless be valid as if such authority had remained in force. Borrower hereby authorizes the Administrative Agent, and agrees that the Administrative Agent shall be entitled (i) at any time after delivery of the Collection Notices, to endorse Borrower’s name on checks and other instruments representing Collections, (ii) at any time after the occurrence of an Event of Default, to enforce the Receivables, the related Contracts and the Related Security, and (iii) at any time after the occurrence of an Event of Default, to take such action as shall be necessary or desirable to cause all cash, checks and other instruments constituting Collections of Receivables to come into the possession of the Administrative Agent rather than Borrower.
Section 8.4. Responsibilities of Borrower. Anything herein to the contrary notwithstanding, the exercise by the Administrative Agent on behalf of the Secured Parties of their rights hereunder shall not release the Servicer, any Originator or Borrower from any of their duties or obligations with respect to any Receivables or under the related Contracts. The Lenders shall have no obligation or liability with respect to any Receivables or related Contracts, nor shall any of them be obligated to perform the obligations of Borrower. Moreover, the ultimate responsibility for the servicing of the Receivables shall be borne by Borrower.
Section 8.5. Pool Reports. The Servicer shall prepare and forward to the Lenders (i) on each Monthly Reporting Date, a Monthly Report in substantially the form of Exhibit VI-A hereto and an electronic file of the data contained therein, and (ii) at such times as any Co-Agent shall
reasonably request, a listing by Obligor of all Receivables together with an aging of such Receivables. After a Ratings Trigger Event, the Servicer shall prepare and forward to the Lenders on a weekly basis, a Weekly Report in substantially the form of Exhibit VI-B hereto and an electronic file of the data contained therein. On and after the date on which any Receivable is designated an Excluded Receivable under the Receivables Sale Agreement, each Pool Report shall exclude any such Excluded Receivables. On and after the date on which any Originator is designated an Excluded Originator under the Receivables Sale Agreement, each Pool Report shall exclude any such Excluded Originator.
Section 8.6. Servicing Fee. As compensation for the Servicer’s servicing activities on their behalf, Borrower shall pay the Servicer the Servicing Fee, which fee shall be paid from Collections in arrears on each Settlement Date in accordance with Sections 2.2 and 2.3 herein.
ARTICLE IX.
EVENTS OF DEFAULT
Section 9.1. Events of Default. The occurrence of any one or more of the following events shall constitute an Event of Default:
(a) any Loan Party or Performance Guarantor shall fail to make any payment or deposit required to be made by it under the Transaction Documents when due and, for any such payment or deposit which is not in respect of principal, such failure continues for two consecutive Business Days;
(b) any representation, warranty, certification or statement made by Performance Guarantor or any Loan Party in any Transaction Document to which it is a party or in any other document delivered pursuant thereto shall prove to have been materially incorrect when made or deemed made; provided that the materiality threshold in the preceding clause shall not be applicable with respect to any representation or warranty that itself contains a materiality threshold;
(c) any Loan Party shall fail to perform or observe any covenant contained in Section 7.1(n), 7.2 or 8.5 when due;
(d) any Loan Party or Performance Guarantor shall fail to perform or observe any other covenant or agreement under any Transaction Documents and such failure shall remain unremedied for 15 days after the earlier of (i) an Executive Officer of any of such Persons obtaining knowledge thereof, or (ii) written notice thereof shall have been given to any Loan Party or Performance Guarantor by any of the Agents;
(e) failure of Borrower to pay any Debt (other than the Obligations) when due or the default by Borrower in the performance of any term, provision or condition contained in any agreement under which any such Debt was created or is governed, the effect of which is to cause, or to permit the holder or holders of such Debt to cause, such Debt to become due prior to its stated maturity; or any such Debt of Borrower shall be declared to be due and payable or
required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof;
(f) failure of Performance Guarantor or the Servicer or any of their respective Subsidiaries (other than the Borrower, any Non-Material Subsidiary and any Excluded Subsidiary) shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;
(g) a regulatory, tax or accounting body has ordered that the activities of the Borrower or any Affiliate of the Borrower contemplated hereby be terminated or, as a result of any other event or circumstance, the activities of the Borrower or any Affiliate of the Borrower contemplated hereby may reasonably be expected to cause the Borrower or any of its respective Affiliates to suffer materially adverse regulatory, accounting or tax consequences;
(h) any Person who does not satisfy the requirements of an “Independent Director” shall be appointed as an independent director of the Borrower;
(i) any change in the Credit and Collection Policy prohibited by Section 7.2(c) occurs, without the prior written consent of the Administrative Agent;
(j) an Event of Bankruptcy shall occur with respect to Performance Guarantor, any Originator or any Loan Party;
(k) as at the end of any Calculation Period:
(i) the three-month rolling average Delinquency Ratio shall exceed three percent (3)%,
(ii) the three-month rolling average Default Ratio shall exceed one percent (1)%,
(iii) the three-month rolling average Dilution Ratio shall exceed five percent (5)%, or
(iv) Days’ Sales Outstanding shall exceed 35 days;
(l) a Change of Control shall occur or the Borrower shall enter into any merger;
(m) one or more judgments for the payment of money in an aggregate amount in excess of $150,000,000 (to the extent not adequately covered by insurance as to which the insurer has not denied or contested coverage) shall be rendered against the Performance Guarantor, any Subsidiary of Performance Guarantor (other than any Excluded Subsidiary), any Loan Party, any Subsidiary of a Loan Party (other than any Excluded Subsidiary) or any combination thereof and the same shall remain unpaid or undischarged for a period of 45 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Performance
Guarantor, any Subsidiary of Performance Guarantor, any Loan Party or any Subsidiary of any Loan Party (other than any Excluded Subsidiary) to enforce any such judgment, or the Performance Guarantor, any Subsidiary of Performance Guarantor (other than any Excluded Subsidiary), any Loan Party or any Subsidiary of any Loan Party (other than any Excluded Subsidiary) shall fail within 45 days to discharge one or more non-monetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgments or orders, in any such case, are not stayed on appeal or otherwise being appropriately contested in good faith by proper proceedings diligently pursued;
(n) (i) the “Termination Date” shall occur under the Receivables Sale Agreement as to any Originator or any Originator shall for any reason cease to transfer, or cease to have the legal capacity to transfer, or otherwise be incapable of transferring Receivables to Borrower under the Receivables Sale Agreement or (ii) (x) an “Event of Default” (as such term is defined in the Parent Credit Agreement) shall have occurred and be continuing under the Parent Credit Agreement and (y) to the extent that the Administrative Agent is also a party to the Parent Credit Agreement, such Event of Default has not been waived or cured in accordance with the terms of the Parent Credit Agreement;
(o) this Agreement shall terminate in whole or in part (except in accordance with its terms), or shall cease to be effective or to be the legally valid, binding and enforceable obligation of Borrower, or any Obligor shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability, or the Administrative Agent for the benefit of the Lenders shall cease to have a valid and perfected first priority security interest in the Collateral;
(p) the Aggregate Principal shall exceed the Borrowing Limit for 2 consecutive Business Days;
(q) the Performance Undertaking shall cease to be effective or to be the legally valid, binding and enforceable obligation of Performance Guarantor, or Performance Guarantor shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability of any of its obligations thereunder;
(r) the Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the Tax Code with regard to any of the Collateral and such lien shall not have been released within fifteen (15) days, or the PBGC shall, or shall indicate its intention to, file notice of a lien pursuant to Section 4068 of ERISA with regard to any of the Collateral;
(s) (i) an ERISA Event shall have occurred or (ii) such other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) and (ii) such event or condition, when taken together with all other such events or conditions, if any, that have occurred, is reasonably likely to result in a Material Adverse Effect;
(t) any event shall occur which (i) materially and adversely impairs the ability of the Originators to originate Receivables of a credit quality that is, on average, at least equal to
the average credit quality of the Receivables sold or contributed to Borrower on the date of this Agreement or (ii) has, or would be reasonably expected to have, a Material Adverse Effect;
(u) a Subordinated Lender shall fail to make any Subordinated Loan under the applicable subordinated loan agreement following the Borrower’s request therefor;
(v) any Collection Account (other than any FX Collection Account) fails to be subject to a Collection Account Agreement at any time;
(w) on or after the Legal Final Maturity Date, the Outstanding Balance of all Eligible Receivables is greater than zero;
(x) Smithfield (or any successor borrower or guarantor under the Parent Credit Agreement) shall permit (i) the ratio of Consolidated Funded Debt to Consolidated Capitalization to be equal to or greater than 0.00 to 0.50 (or such other ratio as required by the Parent Credit Agreement as amended, restated or other modified in accordance with the definition of Parent Credit Agreement) or (ii) ratio of Consolidated EBITDA to Consolidated Interest Expense to be equal to or greater than 3.50 to 0.00 (or such other ratio as required by the Parent Credit Agreement as amended, restated or other modified in accordance with the definition of Parent Credit Agreement). For purposes of this clause (x) terms used (including all defined terms used within such terms) shall have the respective meaning assigned to such terms in the Parent Credit Agreement as amended, restated or other modified in accordance with the definition of Parent Credit Agreement; or
(y) any Loan Party shall breach Section 5.1(x).
Section 9.2. Remedies. Upon the occurrence of an Event of Default: (i) the Administrative Agent, upon the direction of the Required Committed Lenders, shall replace the Person then acting as Servicer, (ii) the Administrative Agent may (and, upon direction of the Required Committed Lenders, the Administrative Agent shall) declare the Commitment Termination Date to have occurred, whereupon the Aggregate Commitment shall immediately terminate and the Commitment Termination Date shall forthwith occur, all without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Loan Party; provided, however, that upon the occurrence of an Event of Default described in Section 9.1(j), the Commitment Termination Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Loan Party, (iii) the Administrative Agent may (and, upon the direction of the Required Committed Lenders, shall) deliver the Collection Notices to the Collection Banks, (iv) the Administrative Agent may (and, upon the direction of the Required Committed Lenders, shall) exercise all rights and remedies of a secured party upon default under the UCC and other applicable laws, and (v) the Administrative Agent may (and, upon the direction of the Required Committed Lenders, shall) notify Obligors of the Administrative Agent’s security interest in the Receivables and other Collateral and instruct them to make future payments into accounts designated by the Administrative Agent. The aforementioned rights and remedies shall be without limitation, and shall be in addition to all other rights and remedies of the Agents and the Lenders otherwise available under any other provision of this Agreement, by operation of law, at equity or
otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative.
ARTICLE X.
INDEMNIFICATION
Section 10.1. Indemnities by the Loan Parties. Without limiting any other rights that the Administrative Agent or any Lender may have hereunder or under applicable law, (A) Borrower hereby agrees to indemnify (and pay within 15 days of demand (together with a reasonably detailed invoice therefor) to) each of the Agents, each of the Conduits, each of the Committed Lenders, each of the Letter of Credit Issuers, each of the L/C Participants and each of the respective assigns, officers, directors, agents and employees of the foregoing (each, an “Indemnified Party”) from and against any and all damages, losses, claims, Taxes, liabilities, costs, expenses and for all other amounts payable (but in the case of attorneys’ fees, limited to reasonable attorneys’ fees actually incurred and disbursements of one primary counsel for the Indemnified Parties (taken as a whole) (and, if necessary, one local counsel in each material jurisdiction for the Indemnified Parties (taken as a whole) and, solely in the case of a conflict of interest, one additional counsel as necessary to the Indemnified Parties actually affected by such conflict (taken as a whole))) and, to the extent the Borrower does not timely pay such indemnity, any additional liability (including penalties, interest and expenses) arising from or with respect to any of the foregoing (all of the foregoing being collectively referred to as “Indemnified Amounts”) awarded against or incurred by any of them arising out of or as a result of this Agreement, any Letter of Credit or the acquisition, either directly or indirectly, by a Lender of an interest in the Receivables, and (B) the Servicer hereby agrees to indemnify (and pay within 15 days of demand (together with a reasonably detailed invoice therefor) to) each Indemnified Party for Indemnified Amounts awarded against or incurred by any of them arising out of the Servicer’s activities as Servicer hereunder excluding, however, in all of the foregoing instances under the preceding clause (A):
(a) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence, bad faith or willful misconduct on the part of the Indemnified Party seeking indemnification;
(b) Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor or the intentional non-payment of amounts due by the related Obligor in breach of its obligations in respect of such Receivable; or
(c) (i) taxes imposed on or measured by such Indemnified Party’s net income, and franchise taxes and branch profit taxes imposed on it, by the jurisdiction under the laws of which such Indemnified Party is organized or any political subdivision thereof, (ii) taxes imposed on or measured by such Indemnified Party’s net income, and franchise taxes and branch profit taxes imposed on it, by the jurisdiction in which such Indemnified Party’s principal executive office is located or any political subdivision thereof and (iii) in the case of a Foreign Lender, any U.S. federal withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new
lending office), except to the extent that such Foreign Lender was entitled at the time of designating a new lending office, to receive additional amounts with respect to such withholding tax pursuant to this Section 10.1 (all of the foregoing contained in clauses (i), (ii) and (iii) collectively, “Excluded Taxes”);
provided, however, that nothing contained in this sentence shall limit the liability of any Loan Party or limit the recourse of the Lenders to any Loan Party for amounts otherwise specifically provided to be paid by such Loan Party under the terms of this Agreement. Without limiting the generality of the foregoing indemnification, Borrower shall indemnify the Agents and the Lenders for Indemnified Amounts (including, without limitation, losses in respect of uncollectible receivables, regardless of whether reimbursement therefor would constitute recourse to such Loan Party) relating to or resulting from:
(i) any representation or warranty made by any Loan Party or any Originator (or any officers of any such Person) under or in connection with this Agreement, any other Transaction Document or any other information or report delivered by any such Person pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made;
(ii) the failure by Borrower, the Servicer or any Originator to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of any Originator to keep or perform any of its obligations, express or implied, with respect to any Contract;
(iii) any failure of Borrower, the Servicer or any Originator to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document;
(iv) any products liability, personal injury or damage suit, or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract or any Receivable;
(v) any dispute, claim, offset or defense (other than a defense related to the financial condition, or discharge in bankruptcy, of the Obligor) of the Obligor to the payment of any Receivable (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services or any reduction of the Outstanding Balance of any Receivable due to PASA;
(vi) the commingling of Collections of Receivables at any time with other funds, including any commingling with any Monetized Receivable Collections;
(vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, the use of the proceeds of any Advance, the Collateral or any other investigation, litigation or proceeding relating to Borrower, the Servicer or any Originator in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby;
(viii) any Regulatory Change which increases the cost of, or lowers the Yield, to any Indemnified Party;
(ix) any inability to litigate any claim against any Obligor in respect of any Receivable as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding;
(x) any Event of Default;
(xi) any failure of Borrower to acquire and maintain legal and equitable title to, and ownership of any of the Collateral from the applicable Originator, free and clear of any Adverse Claim (other than as created hereunder); or any failure of Borrower to give reasonably equivalent value to any Originator under the Receivables Sale Agreement in consideration of the transfer by such Originator of any Receivable, or any attempt by any Person to void such transfer under statutory provisions or common law or equitable action;
(xii) any failure to vest and maintain vested in the Administrative Agent for the benefit of the Lenders, or to transfer to the Administrative Agent for the benefit of the Secured Parties, a valid first priority perfected security interests in the Collateral, free and clear of any Adverse Claim (other than Adverse Claims in favor of the Administrative Agent, for the benefit of the Secured Parties);
(xiii) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Collateral, and the proceeds thereof, whether at the time of any Advance or at any subsequent time;
(xiv) any action or omission by any Loan Party which reduces or impairs the rights of the Administrative Agent or the Lenders with respect to any Collateral or the value of any Collateral;
(xv) any attempt by any Person to void any Advance or the Administrative Agent’s security interest in the Collateral under statutory provisions or common law or equitable action;
(xvi) any civil penalty or fine assessed by OFAC against, and all reasonable costs and expenses (including counsel fees and disbursements) incurred in
connection with defense thereof by the Administrative Agent or any Lender as a result of the funding of the Commitments or the acceptance of payments due under the Transaction Documents;
(xvii) the failure of any Receivable included in the calculation of the Net Pool Balance as an Eligible Receivable to be an Eligible Receivable at the time so included; and
(xviii) any In-Transit Receivable included in the calculation of the Net Pool Balance as an Eligible Receivable ceasing to be deemed to be an Eligible Receivable.
Notwithstanding the foregoing, (A) the foregoing indemnification is not intended to, and shall not, constitute a guarantee of the collectability or payment of the Receivables; and (B) except as provided in clause (xviii) above solely in relation to In-Transit Receivables, nothing in this Section 10.1 shall require Borrower to indemnify the Indemnified Parties for Receivables which are not collected, not paid or otherwise uncollectible on account of the insolvency, bankruptcy, credit-worthiness or financial inability to pay of the applicable Obligor.
Section 10.2. Increased Cost and Reduced Return
(a) Increased Costs Generally.
(i) If after the Closing Date, any Affected Entity shall be charged any fee, expense or increased cost on account of any Regulatory Change (1) that subjects such Affected Entity to any charge or withholding on or with respect to any Funding Agreement or such Affected Entity’s obligations under any Funding Agreement, or on or with respect to the Receivables, or changes the basis of taxation of payments to such Affected Entity of any amounts payable under any Funding Agreement (except for changes in the rate of tax on the overall net income of such Affected Entity or Excluded Taxes) or (2) that imposes, modifies or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of such Affected Entity, or credit extended by such Affected Entity pursuant to any Funding Agreement or (3) that imposes any other condition the result of which is to increase the cost to such Affected Entity of performing its obligations under any Funding Agreement, or to reduce the rate of return on such Affected Entity’s capital as a consequence of its obligations under any Funding Agreement, or to reduce the amount of any sum received or receivable by such Affected Entity under any Funding Agreement or to require any payment calculated by reference to the amount of interests or loans held or interest received by it, then, upon demand by the applicable Co-Agent, on behalf of such Affected Entity, and receipt by Borrower of a certificate as to such amounts (to be conclusive absent manifest error), Borrower shall pay to such Co-Agent, as applicable, for the benefit of such Affected Entity, such amounts charged to such Affected Entity or such amounts to otherwise compensate such Affected Entity for such increased
cost or such reduction. Notwithstanding anything in this Agreement to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations or directives thereunder, issued in connection therewith or in implementation thereof (whether or not having the force of law) and (y) all requests, rules, regulations, guidelines, interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (whether or not having the force of law), in each case pursuant to Basel III, shall be deemed to be adopted and effective after the Closing Date regardless of the date enacted, adopted, issued, promulgated or implemented (including for purposes of Section 10.1 and this Section 10.2).
(ii) Failure or delay on the part of any Affected Entity to demand compensation pursuant to clause (i) above shall not constitute a waiver of such Affected Entity’s right to demand such compensation, provided that the Borrower shall not be required to compensate an Affected Entity pursuant to clause (i) above for any increased costs incurred or reductions suffered more than nine months prior to the date that the applicable Co-Agent, on behalf of such Affected Entity, notifies the Borrower of the Regulatory Change giving rise to such increased costs or reductions and of such Affected Entity’s intention to claim compensation therefor (except that, if the Regulatory Change giving rise to such increased costs or reductions is retroactive, then the nine month period referred to above shall be extended to include the period of retroactive effect thereof).
(iii) Notwithstanding anything else to the contrary in this Section 10.2, no Affected Entity shall request that the Borrower pay any additional amount pursuant to this Section 10.2 unless it generally is, or shall be making, similar requests from other similarly situated borrowers from whom such Affected Entity is permitted, under contract and applicable law, to seek similar amounts.
(b) Indemnified Taxes.
(i) Without limiting the generality of the foregoing, if Borrower or the Administrative Agent shall be required by applicable law to deduct any Indemnified Taxes from any payments made to any Affected Entity, then (a) the sum payable shall be increased as necessary so that, after making all required deductions (including deductions applicable to additional sums payable under this Section 10.2), such Affected Entity receives an amount equal to the sum it would have received had no such deductions been made, (b) Borrower or the Administrative Agent shall make such deductions and (c) Borrower or the Administrative Agent shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. As soon as practicable, but in no event more than 30 days after any payment of such Indemnified Taxes by Borrower to a Governmental Authority, Borrower shall
deliver to the Administrative Agent and the applicable Co-Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent or such Co-Agent, as the case may be.
(ii) In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Transaction Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Transaction Document (hereinafter referred to as “Other Taxes”). The Borrower shall not be required to make payment under this Section 10.2(b)(ii) to the extent paid under Section 10.1.
(iii) If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Transaction Document to any Indemnified Party, the Borrower shall also pay to such Indemnified Party at the time interest is paid, such additional amount that such Indemnified Party specifies is necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) that such Indemnified Party would have received if such Taxes or Other Taxes had not been imposed. The Borrower shall not be required to make payment under this Section 10.2(b)(iii) to the extent paid under Section 10.1, 10.2(b)(i) or 10.2(b)(ii).
(c) In connection with the foregoing, the Borrower and the Servicer agree to cooperate with the Administrative Agent to take any action or provide any information (including any Required Data) reasonably requested by the Administrative Agent to mitigate any cost, expense or condition described above. Also, each Lender shall deliver to the Administrative Agent, at the time or times reasonably requested by the Administrative Agent, such properly completed and executed documentation reasonably requested by the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to withholding, backup withholding or information reporting requirements. Notwithstanding the preceding sentence, other than in the case of an IRS Form W-9 or W-8, the completion, execution and submission of such documentation shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(d) The Servicer and the Borrower acknowledge that, in connection with the funding of the Loan, or any portion thereof, by a Conduit, the Administrative Agent may be required to obtain commercial paper ratings affirmation(s). Each of the Servicer and the Borrower agrees that it will (i) cooperate with the Administrative Agent and any rating agency
involved in the issuance of such rating, (ii) amend and/or supplement the terms of this Agreement and the other Transaction Documents that define, employ or relate to the term “ARM Dilution Reserve,” “Borrowing Base,” “Concentration Reserve Percentage,” “Eligible Receivable,” “Loss Reserve,” “Dilution Reserve,” “Interest and Servicing Reserve,” “Minimum Dilution Reserve Percentage,” “PASA Reserve Amount,” “Servicing Fee Rate” or “Required Reserve”, or any defined term utilized in the definitions of such terms, in each case, as required by such rating agency in connection with the issuance of such rating (as so amended or supplemented, the “Revised Documents”), and (iii) take all actions required to ensure that (A) it is in compliance with all material provisions, representation, warranties and covenants of the Revised Documents applicable to it, (B) no Unmatured Event of Default, Event of Default, or any event that, with the giving of notice or the lapse of time, or both, would constitute a Unmatured Event of Default or Event of Default exists under the Revised Documents and (C) all other requirements under the Revised Documents relating to the funding of the Loan or the ownership of any Receivable have been complied with. The Borrower shall pay in immediately available funds to the Administrative Agent, all costs and expenses in connection with this Section 10.2, including, without limitation, the initial fees payable to such rating agency or agencies in connection with providing such rating and all ongoing fees payable to the rating agency or agencies for their continued monitoring of such rating.
Section 10.3. Other Costs and Expenses. Subject to Section 7.1(d), Borrower shall pay to the Agents and the Conduits within 15 days of demand (together with a reasonably detailed invoice therefor) all reasonable and documented costs and out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder, including without limitation, the reasonable fees and out-of-pocket expenses of legal counsel for the Agents and the Conduits with respect thereto and with respect to advising the Agents and the Conduits as to their respective rights and remedies under this Agreement. Borrower shall pay to the Agents on demand any and all costs and expenses of the Agents and the Lenders, if any, including reasonable counsel fees and expenses actually incurred in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following an Event of Default. Notwithstanding anything to the contrary contained herein, so long as no Event of Default exists, the parties hereto agree that in no event shall the Borrower be obligated to pay the fees and expenses of more than one legal counsel in respect of the Lenders, Agents, the Receivables Buyers and the Receivables Agent (taken as a whole), which counsel shall be counsel for the Administrative Agent.
ARTICLE XI.
THE AGENTS
Section 11.1. Authorization and Action.
(a) Each Committed Lender in any Lender Group hereby designates the Person designated herein as Co-Agent for such Lender Group, as applicable, as agent for such Person hereunder and authorizes such Person to take such actions as agent on its behalf and to
exercise such powers as are delegated to the Co-Agent for such Person by the terms of this Agreement together with such powers as are reasonably incidental thereto. Each Secured Party hereby irrevocably designates and appoints PNC Bank, National Association as Administrative Agent hereunder and under the Transaction Documents to which the Administrative Agent is a party, and each Lender and each Co-Agent that becomes a party to this Agreement hereafter ratifies such designation and appointment and authorizes the Administrative Agent to take such action on its behalf under the provisions of the Transaction Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of the Transaction Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, none of the Agents or the Letter of Credit Issuers shall have any duties or responsibilities, except those expressly set forth in the Transaction Documents to which it is a party, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of such Agent shall be read into any Transaction Document or otherwise exist against such Agent. In addition, the Administrative Agent is hereby authorized by each Lender, each Letter of Credit Issuer and each Co-Agent to consent to any amendments or restatements to the Certificate of Incorporation of Borrower to the extent such amendments or restatements are not prohibited by Section 7.1(i)(xxix).
(b) The provisions of this Article XI are solely for the benefit of the Agents, the Letter of Credit Issuers and the Lenders, and none of the Loan Parties shall have any rights as a third-party beneficiary or otherwise under any of the provisions of this Article XI, except that this Article XI shall not affect any obligations which any of the Agents or Lenders may have to any of the Loan Parties under the other provisions of this Agreement.
(c) In performing its functions and duties hereunder, (i) each Co-Agent shall act solely as agent for its related Committed Lender or the Lenders in its Lender Group, as applicable, and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any of the Loan Parties or any other Lenders or any of their respective successors or assigns, and (ii) the Administrative Agent shall act solely as the agent of the Secured Parties and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any of the Loan Parties or any of their respective successors and assigns.
Section 11.2. Delegation of Duties. Each of the Agents may execute any of its duties under any Liquidity Agreement to which it is a party and each Transaction Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Each Letter of Credit Issuer may execute any of its duties under each Transaction Document to which it is a party by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. None of the Agents or the Letter of Credit Issuers shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
Section 11.3. Exculpatory Provisions. None of the Agents or the Letter of Credit Issuers or any of their directors, officers, agents or employees shall be (i) liable for any action lawfully
taken or omitted to be taken by it or them under or in connection with this Agreement or any other Transaction Document (except for its, their or such Person’s own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Lenders or other Agents for any recitals, statements, representations or warranties made by any Loan Party contained in this Agreement, any other Transaction Document or any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this Agreement, or any other Transaction Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, or any other Transaction Document or any other document furnished in connection herewith or therewith, or for any failure of any Loan Party to perform its obligations hereunder or thereunder, or for the satisfaction of any condition specified in Article VI, or for the perfection, priority, condition, value or sufficiency of any collateral pledged in connection herewith. None of the Agents or the Letter of Credit Issuers shall be under any obligation to any other Agent or any Lender to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the Loan Parties. None of the Agents or the Letter of Credit Issuers shall be deemed to have knowledge of any Event of Default or Unmatured Event of Default unless such Agent has received notice from Borrower, another Agent or a Lender.
Section 11.4. Reliance by Agents.
(a) Each of the Agents and the Letter of Credit Issuers shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to Borrower), independent accountants and other experts selected by such Agent or Letter of Credit Issuer. Each of the Agents and the Letter of Credit Issuers shall in all cases be fully justified in failing or refusing to take any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence of such of the Lenders or Committed Lenders in its Lender Group as it deems appropriate and it shall first be indemnified to its satisfaction by the Committed Lenders in its Lender Group against any and all liability, cost and expense which may be incurred by it by reason of taking or continuing to take any such action; provided that unless and until an Agent or a Letter of Credit Issuer shall have received such advice, such Agent or Letter of Credit Issuer may take or refrain from taking any action, as such Agent shall deem advisable and in the best interests of the Lenders.
(b) The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a request of the Required Committed Lenders or all of the Lenders, as applicable, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.
(c) Any action taken by any of the Agents or Letter of Credit Issuers in accordance with Section 11.4 shall be binding upon all of the Agents, the Letter of Credit Issuers and the Lenders, as applicable.
Section 11.5. Non-Reliance on Other Agents and Other Lenders. Each Lender expressly acknowledges that none of the Agents, the Letter of Credit Issuers or other Lenders, nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates, has made any representations or warranties to it and that no act by any Agent, any Letter of Credit Issuer or any other Lender hereafter taken, including, without limitation, any review of the affairs of any Loan Party, shall be deemed to constitute any representation or warranty by such Agent or such other Lender. Each Lender represents and warrants to each Agent and each Letter of Credit Issuer that it has made and will make, independently and without reliance upon any Agent, any Letter of Credit Issuer or any other Lender and based on such documents and information as it has deemed appropriate, its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of Borrower and made its own decision to enter into its Liquidity Agreement (if applicable), the Transaction Documents and all other documents related thereto.
Section 11.6. Reimbursement and Indemnification. Each of the Committed Lenders agree to reimburse and indemnify (a) its applicable Co-Agent, (b) each Letter of Credit Issuer and (c) the Administrative Agent and its officers, directors, employees, representatives and agents ratably in accordance with their respective Commitments, to the extent not paid or reimbursed by the Loan Parties (i) for any amounts for which such Agent, acting in its capacity as Agent, or such Letter of Credit Issuer is entitled to reimbursement by the Loan Parties hereunder and (ii) (A) with respect to such Agent, for any other expenses incurred by such Agent, in its capacity as Agent and acting on behalf of the Lenders, in connection with the administration and enforcement of its Liquidity Agreements and the Transaction Documents and (B) with respect to such Letter of Credit Issuer, for any other expenses incurred in its capacity as a Letter of Credit Issuer, in connection with the administration and enforcement of the Transaction Documents.
Section 11.7. Agents in their Individual Capacities. Each of the Agents and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with Borrower or any Affiliate of Borrower as though such Agent were not an Agent hereunder. With respect to the making of Loans pursuant to this Agreement, each of the Agents shall have the same rights and powers under any Liquidity Agreement to which it is a party and the Transaction Documents in its individual capacity as any Lender and may exercise the same as though it were not an Agent, and the terms “Committed Lender,” “Lender,” “Committed Lenders” and “Lenders” shall include each of the Agents in its individual capacity.
Section 11.8. Conflict Waivers. Each Co-Agent acts, or may in the future act: (i) as administrative agent for such Co-Agent’s Conduit, (ii) as issuing and paying agent for such Conduit’s Commercial Paper, (iii) to provide credit or liquidity enhancement for the timely payment for such Conduit’s Commercial Paper and (iv) to provide other services from time to time for such Conduit (collectively, the “Co-Agent Roles”). Without limiting the generality of Sections 11.1 and 11.8, each of the other Agents and the Lenders hereby acknowledges and consents to any and all Co-Agent Roles and agrees that in connection with any Co-Agent Role, a Co-Agent may take, or refrain from taking, any action which it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent for its Conduit, the
giving of notice to the Committed Lenders in its Lender Group of a mandatory purchase pursuant to the applicable Liquidity Agreement for such Lender Group, and hereby acknowledges that neither the applicable Co-Agent nor any of its Affiliates has any fiduciary duties hereunder to any Lender (other than its Conduit) arising out of any Co-Agent Roles.
Section 11.9. UCC Filings. Each of the Secured Parties hereby expressly recognizes and agrees that the Administrative Agent may be listed as the assignee or secured party of record on the various UCC filings required to be made under the Transaction Documents in order to perfect their respective interests in the Collateral, that such listing shall be for administrative convenience only in creating a record or nominee holder to take certain actions hereunder on behalf of the Secured Parties and that such listing will not affect in any way the status of the Secured Parties as the true parties in interest with respect to the Collateral. In addition, such listing shall impose no duties on the Administrative Agent other than those expressly and specifically undertaken in accordance with this Article XI.
Section 11.10. Successor Administrative Agent and Letter of Credit Issuer. The Administrative Agent or any Letter of Credit Issuer, upon five (5) days’ notice to the Loan Parties, the other Agents and the Lenders, may voluntarily resign and may be removed at any time, with or without cause, by Committed Lenders holding in the aggregate at least sixty-six and two-thirds percent (66 2/3%) of the Aggregate Commitment and the Borrower. If the Administrative Agent or any Letter of Credit Issuer shall voluntarily resign or be removed as Agent or Letter of Credit Issuer under this Agreement, then the Required Committed Lenders during such five-day period shall appoint, with the consent of the Borrower from among the remaining Committed Lenders, a successor Administrative Agent or a successor Letter of Credit Issuer, whereupon such successor Administrative Agent or such successor Letter of Credit Issuer shall succeed to the rights, powers and duties of the Administrative Agent or the applicable Letter of Credit Issuer, respectively. The term “Administrative Agent” shall mean such successor agent, effective upon its appointment, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement. The term “Letter of Credit Issuer” shall mean such successor Letter of Credit Issuer, effective upon its appointment, and the former Letter of Credit Issuer’s rights, powers and duties as Letter of Credit Issuer shall be terminated, without any other or further act or deed on the part of such former Letter of Credit Issuer or any of the parties to this Agreement. Upon resignation or replacement of any Agent in accordance with this Section 11.10, the retiring Administrative Agent shall execute such UCC-3 assignments and amendments, and assignments and amendments of any Liquidity Agreement to which it is a party and the Transaction Documents, as may be necessary to give effect to its replacement by a successor Administrative Agent. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent or retiring Letter of Credit Issuer’s resignation hereunder as Letter of Credit Issuer, the provisions of this Article XI and Article X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent or Letter of Credit Issuer, respectively, under this Agreement. In addition, the resigning Letter of Credit Issuer shall retain all rights and obligations of a Letter of Credit Issuer hereunder with respect to all of its Letters of Credit outstanding as of the effective date of the resignation and all Letter of Credit Liability with respect thereto (including the right
to require the Lenders to fund payment of any amount drawn under a Letter of Credit issued by it pursuant to Section 1.8 and the right to have any such Letter of Credit Liability cash collateralized as provided herein).
Section 11.11. Erroneous Payments.
(a) If the Administrative Agent notifies a Lender or other Secured Party, or any Person who has received funds on behalf of a Lender or other Secured Party (any Lender, Secured Party or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, other Secured Party or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Lender or other Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Overnight Bank Funding Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting immediately preceding clause (a), each Lender or other Secured Party, or any Person who has received funds on behalf of a Lender or other Secured Party, hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender or other Secured Party, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) in each case:
(i) (A) in the case of immediately preceding clauses (x) or (y), an error shall be presumed to have been made (absent written confirmation from the
Administrative Agent to the contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Lender or other Secured Party shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of such error) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 11.11(b).
(c) Each Lender or other Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender or other Secured Party under any Transaction Document, or otherwise payable or distributable by the Administrative Agent to such Lender or other Secured Party from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.
(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender at any time, (i) such Lender shall be deemed to have assigned its Loans (but not its Commitments) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments), the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption with respect to such Erroneous Payment Deficiency Assignment, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender and (iv) the Administrative Agent may reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf).
For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has sold a Loan (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Lender or other Secured Party under the Transaction Documents with respect to each Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”).
(e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations or any other obligations owed by any Borrower-Related Party; provided that this Section 11.11 shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the obligations of the Borrower relative to the amount (and/or timing for payment) of the obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; provided, further, that for the avoidance of doubt, this clause (e) shall not apply to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from any Borrower-Related Party for the purpose of making such Erroneous Payment.
(f) To the extent permitted by applicable Law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
(g) Each party’s obligations, agreements and waivers under this Section 10.13 shall survive the resignation or replacement of the Administrative Agent, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Transaction Document.
ARTICLE XII.
ASSIGNMENTS; PARTICIPATIONS
Section 12.1. Assignments.
(a) Each of the Agents, the Letter of Credit Issuers, the Loan Parties and the Committed Lenders hereby agrees and consents to the complete or partial assignment by each Conduit of all or any portion of its rights under, interest in, title to and obligations under this Agreement to the Committed Lenders in its Lender Group pursuant to its Liquidity Agreement.
(b) Any Lender may at any time and from time to time assign to one or more Eligible Assignees (each, a “Purchasing Lender”) all or any part of its rights and obligations under this Agreement pursuant to an assignment agreement substantially in the form set forth in
Exhibit V hereto (an “Assignment Agreement”) executed by such Purchasing Lender and such selling Lender; provided, however, that any assignment of a Lender’s rights and obligations hereunder shall include a pro rata assignment of its rights and obligations under the applicable Liquidity Agreement (if any). The consent of the applicable Conduit shall be required prior to the effectiveness of any such assignment by a Lender in such Conduit’s Lender Group. Each assignee of a Lender must (i) be (x) an Eligible Assignee or (y) an assignee with respect to which the Borrower and the Letter of Credit Issuers have provided prior written consent (such consent not to be unreasonably withheld or delayed) and (ii) agree to deliver to the applicable Co-Agent, as the case may be, promptly following any request therefor by such Person, an enforceability opinion in form and substance satisfactory to such Person. Upon delivery of an executed Assignment Agreement to the applicable Co-Agent, such selling Lender shall be released from its obligations hereunder and, if applicable, under its Liquidity Agreement to the extent of such assignment. Thereafter the Purchasing Lender shall for all purposes be a Lender party to this Agreement and, if applicable, its Lender Group’s Liquidity Agreement and shall have all the rights and obligations of a Lender hereunder and thereunder to the same extent as if it were an original party hereto and thereto and no further consent or action by Borrower, the Lenders or the Agents shall be required.
(c) (i) Notwithstanding anything to the contrary contained herein, each of the Committed Lenders agrees that in the event that it shall become a Defaulting Lender, then until such time as such Committed Lender is no longer a Defaulting Lender, to the extent permitted by applicable law, such Defaulting Lender’s right to vote in respect of any amendment, consent or waiver of the terms of this Agreement or any other Transaction Document or to direct any action or inaction of the Administrative Agent or to be taken into account in the calculation of the Required Committed Lenders shall be suspended at all times that such Committed Lender remains a Defaulting Lender; provided, however, that, except as otherwise set forth in this Section 12.1(c), the foregoing suspension shall not empower Lenders that are not Defaulting Lenders to increase a Defaulting Lender’s Commitment, decrease the rate of interest or fees applicable to, or extend the maturity date of such Defaulting Lender’s Advances or other Obligations owing to such Lender, in each case, without such Lender’s consent. No Commitment of any Committed Lender shall be increased or otherwise affected, and except as otherwise expressly provided in this Section 12.1(c), performance by the Borrower of its obligations hereunder and under the other Transaction Documents shall not be excused or otherwise modified, as a result of the operation of this Section 12.1(c).
(ii) To the extent that any Committed Lender is a Defaulting Lender with respect to an Advance, the Borrower may deliver a notice to the Lenders specifying the date of such Advance, the identity of the Defaulting Lender and the portion of such Advance that the Defaulting Lender failed to fund, which notice shall be deemed to be an additional Borrowing Notice in respect of such unfunded portion of such Advance, and each Committed Lender (or its related Conduit, if applicable, and acting in its sole discretion) shall, to the extent of its remaining unfunded Commitment and subject to the continued fulfillment of all applicable conditions precedent set forth herein with respect to such Advance, fund its
Percentage (recomputed by excluding the Commitment of Defaulting Lenders from the Aggregate Commitment) of such unfunded portion of such Advance not later than 2:30 p.m. (New York City time) on the Business Day following the date of such notice. To the extent that any Committed Lender is a Defaulting Lender on any date that the Letter of Credit Liability is greater than zero, each Committed Lender shall, automatically and without further action of any kind upon such date, acquire an increased participation interest in the Letters of Credit outstanding, along with all accompanying rights and obligations described in Sections 1.7 through 1.14, equal to the lessor of (x) its Percentage (recomputed by excluding the Commitment of Defaulting Lenders from the Aggregate Commitment) of such Defaulting Lender’s Percentage of the Letter of Credit Liability and (y) its remaining unfunded Commitment.
(iii) Until the Defaulting Lender Excess of a Defaulting Lender has been reduced to zero, any payment of the principal of any Loan to a Defaulting Lender shall, unless the Required Committed Lenders agree otherwise, be applied first (1) ratably, to the reduction of the Loans or the Letter of Credit Liability funding any defaulted portion of Advances or the Letter of Credit Liability pursuant to Section 12.1(c)(ii) and then (2) ratably to reduce the Loans of each of the Lenders that are not Defaulting Lenders in accordance with the principal amount (if any) thereof. Subject to the preceding sentence, any amount paid by or on behalf of the Borrower for the account of a Defaulting Lender under this Agreement or any other Transaction Document will not be paid or distributed to such Defaulting Lender, but will instead be applied to the making of payments from time to time in the following order of priority until such Defaulting Lender has ceased to be a Defaulting Lender as provided below: first, to the funding of any portion of any Advance or the Letter of Credit Liability in respect of which such Defaulting Lender has failed to fund as required by this Agreement, as determined by the Administrative Agent; second, held in a segregated subaccount of any Collection Account (other than any FX Collection Account) as cash collateral for future funding obligations of the Defaulting Lender in respect of Advances or the Letter of Credit Liability under this Agreement; and third, after the termination of the Commitments and payment in full of all Obligations, to such Defaulting Lender or as a court of competent jurisdiction may otherwise direct.
(iv) During any period that a Committed Lender is a Defaulting Lender, the Borrower shall not accrue or be required to pay, and such Defaulting Lender shall not be entitled to receive, the Unused Fee (as defined in the Fee Letter) otherwise payable to such Defaulting Lender under this Agreement at any time, or with respect to any period, that such Committed Lender is a Defaulting Lender.
(v) During any period that a Committed Lender is a Defaulting Lender, the Borrower may, by giving written notice thereof to the Administrative Agent and such Defaulting Lender, require such Defaulting Lender, at the cost and expense of the Borrower, to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in, and consents required by, this Article XII), (i) all and not less than all of its interests, rights and obligations under this Agreement and the Transaction Documents to an assignee or assignees that shall assume such obligations (which assignee may be another Lender, if such other Lender accepts such assignment) in whole or (ii) all of its interests, rights and obligations under this Agreement and the Transaction Documents with respect to all prospective Commitments, including any unfunded Commitment as of the date of such assignment. No party hereto shall have any obligation whatsoever to initiate any such complete or partial replacement or to assist in finding an assignee. In connection with any such complete or partial assignment, such Defaulting Lender shall promptly execute all documents reasonably requested to effect such assignment, including an appropriate Assignment Agreement. No such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, (A) to the extent that the assignee is assuming all of the interests, rights and obligations of the Defaulting Lender, the parties to the assignment shall make such additional payments in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable Percentage of Advances previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Borrower or any Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) the Loans made by such Defaulting Lender or members of such Defaulting Lender Group, as applicable, (B) to the extent that the assignee is assuming all of the interests, rights and obligations of the Defaulting Lender, such Defaulting Lender or members of such Defaulting Lender Group, as applicable, shall have received payment of an amount equal to all of its Loans outstanding, accrued interest thereon, accrued fees (subject to Section 12.1(c)(iv)) and all other amounts, including any Breakage Costs, payable to it and its Affected Entities hereunder and the other Transaction Documents through (but excluding) the date of such assignment from the assignee or the Borrower, and (C) such assignment does not conflict with applicable law. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
(vi) If the Borrower, Servicer, and the Administrative Agent agree in writing in their discretion that a Committed Lender that is a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the Lenders and the Co-Agents, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, such
Committed Lender will, to the extent applicable, purchase such portion of outstanding Advances of the other Lenders and make such other adjustments as the Administrative Agent may reasonably determine to be necessary to cause the interest of the Lenders in the Aggregate Principal to be on a pro rata basis in accordance with their respective Percentages, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower or forfeited pursuant to Section 12.1(c)(iv), while such Committed Lender was a Defaulting Lender; and provided further that, except to the extent otherwise expressly agreed by the affected parties, no cure by a Committed Lender under this subsection of its status as a Defaulting Lender will constitute a waiver or release of any claim or any party hereunder arising from such Committed Lender having been a Defaulting Lender.
(vii) The rights and remedies of the Borrower, any Agent or the other Lenders against a Defaulting Lender under this Section 12.1(c) are in addition to any other rights and remedies the Borrower, the Agents and the other Lender may have against such Defaulting Lender under this Agreement, any of the other Transaction Documents, applicable law or otherwise.
(viii) Any Committed Lender that fails to timely fund a Loan shall be obligated to promptly (but in any event not later than 10:00 a.m. (New York City time) on the Business Day after the date of the related Advance) notify the Borrower and the Administrative Agent if any such failure is the result of an administrative error or omission by such Committed Lender or force majeure, computer malfunction, interruption of communication facilities, labor difficulties or other causes, in each case to the extent beyond such Committed Lender’s reasonable control. If (i) the Administrative Agent had been notified by the Borrower or the affected Committed Lender that a Committed Lender has failed to timely fund a Loan, (ii) an Authorized Officer of the Administrative Agent has actual knowledge or has written notice that such Committed Lender is the subject of an Event of Bankruptcy or has publicly announced that it does not intend to comply with its funding obligations under this Agreement or (iii) the Administrative Agent had been notified by the affected Committed Lender that a Committed Lender has failed timely to deliver the written confirmation contemplated by clause (a)(iii) of the definition of “Defaulting Lender”, the Administrative Agent shall promptly provide notice to the Borrower and the Co-Agents of such occurrence.
(d) No Loan Party may assign any of its rights or obligations under this Agreement without the prior written consent of each of the Agents and each of the Lenders and without satisfying the Rating Agency Condition, if applicable.
Section 12.2. Participations. Any Committed Lender may, in the ordinary course of its business at any time sell to one or more Persons (each, a “Participant”) participating interests in its Pro Rata Share of its Lender Group’s Percentage of Aggregate Commitment, its Loans, its
Letters of Credit, its Liquidity Commitment (if applicable) or any other interest of such Committed Lender hereunder or, if applicable, under its Liquidity Agreement. Notwithstanding any such sale by a Committed Lender of a participating interest to a Participant, such Committed Lender’s rights and obligations under this Agreement and, if applicable, such Liquidity Agreement shall remain unchanged, such Committed Lender shall remain solely responsible for the performance of its obligations hereunder and, if applicable, under its Liquidity Agreement, and the Loan Parties, the Lenders and the Agents shall continue to deal solely and directly with such Committed Lender in connection with such Committed Lender’s rights and obligations under this Agreement and, if applicable, its Liquidity Agreement. Each Committed Lender agrees that any agreement between such Committed Lender and any such Participant in respect of such participating interest shall not restrict such Committed Lender’s right to agree to any amendment, supplement, waiver or modification to this Agreement, except for any amendment, supplement, waiver or modification described in Section 14.1(b)(i).
Section 12.3. Register. The Administrative Agent (as agent for the Borrower) shall maintain at its office referred to in Section 14.2 a copy of each Assignment Agreement delivered to and accepted by it and register (the “Register”) for the recordation of the names and addresses of the Lenders and the Pro Rata Share of, outstanding principal amount of all Advances owing to and Interest of, each Lender from time to time, which Register shall be available for inspection by the Borrower at any reasonable time and from time to time upon reasonable prior notice. No assignment under this Article XII shall be effective until the entries described in the preceding sentence have been made in the Register. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Servicer, the Lenders, the Co-Agents, the Letter of Credit Issuers and the Administrative Agent may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement.
Section 12.4. Federal Reserve and Security Trustee. Notwithstanding any other provision of this Agreement to the contrary, any Lender may at any time pledge or grant a security interest in all or any portion of its rights (including, without limitation, any Loan and any rights to payment of principal or interest thereon) under this Agreement (i) to secure obligations of such Lender to a Federal Reserve Bank, or (ii) to a collateral agent or a security trustee in connection with the funding by such Lender of the Loan, without notice to or consent of Borrower, Servicer or any Agent; provided that no such pledge or grant of a security interest shall release such Lender from any of its obligations hereunder, or substitute any such pledgee or grantee for such Lender as a party hereto.
ARTICLE XIII.
SECURITY INTEREST
Section 13.1. Grant of Security Interest. To secure the due and punctual payment of the Obligations, whether now or hereafter existing, due or to become due, direct or indirect, or absolute or contingent, including, without limitation, all Indemnified Amounts, in each case pro rata according to the respective amounts thereof, Borrower hereby grants to the Administrative Agent, for the benefit of the Secured Parties, a security interest in, all of Borrower’s right, title and interest, whether now owned and existing or hereafter arising in and to all of the
Receivables, the Related Security, the Collections, the Lock-Boxes and Collection Accounts (other than any FX Collection Account) and all amounts on deposit therein, and all certificates and instruments, if any, from time to time evidencing such Lock-Boxes, Collection Accounts (other than any FX Collection Account) and amounts on deposit therein, each L/C Collateral Account and all amounts on deposit therein, and all certificates and instruments, if any, from time to time evidencing such L/C Collateral Account and amounts on deposit therein, and all proceeds of the foregoing (collectively, the “Collateral”). Borrower hereby authorizes the Administrative Agent to file a financing statement naming Borrower as debtor or seller that describes the collateral as “all assets of the debtor whether now existing or hereafter arising” or words of similar effect.
Section 13.2. Termination after Final Payout Date. Each of the Secured Parties hereby authorizes the Administrative Agent, and the Administrative Agent hereby agrees, promptly after the Final Payout Date to execute and deliver to Borrower such UCC termination statements as may be necessary to terminate the Administrative Agent’s security interest in and lien upon the Collateral, all at Borrower’s expense. Upon the Final Payout Date, all right, title and interest of the Administrative Agent and the other Secured Parties in and to the Collateral shall terminate.
ARTICLE XIV.
MISCELLANEOUS
Section 14.1. Waivers and Amendments.
(a) No failure or delay on the part of any Agent or any Lender in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing in accordance with the provisions of this Section 14.1(b). The Loan Parties, the Required Committed Lenders and the Administrative Agent may enter into written modifications or waivers of any provisions of this Agreement; provided, however, that no such modification or waiver shall:
(i) without the consent of each affected Lender, (A) extend the Scheduled Termination Date or the date of any payment or deposit of Collections by Borrower or the Servicer, (B) reduce the rate or extend the time of payment of Interest or any CP Costs (or any component of Interest or CP Costs), (C) reduce any fee payable to any Agent for the benefit of the Lenders, (D) except pursuant to Article XII hereof, change the amount of the principal of any Lender, any Committed Lender’s Pro Rata Share or any Committed Lender’s Commitment, (E) amend, modify or waive any provision of the definition of Required Committed Lenders or this Section 14.1(b), (F) consent to or permit the
assignment or transfer by Borrower of any of its rights and obligations under this Agreement, or (G) amend or modify any defined term (or any defined term used directly or indirectly in such defined term) used in clauses (A) through (F) above in a manner that would circumvent the intention of the restrictions set forth in such clauses;
(ii) without the written consent of any affected Agent, amend, modify or waive any provision of this Agreement if the effect thereof is to affect the rights or duties of such Agent, or
(iii) without the consent of the Required Committed Lenders, change the definition of “ARM Dilution Reserve,” “Borrowing Base,” “Concentration Reserve Percentage,” “Eligible Receivable,” “Loss Reserve,” “Dilution Reserve,” “Interest and Servicing Reserve,” “Minimum Dilution Reserve Percentage,” “PASA Reserve Amount,” “Servicing Fee Rate” or “Required Reserve,”
and any material amendment, waiver or other modification of this Agreement shall require satisfaction of the Rating Agency Condition, to the extent the Rating Agency Condition is required of any Conduit. Notwithstanding the foregoing, (i) without the consent of the Committed Lenders, but with the consent of Borrower, any Co-Agent may direct the Administrative Agent to amend this Agreement solely to add additional Persons as Committed Lenders in respect of the related Lender Group hereunder and (ii) the Agents, the Required Committed Lenders and the Conduits may enter into amendments to modify any of the terms or provisions of Article XI, Article XII, Section 14.13 or any other provision of this Agreement without the consent of Borrower; provided that such amendment has no negative impact upon Borrower. Any modification or waiver made in accordance with this Section 14.1 shall apply to each of the Lenders equally and shall be binding upon Borrower, the Lenders and the Agents.
Section 14.2. Notices; Effectiveness; Electronic Communication.
(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile to the relevant party as specified on the signature pages hereof. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given and received (i) when personally delivered, or delivered by same-day courier; (ii) on the third business day after mailing by registered or certified mail, postage prepaid; or (iii) upon delivery when sent by prepaid overnight express delivery service (e.g., FedEx, UPS); notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications, to the extent provided in paragraph (b) below, shall be effective as provided in such paragraph (b).
(b) Electronic Communications. Notices and other communications to the Administrative Agent, the Co-Agents, each L/C Participant, each Letter of Credit Issuer and each Lender hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(c) Change of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.
Section 14.3. Ratable Payments. If (a) any Lender, whether by setoff or otherwise, has payment made to it with respect to any portion of the Obligations owing to such Lender (other than payments received pursuant to Section 10.2 or 10.3) in a greater proportion than that received by any other Lender in such Lender’s Lender Group entitled to receive a ratable share of such Obligations, such Lender agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Obligations held by the other Lenders in such Lender’s Lender Group so that after such purchase each Lender in such Lender Group will hold its Pro Rata Share of such Obligations and (b) any Lender Group, whether by set off or otherwise, has payment made to such Lender Group (other than payments received pursuant to Section 10.2 or 10.3) in a greater proportion than that received by any other Lender Group entitled to receive a ratable share of such Obligations, the Lenders in such Lender Group agree, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Obligations held by the other Lender Groups so that after such purchase each Lender in such Lender Group, taken together, will hold its Lender Group’s Percentage of such Obligations; provided that in the case of the preceding clauses (a) and (b), if all or any portion of such excess amount is thereafter recovered from such Lender or Lender Group, as applicable, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
Section 14.4. Protection of Administrative Agent’s Security Interest.
(a) Borrower agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or
desirable, or that any of the Agents may request, to perfect, protect or more fully evidence the Administrative Agent’s security interest in the Collateral, or to enable the Agents or the Lenders to exercise and enforce their rights and remedies hereunder. At any time after the occurrence of an Event of Default, the Administrative Agent may, or the Administrative Agent may direct Borrower or the Servicer to, notify the Obligors of Receivables, at Borrower’s expense, of the ownership or security interests of the Lenders under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to the Administrative Agent or its designee. Borrower or the Servicer (as applicable) shall, at any Lender’s request, withhold the identity of such Lender in any such notification.
(b) If any Loan Party fails to perform any of its obligations hereunder, the Administrative Agent or any Lender may (but shall not be required to) perform, or cause performance of, such obligations, and the Administrative Agent’s or such Lender’s costs and expenses incurred in connection therewith shall be payable by Borrower as provided in Section 10.3. Each Loan Party irrevocably authorizes the Administrative Agent at any time and from time to time in the sole discretion of the Administrative Agent, and appoints the Administrative Agent as its attorney-in-fact, to act on behalf of such Loan Party (i) to execute on behalf of Borrower as debtor and to file financing statements necessary or desirable in the Administrative Agent’s sole discretion to perfect and to maintain the perfection and priority of the interest of the Lenders in the Receivables and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as the Administrative Agent in its sole discretion deems necessary or desirable to perfect and to maintain the perfection and priority of the Administrative Agent’s security interest in the Collateral, for the benefit of the Secured Parties. This appointment is coupled with an interest and is irrevocable.
Section 14.5. Confidentiality.
(a) Each Loan Party and each Lender shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Fee Letter, the Agent Fee Letter and the other confidential or proprietary information with respect to the Agents and the Conduits and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that such Loan Party and such Lender and its officers and employees may disclose such information to such Loan Party’s and such Lender’s external accountants and attorneys and as required by any applicable law or order of any judicial or administrative proceeding.
(b) Each of the Lenders and each of the Agents shall maintain and shall cause each of its officers, directors, employees, investors, potential investors, credit enhancers, outside accountants, attorneys and other advisors to maintain the confidentiality of, and not disclose to any other Person, any nonpublic information with respect to the Originators and the Loan Parties, except that any of the foregoing may disclose such information (i) to any party to this Agreement, (ii) to any provider of a surety, guaranty or credit or liquidity enhancement to any Conduit, (iii) to its Affiliates and its insurers and reinsurers (iv) to the outside accountants, attorneys and other advisors of any Person described in clause (i) or (ii) above, (v) to any
prospective or actual assignee or participant of any of the Agents or any Lender, (vi) to any rating agency who rates the Commercial Paper, to any Commercial Paper dealer, (vii) to any other entity organized for the purpose of purchasing, or making loans secured by, financial assets for which any Co-Agent (or one of its Affiliates) acts as the administrative agent and to any officers, directors, employees, outside accountants and attorneys of each of the foregoing; provided that each Person described in the foregoing clause (ii) through (vii) is informed of the confidential nature of such information and, in the case of a Person described in clauses (ii) or (iii) is subject to customary obligations of confidentiality, and in the case of a Person described in clause (v), agrees in writing to maintain the confidentiality of such information in accordance with this Section 14.5(b); (viii) as required pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law) and (ix) in connection with the exercise of any remedies hereunder or under any other Transaction Document or any action or proceeding relating to this Agreement or any other Transaction Document or the enforcement of rights hereunder or thereunder. Notwithstanding the foregoing, (x) each Conduit and its officers, directors, employees, investors, potential investors, credit enhancers, outside accountants, attorneys and other advisors shall be permitted to disclose Receivables performance information and details concerning the structure of the facility contemplated hereby in summary form and in a manner not identifying the Originators, Borrower, the Servicer, the Performance Guarantor, or the Obligors to prospective investors in Commercial Paper issued by such Conduit, and (y) the Conduits, the Agents and the Lenders shall have no obligation of confidentiality in respect of any information which may be generally available to the public or becomes available to the public through no fault of theirs or their respective Affiliates.
(c) Notwithstanding any other express or implied agreement to the contrary, the parties hereto hereby agree and acknowledge that each of them and each of their employees, representatives, and other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to any of them relating to such tax treatment and tax structure, except to the extent that confidentiality is reasonably necessary to comply with U.S. federal or state securities laws. For purposes of this Section 14.5(c), the terms “tax treatment” and “tax structure” have the meanings specified in Treasury Regulation section 1.6011-4(c).
Section 14.6. Bankruptcy Petition. Borrower, the Servicer, the Agents and each Committed Lender hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any Conduit, it will not institute against, or join any other Person in instituting against, such Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
Section 14.7. Limitation of Liability. Except with respect to any claim arising out of the willful misconduct, bad faith or gross negligence of any Conduit, the Agents or any Committed Lender, no claim may be made by any Loan Party or any other Person against any Conduit, the Agents or any Committed Lender or their respective Affiliates, directors, officers, employees,
attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each Loan Party hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
The obligations of each Conduit under this Agreement shall be payable solely out of the funds of such Conduit available for such purpose and shall be solely the corporate obligations of such Conduit. No recourse shall be had for the payment of any amount owing in respect of this Agreement or for the payment of any fee hereunder or for any other obligation or claim arising out of or based upon this Agreement against any Agent, any Affiliate of any of the foregoing, or any stockholder, employee, officer, director, incorporator or beneficial owner of any of the foregoing. Notwithstanding any provisions contained in this Agreement to the contrary, no Conduit shall, nor shall be obligated to, pay any amount pursuant to this Agreement unless (a) such Conduit has received funds which may be used to make such payment and which funds are not required to repay its Commercial Paper and advances under its Liquidity Agreement when due and (b) after giving effect to such payment, either (i) there is sufficient liquidity availability (determined in accordance with the Liquidity Agreement), under all of the liquidity facilities for such Conduit's Commercial Paper program, to pay the "Face Amount" (as defined below) of all outstanding Commercial Paper and advances under its Liquidity Agreement when due or (ii) all Commercial Paper and advances under the Liquidity Agreement are paid in full. Any amount which a Conduit does not pay pursuant to the operation of the preceding sentence shall not constitute a claim (as defined in § 1 01 of the Bankruptcy Code) against or limited liability company obligation of such Conduit for any such insufficiency unless and until such payment may be made in accordance with clauses (a) and (b) above. The agreements in this Section shall survive termination of this Agreement and payment of all obligations hereunder. As used in this Section, the term “Face Amount" means, with respect to outstanding Commercial Paper or advances under Conduit’s Liquidity Agreement, (x) the face amount of any such Commercial Paper issued on a discount basis, and (y) the principal amount of, plus the amount of all interest accrued and to accrue thereon to the stated maturity date of, any such Commercial Paper issued on an interest-bearing basis or any such advances under its Liquidity Agreement.
Section 14.8. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (EXCEPT IN THE CASE OF THE OTHER TRANSACTION DOCUMENTS, TO THE EXTENT OTHERWISE EXPRESSLY STATED THEREIN) AND EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE OWNERSHIP INTEREST OF BORROWER OR THE SECURITY INTEREST OF THE ADMINISTRATIVE AGENT, FOR THE BENEFIT OF THE SECURED PARTIES, IN ANY OF THE COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 14.9. CONSENT TO JURISDICTION. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT, AND EACH SUCH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF ANY AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY LOAN PARTY AGAINST ANY AGENT OR ANY LENDER OR ANY AFFILIATE OF ANY AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH LOAN PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.
Section 14.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY LOAN PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
Section 14.11. Integration; Binding Effect; Survival of Terms.
(a) This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings.
(b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy). This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however, that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Loan Party pursuant to Article V, (ii) the indemnification and payment provisions of Article X, and Sections 14.5 and 14.6 shall be continuing and shall survive any termination of this Agreement.
Section 14.12. Counterparts; Severability; Section References. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Any provisions of this Agreement which
are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Unless otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule” or “Exhibit” shall mean articles and sections of, and schedules and exhibits to, this Agreement.
Section 14.13. Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Transaction Document or in any other agreement, arrangement or understanding among the respective parties thereto, each party hereto acknowledges that any liability of any EEA Financial Institution arising under any Transaction Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(b) the effects of any Bail-in Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, any such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Funding Agreement; or
(iii) the variation of the terms of any such liability.
Section 14.14. Patriot Act. Each Agent hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name, address, tax identification number and other information that will allow such Agent to identify the Borrower in accordance with the Patriot Act. This notice is given in accordance with the requirements of the Patriot Act.
Section 14.15. Amendment and Restatement. The parties hereto acknowledge and agree that this Agreement does not constitute a novation or termination of the existing obligations under the Original Agreement and that such obligations, including the grant of the security interest in respect of the Collateral, are in all respects continued and outstanding as obligations under this Agreement with only the terms being modified from and after the date hereof as provided herein.
Section 14.16. Intercreditor Agreement. Each Lender hereby acknowledges that it has received and reviewed the Intercreditor Agreement and agrees to be bound by the terms thereof. Each Lender (and each Person that becomes a Lender under this Agreement after the date hereof) hereby authorizes and directs the Administrative Agent to enter into the Intercreditor Agreement on behalf of such Lender and agrees that the Administrative Agent may take such actions on its behalf as is contemplated by the terms of the Intercreditor Agreement. To the extent that any terms or provisions herein are inconsistent with any terms or provisions of the Intercreditor Agreement, the Intercreditor Agreement shall govern. In addition, each Lender and the Administrative Agent acknowledge and agree that the rights and remedies of the Administrative Agent and the Lenders hereunder and under the other Transaction Documents are subject to the Intercreditor Agreement.
Section 14.17. Post-Closing Covenants.
(a) On or prior to the Post-Closing Date, the Borrower and the Servicer shall deliver to the Administrative Agent written confirmation that the ownership of each Lock-Box and Collection Account (other than any FX Collection Account and the related Lock-Boxes) has been assigned or otherwise novated to the Borrower.
(b) On or prior to the Post-Closing Date, the Borrower and the Servicer shall deliver to the Administrative Agent a fully executed Collection Account Agreement with respect to the Collection Accounts (other than any FX Collection Account), in form and substance reasonably satisfactory to the Administrative Agent.
(c) On or prior to the Post-Closing Date, the Borrower and the Servicer shall deliver to the Administrative Agent a written opinion of counsel to the Borrower and the Servicer, in form and substance reasonably satisfactory to the Administrative Agent, covering general corporate, enforceability and security interest perfection matters with respect to the Collection Account Agreements referenced in clause (a) above.
(d) Notwithstanding anything to the contrary set forth in this Agreement or any other Transaction Document, the failure of the Borrower or the Servicer to timely perform its respective obligations under this Section 14.17 shall constitute an immediate Event of Default under this Agreement with no grace period.
<signature pages follow>
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date hereof.
SMITHFIELD RECEIVABLES FUNDING LLC, AS BORROWER
By: SFFC, Inc., its managing member
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| By: | /s/ Jeffrey A. Porter | |
| Name: Jeffrey A. Porter | |
| Title: President, Assistant Treasurer and Assistant Secretary |
Address: 3411 Silverside Rd, 103 Baynard Bldg
Wilmington, DE 19810
Attention: Jeffrey A. Porter
With a copy to:
c/o Smithfield Foods, Inc.
200 Commerce Street
Smithfield, VA 23430,
Attention: Jenifer Byrd
SMITHFIELD FOODS, INC., AS SERVICER
| | | | | | | | |
| By: | /s/ Jenifer Byrd | |
| Name: Jenifer Byrd | |
| Title: Vice President and Corporate Treasurer |
Address:
Smithfield Foods, Inc.
200 Commerce Street
Smithfield, VA 23430
Attention: Jenifer Byrd
and Mark Hall
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COÖPERATIEVE RABOBANK, U.A., NEW YORK BRANCH, AS A LETTER OF CREDIT ISSUER
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| By: | /s/ Christopher Lew | |
| Name: | Christopher Lew | |
| Title: | Managing Director | |
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| By: | /s/ Jinyang Wang | |
| Name: | Jinyang Wang | |
| Title: | Executive Director | |
Address: Securitization - Transaction Management
Rabobank International
245 Park Avenue
New York, NY 10167
COÖPERATIEVE RABOBANK, U.A., AS A COMMITTED LENDER AND L/C PARTICIPANT IN THE RABOBANK LENDER GROUP
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| By: | /s/ CHRISTOPHER LEW | |
| Name: | CHRISTOPHER LEW | |
| Title: | ATTORNEY IN FACT | |
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| By: | /s/ Jinyang Wang | |
| Name: | Jinyang Wang | |
| Title: | Attorney in Fact | |
Address: Securitization - Transaction Management
Rabobank International
245 Park Avenue
New York, NY 10167
5th A&R Credit and Security Agreement (Smithfield)
NIEUW AMSTERDAM RECEIVABLES CORPORATION B.V.,
AS A CONDUIT IN THE RABOBANK LENDER GROUP
Intertrust Management B.V. - Managing Director
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| By: | /s/ Sytse van Ulsen | |
| Name: | Sytse van Ulsen | |
| Title: | Proxyholder | |
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| By: | /s/ Leendert Slabbekoorn | |
| Name: | Leendert Slabbekoorn | |
| Title: | Proxyholder | |
Address: Nieuw Amsterdam Receivables Corporation B.V.
c/o Global Securitization Services, LLC
68 South Service Road, Suite 120
Melville, NY 11747
Attention: JR Angelo
With a copy to:
Address: InterTrust Group
c/o Nieuw Amsterdam Receivables Co.
Basisweg 10
1043 AP Amsterdam
The Netherlands
Attention: The Directors
5th A&R Credit and Security Agreement (Smithfield)
PNC BANK, NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT AND A LETTER OF CREDIT ISSUER
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| By: | /s/ Christopher Blaney | |
| Name: | Christopher Blaney | |
| Title: | Senior Vice President | |
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| By: | /s/ Christopher Blaney | |
| Name: | Christopher Blaney | |
| Title: | Senior Vice President | |
Address: PNC Bank, National Association
The Tower at PNC Plaza
300 Fifth Avenue, 11th Floor
Pittsburgh, PA 15222
Attention: Brian Stanley
5th A&R Credit and Security Agreement (Smithfield)
PNC BANK, NATIONAL ASSOCIATION, AS A COMMITTED LENDER AND L/C PARTICIPANT IN THE PNC LENDER GROUP
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| By: | /s/ Christopher Blaney | |
| Name: Christopher Blaney | |
| Title: Senior Vice President | |
| | | |
| | | |
| By: | /s/ Christopher Blaney | |
| Name: Christopher Blaney | |
| Title: Senior Vice President | |
Address: PNC Bank, National Association
The Tower at PNC Plaza
300 Fifth Avenue, 11th Floor
Pittsburgh, PA 15222
Attention: Brian Stanley
5th A&R Credit and Security Agreement (Smithfield)
PNC CAPITAL MARKETS LLC, AS STRUCTURING AGENT
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| By: | /s/ Christopher Blaney | |
| Name: Christopher Blaney | |
| Title: Managing Director | |
| | | |
| | | |
| By: | /s/ Christopher Blaney | |
| Name: Christopher Blaney | |
| Title: Managing Director | |
Address: PNC Bank, National Association
The Tower at PNC Plaza
300 Fifth Avenue, 11th Floor
Pittsburgh, PA 15222
Attention: Brian Stanley
5th A&R Credit and Security Agreement (Smithfield)
EXHIBIT I
DEFINITIONS
As used in the Agreement and the Exhibits and Schedules thereto, capitalized terms have the meanings set forth in this Exhibit I (such meanings to be equally applicable to the singular and plural forms thereof). Any references in the Agreement or this Exhibit I to any Person includes such Persons successors and permitted assigns. The words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement. The term “including” means “including without limitation”. References to any agreement refer to that agreement as from time to time amended or restated.
As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
“Accrual Adjusted Net Pool Balance” means, at any time of determination: (a) the Net Pool Balance at such time, minus (b) the Volume Rebate Accrual Amount at such time.
“Adjusted Dilution Ratio” means, at any time, the rolling average of the Dilution Ratio for the 12 Calculation Periods then most recently ended.
“Adjusted Federal Funds Rate” means, for each Settlement Period, the weighted daily average of (a) a rate per annum equal to the Federal Funds Rate on each day of such Settlement Period, plus (b) the Market Spread per annum on each day of such Settlement Period. For purposes of determining the Adjusted Federal Funds Rate for any day, changes in the Federal Funds Rate shall be effective on the date of each such change.
“Adjusted Federal Funds Rate Loan” means a Loan which bears interest at the Adjusted Federal Funds Rate.
“Adjusted Federal Funds Rate Option” means the option of the Borrower to have Loans bear Interest at a fluctuating rate per annum equal to the Adjusted Federal Funds Rate, such interest rate to change automatically from time to time effective as of the effective date of each change in the Adjusted Federal Funds Rate.
“Adjusted Letter of Credit Liability” means, at any time, the Letter of Credit Liability less the amount of cash collateral held in the L/C Collateral Account at such time.
“Administrative Agent” has the meaning provided in the preamble to this Agreement.
“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent to each Lender.
“Advance” means a borrowing hereunder consisting of the aggregate amount of the several Loans made on the same Borrowing Date.
“Adverse Claim” has the meaning provided in the Receivables Sale Agreement.
“Affected Entity” means (i) any Funding Source, (ii) any agent, administrator or manager of a Conduit, or (iii) any bank holding company in respect of any of the foregoing.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person or any Subsidiary of such Person. A Person shall be deemed to control another Person if (a) the controlling Person owns 10-50% of any class of voting securities of the controlled Person only if it also possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise, or (b) if the controlling Person owns more than 50% of any class of voting securities of the controlled Person.
“Agent Fee Letter” means that certain Structuring Agent and Administrative Agents Fee Letter, dated as of December 22, 2022, among the Borrower, the Structuring Agent, the Administrative Agent, the Receivables Agent and the Structuring Agent, as it may be amended or modified and in effect from time to time.
“Agents” has the meaning provided in the preamble to this Agreement.
“Aggregate Commitment” means, on any date of determination, the aggregate amount of the Committed Lenders’ Commitments to make Loans and the L/C Credit Extensions hereunder. As of the Closing Date, the Aggregate Commitment is $275,000,000.
“Aggregate Principal” means, on any date of determination, the sum of (i) the aggregate outstanding principal amount of all Advances (other than in respect of Loans relating to Letters of Credit) outstanding on such date and (ii) the Letter of Credit Liability on such date.
“Aggregate Reduction” has the meaning provided in Section 1.3.
“Agreement” means this Fifth Amended and Restated Credit and Security Agreement, as it may be amended or modified and in effect from time to time.
“Alternate Base Rate” means for any day, the rate per annum equal to the higher as of such day of (i) the Prime Rate, or (ii) one-half of one percent (0.50%) above the Federal Funds Rate. For purposes of determining the Alternate Base Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall be effective on the date of each such change. In addition, the Alternate Base Rate shall be rounded, if necessary, to the next higher 1/16 of 1%.
“Alternate Base Rate Loan” means a Loan which bears interest at the Alternate Base Rate or the Default Rate.
“Alternate Base Rate Option” means the option of the Borrower to have Loans bear Interest at a fluctuating rate per annum equal to the Alternate Base Rate, such interest rate to change automatically from time to time effective as of the effective date of each change in the Alternate Base Rate.
5th A&R Credit and Security Agreement (Smithfield)
“Anti-Corruption Laws” means the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010, and any other similar anti-corruption Laws or regulations administered or enforced in any jurisdiction in which Smithfield or any of its Subsidiaries conduct business.
“Anti-Terrorism Law” means any Law in force or hereinafter enacted related to terrorism, money laundering, or economic sanctions, including the Bank Secrecy Act, 31 U.S.C. § 5311 et seq., the USA PATRIOT Act, any such Law administered or enforced by the Netherlands, the International Emergency Economic Powers Act, 50 U.S.C. 1701, et seq., the Trading with the Enemy Act, 50 U.S.C. App. 1, et seq., 18 U.S.C. § 2332d, and 18 U.S.C. § 2339B.
“Approved Currency” means Dollars, Australian Dollars, Canadian Dollars and Yen, and any other currency that is the lawful currency of an Approved Obligor Jurisdiction that is approved in writing by the Administrative Agent.
“Approved Obligor Jurisdiction” means any country which is a member of the Organization for Economic Cooperation and Development, excluding (a) the province of Quebec in the country of Canada or (b) any country whose Governmental Authority (i) shall have admitted in writing its inability to pay its debts as the same become due, (ii) shall have declared a moratorium on the payment of its debts or the debts of any Governmental Authority of such country or (iii) shall have ceased to be a member of the International Monetary Fund or ceased to be eligible to use the resources of the International Monetary Fund or (c) any country with respect to which the U.S. shall have imposed economic sanctions.
“ARM Dilution Reserve” means, on any day, an amount equal to: (a) the aggregate Outstanding Balance of Monetized Receivables at the close of business on such day multiplied by (b) the Minimum Dilution Reserve Percentage.
“Article 7 Transparency and Reporting Requirements” means the reporting requirements set out in Article 7(1) of the EU Securitization Regulation, together with any relevant technical standards adopted by the European Commission in relation thereto, any relevant regulations and technical standards applicable in relation thereto pursuant to any transitional arrangements made pursuant to the EU Securitization Regulation, and, in each case relevant guidance published in relation thereto as may be effective from time to time.
“Assignment Agreement” has the meaning provided in Section 12.1(b).
“Australian Dollars” and the sign “A$” means the lawful currency of Australia.
“Authorized Officer” means, with respect to any Person, its president, corporate controller, treasurer, chief financial officer or any other officer of such Person, or any other individual having express authority to act on behalf of such Person as designated by the board of directors or other managing authority or officer of such Person, as identified to the Administrative Agent in an incumbency certificate that has been certified by such Person’s
5th A&R Credit and Security Agreement (Smithfield)
secretary or assistant secretary or the secretary or assistant secretary of the managing member of such Person.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
“Bankruptcy Code” means the Bankruptcy Code of 1978, as amended and in effect from time to time (11 U.S.C. § 101 et seq.) and any successor statute thereto.
“Basel III” means (a) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, (b) the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Committee on Banking Supervision in November 2011, and (c) any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Rule.
“Beneficial Ownership Rule” means 31 C.F.R. § 1010.230.
“Borrower” has the meaning provided in the preamble to this Agreement.
“Borrowing Base” means, on any date of determination, the Accrual Adjusted Net Pool Balance as of the last day of the period covered by the most recent Pool Report, minus the Required Reserve as of the last day of the period covered by the most recent Pool Report, and minus Deemed Collections that have occurred since the most recent Cut-Off Date to the extent that such Deemed Collections exceed the Dilution Reserve.
“Borrowing Date” means a Business Day on which an Advance is made hereunder.
“Borrowing Limit” means, at any time of determination, the lesser of (x) the Aggregate Commitment less the Letter of Credit Liability at such time and (y) the Borrowing Base at such time.
“Borrowing Notice” has the meaning provided in Section 1.2.
5th A&R Credit and Security Agreement (Smithfield)
“Borrowing Tranche” means specified portions of Loans outstanding as follows: (a) any Loans (or portions thereof) for which the applicable Interest Rate is determined by reference to the Term SOFR Rate and which have the same Interest Period shall constitute one Borrowing Tranche, (b) all Loans (or portions thereof) for which the applicable Interest Rate is determined by reference to Daily 1M SOFR shall constitute one Borrowing Tranche, (c) all Loans (or portions thereof) for which Interest is determined by reference to the Alternate Base Rate shall constitute one Borrowing Tranche and (d) all Loans (or portions thereof) for which Interest is determined by reference to the Adjusted Federal Funds Rate shall constitute one Borrowing Tranche.
“Broken Funding Costs” means for any CP Rate Loan or Term SOFR Rate Loan which: (a) in the case of a CP Rate Loan, has its principal reduced without compliance by Borrower with the notice requirements hereunder, (b) in the case of a CP Rate Loan or a Term SOFR Rate Loan, does not become subject to an Aggregate Reduction following the delivery of any Reduction Notice, (c) in the case of a CP Rate Loan, is assigned under the applicable Liquidity Agreement or (d) in the case of a Term SOFR Rate Loan, is terminated or reduced prior to the last day of its Interest Period, whether voluntarily or due to the occurrence of the Commitment Termination Date, an amount equal to the excess, if any, of (i) the CP Costs or Interest (as applicable) that would have accrued during the remainder of the Interest Periods or the tranche periods for Commercial Paper determined by the Administrative Agent to relate to such Loan (as applicable) subsequent to the date of such reduction, assignment or termination (or in respect of clause (b) above, the date such Aggregate Reduction was designated to occur pursuant to the Reduction Notice) of the principal of such Loan if such reduction, assignment or termination had not occurred or such Reduction Notice had not been delivered, over (ii) the sum of (x) to the extent all or a portion of such principal is allocated to another Loan, the amount of CP Costs or Interest actually accrued during the remainder of such period on such principal for the new Loan, and (y) to the extent such principal is not allocated to another Loan, the income, if any, actually received during the remainder of such period by the holder of such Loan from investing the portion of such principal not so allocated. In the event that the amount referred to in clause (ii) exceeds the amount referred to in clause (i), the relevant Lender or Lenders agree to pay to Borrower the amount of such excess.
“Business Day” means any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed, or are in fact closed, for business in Pittsburgh, Pennsylvania (or, if otherwise, the Lending Office of the Administrative Agent); provided that, when used in connection with an amount that bears interest at a rate based on SOFR or any direct or indirect calculation or determination of SOFR, the term “Business Day” means any such day that is also a U.S. Government Securities Business Day.
“Calculation Period” means each fiscal calendar month of Smithfield or portion thereof which elapses during the term of the Agreement. The first Calculation Period shall commence on the date of the initial Advance hereunder and the final Calculation Period shall terminate on the Final Payout Date.
“Canadian Dollars” and the sign “C$” means the lawful currency of Canada.
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“Change of Control” has the meaning provided in the Receivables Sale Agreement.
“Closing Date” means June 9, 2011.
“Co-Agent” means with respect to each Lender, the agent appointed to act on behalf of such Lender in the applicable Lender Supplement.
“Collateral” has the meaning provided in Section 13.1.
“Collection Account” means collectively, (i) each account listed on Part A of Schedule D to this Agreement (as such schedule may be modified from time to time in connection with the closing or opening of any Collection Account in accordance with the terms hereof) (in each case, on and after the Post-Closing Date, in the name of the Borrower) and maintained at a bank or other financial institution acting as a Collection Bank pursuant to a Collection Account Agreement for the purpose of receiving Collections, and (ii) any FX Collection Account.
“Collection Account Agreement” means each agreement among the Borrower (or, on or prior to the Post-Closing Date, Smithfield Direct, LLC, Smithfield Specialty Foods Group, LLC and Smithfield Support), the Servicer (if applicable), the Administrative Agent and a Collection Bank, governing the terms of one or more Collection Accounts (other than any FX Collection Account) that provides the Administrative Agent with “control” (within the meaning of the UCC) over such Collection Account(s).
“Collection Bank” means any of the banks or other financial institutions holding one or more Collection Accounts.
“Collection Notice” means a notice from the Administrative Agent to a Collection Bank in the form attached to each Collection Account Agreement.
“Collections” means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable, including all Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Security with respect to such Receivable; provided, however, that the term “Collections” shall not include any payment made for the account of the Servicer, a third-party service provider or sub-contractor whose services were not included in the amount invoiced for the applicable Receivable; provided, further, that the term “Collections” shall not include Monetized Receivable Collections.
“Commencement Date” has the meaning provided in the Receivables Sale Agreement.
“Commercial Paper” means promissory notes of any Conduit issued by such Conduit, in each case, in the commercial paper market.
“Commitment” means, for each Committed Lender or L/C Participant, the commitment of such Committed Lender to make Loans hereunder or such L/C Participant to pay hereunder on account of all drawings under all Letters of Credit, on a combined basis, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Committed Lender’s or L/C Participant’s name on Schedule A to this Agreement.
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“Commitment Termination Date” means the earliest to occur of (i) the day on which any of the conditions precedent set forth in Section 6.2 (other than Section 6.2(e)(ii)(B)) are not satisfied, (ii) the Business Day immediately prior to the occurrence of an Event of Default described in Section 9.1(j), (iii) the Business Day specified in a written notice from the Administrative Agent following the occurrence of any other Event of Default, and (iv) the date which is ten (10) days after the Administrative Agent’s receipt of written notice from the Borrower that it wishes to terminate the facility evidenced by this Agreement.
“Committed Lenders” means (i) each Unaffiliated Committed Lender and (ii) with respect to each Lender Group without an Unaffiliated Committed Lender, the banks or other financial institutions and their respective successors and permitted assigns under each Lender Group’s Liquidity Agreement.
“Concentration Reserve Percentage” means, at any time, the largest of: (a) the sum of the four (4) largest Obligor Percentages of the Group D Obligors, (b) the sum of the two (2) largest Obligor Percentages of the Group C Obligors, (c) the largest Obligor Percentage of the Group B Obligors and (d) the largest Obligor Percentage of the Group A Obligors.
“Conduit” means any Lender that is designated as the Conduit in the Lender Supplement or in the Assignment Agreement pursuant to which it became a party to this Agreement, and any assignee of such Lender to the extent of the portion of such Percentage assumed by such assignee pursuant to its respective Assignment Agreement.
“Conforming Changes” means, with respect to Daily 1M SOFR, the Term SOFR Rate or any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Accrual Period,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest and other technical, administrative or operational matters) that the Administrative Agent decides in consultation with the Borrower may be appropriate to reflect the adoption and implementation of Daily 1M SOFR, the Term SOFR Rate or such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of Daily 1M SOFR, the Term SOFR Rate or the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides in consultation with the Borrower is reasonably necessary in connection with the administration of this Agreement and the other Transaction Documents).
“Consolidated Capitalization” has the meaning provided in the Parent Credit Agreement.
“Consolidated EBITDA” has the meaning provided in the Parent Credit Agreement.
“Consolidated Funded Debt” has the meaning provided in the Parent Credit Agreement.
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“Consolidated Interest Expense” has the meaning provided in the Parent Credit Agreement.
“Contingent Obligation” of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or application for a letter of credit.
“Contract” has the meaning provided in the Receivables Sale Agreement.
“Covered Entity” means (a) each of Smithfield, the Borrower, the Originators, the Servicer, the Performance Guarantor and their respective Subsidiaries and (b) each Person that, directly or indirectly, controls a Person described in clause (a) above. For purposes of this definition, control of a Person means the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.
“CP Costs” means:
(a) for a Pool Funded Conduit, for each day, the sum of, without duplication, (i) discount or interest accrued on such Conduit’s Pooled Commercial Paper at the applicable CP Rate on such day, plus (ii) any and all accrued commissions in respect of its placement agents and its Commercial Paper dealers, and issuing and paying agent fees incurred, in respect of such Conduit’s Pooled Commercial Paper for such day, plus (iii) other costs associated with funding small or odd-lot amounts with respect to all receivable purchase or financing facilities which are funded by such Conduit’s Pooled Commercial Paper for such day, minus (iv) any accrual of income net of expenses received by or on behalf of such Conduit on such day from investment of collections received under all receivable purchase or financing facilities funded substantially with such Conduit’s Pooled Commercial Paper, minus (v) any payment received on such day net of expenses in respect of such Conduit’s Broken Funding Costs related to the prepayment of any investment of such Conduit pursuant to the terms of any receivable purchase or financing facilities funded substantially with its Pooled Commercial Paper. In addition to the foregoing costs, if Borrower (or the Servicer, on Borrower’s behalf) shall request any Advance during any period of time determined by a Co-Agent in its sole discretion to result in incrementally higher CP Costs applicable to its Conduit’s Loan included in such Advance, the principal associated with any such Loan of such Conduit shall, during such period, be deemed to be funded by such Conduit in a special pool (which may include capital associated with other receivable purchase or financing facilities) for purposes of determining such additional CP Costs applicable only to such special pool and charged each day during such period against such principal; and
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(b) for a Conduit that is not a Pool Funded Conduit, for each day, the sum of (x) discount or interest accrued on its Related Commercial Paper at the applicable CP Rate on such day, plus (y) any and all accrued commissions and fees of placement agents, dealers and issuing and paying agents incurred in respect of such Related Commercial Paper for such day, plus (z) other costs associated with funding small or odd-lot amounts with respect to all receivable purchase facilities which are funded by Pooled Commercial Paper for such day.
“CP Rate” means, for any CP Tranche Period of any Conduit,
(a) for any CP Rate Loans funded by a Pool Funded Conduit, a rate per annum that, when applied to the outstanding principal balance of such CP Rate Loans for the actual number of days elapsed in such CP Tranche Period, would result in an amount of accrued interest equivalent to such Conduit’s CP Costs for such CP Tranche Period; and
(b) for any CP Rate Loans funded by a Conduit that is not a Pool Funded Conduit, a rate per annum equal to the sum of (i) the rate or, if more than one rate, the weighted average of the rates, determined by converting to an interest-bearing equivalent rate per annum the discount rate (or rates) at which such Conduit’s Related Commercial Paper outstanding during such CP Tranche Period has been or may be sold by any placement agent or commercial paper dealer selected by such Conduit’s Co-Agent, plus (ii) the commissions and charges charged by such placement agent or commercial paper dealer with respect to such Related Commercial Paper, expressed as a percentage of the face amount thereof and converted to an interest-bearing equivalent rate per annum.
“CP Rate Loan” means, for each Loan of a Conduit prior to the time, if any, when (i) it is refinanced with a Liquidity Funding pursuant to the Liquidity Agreement, or (ii) the occurrence of an Event of Default and the commencement of the accrual of Interest thereon at the Default Rate.
“CP Tranche Period” means with respect to any Loan of any Conduit that is not funded with Pooled Commercial Paper, a period of days from 1 Business Day up to the number of days (not to exceed 60 days) necessary to extend such period to include the next Settlement Date, commencing on a Business Day, which period is either (i) requested by Borrower and agreed to by such Conduit or such Conduit’s Co-Agent or (ii) in the absence of such request and agreement, selected by such Conduit or such Conduit’s Co-Agent (it being understood that the goal shall be to select a period which ends on or as close to the next Settlement Date as possible).
“Credit and Collection Policy” has the meaning provided in the Receivables Sale Agreement.
“Cut-Off Date” means the last day of a Calculation Period.
“Daily 1M SOFR” means, for any day, the rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, at the Administrative Agent’s discretion, to the nearest 1/100th of 1%) (a) the Term SOFR Reference Rate for such day for a one (1) month period, as published by the Term SOFR Administrator, by (b) a number
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equal to 1.00 minus the SOFR Reserve Percentage; provided, that if Daily 1M SOFR, determined as provided above, would be less than the SOFR Floor, then Daily 1M SOFR shall be deemed to be the SOFR Floor. Such rate of interest will be adjusted automatically as of each Business Day based on changes in Daily 1M SOFR without notice to the Borrower.
“Daily 1M SOFR Loan” means a Loan which bears interest at Daily 1M SOFR.
“Daily 1M SOFR Option” means the option of the Borrower to have Loans bear Interest at a fluctuating rate per annum equal to Daily 1M SOFR, such interest rate to change automatically from time to time effective as of the effective date of each change in Daily 1M SOFR.
“Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, at the Administrative Agent’s discretion, to the nearest 1/100th of 1%) (A) SOFR for the day (the “SOFR Determination Date”) that is two (2) Business Days prior to (i) such SOFR Rate Day if such SOFR Rate Day is a Business Day or (ii) the Business Day immediately preceding such SOFR Rate Day if such SOFR Rate Day is not a Business Day, by (B) a number equal to 1.00 minus the SOFR Reserve Percentage, in each case, as such SOFR is published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate) on the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source identified by the Federal Reserve Bank of New York or its successor administrator for the secured overnight financing rate from time to time. If Daily Simple SOFR as determined above would be less than the SOFR Floor, then Daily Simple SOFR shall be deemed to be the SOFR Floor. If SOFR for any SOFR Determination Date has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (Pittsburgh, Pennsylvania time) on the second Business Day immediately following such SOFR Determination Date, then SOFR for such SOFR Determination Date will be SOFR for the first Business Day preceding such SOFR Determination Date for which SOFR was published in accordance with the definition of “SOFR”; provided that SOFR determined pursuant to this sentence shall be used for purposes of calculating Daily Simple SOFR for no more than 3 consecutive SOFR Rate Days. If and when Daily Simple SOFR as determined above changes, any applicable rate of interest based on Daily Simple SOFR will change automatically without notice to the Borrower, effective on the date of any such change.
“Days’ Sales Outstanding” means, as of any day, an amount equal to the product of (x) 91, multiplied by (y) the amount obtained by dividing (i) the aggregate outstanding balance of Receivables as of the most recent Cut-Off Date, by (ii) the aggregate amount of Receivables created during the three (3) Calculation Periods including and immediately preceding such Cut-Off Date.
“Debt” has the meaning provided in the Receivables Sale Agreement.
“Deemed Collections” means Collections deemed received by Borrower under Section 1.4(a).
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“Default Horizon Ratio” means, as of any Cut-Off Date, the ratio (expressed as a decimal) computed by dividing (i) the aggregate Outstanding Balance of Receivables created during the five (5) Calculation Periods ending on such Cut-Off Date, by (ii) the Net Pool Balance as of such Cut-Off Date.
“Default Rate” means a rate per annum equal to the sum of (i) the Prime Rate plus (ii) 2.00%, changing when and as the Prime Rate changes; provided, however, that such Default Rate shall not at any time exceed the maximum rate permitted by applicable law.
“Default Ratio” means, as of any Cut-Off Date, the ratio (expressed as a percentage) computed by dividing (x) the total amount of Receivables which became Defaulted Receivables during the Calculation Period that includes such Cut-Off Date, by (y) the aggregate Outstanding Balance of Receivables created during the Calculation Period occurring four (4) months prior to the Calculation Period ending on such Cut-Off Date.
“Defaulted Receivable” means a Receivable: (i) as to which the Obligor thereof has suffered an Event of Bankruptcy; (ii) which, consistent with the Credit and Collection Policy, would be written off Borrower’s books as uncollectible; or (iii) as to which any payment, or part thereof, remains unpaid for 91 days or more from the date such payment was due and payable.
“Defaulting Lender” means (a) any Committed Lender that (i) has failed to perform any of its funding obligations hereunder within one Business Day of the date required to be funded by it hereunder (other than failures to fund solely as a result of (A) a bona fide dispute as to whether the conditions to borrowing were satisfied on the relevant Advance date, but only for such time as such Committed Lender is continuing to engage in good faith discussions regarding the determination or resolution of such dispute, (B) a failure to disburse due to an administrative error or omission by such Committed Lender, or (C) a failure to disburse due to force majeure, computer malfunctions, interruption or communication facilities, labor difficulties or other causes, in each case to the extent beyond such Committed Lender’s reasonable control), (ii) has notified the Borrower or the Administrative Agent that it does not intend to comply with its funding obligations under this Agreement, or (iii) has failed to confirm in writing that it intends to comply with its funding obligation under this Agreement, by the date requested by the Administrative Agent in writing following the Administrative Agent’s determination that it has a reasonable basis to believe that such Committed Lender will not comply with its funding obligations under this Agreement, (b) any Committed Lender that is (or that has a direct or indirect parent company that is) the subject of an Event of Bankruptcy a Bail-In Action or (c) any assignee of a Defaulting Lender under applicable law as contemplated in the last sentence of Section 12.1(c)(v). Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (c) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Servicer, the Borrower and each other Lender promptly following such determination.
“Defaulting Lender Excess” means, with respect to any Defaulting Lender at any time, the excess, if any, at such time of (i) an amount equal to such Defaulting Lender’s Percentage
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multiplied by the Aggregate Principal (calculated as if any other Defaulting Lenders had funded all of their respective Loans) over (ii) the aggregate principal amount of all Loans made by such Defaulting Lender.
“Defaulting Lender Group” means any Lender Group that includes a Defaulting Lender.
“Delinquency Ratio” means, at any time, a percentage equal to (i) the aggregate Outstanding Balance of all Receivables that were Delinquent Receivables at such time divided by (ii) the aggregate Outstanding Balance of all Receivables at such time.
“Delinquent Receivable” means a Receivable, (i) as to which any payment, or part thereof, remains unpaid for 91 days or more from the date such payment was due and payable and (ii) which is not a Defaulted Receivable.
“Dilution” means the amount of any reduction or cancellation of the Outstanding Balance of a Receivable as described in Section 1.4(a).
“Dilution Horizon Ratio” means, as of any Cut-Off Date, a ratio (expressed as a decimal), computed by dividing (i) the aggregate sales generated by the Originators during the Calculation Period ending on such Cut-Off Date, by (ii) the Net Pool Balance as of such Cut-Off Date.
“Dilution Ratio” means, as of any Cut-Off Date, a ratio (expressed as a percentage), computed by dividing (i) the total amount of decreases in Outstanding Balances due to Dilutions (other than cash discounts), which included returns, adjustments, rebates, discounts or retropricing during the Calculation Period ending on such Cut-Off Date, by (ii) the aggregate Outstanding Balance of Receivables created during the Calculation Period ending on such Cut-Off Date.
“Dilution Reserve” means, for any Calculation Period, the product (expressed as a percentage) of:
(a) the sum of (i) 2.00 times the Adjusted Dilution Ratio as of the immediately preceding Cut-Off Date, plus (ii) the Dilution Volatility Component as of the immediately preceding Cut-Off Date, times
(b) the Dilution Horizon Ratio as of the immediately preceding Cut-Off Date.
“Dilution Volatility Component” means the product (expressed as a percentage) of (i) the difference between (a) the highest Dilution Ratio over the past 12 Calculation Periods and (b) the Adjusted Dilution Ratio, and (ii) a fraction, the numerator of which is equal to the amount calculated in (i)(a) of this definition and the denominator of which is equal to the amount calculated in (i)(b) of this definition.
“Dollars” and the sign “$” means lawful currency of the United States of America.
“Drawing Date” has the meaning specified in Section 1.10(b).
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“EBA” means European Banking Authority (including any successor or replacement organization thereto).
“EEA Financial Institution” means (x) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority; (y) any entity established in an EEA Member Country which is a parent of an institution described in clause (x) of this definition, or (x) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (x) or (y) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective Date” has the meaning provided in the Receivables Sale Agreement.
“EIOPA” means The European Insurance and Occupational Pensions Authority (including any successor or replacement organization thereto).
“Eligible Assignee” means a commercial bank having a combined capital and surplus of at least $250,000,000 with a rating of its (or its parent holding company’s) short-term securities equal to or higher than (i) A-1 by S&P and (ii) P-1 by Moody’s.
“Eligible Government Receivable” means an Eligible Receivable that is a Government Receivable.
“Eligible Receivable” means, at any time, a Receivable:
(a) the Obligor of which (i) is not an Affiliate of any of the parties hereto, (ii) is not an individual, (iii) is not a government or a governmental subdivision or agency if the addition of such Receivable shall cause the Government Receivable Excess to be greater than zero, (iv) is not insolvent or has not entered into any insolvency proceedings and (v) is a resident of an Approved Obligor Jurisdiction,
(b) (i) which by its terms is due and payable not greater than 120 days from the original invoice date thereof and (ii) which is not a Defaulted Receivable,
(c) which is not owing from an Obligor (together with any affiliated Obligors) as to which more than 50% of the aggregate Outstanding Balance of all Receivables owing from such Obligor (together with any affiliated Obligors) are Defaulted Receivables,
(d) which is an “account” within the meaning of Article 9 of the UCC of all applicable jurisdictions,
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(e) which is either (i) denominated and payable only in Dollars or an Approved Currency (provided, that to the extent it is denominated and payable in an Approved Currency (other than Dollars) the Collections related thereto are promptly converted to Dollars, and the Obligor with respect to which has been instructed to remit Collections in respect thereof directly to a Lock-Box or Collection Account in the United States of America or (ii) denominated and payable only in an Approved Currency, and the Obligor with respect to which has been instructed to remit Collections in respect thereof directly to a Lock-Box or Collection Account,
(f) which arises under a Contract which, together with such Receivable, is in full force and effect and constitutes the legal, valid and binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms subject to no offset, counterclaim or other defense,
(g) which arises under a Contract which (A) (i) does not require the Obligor under such Contract to consent to the transfer, sale, pledge or assignment of the rights and duties of the applicable Originator or any of its assignees under such Contract or (ii) for which consent to the transfer, sale, pledge or assignment of the rights and duties of the applicable Originator or any of its assignees under such Contract has been obtained from the Obligor under such Contract and (B) does not contain a confidentiality provision that purports to restrict the ability of any Lender to exercise its rights under this Agreement, including, without limitation, its right to review the Contract,
(h) which arises under a Contract that contains an obligation to pay a specified sum of money, contingent only upon the sale of goods or the provision of services by the applicable Originator,
(i) which, together with the Contract related thereto, does not contravene any law, rule or regulation applicable thereto (including, without limitation, any law, rule and regulation relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no part of the Contract related thereto is in violation of any such law, rule or regulation,
(j) which satisfies all applicable requirements of the Credit and Collection Policy,
(k) which was generated in the ordinary course of the applicable Originator’s business,
(l) which (i) arises solely from the sale of goods or the provision of services to the related Obligor by the applicable Originator, and not by any other Person (in whole or in part) and (ii) does not constitute sales tax, finance charges, service charges or similar charges (other than GST or VAT) (it being understood that only the portion of such Receivable so constituted shall not be eligible),
(m) which is not subject to any dispute, counterclaim, right of rescission, set-off, counterclaim or any other defense (including defenses arising out of violations of usury laws) of the applicable Obligor against the applicable Originator or any other Adverse Claim, and the
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Obligor thereon holds no right as against such Originator to cause such Originator to repurchase the goods or merchandise the sale of which shall have given rise to such Receivable (except with respect to sale discounts effected pursuant to the Contract, or defective goods returned in accordance with the terms of the Contract),
(n) as to which the applicable Originator has satisfied and fully performed all obligations on its part with respect to such Receivable required to be fulfilled by it, and no further action is required to be performed by any Person with respect thereto other than payment thereon by the applicable Obligor,
(o) as to which each of the representations and warranties contained in Sections 5.1(i), (j), (r), (s), (t) and (u) is true and correct,
(p) all right, title and interest to and in which has been validly transferred by the applicable Originator directly to Borrower under and in accordance with the Receivables Sale Agreement, and Borrower has good and marketable title thereto free and clear of any Adverse Claim,
(q) which is not originated on a “billed but not shipped,” “bill and hold,” “guaranteed sale,” “sale and return,” “sale on approval,” “progress billed,” “consignment” or similar basis,
(r) is an “eligible asset” under and as defined in Rule 3a-7 under the Investment Company Act, and
(s) is not a Permitted Monetized Receivable.
provided, that, so long as the long term unsecured senior debt ratings assigned to Smithfield by S&P and Moody’s are at least “BB-” and “Ba3”, respectively, a Receivable that relates to In-Transit Collateral shall be deemed to satisfy any clause of this definition of “Eligible Receivable” to the extent that such clause is reasonably expected to be satisfied at the time such In-Transit Collateral is delivered to the related Obligor.
“Embargoed Property” means any property; (a) 50% or more beneficially owned, directly or indirectly, by a Sanctioned Person; (b) that is due to or from a Sanctioned Person; (c) in which a Sanctioned Person otherwise holds any property interest; (d) that is located in a Sanctioned Jurisdiction; or (e) that otherwise would cause any actual violation by any Agent, Conduit or Committed Lender of any applicable Anti-Terrorism Law if any Agent, Conduit or Committed Lender were to obtain an encumbrance on, lien on, pledge of, or security interest in such property, or provide services in consideration of such property.
“Equity Interests” has the meaning provided in the Receivables Sale Agreement.
“ERISA” has the meaning provided in the Receivables Sale Agreement.
“ERISA Affiliate” has the meaning provided in the Receivables Sale Agreement.
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“ERISA Event” means (a) any Reportable Event; (b) the existence with respect to any Plan of a non-exempt Prohibited Transaction; (c) any failure by any Plan to satisfy the minimum funding standards (within the meaning of Sections 412 or 430 of the Tax Code or Section 302 of ERISA) applicable to such Plan, whether or not waived; (d) the filing pursuant to Section 412 of the Tax Code or Section 303 of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, the failure to make by its due date a required installment under Section 430(j) of the Tax Code with respect to any Plan, or the failure by any Loan Party or any of its ERISA Affiliates to make any required contribution to a Multiemployer Plan; (e) the incurrence by any Loan Party or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan, including but not limited to the imposition of any lien in favor of the PBGC or any Plan; (f) a determination that any Plan is, or is expected to be, in “at risk” status (within the meaning of Section 430 of the Tax Code or Title IV of ERISA); (g) the receipt by any Loan Party or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (h) the incurrence by any Loan Party or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (i) the receipt by any Loan Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any Loan Party or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent (within the meaning of Section 4245 of ERISA), Reorganization, or in endangered or critical status (within the meaning of Section 432 of the Tax Code or Section 305 or Title IV of ERISA).
“ESMA” means The European Securities and Markets Authority (including any successor or replacement organization thereto).
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“EU Securitization Regulation” means Regulation (EU) 2017/2402.
“EU Securitization Rules” means: (a) the EU Securitization Regulation; together with (b) any relevant technical standards adopted by the European Commission in relation thereto, any relevant regulations and technical standards applicable in relation thereto pursuant to any transitional arrangements made pursuant to the EU Securitization Regulation, and, in each case relevant guidance published in relation thereto by the European Supervisory Authorities as may be effective from time to time.
“European Supervisory Authorities” means, together, the EBA, ESMA and EIOPA.
“Event of Bankruptcy” shall be deemed to have occurred with respect to a Person if either:
(a) a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement,
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dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts, and such case or proceeding shall continue undismissed, or unstayed and in effect, for a period of 60 consecutive days; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee (other than a trustee under a deed of trust, indenture or similar instrument), custodian, sequestrator (or other similar official) for, such Person or for any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall be adjudicated insolvent, or admit in writing its inability to pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors shall vote to implement any of the foregoing.
“Event of Default” has the meaning specified in Article IX.
“Excluded Originator” has the meaning provided in the Receivables Sale Agreement.
“Excluded Receivable” has the meaning provided in the Receivables Sale Agreement.
“Excluded Subsidiary” has the meaning provided in the Receivables Sale Agreement.
“Excluded Taxes” has the meaning provided in Section 10.1(c).
“Executive Officer” has the meaning provided in the Receivables Sale Agreement.
“Executive Order” has the meaning provided in Section 5.1(x).
“Existing Letter of Credit” means each of the letters of credit letter identified on Exhibit IX.
“Extended Payment Term Excess” means, as of any date of determination, the amount, if any, by which the aggregate Outstanding Balance of all Eligible Receivables that by their terms are due and payable more than 30 days but not greater than 120 days from the original invoice date thereof exceeds 7.5% of the aggregate Outstanding Balance of all Eligible Receivables.
“Facility Termination Date” means the earliest to occur of (i) the Scheduled Termination Date and (ii) the Commitment Termination Date.
“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum for each day during such period equal to (a) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds
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brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York in the Composite Closing Quotations for U.S. Government Securities; or (b) if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 11:30 a.m. (New York City time) for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.
“Fee Letter” means that certain Lender Fee Letter, dated as of December 22, 2022, among Performance Guarantor, the Borrower, the Letter of Credit Issuers, the Structuring Agent and the Agents, as it may be amended or modified and in effect from time to time.
“Final Payout Date” means the date on which (i) all Obligations have been paid in full and the Aggregate Commitment has been terminated and (ii) all other amounts owing by the Borrower to the Receivables Agent and the Receivables Buyers under the Monetization Documents have been paid in full.
“Finance Charges” means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Obligor pursuant to such Contract.
“Financial Officer” has the meaning provided in the Receivables Sale Agreement.
“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“Foreign Receivable” means any Eligible Receivable, the Obligor of which is organized under the laws of, or has its chief executive office in, any jurisdiction other than the United States (or any political subdivision thereof).
“Foreign Receivable Excess” means (i) prior to a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Foreign Receivables that constitute Eligible Receivables exceeds 20.0% of the aggregate Outstanding Balance of all Eligible Receivables or (ii) after a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Foreign Receivables that constitute Eligible Receivables exceeds any lower percentage determined by the Administrative Agent in its sole discretion (which percentage may be 0.0%) of the Outstanding Balance of all Eligible Receivables.
“Funding Agreement” means (i) this Agreement, (ii) the Liquidity Agreement and (iii) any other agreement or instrument executed by any Funding Source with or for the benefit of a Conduit.
“Funding Source” means (i) each Committed Lender and (ii) any insurance company, bank or other funding entity providing liquidity, credit enhancement or back-up purchase support or facilities to a Conduit.
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“FX Collection Account” means each account listed on Part B of Schedule D to this Agreement (as such schedule may be modified from time to time in connection with the closing or opening of any FX Collection Account in accordance with the terms hereof) (in each case, in the name of the Borrower or Smithfield Support) and maintained at a bank or other financial institution acting as a Collection Bank and in which any Collections denominated in Canadian Dollars, Yen, or Australian Dollars are collected or deposited.
“FX Excess” means (i) prior to a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Eligible Receivables that are denominated in a currency other than Dollars exceeds 2.5% of the aggregate Outstanding Balance of all Eligible Receivables or (ii) after a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Eligible Receivables that are denominated in a currency other than Dollars exceeds any lower percentage determined by the Administrative Agent in its sole discretion (which percentage may be 0.0%) of the Outstanding Balance of all Eligible Receivables.
“GAAP” means generally accepted accounting principles in effect in the United States of America as of the date of this Agreement.
“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
“Government Receivable” means any Receivable, the Obligor of which is a government or governmental subdivision or agency of the United States (or any political subdivision thereof).
“Government Receivable Excess” means (i) prior to a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Eligible Government Receivables exceeds 5.0% of the Outstanding Balance of all Eligible Receivables or (ii) after a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Eligible Government Receivables exceeds any lower percentage determined by the Administrative Agent in its sole discretion (which percentage may be 0.0%) of the Outstanding Balance of all Eligible Receivables.
“Group A Obligor” means any Obligor with an Obligor Concentration Limit of 20.00% as determined according to the chart set forth in the definition thereof.
“Group B Obligor” means any Obligor with an Obligor Concentration Limit of 15.00% as determined according to the chart set forth in the definition thereof.
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“Group C Obligor” means any Obligor with an Obligor Concentration Limit of 10.00% as determined according to the chart set forth in the definition thereof.
“Group D Obligor” means any Obligor with an Obligor Concentration Limit of 5.00% as determined according to the chart set forth in the definition thereof.
“GST” means all goods and services tax payable under Part IX of the Excise Tax Act (Canada) and harmonized sales tax in any participating province payable under the Excise Tax Act (Canada), as such statutes may be amended, supplemented or replaced from time to time.
“In-Transit Collateral” means, as of any date of determination, any inventory of an Originator that (i) is in the process of being transported by such Originator to an Obligor pursuant to a Contract that is then expected to be delivered within five (5) or fewer calendar days, (ii) is covered by insurance in accordance with the applicable Originator’s normal business practices, and (iii) upon its receipt and acceptance by such Obligor, will give rise to an amount payable by such Obligor to such Originator under such Contract.
“In-Transit Receivable” means any Eligible Receivable relating to In-Transit Collateral. For the avoidance of doubt, an In-Transit Receivable shall no longer be deemed to be an Eligible Receivable on the date that any related inventory that at one time satisfied the definition of “In-Transit Collateral” fails to satisfy the definition of “In-Transit Collateral” except solely as a result of the delivery and acceptance of such inventory by the related Obligor.
“In-Transit Receivable Excess” means, as of any date of determination, the amount, if any, by which the aggregate Outstanding Balance of all In-Transit Receivables exceeds 20.0% of the Outstanding Balance of all Eligible Receivables.
“Indemnified Amounts” has the meaning specified in Section 10.1.
“Indemnified Party” has the meaning specified in Section 10.1.
“Indemnified Taxes” means Taxes other than Excluded Taxes.
“Independent Director” means a director of Borrower who (A) is not at the time of initial appointment or at any time during the continuation of his or her appointment as an Independent Director and has not been at any time during the five (5) years preceding such appointment: (i) an equity holder, director (other than an Independent Director), officer, employee, member, manager, attorney or partner of Borrower or any of its Affiliates; (ii) a customer, supplier or other Person who derives more than 1% of its purchases or revenues from its activities with Borrower or any of its Affiliates; (iii) a Person or other entity controlling or under common control with any such equity holder, partner, member, customer, supplier or other Person; (iv) a member of the immediate family of any such equity holder, director, officer, employee, member, manager, partner, customer, supplier or other person; or (v) a trustee in bankruptcy for Borrower or any of its Affiliates and (B) has, (i) prior experience as an Independent Director for a corporation or limited liability company whose charter documents required the unanimous consent of all “independent directors” thereof before such corporation or limited liability
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company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (ii) at least three years of employment experience and who is provided by CT Corporation, Corporation Service Company, Global Securitization Services, LLC, National Registered Agents, Inc., Wilmington Trust Company, Lord Securities Corporation or, if none of those companies is then providing professional “independent directors”, another nationally recognized company reasonably approved by the Administrative Agent. As used herein, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of management, policies or activities of a person or entity, whether through ownership of voting securities, by contract or otherwise.
“Initial Contributed Assets” has the meaning provided in the Receivables Sale Agreement.
“Initial Purchased Assets” has the meaning provided in the Receivables Sale Agreement.
“Interest” means, for each Loan and any Interest Period or Interest Accrual Period (or portion thereof), the amount of interest accrued on the Principal of such Loan during such Interest Period or Interest Accrual Period (or portion thereof) in accordance with this Agreement.
“Interest Accrual Period” means, with respect to any Loan, (a) before the Termination Date: (i) initially, the period commencing on the date such Loan is funded hereunder (or in the case of any fees payable hereunder, commencing on the Closing Date) and ending on (but not including) the next Settlement Date and (ii) thereafter, each period commencing on a Settlement Date and ending on (but not including) the next Settlement Date and (b) on and after the Termination Date, such period (including a period of one day) as shall be selected from time to time by the Administrative Agent or, in the absence of any such selection, each period commencing on a Settlement Date and ending on (but not including) the next Settlement Date.
“Interest and Servicing Reserve” means at any time:
1.50 x DSO x (ABR + SFR)
360
where:
ABR = the Alternate Base Rate at such time;
DSO = the Days’ Sales Outstanding for the most recently ended
Calculation Period; and
SFR = the Servicing Fee Rate.
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“Interest Period” means, with respect to any Loan held by a Committed Lender:
(a) if Interest for such Loan is calculated on the basis of Term SOFR, a period of time selected by the Borrower in connection with (and to apply to) any election permitted hereunder by the Borrower to have Loans accrue Interest under the Term SOFR Rate Option. Subject to the last sentence of this clause (a), such period shall be one or three Months. Such Interest Period shall commence on the effective date of such Term SOFR Rate Option, which shall be (i) the date of the related Advance if the Borrower is requesting the Lenders fund new Advances, or (ii) the date of renewal of or conversion to the Term SOFR Rate Option if the Borrower is renewing or converting to the Term SOFR Rate Option applicable to outstanding Loans. Notwithstanding the second sentence hereof: (A) any Interest Period which would otherwise end on a date which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (B) the Borrower shall not select, convert to or renew an Interest Period for any portion of the Loans that would end after the Scheduled Termination Date; and
(b) if Interest for such Loan is calculated on the basis of Daily 1M SOFR, the Alternate Base Rate or the Adjusted Federal Funds Rate, a period of one (1) day.
“Interest Rate” means, subject to Sections 4.4 and 4.5, means,
(a) with respect to any Loan (or any portion thereof) accruing Interest under the Term SOFR Rate Option or the Daily 1M SOFR Rate Option for any day in any Interest Accrual Period, the sum of (i) either (x) if the Borrower has elected for such Loan (or any portion thereof) to accrue interest by reference to the Term SOFR Rate during such Interest Accrual Period in accordance with Section 4.3(a), the Term SOFR Rate for such day, or (y) in any other case (including if no such election has been made), Daily 1M SOFR plus (ii) the SOFR Adjustment;
(b) with respect to any Loan (or any portion thereof) accruing Interest under the Adjusted Federal Funds Rate Option, the Adjusted Federal Funds Rate; and
(c) with respect to any Loan (or any portion thereof) accruing Interest under the Alternate Base Rate Option, the Alternate Base Rate.
“Interest Rate Option” means any Term SOFR Rate Option, Daily 1M SOFR Option, Adjusted Federal Funds Rate Option or Alternate Base Rate Option.
“Investment Company Act” means the Investment Company Act of 1940, as amended, or any successor statute.
“Law” means any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any Governmental Authority, foreign or domestic.
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“L/C Collateral Account” means the account designated as the L/C Collateral Account established and maintained by the Administrative Agent (for the benefit of the Letter of Credit Issuers and the L/C Participants), or such other account as may be so designated as such by the Administrative Agent.
“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.
“L/C Participant” means any Person that is designated as the L/C Participant for each Lender Group in the Lender Supplement or in the Assignment Agreement pursuant to which it became a party to this Agreement.
“LCR Security” means any commercial paper or security (other than equity securities issued to any Person that is a consolidated subsidiary of Smithfield under GAAP) within the meaning of Paragraph __.32(e)(viii) of the final rules titled Liquidity Coverage Ratio: Liquidity Risk Measurement Standards, 79 Fed. Reg. 197, 61440 et seq. (October 10, 2014).
“Legal Final Maturity Date” means the date occurring one-hundred and ten (110) calendar days after the Scheduled Termination Date.
“Lender” means each Conduit, each Committed Lender, each L/C Participant and each Letter of Credit Issuer.
“Lender Group” means, collectively, (A) with respect to any Conduit or Conduits, (i) such Conduit or Conduits, as the case may be, (ii) the Committed Lenders with respect to such Conduit or Conduits and (iii) the applicable Co-Agent for such Conduit or Conduits and, (B) with respect to any Unaffiliated Committed Lender, (i) such Unaffiliated Committed Lender and (ii) the applicable Co-Agent for such Unaffiliated Committed Lender.
“Lender Group Commitment” means, with respect to any Lender Group the amount set forth as the Lender Group Commitment for such Lender Group on Schedule A to this Agreement. The parties hereto acknowledge and agree that any such Lender Group Commitment may be less than the sum of the Commitments of the Lenders within the relevant Lender Group.
“Lender Group Exposure” means, with respect to any Lender Group, the sum of (a) the aggregate outstanding principal amount of all Loans held by the Lenders in such Lender Group, plus (b) the related L/C Participant’s Ratable LC Share of the Letter of Credit Liability.
“Lender Group Exposure Percentage” means, with respect to any Lender Group, a fraction, expressed as a percentage, (a) the numerator of which is such Lender Group’s Lender Group Exposure and (b) the denominator of which is the sum of (i) the Aggregate Principal plus (ii) the Letter of Credit Liability.
“Lender Supplement” means, with respect to any Lender, the information set forth in Schedule C to this Agreement in respect of such Lender, as it may be amended or otherwise modified from time to time by such Lender or the Lenders named therein.
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“Lending Office” means, as to the Administrative Agent or any Lender, the office or offices of such Person described as such in such Lender’s Administrative Questionnaire, or such other office or offices as such Person may from time to time notify the Borrower and the Administrative Agent.
“Letter of Credit” means either (a) a standby letter of credit issued in Dollars by a Letter of Credit Issuer pursuant to Section 1.7, or (b) an Existing Letter Credit, in each case, either as originally issued or as the same may, from time to time, be amended or otherwise modified or extended.
“Letter of Credit Application” has the meaning specified in Section 1.8(a).
“Letter of Credit Fees” has the meaning specified in Section 1.17.
“Letter of Credit Issuer” means each of (i) PNC in its capacity as issuer of Letters of Credit hereunder and (ii) Rabobank in its capacity as issuer of Letters of Credit hereunder.
“Letter of Credit Liability” means, at any time, the excess, if any, of (a) aggregate face amount of the outstanding Letters of Credit at such time over (b) the amount of any drawings made under such Letters of Credit.
“Liquidity Agreement” means the liquidity asset purchase agreement between the Conduit of any Lender Group and the Committed Lenders of such Lender Group.
“Liquidity Commitment” means, as to each Committed Lender in any Lender Group, its commitment to such Lender Group’s Conduit under the Liquidity Agreements, (which shall equal 102% of such Lender Group’s Percentage of the Aggregate Commitment hereunder).
“Liquidity Funding” means (a) a purchase made by any Committed Lender pursuant to its Liquidity Commitment of all or any portion of, or any undivided interest in, an applicable Conduit’s Loans, or (b) any Loan made by a Committed Lender.
“Loan” means any loan made by a Lender to Borrower pursuant to this Agreement (including, without limitation, any Liquidity Funding). Each Loan shall either be a CP Rate Loan, an Alternate Base Rate Loan, an Adjusted Federal Funds Rate Loan, a Daily 1M SOFR Loan or a Term SOFR Rate Loan, selected in accordance with the terms of this Agreement.
“Loan Parties” has the meaning provided in the preamble to this Agreement.
“Lock-Box” means each locked postal box with respect to which a bank who has executed a Collection Account Agreement has been granted exclusive access for the purpose of retrieving and processing payments made on the Receivables and which is listed on Schedule D hereto.
“Loss Reserve” means, for any Calculation Period, the product (expressed as a percentage) of (a) 2.00, times (b) the highest three-month rolling average Default Ratio during
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the 12 Calculation Periods ending on the immediately preceding Cut-Off Date, times (c) the Default Horizon Ratio as of the immediately preceding Cut-Off Date.
“Market Spread” means, on any date of determination, the positive difference between (i) the Federal Funds Rate on such date of determination, and (ii) the 1-month Term SOFR Rate effective as of 11:00 a.m. (New York City time) on such date of determination (and not as in effect two Business Days prior thereto), plus the SOFR Adjustment.
“Material Adverse Effect” means (i) any material adverse effect on the business, assets, operations, property or financial condition of the Performance Guarantor and its Non-Excluded Subsidiaries, taken as a whole, (ii) any material adverse effect on the abilities of the Loan Parties, taken as a whole, to perform their obligations under the Transaction Documents to which they are a party, (iii) any material adverse effect on the legality, validity or enforceability of the Agreement or any other Transaction Document, (iv) any material adverse effect on the Administrative Agent’s interest (on behalf of itself and the Secured Parties) in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto, (v) any material adverse effect on the collectability of the Receivables generally or of any material portion of the Receivables and (vi) material adverse effect on the rights of or benefits available to the Administrative Agent, the Letter of Credit Issuers, the Co-Agents or the Lenders.
“Material Subsidiary” has the meaning provided in the Parent Credit Agreement.
“Minimum Dilution Reserve Percentage” means, at any time, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of (a) the Adjusted Dilution Ratios for the most recent Calculation Period, multiplied by (b) the Dilution Horizon Ratio.
“Monetization Documents” means the Receivables Purchase Agreement, the Monetization Intercreditor Agreement and all other certificates, instruments, reports, notices, agreements and documents executed or delivered under or in connection with the Receivables Purchase Agreement, in each case the same may be amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
“Monetization Intercreditor Agreement” means the Intercreditor Agreement, dated as of December 22, 2022, by and among, inter alia, the Administrative Agent and the Receivables Agent.
“Monetized Receivable” has the meaning set forth in Section 1.1(d).
“Monetized Receivable Collections” means, with respect to any Monetized Receivable, all cash collections and other cash proceeds in respect of such Monetized Receivable, including all Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Monetized Assets; provided, however, that the term “Monetized Receivable Collections” shall not include any payment made for the account of the Servicer, a third-party
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service provider or sub-contractor whose services were not included in the amount invoiced for the applicable Monetized Receivable.
“Month” means, with respect to an Interest Period for Loans accruing Interest under the Term SOFR Rate Option, the interval between the days in consecutive calendar months numerically corresponding to the first day of such Interest Period. If any Interest Period for Loans accruing Interest under the Term SOFR Rate Option begins on a day of a calendar month for which there is no numerically corresponding day in the month in which such Interest Period is to end, the final Month of such Interest Period shall be deemed to end on the last Business Day of such final month.
“Monthly Report” means a report, in substantially the form of Exhibit VI-A hereto (appropriately completed), furnished by the Servicer to the Administrative Agent pursuant to Section 8.5.
“Monthly Reporting Date” means the second (2nd) Business Day preceding each Settlement Date.
“Moody’s” means Moody’s Investors Service, Inc. and any successors thereto.
“Multiemployer Plan” means a multiemployer benefit plan as defined in Section 4001(a)(3) of ERISA.
“Net Pool Balance” means, at any time, the aggregate Outstanding Balance of all Eligible Receivables at such time reduced by the sum of (i) the aggregate amount by which the Outstanding Balance of all Eligible Receivables of each Obligor and its Affiliates exceeds the Obligor Concentration Limit for such Obligor, (ii) the Foreign Receivable Excess, (iii) the Government Receivables Excess, (iv) the In-Transit Receivable Excess, (v) the Extended Payment Term Excess and (vi) the FX Excess.
“Non-Excluded Subsidiary” has the meaning provided in the Receivables Sale Agreement.
“Non-Material Subsidiary” means a Subsidiary that is not a Material Subsidiary.
“Notice Date” has the meaning specified in Section 1.8(b).
“Obligations” means, at any time, any and all obligations of either of the Loan Parties to any of the Secured Parties arising under or in connection with the Transaction Documents, whether now existing or hereafter arising, due or accrued, absolute or contingent, including, without limitation, obligations in respect of Aggregate Principal, CP Costs, Interest, fees under the Fee Letter, Agent Fee Letter, Broken Funding Costs and Indemnified Amounts.
“Obligor” has the meaning provided in the Receivables Sale Agreement.
“Obligor Concentration Limit” means, at any time, in relation to the aggregate Outstanding Balance of Receivables owed by any single Obligor and its Affiliates (if any), the
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applicable concentration limit set forth below for Obligors who have short term unsecured debt ratings currently assigned to them by S&P and Moody’s (or in the absence thereof, the long term unsecured senior debt ratings set forth below):
| | | | | | | | | | | |
| Short Term Rating
(S&P/Moody’s) | Long Term Rating
(S&P/Moody’s) | Maximum
Allowable % of
Eligible Receivables |
| A-1/P-1 or higher | AA- to A+/ Aa3 to A1
or higher | 20.00% |
| A-2/P-2 | A to BBB / A2 to
Baa2 | 15.00% |
| A-3 / P-3 | BBB- / Baa3 | 10.00% |
| lower than A-3 / lower than P-3 (Non-Investment Grade) | BB+ or lower / Ba1 or lower (Non-Investment Grade) | 5.00% |
; provided, however, that (a) if any Obligor has only received a short term rating or long term rating from one of S&P and Moody’s, such short term rating or long term rating, as applicable, shall apply, (b) if any Obligor has a split short term rating by S&P and Moody’s or a split long term rating by S&P and Moody’s, the applicable short term rating or long term rating, as applicable, will be the lower of the two, (c) if any Obligor is not rated by either S&P or Moody’s, the applicable Obligor Concentration Limit shall be the one set forth in the last line of the table above, and (d) subject to satisfaction of the Rating Agency Condition, upon Borrower’s request from time to time, the Agents may agree to a higher percentage of Eligible Receivables for a particular Obligor and its Affiliates (each such higher percentage, a “Special Concentration Limit”), it being understood that any Special Concentration Limit may be cancelled by any Agent on not less than two (2) Business Days’ written notice to the Loan Parties.
“Obligor Percentage” means, at any time, for each Obligor, a fraction, expressed as a percentage, (a) the numerator of which is the aggregate Outstanding Balance of the Eligible Receivables of such Obligor and its Affiliates less the amount (if any) by which the Outstanding Balance of all Eligible Receivables of such Obligor and its Affiliates exceeds the Obligor Concentration Limit for such Obligor and (b) the denominator of which is the aggregate Outstanding Balance of all Eligible Receivables at such time.
“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“Original Agreement” has the meaning provided in the preamble to this Agreement.
“Originator” has the meaning provided in the Receivables Sale Agreement, and such term excludes, for the purposes of this Agreement, any Excluded Originator.
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“Outstanding Balance” of any Receivable at any time means the then outstanding principal balance thereof or, in the case of any Receivable described in clause (ii) of the definition of “Receivable” herein, the principal amount to become due and payable under the relevant Contract in respect of the relevant In-Transit Collateral.
“Overnight Bank Funding Rate” means for any day, the rate comprised of both overnight federal funds and overnight eurocurrency borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the Federal Reserve Bank of New York, as set forth on its public website from time to time, and as published on the next succeeding Business Day as the overnight bank funding rate by the Federal Reserve Bank of New York (or by such other recognized electronic source (such as Bloomberg) selected by the Administrative Agent for the purpose of displaying such rate); provided, that if such day is not a Business Day, the Overnight Bank Funding Rate for such day shall be such rate on the immediately preceding Business Day; provided, further, that if such rate shall at any time, for any reason, no longer exist, a comparable replacement rate determined by the Administrative Agent at such time (which determination shall be conclusive absent manifest error). If the Overnight Bank Funding Rate determined as above would be less than zero, then such rate shall be deemed to be zero. The rate of interest charged shall be adjusted as of each Business Day based on changes in the Overnight Bank Funding Rate without notice to the Borrower.
“Parent Credit Agreement” means that certain Second Amended and Restated Credit Agreement, dated as of May 21, 2021, by and among Smithfield, certain subsidiaries of Smithfield party thereto pursuant to Section 2.14 thereof, each lender from time to time party thereto, each joint lead arranger, joint bookrunner and documentation agent from time to time party thereto and Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer, as in effect as of the date hereof notwithstanding anything to the contrary set forth in the rules of interpretation set forth in the Receivables Sale Agreement; provided, however, “Parent Credit Agreement” shall mean such agreement after giving effect to any amendment, restatement, waiver or other modification to which each Committed Lender or its Affiliate, in its capacity as a party to the Parent Credit Agreement, has given its consent; provided, further, that for purposes of Section 9.1(x), “Parent Credit Agreement” shall mean as amended, restated and modified so long as PNC and Rabobank (or their Affiliates) are lenders thereunder.
“Participant” has the meaning provided in Section 12.2.
“PASA” means the Packers and Stockyards Act of 1921, as amended.
“PASA Reserve Amount” means (a) prior to a Ratings Trigger Event, (i) 0.50 times (ii) the amount of all outstanding trade payables of Smithfield and its Subsidiaries, which are entitled to the benefits of the trust created under the Packers and Stockyards Act of 1921, as amended; or (b) after a Ratings Trigger Event, the amount of all outstanding trade payables of Smithfield and its Subsidiaries, which are entitled to the benefits of the trust created under the Packers and Stockyards Act of 1921, as amended.
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“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
“Payment Account” means, with respect to each Co-Agent, the account designated by such Co-Agent for receipt of payments hereunder and identified on the Lender Supplement.
“PBGC” has the meaning provided in the Receivables Sale Agreement.
“Percentage” means for each Lender Group, the ratio (expressed as a percentage) of the aggregate Commitments of the Committed Lenders in such Lender Group to the Aggregate Commitment.
“Performance Guarantor” means Smithfield.
“Performance Undertaking” means that certain Seventh Amended and Restated Performance Undertaking, dated as of December 22, 2022, by Performance Guarantor in favor of Borrower, substantially in the form of Exhibit VII, as the same may be amended, restated or otherwise modified from time to time.
“Permitted Monetization Receivable” means any Receivable the Obligor of which is set forth on Schedule E attached hereto.
“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Tax Code or Section 302 of ERISA, and in respect of which any Loan Party or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4062 or Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“PNC” has the meaning provided in the preamble to this Agreement.
“PNC Lender Group” means the Lender Group with respect to which PNC is the Co-Agent.
“Pool Report” means each Monthly Report and each Weekly Report, as applicable, required to be delivered pursuant to Section 8.5.
“Pooled Commercial Paper” means, for each of the Pool Funded Conduits, the Commercial Paper of such Pool Funded Conduit subject to any particular pooling arrangement by such Conduit, but excluding Related Commercial Paper issued by any Pool Funded Conduit for a tenor and in an amount specifically requested by any Person with any agreement effected by such Pool Funded Conduit.
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“Pool Funded Conduits” means, at any time, the Conduits that have notified the Loan Parties that they will be pool-funding their Loans.
“Post-Closing Date” means the date occurring ninety (90) days following the Closing Date (or such later date (if any) consented to in writing by the Administrative Agent in its sole discretion).
“Prime Rate” means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime commercial lending rate or base rate in effect at its principal office for loans in the United States of America, with each change in the Prime Rate being effective on the date such change is publicly announced as effective (it being understood and agreed that the Prime Rate is a reference rate used by the Administrative Agent in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged on any extension of credit by the Administrative Agent to any debtor).
“Prohibited Transaction” has the meaning assigned to such term in Section 406 of ERISA and Section 4975(f)(3) of the Tax Code.
“Pro Rata Share” means, with respect to each Lender Group on any date of determination, the ratio which the Liquidity Commitment of a Committed Lender in such Lender Group bears to the sum of the Liquidity Commitments of all Committed Lenders in such Lender Group.
“Proposed Reduction Date” has the meaning provided in Section 1.3.
“Purchasing Lender” has the meaning provided in Section 12.1(b).
“Rabobank” has the meaning provided in the preamble to this Agreement.
“Raboank Lender Group” means the Lender Group with respect to which Rabobank is the Co-Agent.
“Ratable LC Share” means, as to any L/C Participant, a fraction, the numerator of which equals the Commitment of such L/C Participant at such time and the denominator of which equals the aggregate of the Commitments of all L/C Participants at such time.
“Rating Agency Condition” means, if applicable, that a Conduit has received written notice from S&P or Moody’s or any other rating agency then rating such Conduit’s Commercial Paper that the execution and delivery of, or an amendment, a change or a waiver of, this Agreement or the Receivables Sale Agreement will not result in a withdrawal or downgrade of the then current ratings on such Conduit’s Commercial Paper or, if applicable, the conditions required for post-closing review as described in a letter or letters from S&P or Moody’s or such other rating agency.
“Ratings Trigger Event” means, as of any date of determination, the lowering with regard to the Performance Guarantor of (i) S&P’s Corporate Credit Rating to below BB-, or (ii) Moody’s Long Term Corporate Family Rating to below Ba3.
5th A&R Credit and Security Agreement (Smithfield)
“Receivable” has the meaning provided in the Receivables Sale Agreement, and such term excludes, for the purposes of this Agreement, any Excluded Receivable and any Monetized Receivable.
“Receivables Agent” means PNC, in its capacity as administrative agent under the Receivables Purchase Agreement.
“Receivables Buyer” means each buyer under the Receivables Purchase Agreement.
“Receivables Purchase Agreement” means the Receivables Purchase Agreement, dated as of December 22, 2022, by and among the Borrower, as seller, the Servicer, the Receivables Buyers and the Receivables Agent.
“Receivables Sale Agreement” means that certain Fifth Amended and Restated Receivables Sale Agreement, dated as of the date hereof, among Smithfield, SFFC, the Originators and the Borrower, as the same may be amended, restated or otherwise modified from time to time.
“Records” has the meaning provided in the Receivables Sale Agreement.
“Reduction Notice” has the meaning provided in Section 1.3.
“Register” has the meaning provided in Section 12.3.
“Regulatory Change” means any change after the date of this Agreement in United States (federal, state or municipal) or foreign laws, regulations (including Regulation D) or accounting principles or the adoption or making after such date of any interpretations, directives or requests of or under any United States (federal, state or municipal) or foreign laws, regulations (whether or not having the force of law) or accounting principles by any court, governmental or monetary authority, or accounting board or authority (whether or not part of government) charged with the establishment, interpretation or administration thereof. For the avoidance of doubt, any change in accounting standards or the issuance of any other pronouncement, release or interpretation (or revisions to the foregoing) that causes or requires the consolidation of all or a portion of the assets and liabilities of a Conduit or Borrower with the assets and liabilities of any Agent, any Committed Lender or any other Affected Entity shall constitute a Regulatory Change.
“Reimbursement Obligation” has the meaning specified in Section 1.10(b).
“Related Commercial Paper” means, for any period with respect to either Conduit, any Commercial Paper of such Conduit issued or deemed issued for purposes of financing or maintaining any Loan by such Conduit (including any discount, yield, or interest thereon) outstanding on any day during such period.
“Related Monetized Assets” means with respect to any Monetized Receivables, (i) all Related Security with respect to such Monetized Receivable, (ii) all Monetized Receivable
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Collections relating thereto and (iii) all proceeds of, and all amounts received or receivable under any or all of, the foregoing.
“Related Security” means, with respect to any Receivable:
(i) all of Borrower’s interest in the Related Security (under and as defined in the Receivables Sale Agreement),
(ii) all of Borrower’s right, title and interest in, to and under the Receivables Sale Agreement in respect of such Receivable,
(iii) all of Borrower’s right, title and interest in, to and under the Performance Undertaking,
(iv) all rights, remedies, powers, privileges, title and interest (but not obligations) in and to each Lock-Box and Collection Account (other than any FX Collection Account), into which any Collections or other proceeds with respect to such Receivable may be deposited, and any related investment property acquired with any such Collections or other proceeds (as such term is defined in the applicable UCC), and
(v) all proceeds of any of the foregoing.
“Reorganization” means, with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.
“Reportable Compliance Event” means that: (a) any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint, or similar charging instrument, arraigned, custodially detained, penalized or the subject of an assessment for a penalty, or enters into a settlement with a Governmental Authority in connection with any economic sanctions or other Anti-Terrorism Law or Anti-Corruption Law, or any predicate crime to any Anti-Terrorism Law or Anti-Corruption Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations represents a material violation of any Anti-Terrorism Law or Anti-Corruption Law; (b) any Covered Entity engages in a transaction that has caused or may cause any Agent, Conduit or Committed Lender to be in violation of any Anti-Terrorism Laws, including a Covered Entity’s use of any proceeds of the facilities provided hereunder to fund any operations in, finance any investments or activities in, or, make any payments to, directly or indirectly, a Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws; (c) any Collateral becomes Embargoed Property; or (d) any Covered Entity otherwise violates, or reasonably believes that it will violate, any of the representations, warranties or covenants set forth in Section 5.1(x), 7.1(n) or 7.2(k) of this Agreement.
“Reportable Event” means any "reportable event," as defined in Section 4043 of ERISA or the regulations issued thereunder, other than those events as to which the 30-day notice period referred to in Section 4043(c) of ERISA has been waived, with respect to a Plan (other than a
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Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Tax Code).
“Required Committed Lenders” means Committed Lenders holding in the aggregate more than fifty percent (50%) of the Aggregate Commitment; provided, that at any time when there are two or fewer Committed Lenders, “Required Committed Lenders” shall mean all of the Committed Lenders.
“Required Data” means ongoing information regarding the Collateral required to be provided by the Borrower or the Servicer to the Administrative Agent at the request of the Administrative Agent, including in connection with any Lender’s regulatory capital requirements.
“Required Reserve” means, on any day during a Calculation Period, the sum of:
(a) the product of (i) the Accrual Adjusted Net Pool Balance on such day, multiplied by (ii) the sum of (x) the Interest and Servicing Reserve, plus (y) the greater of (A) the sum of (I) the Loss Reserve, plus (II) the Dilution Reserve and (B) the sum of the Concentration Reserve Percentage and the Minimum Dilution Reserve Percentage, plus
(b) the PASA Reserve, plus
(c) the ARM Dilution Reserve.
“Restricted Junior Payment” means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of capital stock of Borrower now or hereafter outstanding, except a dividend payable solely in shares of that class of stock or in any junior class of stock of Borrower, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of capital stock of Borrower now or hereafter outstanding, (iii) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to the Subordinated Loans (as defined in the Receivables Sale Agreement), (iv) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of capital stock of Borrower now or hereafter outstanding, and (v) any payment of management fees by Borrower (except for reasonable management fees to any Originator or its Affiliates in reimbursement of actual management services performed).
“Restructuring Transactions” has the meaning provided in the Receivables Sale Agreement.
“S&P” means S&P Global Ratings and any successor thereto.
“Sanctioned Jurisdiction” means any country, territory, or region that is the subject of comprehensive country- or territory-wide sanctions administered by OFAC.
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“Sanctioned Person” means (a) a Person that is the subject of sanctions administered by OFAC or the U.S. Department of State (“State”), including by virtue of being (i) named on OFAC’s list of “Specially Designated Nationals and Blocked Persons”; (ii) organized under the Laws of, ordinarily resident in, or physically located in a Sanctioned Jurisdiction; (iii) owned or controlled 50% or more in the aggregate, by one or more Persons that are the subject of sanctions administered by OFAC; (b) a Person that is the subject of sanctions maintained by the European Union (“E.U.”), including by virtue of being named on the E.U.’s “Consolidated list of persons, groups and entities subject to E.U. financial sanctions” or other, similar lists; (c) a Person that is the subject of sanctions maintained by the United Kingdom (“U.K.”), including by virtue of being named on the “Consolidated List Of Financial Sanctions Targets in the U.K.” or other, similar lists; or (d) a Person that is the subject of sanctions imposed by any Governmental Authority of a jurisdiction whose Laws apply to this Agreement.
“Scheduled Termination Date” means December 22, 2025.
“Secured Parties” means the Indemnified Parties.
“Servicer” means at any time the Person domiciled in the United States (which may be the Administrative Agent) then authorized pursuant to Article VIII to service, administer and collect Receivables.
“Servicing Fee” means, for each day in a Calculation Period:
(a) an amount equal to (i) the Servicing Fee Rate (or, at any time while Smithfield or one of its Affiliates is the Servicer, such lesser percentage as may be agreed between Borrower and the Servicer on an arms’ length basis based on then prevailing market terms for similar services), times (ii) the Outstanding Balance of all Receivables at the close of business on the Cut-Off Date immediately preceding such Calculation Period, times (iii) 1/360; or
(b) on and after the Servicer’s reasonable request made at any time when Smithfield or one of its Affiliates is no longer acting as Servicer hereunder, an alternative amount specified by the successor Servicer not exceeding (i) 110% of such Servicer’s reasonable costs and expenses of performing its obligations under this Agreement during the preceding Calculation Period, divided by (ii) the number of days in the current Calculation Period.
“Servicing Fee Rate” means 1.0% per annum.
“Settlement Date” means the 25th day of each month (or if any such day is not a Business Day, the next succeeding Business Day thereafter).
“Settlement Period” means the immediately preceding Calculation Period (or portion thereof).
“SFFC” means SFFC, Inc., a Delaware corporation.
“Smithfield” has the meaning provided in the preamble to this Agreement.
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“Smithfield Support” has the meaning provided in the Receivables Sale Agreement.
“SOFR” means, for any day, a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Adjustment” means 0.10%.
“SOFR Floor” means a rate of interest per annum equal to 0.00%.
“SOFR Reserve Percentage” means, for any day, the maximum effective percentage in effect on such day, if any, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including, without limitation, supplemental, marginal and emergency reserve requirements) with respect to SOFR funding.
“Specified Days’ Sales Outstanding” means, as of any day, an amount equal to the sum of (I) the product of (x) 91, times (y) the amount obtained by dividing (i) the aggregate Outstanding Balance of Receivables as of the most recent Cut-Off Date, by (ii) the aggregate amount of Receivables created during the three (3) Calculation Periods including and immediately preceding such Cut-Off Date, times (z) 0.85, and (II) the product of (x) 120, times (y) the amount obtained by dividing (i) the aggregate Outstanding Balance of Receivables as of the most recent Cut-Off Date, by (ii) the aggregate amount of Receivables created during the three(3) Calculation Periods including and immediately preceding such Cut-Off Date, times (z) 0.15.
“Structuring Agent” means PNC Capital Markets LLC, a Pennsylvania limited liability company.
“Subordinated Lender” has the meaning provided in the Receivables Sale Agreement.
“Subordinated Loan” has the meaning provided in the Receivables Sale Agreement.
“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, association, limited liability company, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.
“Tax Code” means the Internal Revenue Code of 1986, as the same may be amended from time to time.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
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“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Rate” means, with respect to any amount for which the Term SOFR Reference Rate applies, for any day in any Interest Period, the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, at the Administrative Agent’s discretion, to the nearest 1/100th of 1%) (A) the Term SOFR Reference Rate for a term equal to such Interest Period on the day (the “Term SOFR Determination Date”) that is two (2) Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator, by (B) a number equal to 1.00 minus the SOFR Reserve Percentage. If the Term SOFR Reference Rate for the applicable tenor has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (Pittsburgh, Pennsylvania time) on the Term SOFR Determination Date, then the Term SOFR Reference Rate, for purposes of clause (A) in the preceding sentence, shall be the Term SOFR Reference Rate for such tenor on the first Business Day preceding such Term SOFR Determination Date for which such Term SOFR Reference Rate for such tenor was published in accordance herewith, so long as such first preceding Business Day is not more than three (3) Business Days prior to such Term SOFR Determination Date. If the Term SOFR Rate, determined as provided above, would be less than the SOFR Floor, then the Term SOFR Rate shall be deemed to be the SOFR Floor.
“Term SOFR Rate Loan” means a Loan which bears interest at the Term SOFR Rate.
“Term SOFR Rate Option” means the option of the Borrower to have Loans bear Interest at a rate per annum equal to the Term SOFR Rate as determined for each applicable Interest Period.
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Termination Date” has the meaning provided in the Receivables Sale Agreement.
“Transaction Documents” means, collectively, this Agreement, each Borrowing Notice, the Receivables Sale Agreement, the Monetization Intercreditor Agreement, each Collection Account Agreement, the Performance Undertaking, any Letter of Credit, the Fee Letter, the Agent Fee Letter, each Subordinated Note (as defined in the Receivables Sale Agreement) and all other instruments, documents and agreements executed and delivered in connection herewith.
“UCC” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.
“Unaffiliated Committed Lender” means each Committed Lender that is not related to a Conduit.
“Unmatured Event of Default” means an event which, with the passage of time or the giving of notice, or both, would constitute an Event of Default.
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“U.S. Government Securities Business Day” means any day except for (a) a Saturday or Sunday or (b) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“Volume Rebate” means, with respect to any Receivable, any terms discount, indirect rebate, direct rebate (net of any direct rebate recovery), promotional program or similar arrangement that reduces the Outstanding Balance of any Receivable. For the avoidance of doubt, to the extent the Borrower has, or will be deemed to have, received a Collection of such Receivable under Section 1.4(c) and the Outstanding Balance has been reduced by the amount of such Collection, such amount shall no longer constitute a Volume Rebate.
“Volume Rebate Accrual Amount” means, on any date of determination, the aggregate amount of all Volume Rebates that have accrued as of or on such date of determination.
“Weekly Report” means a report, in substantially the form of Exhibit VI-B hereto (appropriately completed), furnished by the Servicer to the Administrative Agent pursuant to Section 8.5.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
“Yen” and the sign “¥” means the lawful currency of Japan.
“Yield” means, the amounts described in Section 2.1.
All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.
5th A&R Credit and Security Agreement (Smithfield)
Exhibit 10.5
EXECUTION VERSION
OMNIBUS AMENDMENT
This OMNIBUS AMENDMENT (this “Amendment”), dated as of November 22, 2024, is the:
(i) FIRST AMENDMENT TO FIFTH AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT, among Smithfield Receivables Funding LLC, a Delaware limited liability company (the “Borrower”), Smithfield Foods, Inc., a Virginia corporation, (“Smithfield”), as initial servicer (the “Servicer”, and together with Borrower, the “Loan Parties”), PNC Bank, National Association (“PNC”), in its capacity as administrative agent for the Lenders hereunder or any successor administrative agent hereunder (the “Administrative Agent” collectively with the Administrative Agent and Co-Agents, the “Agents”) and in its capacity as a letter of credit issuer, Coöperatieve Rabobank U.A., New York Branch (“Rabobank”), in its capacity as a letter of credit issuer (together with PNC in such capacity, the “Letter of Credit Issuers” and each, a “Letter of Credit Issuer”), PNC Capital Markets LLC, a Pennsylvania limited liability company, as Structuring Agent, and the Lenders and the Co-Agents from time to time party thereto;
(ii) FIRST AMENDMENT TO FIFTH AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, among the Servicer, SFFC, Inc., a Delaware corporation (“SFFC”), VARIOUS ENTITIES LISTED ON THE SIGNATURE PAGES HERETO AS ORIGINATORS (each an “Originator”; and collectively, the “Originators”), and the Borrower, as buyer (in such capacity, the “Buyer”); and
(iii) FIRST AMENDMENT TO MASTER RECEIVABLES PURCHASE AGREEMENT, among Smithfield Receivables Funding LLC, a Delaware limited liability company, as seller (the “Seller”), the Servicer, the buyers from time to time party thereto (the “Receivables Purchasers”), and PNC, as the Administrative Agent.
Each of the Loan Parties, SFFC, the Servicer, the Originators, the Buyer, the Seller, and Smithfield, as the Performance Guarantor under the Performance Undertaking and the Performance Guaranty (as defined in the Receivables Purchase Agreement), may be referred hereto as the “Smithfield Parties”.
PRELIMINARY STATEMENTS
WHEREAS, each of the Loan Parties, the Letter of Credit Issuers, the Lenders and the Agents entered into that certain Fifth Amended and Restated Credit and Security Agreement dated as of December 22, 2022 (as may be amended, restated, supplemented or otherwise modified from time to time, the “Credit and Security Agreement”);
WHEREAS, the Servicer, SFFC, the Originators and the Buyer have entered into that certain Fifth Amended and Restated Receivables Sale Agreement, dated as of December 22, 2022 (as may be amended, restated, supplemented or otherwise modified from time to time, the “Receivables Sale Agreement”);
WHEREAS, the Seller, the Servicer, the Receivables Purchasers and the Administrative Agent have entered into that certain Master Receivables Purchase Agreement, dated as of
December 22, 2022 (as may be amended, restated, supplemented or otherwise modified from time to time, the “Receivables Purchase Agreement”, and together with the Credit and Security Agreement and Receivables Sale Agreement, the “Agreements”);
WHEREAS, concurrently herewith, the parties thereto are entering into an Amended and Restated Lender Fee Letter (the “Fee Letter”), dated as of the date hereof; and
WHEREAS, the parties hereto desire to amend the Agreements, in each case, as set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
AMENDMENT
Section 1.1 Amendments to the Credit and Security Agreement. The Credit and Security Agreement is hereby amended to incorporate the changes shown on the marked pages of the Credit and Security Agreement attached hereto as Exhibit A.
Section 1.2 Amendments to the Receivables Sale Agreement. The Receivables Sale Agreement is hereby amended as follows:
(a) The Receivables Sale Agreement is hereby amended to incorporate the changes shown on the marked pages of the Receivables Sale Agreement attached hereto as Exhibit B.
(b) Exhibit V of the Receivables Sale Agreement shall be hereby amended by deleting such Exhibit V in its entirety and replacing it with a new Exhibit V attached as Exhibit V hereto.
Section 1.3 Amendments to the Receivables Purchase Agreement. The Receivables Purchase Agreement is hereby amended to incorporate the changes shown on the marked pages of the Receivables Purchase Agreement attached hereto as Exhibit C.
Section 1.4 Effect of Amendment. Except as expressly set forth herein, this Amendment shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Agreements, all of which are ratified and affirmed in all respects and shall continue in full force and effect.
Section 1.5 References. On and after the effective date of this Amendment, each reference in any of the Agreements to “this Agreement”, “hereunder”, “hereof”, “herein” and words of similar import referring to any such Agreement, and each reference in the other Transaction Documents (as defined in the Credit and Security Agreement or the Receivables Sale Agreement, as applicable) to the “Credit and Security Agreement”, the “Receivables Sale Agreement”, the “Receivables Purchase Agreement”, “thereunder”, “thereof” or words of similar
import referring to each of the respective Agreements, shall mean a reference to the respective Agreement, as applicable, as amended by and in accordance with this Amendment.
ARTICLE II
REPRESENTATIONS AND AGREEMENTS
Section 2.1 Each of the Smithfield Parties represents and warrants to the Administrative Agent and Lenders on the date hereof that it has duly authorized, executed and delivered this Amendment and that this Amendment constitutes a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law)).
Section 2.2 Each of the Smithfield Parties further represents and warrants to the Administrative Agent and Lenders that, as of the date of this Amendment: (a) each of the representations and warranties made by it pursuant to Section 5.1 of the Credit and Security Agreement, Section 2.1 of the Receivables Sale Agreement, or Section 2 of the Receivables Purchase Agreement, as applicable, is true and correct as though made on and as of such date (except with respect to those representations and warranties that by their express terms relate solely to an earlier date), (b) no event has occurred and is continuing that will constitute a an Event of Default or an Unmatured Event of Default, (c) no event has occurred and is continuing that will constitute a Termination Event or an Unmatured Termination Event (as such terms are defined in the Receivables Sale Agreement), or (d) no event has occurred and is continuing that will constitute a Servicer Termination Event (as such term is defined in the Receivables Purchase Agreement).
Section 2.3 Conditions Precedent. This Amendment shall become effective as of the date hereof (the “Effective Date”) upon receipt by the Administrative Agent of (a) counterparts to this Amendment and the Fee Letter executed by each of the parties hereto and thereto and (b) confirmation that the “Closing Fee” (as defined in and owing under the Fee Letter) has been paid in full.
ARTICLE III
MISCELLANEOUS
Section 3.1 Definitions; Interpretation. All capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Credit and Security Agreement, except where the context otherwise requires or except as defined herein.
Section 3.2 Headings. The section headings contained in this Amendment are for reference purposes only and shall not affect the meaning or interpretation of this Amendment.
Section 3.3 Amendment. No provision of this Amendment may be amended, modified or supplemented except by the written agreement of all of the parties hereto.
Section 3.4 Counterparts. This Amendment may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement.
Section 3.5 Transaction Document. This Amendment shall constitute a Transaction Document.
Section 3.6 Miscellaneous.
(a) Sections 14.5, 14.8, 14.9, 14.10 and 14.11 of the Credit and Security Agreement are incorporated by reference in and shall apply to this Amendment as if set out herein in their entirety.
(b) Sections 7.4, 7.7, 7.8, 7.9 and 7.10 of the Receivables Sale Agreement are incorporated by reference in and shall apply to this Second Amendment as if set out herein in their entirety.
(c) Sections 9, 13(a), 13(f), 13(g) and 13(p) of the Receivables Purchase Agreement are incorporated by reference in and shall apply to this Second Amendment as if set out herein in their entirety.
Section 3.7 Reaffirmation of Performance Guaranty. By executing a counterpart to this Amendment, Smithfield, as the Performance Guarantor under the Performance Undertaking and the Performance Guaranty (as defined in the Receivables Purchase Agreement), hereby unconditionally reaffirms its obligations under the Performance Undertaking and the Performance Guaranty (as defined in the Receivables Purchase Agreement) and acknowledges and agrees that such obligations continue in full force and effect (including, without limitation, with respect to the Guaranteed Obligations, as defined in the Performance Guaranty and the Performance Undertaking, as applicable), and each of the Performance Guaranty and the Performance Undertaking is hereby ratified and confirmed.
[Signature Pages Follow]
IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed as of the date first above written.
| | | | | | | | |
| SMITHFIELD RECEIVABLES FUNDING LLC, |
| as the Borrower, the Buyer and the Seller |
| | |
| By: | SFFC, Inc., its managing member |
| | |
| | |
| By: | /s/ Jeffrey A. Porter |
| Name: Jeffrey A. Porter |
| Title: President, Assistant Treasurer and Assistant Secretary |
| | |
| | |
| SMITHFIELD FOODS, INC., |
| as the Servicer and as Performance Guarantor |
| | |
| | |
| By: | /s/ Jenifer Byrd |
| Name: Jenifer Byrd |
| Title: Vice President and Corporate Treasurer |
S-1
PNC-Smithfield-Omnibus Amendment (2024)
| | | | | | | | |
| PNC BANK, NATIONAL ASSOCIATION, as the Administrative Agent, a Letter Of Credit Issuer and a Receivables Purchaser |
| | |
| | |
| By: | /s/ Christopher Blaney |
| Name: Christopher Blaney |
| Title: Senior Vice President |
| | |
| | |
| By: | /s/ Christopher Blaney |
| Name: Christopher Blaney |
| Title: Senior Vice President |
| | |
| | |
| PNC BANK, NATIONAL ASSOCIATION, |
| as a Committed Lender and L/C Participant in the
PNC Lender Group |
| | |
| | |
| By: | /s/ Christopher Blaney |
| Name: Christopher Blaney |
| Title: Senior Vice President |
| | |
| | |
| By: | /s/ Christopher Blaney |
| Name: Christopher Blaney |
| Title: Senior Vice President |
| | |
| | |
| PNC CAPITAL MARKETS LLC, |
| as the Structuring Agent |
| | |
| | |
| By: | /s/ Christopher Blaney |
| Name: Christopher Blaney |
| Title: Senior Vice President |
| | |
| | |
| By: | /s/ Christopher Blaney |
| Name: Christopher Blaney |
| Title: Senior Vice President |
S-2
PNC-Smithfield-Omnibus Amendment (2024)
| | | | | | | | | | | |
| COÖPERATIEVE RABOBANK U.A., NEW YORK BRANCH, as Letter Of Credit Issuer and a Receivables Purchaser | |
| | | |
| | | |
| By: | /s/ Christopher Lew | |
| Name: Christopher Lew | |
| Title: Managing Director | |
| | | |
| | | |
| By: | /s/ Jinyang Wang | |
| Name: Jinyang Wang | |
| Title: Executive Director | |
| | | |
| | | |
| COÖPERATIEVE RABOBANK U.A., as a Committed Lender and L/C Participant in the Rabobank Lender Group | |
| | | |
| | | |
| By: | /s/ Christopher Lew | |
| Name: Christopher Lew | |
| Title: Attorney-in-fact | |
| | | |
| | | |
| By: | /s/ Jinyang Wang | |
| Name: Jinyang Wang | |
| Title: Attorney-in-fact | |
| | | |
| | | |
| NIEUW AMSTERDAM RECEIVABLES CORPORATION B.V., | |
| as a Conduit in the Rabobank Lender Group | |
| | |
| | Intertrust Management B.V. - Managing Director |
| By: | /s/ Bart Paulusma | |
| Name: Bart Paulusma | |
| Title: Proxyholder | |
| | | |
| | | |
| By: | /s/ Edwin van Ankeren | |
| Name: Edwin van Ankeren | |
| Title: Director | |
S-3
PNC-Smithfield-Omnibus Amendment (2024)
| | | | | | | | |
| SMITHFIELD BIOSCIENCE, INC., |
| as an Originator |
| | |
| | |
| By: | /s/ Ying Yang |
| Name: Ying Yang |
| Title: General Manager |
| | |
| | |
| SMITHFIELD FRESH MEATS SALES CORP., |
| as an Originator |
| | |
| | |
| By: | /s/ Jenifer A. Byrd |
| Name: Jenifer A. Byrd |
| Title: Vice President & Treasurer |
| | |
| | |
| SMITHFIELD FRESH MEATS CORP., |
| as an Originator |
| | |
| | |
| By: | /s/ Jenifer A. Byrd |
| Name: Jenifer A. Byrd |
| Title: Vice President & Treasurer |
| | |
| | |
| SMITHFIELD DIRECT, LLC, |
| as an Originator |
| | |
| | |
| By: | /s/ Jenifer A. Byrd |
| Name: Jenifer A. Byrd |
| Title: Vice President & Treasurer |
| | |
| | |
| SMITHFIELD PACKAGED MEATS SALES CORP., |
| as an Originator |
| | |
| | |
| By: | /s/ Jenifer A. Byrd |
| Name: Jenifer A. Byrd |
| Title: Vice President & Treasurer |
S-4
PNC-Smithfield-Omnibus Amendment (2024)
| | | | | | | | |
| SFFC, INC. |
| | |
| | |
| By: | /s/ Jeffrey A. Porter |
| Name: Jeffrey A. Porter |
| Title: President Assistant Treasurer and Assistant Secretary |
| | |
| | |
| SMITHFIELD SUPPORT SERVICES CORP. |
| | |
| | |
| By: | /s/ Jenifer A. Byrd |
| Name: Jenifer A. Byrd |
| Title: Vice President & Treasurer |
S-5
PNC-Smithfield-Omnibus Amendment (2024)
EXHIBIT A
Amendments to the Credit and Security Agreement
(Attached)
EXECUTION VERSION
EXHIBIT A to Amendment No. 1, dated November 22, 2024
| | |
|
| FIFTH AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT |
|
| DATED AS OF DECEMBER 22, 2022 |
|
| AMONG |
|
| SMITHFIELD RECEIVABLES FUNDING LLC, |
| AS BORROWER, |
|
| SMITHFIELD FOODS, INC., |
| AS SERVICER, |
|
| THE LENDERS, L/C PARTICIPANTS AND CO-AGENTS FROM TIME TO TIME PARTY HERETO, |
|
| COÖPERATIEVE RABOBANK U.A., NEW YORK BRANCH, |
| AS A LETTER OF CREDIT ISSUER, |
|
| PNC BANK, NATIONAL ASSOCIATION, |
| AS ADMINISTRATIVE AGENT AND A LETTER OF CREDIT ISSUER, |
|
| AND |
|
| PNC CAPITAL MARKETS LLC, |
| AS STRUCTURING AGENT |
|
| | | | | | | | | | | |
| | Page |
| | | |
| ARTICLE I. THE ADVANCES | 1 |
| | | |
| Section 1.1. | Credit Facility. | 1 |
| | | |
| Section 1.2. | Increases | 3 |
| | | |
| Section 1.3. | Decreases | 4 |
| | | |
| Section 1.4. | Deemed Collections; Borrowing Limit. | 4 |
| | | |
| Section 1.5. | Payment Requirements | 5 |
| | | |
| Section 1.6. | Advances; Ratable Loans; Funding Mechanics;
Liquidity Fundings. | 5 |
| | | |
| Section 1.7. | Letters of Credit | 6 |
| | | |
| Section 1.8. | Issuance of Letters of Credit. | 6 |
| | | |
| Section 1.9. | Requirements For Issuance of Letters of Credit | 7 |
| | | |
| Section 1.10. | Disbursements, Reimbursement. | 7 |
| | | |
| Section 1.11. | Repayment of Participation Advances. | 9 |
| | | |
| Section 1.12. | Documentation. | 10 |
| | | |
| Section 1.13. | Determination to Honor Drawing Request. | 10 |
| | | |
| Section 1.14. | Nature of Participation and Reimbursement
Obligations. | 10 |
| | | |
| Section 1.15. | Indemnity. | 12 |
| | | |
| Section 1.16. | Liability for Acts and Omissions. | 13 |
| | | |
| Section 1.17. | Letter of Credit Fees | 14 |
| | | |
| Section 1.18. | Benchmark Replacement Notification | 15 |
| | | |
| ARTICLE II. PAYMENTS AND COLLECTIONS | 15 |
| | | |
| Section 2.1. | Payments | 15 |
| | | |
| Section 2.2. | Collections Prior to the Commitment Termination Date | 15 |
| | | |
| Section 2.3. | Collections Following the Commitment Termination
Date | 16 |
| | | |
| Section 2.4. | Payment Rescission | 17 |
| | | |
| ARTICLE III. CONDUIT FUNDING | 17 |
| | | |
| Section 3.1. | CP Costs | 17 |
| | | |
| Section 3.2. | Calculation of CP Costs | 17 |
| | | |
| Section 3.3. | CP Costs Payments | 17 |
| | | |
TABLE OF CONTENTS
(continued)
| | | | | | | | | | | |
| | Page |
| | | |
| Section 3.4. | Default Rate | 17 |
| | | |
| ARTICLE IV. COMMITTED LENDER FUNDING | 18 |
| | | |
| Section 4.1. | Committed Lender Funding | 18 |
| | | |
| Section 4.2. | Interest Payments | 18 |
| | | |
| Section 4.3. | Committed Lender Interest Rates. | 18 |
| | | |
| Section 4.4. | Daily 1M SOFR, Term SOFR Rate or Adjusted Federal
Funds Rate Unascertainable; Increased Costs; Illegality. | 19 |
| | | |
| Section 4.5. | Benchmark Replacement Setting. | 20 |
| | | |
| Section 4.6. | Default Rate. From and after the occurrence of an
Event of Default, all Liquidity Fundings shall accrue
Interest at the Default Rate. | 25 |
| | | |
| ARTICLE V. REPRESENTATIONS AND WARRANTIES | 25 |
| | | |
| Section 5.1. | Representations and Warranties of the Loan Parties | 25 |
| | | |
| ARTICLE VI. CONDITIONS OF ADVANCES | 31 |
| | | |
| Section 6.1. | Conditions Precedent to Initial Advance | 31 |
| | | |
| Section 6.2. | Conditions Precedent to All Advances and L/C Credit
Extensions | 32 |
| | | |
| ARTICLE VII. COVENANTS | 33 |
| | | |
| Section 7.1. | Affirmative Covenants of the Loan Parties | 33 |
| | | |
| Section 7.2. | Negative Covenants of the Loan Parties | 42 |
| | | |
| Section 7.3. | Restructuring Transactions. | 46 |
| | | |
| ARTICLE VIII. ADMINISTRATION AND COLLECTION | 46 |
| | | |
| Section 8.1. | Designation of Servicer. | 46 |
| | | |
| Section 8.2. | Duties of Servicer. | 46 |
| | | |
| Section 8.3. | Collection Notices | 48 |
| | | |
| Section 8.4. | Responsibilities of Borrower | 48 |
| | | |
| Section 8.5. | Pool Reports | 49 |
| | | |
| Section 8.6. | Servicing Fee | 49 |
| | | |
| ARTICLE IX. EVENTS OF DEFAULT | 49 |
| | | |
| Section 9.1. | Events of Default | 49 |
| | | |
| Section 9.2. | Remedies | 52 |
| | | |
TABLE OF CONTENTS
(continued)
| | | | | | | | | | | |
| | Page |
| | | |
| ARTICLE X. INDEMNIFICATION | 53 |
| | | |
| Section 10.1. | Indemnities by the Loan Parties | 53 |
| | | |
| Section 10.2. | Increased Cost and Reduced Return | 56 |
| | | |
| Section 10.3. | Other Costs and Expenses | 59 |
| | | |
| ARTICLE XI. THE AGENTS | 60 |
| | | |
| Section 11.1. | Authorization and Action. | 60 |
| | | |
| Section 11.2. | Delegation of Duties | 61 |
| | | |
| Section 11.3. | Exculpatory Provisions | 61 |
| | | |
| Section 11.4. | Reliance by Agents. | 61 |
| | | |
| Section 11.5. | Non-Reliance on Other Agents and Other Lenders | 62 |
| | | |
| Section 11.6. | Reimbursement and Indemnification | 62 |
| | | |
| Section 11.7. | Agents in their Individual Capacities | 62 |
| | | |
| Section 11.8. | Conflict Waivers | 63 |
| | | |
| Section 11.9. | UCC Filings | 63 |
| | | |
| Section 11.10. | Successor Administrative Agent and Letter of Credit
Issuer | 63 |
| | | |
| ARTICLE XII. ASSIGNMENTS; PARTICIPATIONS | 67 |
| | | |
| Section 12.1. | Assignments. | 67 |
| | | |
| Section 12.2. | Participations | 71 |
| | | |
| Section 12.3. | Register | 71 |
| | | |
| Section 12.4. | Federal Reserve and Security Trustee | 72 |
| | | |
| ARTICLE XIII. SECURITY INTEREST | 72 |
| | | |
| Section 13.1. | Grant of Security Interest | 72 |
| | | |
| Section 13.2. | Termination after Final Payout Date | 72 |
| | | |
| ARTICLE XIV. MISCELLANEOUS | 73 |
| | | |
| Section 14.1. | Waivers and Amendments. | 73 |
| | | |
| Section 14.2. | Notices | 74 |
| | | |
| Section 14.3. | Ratable Payments | 75 |
| | | |
| Section 14.4. | Protection of Administrative Agent’s Security Interest. | 75 |
| | | |
| Section 14.5. | Confidentiality. | 76 |
| | | |
TABLE OF CONTENTS
(continued)
| | | | | | | | | | | |
| | Page |
| | | |
| Section 14.6. | Bankruptcy Petition | 77 |
| | | |
| Section 14.7. | Limitation of Liability | 77 |
| | | |
| Section 14.8. | CHOICE OF LAW | 78 |
| | | |
| Section 14.9. | CONSENT TO JURISDICTION | 78 |
| | | |
| Section 14.10. | WAIVER OF JURY TRIAL | 79 |
| | | |
| Section 14.11. | Integration; Binding Effect; Survival of Terms. | 79 |
| | | |
| Section 14.12. | Counterparts; Severability; Section References | 79 |
| | | |
| Section 14.13. | Acknowledgement and Consent to Bail-In of EEA
Financial Institutions | 79 |
| | | |
| Section 14.14. | Patriot Act | 80 |
| | | |
| Section 14.15. | Amendment and Restatement | 80 |
EXHIBITS AND SCHEDULES
| | | | | |
| Exhibit I | Definitions |
| |
| Exhibit II-A | Form of Borrowing Notice |
| |
| Exhibit II-B | Form of Reduction Notice |
| |
| Exhibit III | Places of Business of the Loan Parties and the Performance
Guarantor; Locations of Records; Federal Employer Identification
Number(s) |
| |
| Exhibit IV | Form of Compliance Certificate |
| |
| Exhibit V | Form of Assignment Agreement |
| |
| Exhibit VI-A | Form of Monthly Report |
| |
| Exhibit VI-B | Form of Weekly Report |
| |
| Exhibit VII | Form of Performance Undertaking |
| |
| Exhibit VIII-A | Form of Letter of Credit Application (PNC) |
| |
| Exhibit VIII-B | Form of Letter of Credit Application (Rabobank) |
| |
| Exhibit IX | Existing Letters of Credit |
| |
| Schedule A | Commitments |
| |
| Schedule B | Closing Documents |
| |
| Schedule C | Lender Supplement |
| |
| Schedule D | Account Details |
| |
| Schedule E | Permitted Monetization Obligors |
FIFTH AMENDED AND RESTATED
CREDIT AND SECURITY AGREEMENT
THIS FIFTH AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT, dated as of December 22, 2022 is entered into by and among Smithfield Receivables Funding LLC, a Delaware limited liability company (“Borrower”), Smithfield Foods, Inc., a Virginia corporation (“Smithfield”), as initial servicer (the “Servicer” together with Borrower, the “Loan Parties” and each, a “Loan Party”), PNC Bank, National Association (“PNC”), in its capacity as administrative agent for the Lenders hereunder or any successor administrative agent hereunder (the “Administrative Agent” collectively with the Administrative Agent and Co-Agents, the “Agents”) and in its capacity as a letter of credit issuer hereunder, Coöperatieve Rabobank U.A., New York Branch (“Rabobank”), in its capacity as a letter of credit issuer (together with PNC in such capacity, the “Letter of Credit Issuers” and each, a “Letter of Credit Issuer”), PNC Capital Markets LLC, a Pennsylvania limited liability company, as Structuring Agent, and the Lenders, the L/C Participants and the Co-Agents from time to time party hereto, and amends and restates in its entirety that certain Fourth Amended and Restated Credit and Security Agreement, dated as of November 21, 2018, by and among the Loan Parties, PNC, as administrative agent, Rabobank, as letter of credit issuer and the Lenders and Co-Agents from time to time party thereto, as amended through the date hereof (the “Original Agreement”).
Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
WHEREAS, Borrower desires to borrow from the Lenders from time to time, which borrowings may take the form of an Advance or Letter of Credit Extension.
WHEREAS, subject to the terms and conditions hereof, the Letter of Credit Issuers shall, at the request of Borrower, issue Letters of Credit.
WHEREAS, subject to the terms and conditions hereof, each Lender Group shall, at the request of Borrower, make its Percentage of such Advance.
WHEREAS, PNC has been requested and is willing to act as Administrative Agent on behalf of the Lenders in accordance with the terms hereof.
NOW THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows.
ARTICLE I.
THE ADVANCES
Section 1.1. Credit Facility.
5th A&R Credit and Security Agreement (Smithfield)
(a) Upon the terms and subject to the conditions hereof, from time to time prior to the Facility Termination Date:
(i) Borrower may request Advances in an aggregate principal amount at any one time outstanding not to exceed the Borrowing Limit; and
(ii) in connection with each such requested Advance, each Lender Group shall make Loans to the Borrower in an amount equal to the lesser of (x) such Lender Group’s Lender Group Commitment and (y) such Lender Group’s Percentage of the requested Advance as follows:
(A) with respect to a Lender Group with a Conduit: (i) the Conduit in such Lender Group may, in its sole discretion, make a Loan to the Borrower in a principal amount equal to its Lender Group’s Percentage of such requested Advance; it being understood and agreed that, at no time will a Conduit have any obligation to make any Loan, and (ii) if such Conduit declines to make any such Loan, the Committed Lenders in such Lender Group shall make Loans in an aggregate principal amount equal to the related Lender Group’s Percentage of such requested Advance; and
(B) with respect to a Lender Group with an Unaffiliated Committed Lender, the Unaffiliated Committed Lenders in such Lender Group shall make Loans in an aggregate principal amount equal to the related Lender Group’s Percentage of such requested Advance.
(b) Borrower may, at any time upon at least ten (10) days’ prior written notice to the Administrative Agent, terminate the Aggregate Commitment in whole or ratably reduce the Aggregate Commitment in part. Each partial reduction in the Aggregate Commitment shall be in a minimum aggregate amount of $10,000,000 or integral multiples of $1,000,000 in excess thereof, and no such partial reduction shall reduce the Aggregate Commitment to an amount less than $100,000,000. In connection with any partial reduction in the Aggregate Commitment, the Commitment of each Committed Lender shall be ratably reduced. If the Aggregate Commitment is terminated in whole, the Commitment of each Committed Lender shall be reduced to zero.
(c) In connection with any reduction of the Aggregate Commitment, the Borrower shall remit to the Administrative Agent (i) instructions regarding such reduction and (ii) for payment to the Lenders, cash in an amount sufficient to pay (A) the aggregate outstanding principal amount of all Loans of each Lender in excess of the Commitment of such Lender and (B) all other outstanding Obligations with respect to such reduction (determined based on the ratio of the reduction of the Commitments being effected to the amount of the Commitments prior to such reduction or, if the Administrative Agent reasonably determines that any portion of the outstanding Obligations is allocable solely to that portion of the Commitments being reduced or has arisen solely as a result of such reduction, all of such portion). Upon receipt of any such amounts, the Administrative
Agent shall apply such amounts first to the reduction of the outstanding Aggregate Principal, and second to the payment of the remaining outstanding Obligations with respect to such reduction by paying such amounts to the Lenders.
(d) On each Business Day, the Borrower shall sell certain Permitted Monetization Receivables to the Receivables Agent (on behalf of the Receivables Buyers) pursuant to the Monetization Documents. Any Permitted Monetization Receivable sold to the Receivables Buyer (on behalf of the Receivables Buyers) in accordance with the Monetization Documents shall constitute a “Monetized Receivable”. On the related Purchase Date therefor, a Monetized Receivable shall cease to constitute a Receivable and the Administrative Agent’s security interest under this Agreement in such Monetized Receivable and Related Monetized Assets (but not in any other Receivable or any other Collateral) shall automatically and without any further action be released and of no further force or effect; provided that if such Monetized Receivable and Related Monetized Assets is transferred, reconveyed or returned to the Borrower by the Receivables Agent (on behalf of the Receivables Buyers) (including in connection with an “Repurchase Event” pursuant to the Monetization Documents with respect to such Receivable), then (x) such Receivable shall cease to constitute a Monetized Receivable and shall thereafter constitute a Receivable and (y) the security interest granted herein shall immediately be reinstated with respect to such Receivable.
Section 1.2. Increases. Not later than 10:00 a.m. (New York City time) on the date of a proposed borrowing (which date shall be a Business Day), Borrower shall provide the Agents with written notice of each Advance in the form set forth as Exhibit II-A hereto (each, a “Borrowing Notice”). Each Borrowing Notice shall be subject to Section 6.2 hereof and, except as otherwise provided in this Section 1.2 and Section 4.5(e), shall be irrevocable and shall specify the requested increase in Aggregate Principal (which shall not be less than $5,000,000 or a larger integral multiple of $100,000) and the Borrowing Date and the requested Interest Rate Option and Interest Period (if applicable) for any portion to be funded by any Committed Lender. Upon receipt of a Borrowing Notice, (a) each Unaffiliated Committed Lender severally agrees to fund a Loan in an amount equal to its Percentage of the requested Advance specified in such Borrowing Notice, and (b) each Co-Agent shall determine whether its Conduit will fund a Loan in an amount equal to its Lender Group’s Percentage of the requested Advance specified in such Borrowing Notice. If a Conduit declines to make its Percentage of a proposed Advance, Borrower may cancel the Borrowing Notice as to all Lenders or, in the absence of such a cancellation, the Advance will be made by each Unaffiliated Committed Lender, each other Conduit and such Conduit’s Committed Lenders. On the date of each Advance, upon satisfaction of the applicable conditions precedent set forth in Article VI, each applicable Lender will cause the proceeds of its Loan comprising a portion of such Advance to be deposited to the account set forth in the related Borrowing Notice, in immediately available funds, no later than 3:00 p.m. (New York City time), an amount equal to (i) in the case of a Conduit or an Unaffiliated Committed Lender, its Percentage of the principal amount of the requested Advance or (ii) in the case of a Conduit’s Committed Lender, each such Committed Lender’s Pro Rata Share of its Lender Group’s Percentage of the principal amount of the requested Advance.
Section 1.3. Decreases. Except as provided in Section 1.4, not later than 10:00 a.m. (New York City time) on the date of a proposed reduction of Aggregate Principal (which date shall be a Business Day), Borrower shall provide the Co-Agents with written notice of such proposed reduction in the form of Exhibit II-B hereto (each, a “Reduction Notice”). Such Reduction Notice shall designate (i) the date (the “Proposed Reduction Date”) upon which any such reduction of Aggregate Principal shall occur, and (ii) the amount of Aggregate Principal to be reduced which shall be applied ratably to the Loans of each of the Lenders in accordance with the principal amount (if any) thereof (the “Aggregate Reduction”). Subject to the other terms and conditions hereof, the Borrower may from time to time borrow under Section 1.2, prepay under Section 1.3, and reborrow under Section 1.2.
Section 1.4. Deemed Collections; Borrowing Limit.
(a) If on any day:
(i) the Outstanding Balance of any Receivable is reduced as a result of any defective or rejected goods or services (including any In-Transit Collateral that is returned or not accepted by the relevant Obligor), any cash discount or any other adjustment by the applicable Originator or any Affiliate thereof, or
(ii) the Outstanding Balance of any Receivable is reduced or canceled as a result of a setoff in respect of any claim by the applicable Obligor thereof (whether such claim arises out of the same or a related or an unrelated transaction), or
(iii) the Outstanding Balance of any Receivable is reduced on account of the obligation of any Originator or any Affiliate thereof to pay to the related Obligor any rebate or refund, or
(iv) the Outstanding Balance of any Receivable is less than the amount included in calculating the Net Pool Balance for purposes of any Pool Report (for any reason other than receipt of Collections thereon or such Receivable becoming a Defaulted Receivable), or
(v) any of the representations or warranties of Borrower set forth in Section 5.1(i), (j), (r), (s), (t) or (u) were not true when made with respect to any Receivable,
then, on such day, Borrower shall be deemed to have received a Collection of such Receivable in the following amounts: (A) in the case of clauses (i)-(iv) above, in the amount of such reduction or cancellation or the difference between the actual Outstanding Balance of such Receivable and the amount included with respect to such Receivable in calculating the then applicable Net Pool Balance, as applicable; and (B) in the case of clause (v) above, in the amount of the Outstanding Balance of such Receivable and, effective as of the date on which the next succeeding Pool Report is required to be delivered, the Borrowing Base shall be reduced by the amount of such Deemed Collection.
(b) The Borrower shall ensure that the Aggregate Principal at no time exceeds the Borrowing Limit. If at any time the Aggregate Principal does exceed the Borrowing Limit, the Borrower shall, not later than 12:00 noon (New York City time) on the next succeeding Settlement Date in an amount sufficient to eliminate such excess, first, prepay the Loans, if any, then outstanding and second, make deposits to the L/C Collateral Account (up to the amount, if any, necessary to reduce the Adjusted Letter of Credit Liability to zero ($0)), such that after giving effect to such prepayments and/or deposits to the L/C Collateral Account, the Aggregate Principal is less than or equal to the Borrowing Limit. Any such prepayment of the Loans shall be (i) allocated ratably among the Lenders based upon the aggregate outstanding principal balance of their respective Loans and (ii) made by the Borrower by wire transfer to the applicable Co-Agent of an amount equal to the principal amount of its Lender Group’s Loans being repaid plus all accrued and unpaid interest thereon. Upon receipt of such funds, each Co-Agent shall apply such funds to the Loans of the Lenders in its Lender Group as determined by such Co-Agent.
Section 1.5. Payment Requirements. All amounts to be paid or deposited by any Loan Party pursuant to any provision of this Agreement shall be paid or deposited in accordance with the terms hereof no later than 12:00 noon (New York City time) on the day when due in immediately available funds, and if not received before 12:00 noon (New York City time) shall be deemed to be received on the next succeeding Business Day. For the avoidance of doubt, the delivery times referenced in the preceding sentence shall only apply to the payment of amounts due and payable by the Loan Parties. If such amounts are payable to a Lender they shall be paid to the applicable Payment Account, for the account of such Lender, until otherwise notified by such Lender. The fees of the Lenders shall be invoiced and paid on a monthly basis pursuant to Article II hereof. All computations of CP Costs, Interest at SOFR, per annum fees calculated as part of any CP Costs, per annum fees hereunder and per annum fees under the Fee Letter shall be made on the basis of a year of 360 days for the actual number of days elapsed. All computations of Interest at the Alternate Base Rate, the Adjusted Federal Funds Rate or the Default Rate shall be made on the basis of a year of 365 days (or 366 days, when appropriate) for the actual number of days elapsed. If any amount hereunder shall be payable on a day which is not a Business Day, such amount shall be payable on the next succeeding Business Day.
Section 1.6. Advances; Ratable Loans; Funding Mechanics; Liquidity Fundings.
(a) Each Advance hereunder shall be made ratably by the Lender Groups, collectively, in accordance with their respective Percentages.
(b) Each Advance hereunder shall consist of one or more Loans made by the Conduits and/or the Committed Lenders in each Lender Group.
(c) Each Lender funding any Loan shall cause the principal amount thereof to be wire transferred to the account set forth in the related Borrowing Notice in immediately available funds as soon as possible but in no event later than 3:00 p.m. (New York City time) on the applicable Borrowing Date.
(d) While it is the intent of each Conduit (but not of any Committed Lender) to fund and maintain its Percentage of each requested Advance through the issuance of Commercial Paper, the parties acknowledge that if any Conduit is unable, or determines that it is undesirable, to issue Commercial Paper to fund all or any portion of its Loans, or is unable to repay such Commercial Paper upon the maturity thereof, such Conduit shall put all or any portion of its Loans to the Committed Lenders in its Lender Group at any time pursuant to its applicable Liquidity Agreement to finance or refinance the necessary portion of its Loans through a Liquidity Funding to the extent available. Regardless of whether a Liquidity Funding constitutes the direct funding of a Loan, an assignment of a Loan made by a Conduit or the sale of one or more participations in a Loan made by a Conduit, each Committed Lender in such Conduit’s Lender Group participating in a Liquidity Funding shall have the rights of a “Lender” hereunder with the same force and effect as if it had directly made a Loan to Borrower in the amount of its Liquidity Funding.
(e) Nothing herein shall be deemed to commit any Conduit to make Loans.
Section 1.7. Letters of Credit. Subject to the terms and conditions hereof (including, without limitation, Article VI), the Letter of Credit Issuers shall issue or cause the issuance of standby Letters of Credit (“Letters of Credit”) on behalf of the Borrower (and, if applicable, on behalf of, or for the account of, any Affiliate of the Borrower designated by the Borrower); provided, however, that the Letter of Credit Issuers will not be required to issue or cause to be issued any Letters of Credit to the extent that the issuance of such Letters of Credit would then cause the Aggregate Principal to exceed the Aggregate Commitment, (b) the Aggregate Principal to exceed the Borrowing Limit or (c) the Letter of Credit Liability to exceed the aggregate of the Commitments of the applicable Letter of Credit Issuer and the L/C Participants. All amounts drawn upon Letters of Credit shall accrue CP Costs and/or Interest (and any associated fees under the Fee Letter) to the same extent as if such amounts had been borrowed by the Borrower through Loans. Letters of Credit that have not been drawn upon shall not accrue CP Costs or Interest but shall accrue fees to the extent set forth in the Fee Letter.
Section 1.8. Issuance of Letters of Credit.
(a) The Borrower may request any Letter of Credit Issuer, upon five (5) Business Days’ prior written notice submitted on or before 11:00 a.m. (New York City time) to issue a Letter of Credit by delivering to the Agents a Borrowing Notice substantially in the form of Exhibit II-A attached hereto and the applicable Letter of Credit Issuer’s form of Letter of Credit Application (the “Letter of Credit Application”), substantially in the form of Exhibit VIII-A or Exhibit VIII-B, as applicable, attached hereto completed to the satisfaction of the Administrative Agent and such Letter of Credit Issuer; and, such other certificates, documents and other papers and information as the Administrative Agent may reasonably request. The Borrower also has the right to give instructions and make agreements with respect to any Letter of Credit Application and the disposition of documents, and to agree with the Administrative Agent upon any amendment, extension or renewal of any Letter of Credit.
(b) Each Letter of Credit shall, among other things, (i) provide for the payment of sight drafts or other written demands for payment when presented for honor thereunder in accordance with the terms thereof and when accompanied by the documents described therein and (ii) have an expiry date not later than twelve (12) months after such Letter of Credit’s date of issuance, extension or renewal, as the case may be, and in no event later than the Facility Termination Date. The terms of each Letter of Credit may include customary “evergreen” provisions providing that such Letter of Credit’s expiry date shall automatically be extended for additional periods not to exceed twelve (12) months unless, not less than thirty (30) days (or such longer period as may be specified in such Letter of Credit) (the “Notice Date”) prior to the applicable expiry date, the applicable Letter of Credit Issuer delivers written notice to the beneficiary thereof declining such extension; provided, however, that if (x) any such extension would cause the expiry date of such Letter of Credit to occur after the Facility Termination Date or (y) the applicable Letter of Credit Issuer determines that any condition precedent (including, without limitation, those set forth in Article VI) to issuing such Letter of Credit hereunder (as if such Letter of Credit were then being first issued) are not satisfied (other than any such condition requiring the Borrower to submit a Borrowing Notice or Letter of Credit Application in respect thereof), then such Letter of Credit Issuer, in the case of clause (x) above, may (or, at the written direction of any L/C Participant, shall) or, in the case of clause (y) above, shall, use reasonable efforts in accordance with (and to the extent permitted by) the terms of such Letter of Credit to prevent the extension of such expiry date (including notifying the Borrower and the beneficiary of such Letter of Credit in writing prior to the Notice Date that such expiry date will not be so extended). Each Letter of Credit shall be subject either to the Uniform Customs and Practice for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No. 600, and any amendments or revisions thereof adhered to by the applicable Letter of Credit Issuer or the International Standby Practices (ISP98-International Chamber of Commerce Publication Number 590), and any amendments or revisions thereof adhered to by such Letter of Credit Issuer, as determined by such Letter of Credit Issuer.
(c) The Administrative Agent shall promptly notify the applicable Letter of Credit Issuer and the L/C Participants, at such Person’s address for notices hereunder, of the request by the Borrower for a Letter of Credit hereunder, and shall provide such Letter of Credit Issuer and the L/C Participants with the Borrowing Notice and Letter of Credit Application delivered to the Administrative Agent by the Borrower pursuant to clause (a), above, by the close of business on the day received or if received on a day that is not a Business Day or on any Business Day after 11:00 a.m. (New York time) on such day, on the next Business Day.
Section 1.9. Requirements For Issuance of Letters of Credit. The Borrower shall authorize and direct the applicable Letter of Credit Issuer to name the Borrower or Affiliate thereof (as determined pursuant to Section 1.7 above) as the “Applicant” or “Account Party” of each Letter of Credit; provided in no event shall any Person other than the Borrower have any obligation to reimburse such Letter of Credit Issuer under the terms of any Letter of Credit.
Section 1.10. Disbursements, Reimbursement.
(a) Immediately upon the issuance of each Letter of Credit, each L/C Participant shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable Letter of Credit Issuer a participation in such Letter of Credit and each drawing thereunder in an amount equal to such L/C Participant’s Ratable LC Share of the face amount of such Letter of Credit and the amount of such drawing, respectively.
(b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the applicable Letter of Credit Issuer will promptly notify each Agent and the Borrower of such request. The Borrower shall reimburse (such obligation to reimburse the applicable Letter of Credit Issuer shall sometimes be referred to as a “Reimbursement Obligation”) the applicable Letter of Credit Issuer prior to 12:00 noon (New York City time) on each date that an amount is paid by such Letter of Credit Issuer under any Letter of Credit (each such date, a “Drawing Date”) in an amount equal to the amount so paid by such Letter of Credit Issuer. In the event the Borrower fails to reimburse the applicable Letter of Credit Issuer for the full amount of any drawing under any Letter of Credit by 12:00 noon (New York City time) on the Drawing Date, such Letter of Credit Issuer will promptly notify each L/C Participant thereof, and the Borrower shall be deemed to have requested that an Advance be made by the Lenders in the Lender Groups for such Letter of Credit Issuer and the L/C Participants to be disbursed on the Drawing Date under such Letter of Credit in accordance with clause (c) below. Any notice given by any Letter of Credit Issuer pursuant to this Section may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such oral notice. The Borrower’s obligations to reimburse any such drawing under a Letter of Credit shall be deemed satisfied in the event such amount is fully refinanced by an Advance.
(c) Each L/C Participant shall, upon any notice pursuant to clause (b) above and (without limiting the generality of Section 1.14 below) without regard to whether any condition precedent to any Loan hereunder is satisfied or unsatisfied at such time, make available as a participation advance to the applicable Letter of Credit Issuer by no later than 2:00 p.m., New York time on the Drawing Date an amount in immediately available funds equal to its Ratable LC Share of the amount of the related drawing under a Letter of Credit; provided, however, that if any L/C Participant that is a Defaulting Lender fails to fund its portion of any such participation advance pursuant to this clause (c), then, the L/C Participants that are not Defaulting Lenders shall make available to the applicable Letter of Credit Issuer such Defaulting Lender’s portion of such participation advance pro rata in proportion to their relative Commitments (determined without regard to the Defaulting Lender’s Commitment); provided, further, however, that no L/C Participant shall be required to make any portion of any participation advance available to the applicable Letter of Credit Issuer under this clause (c) solely to the extent that such after giving effect thereto:
(i) such L/C Participant’s Ratable LC Share of the Letter of Credit Liability plus the aggregate outstanding principal balance of such L/C Participant’s Loans would exceed such L/C Participant’s Commitment; or
(ii) the Lender Group Exposure of such L/C Participant’s Lender Group would exceed its Lender Group Commitment.
Upon any L/C Participant making any such participation advance to a Letter of Credit Issuer, and whether or not any condition precedent to any Loan hereunder is satisfied or unsatisfied, such L/C Participant shall be deemed to have made a Loan to the Borrower in the amount of such participation advance; provided that, if for any reason (including, without limitation, an L/C Participant being a Defaulting Lender), any portion of the amount of any such drawing is not so made available to such Letter of Credit Issuer by the L/C Participants in accordance with this clause (c), such Letter of Credit Issuer shall be deemed to have made a Loan to the Borrower for all purposes of this Agreement in an amount equal to the excess of (x) the amount of such drawing over (y) the aggregate amount made available by the L/C Participants to such Letter of Credit Issuer in respect of such drawing.
If any L/C Participant so notified fails to make available to the applicable Letter of Credit Issuer the amount of such L/C Participant’s Ratable LC Share of such amount by no later than 2:00 p.m., New York time on the Drawing Date, then interest shall accrue on such L/C Participant’s obligation to make such payment, from the Drawing Date to the date on which such L/C Participant makes such payment (i) at a rate per annum equal to the Federal Funds Rate during the first three days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to interest accruing on Loans funded or maintained by such Letter of Credit Issuer on and after the fourth day following the Drawing Date. The applicable Letter of Credit Issuer will promptly give notice of the occurrence of the Drawing Date, but failure of such Letter of Credit Issuer to give any such notice on the Drawing Date or in sufficient time to enable any L/C Participant to effect such payment on such date shall not relieve such L/C Participant from its obligation under this clause (c); provided that such L/C Participant shall not be obligated to pay interest as provided in subclauses (i) and (ii) above in this paragraph until and commencing from the date of receipt of notice from such Letter of Credit Issuer or the Administrative Agent of a drawing.
Each L/C Participant’s Commitment shall continue until the last to occur of any of the following events: (A) each Letter of Credit Issuer ceases to be obligated to issue or cause to be issued Letters of Credit hereunder; (B) no Letter of Credit issued hereunder remains outstanding and uncancelled or (C) all Persons (other than the Loan Parties and any Originator) have been fully reimbursed for all payments made under or relating to Letters of Credit.
Section 1.11. Repayment of Participation Advances.
(a) Upon (and only upon) receipt by the applicable Letter of Credit Issuer for its account of immediately available funds from the Borrower (i) in reimbursement of any payment made by such Letter of Credit Issuer under a Letter of Credit with respect to which any L/C Participant has made a participation advance to such Letter of Credit Issuer, or (ii) in payment of Interest or CP Costs on the Advances made or deemed to have been made in connection with any such draw, such Letter of Credit Issuer will pay to each L/C
Participant, ratably (based on the outstanding drawn amounts funded by each such L/C Participant in respect of such Letter of Credit), in the same funds as those received by such Letter of Credit Issuer; it being understood, that such Letter of Credit Issuer shall retain a ratable amount of such funds that were not the subject of any payment in respect of such Letter of Credit by any L/C Participant.
(b) If any Letter of Credit Issuer is required at any time to return to the Borrower or Affiliate of the Borrower, or to a trustee, receiver, liquidator, custodian, or any official in any insolvency proceeding, any portion of the payments made by or on behalf of the Borrower to such Letter of Credit Issuer pursuant to this Agreement in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each L/C Participant shall, on demand of such Letter of Credit Issuer, forthwith return to such Letter of Credit Issuer the amount of its Ratable LC Share of any amounts so returned by such Letter of Credit Issuer plus interest at the Federal Funds Rate from the date the payment was first made to such L/C Participant to, but not including, the date the payment is returned by such L/C Participant.
Section 1.12. Documentation.
The Borrower (on behalf of itself and any account party or applicant named on any Letter of Credit issued hereunder) agrees to be bound by the terms of the Letter of Credit Application and by the applicable Letter of Credit Issuer’s written regulations and customary practices relating to letters of credit, though such interpretation may be different from such Loan Party’s own. In the event of a conflict or inconsistency (including as to any representation, covenant or default or event of default) between the Letter of Credit Application and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct by a Letter of Credit Issuer, such Letter of Credit Issuer shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following the Borrower’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.
Section 1.13. Determination to Honor Drawing Request.
In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the applicable Letter of Credit Issuer shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit and that any other drawing condition appearing on the face of such Letter of Credit has been satisfied in the manner so set forth.
Section 1.14. Nature of Participation and Reimbursement Obligations.
Each L/C Participant’s obligation in accordance with this Agreement to make participation advances as a result of a drawing under a Letter of Credit, and the obligation of the Borrower to reimburse the applicable Letter of Credit Issuer upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms of this Article I under all circumstances, including the following circumstances:
(i) any set-off, counterclaim, recoupment, defense or other right which such L/C Participant may have against such Letter of Credit Issuer, the Administrative Agent, any Co-Agent, any Lender, any Loan Party, any Originator or any other Person for any reason whatsoever;
(ii) the failure of any Loan Party or any other Person to comply with the conditions set forth in this Agreement for the making of Advances, requests for Letters of Credit or otherwise, it being acknowledged that such conditions are not required for the making of participation advances hereunder;
(iii) any lack of validity or enforceability of any Letter of Credit;
(iv) any claim of breach of warranty that might be made by any Loan Party, any Originator, any Letter of Credit Issuer, any L/C Participant or any of their respective Affiliates against the beneficiary of a Letter of Credit, or the existence of any claim, set-off, defense or other right which any Loan Party, any Originator, any Letter of Credit Issuer, any L/C Participant or any of their respective Affiliates may have at any time against a beneficiary, any successor beneficiary or any transferee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), any Letter of Credit Issuer, any L/C Participant, any Co-Agent, any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between or among any Loan Party, any Originator, the beneficiary for which any Letter of Credit was procured or any of their respective Affiliates);
(v) the lack of power or authority of any signer of, or lack of validity, sufficiency, accuracy, enforceability or genuineness of, any draft, demand, instrument, certificate or other document presented under any Letter of Credit, or any such draft, demand, instrument, certificate or other document proving to be forged, fraudulent, invalid, defective or insufficient in any respect or any statement therein being untrue or inaccurate in any respect, even if the Administrative Agent or the applicable Letter of Credit Issuer has been notified thereof prior;
(vi) payment by the applicable Letter of Credit Issuer under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit other than as a result of the gross negligence or willful misconduct of such Letter of Credit Issuer;
(vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity,
condition, value or other characteristic of any property or services relating to a Letter of Credit;
(viii) any failure by any Letter of Credit Issuer or any of such Letter of Credit Issuer’s Affiliates to issue any Letter of Credit in the form requested by the Borrower, unless such Letter of Credit Issuer has received written notice from the Borrower of such failure within three Business Days after such Letter of Credit Issuer shall have furnished the Borrower a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;
(ix) any Material Adverse Effect on any Loan Party, any Originator or any Affiliates thereof;
(x) any breach of this Agreement or any Transaction Document by any party thereto;
(xi) the occurrence or continuance of an Event of Bankruptcy with respect to any Loan Party, any Originator or any of their respective Affiliates;
(xii) the fact that an Event of Default or an Unmatured Event of Default shall have occurred and be continuing;
(xiii) the fact that this Agreement or the obligations of any Loan Party hereunder shall have been terminated; and
(xiv) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.
Nothing in this Section 1.14 shall relieve any Letter of Credit Issuer from liability for its gross negligence or willful misconduct, as determined by a final non-appealable judgment of a court of competent jurisdiction.
Section 1.15. Indemnity.
In addition to other amounts payable hereunder (including, without limitation, pursuant to Article X), the Borrower hereby agrees to protect, indemnify, pay and save harmless the Administrative Agent, each Letter of Credit Issuer, each L/C Participant and any Letter of Credit Issuer’s Affiliates that have issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, taxes, penalties, interest, judgments, losses, costs, charges and expenses (but in the case of attorneys’ fees, limited to reasonable attorneys’ fees actually incurred and disbursements of one primary counsel for the Administrative Agent, the Letter of Credit Issuers and the L/C Participants (taken as a whole) (and, if necessary, one local counsel in each material jurisdiction for such parties (taken as a whole) and, solely in the case of a conflict of interest, one additional counsel as necessary to such parties actually affected by such conflict (taken as a whole))) which the Administrative Agent, any Letter of Credit Issuer, any L/C Participant or any of their respective Affiliates may incur or be subject to as a consequence, direct or indirect, of the
issuance of any Letter of Credit, other than as a result of (a) the gross negligence or willful misconduct of the party to be indemnified as determined by a final non-appealable judgment of a court of competent jurisdiction or (b) the wrongful dishonor by the applicable Letter of Credit Issuer of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto governmental authority (all such acts or omissions herein called “Governmental Acts”).
Section 1.16. Liability for Acts and Omissions.
As between the Borrower, on the one hand, and the Administrative Agent, the Letter of Credit Issuers, the L/C Participants, the Co-Agents and the Lenders, on the other, the Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit and by the respective account parties or applicants named on such Letters of Credit. In furtherance and not in limitation of the respective foregoing, none of the Administrative Agent, the Letter of Credit Issuers, the L/C Participants, the Co-Agents or the Lenders shall be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if the applicable Letter of Credit Issuer shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Loan Party, any Originator or any of their respective Affiliates against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Loan Party, any Originator or any of their respective Affiliates and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Administrative Agent, the Letter of Credit Issuers, the L/C Participants, the Co-Agents and the Lenders, including any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any of any Letter of Credit Issuer’s rights or powers hereunder. Nothing in the preceding sentence shall relieve any Letter of Credit Issuer from liability for its gross negligence or willful misconduct, as determined by a final non-appealable judgment of a court of competent jurisdiction, in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall the Administrative Agent, the Letter of Credit Issuers, the L/C Participants, the Co-Agents, the Lenders or their respective Affiliates, be liable to any Loan Party, any Originator or any other Person for any indirect,
consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.
Without limiting the generality of the foregoing, the Administrative Agent, the Letter of Credit Issuers, the L/C Participants, the Co-Agents, the Lenders and each of their respective Affiliates (i) may rely on any written communication believed in good faith by such Person to have been authorized or given by or on behalf of the applicant for a Letter of Credit; (ii) may honor any presentation if the documents presented appear on their face to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by the applicable Letter of Credit Issuer or its Affiliates; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on the Administrative Agent, the Letter of Credit Issuers, the L/C Participants, the Co-Agents, the Lenders or their respective Affiliates, in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.
In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by the applicable Letter of Credit Issuer under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith and without gross negligence or willful misconduct, as determined by a final non-appealable judgment of a court of competent jurisdiction, shall not put such Letter of Credit Issuer under any resulting liability to any Loan Party, any Originator, any L/C Participant or any other Person.
Section 1.17. Letter of Credit Fees. The Borrower shall pay: (a) to each Co-Agent for the account of each Committed Lender, in consideration for the issuance of Letters of Credit hereunder, a fee (as defined in the Fee Letter) per annum on the aggregate available undrawn amount of the outstanding Letters of Credit; and (b) to each Letter of Credit Issuer for its own account the fees specified in the Fee Letter (collectively, the “Letter of Credit Fees”). The Letter of Credit Fees shall be payable monthly in arrears on each Settlement Date for the Calculation Period preceding such Settlement Date, commencing on the first such Settlement Date to occur after the issuance of any Letter of Credit, and continuing for so long as any Letter of Credit remains outstanding.
Section 1.18. Benchmark Replacement Notification. Section 4.6 provides a mechanism for determining an alternative rate of interest in the event that Daily 1M SOFR or the Term SOFR Rate is no longer available or in certain other circumstances. The Administrative Agent does not warrant or accept any responsibility for and shall not have any liability with respect to, the administration, submission or any other matter related to Daily 1M SOFR or the Term SOFR Rate, or with respect to any alternative or successor rate thereto, or replacement rate therefor.
ARTICLE II.
PAYMENTS AND COLLECTIONS
Section 2.1. Payments. Borrower hereby promises to pay:
(a) subject to Section 9.2, the Aggregate Principal on and after the Facility Termination Date as and when Collections are received;
(b) the fees set forth in the Fee Letter and the Agent Fee Letter on the dates specified therein or herein;
(c) all accrued and unpaid Interest and CP Costs on the Loans on each Settlement Date applicable thereto;
(d) all Broken Funding Costs and Indemnified Amounts within 15 days of demand and receipt of a reasonably detailed invoice therefor; and
(e) any amounts required to paid by the Borrower pursuant to Section 1.4(b) to cash collateralize Letter of Credit Liability on the dates specified herein.
Section 2.2. Collections Prior to the Commitment Termination Date. On each Settlement Date prior to the Commitment Termination Date, the Borrower shall deposit to each applicable Payment Account, for distribution to the applicable Lenders, a portion of the Collections received by it during the preceding Settlement Period (after deduction of the Servicing Fee) equal to the sum of the following amounts for application to the Obligations in the order specified:
first, ratably to the payment of (i) all accrued and unpaid CP Costs, Interest and Broken Funding Costs (if any) that are then due and owing and (ii) all accrued and unpaid fees under the Fee Letter and/or the Agent Fee Letter,
second, if required under Section 1.3 or 1.4, (i) first, to the ratable reduction of the Aggregate Principal (ratably among the Lenders based upon the outstanding principal balances of their respective Loans) and (ii) second, into the L/C Collateral Account for the benefit of the Letter of Credit Issuers and the L/C Participants (it being understood and agreed that any amount so distributed to the L/C Collateral Account shall be deposited directly therein, rather than to the applicable Co-Agent Account),
third, for the ratable payment of all other unpaid Obligations of Borrower, if any, that are then due and owing, and
fourth, to the extent that the Borrower has failed to make any payment or deposit required to be made under the Monetization Documents and such failure has remained unremedied for one (1) or more Business Days, the balance, if any, to a separate account designated by the Administrative Agent or, if so instructed by the Administrative Agent, transferred to the Receivables Agent in an amount equal to the amounts then due and owing to the Receivables Agent and the Receivables Buyers under the Monetization Documents.
The balance, if any, shall be paid to Borrower or otherwise in accordance with Borrower’s instructions. Collections applied to the payment of Obligations of Borrower shall be distributed in accordance with the aforementioned provisions, and, giving effect to each of the priorities set forth above in this Section 2.2, shall be shared ratably (within each priority) among the applicable payees in accordance with the amount of such Obligations owing to each of them in respect of each such priority.
Section 2.3. Collections Following the Commitment Termination Date. On the Commitment Termination Date and on each day thereafter, the Borrower (and the Servicer, to the extent the Servicer comes into possession of Collections on any such day) shall set aside and hold in trust, for the Secured Parties, all Collections received on such day. On and after the Commitment Termination Date, the Borrower shall, on each Settlement Date and on each other Business Day specified by the Administrative Agent (as directed by any Co-Agent) (after payment or deduction of any accrued and unpaid Servicing Fee as of such date): (i) remit to the applicable Payment Account the applicable Percentage of the amounts set aside and held in trust pursuant to the preceding sentence, and (ii) apply such amounts to reduce the Obligations of Borrower as follows:
first, to the reimbursement of each Lender Group’s Percentage of the costs of collection and enforcement of this Agreement incurred by the Administrative Agent,
second, ratably to the payment of (i) all accrued and unpaid CP Costs, Interest and Broken Funding Costs (if any), and (ii) all accrued and unpaid fees under the Fee Letter and/or the Agent Fee Letter,
third, to the ratable reduction of each Lender Group’s Percentage of the Aggregate Principal,
fourth, to the L/C Collateral Account for the benefit of the Letter of Credit Issuers and the L/C Participants, the amount (if any) necessary to cause the amount of cash collateral held in the L/C Collateral Account to equal the Letter of Credit Liability,
fifth, for the ratable payment of all other unpaid Obligations of Borrower,
sixth, to the extent that the Borrower has failed to make any payment or deposit required to be made under the Monetization Documents and such failure has remained unremedied for one (1) or more Business Days, the balance, if any, to a separate account designated by the Administrative Agent or, if so instructed by the Administrative Agent, transferred to the Receivables Agent in an amount equal to the amounts then due and owing to the Receivables Agent and the Receivables Buyers under the Monetization Documents, and
seventh, after the Final Payout Date, to Borrower.
Collections applied to the payment of Obligations of Borrower shall be distributed in accordance with the aforementioned provisions, and, giving effect to each of the priorities set forth above in this Section 2.3, shall be shared ratably (within each priority) among the Co-Agents and the Lenders in accordance with the amount of such Obligations owing to each of them in respect of each such priority.
Section 2.4. Payment Rescission. No payment of any of the Obligations shall be considered paid or applied hereunder to the extent that, at any time, all or any portion of such payment or application is rescinded by application of law or judicial authority, or must otherwise be returned or refunded for any reason. Borrower shall remain obligated for the amount of any payment or application so rescinded, returned or refunded, and shall promptly pay to the applicable Payment Account (for application to the Person or Persons who suffered such rescission, return or refund) the full amount thereof, plus Interest on such amount at the Default Rate from the date of any such rescission, return or refunding.
ARTICLE III.
CONDUIT FUNDING
Section 3.1. CP Costs. Borrower shall pay CP Costs with respect to the principal balance of each Conduit’s Loans from time to time outstanding.
Section 3.2. Calculation of CP Costs. Not later than the 3rd Business Day immediately preceding each Monthly Reporting Date, each Conduit shall calculate the aggregate amount of CP Costs applicable to its CP Rate Loans for the Calculation Period then most recently ended and shall notify the Administrative Agent, who shall promptly notify the Borrower of such aggregate amount, not later than the 2nd Business Day immediately preceding such Monthly Reporting Date.
Section 3.3. CP Costs Payments. (a) With respect to CP Rate Loans made by a Pooled Fund Conduit, on each Settlement Date, Borrower shall pay to each of the Co-Agents (for the benefit of its respective Conduit) an aggregate amount equal to all accrued and unpaid CP Costs in respect of the principal associated with all such CP Rate Loans of such Conduit for the calendar month then most recently ended and (b) with respect to CP Rate Loans made by a Conduit that is not a Pooled Fund Conduit, on each Settlement Date, the Borrower shall pay to each of the Co-Agents (for the benefit of its respective Conduit) an aggregate amount equal to all accrued and unpaid CP Costs in respect of the principal associated with all such CP Rate Loans of such Conduit, in each case in accordance with Article II.
Section 3.4. Default Rate. From and after the occurrence of an Event of Default, all Loans of the Conduits shall accrue Interest at the Default Rate and shall cease to be CP Rate Loans.
ARTICLE IV.
COMMITTED LENDER FUNDING
Section 4.1. Committed Lender Funding.
(a) Prior to the occurrence of an Event of Default, the outstanding principal balance of each Liquidity Funding shall accrue interest for each day during its Interest Accrual Period at either the Term SOFR Rate, Daily 1M SOFR, the Adjusted Federal Funds Rate or the Alternate Base Rate in accordance with the terms and conditions hereof. Until Borrower gives notice to the applicable Co-Agent of another Interest Rate Option in accordance with Section 4.3, the initial Interest Rate Option for any Loan transferred to the Committed Lenders in its Lender Group by the applicable Conduit pursuant to its Liquidity Agreement shall be the Adjusted Federal Funds Rate Option (unless the Default Rate is then applicable). If the applicable Committed Lenders in a Lender Group acquire by assignment from the applicable Conduit any Loan pursuant to a Liquidity Agreement, each Loan so assigned shall each be deemed to have an Interest Accrual Period commencing on the date of any such assignment.
(b) The Borrower may call the Administrative Agent on or before the date on which a Borrowing Notice is to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding on the Administrative Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made.
Section 4.2. Interest Payments. On the Settlement Date for each Liquidity Funding, Borrower shall pay to the applicable Co-Agent (for the benefit of the Committed Lenders in its Lender Group) an aggregate amount equal to the accrued and unpaid Interest on each such Liquidity Funding in accordance with Article II.
Section 4.3. Committed Lender Interest Rates.
(a) So long as no Event of Default is continuing, the Borrower may, by written notice to the Administrative Agent, elect for all or any portion of the Aggregate Principal funded by the Committed Lenders to accrue interest by reference to the Term SOFR Rate (rather than Daily 1M SOFR) or any other Interest Rate Option (including Daily 1M SOFR) during any Interest Accrual Period. Any such notice must specify the amount of the Aggregate Principal subject of such election and must be delivered not later than two (2) Business Days prior to the first day of the affected Interest Accrual Period. Any such portion of the Aggregate Principal that is subject to such an election shall be apportioned among the respective Lenders’ Principal ratably. Notwithstanding the foregoing, (x) the Borrower shall not make such an election if, as a result thereof, more than ten Borrowing Tranches would exist and (y) each Borrowing Tranche for Loans accruing interest by reference to the Term SOFR Rate shall be not be less than $1,000,000 and shall be an integral multiple of $100,000. For the avoidance of doubt, if an Event of Default is then continuing, the Interest for any Loan (and any portion thereof) shall calculated by reference to the Default Rate notwithstanding any otherwise applicable election by the Borrower.
(b) The Borrower may call the Administrative Agent on or before the date on which a notice under clause (a) above is to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding on the Administrative Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made.
Section 4.4. Daily 1M SOFR, Term SOFR Rate or Adjusted Federal Funds Rate Unascertainable; Increased Costs; Illegality.
(a) If, on or prior to the first day of an Interest Period:
(i) the Administrative Agent shall have determined (which determination shall be conclusive and binding absent manifest error) that (x) Daily 1M SOFR, the Term SOFR Rate or the Adjusted Federal Funds Rate cannot be determined pursuant to the definition thereof; or (y) a fundamental change has occurred with respect to Daily 1M SOFR, the Term SOFR Rate or the Adjusted Federal Funds Rate (including, without limitation, changes in national or international financial, political or economic conditions); or
(ii) any Lender determines that for any reason that Daily 1M SOFR, the Term SOFR Rate or the Adjusted Federal Funds Rate for any requested Interest Period does not adequately and fairly reflect the cost to such Lender of funding such Lender’s Loans, and such Lender has provided notice of such determination to the Administrative Agent;
then the Administrative Agent shall have the rights specified in Section 4.4(c).
(b) If at any time any Lender shall have determined that the making, maintenance or funding of any Loan accruing interest by reference to Daily 1M SOFR, the Term SOFR Rate or the Adjusted Federal Funds Rate has been made impracticable or unlawful, by compliance by such Lender in good faith with any Law or any interpretation or application thereof by any Governmental Authority or with any request or directive of any such Governmental Authority (whether or not having the force of Law), then the Administrative Agent shall have the rights specified in Section 4.4(c).
(c) In the case of any event specified in Section 4.4(a), the Administrative Agent shall promptly so notify the Lenders and the Borrower thereof, and in the case of an event specified in Section 4.4(b), such Lender shall promptly so notify the Administrative Agent and endorse a certificate to such notice as to the specific circumstances of such notice, and the Administrative Agent shall promptly send copies of such notice and certificate to the other Lenders and the Borrower.
Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of (i) the Lenders, in the case of such notice given by the Administrative Agent, or (ii) such Lender, in the case of such notice given by such Lender, to allow the Borrower to select, convert to or renew a Loan accruing interest by reference to Daily 1M SOFR, the Term SOFR Rate or the Adjusted Federal Funds Rate shall be suspended (to the extent of the affected Interest Rate Option or the applicable
Interest Periods) until the Administrative Agent shall have later notified the Borrower, or such Lender shall have later notified the Administrative Agent, of the Administrative Agent’s or such Lender’s, as the case may be, determination that the circumstances giving rise to such previous determination no longer exist.
If at any time the Administrative Agent makes a determination under Section 4.4(a), (A) if the Borrower has delivered a Borrowing Notice for an affected Loan that has not yet been made, such Borrowing Notice shall be deemed to request an Alternate Base Rate Loan, (B) any outstanding affected Loans shall be deemed to have been converted into Alternate Base Rate Loans at the end of the applicable Interest Period.
If any Lender notifies the Administrative Agent of a determination under Section 4.4(b) above, the Borrower shall, as to any outstanding affected Loans, convert such Loans to an Alternate Base Rate Loan or prepay such Loan at the end of the applicable Interest Period. Absent due notice from the Borrower of conversion or prepayment, such Loan shall automatically be converted to an Alternate Base Rate Loan at the end of the applicable Interest Period.
(d) With respect to Daily 1M SOFR and the Term SOFR Rate, the Administrative Agent, in consultation with the Borrower, may make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Transaction Document; provided that, with respect to any such amendment effected, the Administrative Agent shall provide notice to the Borrower and the Lenders each such amendment implementing such Conforming Changes reasonably promptly after such amendment becomes effective.
Section 4.5. Benchmark Replacement Setting.
(a) Notwithstanding anything to the contrary herein or in any other Transaction Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to any setting of the then-current Benchmark, then (A) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Transaction Document and (B) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of any Benchmark setting at or after 5:00 p.m. Eastern Time on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Agreement or any other Transaction Document so long as the Administrative Agent has
not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Committed Lenders.
(b) In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Administrative Agent, in consultation with the Borrower, may make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Transaction Document.
(c) The Administrative Agent will promptly notify the Borrower and the Lenders of (A) the implementation of any Benchmark Replacement, and (B) the effectiveness of any Conforming Changes in connection with the use, administration, adoption, or implementation of a Benchmark Replacement. The Administrative Agent will notify the Borrower of (x) the removal or reinstatement of any tenor of a Benchmark pursuant to paragraph (iv) below and (y) the commencement of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 4.5, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Transaction Document except, in each case, as expressly required pursuant to this Section 4.5.
(d) Notwithstanding anything to the contrary herein or in any other Transaction Document, at any time (including in connection with the implementation of a Benchmark Replacement), (A) if the then-current Benchmark is a term rate and either (I) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (II) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definition of “Interest Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor; and (B) if a tenor that was removed pursuant to clause (A) above either (I) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (II) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent shall modify the definition of “Interest Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(e) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any pending Borrowing Notice bearing interest based on Daily 1M SOFR or the Term SOFR Rate, conversion to or continuation of Loans bearing interest based on Daily 1M SOFR or the Term SOFR
Rate to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for an Alternate Base Rate Loan. During a Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Alternate Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Alternate Base Rate.
(f) As used in this Section 4.5:
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate or is based on a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor of such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (d) of this Section 4.5.
“Benchmark” means, initially, Daily 1M SOFR and the Term SOFR Rate; provided that if a Benchmark Transition Event has occurred with respect to Daily 1M SOFR, the Term SOFR Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to this Section 4.5.
“Benchmark Replacement” means, with respect to any Benchmark Transition Event, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
(1) the sum of: (A) Daily Simple SOFR and (B) the SOFR Adjustment; and
(2) the sum of (A) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower, giving due consideration to (x) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (y) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for Dollar-denominated syndicated credit facilities at such time and (B) the related Benchmark Replacement Adjustment;
provided, that if the Benchmark Replacement as determined pursuant to clause (2) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Transaction Documents; and provided further, that any Benchmark Replacement shall be administratively feasible as determined by the Administrative Agent in its sole discretion.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower, giving due consideration to (A) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for Dollar-denominated syndicated credit facilities at such time.
“Benchmark Replacement Date” means a date and time determined by the Administrative Agent, which date shall be no later than the earliest to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (A) the date of the public statement or publication of information referenced therein and (B) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date determined by the Administrative Agent, which date shall promptly follow the date of the public statement or publication of information referenced therein;
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means, the occurrence of one or more of the following events, with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by a Relevant Governmental Body having jurisdiction over the Administrative Agent, the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) or a Relevant Governmental Body having jurisdiction over the Administrative Agent announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in accordance with this Section 4.5 titled “Benchmark Replacement Setting” and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes
hereunder and under any Transaction Document in accordance with this Section 4.5 titled “Benchmark Replacement Setting.”
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Term SOFR Rate or, if no floor is specified, zero.
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
Section 4.6. Default Rate. From and after the occurrence of an Event of Default, all Liquidity Fundings shall accrue Interest at the Default Rate.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Section 5.1. Representations and Warranties of the Loan Parties. Each Loan Party hereby represents and warrants to the Agents and the Lenders, as to itself, as of the Closing Date, as of the date hereof, as of the date of each Advance and each L/C Credit Extension and as of each Settlement Date that:
(a) Existence and Power. Such Loan Party’s jurisdiction of organization is correctly set forth in the preamble to this Agreement unless notice of a change in its jurisdiction of organization has been provided in accordance with Section 7.2(a). Such Loan Party is duly organized under the laws of that jurisdiction and no other state or jurisdiction, and such jurisdiction must maintain a public record showing the organization to have been organized. Such Loan Party is validly existing and in good standing under the laws of its state of organization. Such Loan Party is duly qualified to do business and is in good standing as a foreign entity, and has and holds all organizational power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except, in the case of Smithfield, where the failure to so qualify or so hold would not reasonably be expected to have a Material Adverse Effect.
(b) Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by such Loan Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, in the case of Borrower, Borrower’s use of the proceeds of Advances made hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Agreement and each
other Transaction Document to which such Loan Party is a party have been duly executed and delivered by such Loan Party.
(c) No Conflict. The execution and delivery by such Loan Party of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Loan Party or its Subsidiaries (except as created hereunder) except, in any case, where such contravention or violation would not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law.
(d) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any Person or any Governmental Authority is required for the due execution and delivery by such Loan Party of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder.
(e) Actions, Suits. Except as disclosed in the filings made by the Servicer with the Securities and Exchange Commission, there are no actions, suits or proceedings pending, or to the best of such Loan Party’s knowledge, threatened, against or affecting such Loan Party, or any of its properties, in or before any court, arbitrator or other body, that would reasonably be expected to have a Material Adverse Effect. Such Loan Party is not in default with respect to any order of any court, arbitrator or Governmental Authority.
(f) Binding Effect. This Agreement and each other Transaction Document to which such Loan Party is a party constitute the legal, valid and binding obligations of such Loan Party enforceable against such Loan Party in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore furnished by such Loan Party or any of its Affiliates to the Agents or the Lenders for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Loan Party or any of its Affiliates to the Agents or the Lenders will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain, when furnished, any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein, in light
of the circumstances in which they were made, not materially misleading; provided, that with respect to projected financial information, such Loan Party represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time delivered.
(h) Use of Proceeds. Borrower represents and warrants that no proceeds of any Advance or Letter of Credit hereunder will be used (i) for a purpose that violates, or would be inconsistent with, (A) Section 7.2(e) of this Agreement or (B) Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time or (ii) to acquire any security in any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.
(i) Good Title. Borrower represents and warrants that: (i) immediately after the contribution of the Initial Contributed Assets by SFFC in accordance with the Receivables Sale Agreement, and immediately after the transfer by each Originator of the Initial Purchased Assets and each subsequent Receivable under the Receivables Sale Agreement, Borrower is the legal and beneficial owner of all of the right, title and interest in the Receivables and Related Security with respect thereto, free and clear of any Adverse Claim, except an Adverse Claim in favor of the Administrative Agent for the benefit of the Secured Parties or, with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents, and (ii) there have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Borrower’s ownership interest in each Receivable, its Collections and the Related Security.
(j) Perfection. Borrower represents and warrants that: (i) this Agreement is effective to create a valid security interest in favor of the Administrative Agent for the benefit of the Secured Parties in the Collateral to secure payment of the Obligations, free and clear of any Adverse Claim, except an Adverse Claim in favor of the Administrative Agent for the benefit of the Secured Parties or, with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents, and (ii) there have been or (within 2 Business Days after the date of any Advance) will be duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Administrative Agent’s (on behalf of the Secured Parties) first priority security interest in the Collateral. Each of the Loan Parties represents and warrants that such Loan Party’s jurisdiction of organization is a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a filing, record or registration system as a condition or result of such a security interest’s obtaining priority over the rights of a lien creditor which respect to collateral.
(k) Places of Business and Locations of Records. The principal places of business and chief executive office of such Loan Party and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit III or such other locations of which the Administrative Agent has been notified in accordance with Section 7.2(a) in
jurisdictions where all action required by Section 14.4(a) has been taken and completed. Borrower’s Federal Employer Identification Number is correctly set forth on Exhibit III.
(l) Collections. The conditions and requirements set forth in Section 7.1(j) and Section 8.2 have at all times been satisfied and duly performed.
(i) Subject to such changes permitted by clauses (ii) and (iii) below and Section 7.2(b), the names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts at each Collection Bank and the post office box number of each Lock-Box, are listed on Schedule D to this Agreement. While Borrower has granted Servicer access to the Lock-Boxes and Collection Accounts prior to delivery of a Collection Notice, Borrower has not granted any Person, other than the Administrative Agent as contemplated by this Agreement, dominion and control of any Lock-Box or Collection Account, or the right to take dominion and control of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future event.
(ii) On or prior to the Post-Closing Date, the Collection Accounts will be novated from each of Smithfield Direct, LLC and Smithfield Support to, in both cases, the Borrower
(iii) Borrower shall be permitted to close the Collection Account appearing opposite its name that is marked with an asterisk on Schedule D and any Lock-Box related thereto, so long as Borrower, has given the Lenders and the Administrative Agent not less than ten (10) days’ prior written notice thereof, certifying that (x) it has instructed all each relevant Originator, SFFC and Smithfield to make payments relating to Receivables originated by such Originators, SFFC and Smithfield to another existing Collection Account, and (y) payments relating to Receivables originated by it are no longer being deposited in such Collection Account.
(m) Material Adverse Effect. (i) The Servicer represents and warrants that since January 2, 2022, no event has occurred that would have a material adverse effect on the financial condition or operations of the Servicer or the ability of the Servicer to perform its obligations under this Agreement, and (ii) Borrower represents and warrants that since the date of its formation, no event has occurred that would have a material adverse effect on (A) the financial condition or operations of Borrower, (B) the ability of Borrower to perform its obligations under the Transaction Documents, or (C) the collectability of the Receivables generally or any material portion of the Receivables.
(n) Names. Borrower represents and warrants that: (i) the name in which Borrower has executed this Agreement is identical to the name of Borrower as indicated on the public record of its state of organization which shows Borrower to have been organized, and (ii) in the past five (5) years, Borrower has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement.
(o) Ownership of Borrower. After giving effect to the transactions on the Closing Date, Smithfield owns, directly or indirectly, 100% of the issued and outstanding Equity Interest of Borrower, free and clear of any Adverse Claim. Such Equity Interests are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Borrower.
(p) Not an Investment Company. Such Loan Party is not, and after giving effect to the transactions contemplated hereby, will not be required to register as, an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or any successor statute. The Borrower is not a “covered fund” under the Volker Rule and in determining that the Borrower is not a covered fund, the Borrower, among other things, either (x) is entitled to rely on the exemption from the definition of “investment company” set forth in Section 3(c)(5) of the Investment Company Act of 1940, as amended or (y) is entitled to the benefit of the exclusion for loan securitizations in the Volcker Rule under 10 C.F.R. 248.10(c)(8).
(q) Compliance with Law. Such Loan Party has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. Borrower represents and warrants that each Receivable, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including, without limitation, laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation would not reasonably be expected to have a Material Adverse Effect.
(r) Compliance with Credit and Collection Policy. Such Loan Party has complied in all material respects with the Credit and Collection Policy with regard to each Receivable and the related Contract, and has not made any material change to such Credit and Collection Policy (other than any change expressly permitted pursuant to the Receivables Sale Agreement).
(s) Payments to Applicable Originator. Borrower represents and warrants that: (i) with respect to each Receivable purchased by Borrower under the Receivables Sale Agreement, Borrower has given reasonably equivalent value (constituting the approximate fair market value) to the applicable Originator in consideration therefor and such transfer was not made for or on account of an antecedent debt, and (ii) no transfer by any Originator of any Receivable under the Receivables Sale Agreement is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101 et seq.), as amended.
(t) Enforceability of Contracts. Borrower represents and warrants that each Contract with respect to each Receivable is effective to create, and has created (or with respect to In-Transit Receivables will create), a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder
and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the Net Pool Balance as an Eligible Receivable on the date of any Pool Report was an Eligible Receivable on such date.
(v) Borrowing Limit. Immediately after giving effect to each Advance, each L/C Credit Extension and each settlement on any Settlement Date hereunder, the Aggregate Principal is less than or equal to the Borrowing Limit.
(w) Accounting. The manner in which such Loan Party accounts for the transactions contemplated by this Agreement and the Receivables Sale Agreement does not jeopardize the true sale analysis.
(x) Sanctions and other Anti-Terrorism Laws. No: (a) Covered Entity, nor any employees, officers, directors, or to the knowledge of a Covered Entity, any affiliates or agents acting on a Covered Entity’s behalf in connection with this Agreement: (i) is a Sanctioned Person; (ii) directly, or indirectly through any third party, is engaged in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, or any transactions or other dealings that otherwise are prohibited by any Anti-Terrorism Laws; (b) Collateral is EmbargoedBlocked Property.
(y) Solvency. Immediately after the consummation of the transactions to occur on the applicable Commencement Date, (a) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured and (d) no Loan Party will have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted after the applicable Commencement Date. No Loan Party intends to, and no Loan Party believes that it or any of its Non-Excluded Subsidiaries (other than Non-Material Subsidiaries) will, incur debts beyond its ability to pay such debts as they mature, taking into account the timing of and amounts of cash to be received by it or any such Non-Excluded Subsidiary (whether from anticipated refinancings, asset sales, capital contributions or otherwise) and the timing of the amounts of cash to be payable on or in respect of its Debt or the Debt of any such Non-Excluded Subsidiary.
(z) Taxes.
(i) Each Loan Party and its Non-Excluded Subsidiaries have timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid all Taxes required to be paid by it except (x) Taxes that are being contested in good faith by appropriate proceedings and for which such Loan Party or such Non-Excluded Subsidiary has set aside on its books adequate reserves or (y) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
(ii) The Borrower is and has always been treated as an entity that is disregarded as separate entity from a “United States person” (within the meaning of Section 7701(a)(30) of the Tax Code) for U.S. federal income tax purposes and is not, and has not elected under Treasury regulations Section 301.7701-3(c) to be, classified as an association (or publicly traded partnership) taxable as a corporation for U.S. federal income tax purposes.
(aa) ERISA. Except as could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (a) each Loan Party and each of their respective ERISA Affiliates is in compliance with the applicable provisions of ERISA and of the Tax Code relating to Plans and the regulations and published interpretations thereunder, and (b) no ERISA Event has occurred or is reasonably expected to occur. The minimum funding standards of ERISA and the Tax Code with respect to each Plan have been satisfied, except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
(bb) Anti-Corruption Laws. Each Covered Entity has (a) conducted its business in compliance with all Anti-Corruption Laws and (b) has instituted and maintains policies and procedures reasonably designed to ensure compliance with such Laws.
(cc) Beneficial Ownership Certification. As of December 22, 2022, the information included in the Beneficial Ownership Certification is true and correct in all respects.
(dd) Liquidity Coverage Ratio. The Borrower has not, does not and will not during this Agreement issue any LCR Security. The Borrower further represents and warrants that its assets and liabilities are consolidated with the assets and liabilities of the Smithfield for purposes of GAAP.
ARTICLE VI.
CONDITIONS OF ADVANCES
Section 6.1. Conditions Precedent to Initial Advance. No Lender shall be obligated to make any Advance hereunder on the occasion of the initial Advance nor shall any Letter of Credit Issuer be obligated to issue any Letter of Credit, nor shall any Lender, the Administrative Agent or any other party hereto be obligated to take, fulfill or perform any other action hereunder, until all of the following conditions, after giving effect to the proposed Advance or Letter of Credit Extension, in each case, have been satisfied, in the sole discretion of the Administrative Agent:
(a) Each Transaction Document shall have been duly executed by, and delivered to, the parties hereto and thereto and the Administrative Agent shall have received such other documents, instruments, agreements and legal opinions as the Administrative Agent shall request in connection with the transactions contemplated by this Agreement, including all those documents listed on Schedule B to this Agreement, each in form and substance satisfactory to the Administrative Agent;
(b) The Borrower shall have paid all fees required to be paid by it, including all fees required hereunder, and shall have reimbursed each Lender and each Agent for all fees, costs and expenses of closing the transaction contemplated hereunder and under the other Transaction Documents, including the attorney fees and any other legal and document preparation costs incurred by any Lender and/or any Agent pursuant to the terms of this Agreement, the Agent Fee Letter and the Fee Letter;
(c) the applicable Commencement Date shall have occurred; and
(d) the Rating Agency Condition shall have been satisfied.
Section 6.2. Conditions Precedent to All Advances and L/C Credit Extensions. Each Advance (including the initial Advance), each L/C Credit Extension and each rollover or continuation of the foregoing shall be subject to the further conditions precedent that (a) the Servicer shall have delivered to the Agents on or prior to the date thereof, in form and substance satisfactory to the Agents, all Pool Reports as and when due under Section 8.5; (b) the Facility Termination Date shall not have occurred; (c) the Borrower shall have delivered the Borrowing Notice in accordance with Section 1.2 or Section 1.8(a), as applicable; (d) [reserved]; and (e) on the date thereof, the following statements shall be true (and acceptance of the proceeds of such Advance shall be deemed a representation and warranty by Borrower that such statements are then true):
(i) the representations and warranties set forth in Section 5.1 are true and correct on and as of the date of such Advance or L/C Credit Extension (or such Settlement Date, as the case may be) as though made on and as of such date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct as of such earlier date;
(ii) no event has occurred and is continuing, or would result from such Advance or L/C Credit Extension (or the continuation thereof), that will constitute (A) an Event of Default or (B) an Unmatured Event of Default;
(iii) after giving effect to such Advance or L/C Credit Extension (or the continuation thereof), the Aggregate Principal will not exceed the Borrowing Limit; and
(iv) the Borrower has not failed to make any payment or deposit required to be made under the Monetization Documents, which failure has remained unremedied for one (1) or more Business Days.
ARTICLE VII.
COVENANTS
Section 7.1. Affirmative Covenants of the Loan Parties. Until the Final Payout Date, each Loan Party hereby covenants, as to itself, as set forth below:
(a) Financial Reporting. Such Loan Party will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and furnish or cause to be furnished to the Agents:
(i) Annual Reporting. Within 90 days after the end of each fiscal year of Servicer or Borrower, as applicable, (1) Servicer’s audited consolidated balance sheet and audited consolidated condensed statements of income, stockholders' equity and cash flows as of the end of and for such year, and related notes thereto setting forth in each case in comparative form the corresponding figures for (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all reported on by Ernst & Young LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception (other than a “going concern” qualification or exception in the case of the Servicer solely as a result of the upcoming maturity of the Debt outstanding under the Parent Credit Agreement and except for qualifications solely relating to changes in accounting principles or practices reflecting changes in GAAP and required or approved by the Servicer’s or Borrower’s independent certified public accountant) and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of Servicer and its consolidated Subsidiaries or Borrower, as applicable, on a consolidated basis in accordance with GAAP consistently applied, and (2) Borrower’s unaudited balance sheet and unaudited statement of income as of the end of and for such year, and related notes thereto setting forth in each case in comparative form the corresponding figures for (or, in the case of the balance sheet, as of the end of) the previous fiscal year.
(ii) Quarterly Reporting. Within 45 days after the end of each of the first three (3) fiscal quarters of each fiscal year of Servicer, Servicer’s unaudited consolidated balance sheet and unaudited consolidated condensed statements of income and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by the Financial Officer of Servicer as presenting fairly in all material respects the financial condition and results of operations of Servicer and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes.
(iii) Compliance Certificate. Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit IV signed by such Loan Party’s Authorized Officer and dated the date of execution thereof.
(iv) [Reserved].
(v) Copies of Notices. Promptly upon its receipt of any notice, request for consent, financial statements, certification, report or other communication under or in connection with any Transaction Document from any Person other than the Administrative Agent or any Lender, copies of the same.
(vi) Change in Credit and Collection Policy. At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such change or amendment, and (B) if such proposed change or amendment would pursuant to the Receivables Sale Agreement require the consent of the Agent, requesting the Agents’ consent thereto.
(vii) Other Information. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables or the condition or operations, financial or otherwise, of such Loan Party as any Agent may from time to time reasonably request in order to protect the interests of the Administrative Agent and the Lenders under or as contemplated by this Agreement.
(b) Notices. Such Loan Party will notify the Agents in writing of any of the following promptly upon learning of the occurrence thereof, describing the same and, if applicable, the steps being taken with respect thereto:
(i) Events of Default or Unmatured Events of Default. The occurrence of each Event of Default and each Unmatured Event of Default, by a statement of an Authorized Officer of such Loan Party.
(ii) Termination Date. The occurrence of the Termination Date under the Receivables Sale Agreement.
(iii) Notices under Receivables Sale Agreement. Copies of all notices delivered under the Receivables Sale Agreement.
(iv) Downgrade of Performance Guarantor. Any downgrade in the rating of any Debt of Performance Guarantor by S&P or Moody’s, setting forth the Debt affected and the nature of such change.
(v) Material Events. (i) With respect to Borrower, the occurrence of any other event or condition that has had, or would reasonably be expected
to have, a Material Adverse Effect and (ii) with respect to Servicer, a copy of each notice delivered pursuant to Section 6.02 of the Parent Credit Agreement as and when such notice is delivered thereunder.
(vi) Independent Director. The decision to appoint a new director of the Borrower as the “Independent Director” for purposes of this Agreement, such notice to be issued not less than ten (10) Business Days prior to the effective date of such appointment and to certify that the designated Person satisfies the criteria set forth in the definition herein of “Independent Director.”
(vii) ERISA. Promptly following receipt thereof, copies of any documents described in Sections 101(k) or 101(l) of ERISA that any Loan Party or any ERISA Affiliate may request with respect to any Multiemployer Plan; provided that if the Loan Parties or any of the ERISA Affiliates have not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Administrative Agent, the Loan Parties and/or the ERISA Affiliates shall promptly make a request for such documents or notices from such administrator or sponsor and the Borrower shall provide copies of such documents and notices promptly to the Administrative Agent after receipt thereof, and further provided that the rights granted to the Administrative Agent in this section shall be exercised not more than once during a 12-month period.
(c) Compliance with Laws and Preservation of Corporate Existence. Such Loan Party will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. Such Loan Party will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where its business is conducted, except where the failure to so preserve and maintain or qualify would not reasonably be expected to have a Material Adverse Effect.
(d) Audits. Such Loan Party will furnish to each of the Co-Agents from time to time such information with respect to it and the Receivables such Co-Agent may reasonably request. Such Loan Party will, from time to time during regular business hours as requested by any Co-Agent upon reasonable notice and at the sole cost of such Loan Party, permit such Co-Agent, or their agents or representatives (and shall cause each Originator to permit such Co-Agent or their agents or representatives): (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Person relating to the Collateral, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Person for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Person’s financial condition or the Collateral or any Person’s performance under any of the Transaction Documents or the Monetization Documents or any Person’s performance
under the Contracts and, in each case, with any of the officers or employees of Borrower or the Servicer having knowledge of such matters (each of the foregoing examinations and visits, a “Review”); provided, however, that, so long as no Event of Default has occurred and is continuing, the Loan Parties shall only be responsible for the costs and expenses of one (1) Review collectively conducted by the Co-Agents in the aggregate in any one calendar year.
(e) Keeping and Marking of Records and Books.
(i) The Servicer will (and will cause each Originator to) maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including, without limitation, records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable). The Servicer will (and will cause each Originator to) give the Agents notice of any material change in the administrative and operating procedures referred to in the previous sentence.
(ii) Such Loan Party will (and the Servicer will cause each Originator to): (A) on or prior to the Closing Date, mark its master data processing records and other books and records relating to the Loans with a legend, acceptable to the Agents, describing the Administrative Agent’s security interest in the Collateral and (B) upon the request of the Agents following the occurrence of an Event of Default: (x) mark each Contract with a legend describing the Administrative Agent’s security interest and (y) deliver to the Administrative Agent all Contracts (including, without limitation, all multiple originals of any such Contract constituting an instrument, a certificated security or chattel paper) relating to the Receivables.
(f) Compliance with Contracts and Credit and Collection Policy. Such Loan Party will (and will cause each Originator to) timely and fully (i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables, and (ii) comply in all respects with the Credit and Collection Policy in regard to each Receivable and the related Contract.
(g) Maintenance and Enforcement of Receivables Sale Agreement and Performance Undertaking. Borrower will maintain the effectiveness of, and continue to perform under the Receivables Sale Agreement and the Performance Undertaking, such that it does not amend, restate, supplement, cancel, terminate or otherwise modify the Receivables Sale Agreement or the Performance Undertaking, or give any consent, waiver, directive or approval thereunder or waive any default, action, omission or breach under the Receivables Sale Agreement or the Performance Undertaking or otherwise grant any indulgence thereunder, without (in each case) the prior written consent of the Required Committed Lenders. Borrower will, and will require each Originator to, perform each of
their respective obligations and undertakings under and pursuant to the Receivables Sale Agreement, will purchase Receivables thereunder in strict compliance with the terms thereof and will vigorously enforce the rights and remedies accorded to Borrower under the Receivables Sale Agreement and the Performance Undertaking. Borrower will take all actions to perfect and enforce its rights and interests (and the rights and interests of the Agents and the Lenders as assignees of Borrower) under the Receivables Sale Agreement as any of the Agents may from time to time reasonably request, including, without limitation, making claims to which it may be entitled under any indemnity, reimbursement or similar provision contained in the Receivables Sale Agreement.
(h) Ownership. Borrower will (or will cause each Originator to) take all necessary action to (i) vest legal and equitable title to the Collateral purchased under the Receivables Sale Agreement irrevocably in Borrower, free and clear of any Adverse Claims (other than Adverse Claims (A) in favor of the Administrative Agent, for the benefit of the Secured Parties or, (B) with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents) including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Borrower’s interest in such Collateral and such other action to perfect, protect or more fully evidence the interest of Borrower therein as any of the Agents may reasonably request, and (ii) establish and maintain, in favor of the Administrative Agent, for the benefit of the Secured Parties, a valid and perfected first priority security interest in all Collateral, free and clear of any Adverse Claims (other than, with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents), including, without limitation, the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect the Administrative Agent’s (for the benefit of the Secured Parties) security interest in the Collateral and such other action to perfect, protect or more fully evidence the interest of the Administrative Agent for the benefit of the Secured Parties as any of the Agents may reasonably request.
(i) Lenders’ Reliance. Borrower acknowledges that the Agents and the Lenders are entering into the transactions contemplated by this Agreement in reliance upon Borrower’s identity as a legal entity that is separate from each Originator. Therefore, from and after the date of execution and delivery of this Agreement, Borrower shall take all reasonable steps, including, without limitation, all steps that any Agent or any Lender may from time to time reasonably request, to maintain Borrower’s identity as a separate legal entity and to make it manifest to third parties that Borrower is an entity with assets and liabilities distinct from those of each Originator and any Affiliates thereof (other than Borrower) and not just a division of any Originator or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, Borrower will:
(i) maintain books, financial records and bank accounts in a manner so that it will not be difficult or costly to segregate, ascertain and otherwise identify the assets and liabilities of Borrower;
(ii) not commingle any of its assets, funds, liabilities or business functions with the assets, funds, liabilities or business functions of any other person or entity except for payments that may be received in any Lock-Box prior to 30 days after the date of this Agreement;
(iii) observe all appropriate limited liability company procedures and formalities;
(iv) pay its own liabilities, losses and expenses only out of its own funds;
(v) maintain separate annual and quarterly financial statements prepared in accordance with generally accepted accounting principles, consistently applied, showing its assets and liabilities separate and distinct from those of any other person or entity;
(vi) pay or bear the cost (or if such statements are consolidated, the pro-rata cost) of the preparation of its financial statements;
(vii) not guarantee or become obligated for the debts or obligations of any other entity or person;
(viii) not hold out its credit as being available to satisfy the debts or obligations of any other person or entity;
(ix) hold itself out as an entity separate and distinct from any other person or entity (including its Affiliates);
(x) correct any known misunderstanding regarding its separate identity;
(xi) use separate stationery, invoices, checks and the like bearing its own name;
(xii) compensate all consultants, independent contractors and agents from its own funds for services provided to it by such consultants, independent contractors and agents;
(xiii) to the extent that Borrower and any of its Affiliates occupy any premises in the same location, allocate fairly, appropriately and nonarbitrarily any rent and overhead expenses among and between such entities with the result that the Borrower bears its fair share of all such rent and expenses;
(xiv) to the extent that Borrower and any of its Affiliates share the same officers, allocate fairly, appropriately and nonarbitrarily any salaries and expenses related to providing benefits to such officers between or among such entities, with the result that the Borrower will bear its fair share of the salary and benefit costs associated with all such common or shared officers;
(xv) to the extent that Borrower and any of its Affiliates jointly contract or do business with vendors or service providers or share overhead expenses, allocate fairly, appropriately and nonarbitrarily any costs and expenses incurred in so doing between or among such entities, with the result that the Borrower bears its fair share of all such costs and expenses;
(xvi) to the extent Borrower contracts or does business with vendors or service providers where the goods or services are wholly or partially for the benefit of its Affiliates, allocate fairly, appropriately and nonarbitrarily any costs incurred in so doing to the entity for whose benefit such goods or services are provided, with the result that the Borrower bears its fair share of all such costs;
(xvii) not make any loans to any person or entity (other than such intercompany loans between Borrower and each Originator contemplated by this Agreement) or buy or hold any indebtedness issued by any other person or entity (except for cash and investment-grade securities);
(xviii) conduct its own business in its own name;
(xix) hold all of its assets in its own name;
(xx) maintain an arm’s-length relationship with its Affiliates and enter into transactions with Affiliates only on a commercially reasonable basis;
(xxi) not pledge its assets for the benefit of any other Person;
(xxii) not identify itself as a division or department of any other entity;
(xxiii) maintain adequate capital in light of its contemplated business operations and in no event less than the Required Capital Amount (as defined in the Receivables Sale Agreement) and refrain from making any dividend, distribution, redemption of capital stock or payment of any subordinated indebtedness which would cause the Required Capital Amount to cease to be so maintained;
(xxiv) conduct transactions between Borrower and third parties in the name of Borrower and as an entity separate and independent from each of its Affiliates;
(xxv) cause representatives and agents of Borrower to hold themselves out to third parties as being representatives or agents, as the case may be, of Borrower;
(xxvi) not enter into or be a party to, any transaction with its members or Affiliates except in the ordinary course of its business and on terms which are intrinsically fair and are substantially similar to those which would be
obtained in a comparable arm’s-length transaction with an unrelated third party;
(xxvii) not acquire or assume the obligations or acquire the securities of its Affiliates or owners, including partners of its Affiliates; provided, however, that notwithstanding the foregoing, Borrower is authorized to engage in and consummate each of the transactions contemplated by each Transaction Document and each Monetization Document and Borrower is authorized to perform its obligations under each Transaction Document;
(xxviii) maintain its limited liability company status in conformity with this Agreement, such that (A) it does not amend, restate, supplement or otherwise modify its Certificate of Formation or Limited Liability Company Agreement in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents, including, without limitation, Section 7.1(i) of this Agreement; and (B) its corporate charter requires that the Board of Directors of the Borrower shall at all times include at least one “Independent Director” as such term is defined herein.
(xxix) maintain its corporate separateness such that it does not merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions, and except as otherwise contemplated herein) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, nor at any time create, have, acquire, maintain or hold any interest in any Subsidiary; and
(xxx) take such other actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinion issued by Hogan Lovells US LLP, as counsel for Borrower, issued as of the date hereof and relating to substantive consolidation issues, and in the certificates accompanying such opinion, remain true and correct in all material respects at all times.
(j) Collections. Such Loan Party will cause (1) all proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection Account and (2) each Lock-Box and Collection Account (other than any FX Collection Account and the related Lock-Boxes) to be subject at all times to a Collection Account Agreement that is in full force and effect; provided, that amounts received in respect of any Excluded Receivables shall not be deposited in any Lock-Box or Collection Account. In the event any payments relating to the Collateral are remitted directly to Borrower or any Affiliate of Borrower, Borrower will remit (or will cause all such payments to be remitted) directly to a Collection Bank and deposit into a Collection Account within two (2) Business Days following receipt thereof, and, at all times prior to such remittance, Borrower will itself hold or, if applicable, will cause such payments to be held in trust for the exclusive benefit of the Agents and the Lenders. Borrower or, solely (i) on and prior to the Post-Closing Date, Smithfield Support or Smithfield Direct, LLC or (ii) with respect to each FX Collection Account and the related Lock-Boxes, Smithfield Support, will maintain
exclusive ownership, dominion and control (subject to the terms of this Agreement) of each Lock-Box and Collection Account and shall not grant the right to take dominion and control of any Lock-Box or Collection Account at a future time or upon the occurrence of a future event to any Person, except to the Administrative Agent as contemplated by this Agreement, and except for access granted to Servicer prior to delivery of Collection Notices. Notwithstanding anything to the contrary in this Agreement, Monetized Receivable Collections may be deposited in a Lock-Box or a Collection Account so long as the Monetization Intercreditor Agreement is in full force and effect.
(k) Taxes. Such Loan Party will file all Tax returns and reports required by law to be filed by it and will promptly pay all Taxes and governmental charges at any time owing, except any such Taxes which are not yet delinquent or are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Borrower will pay when due any and all present and future stamp, documentary, and other similar Taxes and governmental charges payable in connection with the Receivables, and hold each of the Indemnified Parties harmless from and against any and all liabilities (including penalties, interest and expenses) with respect to or resulting from any delay or omission to pay such Taxes and governmental charges.
(l) Payment to Applicable Originator. With respect to any Receivable purchased by Borrower from any Originator, such sale shall be effected under, and in strict compliance with the terms of, the Receivables Sale Agreement, including, without limitation, the terms relating to the amount and timing of payments to be made to such Originator in respect of the purchase price for such Receivable.
(m) Notice of Ratio of Consolidated Funded Debt to Consolidated Capitalization. Concurrently with the delivery of a certificate of Smithfield pursuant to Section 6.01(c) of the Parent Credit Agreement, the Servicer shall provide to the Administrative Agent written notice of the ratio of Consolidated Funded Debt to Consolidated Capitalization as calculated pursuant to the terms of the Parent Credit Agreement as amended, restated or otherwise modified from time to time.
(n) Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws. Such Loan Party covenants and agrees that:
(i) it shall immediately notify each of the Agents in writing upon the occurrence of a Reportable Compliance Event;
(ii) if, at any time, any Collateral becomes EmbargoedBlocked Property, then, in addition to all other rights and remedies available to each of the Agents, upon request by any of the Agents, such Loan Party shall (or shall cause the Borrower to) provide substitute Collateral acceptable to the Administrative Agent that is not EmbargoedBlocked Property; and
(iii) it shall, and shall require each other Covered Entity to, conduct its business in compliance with all Anti-Corruption Laws and maintain policies and procedures reasonably designed to ensure compliance with such Laws.
(o) Notice of Certain Amendments to the Parent Credit Agreement. Regardless of whether the Administrative Agent is also a party to the Parent Credit Agreement, Smithfield or the Borrower shall provide the Administrative Agent with notice of (i) any change to the definition of “Event of Default” pursuant to the Parent Credit Agreement and (ii) any amendment, restatement, waiver or other modification to the Parent Credit Agreement given effect pursuant to the definition of “Parent Credit Agreement” within ten (10) calendar days of such amendment, restatement, waiver or other modification.
(p) Beneficial Ownership Rule. Promptly following any change in the information included in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners or control parties identified in parts (c) or (d) of such certification, the Borrower shall execute and deliver to the Administrative Agent an updated Beneficial Ownership Certification.
Promptly following any request therefor, the Borrower shall deliver to the Administrative Agent all documentation and other information required by bank regulatory authorities requested by a Committed Lender for purposes of compliance with applicable “know your customer” requirements under the Patriot Act, the Beneficial Ownership Rule or other applicable anti-money laundering laws, rules and regulations.
(q) Monetization Documents. Promptly following the amendment, restatement, modification, waiver or termination of any Monetization Document, the Borrower shall provide (or cause the Servicer to provide) a copy thereof to each Agent.
Section 7.2. Negative Covenants of the Loan Parties. Until the Final Payout Date, each Loan Party hereby covenants, as to itself, that:
(a) Name Change, Offices and Records. Such Loan Party will not change its name, identity or structure (within the meaning of any applicable enactment of the UCC) or jurisdiction of organization, unless it shall have: (i) given the Agents at least ten (10) Business Days’ prior written notice thereof and (ii) delivered to the Administrative Agent all financing statements, instruments and other documents requested by any Agent in connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. Except as may be required by the Administrative Agent pursuant to Section 8.2(b), such Loan Party will not add or terminate any bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box or Collection Account, unless the Administrative Agent shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Collection Bank or a Collection Account (other than any FX Collection Account) or Lock-Box (other than any Lock-Box associated with an FX
Collection Account), an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box; provided, however, that the Servicer may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account, including any Collection Account relating to Smithfield Support.
(c) Modifications to Contracts and Credit and Collection Policy. Such Loan Party will not, and will not permit any Originator to, make any change to the Credit and Collection Policy (other than any change expressly permitted by the Receivables Sale Agreement). Except as provided in Section 8.2(d), the Servicer will not, and will not permit any Originator to, extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy.
(d) Sales, Liens. Borrower will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any of the Collateral, or assign any right to receive income with respect thereto (other than, in each case, (i) the creation of a security interest therein in favor of the Administrative Agent as provided for herein or, (ii) with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents), and Borrower will defend the right, title and interest of the Secured Parties in, to and under any of the foregoing property, against all claims of third parties claiming through or under Borrower or any Originator.
(e) Use of Proceeds. Borrower will not use the proceeds of the Advances for any purpose other than (i) paying for Receivables and Related Security under and in accordance with the Receivables Sale Agreement, including without limitation, making payments on the Subordinated Notes to the extent permitted thereunder and under the Receivables Sale Agreement, (ii) paying its ordinary and necessary operating expenses when and as due, and (iii) making Restricted Junior Payments to the extent permitted under this Agreement.
(f) Termination Date Determination. Borrower will not designate the Termination Date, or send any written notice to any Originator in respect thereof, without the prior written consent of the Agents, except with respect to the occurrence of a Termination Date arising pursuant to Section 5.1(d) of the Receivables Sale Agreement.
(g) Restricted Junior Payments. Borrower will not make any Restricted Junior Payment if after giving effect thereto, Borrower’s Net Worth (as defined in the Receivables Sale Agreement) would be less than the Required Capital Amount (as defined in the Receivables Sale Agreement).
(h) Borrower Debt. Borrower will not incur or permit to exist any Debt or liability on account of deposits except: (i) the Obligations, (ii) the Subordinated Loans, and (iii) other current accounts payable arising in the ordinary course of business and not overdue.
(i) Merger; Consolidation. Subject to the limitations of Section 7.1(i), no Loan Party will, nor will it permit any of its Non-Excluded Subsidiaries to, merge into, amalgamate with or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Non-Excluded Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Event of Default shall have occurred and be continuing:
(i) any Subsidiary (other than the Borrower) may merge, consolidate or amalgamate with the Servicer in a transaction in which the Servicer is the surviving entity pursuant to documentation reasonably satisfactory to the Administrative Agent;
(ii) any other Person (other than the Borrower) may merge into or amalgamate or consolidate with the Servicer in a transaction in which the Servicer is the surviving corporation, or, concurrently with the consummation of such transaction, the surviving entity becomes the Servicer;
(iii) any Non-Excluded Subsidiary that is not a Loan Party may merge into or amalgamate or consolidate with any of the following: (A) any other Non-Excluded Subsidiary that is not a Loan Party and (B) any other Person (other than a Loan Party) if permitted under Section 7.03(a) of the Parent Credit Agreement;
(iv) any Non-Excluded Subsidiary may sell, transfer, lease or otherwise dispose of its assets, including all or substantially all of the stock of any of its Non-Excluded Subsidiaries, to the Servicer or another Non-Excluded Subsidiary; provided that if any such transferor is a Loan Party, such transferee shall be a Loan Party;
(v) any Non-Excluded Subsidiary may liquidate or dissolve if the Servicer determines in good faith that such liquidation or dissolution is in the best interests of the Servicer and is not materially disadvantageous to the Lenders; and
(vi) the Servicer or any Non-Excluded Subsidiary may sell, transfer, lease or otherwise dispose of (including pursuant to any merger, amalgamation or consolidation) its assets (including for the avoidance of doubt any Excluded Receivable and all or substantially all of the stock of any of its Non-Excluded Subsidiaries) in any manner expressly permitted by any Transaction Document or if permitted under Section 7.06 or Section 7.07 of the Parent Credit Agreement.
(j) Excluded Originators. The Borrower shall not designate any Originator as an Excluded Originator pursuant to Section 1.8 of the Receivables Sale Agreement unless and until (i) the Servicer shall have prepared and forwarded to the Administrative Agent and the Lenders a restated Monthly Report for each of the twelve (12) prior Monthly Reporting Dates occurring since the date hereof, which such restated Monthly Report shall be prepared on the basis of the exclusion from the Collateral of the Receivables relating to such Originator and (ii) the Administrative Agent shall have provided its prior written consent to such designation; provided, however, that neither restated Monthly Reports nor consent of the Administrative Agent shall be required in the case of an Originator that had originated Receivables with an aggregate Outstanding Balance as the Calculation Period immediately preceding the Calculation Period in which the Effective Date occurs that is less than 2.5% of Outstanding Balance of all Receivables as of the Calculation Period immediately preceding the Calculation Period in which the Effective Date occurs. Any restated Monthly Report provided pursuant to this Section 7.2(j) shall be subject to the representations and warranties contained in Section 5.1(g).
(k) Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws. Such Loan Party covenants and agrees that:
(i) it and its Subsidiaries will not: (A) take any action that could reasonably be expected to result in it becoming a Sanctioned Person or allow any employees, officers, directors, affiliates or agents acting on its behalf in connection with this Agreement to becometake any action that could reasonably be expected to result in any such person becoming a Sanctioned Person; (B) directly, or indirectly through a third party, engage in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, including any use of the proceeds of the Advances to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws,. (C) directly or indirectly provide, use or make available the proceeds of any Advance hereunder (x) in any manner that could result in a violation by any Person of any Anti-Corruption Law (including any Agent, Conduit or Committed Lender, underwriter, advisor, investor, or otherwise) or (y) in violation of any applicable Anti-Corruption Law; (D) pay or repay any Obligations with EmbargoedBlocked Property or funds derived from any unlawful activity; (DE) permit any Collateral to become EmbargoedBlocked Property; or (EF) cause any Agent, Conduit or Committed Lender to violate any Anti-Terrorism Law; and
(ii) it will not, and will not permit any its Subsidiaries to, directly or indirectly, use the Advances or any proceeds thereof for any purpose which would breach any Anti-Corruption Laws in any jurisdiction in which any Covered Entity conducts business.
(l) Liquidity Coverage Ratio. The Borrower shall not issue any LCR Security.
(m) Tax Status. The Loan Parties shall ensure that the Borrower does not (i) become treated other than as a “disregarded entity” within the meaning of U.S. Treasury Regulation § 301.7701-3 that is wholly owned by a “United States person” within the meaning of Section 7701(a)(30) of the Tax Code for U.S. federal income tax purposes or (ii) become an association taxable as a corporation or a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes.
Section 7.3. Restructuring Transactions.
(a) The parties acknowledge that Smithfield and certain of its Affiliates undertook, or caused to be undertaken, prior to the date hereof, the Restructuring Transactions.
(b) Notwithstanding any other provision contained herein to the contrary, the parties agree that the undertaking by Smithfield or its Affiliates of the Restructuring Transaction, and the consummation thereof, did not cause and shall not be deemed to have constituted (i) a breach of any representation, warranty or covenant contained herein, (ii) a Material Adverse Effect, (iii) an Event of Default, or (iv) an Unmatured Event of Default.
ARTICLE VIII.
ADMINISTRATION AND COLLECTION
Section 8.1. Designation of Servicer.
(a) The servicing, administration and collection of the Receivables shall be conducted by such Person (the “Servicer”) so designated from time to time in accordance with this Section 8.1. Smithfield is hereby designated as, and hereby agrees to perform the duties and obligations of, the Servicer pursuant to the terms of this Agreement. After the occurrence of an Event of Default, the Administrative Agent, at the direction of the Required Committed Lenders, may at any time designate as Servicer any Person domiciled in the United States to succeed Smithfield or any successor Servicer; provided that the Rating Agency Condition (if applicable) is satisfied.
(b) Smithfield may at any time and from time to time delegate any or all of its duties and obligations as Servicer hereunder to one or more Persons domiciled in the United States. Notwithstanding the foregoing, so long as Smithfield remains the Servicer hereunder: (i) Smithfield shall be and remain liable to the Agents and the Lenders for the full and prompt performance of all duties and responsibilities of the Servicer hereunder and (ii) the Agents and the Lenders shall be entitled to deal exclusively with Smithfield in matters relating to the discharge by the Servicer of its duties and responsibilities hereunder.
Section 8.2. Duties of Servicer.
(a) The Servicer shall take or cause to be taken all such actions as may be necessary or advisable to collect each Receivable from time to time, all in accordance
with applicable laws, rules and regulations, with reasonable care and diligence, and in accordance with the Credit and Collection Policy.
(b) The Servicer will instruct (i) all Obligors in respect of Receivables other than Excluded Receivables to pay all Collections directly to a Lock-Box or Collection Account and (ii) all Obligors in respect of Excluded Receivables to pay all Collections to a designated account that is not a Lock-Box or Collection Account. The Servicer shall effect a Collection Account Agreement with each bank party to a Collection Account (other than any FX Collection Account) at any time. In the case of any remittances received in any Lock-Box or Collection Account that shall have been identified, to the satisfaction of the Servicer, to not constitute either Collections or other proceeds of the Receivables or the Related Security or the Monetized Receivables Collections or other proceeds of the Monetized Receivables, the Servicer shall promptly remit such items to the Person identified to it as being the owner of such remittances. From and after the date the Administrative Agent delivers to any Collection Bank a Collection Notice pursuant to Section 8.3, the Administrative Agent may request that the Servicer, and the Servicer thereupon promptly shall instruct all Obligors with respect to the Receivables, to remit all payments thereon to a new depositary account specified by the Administrative Agent and, at all times thereafter, Borrower and the Servicer shall not deposit or otherwise credit, and shall not permit any other Person to deposit or otherwise credit to such new depositary account any cash or payment item other than Collections.
(c) The Servicer shall administer the Collections in accordance with the procedures described herein and in Article II. The Servicer shall set aside and hold in trust for the account of Borrower and the Lenders their respective shares of the Collections in accordance with Article II. The Servicer shall, upon the request of any Agent, segregate, in a manner acceptable to the Agents, all cash, checks and other instruments received by it from time to time constituting Collections from the general funds of the Servicer or Borrower prior to the remittance thereof in accordance with Article II. If the Servicer shall be required to segregate Collections pursuant to the preceding sentence, the Servicer shall segregate and deposit with a bank designated by the Administrative Agent such allocable share of Collections of Receivables set aside for the Lenders on the first Business Day following receipt by the Servicer of such Collections, duly endorsed or with duly executed instruments of transfer.
(d) The Servicer may, in accordance with the Credit and Collection Policy, extend the maturity of any Receivable or adjust the Outstanding Balance of any Receivable as the Servicer determines to be appropriate to maximize Collections thereof; provided, however, that such extension or adjustment shall not alter the status of such Receivable as a Delinquent Receivable or Defaulted Receivable or limit the rights of the Agents or the Lenders under this Agreement. Notwithstanding anything to the contrary contained herein, from and after the occurrence of an Event of Default, the Administrative Agent shall have the absolute and unlimited right to direct the Servicer to commence or settle any legal action with respect to any Receivable or to foreclose upon or repossess any Related Security.
(e) The Servicer shall hold in trust for Borrower and the Lenders all Records that (i) evidence or relate to the Receivables, the related Contracts and Related Security or (ii) are otherwise necessary or desirable to collect the Receivables and shall, as soon as practicable upon demand of the Administrative Agent following the occurrence of an Event of Default, deliver or make available to the Administrative Agent all such Records, at a place selected by the Administrative Agent. The Servicer shall, as soon as practicable following receipt thereof turn over to Borrower any cash collections or other cash proceeds received with respect to Debt not constituting Receivables or proceeds of Collateral. The Servicer shall, from time to time at the request of any Lender, furnish to the Lenders (promptly after any such request) a calculation of the amounts set aside for the Lenders pursuant to Article II.
(f) Any payment by an Obligor in respect of any indebtedness owed by it to Originator or Borrower shall, except as otherwise specified by such Obligor or otherwise required by contract or law and unless otherwise instructed by the Administrative Agent, be applied as a Collection of any Receivable of such Obligor (starting with the oldest such Receivable) to the extent of any amounts then due and payable thereunder before being applied to any other receivable or other obligation of such Obligor.
Section 8.3. Collection Notices. The Administrative Agent is authorized at any time after the occurrence of an Event of Default to date and to deliver to the Collection Banks the Collection Notices. Borrower hereby transfers to the Administrative Agent for the benefit of the Secured Parties, the exclusive ownership and control of each Lock-Box and Collection Account; provided, however, that Borrower shall retain the right to direct the disposition of funds from each such Collection Account until the Administrative Agent (at the direction of any Co-Agent) delivers the applicable Collection Notice. In case any authorized signatory of Borrower whose signature appears on a Collection Account Agreement shall cease to have such authority before the delivery of such notice, such Collection Notice shall nevertheless be valid as if such authority had remained in force. Borrower hereby authorizes the Administrative Agent, and agrees that the Administrative Agent shall be entitled (i) at any time after delivery of the Collection Notices, to endorse Borrower’s name on checks and other instruments representing Collections, (ii) at any time after the occurrence of an Event of Default, to enforce the Receivables, the related Contracts and the Related Security, and (iii) at any time after the occurrence of an Event of Default, to take such action as shall be necessary or desirable to cause all cash, checks and other instruments constituting Collections of Receivables to come into the possession of the Administrative Agent rather than Borrower.
Section 8.4. Responsibilities of Borrower. Anything herein to the contrary notwithstanding, the exercise by the Administrative Agent on behalf of the Secured Parties of their rights hereunder shall not release the Servicer, any Originator or Borrower from any of their duties or obligations with respect to any Receivables or under the related Contracts. The Lenders shall have no obligation or liability with respect to any Receivables or related Contracts, nor shall any of them be obligated to perform the obligations of Borrower. Moreover, the ultimate responsibility for the servicing of the Receivables shall be borne by Borrower.
Section 8.5. Pool Reports. The Servicer shall prepare and forward to the Lenders (i) on each Monthly Reporting Date, a Monthly Report in substantially the form of Exhibit VI-A hereto and an electronic file of the data contained therein, and (ii) at such times as any Co-Agent shall reasonably request, a listing by Obligor of all Receivables together with an aging of such Receivables. After a Ratings Trigger Event, the Servicer shall prepare and forward to the Lenders on a weekly basis, a Weekly Report in substantially the form of Exhibit VI-B hereto and an electronic file of the data contained therein. On and after the date on which any Receivable is designated an Excluded Receivable under the Receivables Sale Agreement, each Pool Report shall exclude any such Excluded Receivables. On and after the date on which any Originator is designated an Excluded Originator under the Receivables Sale Agreement, each Pool Report shall exclude any such Excluded Originator.
Section 8.6. Servicing Fee. As compensation for the Servicer’s servicing activities on their behalf, Borrower shall pay the Servicer the Servicing Fee, which fee shall be paid from Collections in arrears on each Settlement Date in accordance with Sections 2.2 and 2.3 herein.
ARTICLE IX.
EVENTS OF DEFAULT
Section 9.1. Events of Default. The occurrence of any one or more of the following events shall constitute an Event of Default:
(a) any Loan Party or Performance Guarantor shall fail to make any payment or deposit required to be made by it under the Transaction Documents when due and, for any such payment or deposit which is not in respect of principal, such failure continues for two consecutive Business Days;
(b) any representation, warranty, certification or statement made by Performance Guarantor or any Loan Party in any Transaction Document to which it is a party or in any other document delivered pursuant thereto shall prove to have been materially incorrect when made or deemed made; provided that the materiality threshold in the preceding clause shall not be applicable with respect to any representation or warranty that itself contains a materiality threshold;
(c) any Loan Party shall fail to perform or observe any covenant contained in Section 7.1(n), 7.2 or 8.5 when due;
(d) any Loan Party or Performance Guarantor shall fail to perform or observe any other covenant or agreement under any Transaction Documents and such failure shall remain unremedied for 15 days after the earlier of (i) an Executive Officer of any of such Persons obtaining knowledge thereof, or (ii) written notice thereof shall have been given to any Loan Party or Performance Guarantor by any of the Agents;
(e) failure of Borrower to pay any Debt (other than the Obligations) when due or the default by Borrower in the performance of any term, provision or condition contained in any agreement under which any such Debt was created or is governed, the
effect of which is to cause, or to permit the holder or holders of such Debt to cause, such Debt to become due prior to its stated maturity; or any such Debt of Borrower shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled payment) prior to the date of maturity thereof;
(f) failure of Performance Guarantor or the Servicer or any of their respective Subsidiaries (other than the Borrower, any Non-Material Subsidiary and any Excluded Subsidiary) shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;
(g) a regulatory, tax or accounting body has ordered that the activities of the Borrower or any Affiliate of the Borrower contemplated hereby be terminated or, as a result of any other event or circumstance, the activities of the Borrower or any Affiliate of the Borrower contemplated hereby may reasonably be expected to cause the Borrower or any of its respective Affiliates to suffer materially adverse regulatory, accounting or tax consequences;
(h) any Person who does not satisfy the requirements of an “Independent Director” shall be appointed as an independent director of the Borrower;
(i) any change in the Credit and Collection Policy prohibited by Section 7.2(c) occurs, without the prior written consent of the Administrative Agent;
(j) an Event of Bankruptcy shall occur with respect to Performance Guarantor, any Originator or any Loan Party;
(k) as at the end of any Calculation Period:
(i) the three-month rolling average Delinquency Ratio shall exceed three percent (3)%,
(ii) the three-month rolling average Default Ratio shall exceed one percent (1)%,
(iii) the three-month rolling average Dilution Ratio shall exceed five percent (5)%, or
(iv) Days’ Sales Outstanding shall exceed 35 days;
(l) a Change of Control shall occur or the Borrower shall enter into any merger;
(m) one or more judgments for the payment of money in an aggregate amount in excess of $150,000,000 (to the extent not adequately covered by insurance as to which the insurer has not denied or contested coverage) shall be rendered against the Performance Guarantor, any Subsidiary of Performance Guarantor (other than any Excluded Subsidiary), any Loan Party, any Subsidiary of a Loan Party (other than any Excluded Subsidiary) or any combination thereof and the same shall remain unpaid or
undischarged for a period of 45 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Performance Guarantor, any Subsidiary of Performance Guarantor, any Loan Party or any Subsidiary of any Loan Party (other than any Excluded Subsidiary) to enforce any such judgment, or the Performance Guarantor, any Subsidiary of Performance Guarantor (other than any Excluded Subsidiary), any Loan Party or any Subsidiary of any Loan Party (other than any Excluded Subsidiary) shall fail within 45 days to discharge one or more non-monetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgments or orders, in any such case, are not stayed on appeal or otherwise being appropriately contested in good faith by proper proceedings diligently pursued;
(n) (i) the “Termination Date” shall occur under the Receivables Sale Agreement as to any Originator or any Originator shall for any reason cease to transfer, or cease to have the legal capacity to transfer, or otherwise be incapable of transferring Receivables to Borrower under the Receivables Sale Agreement or (ii) (x) an “Event of Default” (as such term is defined in the Parent Credit Agreement) shall have occurred and be continuing under the Parent Credit Agreement and (y) to the extent that the Administrative Agent is also a party to the Parent Credit Agreement, such Event of Default has not been waived or cured in accordance with the terms of the Parent Credit Agreement;
(o) this Agreement shall terminate in whole or in part (except in accordance with its terms), or shall cease to be effective or to be the legally valid, binding and enforceable obligation of Borrower, or any Obligor shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability, or the Administrative Agent for the benefit of the Lenders shall cease to have a valid and perfected first priority security interest in the Collateral;
(p) the Aggregate Principal shall exceed the Borrowing Limit for 2 consecutive Business Days;
(q) the Performance Undertaking shall cease to be effective or to be the legally valid, binding and enforceable obligation of Performance Guarantor, or Performance Guarantor shall directly or indirectly contest in any manner such effectiveness, validity, binding nature or enforceability of any of its obligations thereunder;
(r) the Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the Tax Code with regard to any of the Collateral and such lien shall not have been released within fifteen (15) days, or the PBGC shall, or shall indicate its intention to, file notice of a lien pursuant to Section 4068 of ERISA with regard to any of the Collateral;
(s) (i) an ERISA Event shall have occurred or (ii) such other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) and (ii) such event or condition, when taken together with all other such events or conditions, if any, that have occurred, is reasonably likely to result in a Material Adverse Effect;
(t) any event shall occur which (i) materially and adversely impairs the ability of the Originators to originate Receivables of a credit quality that is, on average, at least equal to the average credit quality of the Receivables sold or contributed to Borrower on the date of this Agreement or (ii) has, or would be reasonably expected to have, a Material Adverse Effect;
(u) a Subordinated Lender shall fail to make any Subordinated Loan under the applicable subordinated loan agreement following the Borrower’s request therefor;
(v) any Collection Account (other than any FX Collection Account) fails to be subject to a Collection Account Agreement at any time;
(w) on or after the Legal Final Maturity Date, the Outstanding Balance of all Eligible Receivables is greater than zero;
(x) Smithfield (or any successor borrower or guarantor under the Parent Credit Agreement) shall permit (i) the ratio of Consolidated Funded Debt to Consolidated Capitalization to be equal to or greater than 0.00 to 0.50 (to 1.00 (or, subject to the conditions set forth in Section 7.10 of the Parent Credit Agreement, 0.55 to 1.00, or such other ratio as required by the Parent Credit Agreement as amended, restated or other modified in accordance with the definition of Parent Credit Agreement) on the last day of any fiscal quarter or (ii) ratio of Consolidated EBITDA for any period of four trailing fiscal quarters ended on the last day of any fiscal quarter to Consolidated Interest Expense for such period to be equal to or greaterless than 3.50 to 0.001.00 (or such other ratio as required by the Parent Credit Agreement as amended, restated or other modified in accordance with the definition of Parent Credit Agreement). For purposes of this clause (x) terms used (including all defined terms used within such terms) shall have the respective meaning assigned to such terms in the Parent Credit Agreement as amended, restated or other modified in accordance with the definition of Parent Credit Agreement; or
(y) any Loan Party shall breach Section 5.1(x).
Section 9.2. Remedies. Upon the occurrence of an Event of Default: (i) the Administrative Agent, upon the direction of the Required Committed Lenders, shall replace the Person then acting as Servicer, (ii) the Administrative Agent may (and, upon direction of the Required Committed Lenders, the Administrative Agent shall) declare the Commitment Termination Date to have occurred, whereupon the Aggregate Commitment shall immediately terminate and the Commitment Termination Date shall forthwith occur, all without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Loan Party; provided, however, that upon the occurrence of an Event of Default described in Section 9.1(j), the Commitment Termination Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Loan Party, (iii) the Administrative Agent may (and, upon the direction of the Required Committed Lenders, shall) deliver the Collection Notices to the Collection Banks, (iv) the Administrative Agent may (and, upon the direction of the Required Committed Lenders, shall) exercise all rights and remedies of a secured party upon default
under the UCC and other applicable laws, and (v) the Administrative Agent may (and, upon the direction of the Required Committed Lenders, shall) notify Obligors of the Administrative Agent’s security interest in the Receivables and other Collateral and instruct them to make future payments into accounts designated by the Administrative Agent. The aforementioned rights and remedies shall be without limitation, and shall be in addition to all other rights and remedies of the Agents and the Lenders otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including, without limitation, all rights and remedies provided under the UCC, all of which rights shall be cumulative.
ARTICLE X.
INDEMNIFICATION
Section 10.1. Indemnities by the Loan Parties. Without limiting any other rights that the Administrative Agent or any Lender may have hereunder or under applicable law, (A) Borrower hereby agrees to indemnify (and pay within 15 days of demand (together with a reasonably detailed invoice therefor) to) each of the Agents, each of the Conduits, each of the Committed Lenders, each of the Letter of Credit Issuers, each of the L/C Participants and each of the respective assigns, officers, directors, agents and employees of the foregoing (each, an “Indemnified Party”) from and against any and all damages, losses, claims, Taxes, liabilities, costs, expenses and for all other amounts payable (but in the case of attorneys’ fees, limited to reasonable attorneys’ fees actually incurred and disbursements of one primary counsel for the Indemnified Parties (taken as a whole) (and, if necessary, one local counsel in each material jurisdiction for the Indemnified Parties (taken as a whole) and, solely in the case of a conflict of interest, one additional counsel as necessary to the Indemnified Parties actually affected by such conflict (taken as a whole))) and, to the extent the Borrower does not timely pay such indemnity, any additional liability (including penalties, interest and expenses) arising from or with respect to any of the foregoing (all of the foregoing being collectively referred to as “Indemnified Amounts”) awarded against or incurred by any of them arising out of or as a result of this Agreement, any Letter of Credit or the acquisition, either directly or indirectly, by a Lender of an interest in the Receivables, and (B) the Servicer hereby agrees to indemnify (and pay within 15 days of demand (together with a reasonably detailed invoice therefor) to) each Indemnified Party for Indemnified Amounts awarded against or incurred by any of them arising out of the Servicer’s activities as Servicer hereunder excluding, however, in all of the foregoing instances under the preceding clause (A):
(a) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence, bad faith or willful misconduct on the part of the Indemnified Party seeking indemnification;
(b) Indemnified Amounts to the extent the same includes losses in respect of Receivables that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor or the intentional non-payment of amounts due by the related Obligor in breach of its obligations in respect of such Receivable; or
(c) (i) taxes imposed on or measured by such Indemnified Party’s net income, and franchise taxes and branch profit taxes imposed on it, by the jurisdiction under the laws of which such Indemnified Party is organized or any political subdivision thereof, (ii) taxes imposed on or measured by such Indemnified Party’s net income, and franchise taxes and branch profit taxes imposed on it, by the jurisdiction in which such Indemnified Party’s principal executive office is located or any political subdivision thereof and (iii) in the case of a Foreign Lender, any U.S. federal withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office), except to the extent that such Foreign Lender was entitled at the time of designating a new lending office, to receive additional amounts with respect to such withholding tax pursuant to this Section 10.1 (all of the foregoing contained in clauses (i), (ii) and (iii) collectively, “Excluded Taxes”);
provided, however, that nothing contained in this sentence shall limit the liability of any Loan Party or limit the recourse of the Lenders to any Loan Party for amounts otherwise specifically provided to be paid by such Loan Party under the terms of this Agreement. Without limiting the generality of the foregoing indemnification, Borrower shall indemnify the Agents and the Lenders for Indemnified Amounts (including, without limitation, losses in respect of uncollectible receivables, regardless of whether reimbursement therefor would constitute recourse to such Loan Party) relating to or resulting from:
(i) any representation or warranty made by any Loan Party or any Originator (or any officers of any such Person) under or in connection with this Agreement, any other Transaction Document or any other information or report delivered by any such Person pursuant hereto or thereto, which shall have been false or incorrect when made or deemed made;
(ii) the failure by Borrower, the Servicer or any Originator to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of any Originator to keep or perform any of its obligations, express or implied, with respect to any Contract;
(iii) any failure of Borrower, the Servicer or any Originator to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document;
(iv) any products liability, personal injury or damage suit, or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract or any Receivable;
(v) any dispute, claim, offset or defense (other than a defense related to the financial condition, or discharge in bankruptcy, of the Obligor) of the Obligor to the payment of any Receivable (including, without limitation, a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services or any reduction of the Outstanding Balance of any Receivable due to PASA;
(vi) the commingling of Collections of Receivables at any time with other funds, including any commingling with any Monetized Receivable Collections;
(vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, the use of the proceeds of any Advance, the Collateral or any other investigation, litigation or proceeding relating to Borrower, the Servicer or any Originator in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby;
(viii) any Regulatory Change which increases the cost of, or lowers the Yield, to any Indemnified Party;
(ix) any inability to litigate any claim against any Obligor in respect of any Receivable as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding;
(x) any Event of Default;
(xi) any failure of Borrower to acquire and maintain legal and equitable title to, and ownership of any of the Collateral from the applicable Originator, free and clear of any Adverse Claim (other than as created hereunder); or any failure of Borrower to give reasonably equivalent value to any Originator under the Receivables Sale Agreement in consideration of the transfer by such Originator of any Receivable, or any attempt by any Person to void such transfer under statutory provisions or common law or equitable action;
(xii) any failure to vest and maintain vested in the Administrative Agent for the benefit of the Lenders, or to transfer to the Administrative Agent for the benefit of the Secured Parties, a valid first priority perfected security interests in the Collateral, free and clear of any Adverse Claim (other than Adverse Claims in favor of the Administrative Agent, for the benefit of the Secured Parties);
(xiii) the failure to have filed, or any delay in filing, financing statements or other similar instruments or documents under the UCC of any applicable jurisdiction or other applicable laws with respect to any Collateral, and the proceeds thereof, whether at the time of any Advance or at any subsequent time;
(xiv) any action or omission by any Loan Party which reduces or impairs the rights of the Administrative Agent or the Lenders with respect to any Collateral or the value of any Collateral;
(xv) any attempt by any Person to void any Advance or the Administrative Agent’s security interest in the Collateral under statutory provisions or common law or equitable action;
(xvi) any civil penalty or fine assessed by OFAC against, and all reasonable costs and expenses (including counsel fees and disbursements) incurred in connection with defense thereof by the Administrative Agent or any Lender as a result of the funding of the Commitments or the acceptance of payments due under the Transaction Documents;
(xvii) the failure of any Receivable included in the calculation of the Net Pool Balance as an Eligible Receivable to be an Eligible Receivable at the time so included; and
(xviii) any In-Transit Receivable included in the calculation of the Net Pool Balance as an Eligible Receivable ceasing to be deemed to be an Eligible Receivable.
Notwithstanding the foregoing, (A) the foregoing indemnification is not intended to, and shall not, constitute a guarantee of the collectability or payment of the Receivables; and (B) except as provided in clause (xviii) above solely in relation to In-Transit Receivables, nothing in this Section 10.1 shall require Borrower to indemnify the Indemnified Parties for Receivables which are not collected, not paid or otherwise uncollectible on account of the insolvency, bankruptcy, credit-worthiness or financial inability to pay of the applicable Obligor.
Section 10.2. Increased Cost and Reduced Return
(a) Increased Costs Generally.
(i) If after the Closing Date, any Affected Entity shall be charged any fee, expense or increased cost on account of any Regulatory Change (1) that subjects such Affected Entity to any charge or withholding on or with respect to any Funding Agreement or such Affected Entity’s obligations under any Funding Agreement, or on or with respect to the Receivables, or changes the basis of taxation of payments to such Affected Entity of any amounts payable under any Funding Agreement (except for changes in the rate of tax on the overall net income of such Affected Entity or Excluded Taxes) or (2) that imposes, modifies or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of such Affected Entity, or credit extended by such Affected Entity pursuant to any Funding Agreement or (3) that imposes any other condition the result of which is to increase the cost to such Affected Entity of performing its obligations under any
Funding Agreement, or to reduce the rate of return on such Affected Entity’s capital as a consequence of its obligations under any Funding Agreement, or to reduce the amount of any sum received or receivable by such Affected Entity under any Funding Agreement or to require any payment calculated by reference to the amount of interests or loans held or interest received by it, then, upon demand by the applicable Co-Agent, on behalf of such Affected Entity, and receipt by Borrower of a certificate as to such amounts (to be conclusive absent manifest error), Borrower shall pay to such Co-Agent, as applicable, for the benefit of such Affected Entity, such amounts charged to such Affected Entity or such amounts to otherwise compensate such Affected Entity for such increased cost or such reduction. Notwithstanding anything in this Agreement to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations or directives thereunder, issued in connection therewith or in implementation thereof (whether or not having the force of law) and (y) all requests, rules, regulations, guidelines, interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (whether or not having the force of law), in each case pursuant to Basel III, shall be deemed to be adopted and effective after the Closing Date regardless of the date enacted, adopted, issued, promulgated or implemented (including for purposes of Section 10.1 and this Section 10.2).
(ii) Failure or delay on the part of any Affected Entity to demand compensation pursuant to clause (i) above shall not constitute a waiver of such Affected Entity’s right to demand such compensation, provided that the Borrower shall not be required to compensate an Affected Entity pursuant to clause (i) above for any increased costs incurred or reductions suffered more than nine months prior to the date that the applicable Co-Agent, on behalf of such Affected Entity, notifies the Borrower of the Regulatory Change giving rise to such increased costs or reductions and of such Affected Entity’s intention to claim compensation therefor (except that, if the Regulatory Change giving rise to such increased costs or reductions is retroactive, then the nine month period referred to above shall be extended to include the period of retroactive effect thereof).
(iii) Notwithstanding anything else to the contrary in this Section 10.2, no Affected Entity shall request that the Borrower pay any additional amount pursuant to this Section 10.2 unless it generally is, or shall be making, similar requests from other similarly situated borrowers from whom such Affected Entity is permitted, under contract and applicable law, to seek similar amounts.
(b) Indemnified Taxes.
(i) Without limiting the generality of the foregoing, if Borrower or the Administrative Agent shall be required by applicable law to deduct any Indemnified Taxes from any payments made to any Affected Entity, then (a) the sum payable shall be increased as necessary so that, after making all required deductions (including deductions applicable to additional sums payable under this Section 10.2), such Affected Entity receives an amount equal to the sum it would have received had no such deductions been made, (b) Borrower or the Administrative Agent shall make such deductions and (c) Borrower or the Administrative Agent shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. As soon as practicable, but in no event more than 30 days after any payment of such Indemnified Taxes by Borrower to a Governmental Authority, Borrower shall deliver to the Administrative Agent and the applicable Co-Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent or such Co-Agent, as the case may be.
(ii) In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Transaction Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Transaction Document (hereinafter referred to as “Other Taxes”). The Borrower shall not be required to make payment under this Section 10.2(b)(ii) to the extent paid under Section 10.1.
(iii) If the Borrower shall be required to deduct or pay any Taxes or Other Taxes from or in respect of any sum payable under any Transaction Document to any Indemnified Party, the Borrower shall also pay to such Indemnified Party at the time interest is paid, such additional amount that such Indemnified Party specifies is necessary to preserve the after-tax yield (after factoring in all taxes, including taxes imposed on or measured by net income) that such Indemnified Party would have received if such Taxes or Other Taxes had not been imposed. The Borrower shall not be required to make payment under this Section 10.2(b)(iii) to the extent paid under Section 10.1, 10.2(b)(i) or 10.2(b)(ii).
(c) In connection with the foregoing, the Borrower and the Servicer agree to cooperate with the Administrative Agent to take any action or provide any information (including any Required Data) reasonably requested by the Administrative Agent to mitigate any cost, expense or condition described above. Also, each Lender shall deliver to the Administrative Agent, at the time or times reasonably requested by the Administrative Agent, such properly completed and executed documentation reasonably requested by the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to withholding, backup
withholding or information reporting requirements. Notwithstanding the preceding sentence, other than in the case of an IRS Form W-9 or W-8, the completion, execution and submission of such documentation shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(d) The Servicer and the Borrower acknowledge that, in connection with the funding of the Loan, or any portion thereof, by a Conduit, the Administrative Agent may be required to obtain commercial paper ratings affirmation(s). Each of the Servicer and the Borrower agrees that it will (i) cooperate with the Administrative Agent and any rating agency involved in the issuance of such rating, (ii) amend and/or supplement the terms of this Agreement and the other Transaction Documents that define, employ or relate to the term “ARM Dilution Reserve,” “Borrowing Base,” “Concentration Reserve Percentage,” “Eligible Receivable,” “Loss Reserve,” “Dilution Reserve,” “Interest and Servicing Reserve,” “Minimum Dilution Reserve Percentage,” “PASA Reserve Amount,” “Servicing Fee Rate” or “Required Reserve”, or any defined term utilized in the definitions of such terms, in each case, as required by such rating agency in connection with the issuance of such rating (as so amended or supplemented, the “Revised Documents”), and (iii) take all actions required to ensure that (A) it is in compliance with all material provisions, representation, warranties and covenants of the Revised Documents applicable to it, (B) no Unmatured Event of Default, Event of Default, or any event that, with the giving of notice or the lapse of time, or both, would constitute a Unmatured Event of Default or Event of Default exists under the Revised Documents and (C) all other requirements under the Revised Documents relating to the funding of the Loan or the ownership of any Receivable have been complied with. The Borrower shall pay in immediately available funds to the Administrative Agent, all costs and expenses in connection with this Section 10.2, including, without limitation, the initial fees payable to such rating agency or agencies in connection with providing such rating and all ongoing fees payable to the rating agency or agencies for their continued monitoring of such rating.
Section 10.3. Other Costs and Expenses. Subject to Section 7.1(d), Borrower shall pay to the Agents and the Conduits within 15 days of demand (together with a reasonably detailed invoice therefor) all reasonable and documented costs and out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder, including without limitation, the reasonable fees and out-of-pocket expenses of legal counsel for the Agents and the Conduits with respect thereto and with respect to advising the Agents and the Conduits as to their respective rights and remedies under this Agreement. Borrower shall pay to the Agents on demand any and all costs and expenses of the Agents and the Lenders, if any, including reasonable counsel fees and expenses actually incurred in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following
an Event of Default. Notwithstanding anything to the contrary contained herein, so long as no Event of Default exists, the parties hereto agree that in no event shall the Borrower be obligated to pay the fees and expenses of more than one legal counsel in respect of the Lenders, Agents, the Receivables Buyers and the Receivables Agent (taken as a whole), which counsel shall be counsel for the Administrative Agent.
ARTICLE XI.
THE AGENTS
Section 11.1. Authorization and Action.
(a) Each Committed Lender in any Lender Group hereby designates the Person designated herein as Co-Agent for such Lender Group, as applicable, as agent for such Person hereunder and authorizes such Person to take such actions as agent on its behalf and to exercise such powers as are delegated to the Co-Agent for such Person by the terms of this Agreement together with such powers as are reasonably incidental thereto. Each Secured Party hereby irrevocably designates and appoints PNC Bank, National Association as Administrative Agent hereunder and under the Transaction Documents to which the Administrative Agent is a party, and each Lender and each Co-Agent that becomes a party to this Agreement hereafter ratifies such designation and appointment and authorizes the Administrative Agent to take such action on its behalf under the provisions of the Transaction Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of the Transaction Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, none of the Agents or the Letter of Credit Issuers shall have any duties or responsibilities, except those expressly set forth in the Transaction Documents to which it is a party, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of such Agent shall be read into any Transaction Document or otherwise exist against such Agent. In addition, the Administrative Agent is hereby authorized by each Lender, each Letter of Credit Issuer and each Co-Agent to consent to any amendments or restatements to the Certificate of Incorporation of Borrower to the extent such amendments or restatements are not prohibited by Section 7.1(i)(xxix).
(b) The provisions of this Article XI are solely for the benefit of the Agents, the Letter of Credit Issuers and the Lenders, and none of the Loan Parties shall have any rights as a third-party beneficiary or otherwise under any of the provisions of this Article XI, except that this Article XI shall not affect any obligations which any of the Agents or Lenders may have to any of the Loan Parties under the other provisions of this Agreement.
(c) In performing its functions and duties hereunder, (i) each Co-Agent shall act solely as agent for its related Committed Lender or the Lenders in its Lender Group, as applicable, and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any of the Loan Parties or any other Lenders or any of their respective successors or assigns, and (ii) the Administrative Agent shall act solely as the agent of the Secured Parties and does not assume nor shall be deemed
to have assumed any obligation or relationship of trust or agency with or for any of the Loan Parties or any of their respective successors and assigns.
Section 11.2. Delegation of Duties. Each of the Agents may execute any of its duties under any Liquidity Agreement to which it is a party and each Transaction Document by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Each Letter of Credit Issuer may execute any of its duties under each Transaction Document to which it is a party by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. None of the Agents or the Letter of Credit Issuers shall be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
Section 11.3. Exculpatory Provisions. None of the Agents or the Letter of Credit Issuers or any of their directors, officers, agents or employees shall be (i) liable for any action lawfully taken or omitted to be taken by it or them under or in connection with this Agreement or any other Transaction Document (except for its, their or such Person’s own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Lenders or other Agents for any recitals, statements, representations or warranties made by any Loan Party contained in this Agreement, any other Transaction Document or any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this Agreement, or any other Transaction Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, or any other Transaction Document or any other document furnished in connection herewith or therewith, or for any failure of any Loan Party to perform its obligations hereunder or thereunder, or for the satisfaction of any condition specified in Article VI, or for the perfection, priority, condition, value or sufficiency of any collateral pledged in connection herewith. None of the Agents or the Letter of Credit Issuers shall be under any obligation to any other Agent or any Lender to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the Loan Parties. None of the Agents or the Letter of Credit Issuers shall be deemed to have knowledge of any Event of Default or Unmatured Event of Default unless such Agent has received notice from Borrower, another Agent or a Lender.
Section 11.4. Reliance by Agents.
(a) Each of the Agents and the Letter of Credit Issuers shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to Borrower), independent accountants and other experts selected by such Agent or Letter of Credit Issuer. Each of the Agents and the Letter of Credit Issuers shall in all cases be fully justified in failing or refusing to take any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence of such of the Lenders or Committed Lenders in its Lender Group as it deems appropriate and it shall first be indemnified to its satisfaction by the Committed
Lenders in its Lender Group against any and all liability, cost and expense which may be incurred by it by reason of taking or continuing to take any such action; provided that unless and until an Agent or a Letter of Credit Issuer shall have received such advice, such Agent or Letter of Credit Issuer may take or refrain from taking any action, as such Agent shall deem advisable and in the best interests of the Lenders.
(b) The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a request of the Required Committed Lenders or all of the Lenders, as applicable, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.
(c) Any action taken by any of the Agents or Letter of Credit Issuers in accordance with Section 11.4 shall be binding upon all of the Agents, the Letter of Credit Issuers and the Lenders, as applicable.
Section 11.5. Non-Reliance on Other Agents and Other Lenders. Each Lender expressly acknowledges that none of the Agents, the Letter of Credit Issuers or other Lenders, nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates, has made any representations or warranties to it and that no act by any Agent, any Letter of Credit Issuer or any other Lender hereafter taken, including, without limitation, any review of the affairs of any Loan Party, shall be deemed to constitute any representation or warranty by such Agent or such other Lender. Each Lender represents and warrants to each Agent and each Letter of Credit Issuer that it has made and will make, independently and without reliance upon any Agent, any Letter of Credit Issuer or any other Lender and based on such documents and information as it has deemed appropriate, its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of Borrower and made its own decision to enter into its Liquidity Agreement (if applicable), the Transaction Documents and all other documents related thereto.
Section 11.6. Reimbursement and Indemnification. Each of the Committed Lenders agree to reimburse and indemnify (a) its applicable Co-Agent, (b) each Letter of Credit Issuer and (c) the Administrative Agent and its officers, directors, employees, representatives and agents ratably in accordance with their respective Commitments, to the extent not paid or reimbursed by the Loan Parties (i) for any amounts for which such Agent, acting in its capacity as Agent, or such Letter of Credit Issuer is entitled to reimbursement by the Loan Parties hereunder and (ii) (A) with respect to such Agent, for any other expenses incurred by such Agent, in its capacity as Agent and acting on behalf of the Lenders, in connection with the administration and enforcement of its Liquidity Agreements and the Transaction Documents and (B) with respect to such Letter of Credit Issuer, for any other expenses incurred in its capacity as a Letter of Credit Issuer, in connection with the administration and enforcement of the Transaction Documents.
Section 11.7. Agents in their Individual Capacities. Each of the Agents and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with Borrower or any Affiliate of Borrower as though such Agent were not an Agent hereunder. With respect to the making of Loans pursuant to this Agreement, each
of the Agents shall have the same rights and powers under any Liquidity Agreement to which it is a party and the Transaction Documents in its individual capacity as any Lender and may exercise the same as though it were not an Agent, and the terms “Committed Lender,” “Lender,” “Committed Lenders” and “Lenders” shall include each of the Agents in its individual capacity.
Section 11.8. Conflict Waivers. Each Co-Agent acts, or may in the future act: (i) as administrative agent for such Co-Agent’s Conduit, (ii) as issuing and paying agent for such Conduit’s Commercial Paper, (iii) to provide credit or liquidity enhancement for the timely payment for such Conduit’s Commercial Paper and (iv) to provide other services from time to time for such Conduit (collectively, the “Co-Agent Roles”). Without limiting the generality of Sections 11.1 and 11.8, each of the other Agents and the Lenders hereby acknowledges and consents to any and all Co-Agent Roles and agrees that in connection with any Co-Agent Role, a Co-Agent may take, or refrain from taking, any action which it, in its discretion, deems appropriate, including, without limitation, in its role as administrative agent for its Conduit, the giving of notice to the Committed Lenders in its Lender Group of a mandatory purchase pursuant to the applicable Liquidity Agreement for such Lender Group, and hereby acknowledges that neither the applicable Co-Agent nor any of its Affiliates has any fiduciary duties hereunder to any Lender (other than its Conduit) arising out of any Co-Agent Roles.
Section 11.9. UCC Filings. Each of the Secured Parties hereby expressly recognizes and agrees that the Administrative Agent may be listed as the assignee or secured party of record on the various UCC filings required to be made under the Transaction Documents in order to perfect their respective interests in the Collateral, that such listing shall be for administrative convenience only in creating a record or nominee holder to take certain actions hereunder on behalf of the Secured Parties and that such listing will not affect in any way the status of the Secured Parties as the true parties in interest with respect to the Collateral. In addition, such listing shall impose no duties on the Administrative Agent other than those expressly and specifically undertaken in accordance with this Article XI.
Section 11.10. Successor Administrative Agent and Letter of Credit Issuer. The Administrative Agent or any Letter of Credit Issuer, upon five (5) days’ notice to the Loan Parties, the other Agents and the Lenders, may voluntarily resign and may be removed at any time, with or without cause, by Committed Lenders holding in the aggregate at least sixty-six and two-thirds percent (66 2/3%) of the Aggregate Commitment and the Borrower. If the Administrative Agent or any Letter of Credit Issuer shall voluntarily resign or be removed as Agent or Letter of Credit Issuer under this Agreement, then the Required Committed Lenders during such five-day period shall appoint, with the consent of the Borrower from among the remaining Committed Lenders, a successor Administrative Agent or a successor Letter of Credit Issuer, whereupon such successor Administrative Agent or such successor Letter of Credit Issuer shall succeed to the rights, powers and duties of the Administrative Agent or the applicable Letter of Credit Issuer, respectively. The term “Administrative Agent” shall mean such successor agent, effective upon its appointment, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the
part of such former Administrative Agent or any of the parties to this Agreement. The term “Letter of Credit Issuer” shall mean such successor Letter of Credit Issuer, effective upon its appointment, and the former Letter of Credit Issuer’s rights, powers and duties as Letter of Credit Issuer shall be terminated, without any other or further act or deed on the part of such former Letter of Credit Issuer or any of the parties to this Agreement. Upon resignation or replacement of any Agent in accordance with this Section 11.10, the retiring Administrative Agent shall execute such UCC-3 assignments and amendments, and assignments and amendments of any Liquidity Agreement to which it is a party and the Transaction Documents, as may be necessary to give effect to its replacement by a successor Administrative Agent. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent or retiring Letter of Credit Issuer’s resignation hereunder as Letter of Credit Issuer, the provisions of this Article XI and Article X shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent or Letter of Credit Issuer, respectively, under this Agreement. In addition, the resigning Letter of Credit Issuer shall retain all rights and obligations of a Letter of Credit Issuer hereunder with respect to all of its Letters of Credit outstanding as of the effective date of the resignation and all Letter of Credit Liability with respect thereto (including the right to require the Lenders to fund payment of any amount drawn under a Letter of Credit issued by it pursuant to Section 1.8 and the right to have any such Letter of Credit Liability cash collateralized as provided herein).
Section 11.11. Erroneous Payments.
(a) If the Administrative Agent notifies a Lender or other Secured Party, or any Person who has received funds on behalf of a Lender or other Secured Party (any Lender, Secured Party or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Lender, other Secured Party or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Lender or other Secured Party shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Overnight Bank Funding Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in
effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting immediately preceding clause (a), each Lender or other Secured Party, or any Person who has received funds on behalf of a Lender or other Secured Party, hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Lender or other Secured Party, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) in each case:
(i) (A) in the case of immediately preceding clauses (x) or (y), an error shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Lender or other Secured Party shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of such error) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 11.11(b).
(c) Each Lender or other Secured Party hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Lender or other Secured Party under any Transaction Document, or otherwise payable or distributable by the Administrative Agent to such Lender or other Secured Party from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.
(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Lender that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Lender at any time, (i) such Lender shall be deemed to have assigned its Loans (but not its Commitments) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Loans (but not Commitments), the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid
interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with the Borrower) deemed to execute and deliver an Assignment and Assumption with respect to such Erroneous Payment Deficiency Assignment, (ii) the Administrative Agent as the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Lender shall become a Lender hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Lender shall cease to be a Lender hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Commitments which shall survive as to such assigning Lender and (iv) the Administrative Agent may reflect in the Register its ownership interest in the Loans subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Lender shall be reduced by the net proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall retain all other rights, remedies and claims against such Lender (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any Lender and such Commitments shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has sold a Loan (or portion thereof) acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Lender or other Secured Party under the Transaction Documents with respect to each Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”).
(e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations or any other obligations owed by any Borrower-Related Party; provided that this Section 11.11 shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the obligations of the Borrower relative to the amount (and/or timing for payment) of the obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; provided, further, that for the avoidance of doubt, this clause (e) shall not apply to the extent such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from any Borrower-Related Party for the purpose of making such Erroneous Payment.
(f) To the extent permitted by applicable Law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
(g) Each party’s obligations, agreements and waivers under this Section 10.13 shall survive the resignation or replacement of the Administrative Agent, the termination of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or any portion thereof) under any Transaction Document.
ARTICLE XII.
ASSIGNMENTS; PARTICIPATIONS
Section 12.1. Assignments.
(a) Each of the Agents, the Letter of Credit Issuers, the Loan Parties and the Committed Lenders hereby agrees and consents to the complete or partial assignment by each Conduit of all or any portion of its rights under, interest in, title to and obligations under this Agreement to the Committed Lenders in its Lender Group pursuant to its Liquidity Agreement.
(b) Any Lender may at any time and from time to time assign to one or more Eligible Assignees (each, a “Purchasing Lender”) all or any part of its rights and obligations under this Agreement pursuant to an assignment agreement substantially in the form set forth in Exhibit V hereto (an “Assignment Agreement”) executed by such Purchasing Lender and such selling Lender; provided, however, that any assignment of a Lender’s rights and obligations hereunder shall include a pro rata assignment of its rights and obligations under the applicable Liquidity Agreement (if any). The consent of the applicable Conduit shall be required prior to the effectiveness of any such assignment by a Lender in such Conduit’s Lender Group. Each assignee of a Lender must (i) be (x) an Eligible Assignee or (y) an assignee with respect to which the Borrower and the Letter of Credit Issuers have provided prior written consent (such consent not to be unreasonably withheld or delayed) and (ii) agree to deliver to the applicable Co-Agent, as the case may be, promptly following any request therefor by such Person, an enforceability opinion in form and substance satisfactory to such Person. Upon delivery of an executed Assignment Agreement to the applicable Co-Agent, such selling Lender shall be released from its obligations hereunder and, if applicable, under its Liquidity Agreement to the extent of such assignment. Thereafter the Purchasing Lender shall for all purposes be a Lender party to this Agreement and, if applicable, its Lender Group’s Liquidity Agreement and shall have all the rights and obligations of a Lender hereunder and thereunder to the same extent as if it were an original party hereto and thereto and no further consent or action by Borrower, the Lenders or the Agents shall be required.
(c) (i) Notwithstanding anything to the contrary contained herein, each of the Committed Lenders agrees that in the event that it shall become a Defaulting Lender, then until such time as such Committed Lender is no longer a Defaulting Lender, to the extent permitted by applicable law, such Defaulting Lender’s right to vote in respect of any amendment, consent or waiver of the terms of this Agreement or any other Transaction Document or to direct any action or inaction of the Administrative Agent or to be taken into account in the calculation of the Required Committed Lenders shall be suspended at all times that such Committed Lender remains a Defaulting Lender; provided, however, that, except
as otherwise set forth in this Section 12.1(c), the foregoing suspension shall not empower Lenders that are not Defaulting Lenders to increase a Defaulting Lender’s Commitment, decrease the rate of interest or fees applicable to, or extend the maturity date of such Defaulting Lender’s Advances or other Obligations owing to such Lender, in each case, without such Lender’s consent. No Commitment of any Committed Lender shall be increased or otherwise affected, and except as otherwise expressly provided in this Section 12.1(c), performance by the Borrower of its obligations hereunder and under the other Transaction Documents shall not be excused or otherwise modified, as a result of the operation of this Section 12.1(c).
(ii) To the extent that any Committed Lender is a Defaulting Lender with respect to an Advance, the Borrower may deliver a notice to the Lenders specifying the date of such Advance, the identity of the Defaulting Lender and the portion of such Advance that the Defaulting Lender failed to fund, which notice shall be deemed to be an additional Borrowing Notice in respect of such unfunded portion of such Advance, and each Committed Lender (or its related Conduit, if applicable, and acting in its sole discretion) shall, to the extent of its remaining unfunded Commitment and subject to the continued fulfillment of all applicable conditions precedent set forth herein with respect to such Advance, fund its Percentage (recomputed by excluding the Commitment of Defaulting Lenders from the Aggregate Commitment) of such unfunded portion of such Advance not later than 2:30 p.m. (New York City time) on the Business Day following the date of such notice. To the extent that any Committed Lender is a Defaulting Lender on any date that the Letter of Credit Liability is greater than zero, each Committed Lender shall, automatically and without further action of any kind upon such date, acquire an increased participation interest in the Letters of Credit outstanding, along with all accompanying rights and obligations described in Sections 1.7 through 1.14, equal to the lessor of (x) its Percentage (recomputed by excluding the Commitment of Defaulting Lenders from the Aggregate Commitment) of such Defaulting Lender’s Percentage of the Letter of Credit Liability and (y) its remaining unfunded Commitment.
(iii) Until the Defaulting Lender Excess of a Defaulting Lender has been reduced to zero, any payment of the principal of any Loan to a Defaulting Lender shall, unless the Required Committed Lenders agree otherwise, be applied first (1) ratably, to the reduction of the Loans or the Letter of Credit Liability funding any defaulted portion of Advances or the Letter of Credit Liability pursuant to Section 12.1(c)(ii) and then (2) ratably to reduce the Loans of each of the Lenders that are not Defaulting Lenders in accordance with the principal amount (if any) thereof. Subject to the preceding sentence, any amount paid by or on behalf of the Borrower for the account of a Defaulting Lender under this Agreement or any other Transaction Document will not be paid or distributed to such Defaulting Lender, but will instead be applied to the making of payments from time to time in the following order of priority until such Defaulting Lender has ceased to be a
Defaulting Lender as provided below: first, to the funding of any portion of any Advance or the Letter of Credit Liability in respect of which such Defaulting Lender has failed to fund as required by this Agreement, as determined by the Administrative Agent; second, held in a segregated subaccount of any Collection Account (other than any FX Collection Account) as cash collateral for future funding obligations of the Defaulting Lender in respect of Advances or the Letter of Credit Liability under this Agreement; and third, after the termination of the Commitments and payment in full of all Obligations, to such Defaulting Lender or as a court of competent jurisdiction may otherwise direct.
(iv) During any period that a Committed Lender is a Defaulting Lender, the Borrower shall not accrue or be required to pay, and such Defaulting Lender shall not be entitled to receive, the Unused Fee (as defined in the Fee Letter) otherwise payable to such Defaulting Lender under this Agreement at any time, or with respect to any period, that such Committed Lender is a Defaulting Lender.
(v) During any period that a Committed Lender is a Defaulting Lender, the Borrower may, by giving written notice thereof to the Administrative Agent and such Defaulting Lender, require such Defaulting Lender, at the cost and expense of the Borrower, to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, this Article XII), (i) all and not less than all of its interests, rights and obligations under this Agreement and the Transaction Documents to an assignee or assignees that shall assume such obligations (which assignee may be another Lender, if such other Lender accepts such assignment) in whole or (ii) all of its interests, rights and obligations under this Agreement and the Transaction Documents with respect to all prospective Commitments, including any unfunded Commitment as of the date of such assignment. No party hereto shall have any obligation whatsoever to initiate any such complete or partial replacement or to assist in finding an assignee. In connection with any such complete or partial assignment, such Defaulting Lender shall promptly execute all documents reasonably requested to effect such assignment, including an appropriate Assignment Agreement. No such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, (A) to the extent that the assignee is assuming all of the interests, rights and obligations of the Defaulting Lender, the parties to the assignment shall make such additional payments in an aggregate amount sufficient, upon distribution thereof as appropriate (which may be outright payment, purchases by the assignee of participations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable Percentage of Advances previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Borrower
or any Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) the Loans made by such Defaulting Lender or members of such Defaulting Lender Group, as applicable, (B) to the extent that the assignee is assuming all of the interests, rights and obligations of the Defaulting Lender, such Defaulting Lender or members of such Defaulting Lender Group, as applicable, shall have received payment of an amount equal to all of its Loans outstanding, accrued interest thereon, accrued fees (subject to Section 12.1(c)(iv)) and all other amounts, including any Breakage Costs, payable to it and its Affected Entities hereunder and the other Transaction Documents through (but excluding) the date of such assignment from the assignee or the Borrower, and (C) such assignment does not conflict with applicable law. Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
(vi) If the Borrower, Servicer, and the Administrative Agent agree in writing in their discretion that a Committed Lender that is a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the Lenders and the Co-Agents, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, such Committed Lender will, to the extent applicable, purchase such portion of outstanding Advances of the other Lenders and make such other adjustments as the Administrative Agent may reasonably determine to be necessary to cause the interest of the Lenders in the Aggregate Principal to be on a pro rata basis in accordance with their respective Percentages, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower or forfeited pursuant to Section 12.1(c)(iv), while such Committed Lender was a Defaulting Lender; and provided further that, except to the extent otherwise expressly agreed by the affected parties, no cure by a Committed Lender under this subsection of its status as a Defaulting Lender will constitute a waiver or release of any claim or any party hereunder arising from such Committed Lender having been a Defaulting Lender.
(vii) The rights and remedies of the Borrower, any Agent or the other Lenders against a Defaulting Lender under this Section 12.1(c) are in addition to any other rights and remedies the Borrower, the Agents and the other Lender may have against such Defaulting Lender under this Agreement, any of the other Transaction Documents, applicable law or otherwise.
(viii) Any Committed Lender that fails to timely fund a Loan shall be obligated to promptly (but in any event not later than 10:00 a.m. (New York City time) on the Business Day after the date of the related Advance) notify the Borrower and the Administrative Agent if any such failure is the result of an administrative error or omission by such Committed Lender or force majeure, computer malfunction, interruption of communication facilities, labor difficulties or other causes, in each case to the extent beyond such Committed Lender’s reasonable control. If (i) the Administrative Agent had been notified by the Borrower or the affected Committed Lender that a Committed Lender has failed to timely fund a Loan, (ii) an Authorized Officer of the Administrative Agent has actual knowledge or has written notice that such Committed Lender is the subject of an Event of Bankruptcy or has publicly announced that it does not intend to comply with its funding obligations under this Agreement or (iii) the Administrative Agent had been notified by the affected Committed Lender that a Committed Lender has failed timely to deliver the written confirmation contemplated by clause (a)(iii) of the definition of “Defaulting Lender”, the Administrative Agent shall promptly provide notice to the Borrower and the Co-Agents of such occurrence.
(d) No Loan Party may assign any of its rights or obligations under this Agreement without the prior written consent of each of the Agents and each of the Lenders and without satisfying the Rating Agency Condition, if applicable.
Section 12.2. Participations. Any Committed Lender may, in the ordinary course of its business at any time sell to one or more Persons (each, a “Participant”) participating interests in its Pro Rata Share of its Lender Group’s Percentage of Aggregate Commitment, its Loans, its Letters of Credit, its Liquidity Commitment (if applicable) or any other interest of such Committed Lender hereunder or, if applicable, under its Liquidity Agreement. Notwithstanding any such sale by a Committed Lender of a participating interest to a Participant, such Committed Lender’s rights and obligations under this Agreement and, if applicable, such Liquidity Agreement shall remain unchanged, such Committed Lender shall remain solely responsible for the performance of its obligations hereunder and, if applicable, under its Liquidity Agreement, and the Loan Parties, the Lenders and the Agents shall continue to deal solely and directly with such Committed Lender in connection with such Committed Lender’s rights and obligations under this Agreement and, if applicable, its Liquidity Agreement. Each Committed Lender agrees that any agreement between such Committed Lender and any such Participant in respect of such participating interest shall not restrict such Committed Lender’s right to agree to any amendment, supplement, waiver or modification to this Agreement, except for any amendment, supplement, waiver or modification described in Section 14.1(b)(i).
Section 12.3. Register. The Administrative Agent (as agent for the Borrower) shall maintain at its office referred to in Section 14.2 a copy of each Assignment Agreement delivered to and accepted by it and register (the “Register”) for the recordation of the names and addresses of the Lenders and the Pro Rata Share of, outstanding principal amount of all Advances owing to and Interest of, each Lender from time to time, which Register shall
be available for inspection by the Borrower at any reasonable time and from time to time upon reasonable prior notice. No assignment under this Article XII shall be effective until the entries described in the preceding sentence have been made in the Register. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Servicer, the Lenders, the Co-Agents, the Letter of Credit Issuers and the Administrative Agent may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement.
Section 12.4. Federal Reserve and Security Trustee. Notwithstanding any other provision of this Agreement to the contrary, any Lender may at any time pledge or grant a security interest in all or any portion of its rights (including, without limitation, any Loan and any rights to payment of principal or interest thereon) under this Agreement (i) to secure obligations of such Lender to a Federal Reserve Bank, or (ii) to a collateral agent or a security trustee in connection with the funding by such Lender of the Loan, without notice to or consent of Borrower, Servicer or any Agent; provided that no such pledge or grant of a security interest shall release such Lender from any of its obligations hereunder, or substitute any such pledgee or grantee for such Lender as a party hereto.
ARTICLE XIII.
SECURITY INTEREST
Section 13.1. Grant of Security Interest. To secure the due and punctual payment of the Obligations, whether now or hereafter existing, due or to become due, direct or indirect, or absolute or contingent, including, without limitation, all Indemnified Amounts, in each case pro rata according to the respective amounts thereof, Borrower hereby grants to the Administrative Agent, for the benefit of the Secured Parties, a security interest in, all of Borrower’s right, title and interest, whether now owned and existing or hereafter arising in and to all of the Receivables, the Related Security, the Collections, the Lock-Boxes and Collection Accounts (other than any FX Collection Account) and all amounts on deposit therein, and all certificates and instruments, if any, from time to time evidencing such Lock-Boxes, Collection Accounts (other than any FX Collection Account) and amounts on deposit therein, each L/C Collateral Account and all amounts on deposit therein, and all certificates and instruments, if any, from time to time evidencing such L/C Collateral Account and amounts on deposit therein, and all proceeds of the foregoing (collectively, the “Collateral”). Borrower hereby authorizes the Administrative Agent to file a financing statement naming Borrower as debtor or seller that describes the collateral as “all assets of the debtor whether now existing or hereafter arising” or words of similar effect.
Section 13.2. Termination after Final Payout Date. Each of the Secured Parties hereby authorizes the Administrative Agent, and the Administrative Agent hereby agrees, promptly after the Final Payout Date to execute and deliver to Borrower such UCC termination statements as may be necessary to terminate the Administrative Agent’s security interest in and lien upon the Collateral, all at Borrower’s expense. Upon the Final Payout Date, all right, title and interest of the Administrative Agent and the other Secured Parties in and to the Collateral shall terminate.
ARTICLE XIV.
MISCELLANEOUS
Section 14.1. Waivers and Amendments.
(a) No failure or delay on the part of any Agent or any Lender in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing in accordance with the provisions of this Section 14.1(b). The Loan Parties, the Required Committed Lenders and the Administrative Agent may enter into written modifications or waivers of any provisions of this Agreement; provided, however, that no such modification or waiver shall:
(i) without the consent of each affected Lender, (A) extend the Scheduled Termination Date or the date of any payment or deposit of Collections by Borrower or the Servicer, (B) reduce the rate or extend the time of payment of Interest or any CP Costs (or any component of Interest or CP Costs), (C) reduce any fee payable to any Agent for the benefit of the Lenders, (D) except pursuant to Article XII hereof, change the amount of the principal of any Lender, any Committed Lender’s Pro Rata Share or any Committed Lender’s Commitment, (E) amend, modify or waive any provision of the definition of Required Committed Lenders or this Section 14.1(b), (F) consent to or permit the assignment or transfer by Borrower of any of its rights and obligations under this Agreement, or (G) amend or modify any defined term (or any defined term used directly or indirectly in such defined term) used in clauses (A) through (F) above in a manner that would circumvent the intention of the restrictions set forth in such clauses;
(ii) without the written consent of any affected Agent, amend, modify or waive any provision of this Agreement if the effect thereof is to affect the rights or duties of such Agent, or
(iii) without the consent of the Required Committed Lenders, change the definition of “ARM Dilution Reserve,” “Borrowing Base,” “Concentration Reserve Percentage,” “Eligible Receivable,” “Loss Reserve,” “Dilution Reserve,” “Interest and Servicing Reserve,” “Minimum Dilution Reserve Percentage,” “PASA Reserve Amount,” “Servicing Fee Rate” or “Required Reserve,”
and any material amendment, waiver or other modification of this Agreement shall require satisfaction of the Rating Agency Condition, to the extent the Rating Agency
Condition is required of any Conduit. Notwithstanding the foregoing, (i) without the consent of the Committed Lenders, but with the consent of Borrower, any Co-Agent may direct the Administrative Agent to amend this Agreement solely to add additional Persons as Committed Lenders in respect of the related Lender Group hereunder and (ii) the Agents, the Required Committed Lenders and the Conduits may enter into amendments to modify any of the terms or provisions of Article XI, Article XII, Section 14.13 or any other provision of this Agreement without the consent of Borrower; provided that such amendment has no negative impact upon Borrower. Any modification or waiver made in accordance with this Section 14.1 shall apply to each of the Lenders equally and shall be binding upon Borrower, the Lenders and the Agents.
Section 14.2. Notices; Effectiveness; Electronic Communication.
(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile to the relevant party as specified on the signature pages hereof. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given and received (i) when personally delivered, or delivered by same-day courier; (ii) on the third business day after mailing by registered or certified mail, postage prepaid; or (iii) upon delivery when sent by prepaid overnight express delivery service (e.g., FedEx, UPS); notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications, to the extent provided in paragraph (b) below, shall be effective as provided in such paragraph (b).
(b) Electronic Communications. Notices and other communications to the Administrative Agent, the Co-Agents, each L/C Participant, each Letter of Credit Issuer and each Lender hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in the foregoing clause (i), of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours
of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(c) Change of Address, etc. Any party hereto may change its address or facsimile number for notices and other communications hereunder by notice to the other parties hereto.
Section 14.3. Ratable Payments. If (a) any Lender, whether by setoff or otherwise, has payment made to it with respect to any portion of the Obligations owing to such Lender (other than payments received pursuant to Section 10.2 or 10.3) in a greater proportion than that received by any other Lender in such Lender’s Lender Group entitled to receive a ratable share of such Obligations, such Lender agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Obligations held by the other Lenders in such Lender’s Lender Group so that after such purchase each Lender in such Lender Group will hold its Pro Rata Share of such Obligations and (b) any Lender Group, whether by set off or otherwise, has payment made to such Lender Group (other than payments received pursuant to Section 10.2 or 10.3) in a greater proportion than that received by any other Lender Group entitled to receive a ratable share of such Obligations, the Lenders in such Lender Group agree, promptly upon demand, to purchase for cash without recourse or warranty a portion of such Obligations held by the other Lender Groups so that after such purchase each Lender in such Lender Group, taken together, will hold its Lender Group’s Percentage of such Obligations; provided that in the case of the preceding clauses (a) and (b), if all or any portion of such excess amount is thereafter recovered from such Lender or Lender Group, as applicable, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
Section 14.4. Protection of Administrative Agent’s Security Interest.
(a) Borrower agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that any of the Agents may request, to perfect, protect or more fully evidence the Administrative Agent’s security interest in the Collateral, or to enable the Agents or the Lenders to exercise and enforce their rights and remedies hereunder. At any time after the occurrence of an Event of Default, the Administrative Agent may, or the Administrative Agent may direct Borrower or the Servicer to, notify the Obligors of Receivables, at Borrower’s expense, of the ownership or security interests of the Lenders under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to the Administrative Agent or its designee. Borrower or the Servicer (as applicable) shall, at any Lender’s request, withhold the identity of such Lender in any such notification.
(b) If any Loan Party fails to perform any of its obligations hereunder, the Administrative Agent or any Lender may (but shall not be required to) perform, or cause performance of, such obligations, and the Administrative Agent’s or such Lender’s costs and expenses incurred in connection therewith shall be payable by Borrower as provided in Section 10.3. Each Loan Party irrevocably authorizes the Administrative Agent at any time and from time to time in the sole discretion of the Administrative Agent,
and appoints the Administrative Agent as its attorney-in-fact, to act on behalf of such Loan Party (i) to execute on behalf of Borrower as debtor and to file financing statements necessary or desirable in the Administrative Agent’s sole discretion to perfect and to maintain the perfection and priority of the interest of the Lenders in the Receivables and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement with respect to the Receivables as a financing statement in such offices as the Administrative Agent in its sole discretion deems necessary or desirable to perfect and to maintain the perfection and priority of the Administrative Agent’s security interest in the Collateral, for the benefit of the Secured Parties. This appointment is coupled with an interest and is irrevocable.
Section 14.5. Confidentiality.
(a) Each Loan Party and each Lender shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Fee Letter, the Agent Fee Letter and the other confidential or proprietary information with respect to the Agents and the Conduits and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that such Loan Party and such Lender and its officers and employees may disclose such information to such Loan Party’s and such Lender’s external accountants and attorneys and as required by any applicable law or order of any judicial or administrative proceeding.
(b) Each of the Lenders and each of the Agents shall maintain and shall cause each of its officers, directors, employees, investors, potential investors, credit enhancers, outside accountants, attorneys and other advisors to maintain the confidentiality of, and not disclose to any other Person, any nonpublic information with respect to the Originators and the Loan Parties, except that any of the foregoing may disclose such information (i) to any party to this Agreement, (ii) to any provider of a surety, guaranty or credit or liquidity enhancement to any Conduit, (iii) to its Affiliates and its insurers and reinsurers (iv) to the outside accountants, attorneys and other advisors of any Person described in clause (i) or (ii) above, (v) to any prospective or actual assignee or participant of any of the Agents or any Lender, (vi) to any rating agency who rates the Commercial Paper, to any Commercial Paper dealer, (vii) to any other entity organized for the purpose of purchasing, or making loans secured by, financial assets for which any Co-Agent (or one of its Affiliates) acts as the administrative agent and to any officers, directors, employees, outside accountants and attorneys of each of the foregoing; provided that each Person described in the foregoing clause (ii) through (vii) is informed of the confidential nature of such information and, in the case of a Person described in clauses (ii) or (iii) is subject to customary obligations of confidentiality, and in the case of a Person described in clause (v), agrees in writing to maintain the confidentiality of such information in accordance with this Section 14.5(b); (viii) as required pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law) and (ix) in connection with the exercise of any remedies hereunder or under any other Transaction Document or any action or proceeding relating to this Agreement or any other Transaction Document or the enforcement of rights hereunder or thereunder. Notwithstanding the foregoing, (x) each
Conduit and its officers, directors, employees, investors, potential investors, credit enhancers, outside accountants, attorneys and other advisors shall be permitted to disclose Receivables performance information and details concerning the structure of the facility contemplated hereby in summary form and in a manner not identifying the Originators, Borrower, the Servicer, the Performance Guarantor, or the Obligors to prospective investors in Commercial Paper issued by such Conduit, and (y) the Conduits, the Agents and the Lenders shall have no obligation of confidentiality in respect of any information which may be generally available to the public or becomes available to the public through no fault of theirs or their respective Affiliates.
(c) Notwithstanding any other express or implied agreement to the contrary, the parties hereto hereby agree and acknowledge that each of them and each of their employees, representatives, and other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to any of them relating to such tax treatment and tax structure, except to the extent that confidentiality is reasonably necessary to comply with U.S. federal or state securities laws. For purposes of this Section 14.5(c), the terms “tax treatment” and “tax structure” have the meanings specified in Treasury Regulation section 1.6011-4(c).
Section 14.6. Bankruptcy Petition. Borrower, the Servicer, the Agents and each Committed Lender hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of any Conduit, it will not institute against, or join any other Person in instituting against, such Conduit any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
Section 14.7. Limitation of Liability. Except with respect to any claim arising out of the willful misconduct, bad faith or gross negligence of any Conduit, the Agents or any Committed Lender, no claim may be made by any Loan Party or any other Person against any Conduit, the Agents or any Committed Lender or their respective Affiliates, directors, officers, employees, attorneys or agents for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each Loan Party hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
The obligations of each Conduit under this Agreement shall be payable solely out of the funds of such Conduit available for such purpose and shall be solely the corporate obligations of such Conduit. No recourse shall be had for the payment of any amount owing in respect of this Agreement or for the payment of any fee hereunder or for any other obligation or claim arising out of or based upon this Agreement against any Agent, any Affiliate of any of the foregoing, or any stockholder, employee, officer, director, incorporator or beneficial owner of any of the foregoing. Notwithstanding any provisions contained in this Agreement to the contrary, no Conduit shall, nor shall be obligated to, pay any amount pursuant to this Agreement unless (a) such Conduit has received funds
which may be used to make such payment and which funds are not required to repay its Commercial Paper and advances under its Liquidity Agreement when due and (b) after giving effect to such payment, either (i) there is sufficient liquidity availability (determined in accordance with the Liquidity Agreement), under all of the liquidity facilities for such Conduit's Commercial Paper program, to pay the "Face Amount" (as defined below) of all outstanding Commercial Paper and advances under its Liquidity Agreement when due or (ii) all Commercial Paper and advances under the Liquidity Agreement are paid in full. Any amount which a Conduit does not pay pursuant to the operation of the preceding sentence shall not constitute a claim (as defined in § 1 01 of the Bankruptcy Code) against or limited liability company obligation of such Conduit for any such insufficiency unless and until such payment may be made in accordance with clauses (a) and (b) above. The agreements in this Section shall survive termination of this Agreement and payment of all obligations hereunder. As used in this Section, the term “Face Amount" means, with respect to outstanding Commercial Paper or advances under Conduit’s Liquidity Agreement, (x) the face amount of any such Commercial Paper issued on a discount basis, and (y) the principal amount of, plus the amount of all interest accrued and to accrue thereon to the stated maturity date of, any such Commercial Paper issued on an interest-bearing basis or any such advances under its Liquidity Agreement.
Section 14.8. CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (EXCEPT IN THE CASE OF THE OTHER TRANSACTION DOCUMENTS, TO THE EXTENT OTHERWISE EXPRESSLY STATED THEREIN) AND EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE OWNERSHIP INTEREST OF BORROWER OR THE SECURITY INTEREST OF THE ADMINISTRATIVE AGENT, FOR THE BENEFIT OF THE SECURED PARTIES, IN ANY OF THE COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 14.9. CONSENT TO JURISDICTION. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT, AND EACH SUCH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF ANY AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY LOAN PARTY AGAINST ANY AGENT OR ANY LENDER OR ANY AFFILIATE OF ANY AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH LOAN PARTY PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.
Section 14.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY LOAN PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
Section 14.11. Integration; Binding Effect; Survival of Terms.
(a) This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings.
(b) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy). This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however, that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Loan Party pursuant to Article V, (ii) the indemnification and payment provisions of Article X, and Sections 14.5 and 14.6 shall be continuing and shall survive any termination of this Agreement.
Section 14.12. Counterparts; Severability; Section References. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Unless otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule” or “Exhibit” shall mean articles and sections of, and schedules and exhibits to, this Agreement.
Section 14.13. Acknowledgement and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Transaction Document or in any other agreement, arrangement or understanding among the respective parties thereto, each party hereto acknowledges that any liability of any EEA Financial Institution arising
under any Transaction Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(b) the effects of any Bail-in Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, any such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Funding Agreement; or
(iii) the variation of the terms of any such liability.
Section 14.14. Patriot Act. Each Agent hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name, address, tax identification number and other information that will allow such Agent to identify the Borrower in accordance with the Patriot Act. This notice is given in accordance with the requirements of the Patriot Act.
Section 14.15. Amendment and Restatement. The parties hereto acknowledge and agree that this Agreement does not constitute a novation or termination of the existing obligations under the Original Agreement and that such obligations, including the grant of the security interest in respect of the Collateral, are in all respects continued and outstanding as obligations under this Agreement with only the terms being modified from and after the date hereof as provided herein.
Section 14.16. Intercreditor Agreement. Each Lender hereby acknowledges that it has received and reviewed the Intercreditor Agreement and agrees to be bound by the terms thereof. Each Lender (and each Person that becomes a Lender under this Agreement after the date hereof) hereby authorizes and directs the Administrative Agent to enter into the Intercreditor Agreement on behalf of such Lender and agrees that the Administrative Agent may take such actions on its behalf as is contemplated by the terms of the Intercreditor Agreement. To the extent that any terms or provisions herein are inconsistent with any terms or provisions of the Intercreditor Agreement, the Intercreditor Agreement shall govern. In addition, each Lender and the Administrative Agent acknowledge and agree that the rights and remedies of the Administrative Agent and the Lenders hereunder and under the other Transaction Documents are subject to the Intercreditor Agreement.
Section 14.17. Post-Closing Covenants.
(a) On or prior to the Post-Closing Date, the Borrower and the Servicer shall deliver to the Administrative Agent written confirmation that the ownership of each Lock-Box and Collection Account (other than any FX Collection Account and the related Lock-Boxes) has been assigned or otherwise novated to the Borrower.
(b) On or prior to the Post-Closing Date, the Borrower and the Servicer shall deliver to the Administrative Agent a fully executed Collection Account Agreement with respect to the Collection Accounts (other than any FX Collection Account), in form and substance reasonably satisfactory to the Administrative Agent.
(c) On or prior to the Post-Closing Date, the Borrower and the Servicer shall deliver to the Administrative Agent a written opinion of counsel to the Borrower and the Servicer, in form and substance reasonably satisfactory to the Administrative Agent, covering general corporate, enforceability and security interest perfection matters with respect to the Collection Account Agreements referenced in clause (a) above.
(d) Notwithstanding anything to the contrary set forth in this Agreement or any other Transaction Document, the failure of the Borrower or the Servicer to timely perform its respective obligations under this Section 14.17 shall constitute an immediate Event of Default under this Agreement with no grace period.
<signature pages follow>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their duly authorized officers as of the date hereof.
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| SMITHFIELD RECEIVABLES FUNDING LLC, AS BORROWER |
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| By: SFFC, Inc., its managing member |
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| By: | | | |
| Name: Jeffrey Porter | |
| Title: President, Assistant Treasurer and Assistant Secretary |
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| Address: | 3411 Silverside Rd, 103 Baynard Bldg | |
| | Wilmington, DE 19810 | |
| | Attention: Jeffrey Porter | |
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| | With a copy to: | |
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| | c/o Smithfield Foods, Inc. | |
| | 200 Commerce Street | |
| | Smithfield, VA 23430, | |
| | Attention: Jenifer Byrd | |
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| SMITHFIELD FOODS, INC., AS SERVICER |
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| By: | | | | |
| Name: Jenifer Byrd | |
| Title: Vice President and Corporate Treasurer |
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| | Address: | | |
| | | Smithfield Foods, Inc. |
| | | 200 Commerce Street |
| | | Smithfield, VA 23430 |
| | | Attention: Jenifer Byrd |
| | | and Mark Hall |
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COÖPERATIEVE RABOBANK U.A., NEW YORK BRANCH, AS A LETTER OF CREDIT ISSUER
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| | Address: | Securitization Value Chain Finance - Transaction Management |
| | | Cooperatieve Rabobank International, U.A., New York Branch |
| | | 245 Park Avenue, 36th Floor |
| | | New York, NY 10167 |
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| COÖPERATIEVE RABOBANK U.A., AS A COMMITTED LENDER AND L/C PARTICIPANT IN THE RABOBANK LENDER GROUP |
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| | Address: | SecuritizationValue Chain Finance - Transaction Management |
| | | Cooperatieve Rabobank International, U.A., New York Branch |
| | | 245 Park Avenue, 36th Floor |
| | | New York, NY 10167 |
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NIEUW AMSTERDAM RECEIVABLES CORPORATION B.V.,
AS A CONDUIT IN THE RABOBANK LENDER GROUP
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| | Address: | Nieuw Amsterdam Receivables Corporation B.V. |
| | | c/o Global Securitization Services, LLC |
| | | 68 South Service Road, Suite 120 |
| | | Melville, NY 11747 |
| | | Attention: JR Angelo |
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| | With a copy to: | |
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| | Address: | InterTrust Group |
| | | c/o Nieuw Amsterdam Receivables Co. |
| | | Basisweg 10 |
| | | 1043 AP Amsterdam |
| | | The Netherlands |
| | | Attention: The Directors |
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PNC BANK, NATIONAL ASSOCIATION, AS ADMINISTRATIVE AGENT AND A LETTER OF CREDIT ISSUER
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| | Address: | PNC Bank, National Association |
| | | The Tower at PNC Plaza |
| | | 300 Fifth Avenue, 11th Floor |
| | | Pittsburgh, PA 15222 |
| | | Attention: Brian Stanley |
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PNC BANK, NATIONAL ASSOCIATION, AS A COMMITTED LENDER AND L/C PARTICIPANT IN THE PNC LENDER GROUP
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| | Address: | PNC Bank, National Association |
| | | The Tower at PNC Plaza |
| | | 300 Fifth Avenue, 11th Floor |
| | | Pittsburgh, PA 15222 |
| | | Attention: Brian Stanley |
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PNC CAPITAL MARKETS LLC, AS STRUCTURING AGENT
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| | Address: | PNC Bank, National Association |
| | | The Tower at PNC Plaza |
| | | 300 Fifth Avenue, 11th Floor |
| | | Pittsburgh, PA 15222 |
| | | Attention: Brian Stanley |
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5th A&R Credit and Security Agreement (Smithfield)
EXHIBIT I
DEFINITIONS
As used in the Agreement and the Exhibits and Schedules thereto, capitalized terms have the meanings set forth in this Exhibit I (such meanings to be equally applicable to the singular and plural forms thereof). Any references in the Agreement or this Exhibit I to any Person includes such Persons successors and permitted assigns. The words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement. The term “including” means “including without limitation”. References to any agreement refer to that agreement as from time to time amended or restated.
As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
“Accrual Adjusted Net Pool Balance” means, at any time of determination: (a) the Net Pool Balance at such time, minus (b) the Volume Rebate Accrual Amount at such time.
“Adjusted Dilution Ratio” means, at any time, the rolling average of the Dilution Ratio for the 12 Calculation Periods then most recently ended.
“Adjusted Federal Funds Rate” means, for each Settlement Period, the weighted daily average of (a) a rate per annum equal to the Federal Funds Rate on each day of such Settlement Period, plus (b) the Market Spread per annum on each day of such Settlement Period. For purposes of determining the Adjusted Federal Funds Rate for any day, changes in the Federal Funds Rate shall be effective on the date of each such change.
“Adjusted Federal Funds Rate Loan” means a Loan which bears interest at the Adjusted Federal Funds Rate.
“Adjusted Federal Funds Rate Option” means the option of the Borrower to have Loans bear Interest at a fluctuating rate per annum equal to the Adjusted Federal Funds Rate, such interest rate to change automatically from time to time effective as of the effective date of each change in the Adjusted Federal Funds Rate.
“Adjusted Letter of Credit Liability” means, at any time, the Letter of Credit Liability less the amount of cash collateral held in the L/C Collateral Account at such time.
“Administrative Agent” has the meaning provided in the preamble to this Agreement.
“Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent to each Lender.
“Advance” means a borrowing hereunder consisting of the aggregate amount of the several Loans made on the same Borrowing Date.
“Adverse Claim” has the meaning provided in the Receivables Sale Agreement.
“Affected Entity” means (i) any Funding Source, (ii) any agent, administrator or manager of a Conduit, or (iii) any bank holding company in respect of any of the foregoing.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person or any Subsidiary of such Person. A Person shall be deemed to control another Person if (a) the controlling Person owns 10-50% of any class of voting securities of the controlled Person only if it also possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise, or (b) if the controlling Person owns more than 50% of any class of voting securities of the controlled Person.
“Agent Fee Letter” means that certain Structuring Agent and Administrative Agents Fee Letter, dated as of December 22, 2022, among the Borrower, the Structuring Agent, the Administrative Agent, the Receivables Agent and the Structuring Agent, as it may be amended or modified and in effect from time to time.
“Agents” has the meaning provided in the preamble to this Agreement.
“Aggregate Commitment” means, on any date of determination, the aggregate amount of the Committed Lenders’ Commitments to make Loans and the L/C Credit Extensions hereunder. As of the ClosingFirst Amendment Effective Date, the Aggregate Commitment is $275,000,000225,000,000.
“Aggregate Principal” means, on any date of determination, the sum of (i) the aggregate outstanding principal amount of all Advances (other than in respect of Loans relating to Letters of Credit) outstanding on such date and (ii) the Letter of Credit Liability on such date.
“Aggregate Reduction” has the meaning provided in Section 1.3.
“Agreement” means this Fifth Amended and Restated Credit and Security Agreement, as it may be amended or modified and in effect from time to time.
“Alternate Base Rate” means for any day, the rate per annum equal to the higher as of such day of (i) the Prime Rate, or (ii) one-half of one percent (0.50%) above the Federal Funds Rate. For purposes of determining the Alternate Base Rate for any day, changes in the Prime Rate or the Federal Funds Rate shall be effective on the date of each such change. In addition, the Alternate Base Rate shall be rounded, if necessary, to the next higher 1/16 of 1%.
“Alternate Base Rate Loan” means a Loan which bears interest at the Alternate Base Rate or the Default Rate.
“Alternate Base Rate Option” means the option of the Borrower to have Loans bear Interest at a fluctuating rate per annum equal to the Alternate Base Rate, such interest
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rate to change automatically from time to time effective as of the effective date of each change in the Alternate Base Rate.
“Anti-Corruption Laws” means (a) the United StatesU.S. Foreign Corrupt Practices Act of 1977, as amended,; (b) the UKU.K. Bribery Act 2010, as amended; and (c) any other similarapplicable Law relating to anti-bribery or anti-corruption Laws or regulations administered or enforced in any jurisdiction in which Smithfield or any of its Subsidiaries conductany Borrower-Related Party is located or doing business.
“Anti-Terrorism Law” means any Law in force or hereinafter enacted related to terrorism, money laundering, or economic sanctions, including the Bank Secrecy Act, 31 U.S.C. § 5311 et seq., the USA PATRIOT Act, any such Law administered or enforced by the Netherlands, the International Emergency Economic Powers Act, 50 U.S.C. 1701, et seq., the Trading with the Enemy Act, 50 U.S.C. App. 1, et seq., 18 U.S.C. § 2332d, and 18 U.S.C. § 2339B.
“Approved Currency” means Dollars, Australian Dollars, Canadian Dollars and Yen, and any other currency that is the lawful currency of an Approved Obligor Jurisdiction that is approved in writing by the Administrative Agent.
“Approved Obligor Jurisdiction” means any country which is a member of the Organization for Economic Cooperation and Development, excluding (a) the province of Quebec in the country of Canada or, (b) any country whose Governmental Authority (i) shall havethat has (i) admitted in writing its inability to pay its debts as the same become due, (ii) shall have declared a moratorium on the payment of its debts or the debts of any Governmental Authority of such country or (iii) ceased to be a member of the International Monetary Fund or ceased to be eligible to use the resources of the International Monetary Fund or (c) any country with respect to which the U.S. shall have imposed economic sanctionsSanctioned Jurisdiction.
“ARM Dilution Reserve” means, on any day, an amount equal to: (a) the aggregate Outstanding Balance of Monetized Receivables at the close of business on such day multiplied by (b) the Minimum Dilution Reserve Percentage.
“Article 7 Transparency and Reporting Requirements” means the reporting requirements set out in Article 7(1) of the EU Securitization Regulation, together with any relevant technical standards adopted by the European Commission in relation thereto, any relevant regulations and technical standards applicable in relation thereto pursuant to any transitional arrangements made pursuant to the EU Securitization Regulation, and, in each case relevant guidance published in relation thereto as may be effective from time to time.
“Assignment Agreement” has the meaning provided in Section 12.1(b).
“Australian Dollars” and the sign “A$” means the lawful currency of Australia.
“Authorized Officer” means, with respect to any Person, its president, corporate controller, treasurer, chief financial officer or any other officer of such Person, or any other individual having express authority to act on behalf of such Person as designated by the board of
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directors or other managing authority or officer of such Person, as identified to the Administrative Agent in an incumbency certificate that has been certified by such
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Person’s secretary or assistant secretary or the secretary or assistant secretary of the managing member of such Person.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
“Bankruptcy Code” means the Bankruptcy Code of 1978, as amended and in effect from time to time (11 U.S.C. § 101 et seq.) and any successor statute thereto.
“Basel III” means (a) the agreements on capital requirements, a leverage ratio and liquidity standards contained in “Basel III: A global regulatory framework for more resilient banks and banking systems”, “Basel III: International framework for liquidity risk measurement, standards and monitoring” and “Guidance for national authorities operating the countercyclical capital buffer” published by the Basel Committee on Banking Supervision in December 2010, (b) the rules for global systemically important banks contained in “Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text” published by the Committee on Banking Supervision in November 2011, and (c) any further guidance or standards published by the Basel Committee on Banking Supervision relating to “Basel III”.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership as required by the Beneficial Ownership Rule.
“Beneficial Ownership Rule” means 31 C.F.R. § 1010.230.
“Blocked Property” means any property: (a) owned, directly or indirectly, by a Sanctioned Person; (b) due to or from a Sanctioned Person; (c) in which a Sanctioned Person otherwise holds any interest; (d) located in a Sanctioned Jurisdiction; or (e) that otherwise could cause any actual or possible violation by any Agent, Conduit or Committed Lender of any applicable Anti-Terrorism Laws if any Agent, Conduit or Committed Lender were to obtain an encumbrance on, lien on, pledge of, or security interest in such property, or provide services in consideration of such property.
“Borrower” has the meaning provided in the preamble to this Agreement.
“Borrower-Related Party” means each of the Borrower, the Servicer, the Performance Guarantor, Smithfield, the Originators and any other Affiliate of the Smithfield from time to time party to any Transaction Document.
“Borrowing Base” means, on any date of determination, the Accrual Adjusted Net Pool Balance as of the last day of the period covered by the most recent Pool Report, minus the Required Reserve as of the last day of the period covered by the most recent Pool
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Report, and minus Deemed Collections that have occurred since the most recent Cut-Off Date to the extent that such Deemed Collections exceed the Dilution Reserve.
“Borrowing Date” means a Business Day on which an Advance is made hereunder.
“Borrowing Limit” means, at any time of determination, the lesser of (x) the Aggregate Commitment less the Letter of Credit Liability at such time and (y) the Borrowing Base at such time.
“Borrowing Notice” has the meaning provided in Section 1.2.
“Borrowing Tranche” means specified portions of Loans outstanding as follows: (a) any Loans (or portions thereof) for which the applicable Interest Rate is determined by reference to the Term SOFR Rate and which have the same Interest Period shall constitute one Borrowing Tranche, (b) all Loans (or portions thereof) for which the applicable Interest Rate is determined by reference to Daily 1M SOFR shall constitute one Borrowing Tranche, (c) all Loans (or portions thereof) for which Interest is determined by reference to the Alternate Base Rate shall constitute one Borrowing Tranche and (d) all Loans (or portions thereof) for which Interest is determined by reference to the Adjusted Federal Funds Rate shall constitute one Borrowing Tranche.
“Broken Funding Costs” means for any CP Rate Loan or Term SOFR Rate Loan which: (a) in the case of a CP Rate Loan, has its principal reduced without compliance by Borrower with the notice requirements hereunder, (b) in the case of a CP Rate Loan or a Term SOFR Rate Loan, does not become subject to an Aggregate Reduction following the delivery of any Reduction Notice, (c) in the case of a CP Rate Loan, is assigned under the applicable Liquidity Agreement or (d) in the case of a Term SOFR Rate Loan, is terminated or reduced prior to the last day of its Interest Period, whether voluntarily or due to the occurrence of the Commitment Termination Date, an amount equal to the excess, if any, of (i) the CP Costs or Interest (as applicable) that would have accrued during the remainder of the Interest Periods or the tranche periods for Commercial Paper determined by the Administrative Agent to relate to such Loan (as applicable) subsequent to the date of such reduction, assignment or termination (or in respect of clause (b) above, the date such Aggregate Reduction was designated to occur pursuant to the Reduction Notice) of the principal of such Loan if such reduction, assignment or termination had not occurred or such Reduction Notice had not been delivered, over (ii) the sum of (x) to the extent all or a portion of such principal is allocated to another Loan, the amount of CP Costs or Interest actually accrued during the remainder of such period on such principal for the new Loan, and (y) to the extent such principal is not allocated to another Loan, the income, if any, actually received during the remainder of such period by the holder of such Loan from investing the portion of such principal not so allocated. In the event that the amount referred to in clause (ii) exceeds the amount referred to in clause (i), the relevant Lender or Lenders agree to pay to Borrower the amount of such excess.
“Business Day” means any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed, or are in fact closed, for business in Pittsburgh, Pennsylvania (or, if otherwise, the Lending Office of the
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Administrative Agent); provided that, when used in connection with an amount that bears interest at a rate based on SOFR or any direct or indirect calculation or determination of SOFR, the term “Business Day” means any such day that is also a U.S. Government Securities Business Day.
“Calculation Period” means each fiscal calendar month of Smithfield or portion thereof which elapses during the term of the Agreement. The first Calculation Period shall commence on the date of the initial Advance hereunder and the final Calculation Period shall terminate on the Final Payout Date.
“Canadian Dollars” and the sign “C$” means the lawful currency of Canada.
“Change of Control” has the meaning provided in the Receivables Sale Agreement.
“Closing Date” means June 9, 2011.
“Co-Agent” means with respect to each Lender, the agent appointed to act on behalf of such Lender in the applicable Lender Supplement.
“Collateral” has the meaning provided in Section 13.1.
“Collection Account” means collectively, (i) each account listed on Part A of Schedule D to this Agreement (as such schedule may be modified from time to time in connection with the closing or opening of any Collection Account in accordance with the terms hereof) (in each case, on and after the Post-Closing Date, in the name of the Borrower) and maintained at a bank or other financial institution acting as a Collection Bank pursuant to a Collection Account Agreement for the purpose of receiving Collections, and (ii) any FX Collection Account.
“Collection Account Agreement” means each agreement among the Borrower (or, on or prior to the Post-Closing Date, Smithfield Direct, LLC, Smithfield Specialty Foods Group, LLC and Smithfield Support), the Servicer (if applicable), the Administrative Agent and a Collection Bank, governing the terms of one or more Collection Accounts (other than any FX Collection Account) that provides the Administrative Agent with “control” (within the meaning of the UCC) over such Collection Account(s).
“Collection Bank” means any of the banks or other financial institutions holding one or more Collection Accounts.
“Collection Notice” means a notice from the Administrative Agent to a Collection Bank in the form attached to each Collection Account Agreement.
“Collections” means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable, including all Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Security with respect to such Receivable; provided, however, that the term “Collections” shall not include any payment made for the account of the Servicer, a third-party service provider or sub-contractor whose services were not included in the amount invoiced for the applicable
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Receivable; provided, further, that the term “Collections” shall not include Monetized Receivable Collections.
“Commencement Date” has the meaning provided in the Receivables Sale Agreement.
“Commercial Paper” means promissory notes of any Conduit issued by such Conduit, in each case, in the commercial paper market.
“Commitment” means, for each Committed Lender or L/C Participant, the commitment of such Committed Lender to make Loans hereunder or such L/C Participant to pay hereunder on account of all drawings under all Letters of Credit, on a combined basis, in an aggregate principal amount at any one time outstanding not to exceed the amount set forth opposite such Committed Lender’s or L/C Participant’s name on Schedule A to this Agreement.
“Commitment Termination Date” means the earliest to occur of (i) the day on which any of the conditions precedent set forth in Section 6.2 (other than Section 6.2(e)(ii)(B)) are not satisfied, (ii) the Business Day immediately prior to the occurrence of an Event of Default described in Section 9.1(j), (iii) the Business Day specified in a written notice from the Administrative Agent following the occurrence of any other Event of Default, and (iv) the date which is ten (10) days after the Administrative Agent’s receipt of written notice from the Borrower that it wishes to terminate the facility evidenced by this Agreement.
“Committed Lenders” means (i) each Unaffiliated Committed Lender and (ii) with respect to each Lender Group without an Unaffiliated Committed Lender, the banks or other financial institutions and their respective successors and permitted assigns under each Lender Group’s Liquidity Agreement.
“Concentration Reserve Percentage” means, at any time, the largest of: (a) the sum of the four (4) largest Obligor Percentages of the Group D Obligors, (b) the sum of the two (2) largest Obligor Percentages of the Group C Obligors, (c) the largest Obligor Percentage of the Group B Obligors and (d) the largest Obligor Percentage of the Group A Obligors.
“Conduit” means any Lender that is designated as the Conduit in the Lender Supplement or in the Assignment Agreement pursuant to which it became a party to this Agreement, and any assignee of such Lender to the extent of the portion of such Percentage assumed by such assignee pursuant to its respective Assignment Agreement.
“Conforming Changes” means, with respect to Daily 1M SOFR, the Term SOFR Rate or any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “Interest Accrual Period,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest and other technical, administrative or operational matters) that the Administrative Agent decides in consultation with the Borrower may be appropriate to reflect the adoption and
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implementation of Daily 1M SOFR, the Term SOFR Rate or such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of Daily 1M SOFR, the Term SOFR Rate or the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides in consultation with the Borrower is reasonably necessary in connection with the administration of this Agreement and the other Transaction Documents).
“Consolidated Capitalization” has the meaning provided in the Parent Credit Agreement.
“Consolidated EBITDA” has the meaning provided in the Parent Credit Agreement.
“Consolidated Funded Debt” has the meaning provided in the Parent Credit Agreement.
“Consolidated Interest Expense” has the meaning provided in the Parent Credit Agreement.
“Contingent Obligation” of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, operating agreement, take-or-pay contract or application for a letter of credit.
“Contract” has the meaning provided in the Receivables Sale Agreement.
“Covered Entity” means (a) each of Smithfield, the Borrower, the Originators, the Servicer, the Performance Guarantor and their respective Subsidiaries and (b) each Person that, directly or indirectly, controls a Person described in clause (a) above. For purposes of this definition, control of a Person means the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.
“CP Costs” means:
(a) for a Pool Funded Conduit, for each day, the sum of, without duplication, (i) discount or interest accrued on such Conduit’s Pooled Commercial Paper at the applicable CP Rate on such day, plus (ii) any and all accrued commissions in respect of its placement agents and its Commercial Paper dealers, and issuing and paying agent fees
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incurred, in respect of such Conduit’s Pooled Commercial Paper for such day, plus (iii) other costs associated with funding small or odd-lot amounts with respect to all receivable purchase or financing facilities which are funded by such Conduit’s Pooled Commercial Paper for such day, minus (iv) any accrual of income net of expenses received by or on behalf of such Conduit on such day from investment of collections received under all receivable purchase or financing facilities funded substantially with such Conduit’s Pooled Commercial Paper, minus (v) any payment received on such day net of expenses in respect of such Conduit’s Broken Funding Costs related to the prepayment of any investment of such Conduit pursuant to the terms of any receivable purchase or financing facilities funded substantially with its Pooled Commercial Paper. In addition to the foregoing costs, if Borrower (or the Servicer, on Borrower’s behalf) shall request any Advance during any period of time determined by a Co-Agent in its sole discretion to result in incrementally higher CP Costs applicable to its Conduit’s Loan included in such Advance, the principal associated with any such Loan of such Conduit shall, during such period, be deemed to be funded by such Conduit in a special pool (which may include capital associated with other receivable purchase or financing facilities) for purposes of determining such additional CP Costs applicable only to such special pool and charged each day during such period against such principal; and
(b) for a Conduit that is not a Pool Funded Conduit, for each day, the sum of (x) discount or interest accrued on its Related Commercial Paper at the applicable CP Rate on such day, plus (y) any and all accrued commissions and fees of placement agents, dealers and issuing and paying agents incurred in respect of such Related Commercial Paper for such day, plus (z) other costs associated with funding small or odd-lot amounts with respect to all receivable purchase facilities which are funded by Pooled Commercial Paper for such day.
“CP Rate” means, for any CP Tranche Period of any Conduit,
(a) for any CP Rate Loans funded by a Pool Funded Conduit, a rate per annum that, when applied to the outstanding principal balance of such CP Rate Loans for the actual number of days elapsed in such CP Tranche Period, would result in an amount of accrued interest equivalent to such Conduit’s CP Costs for such CP Tranche Period; and
(b) for any CP Rate Loans funded by a Conduit that is not a Pool Funded Conduit, a rate per annum equal to the sum of (i) the rate or, if more than one rate, the weighted average of the rates, determined by converting to an interest-bearing equivalent rate per annum the discount rate (or rates) at which such Conduit’s Related Commercial Paper outstanding during such CP Tranche Period has been or may be sold by any placement agent or commercial paper dealer selected by such Conduit’s Co-Agent, plus (ii) the commissions and charges charged by such placement agent or commercial paper dealer with respect to such Related Commercial Paper, expressed as a percentage of the face amount thereof and converted to an interest-bearing equivalent rate per annum.
“CP Rate Loan” means, for each Loan of a Conduit prior to the time, if any, when (i) it is refinanced with a Liquidity Funding pursuant to the Liquidity Agreement, or (ii)
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the occurrence of an Event of Default and the commencement of the accrual of Interest thereon at the Default Rate.
“CP Tranche Period” means with respect to any Loan of any Conduit that is not funded with Pooled Commercial Paper, a period of days from 1 Business Day up to the number of days (not to exceed 60 days) necessary to extend such period to include the next Settlement Date, commencing on a Business Day, which period is either (i) requested by Borrower and agreed to by such Conduit or such Conduit’s Co-Agent or (ii) in the absence of such request and agreement, selected by such Conduit or such Conduit’s Co-Agent (it being understood that the goal shall be to select a period which ends on or as close to the next Settlement Date as possible).
“Credit and Collection Policy” has the meaning provided in the Receivables Sale Agreement.
“Cut-Off Date” means the last day of a Calculation Period.
“Daily 1M SOFR” means, for any day, the rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, at the Administrative Agent’s discretion, to the nearest 1/100th of 1%) (a) the Term SOFR Reference Rate for such day for a one (1) month period, as published by the Term SOFR Administrator, by (b) a number equal to 1.00 minus the SOFR Reserve Percentage; provided, that if Daily 1M SOFR, determined as provided above, would be less than the SOFR Floor, then Daily 1M SOFR shall be deemed to be the SOFR Floor. Such rate of interest will be adjusted automatically as of each Business Day based on changes in Daily 1M SOFR without notice to the Borrower.
“Daily 1M SOFR Loan” means a Loan which bears interest at Daily 1M SOFR.
“Daily 1M SOFR Option” means the option of the Borrower to have Loans bear Interest at a fluctuating rate per annum equal to Daily 1M SOFR, such interest rate to change automatically from time to time effective as of the effective date of each change in Daily 1M SOFR.
“Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded upwards, at the Administrative Agent’s discretion, to the nearest 1/100th of 1%) (A) SOFR for the day (the “SOFR Determination Date”) that is two (2) Business Days prior to (i) such SOFR Rate Day if such SOFR Rate Day is a Business Day or (ii) the Business Day immediately preceding such SOFR Rate Day if such SOFR Rate Day is not a Business Day, by (B) a number equal to 1.00 minus the SOFR Reserve Percentage, in each case, as such SOFR is published by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate) on the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source identified by the Federal Reserve Bank of New York or its successor administrator for the secured overnight financing rate from time to time. If Daily Simple SOFR as determined above would be less than the SOFR Floor, then Daily Simple SOFR
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shall be deemed to be the SOFR Floor. If SOFR for any SOFR Determination Date has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (Pittsburgh, Pennsylvania time) on the second Business Day immediately following such SOFR Determination Date, then SOFR for such SOFR Determination Date will be SOFR for the first Business Day preceding such SOFR Determination Date for which SOFR was published in accordance with the definition of “SOFR”; provided that SOFR determined pursuant to this sentence shall be used for purposes of calculating Daily Simple SOFR for no more than 3 consecutive SOFR Rate Days. If and when Daily Simple SOFR as determined above changes, any applicable rate of interest based on Daily Simple SOFR will change automatically without notice to the Borrower, effective on the date of any such change.
“Days’ Sales Outstanding” means, as of any day, an amount equal to the product of (x) 91, multiplied by (y) the amount obtained by dividing (i) the aggregate outstanding balance of Receivables as of the most recent Cut-Off Date, by (ii) the aggregate amount of Receivables created during the three (3) Calculation Periods including and immediately preceding such Cut-Off Date.
“Debt” has the meaning provided in the Receivables Sale Agreement.
“Deemed Collections” means Collections deemed received by Borrower under Section 1.4(a).
“Default Horizon Ratio” means, as of any Cut-Off Date, the ratio (expressed as a decimal) computed by dividing (i) the aggregate Outstanding Balance of Receivables created during the five (5) Calculation Periods ending on such Cut-Off Date, by (ii) the Net Pool Balance as of such Cut-Off Date.
“Default Rate” means a rate per annum equal to the sum of (i) the Prime Rate plus (ii) 2.00%, changing when and as the Prime Rate changes; provided, however, that such Default Rate shall not at any time exceed the maximum rate permitted by applicable law.
“Default Ratio” means, as of any Cut-Off Date, the ratio (expressed as a percentage) computed by dividing (x) the total amount of Receivables which became Defaulted Receivables during the Calculation Period that includes such Cut-Off Date, by (y) the aggregate Outstanding Balance of Receivables created during the Calculation Period occurring four (4) months prior to the Calculation Period ending on such Cut-Off Date.
“Defaulted Receivable” means a Receivable: (i) as to which the Obligor thereof has suffered an Event of Bankruptcy; (ii) which, consistent with the Credit and Collection Policy, would be written off Borrower’s books as uncollectible; or (iii) as to which any payment, or part thereof, remains unpaid for 91 days or more from the date such payment was due and payable.
“Defaulting Lender” means (a) any Committed Lender that (i) has failed to perform any of its funding obligations hereunder within one Business Day of the date
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required to be funded by it hereunder (other than failures to fund solely as a result of (A) a bona fide dispute as to whether the conditions to borrowing were satisfied on the relevant Advance date, but only for such time as such Committed Lender is continuing to engage in good faith discussions regarding the determination or resolution of such dispute, (B) a failure to disburse due to an administrative error or omission by such Committed Lender, or (C) a failure to disburse due to force majeure, computer malfunctions, interruption or communication facilities, labor difficulties or other causes, in each case to the extent beyond such Committed Lender’s reasonable control), (ii) has notified the Borrower or the Administrative Agent that it does not intend to comply with its funding obligations under this Agreement, or (iii) has failed to confirm in writing that it intends to comply with its funding obligation under this Agreement, by the date requested by the Administrative Agent in writing following the Administrative Agent’s determination that it has a reasonable basis to believe that such Committed Lender will not comply with its funding obligations under this Agreement, (b) any Committed Lender that is (or that has a direct or indirect parent company that is) the subject of an Event of Bankruptcy a Bail-In Action or (c) any assignee of a Defaulting Lender under applicable law as contemplated in the last sentence of Section 12.1(c)(v). Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (c) above, and of the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Servicer, the Borrower and each other Lender promptly following such determination.
“Defaulting Lender Excess” means, with respect to any Defaulting Lender at any time, the excess, if any, at such time of (i) an amount equal to such Defaulting Lender’s Percentage multiplied by the Aggregate Principal (calculated as if any other Defaulting Lenders had funded all of their respective Loans) over (ii) the aggregate principal amount of all Loans made by such Defaulting Lender.
“Defaulting Lender Group” means any Lender Group that includes a Defaulting Lender.
“Delinquency Ratio” means, at any time, a percentage equal to (i) the aggregate Outstanding Balance of all Receivables that were Delinquent Receivables at such time divided by (ii) the aggregate Outstanding Balance of all Receivables at such time.
“Delinquent Receivable” means a Receivable, (i) as to which any payment, or part thereof, remains unpaid for 91 days or more from the date such payment was due and payable and (ii) which is not a Defaulted Receivable.
“Dilution” means the amount of any reduction or cancellation of the Outstanding Balance of a Receivable as described in Section 1.4(a).
“Dilution Horizon Ratio” means, as of any Cut-Off Date, a ratio (expressed as a decimal), computed by dividing (i) the aggregate sales generated by the Originators during
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the Calculation Period ending on such Cut-Off Date, by (ii) the Net Pool Balance as of such Cut-Off Date.
“Dilution Ratio” means, as of any Cut-Off Date, a ratio (expressed as a percentage), computed by dividing (i) the total amount of decreases in Outstanding Balances due to Dilutions (other than cash discounts), which included returns, adjustments, rebates, discounts or retropricing during the Calculation Period ending on such Cut-Off Date, by (ii) the aggregate Outstanding Balance of Receivables created during the Calculation Period ending on such Cut-Off Date.
“Dilution Reserve” means, for any Calculation Period, the product (expressed as a percentage) of:
(a) the sum of (i) 2.00 times the Adjusted Dilution Ratio as of the immediately preceding Cut-Off Date, plus (ii) the Dilution Volatility Component as of the immediately preceding Cut-Off Date, times
(b) the Dilution Horizon Ratio as of the immediately preceding Cut-Off Date.
“Dilution Volatility Component” means the product (expressed as a percentage) of (i) the difference between (a) the highest Dilution Ratio over the past 12 Calculation Periods and (b) the Adjusted Dilution Ratio, and (ii) a fraction, the numerator of which is equal to the amount calculated in (i)(a) of this definition and the denominator of which is equal to the amount calculated in (i)(b) of this definition.
“Dollars” and the sign “$” means lawful currency of the United States of America.
“Drawing Date” has the meaning specified in Section 1.10(b).
“EBA” means European Banking Authority (including any successor or replacement organization thereto).
“EEA Financial Institution” means (x) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority; (y) any entity established in an EEA Member Country which is a parent of an institution described in clause (x) of this definition, or (x) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (x) or (y) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
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“Effective Date” has the meaning provided in the Receivables Sale Agreement.
“EIOPA” means The European Insurance and Occupational Pensions Authority (including any successor or replacement organization thereto).
“Eligible Assignee” means a commercial bank having a combined capital and surplus of at least $250,000,000 with a rating of its (or its parent holding company’s) short-term securities equal to or higher than (i) A-1 by S&P and (ii) P-1 by Moody’s.
“Eligible Government Receivable” means an Eligible Receivable that is a Government Receivable.
“Eligible Receivable” means, at any time, a Receivable:
(a) the Obligor of which (i) is not an Affiliate of any of the parties hereto, (ii) is not an individual, (iii) is not a government or a governmental subdivision or agency if the addition of such Receivable shall cause the Government Receivable Excess to be greater than zero, (iv) is not insolvent or has not entered into any insolvency proceedings and (v) is a resident of an Approved Obligor Jurisdiction,
(b) (i) which by its terms is due and payable not greater than 120 days from the original invoice date thereof and (ii) which is not a Defaulted Receivable,
(c) which is not owing from an Obligor (together with any affiliated Obligors) as to which more than 50% of the aggregate Outstanding Balance of all Receivables owing from such Obligor (together with any affiliated Obligors) are Defaulted Receivables,
(d) which is an “account” within the meaning of Article 9 of the UCC of all applicable jurisdictions,
(e) which is either (i) denominated and payable only in Dollars or an Approved Currency (provided, that to the extent it is denominated and payable in an Approved Currency (other than Dollars) the Collections related thereto are promptly converted to Dollars, and the Obligor with respect to which has been instructed to remit Collections in respect thereof directly to a Lock-Box or Collection Account in the United States of America or (ii) denominated and payable only in an Approved Currency, and the Obligor with respect to which has been instructed to remit Collections in respect thereof directly to a Lock-Box or Collection Account,
(f) which arises under a Contract which, together with such Receivable, is in full force and effect and constitutes the legal, valid and binding obligation of the related Obligor enforceable against such Obligor in accordance with its terms subject to no offset, counterclaim or other defense,
(g) which arises under a Contract which (A) (i) does not require the Obligor under such Contract to consent to the transfer, sale, pledge or assignment of the rights and duties of the applicable Originator or any of its assignees under such Contract or (ii) for which consent to the transfer, sale, pledge or assignment of the rights and duties of the
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applicable Originator or any of its assignees under such Contract has been obtained from the Obligor under such Contract and (B) does not contain a confidentiality provision that purports to restrict the ability of any Lender to exercise its rights under this Agreement, including, without limitation, its right to review the Contract,
(h) which arises under a Contract that contains an obligation to pay a specified sum of money, contingent only upon the sale of goods or the provision of services by the applicable Originator,
(i) which, together with the Contract related thereto, does not contravene any law, rule or regulation applicable thereto (including, without limitation, any law, rule and regulation relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy) and with respect to which no part of the Contract related thereto is in violation of any such law, rule or regulation,
(j) which satisfies all applicable requirements of the Credit and Collection Policy,
(k) which was generated in the ordinary course of the applicable Originator’s business,
(l) which (i) arises solely from the sale of goods or the provision of services to the related Obligor by the applicable Originator, and not by any other Person (in whole or in part) and (ii) does not constitute sales tax, finance charges, service charges or similar charges (other than GST or VAT) (it being understood that only the portion of such Receivable so constituted shall not be eligible),
(m) which is not subject to any dispute, counterclaim, right of rescission, set-off, counterclaim or any other defense (including defenses arising out of violations of usury laws) of the applicable Obligor against the applicable Originator or any other Adverse Claim, and the Obligor thereon holds no right as against such Originator to cause such Originator to repurchase the goods or merchandise the sale of which shall have given rise to such Receivable (except with respect to sale discounts effected pursuant to the Contract, or defective goods returned in accordance with the terms of the Contract),
(n) as to which the applicable Originator has satisfied and fully performed all obligations on its part with respect to such Receivable required to be fulfilled by it, and no further action is required to be performed by any Person with respect thereto other than payment thereon by the applicable Obligor,
(o) as to which each of the representations and warranties contained in Sections 5.1(i), (j), (r), (s), (t) and (u) is true and correct,
(p) all right, title and interest to and in which has been validly transferred by the applicable Originator directly to Borrower under and in accordance with the Receivables Sale Agreement, and Borrower has good and marketable title thereto free and clear of any Adverse Claim,
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(q) which is not originated on a “billed but not shipped,” “bill and hold,” “guaranteed sale,” “sale and return,” “sale on approval,” “progress billed,” “consignment” or similar basis,
(r) is an “eligible asset” under and as defined in Rule 3a-7 under the Investment Company Act, and
(s) is not a Permitted Monetized Receivable.
provided, that, so long as the long term unsecured senior debt ratings assigned to Smithfield by S&P and Moody’s are at least “BB-” and “Ba3”, respectively, a Receivable that relates to In-Transit Collateral shall be deemed to satisfy any clause of this definition of “Eligible Receivable” to the extent that such clause is reasonably expected to be satisfied at the time such In-Transit Collateral is delivered to the related Obligor.
“Embargoed Property” means any property; (a) 50% or more beneficially owned, directly or indirectly, by a Sanctioned Person; (b) that is due to or from a Sanctioned Person; (c) in which a Sanctioned Person otherwise holds any property interest; (d) that is located in a Sanctioned Jurisdiction; or (e) that otherwise would cause any actual violation by any Agent, Conduit or Committed Lender of any applicable Anti-Terrorism Law if any Agent, Conduit or Committed Lender were to obtain an encumbrance on, lien on, pledge of, or security interest in such property, or provide services in consideration of such property.
“Equity Interests” has the meaning provided in the Receivables Sale Agreement.
“ERISA” has the meaning provided in the Receivables Sale Agreement.
“ERISA Affiliate” has the meaning provided in the Receivables Sale Agreement.
“ERISA Event” means (a) any Reportable Event; (b) the existence with respect to any Plan of a non-exempt Prohibited Transaction; (c) any failure by any Plan to satisfy the minimum funding standards (within the meaning of Sections 412 or 430 of the Tax Code or Section 302 of ERISA) applicable to such Plan, whether or not waived; (d) the filing pursuant to Section 412 of the Tax Code or Section 303 of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, the failure to make by its due date a required installment under Section 430(j) of the Tax Code with respect to any Plan, or the failure by any Loan Party or any of its ERISA Affiliates to make any required contribution to a Multiemployer Plan; (e) the incurrence by any Loan Party or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan, including but not limited to the imposition of any lien in favor of the PBGC or any Plan; (f) a determination that any Plan is, or is expected to be, in "at risk" status (within the meaning of Section 430 of the Tax Code or Title IV of ERISA); (g) the receipt by any Loan Party or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (h) the incurrence by any Loan Party or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (i) the receipt by any Loan Party or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any Loan Party or any ERISA Affiliate of any
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notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent (within the meaning of Section 4245 of ERISA), Reorganization, or in endangered or critical status (within the meaning of Section 432 of the Tax Code or Section 305 or Title IV of ERISA).
“ESMA” means The European Securities and Markets Authority (including any successor or replacement organization thereto).
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“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“EU Securitization Regulation” means Regulation (EU) 2017/2402.
“EU Securitization Rules” means: (a) the EU Securitization Regulation; together with (b) any relevant technical standards adopted by the European Commission in relation thereto, any relevant regulations and technical standards applicable in relation thereto pursuant to any transitional arrangements made pursuant to the EU Securitization Regulation, and, in each case relevant guidance published in relation thereto by the European Supervisory Authorities as may be effective from time to time.
“European Supervisory Authorities” means, together, the EBA, ESMA and EIOPA.
“Event of Bankruptcy” shall be deemed to have occurred with respect to a Person if either:
(a) a case or other proceeding shall be commenced, without the application or consent of such Person, in any court, seeking the liquidation, reorganization, debt arrangement, dissolution, winding up, or composition or readjustment of debts of such Person, the appointment of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the like for such Person or all or substantially all of its assets, or any similar action with respect to such Person under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or adjustment of debts, and such case or proceeding shall continue undismissed, or unstayed and in effect, for a period of 60 consecutive days; or an order for relief in respect of such Person shall be entered in an involuntary case under the federal bankruptcy laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding under any applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or other similar law now or hereafter in effect, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee (other than a trustee under a deed of trust, indenture or similar instrument), custodian, sequestrator (or other similar official) for, such Person or for any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall be adjudicated insolvent, or admit in writing its inability to pay its debts generally as they become due, or, if a corporation or similar entity, its board of directors shall vote to implement any of the foregoing.
“Event of Default” has the meaning specified in Article IX.
“Excluded Originator” has the meaning provided in the Receivables Sale Agreement.
“Excluded Receivable” has the meaning provided in the Receivables Sale Agreement.
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“Excluded Subsidiary” has the meaning provided in the Receivables Sale Agreement.
“Excluded Taxes” has the meaning provided in Section 10.1(c).
“Executive Officer” has the meaning provided in the Receivables Sale Agreement.
“Executive Order” has the meaning provided in Section 5.1(x).
“Existing Letter of Credit” means each of the letters of credit letter identified on Exhibit IX.
“Extended Payment Term Excess” means, as of any date of determination, the amount, if any, by which the aggregate Outstanding Balance of all Eligible Receivables that by their terms are due and payable more than 30 days but not greater than 120 days from the original invoice date thereof exceeds 7.5% of the aggregate Outstanding Balance of all Eligible Receivables.
“Facility Termination Date” means the earliest to occur of (i) the Scheduled Termination Date and (ii) the Commitment Termination Date.
“Federal Funds Rate” means, for any period, a fluctuating interest rate per annum for each day during such period equal to (a) the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the preceding Business Day) by the Federal Reserve Bank of New York in the Composite Closing Quotations for U.S. Government Securities; or (b) if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 11:30 a.m. (New York City time) for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.
“Fee Letter” means that certain Amended and Restated Lender Fee Letter, dated as of DecemberNovember 22, 20222024, among Performance Guarantor, the Borrower, the Letter of Credit Issuers, the Structuring Agent and the Agents, as it may be amended or modified and in effect from time to time.
“Final Payout Date” means the date on which (i) all Obligations have been paid in full and the Aggregate Commitment has been terminated and (ii) all other amounts owing by the Borrower to the Receivables Agent and the Receivables Buyers under the Monetization Documents have been paid in full.
“Finance Charges” means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Obligor pursuant to such Contract.
“Financial Officer” has the meaning provided in the Receivables Sale Agreement.
“First Amendment Effective Date” means November 22, 2024.
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“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than that in which Borrower is located. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“Foreign Receivable” means any Eligible Receivable, the Obligor of which is organized under the laws of, or has its chief executive office in, any jurisdiction other than the United States (or any political subdivision thereof).
“Foreign Receivable Excess” means (i) prior to a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Foreign Receivables that constitute Eligible Receivables exceeds 20.0% of the aggregate Outstanding Balance of all Eligible Receivables or (ii) after a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Foreign Receivables that constitute Eligible Receivables exceeds any lower percentage determined by the Administrative Agent in its sole discretion (which percentage may be 0.0%) of the Outstanding Balance of all Eligible Receivables.
“Funding Agreement” means (i) this Agreement, (ii) the Liquidity Agreement and (iii) any other agreement or instrument executed by any Funding Source with or for the benefit of a Conduit.
“Funding Source” means (i) each Committed Lender and (ii) any insurance company, bank or other funding entity providing liquidity, credit enhancement or back-up purchase support or facilities to a Conduit.
“FX Collection Account” means each account listed on Part B of Schedule D to this Agreement (as such schedule may be modified from time to time in connection with the closing or opening of any FX Collection Account in accordance with the terms hereof) (in each case, in the name of the Borrower or Smithfield Support) and maintained at a bank or other financial institution acting as a Collection Bank and in which any Collections denominated in Canadian Dollars, Yen, or Australian Dollars are collected or deposited.
“FX Excess” means (i) prior to a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Eligible Receivables that are denominated in a currency other than Dollars exceeds 2.5% of the aggregate Outstanding Balance of all Eligible Receivables or (ii) after a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Eligible Receivables that are denominated in a currency other than Dollars exceeds any lower percentage determined by the Administrative Agent in its sole discretion (which percentage may be 0.0%) of the Outstanding Balance of all Eligible Receivables.
“GAAP” means generally accepted accounting principles in effect in the United States of America as of the date of this Agreement.
“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any
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agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
“Government Receivable” means any Receivable, the Obligor of which is a government or governmental subdivision or agency of the United States (or any political subdivision thereof).
“Government Receivable Excess” means (i) prior to a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Eligible Government Receivables exceeds 5.0% of the Outstanding Balance of all Eligible Receivables or (ii) after a Ratings Trigger Event, the amount, if any, by which the aggregate Outstanding Balance of all Eligible Government Receivables exceeds any lower percentage determined by the Administrative Agent in its sole discretion (which percentage may be 0.0%) of the Outstanding Balance of all Eligible Receivables.
“Group A Obligor” means any Obligor with an Obligor Concentration Limit of 20.00% as determined according to the chart set forth in the definition thereof.
“Group B Obligor” means any Obligor with an Obligor Concentration Limit of 15.00% as determined according to the chart set forth in the definition thereof.
“Group C Obligor” means any Obligor with an Obligor Concentration Limit of 10.00% as determined according to the chart set forth in the definition thereof.
“Group D Obligor” means any Obligor with an Obligor Concentration Limit of 5.00% as determined according to the chart set forth in the definition thereof.
“GST” means all goods and services tax payable under Part IX of the Excise Tax Act (Canada) and harmonized sales tax in any participating province payable under the Excise Tax Act (Canada), as such statutes may be amended, supplemented or replaced from time to time.
“In-Transit Collateral” means, as of any date of determination, any inventory of an Originator that (i) is in the process of being transported by such Originator to an Obligor pursuant to a Contract that is then expected to be delivered within five (5) or fewer calendar days, (ii) is covered by insurance in accordance with the applicable Originator’s normal business practices, and (iii) upon its receipt and acceptance by such Obligor, will give rise to an amount payable by such Obligor to such Originator under such Contract.
“In-Transit Receivable” means any Eligible Receivable relating to In-Transit Collateral. For the avoidance of doubt, an In-Transit Receivable shall no longer be deemed to be an Eligible Receivable on the date that any related inventory that at one time satisfied
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the definition of “In-Transit Collateral” fails to satisfy the definition of “In-Transit Collateral” except solely as a result of the delivery and acceptance of such inventory by the related Obligor.
“In-Transit Receivable Excess” means, as of any date of determination, the amount, if any, by which the aggregate Outstanding Balance of all In-Transit Receivables exceeds 20.0% of the Outstanding Balance of all Eligible Receivables.
“Indemnified Amounts” has the meaning specified in Section 10.1.
“Indemnified Party” has the meaning specified in Section 10.1.
“Indemnified Taxes” means Taxes other than Excluded Taxes.
“Independent Director” means a director of Borrower who (A) is not at the time of initial appointment or at any time during the continuation of his or her appointment as an Independent Director and has not been at any time during the five (5) years preceding such appointment: (i) an equity holder, director (other than an Independent Director), officer, employee, member, manager, attorney or partner of Borrower or any of its Affiliates; (ii) a customer, supplier or other Person who derives more than 1% of its purchases or revenues from its activities with Borrower or any of its Affiliates; (iii) a Person or other entity controlling or under common control with any such equity holder, partner, member, customer, supplier or other Person; (iv) a member of the immediate family of any such equity holder, director, officer, employee, member, manager, partner, customer, supplier or other person; or (v) a trustee in bankruptcy for Borrower or any of its Affiliates and (B) has, (i) prior experience as an Independent Director for a corporation or limited liability company whose charter documents required the unanimous consent of all “independent directors” thereof before such corporation or limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (ii) at least three years of employment experience and who is provided by CT Corporation, Corporation Service Company, Global Securitization Services, LLC, National Registered Agents, Inc., Wilmington Trust Company, Lord Securities Corporation or, if none of those companies is then providing professional “independent directors”, another nationally recognized company reasonably approved by the Administrative Agent. As used herein, the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of management, policies or activities of a person or entity, whether through ownership of voting securities, by contract or otherwise.
“Initial Contributed Assets” has the meaning provided in the Receivables Sale Agreement.
“Initial Purchased Assets” has the meaning provided in the Receivables Sale Agreement.
“Interest” means, for each Loan and any Interest Period or Interest Accrual Period (or portion thereof), the amount of interest accrued on the Principal of such Loan during
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such Interest Period or Interest Accrual Period (or portion thereof) in accordance with this Agreement.
“Interest Accrual Period” means, with respect to any Loan, (a) before the Termination Date: (i) initially, the period commencing on the date such Loan is funded hereunder (or in the case of any fees payable hereunder, commencing on the Closing Date) and ending on (but not including) the next Settlement Date and (ii) thereafter, each period commencing on a Settlement Date and ending on (but not including) the next Settlement Date and (b) on and after the Termination Date, such period (including a period of one day) as shall be selected from time to time by the Administrative Agent or, in the absence of any such selection, each period commencing on a Settlement Date and ending on (but not including) the next Settlement Date.
“Interest and Servicing Reserve” means at any time:
1.50 x DSO x (ABR + SFR)
360
where:
ABR = the Alternate Base Rate at such time;
DSO = the Days’ Sales Outstanding for the most recently ended Calculation Period; and
SFR = the Servicing Fee Rate.
“Interest Period” means, with respect to any Loan held by a Committed Lender:
(a) if Interest for such Loan is calculated on the basis of Term SOFR, a period of time selected by the Borrower in connection with (and to apply to) any election permitted hereunder by the Borrower to have Loans accrue Interest under the Term SOFR Rate Option. Subject to the last sentence of this clause (a), such period shall be one or three Months. Such Interest Period shall commence on the effective date of such Term SOFR Rate Option, which shall be (i) the date of the related Advance if the Borrower is requesting the Lenders fund new Advances, or (ii) the date of renewal of or conversion to the Term SOFR Rate Option if the Borrower is renewing or converting to the Term SOFR Rate Option applicable to outstanding Loans. Notwithstanding the second sentence hereof: (A) any Interest Period which would otherwise end on a date which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (B) the Borrower shall not select, convert to or renew an Interest Period for any portion of the Loans that would end after the Scheduled Termination Date; and
(b) if Interest for such Loan is calculated on the basis of Daily 1M SOFR, the Alternate Base Rate or the Adjusted Federal Funds Rate, a period of one (1) day.
“Interest Rate” means, subject to Sections 4.4 and 4.5, means,
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(a) with respect to any Loan (or any portion thereof) accruing Interest under the Term SOFR Rate Option or the Daily 1M SOFR Rate Option for any day in any Interest Accrual Period, the sum of (i) either (x) if the Borrower has elected for such Loan (or any portion thereof) to accrue interest by reference to the Term SOFR Rate during such Interest Accrual Period in accordance with Section 4.3(a), the Term SOFR Rate for such day, or (y) in any other case (including if no such election has been made), Daily 1M SOFR plus (ii) the SOFR Adjustment;
(b) with respect to any Loan (or any portion thereof) accruing Interest under the Adjusted Federal Funds Rate Option, the Adjusted Federal Funds Rate; and
(c) with respect to any Loan (or any portion thereof) accruing Interest under the Alternate Base Rate Option, the Alternate Base Rate.
“Interest Rate Option” means any Term SOFR Rate Option, Daily 1M SOFR Option, Adjusted Federal Funds Rate Option or Alternate Base Rate Option.
“Investment Company Act” means the Investment Company Act of 1940, as amended, or any successor statute.
“Law” means any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any Governmental Authority, foreign or domestic.
“L/C Collateral Account” means the account designated as the L/C Collateral Account established and maintained by the Administrative Agent (for the benefit of the Letter of Credit Issuers and the L/C Participants), or such other account as may be so designated as such by the Administrative Agent.
“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the increase of the amount thereof.
“L/C Participant” means any Person that is designated as the L/C Participant for each Lender Group in the Lender Supplement or in the Assignment Agreement pursuant to which it became a party to this Agreement.
“LCR Security” means any commercial paper or security (other than equity securities issued to any Person that is a consolidated subsidiary of Smithfield under GAAP) within the meaning of Paragraph __.32(e)(viii) of the final rules titled Liquidity Coverage Ratio: Liquidity Risk Measurement Standards, 79 Fed. Reg. 197, 61440 et seq. (October 10, 2014).
“Legal Final Maturity Date” means the date occurring one-hundred and ten (110) calendar days after the Scheduled Termination Date.
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“Lender” means each Conduit, each Committed Lender, each L/C Participant and each Letter of Credit Issuer.
“Lender Group” means, collectively, (A) with respect to any Conduit or Conduits, (i) such Conduit or Conduits, as the case may be, (ii) the Committed Lenders with respect to such Conduit or Conduits and (iii) the applicable Co-Agent for such Conduit or Conduits and, (B) with respect to any Unaffiliated Committed Lender, (i) such Unaffiliated Committed Lender and (ii) the applicable Co-Agent for such Unaffiliated Committed Lender.
“Lender Group Commitment” means, with respect to any Lender Group the amount set forth as the Lender Group Commitment for such Lender Group on Schedule A to this Agreement. The parties hereto acknowledge and agree that any such Lender Group Commitment may be less than the sum of the Commitments of the Lenders within the relevant Lender Group.
“Lender Group Exposure” means, with respect to any Lender Group, the sum of (a) the aggregate outstanding principal amount of all Loans held by the Lenders in such Lender Group, plus (b) the related L/C Participant’s Ratable LC Share of the Letter of Credit Liability.
“Lender Group Exposure Percentage” means, with respect to any Lender Group, a fraction, expressed as a percentage, (a) the numerator of which is such Lender Group’s Lender Group Exposure and (b) the denominator of which is the sum of (i) the Aggregate Principal plus (ii) the Letter of Credit Liability.
“Lender Supplement” means, with respect to any Lender, the information set forth in Schedule C to this Agreement in respect of such Lender, as it may be amended or otherwise modified from time to time by such Lender or the Lenders named therein.
“Lending Office” means, as to the Administrative Agent or any Lender, the office or offices of such Person described as such in such Lender’s Administrative Questionnaire, or such other office or offices as such Person may from time to time notify the Borrower and the Administrative Agent.
“Letter of Credit” means either (a) a standby letter of credit issued in Dollars by a Letter of Credit Issuer pursuant to Section 1.7, or (b) an Existing Letter Credit, in each case, either as originally issued or as the same may, from time to time, be amended or otherwise modified or extended.
“Letter of Credit Application” has the meaning specified in Section 1.8(a).
“Letter of Credit Fees” has the meaning specified in Section 1.17.
“Letter of Credit Issuer” means each of (i) PNC in its capacity as issuer of Letters of Credit hereunder and (ii) Rabobank in its capacity as issuer of Letters of Credit hereunder.
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“Letter of Credit Liability” means, at any time, the excess, if any, of (a) aggregate face amount of the outstanding Letters of Credit at such time over (b) the amount of any drawings made under such Letters of Credit.
“Liquidity Agreement” means the liquidity asset purchase agreement between the Conduit of any Lender Group and the Committed Lenders of such Lender Group.
“Liquidity Commitment” means, as to each Committed Lender in any Lender Group, its commitment to such Lender Group’s Conduit under the Liquidity Agreements, (which shall equal 102% of such Lender Group’s Percentage of the Aggregate Commitment hereunder).
“Liquidity Funding” means (a) a purchase made by any Committed Lender pursuant to its Liquidity Commitment of all or any portion of, or any undivided interest in, an applicable Conduit’s Loans, or (b) any Loan made by a Committed Lender.
“Loan” means any loan made by a Lender to Borrower pursuant to this Agreement (including, without limitation, any Liquidity Funding). Each Loan shall either be a CP Rate Loan, an Alternate Base Rate Loan, an Adjusted Federal Funds Rate Loan, a Daily 1M SOFR Loan or a Term SOFR Rate Loan, selected in accordance with the terms of this Agreement.
“Loan Parties” has the meaning provided in the preamble to this Agreement.
“Lock-Box” means each locked postal box with respect to which a bank who has executed a Collection Account Agreement has been granted exclusive access for the purpose of retrieving and processing payments made on the Receivables and which is listed on Schedule D hereto.
“Loss Reserve” means, for any Calculation Period, the product (expressed as a percentage) of (a) 2.00, times (b) the highest three-month rolling average Default Ratio during the 12 Calculation Periods ending on the immediately preceding Cut-Off Date, times (c) the Default Horizon Ratio as of the immediately preceding Cut-Off Date.
“Market Spread” means, on any date of determination, the positive difference between (i) the Federal Funds Rate on such date of determination, and (ii) the 1-month Term SOFR Rate effective as of 11:00 a.m. (New York City time) on such date of determination (and not as in effect two Business Days prior thereto), plus the SOFR Adjustment.
“Material Adverse Effect” means (i) any material adverse effect on the business, assets, operations, property or financial condition of the Performance Guarantor and its Non-Excluded Subsidiaries, taken as a whole, (ii) any material adverse effect on the abilities of the Loan Parties, taken as a whole, to perform their obligations under the Transaction Documents to which they are a party, (iii) any material adverse effect on the legality, validity or enforceability of the Agreement or any other Transaction Document, (iv) any material adverse effect on the Administrative Agent’s interest (on behalf of itself and the Secured Parties) in the Receivables generally or in any significant portion of the
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Receivables, the Related Security or Collections with respect thereto, (v) any material adverse effect on the collectability of the Receivables generally or of any material portion of the Receivables and (vi) material adverse effect on the rights of or benefits available to the Administrative Agent, the Letter of Credit Issuers, the Co-Agents or the Lenders.
“Material Subsidiary” has the meaning provided in the Parent Credit Agreement.
“Minimum Dilution Reserve Percentage” means, at any time, the product (expressed as a percentage and rounded to the nearest 1/100th of 1%, with 5/1000th of 1% rounded upward) of (a) the Adjusted Dilution Ratios for the most recent Calculation Period, multiplied by (b) the Dilution Horizon Ratio.
“Monetization Documents” means the Receivables Purchase Agreement, the Monetization Intercreditor Agreement and all other certificates, instruments, reports, notices, agreements and documents executed or delivered under or in connection with the Receivables Purchase Agreement, in each case the same may be amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof.
“Monetization Intercreditor Agreement” means the Intercreditor Agreement, dated as of December 22, 2022, by and among, inter alia, the Administrative Agent and the Receivables Agent.
“Monetized Receivable” has the meaning set forth in Section 1.1(d).
“Monetized Receivable Collections” means, with respect to any Monetized Receivable, all cash collections and other cash proceeds in respect of such Monetized Receivable, including all Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Monetized Assets; provided, however, that the term “Monetized Receivable Collections” shall not include any payment made for the account of the Servicer, a third-party service provider or sub-contractor whose services were not included in the amount invoiced for the applicable Monetized Receivable.
“Month” means, with respect to an Interest Period for Loans accruing Interest under the Term SOFR Rate Option, the interval between the days in consecutive calendar months numerically corresponding to the first day of such Interest Period. If any Interest Period for Loans accruing Interest under the Term SOFR Rate Option begins on a day of a calendar month for which there is no numerically corresponding day in the month in which such Interest Period is to end, the final Month of such Interest Period shall be deemed to end on the last Business Day of such final month.
“Monthly Report” means a report, in substantially the form of Exhibit VI-A hereto (appropriately completed), furnished by the Servicer to the Administrative Agent pursuant to Section 8.5.
“Monthly Reporting Date” means the second (2nd) Business Day preceding each Settlement Date.
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“Moody’s” means Moody’s Investors Service, Inc. and any successors thereto.
“Multiemployer Plan” means a multiemployer benefit plan as defined in Section 4001(a)(3) of ERISA.
“Net Pool Balance” means, at any time, the aggregate Outstanding Balance of all Eligible Receivables at such time reduced by the sum of (i) the aggregate amount by which the Outstanding Balance of all Eligible Receivables of each Obligor and its Affiliates exceeds the Obligor Concentration Limit for such Obligor, (ii) the Foreign Receivable Excess, (iii) the Government Receivables Excess, (iv) the In-Transit Receivable Excess, (v) the Extended Payment Term Excess and (vi) the FX Excess.
“Non-Excluded Subsidiary” has the meaning provided in the Receivables Sale Agreement.
“Non-Material Subsidiary” means a Subsidiary that is not a Material Subsidiary.
“Notice Date” has the meaning specified in Section 1.8(b).
“Obligations” means, at any time, any and all obligations of either of the Loan Parties to any of the Secured Parties arising under or in connection with the Transaction Documents, whether now existing or hereafter arising, due or accrued, absolute or contingent, including, without limitation, obligations in respect of Aggregate Principal, CP Costs, Interest, fees under the Fee Letter, Agent Fee Letter, Broken Funding Costs and Indemnified Amounts.
“Obligor” has the meaning provided in the Receivables Sale Agreement.
“Obligor Concentration Limit” means, at any time, in relation to the aggregate Outstanding Balance of Receivables owed by any single Obligor and its Affiliates (if any), the applicable concentration limit set forth below for Obligors who have short term unsecured debt ratings currently assigned to them by S&P and Moody’s (or in the absence thereof, the long term unsecured senior debt ratings set forth below):
| | | | | | | | |
Short Term Rating (S&P/Moody’s) | Long Term Rating (S&P/Moody’s) | Maximum Allowable % of Eligible Receivables |
| A-1/P-1 or higher | AA- to A+/ Aa3 to A1 or higher | 20.00% |
| A-2/P-2 | A to BBB / A2 to
Baa2 | 15.00% |
A-3 / P-3 | BBB- / Baa3 | 10.00% |
lower than A-3 / lower than P-3 (Non-Investment Grade) | BB+ or lower / Ba1 or lower (Non-Investment Grade) | 5.00% |
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; provided, however, that (a) if any Obligor has only received a short term rating or long term rating from one of S&P and Moody’s, such short term rating or long term rating, as applicable, shall apply, (b) if any Obligor has a split short term rating by S&P and Moody’s or a split long term rating by S&P and Moody’s, the applicable short term rating or long term rating, as applicable, will be the lower of the two, (c) if any Obligor is not rated by either S&P or Moody’s, the applicable Obligor Concentration Limit shall be the one set forth in the last line of the table above, and (d) subject to satisfaction of the Rating Agency Condition, upon Borrower’s request from time to time, the Agents may agree to a higher percentage of Eligible Receivables for a particular Obligor and its Affiliates (each such higher percentage, a “Special Concentration Limit”), it being understood that any Special Concentration Limit may be cancelled by any Agent on not less than two (2) Business Days’ written notice to the Loan Parties.
“Obligor Percentage” means, at any time, for each Obligor, a fraction, expressed as a percentage, (a) the numerator of which is the aggregate Outstanding Balance of the Eligible Receivables of such Obligor and its Affiliates less the amount (if any) by which the Outstanding Balance of all Eligible Receivables of such Obligor and its Affiliates exceeds the Obligor Concentration Limit for such Obligor and (b) the denominator of which is the aggregate Outstanding Balance of all Eligible Receivables at such time.
“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“Original Agreement” has the meaning provided in the preamble to this Agreement.
“Originator” has the meaning provided in the Receivables Sale Agreement, and such term excludes, for the purposes of this Agreement, any Excluded Originator.
“Outstanding Balance” of any Receivable at any time means the then outstanding principal balance thereof or, in the case of any Receivable described in clause (ii) of the definition of “Receivable” herein, the principal amount to become due and payable under the relevant Contract in respect of the relevant In-Transit Collateral.
“Overnight Bank Funding Rate” means for any day, the rate comprised of both overnight federal funds and overnight eurocurrency borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the Federal Reserve Bank of New York, as set forth on its public website from time to time, and as published on the next succeeding Business Day as the overnight bank funding rate by the Federal Reserve Bank of New York (or by such other recognized electronic source (such as Bloomberg) selected by the Administrative Agent for the purpose of displaying such rate); provided, that if such day is not a Business Day, the Overnight Bank Funding Rate for such day shall be such rate on the immediately preceding Business Day; provided, further, that if such rate shall at any time, for any reason, no longer exist, a comparable
5th A&R Credit and Security Agreement (Smithfield)
replacement rate determined by the Administrative Agent at such time (which determination shall be conclusive absent manifest error). If the Overnight Bank Funding Rate determined as above would be less than zero, then such rate shall be deemed to be zero. The rate of interest charged shall be adjusted as of each Business Day based on changes in the Overnight Bank Funding Rate without notice to the Borrower.
“Parent Credit Agreement” means that certain Second Amended and Restated Credit Agreement, dated as of May 21, 2021, by and among Smithfield, certain subsidiaries of Smithfield party thereto pursuant to Section 2.14 thereof, each lender from time to time party thereto, each joint lead arranger, joint bookrunner and documentation agent from time to time party thereto and Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer, as amended by that certain Amendment No. 1 to Credit Agreement, dated as of May 19, 2023, and that certain Amendment No. 2 to Credit Agreement, dated as of June 28, 2024, as in effect as of the date hereof notwithstanding anything to the contrary set forth in the rules of interpretation set forth in the Receivables Sale Agreement; provided, however, “Parent Credit Agreement” shall mean such agreement after giving effect to any amendment, restatement, waiver or other modification to which each Committed Lender or its Affiliate, in its capacity as a party to the Parent Credit Agreement, has given its consent; provided, further, that for purposes of Section 9.1(x), “Parent Credit Agreement” shall mean as amended, restated and modified so long as PNC and Rabobank (or their Affiliates) are lenders thereunder.
“Participant” has the meaning provided in Section 12.2.
“PASA” means the Packers and Stockyards Act of 1921, as amended.
“PASA Reserve Amount” means (a) prior to a Ratings Trigger Event, (i) 0.50 times (ii) the amount of all outstanding trade payables of Smithfield and its Subsidiaries, which are entitled to the benefits of the trust created under the Packers and Stockyards Act of 1921, as amended; or (b) after a Ratings Trigger Event, the amount of all outstanding trade payables of Smithfield and its Subsidiaries, which are entitled to the benefits of the trust created under the Packers and Stockyards Act of 1921, as amended.
“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
“Payment Account” means, with respect to each Co-Agent, the account designated by such Co-Agent for receipt of payments hereunder and identified on the Lender Supplement.
“PBGC” has the meaning provided in the Receivables Sale Agreement.
“Percentage” means for each Lender Group, the ratio (expressed as a percentage) of the aggregate Commitments of the Committed Lenders in such Lender Group to the Aggregate Commitment.
“Performance Guarantor” means Smithfield.
5th A&R Credit and Security Agreement (Smithfield)
“Performance Undertaking” means that certain Seventh Amended and Restated Performance Undertaking, dated as of December 22, 2022, by Performance Guarantor in favor of Borrower, substantially in the form of Exhibit VII, as the same may be amended, restated or otherwise modified from time to time.
“Permitted Monetization Receivable” means any Receivable the Obligor of which is set forth on Schedule E attached hereto.
“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Tax Code or Section 302 of ERISA, and in respect of which any Loan Party or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4062 or Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
“PNC” has the meaning provided in the preamble to this Agreement.
“PNC Lender Group” means the Lender Group with respect to which PNC is the Co-Agent.
“Pool Report” means each Monthly Report and each Weekly Report, as applicable, required to be delivered pursuant to Section 8.5.
“Pooled Commercial Paper” means, for each of the Pool Funded Conduits, the Commercial Paper of such Pool Funded Conduit subject to any particular pooling arrangement by such Conduit, but excluding Related Commercial Paper issued by any Pool Funded Conduit for a tenor and in an amount specifically requested by any Person with any agreement effected by such Pool Funded Conduit.
“Pool Funded Conduits” means, at any time, the Conduits that have notified the Loan Parties that they will be pool-funding their Loans.
“Post-Closing Date” means the date occurring ninety (90) days following the Closing Date (or such later date (if any) consented to in writing by the Administrative Agent in its sole discretion).
“Prime Rate” means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime commercial lending rate or base rate in effect at its principal office for loans in the United States of America, with each change in the Prime Rate being effective on the date such change is publicly announced as effective (it being understood and agreed that the Prime Rate is a reference rate used by the Administrative Agent in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged on any extension of credit by the Administrative Agent to any debtor).
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“Prohibited Transaction” has the meaning assigned to such term in Section 406 of ERISA and Section 4975(f)(3) of the Tax Code.
“Pro Rata Share” means, with respect to each Lender Group on any date of determination, the ratio which the Liquidity Commitment of a Committed Lender in such Lender Group bears to the sum of the Liquidity Commitments of all Committed Lenders in such Lender Group.
“Proposed Reduction Date” has the meaning provided in Section 1.3.
“Purchasing Lender” has the meaning provided in Section 12.1(b).
“Rabobank” has the meaning provided in the preamble to this Agreement.
“RaboankRabobank Lender Group” means the Lender Group with respect to which Rabobank is the Co-Agent.
“Ratable LC Share” means, as to any L/C Participant, a fraction, the numerator of which equals the Commitment of such L/C Participant at such time and the denominator of which equals the aggregate of the Commitments of all L/C Participants at such time.
“Rating Agency Condition” means, if applicable, that a Conduit has received written notice from S&P or Moody’s or any other rating agency then rating such Conduit’s Commercial Paper that the execution and delivery of, or an amendment, a change or a waiver of, this Agreement or the Receivables Sale Agreement will not result in a withdrawal or downgrade of the then current ratings on such Conduit’s Commercial Paper or, if applicable, the conditions required for post-closing review as described in a letter or letters from S&P or Moody’s or such other rating agency.
“Ratings Trigger Event” means, as of any date of determination, the lowering with regard to the Performance Guarantor of (i) S&P’s Corporate Credit Rating to below BB-, or (ii) Moody’s Long Term Corporate Family Rating to below Ba3.
“Receivable” has the meaning provided in the Receivables Sale Agreement, and such term excludes, for the purposes of this Agreement, any Excluded Receivable and any Monetized Receivable.
“Receivables Agent” means PNC, in its capacity as administrative agent under the Receivables Purchase Agreement.
“Receivables Buyer” means each buyer under the Receivables Purchase Agreement.
“Receivables Purchase Agreement” means the Receivables Purchase Agreement, dated as of December 22, 2022, by and among the Borrower, as seller, the Servicer, the Receivables Buyers and the Receivables Agent, as the same may be amended, restated or otherwise modified from time to time.
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“Receivables Sale Agreement” means that certain Fifth Amended and Restated Receivables Sale Agreement, dated as of the date hereof, among Smithfield, SFFC, the Originators and the Borrower, as the same may be amended, restated or otherwise modified from time to time.
“Records” has the meaning provided in the Receivables Sale Agreement.
“Reduction Notice” has the meaning provided in Section 1.3.
“Register” has the meaning provided in Section 12.3.
“Regulatory Change” means any change after the date of this Agreement in United States (federal, state or municipal) or foreign laws, regulations (including Regulation D) or accounting principles or the adoption or making after such date of any interpretations, directives or requests of or under any United States (federal, state or municipal) or foreign laws, regulations (whether or not having the force of law) or accounting principles by any court, governmental or monetary authority, or accounting board or authority (whether or not part of government) charged with the establishment, interpretation or administration thereof. For the avoidance of doubt, any change in accounting standards or the issuance of any other pronouncement, release or interpretation (or revisions to the foregoing) that causes or requires the consolidation of all or a portion of the assets and liabilities of a Conduit or Borrower with the assets and liabilities of any Agent, any Committed Lender or any other Affected Entity shall constitute a Regulatory Change.
“Reimbursement Obligation” has the meaning specified in Section 1.10(b).
“Related Commercial Paper” means, for any period with respect to either Conduit, any Commercial Paper of such Conduit issued or deemed issued for purposes of financing or maintaining any Loan by such Conduit (including any discount, yield, or interest thereon) outstanding on any day during such period.
“Related Monetized Assets” means with respect to any Monetized Receivables, (i) all Related Security with respect to such Monetized Receivable, (ii) all Monetized Receivable Collections relating thereto and (iii) all proceeds of, and all amounts received or receivable under any or all of, the foregoing.
“Related Security” means, with respect to any Receivable:
(i) all of Borrower’s interest in the Related Security (under and as defined in the Receivables Sale Agreement),
(ii) all of Borrower’s right, title and interest in, to and under the Receivables Sale Agreement in respect of such Receivable,
(iii) all of Borrower’s right, title and interest in, to and under the Performance Undertaking,
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(iv) all rights, remedies, powers, privileges, title and interest (but not obligations) in and to each Lock-Box and Collection Account (other than any FX Collection Account), into which any Collections or other proceeds with respect to such Receivable may be deposited, and any related investment property acquired with any such Collections or other proceeds (as such term is defined in the applicable UCC), and
(v) all proceeds of any of the foregoing.
“Reorganization” means, with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA.
“Reportable Compliance Event” means that: (a) any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint, or similar charging instrument, arraigned, custodially detained, penalized or the subject of an assessment for a penalty, or enters into a settlement with a Governmental Authority in connection with any economic sanctions or other Anti-Terrorism Law or Anti-Corruption Law, or any predicate crime to any Anti-Terrorism Law or Anti-Corruption Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations represents a material violation of any Anti-Terrorism Law or Anti-Corruption Law; (b) any Covered Entity engages in a transaction that has caused or may cause any Agent, Conduit or Committed Lender to be in violation of any Anti-Terrorism LawsLaw or Anti-Corruption Law, including a Covered Entity’s use of any proceeds of the facilities provided hereunder to fund any operations in, finance any investments or activities in, or, make any payments to, directly or indirectly, a Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws or Anti-Corruption Laws; (c) any Collateral becomes EmbargoedBlocked Property; or (d) any Covered Entity otherwise violates, or reasonably believes that it will violate, any of the representations, warranties or covenants set forth in Section 5.1(x), 7.1(n) or 7.2(k) of this Agreement.
“Reportable Event” means any "reportable event," as defined in Section 4043 of ERISA or the regulations issued thereunder, other than those events as to which the 30-day notice period referred to in Section 4043(c) of ERISA has been waived, with respect to a Plan (other than a Plan maintained by an ERISA Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Tax Code).
“Required Committed Lenders” means Committed Lenders holding in the aggregate more than fifty percent (50%) of the Aggregate Commitment; provided, that at any time when there are two or fewer Committed Lenders, “Required Committed Lenders” shall mean all of the Committed Lenders.
“Required Data” means ongoing information regarding the Collateral required to be provided by the Borrower or the Servicer to the Administrative Agent at the request of the Administrative Agent, including in connection with any Lender’s regulatory capital requirements.
“Required Reserve” means, on any day during a Calculation Period, the sum of:
5th A&R Credit and Security Agreement (Smithfield)
(a) the product of (i) the Accrual Adjusted Net Pool Balance on such day, multiplied by (ii) the sum of (x) the Interest and Servicing Reserve, plus (y) the greater of (A) the sum of (I) the Loss Reserve, plus (II) the Dilution Reserve and (B) the sum of the Concentration Reserve Percentage and the Minimum Dilution Reserve Percentage, plus
(b) the PASA Reserve, plus
(c) the ARM Dilution Reserve.
“Restricted Junior Payment” means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of capital stock of Borrower now or hereafter outstanding, except a dividend payable solely in shares of that class of stock or in any junior class of stock of Borrower, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of capital stock of Borrower now or hereafter outstanding, (iii) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to the Subordinated Loans (as defined in the Receivables Sale Agreement), (iv) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of capital stock of Borrower now or hereafter outstanding, and (v) any payment of management fees by Borrower (except for reasonable management fees to any Originator or its Affiliates in reimbursement of actual management services performed).
“Restructuring Transactions” has the meaning provided in the Receivables Sale Agreement.
“S&P” means S&P Global Ratings and any successor thereto.
“Sanctioned Jurisdiction” means any country, territory, or region that is the subject of comprehensive country- or territory-wide sanctions administered by OFAC.
“Sanctioned Person” means (a) a Person that is the subject of sanctions administered by OFAC or the U.S. Department of State (“State”), including by virtue of being (i) named on OFAC’s list of “Specially Designated Nationals and Blocked Persons”; (ii) organized under the Laws of, ordinarily resident in, or physically located in a Sanctioned Jurisdiction; (iii) owned or controlled 50% or more in the aggregate, by one or more Persons that are the subject of sanctions administered by OFAC; (b) a Person that is the subject of sanctions maintained by the European Union (“E.U.”), including by virtue of being named on the E.U.’s “Consolidated list of persons, groups and entities subject to E.U. financial sanctions” or other, similar lists; (c) a Person that is the subject of sanctions maintained by the United Kingdom (“U.K.”), including by virtue of being named on the “Consolidated List Of Financial Sanctions Targets in the U.K.” or other, similar lists; or (d) a Person that is the subject of sanctions imposed by any Governmental Authority of a jurisdiction whose Laws apply to this Agreement.
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“Scheduled Termination Date” means DecemberNovember 22, 20252027.
“Secured Parties” means the Indemnified Parties.
“Servicer” means at any time the Person domiciled in the United States (which may be the Administrative Agent) then authorized pursuant to Article VIII to service, administer and collect Receivables.
“Servicing Fee” means, for each day in a Calculation Period:
(a) an amount equal to (i) the Servicing Fee Rate (or, at any time while Smithfield or one of its Affiliates is the Servicer, such lesser percentage as may be agreed between Borrower and the Servicer on an arms’ length basis based on then prevailing market terms for similar services), times (ii) the Outstanding Balance of all Receivables at the close of business on the Cut-Off Date immediately preceding such Calculation Period, times (iii) 1/360; or
(b) on and after the Servicer’s reasonable request made at any time when Smithfield or one of its Affiliates is no longer acting as Servicer hereunder, an alternative amount specified by the successor Servicer not exceeding (i) 110% of such Servicer’s reasonable costs and expenses of performing its obligations under this Agreement during the preceding Calculation Period, divided by (ii) the number of days in the current Calculation Period.
“Servicing Fee Rate” means 1.0% per annum.
“Settlement Date” means the 25th day of each month (or if any such day is not a Business Day, the next succeeding Business Day thereafter).
“Settlement Period” means the immediately preceding Calculation Period (or portion thereof).
“SFFC” means SFFC, Inc., a Delaware corporation.
“Smithfield” has the meaning provided in the preamble to this Agreement.
“Smithfield Support” has the meaning provided in the Receivables Sale Agreement.
“SOFR” means, for any day, a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Adjustment” means 0.10%.
“SOFR Floor” means a rate of interest per annum equal to 0.00%.
5th A&R Credit and Security Agreement (Smithfield)
“SOFR Reserve Percentage” means, for any day, the maximum effective percentage in effect on such day, if any, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including, without limitation, supplemental, marginal and emergency reserve requirements) with respect to SOFR funding.
“Specified Days’ Sales Outstanding” means, as of any day, an amount equal to the sum of (I) the product of (x) 91, times (y) the amount obtained by dividing (i) the aggregate Outstanding Balance of Receivables as of the most recent Cut-Off Date, by (ii) the aggregate amount of Receivables created during the three (3) Calculation Periods including and immediately preceding such Cut-Off Date, times (z) 0.85, and (II) the product of (x) 120, times (y) the amount obtained by dividing (i) the aggregate Outstanding Balance of Receivables as of the most recent Cut-Off Date, by (ii) the aggregate amount of Receivables created during the three(3) Calculation Periods including and immediately preceding such Cut-Off Date, times (z) 0.15.
“Structuring Agent” means PNC Capital Markets LLC, a Pennsylvania limited liability company.
“Subordinated Lender” has the meaning provided in the Receivables Sale Agreement.
“Subordinated Loan” has the meaning provided in the Receivables Sale Agreement.
“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, association, limited liability company, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.
“Tax Code” means the Internal Revenue Code of 1986, as the same may be amended from time to time.
“Taxes” means any and all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Rate” means, with respect to any amount for which the Term SOFR Reference Rate applies, for any day in any Interest Period, the interest rate per annum determined by the Administrative Agent by dividing (the resulting quotient rounded
5th A&R Credit and Security Agreement (Smithfield)
upwards, at the Administrative Agent’s discretion, to the nearest 1/100th of 1%) (A) the Term SOFR Reference Rate for a term equal to such Interest Period on the day (the “Term SOFR Determination Date”) that is two (2) Business Days prior to the first day of such Interest Period, as such rate is published by the Term SOFR Administrator, by (B) a number equal to 1.00 minus the SOFR Reserve Percentage. If the Term SOFR Reference Rate for the applicable tenor has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (Pittsburgh, Pennsylvania time) on the Term SOFR Determination Date, then the Term SOFR Reference Rate, for purposes of clause (A) in the preceding sentence, shall be the Term SOFR Reference Rate for such tenor on the first Business Day preceding such Term SOFR Determination Date for which such Term SOFR Reference Rate for such tenor was published in accordance herewith, so long as such first preceding Business Day is not more than three (3) Business Days prior to such Term SOFR Determination Date. If the Term SOFR Rate, determined as provided above, would be less than the SOFR Floor, then the Term SOFR Rate shall be deemed to be the SOFR Floor.
“Term SOFR Rate Loan” means a Loan which bears interest at the Term SOFR Rate.
“Term SOFR Rate Option” means the option of the Borrower to have Loans bear Interest at a rate per annum equal to the Term SOFR Rate as determined for each applicable Interest Period.
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Termination Date” has the meaning provided in the Receivables Sale Agreement.
“Transaction Documents” means, collectively, this Agreement, each Borrowing Notice, the Receivables Sale Agreement, the Monetization Intercreditor Agreement, each Collection Account Agreement, the Performance Undertaking, any Letter of Credit, the Fee Letter, the Agent Fee Letter, each Subordinated Note (as defined in the Receivables Sale Agreement) and all other instruments, documents and agreements executed and delivered in connection herewith.
“UCC” means the Uniform Commercial Code as from time to time in effect in the specified jurisdiction.
“Unaffiliated Committed Lender” means each Committed Lender that is not related to a Conduit.
“Unmatured Event of Default” means an event which, with the passage of time or the giving of notice, or both, would constitute an Event of Default.
“U.S. Government Securities Business Day” means any day except for (a) a Saturday or Sunday or (b) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
5th A&R Credit and Security Agreement (Smithfield)
“Volume Rebate” means, with respect to any Receivable, any terms discount, indirect rebate, direct rebate (net of any direct rebate recovery), promotional program or similar arrangement that reduces the Outstanding Balance of any Receivable. For the avoidance of doubt, to the extent the Borrower has, or will be deemed to have, received a Collection of such Receivable under Section 1.4(c) and the Outstanding Balance has been reduced by the amount of such Collection, such amount shall no longer constitute a Volume Rebate.
“Volume Rebate Accrual Amount” means, on any date of determination, the aggregate amount of all Volume Rebates that have accrued as of or on such date of determination.
“Weekly Report” means a report, in substantially the form of Exhibit VI-B hereto (appropriately completed), furnished by the Servicer to the Administrative Agent pursuant to Section 8.5.
“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
“Yen” and the sign “¥” means the lawful currency of Japan.
“Yield” means, the amounts described in Section 2.1.
All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9.
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EXHIBIT B
Amendments to the Receivables Sale Agreement
(Attached)
EXECUTION VERSION
EXHIBIT B to Amendment No. 1, dated November 22, 2024
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FIFTH AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT Dated as of December 22, 2022 AMONG SMITHFIELD FOODS, INC., SFFC, INC., SMITHFIELD SUPPORT SERVICES CORP., SMITHFIELD FRESH MEATS SALES CORP., SMITHFIELD FRESH MEATS CORP., SMITHFIELD DIRECT, LLC, SMITHFIELD BIOSCIENCE, INC. AND SMITHFIELD PACKAGED MEATS SALES CORP. AS ORIGINATORS, AND SMITHFIELD RECEIVABLES FUNDING LLC, AS BUYER |
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| ARTICLE I AMOUNTS AND TERMS OF THE PURCHASE | 2 |
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| Section 1.1 | Commencement Date; Initial Transfer and Contribution of Receivables | 2 |
| | | |
| Section 1.2 | Purchase of Receivables. | 4 |
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| Section 1.3 | Payment of Purchase Price. | 5 |
| | | |
| Section 1.4 | Settlement Date; Adjustments. | 8 |
| | | |
| Section 1.5 | Payments and Computations, Etc | 9 |
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| Section 1.6 | License of Software. | 9 |
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| Section 1.7 | Characterization | 10 |
| | | |
| Section 1.8 | Excluded Originator | 11 |
| | | |
| Section 1.9 | Restructuring Transactions. | 11 |
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| Section 1.10 | Amendment and Restatement | 12 |
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| ARTICLE II REPRESENTATIONS AND WARRANTIES | 12 |
| | | |
| Section 2.1 | Representations and Warranties | 12 |
| | | |
| ARTICLE III CONDITIONS OF PURCHASE | 17 |
| | | |
| Section 3.1 | Conditions Precedent to Purchase | 17 |
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| Section 3.2 | Conditions Precedent to Subsequent Payments | 17 |
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| ARTICLE IV COVENANTS | 18 |
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| Section 4.1 | Affirmative Covenants | 18 |
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| Section 4.2 | Negative Covenants | 23 |
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| ARTICLE V TERMINATION EVENTS | 25 |
| | | |
| Section 5.1 | Termination Events | 25 |
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| Section 5.2 | Remedies | 27 |
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| ARTICLE VI INDEMNIFICATION | 27 |
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| Section 6.1 | Indemnities | 27 |
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| Section 6.2 | Other Costs and Expenses | 31 |
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| ARTICLE VII MISCELLANEOUS | 31 |
| | | |
| Section 7.1 | Waivers and Amendments. | 31 |
| | | |
| Section 7.2 | Notices | 31 |
| | | |
| Section 7.3 | Protection of Ownership Interests of Buyer. | 31 |
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| Section 7.4 | Confidentiality. | 33 |
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| Section 7.5 | Bankruptcy Petition. | 33 |
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| Section 7.6 | Limitation of Liability | 33 |
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| | | | | | | | | | | |
| Section 7.7 | CHOICE OF LAW | 34 |
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| Section 7.8 | CONSENT TO JURISDICTION | 34 |
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| Section 7.9 | WAIVER OF JURY TRIAL | 34 |
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| Section 7.10 | Integration; Binding Effect; Survival of Terms. | 34 |
| | | |
| Section 7.11 | Counterparts; Severability; Section References | 35 |
EXHIBITS AND SCHEDULES
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| Exhibit I | - | Definitions |
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| Exhibit II | - | Principal Place of Business; Location(s) of Records; Federal Employer Identification Number; Other Names |
| | |
| Exhibit III | - | [Reserved] |
| | |
| Exhibit IV | - | Form of Compliance Certificate |
| | |
| Exhibit V | - | Credit and Collection Policy |
| | |
| Exhibit VI | - | Form of Subordinated Note |
| | |
| Exhibit VII | - | Form of Purchase Report |
| | |
| Exhibit VIII | - | Restructuring Transactions |
FIFTH AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
THIS FIFTH AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, dated as of December 22, 2022, is by and among:
(a) Smithfield Foods, Inc., a Virginia corporation (“Smithfield”);
(b) SFFC, Inc., a Delaware corporation (“SFFC”);
(c) Smithfield Support Services Corp., a Delaware corporation (“Smithfield Support”);
(d) each of Smithfield Fresh Meats Sales Corp., a Delaware corporation (formerly known as Smithfield Farmland Sales Corp., “Fresh Sales”), , Smithfield Fresh Meats Corp., a Delaware corporation (“Fresh Meats”), , Smithfield Direct, LLC, a Delaware limited liability company (formerly known as Armour-Eckrich Meats LLC, “Smithfield Direct”), and Smithfield Packaged Meats Sales Corp., a Delaware corporation (formerly known as SFC Employee New Company, “Packaged Sales”) and Smithfield Bioscience, Inc., an Ohio corporation (“Smithfield Bioscience”) and such other Originators that may become party to this Agreement with the consent of the Required Committed Lenders (each, unless excluded from this Agreement as an Excluded Originator in accordance herewith, an “Originator”); and
(e) Smithfield Receivables Funding LLC, a Delaware limited liability company (“Buyer”),
and amends and restates in its entirety that certain Fourth Amended and Restated Receivables Sale Agreement dated as of November 21, 2018, by and among Smithfield, SFFC, Smithfield Support, Fresh Sales, Smithfield Packaged Meats Corp., Fresh Meats, Smithfield Specialty Foods Group, LLC, Smithfield Direct, Packaged Sales, and Buyer, as amended through the date hereof (the “Original Agreement”).
Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I hereto.
PRELIMINARY STATEMENTS
WHEREAS, each of the Originators acquires and originates, or will acquire and originate, from time to time, Receivables and certain rights relating thereto.
WHEREAS, the Originators wish to sell, contribute or otherwise convey the Receivables, Related Security and associated Collections to the Buyer, from time to time, and the Buyer is willing to purchase or otherwise acquire Receivables, Related Security and associated Collections from the Originators, on the terms and subject to the conditions set forth herein.
WHEREAS, each of the Originators, SFFC and Buyer intend the conveyance of Receivables contemplated hereby to be true sales or contributions of the applicable Receivables to Buyer by each such Originator or SFFC, as the case may be, providing Buyer with the full benefits of ownership of such Receivables and Related Security, and none of the Originators, SFFC and
Buyer intends such conveyances to be, or for any purpose to be characterized as, loans from Buyer to such Originator or SFFC, as the case may be.
WHEREAS, the Originators and Buyer acknowledge that a lien and security interest in the Receivables and the Related Security and associated Collections sold, contributed or otherwise conveyed by the Originators to Buyer hereunder, together with the Buyer’s rights and interests under the Performance Undertaking, has been granted and assigned by Buyer pursuant to that certain Fifth Amended and Restated Credit and Security Agreement dated as of December 22, 2022 (as amended, restated and/or otherwise modified from time to time in accordance with the terms thereof, the “Credit and Security Agreement”) among Buyer, Smithfield, as initial Servicer, each of the lenders and co-agents from time to time party thereto, Coöperatieve Rabobank U.A., New York Branch (“Rabobank”), as a letter of credit issuer and PNC Bank, National Association, as administrative agent (in such last capacity, the “Administrative Agent”) and as a letter of credit issuer (together with Rabobank in such capacity, the “Letter of Credit Issuers” and each, a “Letter of Credit Issuer”).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASE
Section 1.1 Commencement Date; Initial Transfer and Contribution of Receivables. (a) None of the Originators shall have any obligation to contribute or sell, and Buyer shall have no obligation to accept or purchase, any of the Receivables, Related Security or associated Collections until the applicable Commencement Date (as defined herein) occurs. The obligation of Smithfield, SFFC, and the Originators to sell, contribute, and convey the Receivables shall commence on the applicable Commencement Date. On the Commencement Date relating to the US Originators:
(i) Buyer shall provide to each of the other parties a notice (the “Transfer Notice”) specifying in respect of each US Originator the aggregate Outstanding Balance of the Initial Transferred Assets of such US Originator that shall constitute Initial Contributed Assets and the aggregate Outstanding Balance of the Initial Transferred Assets of such US Originator that shall constitute Initial Purchased Assets.
(ii) Each of the US Originators agrees to transfer and convey to Smithfield its Initial Contributed Assets.
(iii) Smithfield agrees to contribute, assign, transfer, set-over and otherwise convey to SFFC, and SFFC agrees to accept from Smithfield, the Aggregate Initial Contributed Assets as a contribution to the capital of SFFC.
(iv) SFFC agrees to contribute, assign, transfer, set-over and otherwise convey to Buyer, and Buyer agrees to accept from SFFC, the
Aggregate Initial Contributed Assets contributed to SFFC pursuant to Section 1.1(a)(ii) as a contribution to the capital of Buyer.
(b) It is the intention of the parties hereto that (i) each of the conveyances described in Section 1.1(a)(ii) constitute an outright assignment of Initial Contributed Assets and (ii) each of the conveyances described in Sections 1.1(a)(iii) and (iv) constitute an outright assignment of the Aggregate Initial Contributed Assets, which assignments are absolute and irrevocable and which assignments collectively provide Buyer, upon completion of the transactions described in Sections 1.1(a)(ii), (iii), and (iv), with the full benefits of ownership of the Aggregate Initial Contributed Assets.
(c) The transfer to Smithfield of Initial Contributed Assets by each US Originator is made without recourse to such US Originator, and the contribution of the Aggregate Initial Contributed Assets by Smithfield to SFFC, and by SFFC to Buyer, is made without recourse to Smithfield or SFFC, as applicable; provided, however, that (i) each US Originator remains liable to Smithfield for all representations, warranties, covenants and indemnities made by such US Originator hereunder and under the other Transaction Documents to which such US Originator is party, (ii) Smithfield remains liable to SFFC for all representations, warranties, covenants and indemnities made by Smithfield hereunder and under the other Transaction Documents to which Smithfield is party; (iii) SFFC remains liable to Buyer for all representations, warranties, covenants and indemnities made by SFFC hereunder and under the other Transaction Documents to which SFFC is party, and (iv) such transfer and contribution do not constitute, and will not, and are not intended to, result in, an assumption by Buyer of any obligation of such US Originator or any other Person arising in connection with the Initial Contributed Assets or any other obligations of such US Originator. Each of the US Originators, Smithfield and SFFC agrees that it has marked, or will mark within thirty (30) days of the Commencement Date, its master data processing records relating to the Initial Contributed Assets originated (or, in the case of Smithfield or SFFC, contributed) by it with a legend acceptable to Buyer and to the Administrative Agent, evidencing that Buyer acquired the Aggregate Initial Contributed Assets and to note in its financial statements that the Initial Contributed Assets have been transferred to Smithfield and that the Aggregate Initial Contributed Assets have been contributed to SFFC’s capital and subsequently Buyer’s capital. Upon the request of Buyer or the Administrative Agent, each of the US Originators, and each of Smithfield and SFFC, will execute and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to perfect and maintain the perfection of Buyer’s ownership interest in the Aggregate Initial Contributed Assets to the extent that any such assets remain in existence on the applicable Commencement Date.
(d) On the first Settlement Date following the Commencement Date relating to the US Originators, the exact amounts of the Outstanding Balances of the Initial Contributed Assets and the Initial Purchased Assets for each US
Originator shall be determined, based on information provided to Buyer and Servicer by each US Originator, in the following manner. With respect to each US Originator, the Receivables included in the Initial Transferred Assets will be listed in descending order of Outstanding Balance, with the Receivable having the largest Outstanding Balance listed first. Such list will then be divided into two portions in descending order, with the portion including the Receivables from the largest Outstanding Balance to and including the Receivable that causes the total Outstanding Balance of such portion to equal or exceed the amount specified in the Transfer Notice as the amount of Initial Contributed Assets for such US Originator being designated as the Initial Contributed Assets of such US Originator, and the remaining Initial Transferred Assets being treated as the Initial Purchased Assets of such US Originator. The actual amounts of Initial Contributed Assets and Initial Purchased Assets for such US Originator will then be adjusted accordingly.
Section 1.2 Purchase of Receivables.
(a) On the terms and subject to the conditions set forth herein, each of the Originators hereby sells, assigns, transfers, sets-over and otherwise conveys to Buyer on the applicable Commencement Date, without recourse (except to the extent expressly provided herein), and Buyer hereby purchases from each of the Originators on the applicable Commencement Date, all of each Originator’s right, title and interest, in, to and under such Originator’s Initial Purchased Assets.
(b) Prior to the commencement of each Calculation Period, each Originator shall prepare and deliver to Buyer a report (each, an “Estimated Sales Report”) setting forth its good faith estimate of the aggregate Outstanding Balance of all Receivables that, together with all Related Security and Collections relating thereto, are anticipated to be sold and transferred to Buyer by such Originator on each day of such Calculation Period.
(c) On each Purchase Date until and including the applicable Termination Date, each Receivable (other than any Excluded Receivable), together with all Related Security and Collections relating thereto existing at the opening of the applicable Originator’s business on such Purchase Date, shall be hereby be, and be deemed to have been, sold, assigned, transferred, set-over and otherwise conveyed to Buyer, and purchased by Buyer (and without further action by any Person).
(d) On the eighteenth (18th) Business Day following the end of the fiscal month in which the applicable Commencement Date occurs, and on each Monthly Reporting Date thereafter, each Originator shall (or shall cause Smithfield, as Servicer, under the Credit and Security Agreement to) deliver to Buyer a report in substantially the form of Exhibit VII hereto (each such report being herein called a “Purchase Report”) with respect to the actual aggregate Outstanding Balance of the Receivables sold by such Originator to Buyer during the Calculation Period then most recently ended. In addition to, and not in limitation of, the foregoing, in connection with the payment of the Purchase Price for any Receivables purchased
hereunder, Buyer may request that the applicable Originator deliver, and such Originator shall deliver, such approvals, opinions, information or documents as Buyer or the Administrative Agent may reasonably request.
(e) It is the intention of the parties hereto that the purchase of Receivables from each Originator pursuant to this Section 1.2 shall constitute a sale, which sale is absolute and irrevocable and provides Buyer with the full benefits of ownership of such Receivables. Except for the Purchase Price Credits owed by such Originator pursuant to Section 1.4, the sale of Receivables hereunder by each Originator is made without recourse to such Originator; provided, however, that (i) such Originator shall be liable to Buyer for all representations, warranties, covenants and indemnities made by such Originator pursuant to the terms of the Transaction Documents to which such Originator is a party, and (ii) such sale does not constitute and is not intended to result in an assumption by Buyer of any obligation of such Originator or any other Person arising in connection with such Receivables, the related Contracts and/or other Related Security or any other obligations of such Originator. In view of the intention of the parties hereto that the sale of Receivables by each Originator pursuant to this Section 1.2 shall constitute a sale of such Receivables rather than loans secured thereby, each Originator agrees that it has marked (or will, on or prior to the date hereof and in accordance with Section 4.1(e)(ii), mark) its master data processing records relating to the Receivables originated by it with a legend acceptable to Buyer and to the Administrative Agent, evidencing that Buyer has purchased such Receivables and to note in its financial statements that its Receivables have been sold to Buyer. Upon the request of Buyer or the Administrative Agent, each Originator will execute and file such financing or continuation statements, or amendments thereto, financing change statements or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to perfect and maintain the perfection of Buyer’s ownership interest in the Receivables purchased by Buyer pursuant to this Section 1.2 and the Related Security and Collections with respect thereto, or as Buyer or the Administrative Agent may reasonably request.
Section 1.3 Payment of Purchase Price.
(a) On each Purchase Date, the Purchase Price payable by Buyer to any Originator in respect of the purchase of any Receivables and the Related Security and Collections related thereto from such Originator pursuant to Section 1.2 (the “Purchase Price”) on such Purchase Date shall be an amount equal to the product of (x) the estimated Outstanding Balance of such Receivables on the applicable Purchase Date indicated in the Estimated Sales Report for the Calculation Period within which such Purchase Date occurs, multiplied by (y) one minus the Discount Factor in effect on such Purchase Date.
(b) The Purchase Price with respect to the Receivables purchased by Buyer on any Purchase Date in accordance with the applicable Estimated Sales Report shall be reconciled on the applicable Settlement Date based on the information contained in the applicable Purchase Report, in the following manner:
(i) by wire transfer of immediately available funds to such Originator on such Purchase Date or Settlement Date, as applicable, to the extent that Buyer has funds available for such purpose after satisfying Buyer’s obligations under the Credit and Security Agreement that are then due and payable;
(ii) at the request of one or more Originators, by causing any Letter of Credit Issuer to issue a Letter of Credit, subject to the terms and conditions (including any limitations therein on the amount of any such issuance) for issuing Letters of Credit under the Credit and Security Agreement, in favor of one or more beneficiaries selected by such Originator(s) in the stated amount requested by such Originator(s) (or, if applicable and permitted by the Credit and Security Agreement, by causing the expiration date of an existing Letter of Credit to be extended at the request of such Originator(s)), in which event the face amount of each such Letter of Credit shall be applied as a payment of the Purchase Price payable by Buyer to such Originator(s) and, in the event of a request by more than one such Originator, such payment shall be applied pro rata in proportion to the amounts of the Purchase Prices payable to such Originators that are satisfied by delivery of each such Letter of Credit;
(iii) on the applicable Settlement Date, by delivery of the proceeds of a subordinated revolving loan from such Originator to Buyer (a “Subordinated Loan”) in an amount not to exceed the lowest of (A) the remaining unpaid portion of the aggregate Purchase Price for the Receivables sold by such Originator during the applicable Calculation Period (after giving effect to clauses (i) and (ii) above), (B) the maximum Subordinated Loan that could be borrowed without rendering Buyer’s Net Worth less than the Required Capital Amount and (C) an amount equal to the Subordinated Note Limit with respect to such Originator. Each Originator is hereby authorized by Buyer to, on each Settlement Date, endorse on the schedule attached to its Subordinated Note an appropriate notation evidencing the date and amount of advances made thereunder on such Settlement Date, as well as the date and amount of each payment with respect thereto during the Calculation Period to which such Settlement Date relates; provided that the failure to make such notation shall not affect any obligation of Buyer thereunder; and
(iv) on each Settlement Date, by Buyer (A) accepting a contribution to Buyer’s capital from SFFC (which capital contributions, SFFC hereby agrees to make) in an amount equal to the remaining unpaid portion of such Purchase Price for such Receivables (after giving effect to clauses (i), (ii), and (iii) above) and (B) paying (or causing SFFC to pay on Buyer’s behalf) such remaining unpaid portion of such Purchase Price to the applicable Originator(s) from the proceeds of such capital contribution (which payment may be made in cash, by wire transfer or by book-entry).
In the event that Buyer does not have sufficient cash available to pay the estimated Purchase Price payable on any Purchase Date based on the Estimated Sales Report, Buyer shall be entitled to defer its obligation to pay some or all of the shortfall until a later Purchase Date in such Calculation Period to the extent Buyer has surplus cash available on such later Purchase Date.
(c) Buyer shall be permitted to offset against the Purchase Price payable by it to any Originator in respect of the purchase of any Receivables and the Related Security and Collections related thereto from such Originator pursuant to Section 1.2 any credits and adjustments arising under Section 1.3(d) or Section 1.4 and any other amounts owed by such Originator to Buyer hereunder and which have become due but remain unpaid.
(d) In the event one or more Originators request that any purchases hereunder be paid for by the issuance or extension of Letters of Credit as described herein, such Originator(s) shall, on a timely basis, provide Buyer with such information as is necessary for Buyer to obtain or extend such Letter of Credit from the applicable Letter of Credit Issuer pursuant to the Credit and Security Agreement. No Originator shall have a reimbursement obligation in respect of any such Letter of Credit. In the event that any Letter of Credit expires without being fully drawn or is surrendered for cancellation without being fully drawn, Buyer shall pay to the applicable Originator(s) on the next succeeding Settlement Date an amount equal to the undrawn balance of such Letter of Credit as of the date of such expiration or surrender; provided that in the event such Letter of Credit was requested by more than one Originator, Buyer shall pay to each such Originator an amount equal to such Originator’s proportionate share of such undrawn balance of such Letter of Credit that was allocated hereunder to such Originator. Such payment may be paid in cash when Buyer has and to the extent of funds that are not needed to satisfy Buyer’s obligations under the Credit and Security Agreement (to the extent then due and payable) or, at Buyer’s election, by using the proceeds of a Subordinated Loan from such Originator(s). On each Settlement Date with respect to a Calculation Period during which a Letter of Credit is outstanding, the applicable Originator(s) shall pay to Buyer the Letter of Credit Fees (as defined in the Credit and Security Agreement) payable by the Buyer on such date with respect to the Letters of Credit issued on behalf of such Originator(s); provided that in the event any such Letter of Credit was requested by more than one Originator, each such Originator shall pay to the Buyer its proportionate share of such Letter of Credit Fees based on the amount of such Letter of Credit that is allocable to each such Originator. Buyer shall be entitled, at its election, to offset the amount of such Letter of Credit Fees against the principal balance of the Subordinated Note related to such Originator(s) or against the amount of cash next payable with respect to the purchase of Receivables from such Originator(s).
(e) Subject to the limitations set forth in Section 1.3(b)(iii), each Originator irrevocably agrees to advance each Subordinated Loan requested by Buyer on or prior to the applicable Termination Date. The related Subordinated Loans owing to each Originator shall be evidenced by, and shall be payable in
accordance with the terms and provisions of its related Subordinated Note and shall be payable solely from cash available to Buyer after payment of all amounts due in respect of the related Senior Claim (as defined in the related Subordinated Note) or to become due in respect of the related Senior Claim within thirty (30) days of the date of proposed payment on the related Subordinated Note.
(f) From and after the applicable Termination Date, no Originator shall be obligated to (but may, at its option) sell Receivables to Buyer.
Section 1.4 Settlement Date; Adjustments.
(a) The Purchase Price for each Receivable coming into existence after the Business Day immediately preceding the applicable Commencement Date shall be due and payable in full by Buyer to the applicable Originator on the date and in the manner set forth in Section 1.3(b). Notwithstanding the foregoing, on each Settlement Date, Buyer and each Originator shall effect a settlement of all amounts paid by Buyer and all Receivables purchased by Buyer during the Calculation Period (based on the information contained in the Purchase Report for such Calculation Period) to which such Settlement Date relates. On the Settlement Date, the positive difference (if any) (i) owing to an Originator shall be paid by Buyer pursuant to the methods of payment described in Section 1.3(b) or (ii) owing to Buyer shall be applied by Buyer to reduce the balance (if any) owing under the applicable Originator’s Subordinated Note, with any remaining balance being repaid to Buyer.
(b) In addition to the adjustments described in Section 1.4(a), if (x) on any Purchase Date any of the representations and warranties set forth in Sections 2.1(i), (j), (l), (r), (s), (t), (u) and the second sentence of Section 2.1(q) is not true when made or deemed made with respect to the applicable Receivable or (y) on any day the Outstanding Balance of the applicable Receivable purchased from any Originator is:
(i) reduced as a result of any defective, rejected or returned goods or services (including any In-Transit Collateral that is returned or not accepted by the relevant Obligor), any cash discounts, any volume discounts or any adjustment or otherwise by such Originator or any Affiliate thereof (other than as a result of a charge-off of such Receivable or cash Collections applied to such Receivable);
(ii) reduced or canceled as a result of a setoff in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction);
(iii) reduced on account of the obligation of such Originator or any Affiliate thereof to pay to the related Obligor any rebate or refund; or
(iv) on the date of its sale, equal to an amount that is less than the amount reflected in the applicable Purchase Report
then, in such event, Buyer shall be entitled to a credit (each, a “Purchase Price Credit”), on the Settlement Date related to the Calculation Period when the applicable Purchase Date or reduction or cancellation of Outstanding Balance occurs, against the Purchase Price otherwise payable to the applicable Originator hereunder in respect of such Receivable equal to (A) in the case clauses (y)(i) through (iv) above, the amount of such reduction or cancellation or the difference between the Outstanding Balance of such Receivable and the amount included with respect to such Receivable in calculating the then applicable Net Pool Balance, as applicable, and (B) in the case of clause (x) above, an amount equal to the amount of the Outstanding Balance of such Receivable on the relevant Purchase Date. On such Settlement Date, the applicable Originator shall pay the amount of such Purchase Price Credit to Buyer in cash immediately; provided that if the applicable Termination Date has not occurred, such Originator shall be allowed to deduct the amount of such Purchase Price Credit from any indebtedness owed to it under its Subordinated Note.
Section 1.5 Payments and Computations, Etc. All amounts required to be paid by Buyer hereunder shall be paid in accordance with the terms hereof on the day when due in immediately available funds to the account of the applicable Originator designated from time to time by such Originator or as otherwise directed by such Originator. In the event that any payment owed by any Person hereunder becomes due on a day that is not a Business Day, then such payment shall be made on the next succeeding Business Day. If any Person fails to pay any amount due and payable by it hereunder when due, such Person agrees to pay, on demand, interest on such amount calculated at a rate of interest equal to the Default Rate from the date such payment was due until paid in full. All computations of interest payable hereunder shall be made on the basis of the actual number of days (including the first but excluding the last day) elapsed and a year of 360 days. For the purpose of disclosure pursuant to the Interest Act (Canada) to the extent relevant hereunder, the yearly rate of interest to which any rate of interest payable that is calculated on any basis other than a full calendar year is equivalent may be determined by multiplying such rate by a fraction the numerator of which is the actual number of days in the calendar year in which such yearly rate of interest is to be ascertained and the denominator of which is the number of days comprising such other basis. The parties further agree that for the purposes of the Interest Act (Canada), (i) the principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement, and (ii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields.
Section 1.6 License of Software.
(a) To the extent that any software used by any Originator to account for the Receivables originated by it is non-transferable, such Originator hereby grants to each of Buyer, the Administrative Agent and Smithfield an irrevocable, non-exclusive license to use, without royalty or payment of any kind, all such software used by such Originator to account for such Receivables, to the extent necessary to administer such Receivables, whether such software is owned by such Originator or is owned by others and used by such Originator under license agreements with respect thereto; provided that should the consent of any licensor of such software be required for the grant of the license described herein, to be
effective, such Originator hereby agrees that upon the request of Buyer, such Originator will use its reasonable efforts to obtain the consent of such third-party licensor. If any software used by any Originator to account for the Receivables originated by it prohibits such Originator from granting the license to use described herein, or if, after reasonable efforts, the consent of any licensor of such software for the grant of the license described herein is not obtained, there shall be no transfer of such software hereunder or any grant by such Originator of the license to use described herein. The license granted hereby shall be irrevocable until the later to occur of (i) indefeasible payment in full of the Obligations, and (ii) the date on which each of this Agreement and the Credit and Security Agreement terminates in accordance with its terms.
(b) Each Originator (i) shall take such action requested by Buyer and/or the Administrative Agent, from time to time hereafter, that may be necessary or appropriate to ensure that Buyer has an enforceable ownership interest in the Records relating to the Receivables purchased from such Originator hereunder, and (ii) shall use its reasonable efforts to ensure that Buyer, the Administrative Agent and Smithfield each has an enforceable right (whether by license or sublicense or otherwise) to use all of the computer software used to account for such Receivables and/or to recreate such Records.
Section 1.7 Characterization. If, notwithstanding the intention of the parties expressed in Section 1.1(c) and Section 1.2(e), any (a) transfer by a US Originator of Receivables to Smithfield, (b) contribution of Receivables by Smithfield to SFFC or by SFFC to Buyer, or (c) sale by an Originator to Buyer of Receivables hereunder shall be characterized as a secured loan and not a sale or contribution, or such transfer shall for any reason be ineffective or unenforceable, then this Agreement shall be deemed to constitute a security agreement under the UCC and other applicable law. The parties have structured the transactions contemplated by this Agreement as an absolute and irrevocable sale, and the parties agree to treat each such transaction as a “true sale” for all purposes under Applicable Law and accounting principles, including, without limitation, in their respective books, records, computer files, tax returns (federal, state and local), regulatory and governmental filings (and shall reflect such sale in their respective financial statements). For this purpose and without being in derogation of the parties’ intention that each conveyance of Receivables by an Originator or Smithfield hereunder shall constitute a true sale or other absolute assignment thereof, as applicable: (i) each of Smithfield and SFFC hereby grants to Buyer a security interest in all of its right, title and interest in and to the Aggregate Initial Contributed Assets and all proceeds thereof to secure the prompt and complete payment of a loan deemed to have been made in an amount equal to the Buyer’s paid-in capital and capital surplus booked at the time of the issuance to SFFC or Smithfield, as applicable, of Buyer’s Equity Interests, together with all other obligations of SFFC or Smithfield, as applicable, to Buyer hereunder, which security interest shall be prior to all other Adverse Claims (except as created under the Transaction Documents and the Monetization Documents), and (ii) each Originator and Smithfield Support hereby grants to the Buyer a security interest in all of such Originator’s or Smithfield Support’s, as applicable, right, title and interest in, to and under all Receivables of such Originator which are now existing or hereafter arising, all Collections and Related Security with respect thereto, each Lock-Box and Collection Account (other than any FX Collection Accounts and the related Lock-Boxes), all other rights and payments relating to such Receivables and all proceeds of the foregoing
to secure the prompt and complete performance by Smithfield Support of its obligations under the Transaction Documents and payment in full of a loan deemed to have been made in an amount equal to the Purchase Price owing to such Originator. Buyer shall have, in addition to the rights and remedies which it may have under this Agreement, all other rights and remedies provided to a secured creditor under the UCC and other applicable law, which rights and remedies shall be cumulative.
Section 1.8 Excluded Originator. Subject to the Buyer's obligations under the Credit and Security Agreement, Buyer shall be permitted to, at any time and from time to time after the date hereof, terminate an Originator under this Agreement (such Originator, an “Excluded Originator”) by delivery of prior written notice to each of the other parties hereto and the Administrative Agent, which notice shall specify the effective date (the “Effective Date”) of such termination (such Effective Date not to occur earlier than the end of the Calculation Period during which such notice is given). With effect from the Effective Date set forth in such notice, Buyer, Smithfield, SFFC and each of the other Originators hereby release and discharge the Excluded Originator from any future obligations arising under this Agreement, including the obligation to sell Receivables to the Buyer, and each Receivable originated by such Excluded Originator shall be deemed to be an Excluded Receivable; provided, that (a) all of such Excluded Originator's then existing obligations, indebtedness and liabilities arising hereunder and the other Transaction Documents to which it is a party in respect of Receivables that were sold pursuant hereto prior to the Effective Date and (b) the provisions described in Section 7.10(d) as they relate to such Excluded Originator shall survive such termination. Solely to the extent relating to Excluded Receivables, Buyer shall terminate or amend any UCC financing statement filed naming the Buyer as secured party and the Excluded Originator as debtor, (a) terminate any Collection Account Agreement governing any Lock-Box or Collection Account relating solely to such Excluded Originator and (b) take any other actions as may be appropriate to evidence or record the termination of such Excluded Originator contemplated hereby. Each Excluded Originator agrees that this Agreement and the other Transaction Documents may be amended or otherwise modified after the effective date of such release without the consent or approval of such Excluded Originator and the Excluded Originator shall no longer be considered a party thereto (except with respect to (a) such Excluded Originators obligation's, indebtedness and liabilities arising under this Agreement the other Transaction Documents to which it is a party in respect of Receivables sold hereunder prior to the Effective Date and existing as of the Effective Date and (b) the provisions described in Section 7.10(d) as they relate to such Excluded Originator); provided that no such amendment or other modification that could reasonably be expected to adversely affect the rights and protections afforded to such Excluded Originator under this Section 1.8 shall be effective unless agreed to in writing by such Excluded Originator.
Section 1.9 Restructuring Transactions.
(a) The parties acknowledge that Smithfield and certain of its Affiliates undertook, or caused to be undertaken, the actions set forth on Exhibit VIII hereto prior to the date hereof (collectively, the “Restructuring Transactions”).
(b) The parties further acknowledge that the undertaking by Smithfield and its Affiliates of the Restructuring Transactions, and the consummation thereof, did not cause and shall not be deemed to have constituted (i) a breach of any representation, warranty or covenant
contained herein, (ii) a Material Adverse Effect, (iii) a Termination Event, or (iv) an Unmatured Termination Event.
Section 1.10 Amendment and Restatement. The parties acknowledge and agree that this Agreement does not constitute a novation or termination of the existing obligations under the Original Agreement and that such obligations, including the grant of the security interest in respect of the contribution and sale of Receivables, Related Security and related Collections, are in all respects continued and outstanding as obligations under this Agreement with only the terms being modified from and after the date hereof as provided herein.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties. Each of Smithfield, Smithfield Support and SFFC hereby represents and warrants to Buyer on the date hereof, and each Originator hereby represents and warrants to Smithfield, Smithfield Support, SFFC and Buyer on the date hereof, the applicable Commencement Date and each Purchase Date after such Commencement Date, that:
(a) Existence and Power. Such Transferor’s jurisdiction of organization is correctly set forth in the preamble to this Agreement unless notice of a change in its jurisdiction of organization has been provided in accordance with Section 4.2(a). Each Transferor and Smithfield Support is duly organized under the laws of that jurisdiction and no other state or jurisdiction, and such jurisdiction must maintain a public record showing the organization to have been organized. Each Transferor and Smithfield Support is validly existing and in good standing under the laws of its jurisdiction of organization. Each Transferor and Smithfield Support is duly qualified to do business and is in good standing as a foreign entity, and has and holds all organizational power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so qualify or so hold could not reasonably be expected to have a Material Adverse Effect.
(b) Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by such Person of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder, and, in the case of any Originator, such Originator’s use of the proceeds of the sale of any Receivables, Related Security or related Collections made by it hereunder, are within its organizational powers and authority and have been duly authorized by all necessary organizational action on its part. This Agreement and each other Transaction Document to which any Transferor or Smithfield Support is a party have been duly executed and delivered by such Transferor or Smithfield Support, as applicable.
(c) No Conflict. The execution and delivery by each Transferor and Smithfield Support of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not result in the creation or imposition of any Adverse Claim on the assets of such Transferor or Smithfield Support, as applicable, or contravene or violate (i) its Organizational Documents, (ii) any law,
rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property (except as created under the Transaction Documents) except, in any case, where such contravention or violation could not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law.
(d) Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any Person or Governmental Authority is required for the due execution and delivery by any Transferor or Smithfield Support of this Agreement and each other Transaction Document to which it is a party and the performance by it of its obligations hereunder and thereunder.
(e) Litigation and Contingent Obligations. Except as disclosed in the filings made by Smithfield, any Transferor or Smithfield Support with the Securities and Exchange Commission, there are no actions, suits or proceedings pending or, to the best knowledge of each of the Transferors and Smithfield Support, threatened against or affecting such Transferor or Smithfield Support, as applicable, or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a material adverse effect on (i) the business, properties, financial condition or results of operations of such Transferor, its Subsidiaries and Smithfield Support, taken as a whole, (ii) the ability of such Transferor or Smithfield Support, as applicable, to perform its obligations under the Transaction Documents, or (iii) the validity or enforceability of any of the Transaction Documents or the rights or remedies of the Buyer hereunder. Such Transferor does not have any material Contingent Obligations not provided for or disclosed in the financial statements referred to in Section 4.1(a).
(f) Binding Effect. Each of the Transaction Documents to which any Transferor or Smithfield Support is a party constitutes the legal, valid and binding obligation of such Transferor or Smithfield Support, as applicable, enforceable against such Transferor or Smithfield Support, as applicable, in accordance with its respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore furnished by such Transferor or any of its Affiliates to Buyer for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Transferor or any of its Affiliates to Buyer will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain, when furnished, any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein, taken as a whole, and in light of the circumstances in which they were made, not misleading; provided that, with respect to projected financial information, such Transferor represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time delivered.
(h) Use of Proceeds. No portion of any Purchase Price payment hereunder will be used (i) for a purpose that violates, or would be inconsistent with, any law, rule or regulation applicable to such Transferor or (ii) to acquire any security in any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.
(i) Good Title. Immediately prior to (i) the transfer by each Originator of the applicable Initial Contributed Assets to Smithfield and (ii) the sale by each Originator of Receivables (other than Excluded Receivables) on the applicable Commencement Date and each Purchase Date thereafter, such Originator (x) is the legal and beneficial owner of all right, title and interest in such Initial Contributed Assets or such Receivables, as applicable and (y) is the legal and beneficial owner of the Related Security with respect to such Receivables or possesses a valid and perfected first priority security interest therein, in each case, free and clear of any Adverse Claim, except as created by the Transaction Documents and the Monetization Documents. Immediately prior to Smithfield’s and SFFC’s contribution of the Aggregate Initial Contributed Assets to SFFC’s and Buyer’s capital, respectively, Smithfield or SFFC, as applicable, will be the legal and beneficial owner of the Aggregate Initial Contributed Assets, free and clear of any Adverse Claim, except as created by the Transaction Documents and the Monetization Documents.
(j) Perfection. This Agreement, together with the filing of financing statements and assignments contemplated hereby, is effective to transfer to Buyer (and Buyer shall acquire from such Transferor, directly or indirectly): (i) legal and equitable title to, with the right to sell and encumber, each Receivable (other than any Excluded Receivable) originated by such Originator, whether now existing and hereafter arising, together with the Collections with respect thereto, and (ii) all of such Originator’s right, title and interest in the Related Security associated with each such Receivable, in each case, free and clear of any Adverse Claim, except in favor of Buyer, the Administrative Agent for the benefit of the Secured Parties, pursuant to the Transaction Documents or, with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer’s ownership interest in such Receivables, the Related Security and the Collections. Such Transferor’s jurisdiction of organization is a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a filing, record or registration system as a condition or result of such a security interest’s obtaining priority over the rights of a lien creditor which respect to collateral.
(k) Places of Business and Locations of Records. The principal place of business and chief executive office of each Transferor and Smithfield Support and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit II or such other locations of which Buyer has been notified in accordance with Section 4.2(a) in jurisdictions where all action required by Section 4.2(a) has been taken and completed. Each Transferor’s and Smithfield Support’s Federal Employer Identification Number or Business Number, as applicable is correctly set forth on Exhibit II.
(l) Collections. The conditions and requirements set forth in Section 4.1(i) have at all times been satisfied and duly performed.
(i) Subject to such changes permitted by clause (ii) below and by Section 4.2(b), the names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts at each Collection Bank and the post office box number of each Lock-Box, are listed on Schedule D to the Credit and Security Agreement. None of the Originators nor Smithfield Support has granted to any Person, other than Buyer, the Administrative Agent and, with respect to the Monetized Receivables and Related Monetized Assets, the Receivables Agent, dominion and control of any Lock-Box or Collection Account, or the right to take dominion and control of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future event.
(ii) On or prior to the Post-Closing Date, the Collection Accounts will be novated from each of Smithfield Direct and Smithfield Support to, in both cases, the Buyer.
(m) Material Adverse Effect. Since January 2, 2022, no event has occurred that would have a Material Adverse Effect.
(n) Names. Unless notice of a change in its name has been provided in accordance with Section 4.2(a), the name in which such Transferor has executed this Agreement is identical to the name of such Transferor as indicated on the public record of its jurisdiction of organization which shows such Transferor to have been organized. In the past five (5) years, such Transferor has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement and as listed on Exhibit II.
(o) Ownership of Buyer. Smithfield owns, directly or indirectly, one hundred percent (100%) of the issued and outstanding Equity Interests of each Originator, SFFC and, after giving effect to the transactions on the Closing Date, Buyer. Such Equity Interests are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Buyer, SFFC or any Originator.
(p) Not an Investment Company. Such Transferor is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or any successor statute.
(q) Compliance with Law. Each of such Transferor and Smithfield Support has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Receivable, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation could not reasonably be expected to have a Material Adverse Effect.
(r) Compliance with Credit and Collection Policy. Such Transferor has complied in all material respects with the Credit and Collection Policy with regard to each Receivable originated or contributed by it that was reflected in any Purchase Report as an Eligible Receivable and was an Eligible Receivable on the date of its acquisition by Buyer hereunder, and with regard to each Contract with respect to such Receivable, and has not made any material change to such Credit and Collection Policy, except such material change as to which Buyer has been notified in accordance with Section 4.1(b)(ii).
(s) Payments to such Originator. With respect to each Receivable originated by such Originator and sold to Buyer hereunder, the Purchase Price payable by Buyer in respect thereof constitutes reasonably equivalent value, in consideration therefor. No transfer hereunder by such Originator of any Receivable originated by such Originator is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101 et seq.), as amended.
(t) Enforceability of Contracts. Each Contract with respect to each Receivable that was reflected in any Purchase Report as an Eligible Receivable and was an Eligible Receivable on the date of its acquisition by Buyer hereunder is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable reflected in any Purchase Report as an Eligible Receivable was an Eligible Receivable on the date of its acquisition by Buyer hereunder.
(v) Accounting. The manner in which such Originator accounts for the transactions contemplated by this Agreement in its financial statements does not jeopardize the characterization of the transactions contemplated herein as being true sales.
(w) Taxes. Each of Smithfield, SFFC, Smithfield Support and each Originator has filed or caused to be filed all Tax returns which are required to be filed by it and has paid all Taxes required to be paid by it, except (i) Taxes that are being contested in good faith by appropriate proceedings and for which Smithfield, SFFC, Smithfield Support or such Originator, as applicable, has set aside on its books adequate reserves or (ii) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
(x) ERISA. Except as could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (a) Smithfield, SFFC, Smithfield Support, each US Originator and each of their respective ERISA Affiliates is in compliance with the applicable provisions of ERISA and of the US Internal Revenue Code of 1986, as amended (the “Tax Code”) relating to Plans and the regulations and published interpretations thereunder, and (b) no ERISA Event has occurred or is reasonably expected to occur. The minimum funding standards of ERISA and the Tax Code with respect to each Plan have been satisfied, except
where the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
(y) Sanctions and other Anti-Terrorism Laws. No: (a) Covered Entity, nor any employees, officers, directors, or to the knowledge of a Covered Entity, any affiliates or agents acting on a Covered Entity’s behalf in connection with this Agreement: (i) is a Sanctioned Person; (ii) directly, or indirectly through any third party, is engaged in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, or any transactions or other dealings that otherwise are prohibited by any Anti-Terrorism Laws; (b) Collateral is EmbargoedBlocked Property.
(z) Anti-Corruption Laws. Each Covered Entity has (a) conducted its business in compliance with all Anti-Corruption Laws and (b) has instituted and maintains policies and procedures reasonably designed to ensure compliance with such Laws.
ARTICLE III
CONDITIONS OF PURCHASE
Section 3.1 Conditions Precedent to Purchase. The obligations of Buyer to purchase Receivables, Related Security and associated Collections from each Originator under this Agreement is subject to the satisfaction or waiver by Buyer of the conditions precedent that (a) Collection Account Agreements for each Lock-Box and Collection Account (other than any FX Collection Account) (or amendments to or assignments of existing Collection Account Agreements) in favor of PNC Bank, National Association, as Administrative Agent shall have been executed by the parties thereto and delivered to Buyer; (b) all of the conditions to effectiveness of the Credit and Security Agreement shall have been satisfied on or before the closing date thereunder or waived in accordance with the terms thereof; and (c) the Commencement Date shall have occurred with respect to such Originator.
Section 3.2 Conditions Precedent to Subsequent Payments. Buyer’s obligation to pay the Purchase Price in respect of any Receivables on any Purchase Date shall be subject to the satisfaction or waiver by Buyer of the further conditions precedent that: (a) as of such Purchase Date, the Facility Termination Date shall not have occurred under the Credit and Security Agreement; (b) Buyer shall have received such other approvals, opinions or documents as it may reasonably request, and (c) on the date such Receivable came into existence, the following statements shall be true (and acceptance of the proceeds of any payment for such Receivable shall be deemed a representation and warranty by such Originator that such statements are then true):
(a) the representations and warranties set forth in Article II are true and correct on and as of the date such Receivable came into existence as though made on and as of such date; and
(b) no event has occurred and is continuing that will constitute a Termination Event or an Unmatured Termination Event.
Notwithstanding the foregoing conditions precedent, upon payment of the Purchase Price for any Receivable in the manner provided in Section 1.3, title to such Receivable and the Related
Security and Collections with respect thereto shall vest in Buyer, whether or not the conditions precedent to Buyer’s obligation to pay for such Receivable were in fact satisfied or waived. The failure of an Originator to satisfy any of the foregoing conditions precedent, however, shall give rise to (x) a right of Buyer to rescind the purchase of the applicable Receivables and (y) an obligation of such Originator to pay to Buyer an amount equal to the Purchase Price received by it in respect of such Receivables.
ARTICLE IV
COVENANTS
Section 4.1 Affirmative Covenants. Until the date on which this Agreement terminates in accordance with its terms:
(a) Financial Reporting. Smithfield agrees that it will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and Smithfield will, and, as applicable, will cause each Originator to, furnish to Buyer upon request:
(i) Annual Reporting. Within 90 days after the end of each fiscal year of Smithfield, Smithfield’s audited consolidated balance sheet and audited consolidated condensed statements of income, stockholders’ equity and cash flows as of the end of and for such year, and related notes thereto, setting forth in each case in comparative form the corresponding figures for (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all reported on by Ernst & Young LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception (other than a “going concern” qualification or exception solely as a result of the upcoming maturity of the Debt outstanding under the Parent Credit Agreement and except for qualifications solely relating to changes in accounting principles or practices reflecting changes in GAAP and required or approved by Smithfield’s independent certified public accountant) and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of Smithfield and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied.
(ii) Quarterly Reporting. Within 45 days after the end of each of the first three (3) fiscal quarters of each fiscal year of Smithfield, Smithfield’s unaudited consolidated balance sheet and unaudited consolidated condensed statements of income and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by the Financial Officer of Smithfield as presenting fairly in all material respects the financial condition and results of operations of Smithfield and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes.
(iii) Compliance Certificate. Together with the financial statements required to be delivered pursuant to Section 4.1(a)(i) and (ii) or, if not requested, with
respect to the relevant accounting period, as applicable, a compliance certificate in substantially the form of Exhibit IV signed by a Financial Officer of Smithfield and dated the date of such annual financial statement or such quarterly financial statement, or the end of such relevant accounting period, as the case may be.
(iv) [Reserved].
(v) Auditors Reports and Management Letters. Concurrently with any delivery of financial statements under paragraph (a)(i) and (ii) above (i) a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any default relating to Sections 7.10 or 7.11 of the Parent Credit Agreement (which certificate may be limited to the extent required by accounting rules or guidelines) and (ii) copies of any letters to the management of Smithfield from such accounting firm.
(b) Other Notices and Information. Each Transferor, if applicable, will deliver to Buyer:
(i) ERISA. Promptly following receipt thereof, copies of any documents described in Sections 101(k) or 101(l) of ERISA that any Transferor or any ERISA Affiliate may request with respect to any Multiemployer Plan; provided that if such Transferor or any of the ERISA Affiliates have not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Buyer or the Administrative Agent, the Transferors and/or the ERISA Affiliates shall promptly make a request for such documents or notices from such administrator or sponsor and such Transferor shall provide copies of such documents and notices promptly to the Buyer or the Administrative Agent after receipt thereof, and further provided that the rights granted to the Buyer or the Administrative Agent in this section shall be exercised not more than once during a 12-month period.
(ii) Change in Credit and Collection Policy. At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such proposed change or amendment, and (B) if such proposed change or amendment would be reasonably likely to materially adversely affect the collectability of the Receivables or decrease the credit quality of any newly created Receivables, requesting Buyer’s (and the Administrative Agent’s) consent thereto.
(iii) Other Information. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables originated or contributed by such Transferor or the condition or operations, financial or otherwise, of such Originator as Buyer may from time to time reasonably request in order to protect the interests of Buyer under or as contemplated by this Agreement.
(iv) Termination Events or Unmatured Termination Events. The occurrence of each Termination Event and each Unmatured Termination Event, by a statement of a Financial Officer of such Transferor.
(v) Downgrade of Transferor. Promptly after the occurrence thereof, any downgrade in the rating of any rated Debt of any Transferor by S&P or by Moody’s, setting forth the Debt affected and the nature of such change.
(vi) Material Events. With respect to (i) any Transferor other than Smithfield, promptly upon learning thereof, the occurrence of any event or condition that has had, or could reasonably be expected to have, a Material Adverse Effect and (ii) Smithfield, a copy of each notice delivered pursuant to Section 6.02 of the Parent Credit Agreement as and when such notice is delivered thereunder.
(c) Compliance with Laws and Preservation of Existence. Each Transferor will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Transferor will preserve and maintain its legal existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign entity in each jurisdiction where its business is conducted, except where the failure to so qualify or remain in good standing could not reasonably be expected to have a Material Adverse Effect.
(d) Audits. Each Transferor will furnish to Buyer such information with respect to it and the Receivables sold or contributed by it as may be reasonably requested by Buyer from time to time. Each Transferor will, from time to time during regular business hours as requested by Buyer upon reasonable notice and at the sole cost of such Transferor, permit Buyer, or its agents or representatives: (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Transferor relating to the Receivables and Related Security, including the related Contracts, and (ii) to visit the offices and properties of such Transferor for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Transferor’s financial condition or the Receivables and the Related Security or such Transferor’s performance under any of the Transaction Documents or the Monetization Documents or any Person’s performance under the Contracts and, in each case, with any of the officers or employees of such Transferor having knowledge of such matters (each of the foregoing examinations and visits, a “Review”); provided, however, that, so long as no Event of Default (under and as defined in the Credit and Security Agreement) has occurred and is continuing, the Transferors shall only be responsible for the costs and expenses of the first Review conducted in each calendar year.
(e) Keeping and Marking of Records and Books.
(i) Such Transferor will maintain and implement administrative and operating procedures (including an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable). Such Transferor will give Buyer notice of any material change in the administrative and operating procedures referred to in the previous sentence.
(ii) Such Transferor will (A) on or prior to the date hereof, mark its master data processing records and other books and records relating to the Receivables with a legend, acceptable to Buyer, describing Buyer’s ownership interests in the Receivables and further describing the interest of the Administrative Agent (on behalf of the Lenders) under the Credit and Security Agreement and (B) upon the request of Buyer: (x) mark each Contract with a legend describing Buyer’s ownership interests in the Receivables originated by such Transferor and further describing the interest of the Administrative Agent (on behalf of the Lenders) and (y) after the occurrence of a Termination Event, deliver to Buyer all Contracts (including all multiple originals of any such Contract) relating to such Receivables.
(f) Compliance with Contracts and Credit and Collection Policy. Such Transferor will timely and fully (i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables originated by it, except to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect and (ii) comply in all respects with the Credit and Collection Policy in regard to each such Receivable and the related Contract.
(g) Ownership. Such Transferor will take all necessary action to establish and maintain, irrevocably in Buyer, (A) legal and equitable title to the Receivables (other than the Excluded Receivables) originated by such Transferor and the Collections and (B) all of such Transferor’s right, title and interest in the Related Security associated with the Receivables (other than Excluded Receivables) originated by such Transferor, in each case, free and clear of any Adverse Claims (other than Adverse Claims of (i) Buyer, (ii) the Administrative Agent, for the benefit of the Secured Parties, pursuant to the Transaction Documents and (iii) with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers, pursuant to the Monetization Documents) (including the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer’s ownership interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of Buyer as Buyer may reasonably request).
(h) Lenders’ Reliance. Such Transferor acknowledges that the Administrative Agent and the Lenders are entering into the transactions contemplated by the Credit and Security Agreement in reliance upon Buyer’s identity as a legal entity that is separate from such Transferor and any Affiliates thereof. Therefore, from and after the date of execution and delivery of this Agreement, such Transferor will take all reasonable steps, including all steps that Buyer may from time to time reasonably request, to maintain Buyer’s identity as a separate legal entity and to make it manifest to third parties that Buyer is an entity with assets and liabilities distinct from those of such Transferor and any Affiliates thereof and not just a division of such Transferor or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, such Transferor (i) will not hold itself out to third parties as liable for the debts of Buyer nor purport to own any of the Receivables and other assets acquired by Buyer, (ii) will take all other actions necessary on its part to ensure that Buyer is at all times in compliance with the “separateness covenants” set forth in Section 7.1(i) of the Credit and Security Agreement and (iii) will cause all tax liabilities arising in connection with the transactions contemplated herein or otherwise to be allocated between such Transferor and Buyer
on an arm’s-length basis and in a manner consistent with the procedures set forth in U.S. Treasury Regulations §§1.1502-33(d) and 1.1552-1.
(i) Collections. From and after the Commencement Date, such Transferor will cause (1) all proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection Account and (2) each Collection Account (other than any FX Collection Account) and, to the extent required by the relevant Collection Bank, each Lock-Box to be subject at all times to a Collection Account Agreement that is in full force and effect; provided, that amounts received in respect of any Excluded Receivables shall not be deposited in any Lock-Box or Collection Account. In the event any payments relating to Receivables are remitted directly to such Transferor or any Affiliate of such Transferor (including Smithfield Support), such Transferor or Smithfield Support will remit (or will cause all such payments to be remitted) directly to a Collection Bank and deposit into a Collection Account within two (2) Business Days following receipt thereof and, at all times prior to such remittance, such Transferor or Smithfield Support will itself hold or will cause such payments to be held in trust for the exclusive benefit of Buyer. From and after the Commencement Date, each Transferor and Smithfield Support will transfer exclusive ownership, dominion and control of each Lock-Box to Buyer and, will not grant the right to take dominion and control of any Lock-Box at a future time or upon the occurrence of a future event to any Person, except to Buyer as contemplated by this Agreement and the Credit and Security Agreement.
(j) Taxes. Such Transferor will file all Tax returns and reports required by law to be filed by it and promptly pay all Taxes and governmental charges at any time owing, except any such Taxes which are not yet delinquent or are being contested in good faith by appropriate and timely proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Such Transferor will pay when due any and all present and future stamp, documentary, and other similar taxes and governmental charges payable in connection with the Receivables originated by it, and hold Buyer harmless from and against any and all liabilities (including penalties, interest and expenses) with respect to or resulting from any delay or omission to pay such Taxes and governmental charges.
(k) Additional Covenants of Smithfield Support.
(i) Smithfield Support will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Smithfield Support will preserve and maintain its legal existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign entity in each jurisdiction where its business is conducted, except where the failure to so qualify or remain in good standing could not reasonably be expected to have a Material Adverse Effect.
(ii) Smithfield Support will furnish to Buyer such information with respect to it as may be reasonably requested by Buyer from time to time.
(l) Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws. Each Transferor covenants and agrees that:
(i) it shall immediately notify each of the Agents in writing upon the occurrence of a Reportable Compliance Event;
(ii) if, at any time, any Collateral becomes EmbargoedBlocked Property, then, in addition to all other rights and remedies available to each of the Agents, upon request by any of the Agents, such Loan Party shall (or shall cause the Buyer to) provide substitute Collateral acceptable to the Administrative Agent that is not EmbargoedBlocked Property; and
(iii) it shall, and shall require each other Covered Entity to, conduct its business in compliance with all Anti-Corruption Laws and maintain policies and procedures reasonably designed to ensure compliance with such Laws.
Section 4.2 Negative Covenants. Until the date on which this Agreement terminates in accordance with its terms, each Transferor and Smithfield Support, as applicable, hereby covenants that:
(a) Name Change, Offices and Records. Such Transferor will not change its (i) jurisdiction of organization, (ii) name, (iii) identity or structure (within the meaning of Article 9 of any applicable enactment of the UCC), unless it shall have: (i) given the Buyer (and the Administrative Agent) at least forty-five (45) days’ prior written notice thereof and (ii) delivered to the Administrative Agent all financing statements, instruments and other documents requested by the Administrative Agent in connection with such change or relocation.
(b) Change in Payment Instructions to Obligors. Each Transferor and Smithfield Support, as applicable, will not add or terminate any bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box or Collection Account, unless Buyer shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Collection Bank or a Collection Account (other than any FX Collection Account) or Lock-Box (other than any Lock-Box associated with a FX Collection Account), an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box; provided, however, that such Transferor and Smithfield Support may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account, including any Collection Account relating to Smithfield Support.
(c) Modifications to Contracts and Credit and Collection Policy. Such Transferor will not make any change to the Credit and Collection Policy that would impair the collectability of any Receivable originated by it or reasonably be expected to have a Material Adverse Effect without the consent of the Buyer and the Administrative Agent. Except as otherwise permitted in its capacity as Servicer pursuant to the Credit and Security Agreement, such Transferor will not extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy.
(d) Sales, Liens. Each Transferor and Smithfield Support will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including the filing of any
financing statement) or with respect to, any Receivable (other than any Excluded Receivable), Related Security or Collections, or upon or with respect to any Contract under which any such Receivable arises, or any Lock-Box or Collection Account, or assign any right to receive income with respect thereto (other than, in each case, (i) the creation of the ownership interests therein in favor of Buyer provided for herein, (ii) the creation of the security interest therein in favor of the Administrative Agent as provided for in the Transaction Documents or, (iii) with respect to the Monetized Receivables and Related Monetized Assets, the creation of the ownership interests therein in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents), and each Transferor and Smithfield Support will defend the right, title and interest of Buyer in, to and under any of the foregoing property, against all claims of third parties claiming through or under such Transferor or Smithfield Support, as applicable.
(e) Accounting for Purchase. Such Transferor will not, and will not permit any Affiliate to, financially account (whether in financial statements or otherwise) for the transactions contemplated hereby in any manner other than the sale or other outright conveyance by such Transferor to Buyer of the Receivables originated by such Transferor and the associated Related Security or in any other respect account for or treat the transactions contemplated hereby in any manner other than as a sale of such Receivables and Related Security by such Transferor to Buyer except to the extent that such transactions are not recognized on account of consolidated financial reporting in accordance with GAAP.
(f) ERISA Compliance. Each of Smithfield and such Transferor will not, and will not permit any Subsidiary of Smithfield and such Transferor to, fail to satisfy the minimum funding standard under Section 412 of the Tax Code or Section 302 of ERISA, whether or not waived, or incur any liability under Section 4062 of ERISA to PBGC established thereunder in connection with any Plan except as would not have a Material Adverse Effect.
(g) Merger; Consolidation. Subject to the limitations of Section 7.1(i) of the Credit and Security Agreement, no Transferor will, nor will it permit any of its Non-Excluded Subsidiaries to, merge into, amalgamate with or consolidate with any other Person, or permit any other Person to merge into, amalgamate with or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Non-Excluded Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Termination Event shall have occurred and be continuing:
(i) any Subsidiary (other than the Buyer) may merge, consolidate or amalgamate with Smithfield in a transaction in which Smithfield is the surviving entity pursuant to documentation reasonably satisfactory to the Administrative Agent;
(ii) any Transferor (other than Smithfield) and any other Person may merge into or amalgamate or consolidate with any Transferor in a transaction in which a Transferor is the surviving corporation, or, concurrently with the consummation of such transaction, the surviving entity becomes a Transferor;
(iii) any entity (other than Smithfield or the Buyer) may merge into or amalgamate with any other entity (other than Smithfield or the Buyer);
(iv) any Non-Excluded Subsidiary may sell, transfer, lease or otherwise dispose of its assets, including all or substantially all of the stock of any of its Non-Excluded Subsidiaries, to Smithfield or another Non-Excluded Subsidiary;
(v) any Non-Excluded Subsidiary may liquidate or dissolve if Smithfield determines in good faith that such liquidation or dissolution is in the best interests of Smithfield and is not materially disadvantageous to the Lenders; and
(vi) any Transferor or any Non-Excluded Subsidiary may sell, transfer, lease or otherwise dispose of (including pursuant to any merger, amalgamation or consolidation) its assets (including for the avoidance of doubt any Excluded Receivable and all or substantially all of the stock of any of its Non-Excluded Subsidiaries) in any manner expressly permitted by any Transaction Document or if permitted under Section 7.06 or Section 7.07 of the Parent Credit Agreement.
(h) Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws. Such Transferor covenants and agrees that:
(i) it and its Subsidiaries will not: (A) take any action that could reasonably be expected to result in it becoming a Sanctioned Person or allow any employees, officers, directors, affiliates or agents acting on its behalf in connection with this Agreement to becometake any action that could reasonably be expected to result in any such person becoming a Sanctioned Person; (B) directly, or indirectly through a third party, engage in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, including any use of the proceeds of the Purchase Price to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, (C) directly or indirectly provide, use or make available the proceeds of the Purchase Price (x) in any manner that could result in a violation by any Person of any Anti-Corruption Law (including any Agent, Conduit or Committed Lender, underwriter, advisor, investor, or otherwise) or (y) in violation of any applicable Anti-Corruption Law; (D) pay or repay any Obligations with EmbargoedBlocked Property or funds derived from any unlawful activity; (DE) permit any Collateral to become EmbargoedBlocked Property; or (EF) cause any Agent, Conduit or Committed Lender to violate any Anti-Terrorism Law; and
(ii) it will not, and will not permit any its Subsidiaries to, directly or indirectly, use the Purchase Price or any proceeds thereof for any purpose which would breach any Anti-Corruption Laws in any jurisdiction in which any Covered Entity conducts business.
ARTICLE V
TERMINATION EVENTS
Section 5.1 Termination Events. The occurrence of any one or more of the following events shall constitute a Termination Event:
(a) Any Transferor or Smithfield Support shall fail to make any payment required hereunder when due and such failure shall continue for two (2) consecutive Business Days.
(b) Any Transferor or Smithfield Support shall fail to observe or perform any covenant or agreement contained in Section 4.1(b)(iv) or 4.2.
(c) Any Transferor or Smithfield Support shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those referred to in Sections 5.1(a) and (b)), and such failure shall remain unremedied for fifteen (15) days after the earlier of (i) an Executive Officer of any of the Transferors and Smithfield Support obtaining knowledge thereof, or (ii) written notice thereof shall have been given to any of the Transferors and Smithfield Support by Buyer.
(d) Any representation, warranty, certification or statement made by any Transferor or Smithfield Support in this Agreement, any other Transaction Document or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made or deemed made; provided that the materiality threshold in the preceding clause shall not be applicable with respect to any representation or warranty which itself contains a materiality threshold and provided, further, that any misrepresentation or certification for which Buyer has actually received a Purchase Price Credit shall not constitute a Termination Event hereunder.
(e) Any of the Transferors, Smithfield Support or any of the Non-Excluded Subsidiaries shall become unable, admit in writing its inability or fail generally to pay its Debts as they become due.
(f) An Event of Bankruptcy shall occur with respect to Smithfield, SFFC, Smithfield Support or any Originator.
(g) A Change of Control shall occur.
(h) (i) An ERISA Event shall have occurred or (ii) such other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) and (ii) such event or condition, when taken together with all other such events or conditions, if any, that have occurred, is reasonably likely to result in a Material Adverse Effect;
(i) One or more judgments for the payment of money in an aggregate amount in excess of $150,000,000 (to the extent not adequately covered by insurance as to which the insurer has not denied or contested coverage) shall be rendered against Smithfield, any Subsidiary of Smithfield (other than any Excluded Subsidiary), any Originator, any Subsidiary of an Originator (other than any Excluded Subsidiary) or any combination thereof and the same shall remain unpaid or undischarged for a period of 45 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of Smithfield, any Subsidiary of Smithfield, any Originator or any Subsidiary of any Originator (other than any Excluded Subsidiary) to enforce any such judgment, or Smithfield, any Subsidiary of Smithfield (other than any Excluded Subsidiary), any Originator or any Subsidiary of any Originator (other than any Excluded Subsidiary) shall fail within 45 days to
discharge one or more non-monetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgments or orders, in any such case, are not stayed on appeal or otherwise being appropriately contested in good faith by proper proceedings diligently pursued.
(j) A Subordinated Lender shall fail to make any Subordinated Loan under the applicable subordinated loan agreement following the Buyer’s request therefor.
(k) Any Transaction Document ceases to be in full force and effect or the validity or enforceability thereof is disaffirmed by or on behalf of any Transferor or any Non-Excluded Subsidiary, or at any time it is or becomes unlawful for any Transferor or any Non-Excluded Subsidiary to perform or comply with its obligations under any Transaction Document, or the obligations of any of the Transferors or any Non-Excluded Subsidiary under any Transaction Document are not, or cease to be, legal, valid and binding on any of the Transferors or any Non-Excluded Subsidiary.
(l) A regulatory, tax or accounting body has ordered that the activities of any Originator or any Affiliate of such Originator contemplated hereby be terminated or, as a result of any other event or circumstance, the activities of such Originator or any Affiliate of such Originator contemplated hereby may reasonably be expected to cause such Originator or any of its respective Affiliates to suffer materially adverse regulatory, accounting or tax consequences.
(m) There shall occur any loss, termination, cancellation or other material impairment of any governmental license, certificate, or permit by any Transferor or any Non-Excluded Subsidiary which is reasonably likely to have a Material Adverse Effect.
Section 5.2 Remedies. Upon the occurrence of a Termination Event, Buyer may take any of the following actions: (i) declare the applicable Termination Date to have occurred, whereupon the applicable Termination Date shall forthwith occur, without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Transferor; provided, however, that upon the occurrence of a Termination Event described in Section 5.1(f) with respect to any Transferor, or of an actual or deemed entry of an order for relief with respect to any Transferor under the Bankruptcy Code, the applicable Termination Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Transferor and (ii) to the fullest extent permitted by applicable law, declare that the Default Rate shall accrue with respect to any amounts then due and owing by such Transferor to Buyer. The aforementioned rights and remedies shall be without limitation and shall be in addition to all other rights and remedies of Buyer otherwise available under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including all rights and remedies provided under the UCC, all of which rights shall be cumulative.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnities. Without limiting any other rights that Buyer may have hereunder or under applicable law, each Transferor and Smithfield Support hereby agrees to
indemnify (and pay upon demand to) Buyer, and its officers, directors, agents and employees (each an “Indemnified Party”) from and against any and all damages, losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys’ fees (which attorneys may be employees of Buyer) and disbursements and, to the extent such Transferor or Smithfield Support does not timely pay such indemnity, any additional liability (including penalties, interest and expenses) arising from or with respect to any of the foregoing (all of the foregoing being collectively referred to as “Indemnified Amounts”) awarded against or incurred by any of them arising out of or as a result of this Agreement or the acquisition, either directly or indirectly, by Buyer of an interest in the Receivables originated by such Transferor, provided, however, that the indemnification obligations of each Transferor and Smithfield Support hereunder shall expressly exclude:
(a) Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification;
(b) Indemnified Amounts to the extent the same includes losses in respect of Receivables originated by such Transferor that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor or the intentional non-payment of amounts due by the related Obligor in breach of its obligations in respect of such Receivable; or
(c) taxes imposed on or measured by such Indemnified Party’s net income, and franchise taxes and branch profit taxes imposed on it, by the jurisdiction under the laws of which such Indemnified Party is organized or any political subdivision thereof, and taxes imposed on or measured by such Indemnified Party’s net income, and franchise taxes and branch profit taxes imposed on it, by the jurisdiction in which such Indemnified Party’s principal executive office is located or any political subdivision thereof;
provided, however, that nothing contained in this sentence shall limit the liability of such Transferor or Smithfield Support or limit the recourse of each Indemnified Party to such Transferor or Smithfield Support for amounts otherwise specifically provided to be paid by such Transferor under the terms of this Agreement. Without limiting the generality of the foregoing indemnification, but subject in each case to clauses (a), (b) and (c) above, each Transferor and Smithfield Support, as applicable, shall indemnify each Indemnified Party for Indemnified Amounts relating to or resulting from:
(i) any representation or warranty made by such Transferor (or any officer of such Transferor) or Smithfield Support (or any officer of Smithfield Support) under or in connection with any Purchase Report, this Agreement, any other Transaction Document or any other information or report delivered by such Transferor or Smithfield Support pursuant hereto or thereto for which Buyer has not received a Purchase Price Credit that shall have been false or incorrect when made or deemed made;
(ii) the failure by such Transferor, to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of such Transferor to keep or perform any of its obligations, express or implied, with respect to any Contract;
(iii) any failure of such Transferor or Smithfield Support to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document;
(iv) any products liability, personal injury or damage, suit or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract or any Receivable;
(v) any dispute, claim, offset or defense (other than a defense related to the financial condition, or discharge in bankruptcy, of the Obligor) of the Obligor to the payment of any Receivable (including a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services or any reduction of the Outstanding Balance of any Receivable due to PASA;
(vi) the commingling of Collections of Receivables at any time with other funds;
(vii) any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, such Transferor’s use of the proceeds of the purchase from it hereunder, the ownership of the Receivables originated by such Transferor or any other investigation, litigation or proceeding relating to such Transferor or Smithfield Support in which any Indemnified Party becomes involved as a result of any of the transactions contemplated hereby;
(viii) any inability to litigate any claim against any Obligor in respect of any Receivable as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding;
(ix) any Termination Event;
(x) any failure to vest and maintain vested in Buyer, or to transfer to Buyer, legal and equitable title to, and ownership of, the Receivables originated by such Transferor and the associated Collections,
and all of such Transferor’s right, title and interest in the Related Security associated with such Receivables, in each case, free and clear of any Adverse Claim (except any Adverse Claim in favor of the Buyer, the Administrative Agent, for the benefit of the Secured Parties or, with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents);
(xi) the failure to have filed, or any delay in filing, financing statements, continuation statement, financing change statement or other similar instruments or documents under the UCC or comparable laws of any applicable jurisdiction or other applicable laws with respect to any Receivable originated by such Transferor, the Related Security and Collections with respect thereto, and the proceeds thereof, whether at the time of the purchase thereof from such Transferor hereunder or at any subsequent time;
(xii) any action or omission by such Transferor which reduces or impairs the rights of Buyer with respect to any Receivable or the value of any such Receivable;
(xiii) any attempt by any Person to void any purchase of Receivables from such Transferor hereunder under statutory provisions or common law or equitable action;
(xiv) any civil penalty or fine assessed by OFAC against, and all reasonable costs and expenses (including counsel fees and disbursements) incurred in connection with defense thereof by the Buyer as a result of any action of such Transferor;
(xv) the failure of any Receivable reflected as an Eligible Receivable on any Purchase Report prepared by such Transferor to be an Eligible Receivable at the time acquired by Buyer;
(xvi) any In-Transit Receivable included in the calculation of the Net Pool Balance as an Eligible Receivable ceasing to be deemed to be an Eligible Receivable; and
(xvii) any liability under Section 10.2(b) of the Credit and Security Agreement, or any breach of Sections 5.1(z)(ii) or 7.2(l) of the Credit and Security Agreement;
provided, further, that the foregoing clauses (ii), (iv), (v), (viii), (x), (xi), (xii), (xiii), (xv) and (xvi) shall not be applicable to Smithfield Support.
Notwithstanding the foregoing, (i) the foregoing indemnification is not intended to, and shall not, constitute a guarantee of the collectability or payment of the Receivables conveyed hereunder; and (ii) nothing in the Section 6.1 shall require a Transferor or Smithfield Support to indemnify
any Indemnified Party for Receivables which are not collected, not paid or otherwise uncollectible on account of the insolvency, bankruptcy, creditworthiness or financial inability to pay of the applicable Obligor or the intentional non-payment of amounts due by the related Obligor in breach of its obligations in respect of such Receivable.
Section 6.2 Other Costs and Expenses. Each Transferor shall pay to Buyer on demand all costs and out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder. Each Transferor shall pay to Buyer on demand any and all costs and expenses of Buyer, if any, including reasonable counsel fees and expenses actually incurred in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following a Termination Event.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Waivers and Amendments.
(a) No failure or delay on the part of Buyer in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented, modified or waived except in writing signed by each Transferor, Smithfield Support and Buyer and, to the extent required under the Credit and Security Agreement, the Administrative Agent and the Committed Lenders or the Required Committed Lenders. Any material amendment, supplement, modification or waiver will require satisfaction of the Rating Agency Condition.
Section 7.2 Notices. All communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or telecopy numbers set forth on the signature pages hereof or at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective (a) if given by telecopy, upon the receipt thereof, (b) if given by mail, five (5) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (c) if given by any other means, when received at the address specified in this Section 7.2.
Section 7.3 Protection of Ownership Interests of Buyer.
(a) Each Transferor agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that Buyer may request, to perfect, protect or more fully evidence the interest of Buyer hereunder and the interest of the Administrative Agent (on behalf of the Lenders) under the Credit and Security Agreement, or to enable Buyer to exercise and enforce their rights and remedies hereunder. At any time, Buyer may, at such Transferor’s sole cost and expense, direct such Transferor to notify the Obligors of Receivables of the ownership interests of Buyer under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to Buyer or its designee.
(b) If any Transferor fails to perform any of its obligations hereunder, Buyer may (but shall not be required to) perform, or cause performance of, such obligations, and Buyer’s costs and expenses incurred in connection therewith shall be payable by such Transferor as provided in Section 6.2. Each Transferor irrevocably authorizes Buyer at any time and from time to time in the sole discretion of Buyer, and appoints Buyer as its attorney(ies)-in-fact, to act on behalf of such Transferor (i) to execute on behalf of such Transferor as debtor and to file financing statements or other applicable recording documents necessary or desirable in Buyer’s sole discretion to perfect and to maintain the perfection and priority of the interest of Buyer in the Receivables originated by such Transferor and the associated Related Security and Collections and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement or other applicable recording document with respect to the Receivables as a financing statement or as otherwise applicable in such offices as Buyer in their sole discretion deem necessary or desirable to perfect and to maintain the perfection and priority of Buyer’s interest in such Receivables. This appointment is coupled with an interest and is irrevocable. If any Transferor fails to perform any of its obligations hereunder: (A) such Transferor hereby authorizes Buyer to file financing statements and other filing or recording documents with respect to the Receivables and Related Security (including any amendments thereto, or continuation or termination statements thereof), without the signature or other authorization of such Transferor, in such form and in such offices as Buyer reasonably determines appropriate to perfect or maintain the perfection of the ownership or security interests of Buyer hereunder, (B) such Transferor acknowledges and agrees that it is not authorized to, and will not, file financing statements or other filing or recording documents with respect to the Receivables or Related Security (including any amendments thereto, or continuation or termination statements thereof), without the express prior written approval by the Administrative Agent, consenting to the form and substance of such filing or recording document, and (C) such Transferor approves, authorizes and ratifies any filings or recordings made by or on behalf of the Administrative Agent in connection with the perfection of the ownership or security interests in favor of Buyer or the Administrative Agent, respectively.
Section 7.4 Confidentiality.
(a) Each Transferor and Buyer shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Fee Letter and the other confidential or proprietary information with respect to the Administrative Agent and the Lenders and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that such Transferor and its officers and employees may disclose such information to such Transferor’s external accountants, attorneys and other advisors and as required by any applicable law or order of any judicial or administrative proceeding.
(b) Each Transferor hereby consents to the disclosure of any nonpublic information with respect to it (i) to Buyer, any Agent or the Lenders by each other, (ii) to any prospective or actual assignee or participant of any of the Persons described in clause (i), and (iii) to any rating agency, Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to a Lender or any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which any Co-Agent or one of its Affiliates acts as the administrative agent and to any officers, directors, employees, outside accountants and attorneys of any of the foregoing; provided each such Person described in the foregoing clauses (ii) and (iii) is informed of the confidential nature of such information. In addition, the Lenders and the Administrative Agent may disclose any such nonpublic information pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law).
Section 7.5 Bankruptcy Petition.
(a) Each Transferor, Smithfield Support and Buyer each hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of a Lender, it will not institute against, or join any other Person in instituting against, such Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
(b) Each Transferor and Smithfield Support covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding obligations of Buyer under the Credit and Security Agreement, it will not institute against, or join any other Person in instituting against, Buyer any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
Section 7.6 Limitation of Liability. Except with respect to any claim arising out of the willful misconduct or gross negligence of any Transferor, Buyer, any Lender or any Agent, no claim may be made by any such Person (or its Affiliates, directors, officers, employees, attorneys or agents) against any such other Person (or its Affiliates, directors,
officers, employees, attorneys or agents) for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each of the parties hereto, on behalf of itself and its Affiliates, directors, officers, employees, attorneys, agents, successors and assigns, hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
Section 7.7 CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (EXCEPT IN THE CASE OF THE OTHER TRANSACTION DOCUMENTS, TO THE EXTENT OTHERWISE EXPRESSLY STATED THEREIN) AND EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE OWNERSHIP INTEREST OF ANY TRANSFEROR OR THE BUYER, IN ANY OF THE COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 7.8 CONSENT TO JURISDICTION. EACH TRANSFEROR AND SMITHFIELD SUPPORT HEREBY IRREVOCABLY SUBMITS TO THE NON EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ANY TRANSFEROR OR SMITHFIELD SUPPORT PURSUANT TO THIS AGREEMENT AND EACH TRANSFEROR AND SMITHFIELD SUPPORT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF BUYER TO BRING PROCEEDINGS AGAINST ANY TRANSFEROR OR SMITHFIELD SUPPORT IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY TRANSFEROR OR SMITHFIELD SUPPORT AGAINST BUYER OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ANY TRANSFEROR OR SMITHFIELD SUPPORT PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN THE STATE OF NEW YORK.
Section 7.9 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY TRANSFEROR OR SMITHFIELD SUPPORT PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
Section 7.10 Integration; Binding Effect; Survival of Terms.
(a) This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings.
(b) This Agreement shall be binding upon and inure to the benefit of the Transferors, Smithfield Support, Buyer and their respective successors and permitted assigns (including any trustee in bankruptcy).
(c) None of the Transferors nor Smithfield Support may assign any of its rights and obligations hereunder or any interest herein without the prior written consent of Buyer. Buyer may assign at any time its rights and obligations hereunder and interests herein to any other Person without the consent of any Transferor or Smithfield Support. Without limiting the foregoing, each Transferor and Smithfield Support acknowledges that Buyer, pursuant to the Credit and Security Agreement, may assign to the Administrative Agent, for the benefit of the Lenders, its rights, remedies, powers and privileges hereunder and that the Administrative Agent may further assign such rights, remedies, powers and privileges to the extent permitted in the Credit and Security Agreement. Each Transferor and Smithfield Support agrees that the Administrative Agent shall, subject to the terms of the Credit and Security Agreement, have the right to enforce this Agreement and to exercise directly all of Buyer’s rights and remedies under this Agreement (including the right to give or withhold any consents or approvals of Buyer to be given or withheld hereunder) and each Transferor and Smithfield Support agrees to cooperate fully with the Administrative Agent in the exercise of such rights and remedies.
(d) This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however, that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Transferor pursuant to Article II; (ii) the indemnification and payment provisions of Article VI; and (iii) Section 7.5 shall be continuing and shall survive any termination of this Agreement.
Section 7.11 Counterparts; Severability; Section References. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Unless otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule” or “Exhibit” shall mean articles and sections of, and schedules and exhibits to, this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
| | | | | | | | | | | | | | |
| SMITHFIELD FOODS, INC., | |
| | | | |
| | | | |
| By: | | |
| Name: Jenifer Byrd | |
| Title: Vice President and Corporate Treasurer | |
| | | | |
| Address: | Smithfield Foods, Inc.
200 Commerce Street
Smithfield, VA 23430
Attention: Jenifer Byrd
and Mark Hall
| |
| | | | | | | | | | | | | | |
| SFFC, INC., | |
| | | | |
| | | | |
| By: | | |
| Name: Jeffrey Porter | |
| Title: President, Assistant Treasurer and Assistant Secretary | |
| | | | |
| Address: | c/o Smithfield Foods, Inc.
200 Commerce Street
Smithfield, VA 23430
Attention: Jenifer Byrd
and Mark Hall | |
37
5th A&R Receivables Sale Agreement (Smithfield)
| | | | | | | | | | | | | | |
| SMITHFIELD BIOSCIENCE, INC., | |
| | | | |
| | | | |
| By: | | |
| Name: Scott Webster | |
| Title: Managing Director | |
| | | | |
| Address: | c/o Smithfield Foods, Inc.
200 Commerce Street
Smithfield, VA 23430
Attention: Jenifer Byrd
and Mark Hall
| |
| | | | | | | | | | | | | | |
| SMITHFIELD FRESH MEATS SALES CORP. as Originator |
| | | | |
| | | | |
| By: | | |
| Name: Jenifer Byrd | |
| Title: Vice President and Treasurer | |
| | | | |
| Address: | c/o Smithfield Foods, Inc.
200 Commerce Street
Smithfield, VA 23430
Attention: Jenifer Byrd
and Mark Hall
| |
38
5th A&R Receivables Sale Agreement (Smithfield)
| | | | | | | | | | | | | | |
| SMITHFIELD FRESH MEATS CORP. as Originator |
| | | | |
| | | | |
| By: | | |
| Name: Jenifer Byrd | |
| Title: Vice President and Treasurer | |
| | | | |
| Address: | c/o Smithfield Foods, Inc. 200 Commerce Street Smithfield, VA 23430 Attention: Jenifer Byrd and Mark Hall | |
39
5th A&R Receivables Sale Agreement (Smithfield)
| | | | | | | | | | | | | | |
| SMITHFIELD DIRECT, LLC as Originator |
| | | | |
| | | | |
| By: | | |
| Name: Jenifer Byrd | |
| Title: Vice President and Treasurer | |
| | | | |
| Address: | c/o Smithfield Foods, Inc. 200 Commerce Street Smithfield, VA 23430 Attention: Jenifer Byrd and Mark Hall
| |
| | | | | | | | | | | | | | |
| SMITHFIELD PACKAGED MEATS SALES CORP. as Originator |
| | | | |
| | | | |
| By: | | | |
| Name: Jenifer Byrd | |
| Title: Vice President and Treasurer | |
| | | | |
| Address: | c/o Smithfield Foods, Inc. 200 Commerce Street Smithfield, VA 23430 Attention: Jenifer Byrd and Mark Hall
| |
40
5th A&R Receivables Sale Agreement (Smithfield)
| | | | | | | | | | | | | | |
| SMITHFIELD RECEIVABLES FUNDING LLC as Buyer |
| | | | | | | | | | | | | | |
| By: SFFC, Inc., its managing member |
| | | | |
| | | | |
| By: | | |
| Name: Jeffrey Porter | |
| Title: President, Assistant Treasurer and Assistant Secretary | |
| | | | |
| Address: | 3411 Silverside Rd, 103 Baynard Bldg Wilmington, DE 19810 Attention: Jeffrey Porter
With a copy to: c/o Smithfield Foods, Inc. 200 Commerce Street Smithfield, VA 23430 Attention: Jenifer Byrd
|
| | | | | | | | | | | | | | |
| SMITHFIELD SUPPORT SERVICES CORP. |
| | | | |
| | | | |
| By: | | |
| Name: Jenifer Byrd | |
| Title: Vice President and Treasurer | |
| | | | |
| Address: | c/o Smithfield Foods, Inc. 200 Commerce Street Smithfield, VA 23430 Attention: Jenifer Byrd and Mark Hall |
| | |
41
5th A&R Receivables Sale Agreement (Smithfield)
Exhibit I
Definitions
This is Exhibit I to the Agreement (as hereinafter defined).
(a) Capitalized terms used and not otherwise defined in the Agreement or this Exhibit have the meanings attributed thereto in the Credit and Security Agreement.
(b) As used in the Agreement and the Exhibits and Schedules thereto, capitalized terms have the meanings set forth in this Exhibit I (such meanings to be equally applicable to the singular and plural forms thereof).
(c) Any references in the Agreement or this Exhibit I to any Person includes such Persons successors and permitted assigns.
(d) The words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement.
(e) The term “including” means “including without limitation”.
(f) References to any agreement refer to that agreement as from time to time amended or restated.
“Administrative Agent” has the meaning provided in the Preliminary Statements to the Agreement.
“Adverse Claim” means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement).
“Affiliates” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person or any Subsidiary of such Person. A Person shall be deemed to control another Person (a) if the controlling Person owns 10-50% of any class of voting securities of the controlled Person only if it also possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise, or (b) if the controlling Person owns more than 50% of any class of voting securities of the controlled Person.
“Aggregate Initial Contributed Assets” means, collectively, the Initial Contributed Assets of all US Originators.
“Agreement” means the Fifth Amended and Restated Receivables Sale Agreement, dated as of December 22, 2022, among Smithfield, Originators and Buyer, as the same may be amended, restated and/or otherwise modified from time to time in accordance with the terms thereof.
“Anti-Corruption Laws” has the meaning provided in the Credit and Security Agreement.
“Anti-Terrorism Law” has the meaning provided in the Credit and Security Agreement.
“Blocked Property” has the meaning provided in the Credit and Security Agreement.
“Business Day” means any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed, or are in fact closed, for business in Pittsburgh, Pennsylvania (or, if otherwise, the Lending Office of the Administrative Agent); provided that, when used in connection with an amount that bears interest at a rate based on SOFR or any direct or indirect calculation or determination of SOFR, the term “Business Day” means any such day that is also a U.S. Government Securities Business Day.
“Buyer” has the meaning provided in the preamble to the Agreement.
“Calculation Period” means, with respect to any Originator, each fiscal calendar month of such Originator or portion thereof which elapses during the term of the Agreement. The first Calculation Period shall commence on the applicable Commencement Date and the final Calculation Period shall terminate on the applicable Termination Date.
“Capitalized Lease” means any lease the obligation for rentals with respect to which is required to be capitalized on a balance sheet of the lessee in accordance with GAAP.
“Change of Control” means 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), directly or indirectly, of more than 50% of Smithfield’s Voting Stock (or its successor by merger, consolidation or purchase of all or substantially all of its assets).
“Collection Account” has the meaning provided in the Credit and Security Agreement.
“Collection Account Agreement” has the meaning provided in the Credit and Security Agreement.
“Collection Bank” has the meaning provided in the Credit and Security Agreement.
“Collections” means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable, including all Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Security with respect to such Receivable; provided, however, that the term “Collections” shall not include any payment made for the account of the Servicer, a third-party service provider or sub-contractor whose services were not included in the amount invoiced for the applicable Receivable.
“Commencement Date” means, (i) with respect to the US Originators, June 21, 2011, being the date set forth in the notice from Buyer to the US Originators, Smithfield and SFFC, with a copy to the Administrative Agent, dated June 15, 2011 and stating that Buyer is prepared to accept the contribution of the Initial Contributed Assets on such date, (ii) with respect to Fresh Sales, April 28, 2014, (iii) with respect to Smithfield Support, October 30, 2017, (iv) with respect to Packaged Sales and Fresh Meats, January 1, 2018, and (vi) with respect to Smithfield Bioscience, April 1, 2019.
“Commercial Paper” means promissory notes issued by a Conduit in the commercial paper market.
“Contract” means, with respect to any Receivable, any and all instruments, agreements, invoices or other writings pursuant to which such Receivable arises or which evidences such Receivable.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, or the dismissal or appointment of the management, of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Controlled Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
“Covered Entity” has the meaning provided in the Credit and Security Agreement.
“Credit and Collection Policy” means the credit and collection policies and practices relating to Contracts and Receivables existing on the date hereof and summarized in Exhibit V, as modified from time to time in accordance with the Agreement.
“Credit and Security Agreement” has the meaning provided in the Preliminary Statements to the Agreement.
“Debt” means, with respect to any Person at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee under Capitalized Leases, (v) all obligations of such Person to purchase securities (or other property) which arise out of or in connection with the sale of the same or substantially similar securities or property, (vi) all obligations of such Person to reimburse any bank or other person in respect of amounts paid under a letter of credit or similar instrument, (vii) all Debt of others secured by a lien on any asset of such Person to the extent of the fair market value of such asset, whether or not such Debt is assumed by such Person, (viii) all Synthetic Lease Liabilities of such Person, and (ix) all Debt of others guaranteed by such Person to the extent such Debt represents a liability of such Person; provided that liabilities resulting from the recognition of other post-retirement benefits required by Financial Accounting Standard No. 106 shall not constitute “Debt.”
“Discount Factor” means a percentage calculated to provide Buyer with a reasonable return on its investment in the Receivables purchased from each Originator after taking account of (i) the time value of money based upon the anticipated dates of collection of such Receivables and the cost to Buyer of financing its investment in such Receivables during such period, (ii) the risk of nonpayment by the Obligors, (iii) servicing costs, and (iv) factoring expenses. Each Originator and Buyer may agree from time to time to change the Discount Factor based on changes in one or more of the items affecting the calculation thereof; provided that any change to the Discount Factor shall take effect as of the commencement of a Calculation Period, shall apply only prospectively and shall not affect the Purchase Price payment made prior to the Calculation Period during which such Originator and Buyer agree to make such change.
“Effective Date” has the meaning provided in Section 1.8.
“Embargoed Property” has the meaning provided in the Credit and Security Agreement.
“Equity Interests” means, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or non-voting), of capital of such Person, including, if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership, whether outstanding on the date hereof or issued after the date of this Agreement.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any Originator or Smithfield, is treated as a single employer under Section 414(b) or (c) of the Tax Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Tax Code, is treated as a single employer under Section 414(m) of the Tax Code.
“Estimated Sales Report” has the meaning provided in Section 1.2(b).
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Excluded Originator” has the meaning provided in Section 1.8.
“Excluded Receivable” shall mean, with respect to any Excluded Originator, any Receivable originated by such Excluded Originator on or after the related Effective Date.
“Excluded Subsidiary” has the meaning provided in the Parent Credit Agreement.
“Executive Officer” shall mean with respect to any Person, the Chief Executive Officer, President, Vice Presidents (if elected by the Board of Directors of such Person), Chief
Financial Officer, Treasurer, Secretary and any Person holding comparable offices or duties (if elected by the Board of Directors of such Person).
“Finance Charges” means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Obligor pursuant to such Contract.
“Financial Officer” means with respect to Smithfield, any of the Chief Financial Officer, Vice President of Finance, and Treasurer.
“FX Collection Account” has the meaning provided in the Credit and Security Agreement.
“Governmental Authority” has the meaning provided in the Credit and Security Agreement.
“Indemnified Amounts” has the meaning provided in Section 6.1.
“Indemnified Party” has the meaning provided in Section 6.1.
“Initial Contributed Assets” means, in respect of each US Originator, that portion of the Initial Transferred Assets of such US Originator that has an aggregate Outstanding Balance as of 11:59 pm on the Business Day immediately preceding the applicable Commencement Date equal to the amount designated in the Transfer Notice as the amount of Initial Contributed Assets for such US Originator, which portion of the Initial Transferred Assets shall be identified more particularly on the first Settlement Date following such Commencement Date in accordance with Section 1.1(d).
“Initial Purchased Assets” means, in respect of each Originator, that portion of the Initial Transferred Assets of such Originator that has an aggregate Outstanding Balance as of 11:59 pm on the Business Day immediately preceding the Commencement Date equal to the amount designated in the Transfer Notice, as the amount of Initial Purchased Assets for such Originator, which portion of the Initial Transferred Assets shall be identified more particularly on the first Settlement Date following such Commencement Date in accordance with Section 1.1(d).
“Initial Transferred Assets” means, in respect of each Originator, all of the Receivables and the associated Related Security and Collections owned by such Originator as of 11:59 pm on the Business Day immediately preceding the applicable Commencement Date and to be transferred to Buyer by way of contribution or sale, as applicable, on such Commencement Date.
“Letter of Credit Issuer” has the meaning provided in the Preliminary Statements.
“Lock-Box” has the meaning provided in the Credit and Security Agreement.
“Material Adverse Effect” means (i) any material adverse effect on the business, operations, financial condition or assets of Smithfield and its Non-Excluded Subsidiaries, taken as a whole, (ii) any material adverse effect on the ability of any Transferor to perform its obligations under the Transaction Documents to which it is a party, (iii) any material adverse effect on the legality, validity or enforceability of the Agreement or any other Transaction
Document, (iv) any material adverse effect on any Transferor’s, Buyer’s, the Administrative Agent’s or any Lender’s interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto, or (v) any material adverse effect on the collectability of the Receivables generally or of any material portion of the Receivables.
“Monetization Documents” has the meaning provided in the Credit and Security Agreement.
“Monetized Receivables” has the meaning provided in the Credit and Security Agreement.
“Monetized Receivables Collections” has the meaning provided in the Credit and Security Agreement.
“Monthly Reporting Date” has the meaning provided in the Credit and Security Agreement.
“Net Worth” means as of the last Business Day of each Calculation Period preceding any date of determination, the excess, if any, of (a) the aggregate Outstanding Balance of the Receivables at such time plus cash-on-hand, over (b) the sum of (i) the Aggregate Principal outstanding at such time, plus (ii) the aggregate outstanding principal balance of the Subordinated Loans (including any Subordinated Loan proposed to be made on the date of determination).
“Non-Excluded Subsidiary” means a Subsidiary that is not an Excluded Subsidiary.
“Obligor” means a Person that is or becomes obligated to make payments pursuant to a Contract.
“Organizational Documents” means, for any Person, the documents for its formation and organization, which, for example, (a) for a corporation are its corporate charter or articles of incorporation, as applicable, and bylaws, (b) for a partnership are its certificate of partnership (if applicable) and partnership agreement, (c) for a limited liability company are its certificate of formation or organization and its operating agreement, regulations or the like and (d) for a trust is the trust agreement, declaration of trust, indenture or bylaws under which it is created.
“Original Agreement” has the meaning provided in the recitals to this Agreement.
“Originator” has the meaning provided in the preamble to this Agreement.
“Outstanding Balance” of any Receivable at any time means the then outstanding principal balance thereof or, in the case of any Receivable described in clause (ii) of the definition of “Receivable” herein, the principal amount to become due and payable under the relevant Contract in respect of the relevant In-Transit Collateral.
“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.
“Permitted Holders” means WH Group or any of its Controlled Affiliates and any “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members; provided that, in the case of such group and without giving effect to the existence of such group or any other group, such Persons, collectively, have direct or indirect beneficial ownership of more than 50% of the Voting Stock of Smithfield.
“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
“PNC” means PNC Bank, National Association.
“Post-Closing Date” has the meaning provided in the Credit and Security Agreement.
“Prime Rate” means a rate per annum equal to the prime rate of interest announced from time to time by PNC (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes.
“Purchase Date” means any date on or after the applicable Commencement Date on which the Buyer purchases Receivables and associated Related Security and related Collections (other than the Initial Purchased Assets) pursuant to Section 1.2.
“Purchase Price” has the meaning provided in Section 1.3(a).
“Purchase Price Credit” has the meaning provided in Section 1.4.
“Purchase Report” has the meaning provided in Section 1.2(d).
“Rabobank” means Coöperatieve Rabobank U.A., New York Branch.
“Receivable” means (i) all indebtedness and other obligations owed to an Originator (at the times it arises, and before giving effect to any transfer or conveyance under this Agreement) (including any indebtedness, obligation or interest constituting an account, chattel paper, instrument or general intangible) arising in connection with the sale of goods or the rendering of services by such Originator and further includes the obligation to pay any Finance Charges with respect thereto and (ii) all rights of an Originator under a Contract to collect or receive amounts that become due and payable under such Contract upon the delivery and acceptance of In-Transit Collateral pursuant to such Contract; provided, however, that the term “Receivable” shall exclude any indebtedness or other obligations owed or that become payable to an Originator by an Affiliate that is 100% owned, directly or indirectly, by an Originator or the Buyer; provided, further, that the term “Receivable” shall also exclude any Receivable owing to an Originator from Rotary Vortex Limited or WHG Trading Limited, each a limited company incorporated in Hong Kong. Indebtedness and other rights and obligations arising from any one
transaction, including indebtedness and other rights and obligations represented by an individual invoice, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; provided, further, that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be a Receivable regardless of whether the account debtor or such Originator treats such indebtedness, rights or obligations as a separate payment obligation.
“Receivables Agent” has the meaning provided in the Credit and Security Agreement.
“Receivables Buyers” has the meaning provided in the Credit and Security Agreement.
“Records” means, with respect to any Receivable, all Contracts and other documents, books, records and other information (including computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such Receivable, any Related Security therefor and the related Obligor.
“Related Monetized Assets” has the meaning provided in the Credit and Security Agreement.
“Related Security” means, with respect to any Receivable:
(i) (a) in the case of an In-Transit Receivable, a security interest in the applicable Originator’s In-Transit Collateral relating thereto or (b) in the case of a Receivable other than an In-Transit Receivable, all of the applicable Originator’s interest in the inventory and goods (including returned or repossessed inventory or goods), if any, the sale, financing or lease of which by such Originator gave rise to such Receivable, and, in either case, all insurance contracts with respect thereto,
(ii) all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements and security agreements describing any collateral securing such Receivable,
(iii) all guaranties, letters of credit, insurance and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable whether pursuant to the Contract related to such Receivable or otherwise,
(iv) all service contracts and other contracts and agreements associated with such Receivable,
(v) all Records related to such Receivable,
(vi) all of the applicable Originator’s and Smithfield Support’s, to the extent applicable, right, title and interest in each Lock-Box and each Collection Account (other than any FX Collection Account), and
(vii) all proceeds of any of the foregoing.
“Required Capital Amount” means, as of any date of determination, an amount equal to the greater of (a) 3% of the Aggregate Commitment under the Credit and Security Agreement, and (b) the product of (i) 1.5 times the product of the Default Ratio times the Default Horizon Ratio, each as determined from the most recent Monthly Report received from Smithfield under the Credit and Security Agreement, and (ii) the Outstanding Balance of all Receivables as of such date, as determined from the most recent Monthly Report received from Smithfield in its capacity as Servicer.
“Restructuring Transactions” has the meaning provided in Section 1.9.
“Review” has the meaning provided in Section 4.1(d).
“Sanctioned Person” has the meaning provided in the Credit and Security Agreement.
“Sanctioned Jurisdiction” has the meaning provided in the Credit and Security Agreement.
“SEC” means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.
“Secured Parties” has the meaning provided in the Credit and Security Agreement.
“Senior Notes” has the meaning provided in the Parent Credit Agreement.
“Senior Notes Documents” means any agreement or instrument governing or evidencing any of the Senior Notes.
“Servicer” means at any time the Person (which may be the Administrative Agent) then authorized pursuant to the Credit and Security Agreement to service administer and collect Receivables.
“Settlement Date” means, with respect to each Calculation Period, the eighteenth (18th) Business Day immediately following the end of such Calculation Period.
“SFFC” has the meaning provided in the preamble to this Agreement.
“Smithfield” has the meaning provided in the preamble to this Agreement.
“Smithfield Bioscience” means Smithfield Bioscience, Inc., an Ohio corporation.
“Smithfield Support” means Smithfield Support Services Corp., a Delaware corporation.
“Subordinated Lender” means, with respect to any Subordinated Loan, the related Originator.
“Subordinated Loan” has the meaning provided in Section 1.3(b)(iii).
“Subordinated Note” means, with respect to any Subordinated Loan, the related promissory note in substantially the form of Exhibit VI hereto as more fully described in Section 1.3, pertaining to such Subordinated Loan, as the same may be amended, restated, supplemented or otherwise modified from time to time, and shall include any Subordinated Note issued hereunder.
“Subordinated Note Limit” means, as to any Originator and with respect to the Settlement Date for any Calculation Period, an amount equal to the product of (x) a percentage (in no event in excess of 25%) equal to (i) 0.1 divided by (ii) the percentage of the aggregate Outstanding Balance of Receivables sold by all Originators during such Calculation Period that were sold by such Originator, multiplied by (y) the aggregate Outstanding Balance of Receivables owned by Buyer as of the last day of such Calculation Period, multiplied by (z) the percentage of the aggregate Outstanding Balance of Receivables sold by all Originators during such Calculation Period that were sold by such Originator.
“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, association, limited liability company, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.
“Synthetic Lease Liabilities” of a Person means any liability under any tax retention operating lease or so-called “synthetic” lease transaction, or any obligations arising with respect to any other similar transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the consolidated balance sheets of such Person and its Subsidiaries (other than leases which do not have an attributable interest component that are not Capitalized Leases).
“Tax Code” has the meaning provided in Section 2.1(x).
“Termination Date” means, as to each Originator, the earliest to occur of (i) the Business Day immediately prior to the occurrence of a Termination Event set forth in Section 5.1(f) with respect to such Originator, (ii) the Business Day specified in a written notice (with the prior written consent of the Administrative Agent) from Buyer to such Originator following the occurrence of any other Termination Event, and (iii) the date which is 10 Business Days after Buyer’s and Administrative Agent’s receipt of written notice from such Originator that the facility evidenced by this Agreement has been terminated in accordance with the Transaction Documents insofar as the facility relates to such Originator.
“Termination Event” has the meaning provided in Section 5.1.
“Transaction Documents” has the meaning provided in the Credit and Security Agreement.
“Transfer Notice” has the meaning provided in Section 1.1(a)(i).
“Transferor” means (a) as to the Initial Contributed Assets, each Originator, SFFC and Smithfield, and (b) as to all other Receivables, together with the associated Related Security and Collections, the applicable Originator.
“Unmatured Termination Event” means an event which, with the passage of time or the giving of notice, or both, would constitute a Termination Event.
“US Originator” means any Originator other than Fresh Sales, Packaged Sales, Fresh Meats and Smithfield Bioscience.
“Voting Stock” of an entity means all classes of Equity Interests 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.
“WH Group” means WH Group Ltd., an exempted company incorporated with limited liability status under the laws of Cayman Islands.
All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9 as the context requires.
EXHIBIT C
Amendments to the Receivables Purchase Agreement
(Attached)
EXECUTION VERSION
EXHIBIT C to Amendment No. 1, dated November 22, 2024
MASTER RECEIVABLES PURCHASE AGREEMENT
among
SMITHFIELD RECEIVABLES FUNDING LLC,
as Seller,
SMITHFIELD FOODS, INC.,
as Servicer,
THE BUYERS FROM TIME TO TIME PARTY HERETO,
and
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent,
Dated as of December 22, 2022
| | | | | | | | | | | |
| | Page |
| | | |
| 1. | Sale and Purchase | 1 |
| | | |
| (a) | Sales of Receivables | 1 |
| (b) | Additional Funding of Purchase Price | 3 |
| (c) | Purchase Price Adjustments | 4 |
| (d) | UNCOMMITTED ARRANGEMENT | 4 |
| (e) | Conditions to Effectiveness | 4 |
| (f) | Conditions Precedent to Each Purchase | 4 |
| (g) | Payment of Funding Amounts | 5 |
| (h) | True Sale; No Recourse | 5 |
| (i) | Benchmark Replacement Setting | 5 |
| | | |
| 2. | Representations and Warranties | 9 |
| | | |
| 3. | Covenants | 9 |
| | | |
| 4. | Servicing Activities | 9 |
| | | |
| (a) | Appointment of Servicer | 9 |
| (b) | Collection Accounts; Deposit Account Control Agreements | 9 |
| (c) | Distribution of the Amount on Deposit in Collection Accounts | 10 |
| (d) | Identifying Collections | 11 |
| (e) | No Changes to Receivables | 11 |
| (f) | Servicer Indemnification | 11 |
| (g) | Replacement of Servicer | 12 |
| (h) | The Administrative Agent as Attorney-in-Fact | 12 |
| | | |
| 5. | Deemed Collections; Repurchase Events; Indemnities and Set-Off | 12 |
| | | |
| (a) | Deemed Collections | 12 |
| (b) | Repurchase Event | 12 |
| (c) | Credit Default Certification | 13 |
| (d) | Defaulted Receivables | 13 |
| (e) | Seller Indemnification | 14 |
| (f) | Tax Matters | 15 |
| (g) | Set-Off | 15 |
| (h) | UCC | 15 |
| | | |
| 6. | Notices | 15 |
| | | |
| 7. | Expenses | 17 |
| | | |
| 8. | Interest on Overdue Amounts | 17 |
| | | |
| 9. | Governing Law | 17 |
| | | |
| 10. | No Non-Direct Damages | 17 |
| | | |
| 11. | Administrative Agent . | 17 |
| | | |
| (a) | Authorization and Action | 17 |
| (b) | Delegation of Duties | 18 |
| (c) | Exculpatory Provisions | 18 |
| (d) | Reliance by Administrative Agent | 18 |
| (e) | Non-Reliance on Administrative Agent and Other Buyers | 19 |
| (f) | Reimbursement and Indemnification | 19 |
| (g) | Administrative Agent in its Individual Capacity | 19 |
| (h) | UCC Filings | 19 |
| (i) | Enforcement | 19 |
TABLE OF CONTENTS
(continued)
| | | | | | | | | | | |
| | Page |
| | | |
| (j) | Successor Administrative Agent | 20 |
| | | |
| 12. | Erroneous Payments | 20 |
| | | |
| 13. | General Provisions . | 22 |
| | | |
| (a) | Final Agreement | 22 |
| (b) | Severability | 22 |
| (c) | Execution; Counterparts | 22 |
| (d) | Termination | 22 |
| (e) | Calculation of Interest | 22 |
| (f) | WAIVER OF JURY TRIAL | 22 |
| (g) | CONSENT TO JURISDICTION | 23 |
| (h) | Captions and Cross References | 23 |
| (i) | No Party Deemed Drafter | 23 |
| (j) | PATRIOT Act | 23 |
| (k) | Term SOFR Notification | 23 |
| (l) | Register | 23 |
| (m) | Ratable Payments | 24 |
| (n) | Bankruptcy Petition | 24 |
| (o) | Intercreditor Agreement | 24 |
| | | | | | | | |
| Schedule I | - | Form of Portfolio Report |
| Schedule II | - | Approved Account Debtors |
| Schedule III | - | Portfolio Report Signatories |
| Exhibit A | - | Certain Defined Terms |
| Exhibit B | - | Conditions Precedent for Effectiveness |
| Exhibit C | - | Representations and Warranties |
| Exhibit D | - | Covenants |
| Exhibit E | - | Eligibility Criteria |
| Exhibit F | - | Servicer Termination Events |
| Exhibit G | - | Accounts |
MASTER RECEIVABLES PURCHASE AGREEMENT
This MASTER RECEIVABLES PURCHASE AGREEMENT (this “Agreement”) is entered into as of December 22, 2022, by and among SMITHFIELD RECEIVABLES FUNDING LLC, a Delaware limited liability company (the “Seller”), SMITHFIELD FOODS, INC., a Virginia corporation, as servicer (in such capacity, the “Servicer”), each buyer from time to time party hereto (each, in such capacity, a “Buyer” and collectively, the “Buyers”), and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as administrative agent (in such capacity, the “Administrative Agent”).
RECITALS
WHEREAS, the Seller desires to sell certain of its Eligible Receivables and the corresponding Related Security from time to time, and the Buyers may be willing to purchase from the Seller such Eligible Receivables and Related Security, in which case the terms set forth herein shall apply to such purchase. Each capitalized term used but not defined herein shall have the meaning set forth in, or by reference in, Exhibit A hereto, and the interpretive provisions set out in Exhibit A hereto shall be applied in the interpretation of this Agreement.
Accordingly, the parties hereto agree as follows:
1. Sale and Purchase.
(a) Sales of Receivables.
(i) Sale of Receivables on the Initial Funding Date. Subject to the terms and conditions hereof, on the Initial Funding Date, the Seller shall sell to the Buyers, and the Buyers shall, subject to the satisfaction of the conditions set forth in clause (e) below, purchase from the Seller, their respective Pro Rata Shares of all of the Seller’s right, title and interest (but none of the Seller’s underlying obligations to the applicable Account Debtor) in and to the Eligible Receivables and Related Security specified on the Initial Funding Date Portfolio Report (the “Initial Proposed Receivables”) in the order of priority set forth in clause (iv) below until the sale of the next such Eligible Receivable would cause the occurrence of any of the events specified in Section 1(a)(ii)(x), (y) or (z). The Purchase Price for each Eligible Receivable and Related Security acquired on the Initial Funding Date shall be the Net Invoice Amount of such Eligible Receivable (the aggregate of the Purchase Prices for such Eligible Receivables and Related Security acquired on the Initial Funding Date, the “Initial Purchase Amount”). The Initial Purchase Amount minus the aggregate Initial Discounts applicable to the Eligible Receivables acquired on the Initial Funding Date (the “Initial Funding Amount”) shall be paid as provided in Section 1(g) below.
(ii) Sales of Receivables on Additional Purchase Dates. On each Additional Purchase Date, at 5:00 p.m. New York time, the Seller shall sell to the Buyers, and the Buyers shall, subject to the satisfaction of the conditions set forth in clause (f) below, purchase from the Seller, their respective Pro Rata Shares of each Eligible Receivable and Related Security available and owned by the Seller at such time (the “Additional Proposed Receivables” and together with the Initial Proposed Receivables, the “Proposed Receivables”) in the order of priority set forth in clause (iv) below until the sale of the next such Eligible Receivable would cause:
(x) the aggregate Purchase Prices of all Eligible Receivables and Related Security acquired on such Additional Purchase Date pursuant to this clause (ii) to exceed an amount equal to the Amount on Deposit in the Collection Accounts plus any amount deposited by the Buyers into the Seller’s Account on such Additional Purchase Date in accordance with Section 1(b);
(y) the Outstanding Purchase Amount to exceed the Maximum Outstanding Purchase Amount; or
(z) the Outstanding Purchase Amount with respect to any Buyer to exceed such Buyer’s Facility Share.
The Purchase Price for each Eligible Receivable and Related Security acquired on an Additional Purchase Date pursuant to this clause (ii) shall be paid (A) first, from any amount deposited by the Buyers into Seller’s Account on such Additional Purchase Date in accordance with Section 1(b) and (B) second, from available Amounts on Deposit in the Collection Accounts as provided in Section 4(c)(i)(1) (it being understood that such Eligible Receivables and Related Security purchased using Amounts on Deposit in the Collection Accounts shall be sold on such Additional Purchase Date irrespective of whether the Seller distributes the Purchase Prices therefor from the Collection Accounts on such date).
(iii) Sales of Receivables on Additional Purchase Dates in Exchange for Amounts Owing by Seller. In addition to the foregoing, but only after giving effect to clause (ii) above, at 5:00 p.m. New York time on each Additional Purchase Date, if the Seller owes any amount to the Buyers pursuant to Section 5 (including with respect to any Defaulted Receivable), the Seller shall sell to the Buyers, and the Buyers shall, subject to the satisfaction of the conditions set forth in clause (e) below, purchase from the Seller, their respective Pro Rata Shares of each Eligible Receivable and Related Security available and owned by the Seller at such time in the order of priority set forth in clause (iv) below until the sale of the next such Eligible Receivable from the Seller would cause:
(x) the aggregate Purchase Prices of all such Eligible Receivables and Related Security acquired on such Additional Purchase Date pursuant to this clause (iii) to exceed the amount owing by the Seller on such date under Section 5;
(y) the Outstanding Purchase Amount to exceed the Maximum Outstanding Purchase Amount; or
(z) the Outstanding Purchase Amount with respect to any Buyer to exceed such Buyer’s Facility Share.
The Purchase Price for each Eligible Receivable and Related Security acquired on each Additional Purchase Date pursuant to this clause (iii) shall be deemed paid by way of a set-off against, and in satisfaction of, the corresponding amount owing by the Seller pursuant to Section 5 on such Additional Purchase Date.
(iv) Order of Priority of Sales of Eligible Receivables. The Eligible Receivables to be sold on each Additional Purchase Date pursuant to clauses (i), (ii) and (iii) above, respectively, shall be sold by the Seller in the following order of priority:
(A) Eligible Receivables shall be sold, assigned and purchased in the priority set forth in Schedule II with respect to the Approved Account Debtors with respect to such Eligible Receivables; provided, that, in each case, the Outstanding Purchase Amount with respect to the Purchased Receivables payable by any Approved Account Debtor shall not exceed such Approved Account Debtor’s Purchase Sublimit;
(B) in the case of Eligible Receivables that are owed by the same Approved Account Debtor, such Eligible Receivables shall be sold, assigned and purchased in the order of the date on which they were originated (i.e., on first-in, first-out basis);
(C) in the case of Eligible Receivables that are owed by the same Approved Account Debtor and that are originated on the same day, such Eligible Receivables shall be sold, assigned and purchased in descending order of the Net Invoice Amount thereof, with the Eligible Receivable with the highest Net Invoice Amount being sold first and the Eligible Receivable with the lowest Net Invoice Amount being sold last;
(D) in the case of Eligible Receivables that are owed by the same Account Debtor, that are originated on the same day and that have the same Net Invoice Amount, such Eligible Receivables shall be sold, assigned and purchased in ascending order of invoice number, with the lower invoice number being sold first and the highest invoice number being sold last;
provided, that for purposes of determining the priority of Eligible Receivables to be sold in accordance with this clause (iv), any Eligible Receivable not permitted to be purchased as the result of applicable Purchase Sublimits as provided in the proviso of each of clause (A) above shall be disregarded, and the determination of priority shall continue on to the next Eligible Receivable (if any) permitted to be purchased under such clause (A).
(b) Additional Funding of Purchase Price.
(i) If the Buyer Amount Balance as of any Settlement Date occurring during the Acquisition Period (after giving effect to any distributions pursuant to Section 4(c) on such Settlement Date) is less than the Maximum Outstanding Purchase Amount as of such Settlement Date (after giving effect to any reductions thereof on such Settlement Date) and the Amounts on Deposit in the Collection Accounts as of such Settlement Date (excluding any Additional Funding Amount requested with respect to such Settlement Date) would be insufficient to allow the Buyers to purchase all of the Eligible Receivables and Related Security that would otherwise be subject to purchase in accordance with Sections 1(a)(ii) and (iii) on such Settlement Date but for such insufficiency, then, so long as the Acquisition Period has not been terminated, the Seller may, by written notice to the Administrative Agent and each Buyer (each a “Funding Notice”) delivered no later than the second Business Day prior to such Settlement Date (each such Settlement Date as to which such a request is received being referred to herein as an “Additional Funding Date”), request that the Buyers fund an aggregate amount of additional Purchase Price (an “Additional Funding Amount”) not to exceed the lesser of (x) such insufficiency or (y) the maximum amount which, when added to the then-outstanding Buyer Amount Balance, would not exceed the then-applicable Maximum Outstanding Purchase Amount.
(ii) Following timely receipt of a Funding Notice in accordance with clause (i) above, and so long as the Acquisition Period has not been terminated as of such Additional Funding Date, each Buyer shall deposit its Pro Rata Share of the applicable Additional Funding Amount into the Seller’s Account in accordance with Section 1(g) below to be applied to the purchase of Eligible Receivables and Related Security as provided in Section 1(a)(ii); provided, that (i) if the Additional Funding Amount deposited in the Seller’s Account exceeds the aggregate Purchase Prices of Eligible Receivables and Related Security to be purchased on such Additional Funding Date pursuant to Section 1(a)(ii), the Seller shall deposit such excess into a Collection Account no later than the next succeeding Business Day and (ii) if the Maximum Outstanding Purchase Amount hereunder is reduced after the delivery of a Funding Notice but on or prior to the funding of the Additional Funding Amount on the Additional Funding Date for such Funding Notice, and the Buyer Amount Balance would, after giving effect to the funding of the applicable Additional Funding Amount, exceed the Maximum Outstanding Purchase Amount as so reduced, the Additional Funding Amount shall be adjusted to eliminate any such excess. If on any Settlement Date any Buyer fails to deposit its Pro Rata Share of the applicable Additional Funding Amount into the Seller’s Account in accordance with Section 1(g) below, the Seller shall immediately return all funds received from the other Buyers on such Settlement Date and the applicable Funding Notice shall be deemed cancelled.
(c) Purchase Price Adjustments.
(i) Purchase Price Adjustment. In order to provide the Buyers with an acceptable yield on their investment for having paid the Seller the Purchase Price of Purchased Receivables and Related Security, the Buyer Amount Balance shall be adjusted in advance of each Settlement Period (the “Purchase Price Adjustment”) by the addition of a discount payable by the Seller on each Settlement Date for the
Settlement Period beginning on such Settlement Date. The Purchase Price Adjustment will be applied to the funds remitted between the Seller and the Buyers on each Settlement Date. The Purchase Price Adjustment shall be calculated in accordance with the following formula (subject to any adjustment on account of any Breakage Amounts in accordance with Section 4(c)(ii)):
Purchase Price Adjustment = BAB*(Term SOFR + M)*T/360 where:
BAB = the Buyer Amount Balance as of such Settlement Date;
Term SOFR = Adjusted Term SOFR for such Settlement Period;
M = Applicable Margin; and
T = the number of days in the applicable Settlement Period for which the Purchase Price Adjustment is calculated.
(ii) Payment of Purchase Price Adjustment. The Purchase Price Adjustment (as adjusted on account of any Breakage Amount in accordance with Section 4(c)(ii)) in respect of each applicable Settlement Period shall be payable by the Seller in advance to the Buyers on each Settlement Date. For the avoidance of doubt, the Seller’s obligation to pay the Purchase Price Adjustment is a separate obligation of the Seller, apart from any other payment obligations the Seller may have under this Agreement.
(d) UNCOMMITTED ARRANGEMENT. THE SELLER ACKNOWLEDGES THAT THIS IS AN UNCOMMITTED ARRANGEMENT, THAT THE SELLER HAS NOT PAID, NOR IS REQUIRED TO PAY, A COMMITMENT FEE OR COMPARABLE FEE TO THE BUYERS. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, THE SELLER EXPRESSLY AGREES THAT THE BUYERS WILL NOT BE OBLIGATED TO PURCHASE ANY RECEIVABLE FROM THE SELLER, AND ANY BUYER MAY REFUSE, FOR ANY REASON OR FOR NO REASON, TO PURCHASE ANY RECEIVABLE OFFERED FOR PURCHASE BY THE SELLER REGARDLESS OF WHETHER THE VARIOUS CONDITIONS TO PURCHASE SET FORTH IN THIS AGREEMENT HAVE BEEN SATISFIED.
(e) Conditions to Effectiveness. This Agreement shall become effective, concurrent with the effectiveness of the Securitization Documents, at such time as each of the conditions precedent set forth on Exhibit B to this Agreement has been satisfied to the satisfaction of the Administrative Agent.
(f) Conditions Precedent to Each Purchase. The Buyers shall not purchase the Proposed Receivables and Related Security on any Purchase Date unless:
(i) solely with respect to the Initial Funding Date, the Administrative Agent shall have received a Portfolio Report for the Proposed Receivables to be purchased on the Initial Funding Date prepared as of a date not more than two (2) Business Days prior to the Initial Funding Date and certified in writing by a Portfolio Report Signatory;
(ii) each of the representations and warranties made by the Seller, the Servicer and the Performance Guarantor in this Agreement and each of the other Transaction Documents is true and correct in all material respects as of such Purchase Date or, in the case of any representation or warranty that speaks as to a particular date or period, as of that particular date or period;
(iii) each Proposed Receivable is an Eligible Receivable; and
(iv) no Servicer Termination Event shall have occurred and no Servicer Termination Event shall exist immediately following the Buyers’ purchase of such Proposed Receivables and Related Security.
(g) Payment of Funding Amounts.
(i) On the Initial Funding Date, subject to the terms and conditions of this Agreement, each Buyer shall pay to the Seller an amount equal to its Pro Rata Share of the Initial Funding Amount by wire transfer of immediately available funds to the Seller’s Account.
(ii) On each Additional Funding Date, each Buyer shall pay to the Seller an amount equal to its Pro Rata Share of the Additional Funding Amount for such Additional Funding Date (as such Additional Funding Amount may be adjusted in accordance with Section 1(b)) by wire transfer of immediately available funds to the Seller’s Account no later than 3:00 p.m. New York time on the applicable Settlement Date.
(h) True Sale; No Recourse. Except as otherwise provided in this Agreement, each purchase of the Purchased Receivables and Related Security is made without recourse to the Seller and the Seller shall have no liability to the Buyers for the failure of any Account Debtor to pay any Purchased Receivable when it is due and payable under the terms applicable thereto. The Buyers and the Seller have structured the transactions contemplated by this Agreement as an absolute and irrevocable sale, and the Buyers and the Seller agree to treat each such transaction as a “true sale” for all purposes under Applicable Law and accounting principles, including, without limitation, in their respective books, records, computer files, tax returns (federal, state and local), regulatory and governmental filings (and shall reflect such sale in their respective financial statements). The Seller will advise all Persons inquiring about the ownership of any Purchased Receivable and Related Security that all Purchased Receivables and Related Security have been sold to the Buyers. In the event that, contrary to the mutual intent of the parties hereto, any purchase of Purchased Receivables and Related Security is not characterized as a sale, the Seller shall, effective as of the date hereof, be deemed to have granted to the Buyers (and the Seller hereby does grant to the Buyers), in addition to and not in substitution for the rights and remedies described in Section 4(g) hereof, a first priority security interest in and to any and all present and future Purchased Receivables and Related Security and the proceeds thereof to secure all obligations of the Seller arising in connection with this Agreement and each of the other Transaction Documents, whether now or hereafter existing, due or to become due, direct or indirect, absolute or contingent. This Agreement shall be deemed to be a security agreement under Applicable Law. The Administrative Agent, as representative of the Buyers, shall file a UCC financing statement evidencing the sale of the Purchased Receivables and Related Security as well as the foregoing grant of security. With respect to such grant of a security interest, the Administrative Agent may (and, upon direction of the Required Buyers, the Administrative Agent shall) at its option exercise from time to time any and all rights and remedies available to it, for the benefit of the Buyers, hereunder, under the UCC or otherwise. The Seller agrees that ten (10) days shall be reasonable prior notice to the Seller of the date of any public or private sale or other disposition of all or any of the Purchased Receivables and Related Security.
(i) Several Obligations. The obligations of the Buyers hereunder are several and not joint, and no Buyer shall be responsible for the obligations of any other Buyer hereunder. Nothing contained herein or in any other Transaction Document, and no action taken by the Buyers pursuant hereto or thereto, shall be deemed to constitute the Buyers as a partnership, an association, a joint venture or any other kind of entity.
(j) Benchmark Replacement Setting.
(i) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Transaction Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to any setting of the then-current Benchmark, then such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of any Benchmark setting at or after 5:00 p.m. New York time on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Buyers without any amendment to, or further
action or consent of any other party to, this Agreement or any other Transaction Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Buyers comprising the Required Buyers.
(ii) Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Administrative Agent may, in consultation with the Seller, make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Transaction Document.
(iii) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Seller and the Buyers of (A) the implementation of any Benchmark Replacement, and (B) the effectiveness of any Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark Replacement. The Administrative Agent will notify the Seller of (x) the removal or reinstatement of any tenor of a Benchmark pursuant to paragraph (iv) below and (y) the commencement of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Buyer (or group of Buyers) pursuant to this Section, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Transaction Document except, in each case, as expressly required pursuant to this Section.
(iv) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Transaction Document, at any time (including in connection with the implementation of a Benchmark Replacement), (A) if the then-current Benchmark is a term rate and either (I) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (II) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definitions of “Settlement Period” or “Initial Discount Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor; and (B) if a tenor that was removed pursuant to clause (A) above either (I) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (II) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definitions of “Settlement Period” or “Initial Discount Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(v) Benchmark Unavailability Period. During a Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the Overdue Payment Rate and all Initial Discounts and Purchase Price Adjustments shall be calculated by reference to the Prime Rate.
(vi) Certain Defined Terms. As used in this Section 1(j):
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate or is based on a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an Initial Discount Period or Settlement Period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark
pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor of such Benchmark that is then-removed from the definitions of “Settlement Period” or “Initial Discount Period” pursuant to clause (iv) of this Section.
“Benchmark” means, initially, the Term SOFR Rate; provided that if a Benchmark Transition Event has occurred with respect to the Term SOFR Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to this Section.
“Benchmark Replacement” means, with respect to any Benchmark Transition Event, the sum of (A) the alternate benchmark rate that has been selected by the Administrative Agent and the Seller, giving due consideration to (x) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (y) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for U.S. dollar-denominated non-recourse or partial recourse receivables purchase facilities at such time and (B) the related Benchmark Replacement Adjustment; provided that if the Benchmark Replacement as determined above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Transaction Documents; and provided further, that any Benchmark Replacement shall be administratively feasible as determined by the Administrative Agent in its sole discretion.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Seller, giving due consideration to (A) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated non-recourse or partial recourse receivables purchase facilities at such time.
“Benchmark Replacement Date” means a date and time determined by the Administrative Agent, which date shall be no later than the earliest to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (A) the date of the public statement or publication of information referenced therein and (B) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date determined by the Administrative Agent, which date shall promptly follow the date of the public statement or publication of information referenced therein.
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence
of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means, the occurrence of one or more of the following events, with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by an Relevant Governmental Body having jurisdiction over the Administrative Agent, the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) or an Relevant Governmental Body having jurisdiction over the Administrative Agent announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in accordance with this Section 1(j) titled “Benchmark Replacement Setting” and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in accordance with this Section 1(j) titled “Benchmark Replacement Setting.”.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Term SOFR Rate or, if no floor is specified, zero.
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
2. Representations and Warranties. The Seller and the Servicer represent and warrant to the Administrative Agent and the Buyers on the date hereof and on each Purchase Date that (i) the representations and warranties set forth on Exhibit C hereto are true and correct in all material respects as of such Purchase Date or, in the case of any representation or warranty that speaks as to a particular date or period, as of that particular date or period and (ii) each Proposed Receivable is an Eligible Receivable.
The Seller and the Servicer also represent and warrant to the Administrative Agent and the Buyers that as of the delivery of each Portfolio Report each Purchased Receivable is specified in such Portfolio Report and all other information set forth therein is true and correct in all respects.
3. Covenants. The Seller and the Servicer agree to perform each of the covenants set forth on Exhibit D hereto.
4. Servicing Activities.
(a) Appointment of Servicer. Each Buyer appoints Smithfield as its servicer and agent (the “Servicer”) for the administration and servicing of its Purchased Receivables sold by the Seller to such Buyer hereunder, and Smithfield hereby accepts such appointment and agrees to assume the duties and the administration and servicing obligations as the Servicer, and perform all necessary and appropriate commercial servicing and collection activities in arranging the timely payment of amounts due and owing by any Account Debtor (including the identification of the proceeds of the Purchased Receivables and Related Security and related record-keeping that shall be made available to the Administrative Agent and/or any Buyer upon its reasonable request) all in accordance with Applicable Laws, with reasonable care and diligence, including, without limitation, diligently and faithfully performing all servicing and collection actions (including, if necessary, acting as party of record in foreign jurisdictions); provided, however, that such appointment as Servicer shall not release Seller from any of its duties, responsibilities, liabilities and obligations resulting from or arising hereunder. In connection with its servicing obligations, the Servicer will perform its duties under the Contract related to the Purchased Receivables with the same care and applying the same policies as it applies to its own Receivables generally and would exercise and apply if it owned the Purchased Receivables and shall act to maximize Collections thereon.
(b) Collection Accounts; Deposit Account Control Agreements. The Seller and Servicer covenant and agree (i) to direct each Account Debtor to pay all amounts owing under such Purchased Receivables only to a Collection Account, (ii) not to change such payment instructions while any Purchased Receivable remains outstanding, (iii) to take any and all other reasonable actions, including actions requested by the Administrative Agent, to ensure that all amounts owing under the Purchased Receivables will be deposited exclusively to such Collection Account and (iv) to hold in trust as the Buyers’ exclusive property and safeguard for the benefit of the Buyers all Collections and other amounts remitted or paid to the Seller or Servicer (or any of their respective Affiliates) in respect of Purchased Receivables (including all Collections to the extent that such amounts are not used to pay the Purchase Price on an Additional Purchase Date in accordance with Section 1(b)) for prompt deposit into a Collection Account. The Seller shall be permitted to close the Collection Account appearing below its name that is marked with an asterisk on Exhibit G and any Lock-Box related thereto, so long as the Seller, has given the Buyers and the Administrative Agent not less than ten (10) days’ prior written notice thereof, certifying that (x) it has instructed all relevant Account Debtors to make payments relating to Purchased Receivables originated by it to another existing Collection Account, and (y) payments relating to Purchased Receivables originated by it are no longer being deposited in such Collection Account. Subject to the terms of the Intercreditor Agreement, the Seller hereby grants to the Administrative Agent,
for the benefit of the Buyers, a security interest in each Collection Account as additional collateral to secure the payment and performance of the Seller’s obligations to the Buyers hereunder and under each of the other Transaction Documents or as may be determined in connection therewith by Applicable Law. Each Collection Account shall at all times be subject to a Deposit Account Control Agreement. Prior to the occurrence of any Servicer Termination Event, the Seller (or the Servicer on its behalf) shall be permitted to make withdrawals and distributions from each Collection Account. After the occurrence of any Servicer Termination Event, the Administrative Agent will be authorized to (and, upon direction of the Required Buyers, the Administrative Agent shall) instruct the Securitization Agent to give notice of exclusive control under each Deposit Account Control Agreement and, upon giving such notice (each, an “Activation Notice”), the Securitization Agent will have exclusive authority to make withdrawals and distributions from each Collection Account in accordance with, and subject to, the terms of this Agreement, until the Final Collection Date.
(c) Distribution of the Amount on Deposit in Collection Accounts. The parties hereto acknowledge that although maintained in the Seller’s name, the Collection Accounts are segregated accounts maintained by the Seller for the benefit of the Buyers and, to the extent that the Intercreditor Agreement remains in full force and effect, the Securitization Agent (with respect to the Securitized Receivable Collections) and that the Seller has no right or interest (other than bare legal title) in any amounts on deposit in the Collection Accounts (other than those amounts identified in clauses (i) and (ii) of the proviso to the definition of Amount on Deposit in the Collection Accounts). In furtherance of the foregoing, the Seller and Servicer agrees that it shall hold all Amounts on Deposit in the Collection Accounts in the Collection Accounts in trust for the Buyers and shall not transact any business in or with respect to the Amount on Deposit in the Collection Accounts in the Collection Accounts other than as expressly provided herein. In order to facilitate the payment of Purchase Prices and the reduction of the Buyer Amount Balance, the Buyers hereby and pursuant to the terms of the applicable Deposit Account Control Agreement authorize the Seller and Servicer acting on the Seller’s behalf (until the delivery of an Activation Notice) to effect distributions from the Collection Accounts strictly in accordance with Sections 4(c) and 5(d).
(i) During the Acquisition Period. Subject to Section 5(d), prior to the end of the Acquisition Period, on each Business Day, the Seller shall make the following payments and allocations in the following order:
(1) on each Business Day, the Seller may distribute (or cause to be distributed) available Amounts on Deposit in the Collection Accounts to the Seller to pay unpaid Purchase Prices owing to the Seller pursuant to Section 1(a)(ii);
(2) on each Settlement Date, to the extent the Buyer Amount Balance exceeds the Maximum Outstanding Purchase Amount as of such date (after giving effect to any distributions made or required to be made on such date pursuant to clause (1) above), the Seller shall distribute ratably to the Buyers according to their respective Pro Rata Shares any remaining Amounts on Deposit in the Collection Accounts until the amount of such excess is reduced to zero; and
(3) on each Settlement Date, upon at least two (2) Business Days’ prior notice to the Administrative Agent and each Buyer, the Seller may distribute ratably to the Buyers according to their respective Pro Rata Shares available Amounts on Deposit in the Collection Accounts (after giving effect to any other distributions made or required to be made on such day pursuant to this clause (i)) in reduction of the Buyer Amount Balance.
(ii) Upon Termination of the Acquisition Period. On each Settlement Date and on each Business Day that is not otherwise a Settlement Date (each such Business Day, a “Daily Amortization Date”), in each case, occurring on or after the termination of the Acquisition Period (including any early termination thereof), all Amounts on Deposit in the Collection Accounts as of such Daily Amortization Date shall be distributed ratably to the Buyers according to their respective Pro Rata Shares until the Buyer Amount Balance has been reduced to zero and the Seller has paid or distributed to the Buyers all accrued and unpaid
Purchase Price Adjustments and all amounts owing to the Buyers pursuant to Section 5(d)(ii). Notwithstanding any other provision of this Agreement to the contrary, Breakage Amounts shall be calculated with respect to all payments in reduction of the Buyer Amount Balance made on Daily Amortization Dates occurring during each Settlement Period, and the amount of Purchase Price Adjustment payable by the Seller on the next Settlement Date following such Settlement Period shall (x) in the case of each Breakage Amount for such a Daily Amortization Date occurring during such Settlement Period that is a positive number, be increased by an amount equal to the absolute value of such Breakage Amount and (y) in the case of each Breakage Amount for such a Daily Amortization Date occurring during such Settlement Period that is a negative number, be decreased by an amount equal to the absolute value of such Breakage Amount; provided, however, that if the Buyer Amount Balance will be reduced to zero upon any distribution on a Daily Amortization Date or Settlement Date, the applicable Breakage Amounts not yet applied on a Settlement Date as provided above will be added to or subtracted from, as applicable, the amount to be distributed to the Buyers in reduction of the Buyer Amount Balance.
(iii) Payments Not Representing Collections. If any amount is deposited into or held in the Collection Accounts which the Seller or Servicer, in good faith and with full accounting thereof, has identified as an amount specified in clause (y) of the definition of Amount on Deposit in the Collection Accounts, the Seller may, so long as no Servicer Termination Event shall have occurred and be continuing, distribute such amount to the Seller; provided, that any such amount not distributed due to the continuance of a Servicer Termination Event shall be distributed from any remaining balance in the Collection Accounts after the Buyer Amount Balance has been reduced to zero and all other amounts due and owing to the Administrative Agent and the Buyers hereunder have been paid in full.
(iv) No Other Distributions. Subject to the terms of the Intercreditor Agreement, except as provided in this Section 4(c) or Section 5(d), neither the Seller nor the Servicer shall have any right to effect any distributions from the Collection Accounts, and the Seller and the Servicer shall refrain from making any such unauthorized distributions. Notwithstanding anything to the contrary set forth herein, nothing in this Agreement shall restrict or prohibit the Seller (or the Servicer on its behalf) from (x) making withdrawals and distributions from each Collection Account with respect to those amounts identified in clauses (i) and (ii) of the proviso to the definition of Amount on Deposit in the Collection Accounts (until the delivery of an Activation Notice) or (y) transferring any amounts from one Collection Account to another Collection Account.
(d) Identifying Collections. Pursuant to its servicing obligations under Section 4(a) hereof, the Servicer shall be responsible for identifying, matching and reconciling any payments received from Account Debtors with the Receivable associated with such payment. Any payment by an Account Debtor in respect of any indebtedness owed by it to an Originator shall, except as otherwise specified by such Account Debtor (including by reference to a particular invoice), or required by the related contracts or law, be applied in the following order of priority: first, as a Collection of any Receivables of such Account Debtor then outstanding in the order of the age of such Receivables and second, to other indebtedness of such Account Debtor to such Originator (if any), or in any event in accordance with the terms of the Intercreditor Agreement.
(e) No Changes to Receivables. Neither the Seller nor the Servicer shall compromise or settle any Purchased Receivable or extend the Due Date with respect thereto without the consent of the Administrative Agent except as otherwise expressly provided for in Section 4(a) hereof.
(f) Servicer Indemnification. The Servicer hereby agrees to indemnify and hold harmless the Administrative Agent and each Buyer and their respective officers, directors, agents, representatives, shareholders, counsel, employees and each of their respective Affiliates, successors and assigns (each, an “Indemnified Person”) from and against any and all damages, claims, losses, costs, expenses and liabilities (including, without limitation, reasonable and documented attorneys’ fees and expenses) (all of the foregoing being collectively referred to as “Indemnified Amounts”) arising out of or resulting from or related to (i) any failure by the Servicer to perform its duties or obligations as Servicer hereunder in accordance with this Agreement or to comply with any Applicable Law,
(ii) any breach of the Servicer’s representations, warranties or covenants under any Transaction Document or (iii) any claim brought by any Person other than an Indemnified Person arising from the Servicer’s servicing or collection activities with respect to the Purchased Receivables; provided, however, that in all events there shall be excluded from the foregoing indemnification any damages, claims, losses, costs, expenses or liabilities to the extent resulting solely from (x) the gross negligence or willful misconduct of an Indemnified Person as determined in a final non-appealable judgment by a court of competent jurisdiction or (y) the failure of an Account Debtor to pay any sum due under its Purchased Receivables by reason of the financial or credit condition of such Account Debtor (including, without limitation, the occurrence of an Insolvency Event with respect to the applicable Account Debtor). Any amount due and payable pursuant to this Section shall be paid to the Administrative Agent’s Account or the applicable Buyer’s Account, as applicable, in immediately available funds by no later than the second (2nd) Business Day following demand therefor by the Administrative Agent or any Buyer.
(g) Replacement of Servicer. Following the occurrence of a Servicer Termination Event, the Administrative Agent, at the direction of the Required Buyers, may replace the Servicer with itself or any agent for the Administrative Agent with respect to any and all Purchased Receivables. The Seller shall be responsible for all reasonable costs and expenses incurred in connection with such replacement and shall promptly reimburse the Administrative Agent with respect to same.
(h) The Administrative Agent as Attorney-in-Fact. Each of the Seller and the Servicer hereby appoints the Administrative Agent as the true and lawful attorney-in-fact of such Person, with full power of substitution, coupled with an interest, and hereby authorize and empower the Administrative Agent in the name and on behalf of such Person at any time following removal of Smithfield as Servicer pursuant to Section 4(g), to take such actions, and execute and deliver such documents, as the Administrative Agent deems necessary or advisable in connection with any applicable Purchased Receivable and Related Security (i) to perfect the purchase and sale of such Purchased Receivable and Related Security, including, without limitation, to send a notice of such purchase and sale to the Account Debtor of the transfers contemplated hereby and the sale of such Purchased Receivable and Related Security or (ii) to make collection of and otherwise realize the benefits of such Purchased Receivable and Related Security. At any time that Smithfield is no longer serving as Servicer hereunder, the Administrative Agent shall have the right to bring suit, in the Administrative Agent’s or the Seller’s name, and generally have all other rights of an owner and holder respecting each applicable Purchased Receivable and Related Security, including without limitation the right to accelerate or extend the time of payment, settle, compromise, release in whole or in part any amounts owing on such Purchased Receivables and issue credits in its own name or the name of the Seller. At any time following removal of Smithfield as Servicer, the Administrative Agent may (and, upon direction of the Required Buyers, the Administrative Agent shall) endorse or sign the Administrative Agent’s or the Seller’s name on any checks or other instruments with respect to any applicable Purchased Receivables and Related Security or the goods covered thereby. The Administrative Agent shall not be liable for any actions taken by it in accordance with this Section unless such actions constitute the gross negligence or willful misconduct of the Administrative Agent as determined by a court of competent jurisdiction in a final and non-appealable judgment. This power of attorney, being coupled with an interest, is irrevocable and shall not expire until the Final Collection Date.
(i) Netting of Payments. The parties hereto agree that on each Settlement Date, for administrative convenience, the parties shall net the obligations of each Buyer to the Seller with respect to the payment of the applicable Purchase Price against the obligations of the Seller to such Buyer and transfer the net amount via a single wire payment. To the extent that the obligations of the Seller to a Buyer described in the foregoing sentence exceed the obligations of such Buyer to the Seller described in the foregoing sentence, the Seller shall transfer the net amount to such Buyer in accordance with Section 4(c); to the extent that the obligations of the Buyer to a Seller described in the foregoing sentence exceed the obligations of the Seller to such Buyer in the foregoing sentence, such Buyer shall transfer the net amount to the Seller in accordance with Section 1(b). Such amounts shall be determined by the Administrative Agent and all such determinations shall be conclusive absent manifest error.
5. Deemed Collections; Repurchase Events; Indemnities and Set-Off.
(a) Deemed Collections. If, on any day, the outstanding balance of a Purchased Receivable is reduced (but not cancelled) as a result of any Dilution, the Seller shall be deemed to have received on such day a Collection of such Purchased Receivable in the amount of such reduction. If on any day a Purchased Receivable is cancelled (or reduced to zero) as a result of any Dilution, the Seller shall be deemed to have received on such day a Collection of such Purchased Receivable in the amount of the Outstanding Purchase Amount of such Purchased Receivable (as determined immediately prior to such Dilution). Any amount deemed to have been received under this Section 5(a) shall constitute a “Deemed Collection.” In the event of any such Deemed Collection, the Seller shall deposit an amount equal to such Deemed Collection into a Collection Account by no later than the first Settlement Date after the Seller or Servicer obtains knowledge or notice thereof.
(b) Repurchase Event. If any of the following events (each, a “Repurchase Event”) occurs with respect to a Purchased Receivable:
(i) such Purchased Receivable was not an Eligible Receivable at the time of purchase;
(ii) the Seller or Servicer fails to perform or observe any other term, covenant or agreement with respect to such Purchased Receivable set forth in any Transaction Document or any related Contract and such failure shall or could reasonably be expected to have an adverse effect on the timely payment, validity or enforceability of such Purchased Receivable;
(iii) the Seller or the Servicer instructs the related Account Debtor to pay any amount with respect to such Purchased Receivable to an account other than a Collection Account; or
(iv) a Dispute has arisen with respect to any Purchased Receivable,
then the Seller shall deliver notice thereof to the Administrative Agent no later than the next occurring Reporting Date and, on the Settlement Date related to such Reporting Date, repurchase such Purchased Receivable and Related Security. The repurchase price for a Purchased Receivable shall be the amount equal to the Outstanding Purchase Amount relating to such Purchased Receivable and Related Security at such time and shall be paid to a Collection Account in immediately available funds. Upon the payment in full of the repurchase price with respect to a Purchased Receivable and Related Security, such Purchased Receivable and Related Security shall hereby be, and be deemed to be, repurchased by the Seller from the Buyers without recourse to or warranty by the Buyers (other than that no Buyer has pledged or assigned such Purchased Receivable and Related Security).
(c) Credit Default Certification. If any applicable Account Debtor has not paid in cash all or any portion of any Purchased Receivable by the ninetieth (90th) day after the Due Date thereof, then the Seller shall on or prior to such day (or, if such day, is not a Business Day, the next succeeding Business Day), either (x) fund the Collection Accounts with the amount of the unpaid Purchased Receivable (or apply the corresponding amount as set-off against the Purchase Price for additional Purchased Receivables in lieu of such funding of the Collection Accounts pursuant to (and to the extent permitted by) Section 1(a)(iii)) or (y) certify to the Administrative Agent and each Buyer in writing that the unpaid portion of the Purchased Receivable is payable and that the missed payment is a result of a credit default by such Account Debtor and not as a result of an event that would require the Seller to repurchase the Receivable pursuant to Section 5(b) or otherwise repay the Buyers in accordance with their respective Pro Rata Shares pursuant to Section 5(a) (a “Credit Default Certification”); provided that no such certification may be delivered if such Account Debtor has objected to the payment of the applicable Receivable based on any assertion (whether valid or not) that such Receivable is subject to a Dispute or which, if true, would require that the Seller repurchase such Receivable pursuant to Section 5(b). The failure to duly deliver a Credit Default Certification shall be deemed an irrevocable admission by the Seller that the cause of the missed payment is not the result of a credit default by the applicable Account Debtor. If the Seller anticipates that it will be required to repurchase any Purchased Receivables
as provided in Section 5(b) above, the Seller may effect such repurchase prior to the date required above by depositing the applicable amount into the Collection Accounts (or applying the corresponding amount as set-off against the Purchase Price for additional Purchased Receivables in lieu of such deposit pursuant to (and to the extent permitted by) Section 1(a)(iii)). Notwithstanding the foregoing, the Seller may deliver a Credit Default Certification even if the applicable Account Debtor has objected to the payment of unpaid Purchased Receivables if the Seller believes in good faith that the missed payment is the result of a credit default by the applicable Account Debtor and not the result of an event that would give rise to an obligation of the Seller under Section 5(a) or (b) so long as the Seller funds the full amount of such missed payment into the Collection Accounts and references such missed payment and the amount thereof in its Credit Default Certification. If it is subsequently finally determined that (x) such Purchased Receivables or any portion thereof were not subject to a repurchase obligation pursuant to Section 5(b) and (y) the failure of such Purchased Receivables or relevant portion thereof to be paid was the result of a credit default by the applicable Account Debtor (either by a written acknowledgement from the applicable Account Debtor to such effect, a final judgment by a court of competent jurisdiction that such amount is payable by such Account Debtor or the allowance of a claim in respect thereof in an Insolvency Event of the applicable Account Debtor), then each Buyer shall reimburse the Seller the excess, if any, of (A) the amount that such Buyer received as a result of the Seller having funded the Collection Accounts as provided above with respect to the applicable portion over (B) the amount such Buyer would have received had the Seller not been required to so fund the Collection Accounts with respect to the applicable portion. Such reimbursement shall be made as promptly as practicable following the date such amount can be reasonably finally determined.
(d) Defaulted Receivables. If (x) the Seller provides a Credit Default Certification with respect to an Account Debtor as to which there are any outstanding Purchased Receivables as permitted pursuant to Section 5(c) or (y) any Account Debtor becomes subject to an Insolvency Event, all outstanding Purchased Receivables with respect to such Account Debtor (each such Account Debtor, a “Defaulted Account Debtor”) shall be considered “Defaulted Receivables”. Upon the occurrence of an event described in clause (x) or (y) (such occurrence, a “Defaulted Receivables Event”) (it being agreed that any Credit Default Certification shall be deemed to be effective upon the delivery of such Credit Default Certification):
(i) the Maximum Outstanding Purchase Amount shall be reduced by an amount equal to the Purchase Sublimit of the Defaulted Account Debtor(s),
(ii) all Collections on or with respect to the Defaulted Receivables shall be distributed ratably to the Buyers in accordance with their respective Pro Rata Shares promptly upon receipt and identification thereof by the Seller or Servicer, and
(iii) the Buyer Amount Balance shall be reduced by an amount equal to the aggregate Outstanding Purchase Amount of the Defaulted Receivables.
In addition to the foregoing, the Administrative Agent may (and, upon direction of the Required Buyers, the Administrative Agent shall), with respect to the Defaulted Receivables, elect to enforce on behalf of itself and the Seller all remedies and take such actions against the Defaulted Account Debtor as the Administrative Agent deems necessary to collect the Defaulted Receivables. In connection with any such enforcement by the Administrative Agent, the Seller shall provide to the Administrative Agent any information reasonably available to the Seller as may be necessary to enable the Administrative Agent to take such actions, including providing copies of the applicable invoices and legal names and addresses of the applicable Defaulted Account Debtors. Notwithstanding anything to the contrary in this Section 5(d) or otherwise, the occurrence of a Defaulted Receivables Event shall not limit Seller’s obligations under Section 5(a) or 5(b) above.
(e) Seller Indemnification. The Seller hereby agrees jointly and severally to indemnify each Indemnified Person and hold each Indemnified Person harmless from and against any and all Indemnified Amounts arising out of or resulting from or related to this Agreement or any other Transaction Document or the ownership, maintenance or funding, directly or indirectly, of the Purchased Receivable and Related Security (or any of them) or otherwise arising out of or resulting from the actions or inactions of the Seller or any of its Affiliates, including,
without limitation, any of the following: (i) any representation or warranty made or deemed made by the Seller (or any of its officers) under or in connection with this Agreement or any other Transaction Document that shall have been incorrect when made; (ii) the failure by the Seller to perform any of its covenants or obligations under any Transaction Document; (iii) the failure by the Seller or any Purchased Receivable, Related Security or Contract to comply with any Applicable Law; (iv) the failure to vest in the Buyers ownership of, and a first-priority perfected security interest (within the meaning of the UCC) in, each Purchased Receivable and Related Security and all Collections in respect thereof, free and clear of any Adverse Claim; (v) without duplication of the Seller’s other payment obligations hereunder with respect thereto, any Dispute, Dilution or any other claim resulting from the services performed or merchandise furnished in connection with any Purchased Receivable or the furnishing or failure to furnish such services or merchandise or relating to collection activities with respect to any Purchased Receivable; (vi) any suit or claim related to any Purchased Receivable and Related Security, any Contract or any Transaction Document; (vii) the failure of the Seller to notify any Account Debtor of the sale of the Purchased Receivables to the Buyers pursuant to this Agreement or (viii) the commingling by the Seller of Collections at any time with other funds of the Seller or any other Person; provided, however, that in all events there shall be excluded from the foregoing indemnification any Indemnified Amounts to the extent resulting solely from (x) the gross negligence or willful misconduct of an Indemnified Person as determined in a final non-appealable judgment by a court of competent jurisdiction or (y) the failure of an Account Debtor to pay any sum due under its Purchased Receivables by reason of the financial or credit condition of such Account Debtor (including, without limitation, the occurrence of an Insolvency Event with respect to the applicable Account Debtor). Any amount due and payable pursuant to this Section shall be paid to the Administrative Agent’s Account or the applicable Buyer’s Account, as applicable, in immediately available funds by no later than the second (2nd) Business Day following demand therefor by the Administrative Agent or any Buyer.
(f) Tax Matters.
(i) Tax Indemnification. All payments on the Purchased Receivables or otherwise made hereunder from the Account Debtors, the Servicer and the Seller will be made free and clear of any present or future taxes, levies, imposts, energy surcharges, duties, deductions, withholdings, assessments, fees or other charges whatsoever, including any interest, additions to tax or penalties applicable thereto, but excluding any taxes resulting from (1) a Buyer’s failure to comply with clause (ii) below or (2) a Buyer’s assignment of its interests under this Agreement (and for the avoidance of doubt not including taxes imposed upon each Buyer with respect to its overall net income), including whether imposed on the making of such a payment or whether arising by reason of the sale of the Purchased Receivables to each Buyer or relating to the underlying transactions between the applicable Originator and the related Account Debtors that gave rise to such Purchased Receivables (any such taxes, “Transaction Taxes”) and Other Taxes, and the sum payable to each Buyer shall be increased to the extent necessary to ensure that, after the making any withholding or payment of Transaction Taxes and Other Taxes, if any, each Buyer receives on the due date and retains (free from any liability in respect of any Transaction Taxes and Other Taxes) a net sum equal to what it would have received and so retained, had no such withholding or payment of Transaction Taxes and Other Taxes been present, imposed, required or made. The Seller and the Servicer jointly and severally will indemnify each Buyer and hold each Buyer harmless from any Transaction Taxes and Other Taxes, whether or not such taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Any amount due and payable pursuant to this section shall be paid to the applicable Buyer’s Account in immediately available funds by no later than the second (2nd) Business Day following demand therefor by any Buyer.
(ii) Form Delivery. Each Buyer will deliver any properly completed and executed documentation reasonably requested by the Seller or the Servicer as will allow the Seller or the Servicer to satisfy its tax reporting or withholding obligations to the extent such Buyer is legally entitled to do so and the completion, execution and submission of such documentation would not in such Buyer’s judgment subject such Buyer to any unreimbursed cost or expense or would prejudice the legal or commercial position of such Buyer.
(iii) Other Taxes. The Seller shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Buyer timely reimburse it for the payment of, any Other Taxes.
(g) Set-Off. The Seller and Servicer hereby irrevocably instruct and authorize the Administrative Agent and each Buyer to setoff, appropriate and apply (without presentment, demand, protest or other notice which are hereby expressly waived) any deposits and any other indebtedness held or owing by the Administrative Agent or any Buyer or any branch, agency or Affiliate thereof, including the payment of the Purchase Price for any Proposed Receivables and Related Security, to, or for the account of, the Seller, the Servicer or any of their respective Affiliates against amounts owing by the Seller or Servicer hereunder or under any other Transaction Document (even if contingent or unmatured).
(h) UCC. The rights granted to the Administrative Agent hereunder are in addition to all other rights and remedies afforded to the Administrative Agent as a secured party under the UCC.
6. Notices. Unless otherwise provided herein, all communications by any party to any other party hereunder or any other Transaction Document shall be in a writing personally delivered or sent by a recognized overnight delivery service, or certified mail, postage prepaid, return receipt requested, or by email to such party, as the case may be, at its address set forth below:
| | | | | | | | | | | | | | |
| If to the Seller: | | Smithfield Receivables Funding LLC |
| | | 3411 Silverside Rd, 103 Baynard Bldg |
| | | Wilmington, DE 19810 |
| | | Attention: Jeffrey Porter |
| | | | |
| | | With a copy to: |
| | | | |
| | | c/o Smithfield Foods, Inc. |
| | | 200 Commerce Street |
| | | Smithfield, VA 23430 |
| | | Attention: Jenifer Byrd |
| | | | |
| If to the Servicer: | | Smithfield Foods, Inc. |
| | | 200 Commerce Street |
| | | Smithfield, VA 23430 |
| | | Attention: Jenifer Byrd |
| | | and Mark Hall |
| | | | |
| If to the Administrative Agent
(other than
Funding Notices): | PNC Bank, National Association |
| | | The Tower at PNC Plaza |
| | | 300 Fifth Avenue, 11th Floor |
| | | Pittsburgh, PA 15222 |
| | | Attention: | Brian Stanley |
| | | | | | | | | | | | | | |
| | | | |
| If to the Administrative Agent
(Funding Notices only)
also add: | PNC Bank, National Association |
| | | The Tower at PNC Plaza |
| | | 300 Fifth Avenue, 11th Floor |
| | | Pittsburgh, PA 15222 |
| | | Attention: | Brian Stanley |
The Seller and Servicer agree that the Administrative Agent and each Buyer may presume the authenticity, genuineness, accuracy, completeness and due execution of any email bearing a facsimile or scanned signature resembling a signature of an authorized Person of the Seller or Servicer without further verification or inquiry by the Administrative Agent or any Buyer. Notwithstanding the foregoing, the Administrative Agent or any Buyer in its sole discretion may elect not to act or rely upon such a communication and shall be entitled (but not obligated) to make inquiries or require further Seller or Servicer action to authenticate any such communication.
Any Portfolio Report, and any supporting documentation in connection herewith or therewith, such as copies of invoices, may be sent by the Seller or Servicer by electronic mail attachment in portable document format (.pdf).
A party may change the address at which it is to receive notices hereunder by written notice in the foregoing manner given to the other parties hereto.
7. Expenses. The Seller hereby agrees to reimburse the Administrative Agent and each Buyer within 15 days of demand (together with a reasonably detailed invoice therefor) for all reasonable and documented costs and out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder, including without limitation, the reasonable fees and out-of-pocket expenses of legal counsel for the Administrative Agent and the Buyers with respect thereto and with respect to advising the Administrative Agent and the Buyers as to their respective rights and remedies under this Agreement and all Other Taxes. The Seller shall pay to the Administrative Agent and the Buyers on demand any and all costs and expenses of the Administrative Agent and the Buyers, if any, including reasonable and documented counsel fees and expenses actually incurred in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following a Servicer Termination Event. Notwithstanding anything to the contrary contained herein, the parties hereto agree that (A) in no event shall the Seller be obligated to pay the fees and expenses of more than one legal counsel in respect of the Buyers and the Administrative Agent (and, if necessary, one local counsel in each material jurisdiction for the Administrative Agent and the Buyers (taken as a whole) and, solely in the case of a conflict of interest, one additional counsel as necessary to the parties actually affected by such conflict (taken as a whole)), and (B) in the absence of a Servicer Termination Event, such legal counsel under the foregoing clause (A) shall be shared with the Indemnified Parties (as such term is defined under the Securitization Documents) under the Securitization Documents.
8. Interest on Overdue Amounts. All amounts due for payment by the Seller or Servicer to the Administrative Agent or any Buyer pursuant to this Agreement shall accrue interest at the Overdue Payment Rate from the date on which payment thereof is due until the date on which payment thereof is made in accordance with the terms of this Agreement.
9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (EXCEPT IN THE CASE OF THE OTHER TRANSACTION DOCUMENTS, TO THE EXTENT OTHERWISE EXPRESSLY STATED THEREIN) AND EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE OWNERSHIP INTEREST OF THE BUYERS IN ANY OF THE PURCHASED RECEIVABLES OR RELATED SECURITY IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
10. No Non-Direct Damages. To the fullest extent permitted by Applicable Law, the Seller and Servicer shall not assert, and the Seller hereby waives, any claim against any Indemnified Person, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Transaction Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby. No Indemnified Person shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Transaction Documents or the transactions contemplated hereby or thereby; provided that the waiver provided for in this sentence shall not apply to damages resulting directly from such Indemnified Person’s own gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and non-appealable judgment.
11. Administrative Agent.
(a) Authorization and Action.
(i) Each Buyer hereby irrevocably designates and appoints PNC Bank, National Association as Administrative Agent hereunder and under the Transaction Documents to which the Administrative Agent is a party, and each Buyer that becomes a party to this Agreement hereafter ratifies such designation and appointment and authorizes the Administrative Agent to take such action on its behalf under the provisions of the Transaction Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of the Transaction Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall have no duties or responsibilities, except those expressly set forth in the Transaction Documents to which it is a party, or any fiduciary relationship with any Buyer, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of the Administrative Agent shall be read into any Transaction Document or otherwise exist against the Administrative Agent. In addition, the Administrative Agent is hereby authorized by each Buyer to consent to any amendments or restatements to the Certificate of Incorporation of the Seller to the extent such amendments or restatements are not prohibited by clause (m)(xxviii) of Exhibit D of this Agreement.
(ii) The provisions of this Section 11 are solely for the benefit of the Administrative Agent and the Buyers, and none of the Seller or the Servicer shall have any rights as a third-party beneficiary or otherwise under any of the provisions of this Section 11 (other than Section 11(j)), except that this Section 11 shall not affect any obligations which the Administrative Agent or any Buyer may have to any of the Seller or the Servicer under the other provisions of this Agreement.
(iii) In performing its functions and duties hereunder, the Administrative Agent shall act solely as the agent of the Buyers and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any of the Seller or the Servicer or any of their respective successors and assigns.
(b) Delegation of Duties. The Administrative Agent may execute any of its duties under each Transaction Document to which it is a party by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
(c) Exculpatory Provisions. None of the Administrative Agent or any of its directors, officers, agents or employees shall be (i) liable for any action lawfully taken or omitted to be taken by it or them under or in connection with this Agreement or any other Transaction Document (except for its, their or such Person’s own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Buyers for any recitals, statements, representations or warranties made by the Seller or the Servicer contained in this Agreement, any other Transaction Document or any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this Agreement, or any other Transaction Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, or any other Transaction Document or any other document furnished in connection herewith or therewith, or for any failure of the Seller or the Servicer to perform its obligations hereunder or thereunder, or for the satisfaction of any condition specified in Section 1(g), or for the perfection, priority, condition, value or sufficiency of any collateral pledged in connection herewith. The Administrative Agent shall be under no obligation to any Buyer to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the Seller or the Servicer. The Administrative Agent shall not be deemed to have knowledge of any Servicer Termination Event unless the Administrative Agent has received notice from the Seller, the Servicer or a Buyer.
(d) Reliance by Administrative Agent.
(i) The Administrative Agent shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Seller or the Servicer), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall in all cases be fully justified in failing or refusing to take any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence of such of the Buyers as it deems appropriate; provided that unless and until the Administrative Agent shall have received such advice, the Administrative Agent may take or refrain from taking any action, as the Administrative Agent shall deem advisable and in the best interests of the Buyers.
(ii) The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a request of the Required Buyers or all of the Buyers, as applicable, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Buyers.
(iii) Any action taken by the Administrative Agent in accordance with this clause (d) shall be binding upon all of the Buyers.
(e) Non-Reliance on Administrative Agent and Other Buyers. Each Buyer expressly acknowledges that none of the Administrative Agent or other Buyers, nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates, has made any representations or warranties to it and that no act by the Administrative Agent or any other Buyer hereafter taken, including, without limitation, any review of the affairs of the Seller or the Servicer, shall be deemed to constitute any representation or warranty by the Administrative Agent or such other Buyer. Each Buyer represents and warrants to the Administrative Agent that it has made and will make, independently and without reliance upon the Administrative Agent or any other Buyer and based on such documents and information as it has deemed appropriate, its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Seller and the Servicer and made its own decision to enter into the Transaction Documents and all other documents related thereto.
(f) Reimbursement and Indemnification. Each of the Buyers agree to reimburse and indemnify the Administrative Agent and its officers, directors, employees, representatives and agents ratably in accordance with their respective Pro Rata Shares, to the extent not paid or reimbursed by the Seller or the Servicer (i) for any amounts for which the Administrative Agent, acting in its capacity as Administrative Agent is entitled to reimbursement by the Seller or the Servicer hereunder and (ii) for any other expenses incurred by the Administrative
Agent, in its capacity as Administrative Agent and acting on behalf of the Buyers, in connection with the administration and enforcement of the Transaction Documents.
(g) Administrative Agent in its Individual Capacity. Each of the Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Seller or Servicer or any Affiliate of the Seller or Servicer as though the Administrative Agent were not the Administrative Agent hereunder. With respect to purchase of Receivables pursuant to this Agreement, the Administrative Agent shall have the same rights and powers under the Transaction Documents in its individual capacity as any Buyer and may exercise the same as though it were not the Administrative Agent, and the term “Buyer” shall include the Administrative Agent in its individual capacity.
(h) UCC Filings. Each of the Buyers hereby expressly recognizes and agrees that the Administrative Agent may be listed as the assignee or secured party of record on the various UCC filings required to be made under the Transaction Documents in order to perfect their respective interests in the Purchased Receivables and Related Security, that such listing shall be for administrative convenience only in creating a record or nominee holder to take certain actions hereunder on behalf of the Buyers and that such listing will not affect in any way the status of the Buyers as the true parties in interest with respect to the Purchased Receivables and Related Security. In addition, such listing shall impose no duties on the Administrative Agent other than those expressly and specifically undertaken in accordance with this Section 11.
(i) Enforcement. Notwithstanding anything to the contrary contained herein or in any other Transaction Document, the authority to enforce rights and remedies hereunder and under the other Transaction Documents against the Seller and the Servicer shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent for the benefit of all the Buyers; provided that the foregoing shall not prohibit (i) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Transaction Documents or (ii) any Buyer from exercising setoff rights in accordance with Section 5(g) (subject to the terms of Section 13(m)); provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Transaction Documents, then (x) the Required Buyers shall have the rights otherwise provided to the Administrative Agent and (y) in addition to the matters set forth in clauses (ii) and (iii) of the preceding proviso and subject to Section 13(m), any Buyer may, with the consent of the Required Buyers, enforce any rights or remedies available to it and as authorized by the Required Buyers.
(j) Successor Administrative Agent. The Administrative Agent or, upon five (5) days’ notice to the Seller, the Servicer and the Buyers, may voluntarily resign and may be removed at any time, with or without cause, by Buyers holding in the aggregate at least sixty-six and two-thirds percent (66 2/3%) of the Facility Shares, the Seller and the Servicer. If the Administrative Agent shall voluntarily resign or be removed as Administrative Agent under this Agreement, then the Required Buyers during such five-day period shall appoint, with the consent of the Seller and the Servicer from among the remaining Buyers, a successor Administrative Agent, whereupon such successor Administrative Agent or shall succeed to the rights, powers and duties of the Administrative Agent. The term “Administrative Agent” shall mean such successor agent, effective upon its appointment, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement. Upon resignation or replacement of the Administrative Agent in accordance with this clause (i), the retiring Administrative Agent shall execute such UCC-3 assignments and amendments, and assignments and amendments of the Transaction Documents, as may be necessary to give effect to its replacement by a successor Administrative Agent. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement.
12. Erroneous Payments.
(a) If the Administrative Agent notifies a Buyer, or any Person who has received funds on behalf of a Buyer (any Buyer or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or not known to such Buyer or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Buyer shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two (2) Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Overnight Bank Funding Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting immediately preceding clause (a), each Buyer, or any Person who has received funds on behalf of a Buyer, hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Buyer, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) in each case:
(i) (A) in the case of immediately preceding clauses (x) or (y), an error shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Buyer shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of such error) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 12(b).
(c) Each Buyer hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Buyer under any Transaction Document, or otherwise payable or distributable by the Administrative Agent to such Buyer from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.
(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Buyer that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Buyer at any time, (i) such Buyer shall be deemed to have assigned its Purchased Receivables and Related Security (but not its Facility Share) in an amount equal to the Erroneous Payment Return Deficiency (or such
lesser amount as the Administrative Agent may specify) (such assignment of the Purchased Receivables and Related Security (but not Facility Share), the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with the Seller and the Servicer) deemed to execute and deliver an assignment agreement with respect to such Erroneous Payment Deficiency Assignment, (ii) the Administrative Agent as the assignee Buyer shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee Buyer shall become a Buyer hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Buyer shall cease to be a Buyer hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Facility Share which shall survive as to such assigning Buyer and (iv) the Administrative Agent may reflect in the Register its ownership interest in the Purchased Receivables and Related Security subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any Purchased Receivable and Related Security acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Buyer shall be reduced by the net proceeds of the sale of such Purchased Receivable (or portion thereof) and Related Security, and the Administrative Agent shall retain all other rights, remedies and claims against such Buyer (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Facility Share of any Buyer and such Facility Share shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has sold a Purchased Receivable (or portion thereof) and Related Security acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Buyer under the Transaction Documents with respect to each Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”).
(e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any obligations of the Seller or the Servicer; provided that this Section 12 shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the obligations of the Seller or the Servicer relative to the amount (and/or timing for payment) of the obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; provided, further, that for the avoidance of doubt, this clause (e) shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Seller or the Servicer for the purpose of making such Erroneous Payment.
(f) To the extent permitted by Applicable Law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
(g) Each party’s obligations, agreements and waivers under this Section 12 shall survive the resignation or replacement of the Administrative Agent, the termination of this Agreement and/or the repayment, satisfaction or discharge of all obligations of the Seller and the Servicer (or any portion thereof) under any Transaction Document.
13. General Provisions.
(a) Final Agreement; Assignment. This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings. No provision of this Agreement may be amended or waived except by a writing signed by the parties hereto. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy);
provided, however, that neither the Seller nor the Servicer may assign any of its rights hereunder without the Administrative Agent’s prior written consent, given or withheld in the Administrative Agent’s sole discretion. Each Buyer shall have the right, without the consent of or notice to the Seller, to sell, transfer, negotiate, or grant participations in all or any part of, or any interest in, such Buyer’s obligations, rights and benefits hereunder (including in any Purchased Receivables and Related Security); provided, that the Seller may continue to communicate and deal exclusively with such Buyer and shall not be required to communicate or otherwise deal with the participant; provided, further that Buyer agrees that any agreement between such Buyer and any such participant in respect of such participating interest shall not restrict such Buyer’s right to agree to any amendment, supplement, waiver or modification to this Agreement.
(b) Severability. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
(c) Execution; Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by electronic mail attachment in portable document format (.pdf) shall be effective as delivery of a manually executed counterpart of this Agreement.
(d) Termination. This Agreement, including all covenants, representations and warranties, repurchase obligations and indemnities made herein shall continue in full force and effect until the Final Collection Date. Each of the Buyers hereby authorizes the Administrative Agent, and the Administrative Agent hereby agrees, promptly after the Final Collection Date to execute and deliver to the Seller such UCC termination statements as may be necessary to terminate any UCC financing statements evidencing the sale of the Purchased Receivables and Related Security as well as the grant of security pursuant to Section 1(h), all at the Seller’s expense. The Seller’s and Servicer’s obligations to indemnify the Administrative Agent and each Buyer with respect to the expenses, damages, losses, costs and liabilities shall survive until the later of (x) the Final Collection Date and (y) all applicable statute of limitations periods with respect to actions that may be brought by the Administrative Agent or any Buyer under the Transaction Documents have run.
(e) Calculation of Interest. All interest amounts calculated on a per annum basis hereunder are calculated on the basis of a year of three hundred and sixty (360) days.
(f) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY LOAN PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
(g) CONSENT TO JURISDICTION. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT, AND EACH SUCH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY BUYER TO BRING PROCEEDINGS AGAINST THE SELLER OR THE SERVICER IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY THE SELLER OR THE SERVICER AGAINST THE ADMINISTRATIVE AGENT OR ANY BUYER OR ANY AFFILIATE OF THE ADMINISTRATIVE AGENT OR ANY BUYER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE SELLER OR SERVICER PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.
(h) Captions and Cross References. The various captions in this Agreement are provided solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement. Unless otherwise indicated, references in this Agreement to any Section, Schedule or Exhibit are to such Section of or Schedule or Exhibit to this Agreement, as the case may be, and references in any Section, subsection, or clause to any subsection, clause or subclause are to such subsection, clause or subclause of such Section, subsection or clause.
(i) No Party Deemed Drafter. The Servicer, the Seller, the Administrative Agent and each Buyer agree that no party hereto shall be deemed to be the drafter of this Agreement.
(j) PATRIOT Act. The Administrative Agent and each Buyer hereby notify the Seller and the Servicer that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “PATRIOT Act”), it may be required to obtain, verify and record information that identifies the Seller and the Servicer, which information includes the name, address, tax identification number and other information regarding the Seller and the Servicer that will allow them to identify the Seller and the Servicer in accordance with the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act. The Seller and the Servicer agree to provide the Administrative Agent and each Buyer, from time to time, with all documentation and other information required by bank regulatory authorities under “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act.
(k) Term SOFR Notification. Section 1(j) of this Agreement provides a mechanism for determining an alternative rate of interest in the event that the Term SOFR Rate is no longer available or in certain other circumstances. The Administrative Agent does not warrant or accept any responsibility for and shall not have any liability with respect to, the administration, submission or any other matter related to the Term SOFR Rate or with respect to any alternative or successor rate thereto, or replacement rate therefor.
(l) Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Seller, shall maintain a register (the “Register”) on which it shall record the rights of the Buyers and any assignee or participant of the Buyers with respect to the rights under this Agreement and any Purchased Receivable and Related Security, and each assignment or participation. The Register shall include the names and addresses of the Buyers, assignees, participants or successors and the percentage or portion of such rights and obligations assigned or participated. The entries in the Register shall be conclusive absent manifest error; provided, however, that a failure to make any such recordation, or any error in such recordation shall not affect the Seller’s obligations in respect of such rights.
(m) Ratable Payments. If any Buyer, whether by set off or otherwise, has payment made to such Buyer (other than payments received pursuant to Section 7) in a greater proportion than that received by any other Buyer entitled to receive a ratable share of such obligations, such Buyer agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of such obligations held by the other Buyers so that after such purchase such Buyer will hold its Pro Rata Share of such obligations; provided that, if all or any portion of such excess amount is thereafter recovered from such Buyer, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
(n) Bankruptcy Petition. Each party hereto hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior Debt of the Seller, it will not institute against, or join any other Person in instituting against, the Seller any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
(o) Intercreditor Agreement. Each Buyer hereby acknowledges that it has received and reviewed the Intercreditor Agreement and agrees to be bound by the terms thereof. Each Buyer (and each Person that becomes a Buyer under this Agreement after the date hereof) hereby authorizes and directs the Administrative Agent to enter into the Intercreditor Agreement on behalf of such Buyer and agrees that the Administrative Agent may take such actions on its behalf as is contemplated by the terms of the Intercreditor Agreement. To the extent that any terms or provisions herein are inconsistent with any terms or provisions of the Intercreditor Agreement, the Intercreditor Agreement shall govern. In addition, each Buyer and the Administrative Agent acknowledge and agree that the rights and remedies of the Administrative Agent and the Buyers hereunder and under the other Transaction Documents are subject to the Intercreditor Agreement.
(p) Confidentiality.
(i) Each of the Seller, the Servicer and each Buyer shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Fee Letter and the other confidential or proprietary information with respect to the Administrative Agent and the Buyers and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that the Seller, the Servicer and such Buyer and its officers and employees may disclose such information to such Person’s external accountants and attorneys and as required by any Applicable Law or order of any judicial or administrative proceeding.
(ii) Each of the Buyers and the Administrative Agent shall maintain and shall cause each of its officers, directors, employees, investors, potential investors, credit enhancers, outside accountants, attorneys and other advisors to maintain the confidentiality of, and not disclose to any other Person, any nonpublic information with respect to the Seller and the Servicer, except that any of the foregoing may disclose such information (i) to any party to this Agreement, (ii) to its Affiliates and its insurers and reinsurers (iii) to the outside accountants, attorneys and other advisors of any Person described in clause (i) above, (iv) to any prospective or actual assignee or participant of the Administrative Agent or any Buyer, (v) to any other entity organized for the purpose of purchasing, or making loans secured by, financial assets for which any Buyer (or one of its Affiliates) acts as the administrative agent and to any officers, directors, employees, outside accountants and attorneys of each of the foregoing; provided that each Person described in the foregoing clause (ii) through (v) is informed of the confidential nature of such information and, in the case of a Person described in clauses (ii) or (iii) is subject to customary obligations of confidentiality, and in the case of a Person described in clause (iv), agrees in writing to maintain the confidentiality of such information in accordance with this Section 13(p); (vi) as required pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law); and (vii) in connection with the exercise of any remedies hereunder or under any other Transaction Document or any action or proceeding relating to this Agreement or any other Transaction Document or the enforcement of rights hereunder or thereunder. Notwithstanding the foregoing, the Administrative Agent and the Buyers shall have no obligation of confidentiality in respect of any information which may be generally available to the public or becomes available to the public through no fault of theirs or their respective Affiliates.
(iii) Notwithstanding any other express or implied agreement to the contrary, the parties hereto hereby agree and acknowledge that each of them and each of their employees, representatives, and other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to any of them relating to such tax treatment and tax structure, except to the extent that confidentiality is reasonably necessary to comply with U.S. federal or state securities laws. For purposes of this Section 13(p), the terms “tax treatment” and “tax structure” have the meanings specified in Treasury Regulation section 1.6011-4(c).
[Signatures Commence on the Following Page]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.
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| SMITHFIELD RECEIVABLES FUNDING LLC, |
| as Seller | |
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| By: | SFFC, Inc., its managing member | |
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| By: | | |
| Name: Jeffrey Porter | |
| Title: President, Assistant Treasurer and Assistant Secretary |
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| SMITHFIELD FOODS, INC., | |
| as Servicer | |
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| By: | | |
| Name: Jenifer Byrd | |
| Title: Vice President and Corporate Treasurer | |
Signature Page 1 of 3
Receivables Purchase Agreement (Smithfield)
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| PNC BANK, NATIONAL ASSOCIATION, |
| as Administrative Agent | |
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| By: | | |
| Name: | |
| Title: |
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| PNC BANK, NATIONAL ASSOCIATION, |
| as a Buyer | |
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| By: | | |
| Name: | |
| Title: | |
Signature Page 2 of 3
Receivables Purchase Agreement (Smithfield)
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| COÖPERATIEVE RABOBANK U.A., NEW YORK BRANCH, |
| as a Buyer | |
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| By: | | |
| Name: | |
| Title: |
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| By: | | |
| Name: | |
| Title: | |
Signature Page 3 of 3
Receivables Purchase Agreement (Smithfield)
Exhibit A
Certain Defined Terms
A. Defined Terms.
As used herein, the following terms shall have the following meanings:
“Account Debtor” means, with respect to any Receivable, the Person that is obligated to make payments in respect of such Receivable pursuant to the applicable Contract or invoice therefor.
“Acquisition Period” means the period beginning on the Initial Funding Date and ending on the Acquisition Period Termination Date.
“Acquisition Period Termination Date” means the date specified by any Buyer in a written notice to the Seller and the Administrative Agent or by the Seller in a written notice to the Administrative Agent and the Buyers, in each case, delivered at such Person’s discretion, terminating the Acquisition Period (an “Acquisition Period Termination Notice”), which date shall not be earlier than the date that is one (1) Business Day after the delivery of such Acquisition Period Termination Notice to the other party; provided that (i) the delivery of an Acquisition Period Termination Notice by any Buyer shall cause the Maximum Outstanding Purchase Amount to be reduced to an amount equal to the Buyer Amount Balance as of the date such Acquisition Period Termination Notice is delivered, (ii) the Acquisition Period Termination Date shall be deemed to have occurred upon the occurrence of the Servicer Termination Event specified in clause (e) of Exhibit F and (iii) the Administrative Agent or any Buyer may immediately terminate the Acquisition Period by written notice to the Seller if any other Servicer Termination Event shall have occurred and be continuing.
“Activation Notice” has the meaning set forth in Section 4(b) hereof.
“Additional Funding Amount” has the meaning set forth in Section 1(b)(i) hereof.
“Additional Funding Date” has the meaning set forth in Section 1(b)(i) hereof.
“Additional Proposed Receivables” has the meaning set forth in Section 1(a)(ii) hereof.
“Additional Purchase Date” means each Business Day during the Acquisition Period (other than the Initial Funding Date).
“Adjusted Term SOFR”: At any time for any calculation, the rate per annum equal to (a) the Term SOFR Rate, plus (b) the SOFR Adjustment.
“Administrative Agent’s Account” means the deposit account specified as such in Exhibit G hereto, or such other bank account identified in writing by the Administrative Agent to the Seller from time to time.
“Adverse Claim” means any ownership interest or claim, mortgage, deed of trust, pledge, lien, security interest, hypothecation, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including, but not limited to, any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security; it being understood that any thereof in favor of, or assigned to, the Buyers shall not constitute an Adverse Claim.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person or any Subsidiary of such Person. A Person shall be deemed to control another Person if (a) the controlling Person owns 10-50% of any class of voting securities of the controlled Person only if it also possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise, or (b) if the controlling Person owns more than 50% of any class of voting securities of the controlled Person.
“Agreement” has the meaning set forth in the preamble hereto.
“Amount on Deposit in the Collection Accounts” as of any date, (x) the amounts on deposit in the Collection Accounts as of such date (including any amounts deposited therein by the Buyers on such date pursuant to Section 1(b)) minus (y) the aggregate of Purchase Prices payable pursuant to Section 1(a)(ii) for Purchased Receivables and Related Security purchased prior to such date but not theretofore distributed from the Collection Accounts pursuant to Section 4(c)(i)(1), as applicable; provided, that in calculating the Amount on Deposit in the Collection Accounts on any date, such calculation shall disregard (without duplication) (i) any amount not representing Collections or amounts paid in respect of Purchased Receivables (including (A) any Collections or amounts paid with respect to any Receivable after the Seller has repurchased such Receivable in accordance with Section 5(b) and (B) any Collections with respect to Receivables retained by the Seller and subject to the Securitization Documents), (ii) any Collections or amounts paid by the applicable Account Debtor with respect to any Purchased Receivable as to which the Seller has made a payment pursuant to Section 5(a) to the extent that the sum of such payment by the Seller plus the amounts so collected from or paid by the applicable Account Debtor with respect to such Purchased Receivable exceeds the original Purchase Price paid on the applicable Purchase Date for such Purchased Receivable and Related Security and (iii) any proceeds of Defaulted Receivables and Related Security.
“Anti-Corruption Laws” means (a) the United StatesU.S. Foreign Corrupt Practices Act of 1977, as amended,; (b) the UKU.K. Bribery Act 2010, as amended; and (c) any other similarapplicable Law relating to anti-bribery or anti-corruption Applicable Laws or regulations administered or enforced in any jurisdiction in which Smithfield or any of its Subsidiaries conductany Seller-Related Party is located or doing business.
“Anti-Terrorism Law” means any Applicable Law in force or hereinafter enacted related to terrorism, money laundering, or economic sanctions, including the Bank Secrecy Act, 31 U.S.C. § 5311 et seq., the USA PATRIOT Act, any such Applicable Law administered or enforced by the Netherlands, the International Emergency Economic Powers Act, 50 U.S.C. 1701, et seq., the Trading with the Enemy Act, 50 U.S.C. App. 1, et seq., 18 U.S.C. § 2332d, and 18 U.S.C. § 2339B.
“Applicable Law” means any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any Governmental Authority, foreign or domestic.
“Applicable Margin” means, with respect to each Approved Account Debtor, the percentage set forth on Schedule II to this Agreement as the “Applicable Margin,” as such Schedule may be modified or supplemented from time to time, as approved in advance by the Seller, the Administrative Agent and each Buyer in writing in their sole and absolute discretion.
“Approved Account Debtor” means a Person listed as an Account Debtor on Schedule II to this Agreement, as such Schedule may be modified or supplemented from time to time, as approved in advance by the Administrative Agent and each Buyer in writing in their sole and absolute discretion.
“Beneficial Ownership Certification” means, for the Seller, a certification regarding beneficial ownership as required by the Beneficial Ownership Rule.
“Beneficial Ownership Rule” means 31 C.F.R. § 1010.230.
“Blocked Property” means any property; (a) owned, directly or indirectly, by a Sanctioned Person; (b) due to or from a Sanctioned Person; (c) in which a Sanctioned Person otherwise holds any interest; (d) that is located in a Sanctioned Jurisdiction; or (e) that otherwise could cause any actual or possible violation by the Administrative Agent or any Buyer of any applicable Anti-Terrorism Laws if the Administrative Agent or any Buyer were to obtain an encumbrance on, lien on, pledge of, or security interest in such property, or provide services in consideration of such property.
“Breakage Amount” means, with respect to any distribution to the Buyers made pursuant to Section 4(c)(ii) on any Daily Amortization Date, the amount, if any, by which (A) the additional Purchase Price Adjustment (calculated without taking into account any Breakage Amount or any shortened duration of the applicable Breakage Period pursuant to the definition thereof) which would have accrued during such Breakage Period on the reduction of the Buyer Amount Balance relating to such Breakage Period had such reduction not been made, exceeds (B) the income, if any, received by such Buyer (or likely to be realized by such Buyer (as reasonably determined by the Buyer)) from the investment of the proceeds of such reduction of the Buyer Amount Balance. A certificate as to the amount of any Breakage Amount (including the computation of such amount) shall be submitted by the applicable Buyer to the Seller and shall be conclusive and binding for all purposes, absent manifest error.
“Breakage Period” means, with respect to any Daily Amortization Date, the period beginning on (and including) such Daily Amortization Date and ending on (but excluding) the next succeeding Settlement Date.
“Business Day” means any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed, or are in fact closed, for business in Pittsburgh, Pennsylvania (or, if otherwise, the Lending Office of the Administrative Agent); provided that, when used in connection with an amount that bears interest at a rate based on SOFR or any direct or indirect calculation or determination of SOFR, the term “Business Day” means any such day that is also a U.S. Government Securities Business Day.
“Buyer” has the meaning set forth in the preamble hereto.
“Buyer’s Account” means, with respect to any Buyer, the deposit account specified as such in Exhibit G hereto, or such other bank account identified in writing by such Buyer to the Seller from time to time.
“Buyer Amount Balance” means, as of any date of determination, the net of: (i) the Initial Funding Amount, plus (ii) the cumulative Additional Funding Amounts, if any, paid by the Buyers pursuant to Section 1(b) after the date hereof through such date of determination, minus (iii) the cumulative amounts distributed to the Buyers pursuant to Section 4(c) after the date hereof through such date of determination (including, without limitation, amounts distributed to the Buyers with respect to Deemed Collections and the repurchase price for Purchased Receivables repurchased in accordance with Section 5(b)), minus (iv) the cumulative amount of Defaulted Receivables after the date hereof through such date of determination.
“Change of Control” means a “Change of Control” (as defined under the Securitization Documents) has occurred.
“Closing Date” means December 22, 2022.
“Collection Account” means each deposit account specified as such in Exhibit G hereto; provided, that each Collection Account shall be novated to the Seller on or prior to the Post-Closing Date (as such term is defined in the Credit and Security Agreement) .
“Collections” means, with respect to any Receivable: (a) all funds that are received by the Seller, Servicer or any other Person on their behalf in payment of any amounts owed in respect of such Receivable (including purchase price, finance charges, interest and all other charges), or applied to amounts owed in respect of such Receivable (including insurance payments and net proceeds of the sale or other disposition of repossessed goods or other collateral or property of the related Account Debtor or any other Person directly or indirectly liable for the payment of such Receivable and available to be applied thereon), (b) all Deemed Collections, (c) all proceeds of all Related Security with respect to such Receivable and (d) all other proceeds of such Receivable.
“Conforming Changes” means, with respect to the Term SOFR Rate or any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Initial Discount Rate,” the definition of “Overdue Payment Rate,” the definition of “Business Day,” the definition of “Initial Discount Period,” the definition of “Settlement Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides in consultation with the Seller may be appropriate to reflect the
adoption and implementation of the Term SOFR Rate or such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of the Term SOFR Rate or the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides in consultation with the Seller is reasonably necessary in connection with the administration of this Agreement and the other Transaction Documents).
“Contract” means, with respect to any Receivable, any and all instruments, agreements, invoices or other writings pursuant to which such Receivable arises or which evidences such Receivable.
“Covered Entity” means (a) each of the Seller, the Servicer, the Performance Guarantor and their respective Subsidiaries, and (b) each Person that, directly or indirectly, controls a Person described in clause (a) above. For purposes of this definition, control of a Person means the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.
“Credit and Collection Policy” means, as the context may require, those receivables credit and collection policies and practices of the Seller and the Servicer in effect on the date hereof as modified in compliance with this Agreement.
“Credit and Security Agreement” means that certain Fifth Amended and Restated Credit and Security Agreement, dated as of the date hereof, among the Seller, as borrower, Smithfield, as servicer, the various lenders, l/c participants and co-agents from time to time party thereto, Rabobank, as a letter of credit issuer and PNC, as administrative and letter of credit issuer, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Credit Default Certification” has the meaning set forth in Section 5(c).
“Daily Amortization Date” has the meaning set forth in Section 4(c)(ii).
“Debt” means as to any Person at any time, without duplication, all obligations for money borrowed or raised, all obligations (other than accounts payable and other similar items arising in the ordinary course of business) for the deferred payment of the purchase price of property, all capital lease obligations, all direct or contingent obligations under letters of credit and similar instruments, all net obligations under derivatives contracts and all guarantees (whether contingent or otherwise) of such Person guaranteeing the Debt of any other Person, whether directly or indirectly (other than endorsements for collection or deposit in the ordinary course of business).
“Deemed Collection” has the meaning set forth in Section 5(a) hereof.
“Defaulted Account Debtors” has the meaning set forth in Section 5(d) hereof.
“Defaulted Receivables” has the meaning set forth in Section 5(d) hereof.
“Defaulted Receivables Event” has the meaning set forth in Section 5(d) hereof.
“Deposit Account Control Agreement” means (i) that certain Deposit Account Control Agreement, dated as of the Closing Date, by and among the Servicer, the Seller, the Securitization Agent and Bank of America, N.A., as depositary bank and (ii) each other deposit account control agreement executed from time to time among the Servicer, the Seller, the Securitization Agent and a depositary bank.
“Dilution” means on any date after the related Purchase Date, an amount equal to the sum, without duplication, of the aggregate reduction effected on such day in the outstanding balance of any Purchased Receivable attributable to any non-cash items including credits, rebates, billing errors, sales or similar taxes, cash discounts, volume discounts, allowances, chargebacks, returned or repossessed goods, sales and marketing discounts,
warranties, any unapplied credit memos and other adjustments or reductions that are made in respect of Account Debtors; provided, however, that (a) write-offs to the extent related to the financial or credit condition of an Account Debtor (including the occurrence of an Insolvency Event with respect to the applicable Account Debtor) and (b) Disputes, in each case, shall not constitute Dilution.
“Dispute” means any dispute, discount, deduction, claim, offset, defense, or counterclaim or similar position asserted of any kind relating to one or more Receivables (x) arising on account of the goods relating to such Receivables having been lost or damaged prior to receipt thereof by the related Account Debtor or otherwise not delivered to such Account Debtor in accordance with the Contract related thereto; (y) arising on account of the return of goods by an Account Debtor to the Seller, Servicer, any of their respective Affiliates or successors or assigns (including the Buyer) relating to its obligation to pay an amount due with respect to a Purchased Receivable, or (z) otherwise asserted by the related Account Debtor as being a basis for non-payment in full of the Receivable (other than disputes due only to the applicable Account Debtor’s financial or credit condition or ability to pay); regardless of whether the same (i) is in an amount greater than, equal to or less than the applicable Purchased Receivable concerned or (ii) arises by reason of an act of God, civil strife, war, currency restrictions, foreign political restrictions or regulations, or any other circumstance or event beyond the control of the Seller or the applicable Account Debtor.
“Dollars” means United States Dollars, the lawful currency of the United States of America.
“Due Date” means, with respect to any Purchased Receivable, the date the related Contract provides for timely payment in full of the amounts owing thereunder.
“Eligible Receivable” means a Receivable with respect to which each of the Eligibility Criteria set forth in Exhibit E is satisfied.
“Embargoed Property” means any property; (a) 50% or more beneficially owned, directly or indirectly, by a Sanctioned Person; (b) that is due to or from a Sanctioned Person; (c) in which a Sanctioned Person otherwise holds any property interest; (d) that is located in a Sanctioned Jurisdiction; or (e) that otherwise would cause any actual violation by the Administrative Agent or any Buyer of any applicable Anti-Terrorism Law if the Administrative Agent or any Buyer were to obtain an encumbrance on, lien on, pledge of, or security interest in such property, or provide services in consideration of such property.
“Executive Officer” shall mean with respect to any Person, the Chief Executive Officer, President, Vice Presidents (if elected by the Board of Directors of such Person), Chief Financial Officer, Treasurer, Secretary and any Person holding comparable offices or duties (if elected by the Board of Directors of such Person).
“Facility Share” shall mean, with respect to any Buyer, the amount set forth opposite such Buyer’s name below, or as such amount is modified from time to time.
PNC $125,000,000
Rabobank $125,000,000
“Fee Letter” means that certain structuring agent and administrative agent fee letter agreement, dated as of the Closing Date, by and among the Seller, PNC Capital Markets LLC and the Administrative Agent.
“Final Collection Date” means the date following the termination of this Agreement on which the Administrative Agent and each Buyer, as applicable, has received (i) all Collections owing on the Purchased Receivables and (ii) all payments, if any, required to be paid by the Seller or Servicer under this Agreement or any other Transaction Document, including with respect to Repurchase Events and Indemnified Amounts.
“Finance Charges” means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Account Debtor pursuant to such Contract.
“Funding Notice” has the meaning set forth in Section 1(b)(i) hereof.
“GAAP” means generally accepted accounting principles in the United States of America, applied on a consistent basis as set forth in Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and/or in statements of the Financial Accounting Standards Board or the rules and regulations of the U.S. Securities and Exchange Commission and/or their respective successors and that are applied in the circumstances as of the date in question.
“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
“IFRS” means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements and/or any successor standards.
“Indemnified Amounts” has the meaning set forth in Section 4(i) hereof.
“Indemnified Person” has the meaning set forth in Section 4(f) hereof.
“Initial Discount” means, with respect to each Purchased Receivable acquired on the Initial Funding Date, the initial discount cost applied by the Administrative Agent to such Purchased Receivable, equal to the product of (a) the Initial Discount Rate applicable to such Purchased Receivable multiplied by (b) the Net Invoice Amount of such Purchased Receivable as of the applicable Purchase Date.
“Initial Discount Period” means, with respect to any Purchased Receivable acquired on the Initial Funding Date, the number of days from and including (a) the Purchase Date for such Purchased Receivable to, but not including, (b) the first to occur of (i) the date of payment in full of such Purchased Receivable and (ii) the next occurring Settlement Date.
“Initial Discount Rate” means, with respect to any Purchased Receivable acquired on the Initial Funding Date, a rate equal to the product of (a) Adjusted Term SOFR plus the Applicable Margin, determined as of the Purchase Date for such Purchased Receivable, multiplied by (b) the result of (i) the applicable Initial Discount Period, divided by (ii) 360.
“Initial Funding Amount” has the meaning set forth in Section 1(a)(i) hereof.
“Initial Funding Date” means the Business Day determined by the Seller and the Servicer, notified to the Administrative Agent and the Buyers in writing at least three (3) Business Days in advance thereof and agreed to by each Buyer in its sole discretion.
“Initial Funding Date Portfolio Report” means the Portfolio Report delivered not less than two (2) Business Days prior to the Initial Funding Date.
“Initial Proposed Receivables” has the meaning set forth in Section 1(a)(i) hereof.
“Initial Purchase Amount” has the meaning set forth in Section 1(a)(i) hereof.
“Insolvency Event” shall mean (i) with respect to an Account Debtor, the inability of such Account Debtor to pay any amount owed when due in respect of a Purchased Receivable as a result of the bankruptcy, insolvency or other financial inability of such Account Debtor to make such payment and (ii) with respect to any Person (including an Account Debtor), such Person shall fail to pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against such Person seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any Applicable Law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of thirty (30) days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or such Person shall take any action to authorize any of the actions set forth above in this clause (ii).
“In-Transit Collateral” means, as of any date of determination, any inventory of an Originator that (i) is in the process of being transported by such Originator to an Account Debtor pursuant to a Contract that is then expected to be delivered within five (5) or fewer calendar days, (ii) is covered by insurance in accordance with the applicable Originator’s normal business practices, and (iii) upon its receipt and acceptance by such Account Debtor, will give rise to an amount payable by such Account Debtor to such Originator under such Contract.
“Intercreditor Agreement” means the Intercreditor Agreement, dated as of the date hereof, among the Administrative Agent, the Securitization Agent, Smithfield and the Seller, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.
“Lock-Box” means each locked postal box with respect to which a bank who has executed a Deposit Account Control Agreement has been granted exclusive access for the purpose of retrieving and processing payments made on the Receivables.
“Material Adverse Effect” means (i) any material adverse effect on the business, assets, operations, property or financial condition of the Performance Guarantor and its Non-Excluded Subsidiaries (as defined in the Credit and Security Agreement), taken as a whole, (ii) any material adverse effect on the abilities of the Seller, the Servicer and the Performance Guarantor, taken as a whole, to perform their obligations under the Transaction Documents to which they are a party, (iii) any material adverse effect on the legality, validity or enforceability of the Agreement or any other Transaction Document, (iv) any material adverse effect on the Buyers’ interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto, (v) any material adverse effect on the collectability of the Receivables generally or of any material portion of the Receivables and (vi) material adverse effect on the rights of or benefits available to the Administrative Agent or the Buyers.
“Maximum Outstanding Purchase Amount” means $250,000,000.
“Net Invoice Amount” means the amount of the applicable Purchased Receivable shown on the invoice for such Purchased Receivable as the total amount payable by the related Account Debtor (net of any Dilution, discounts, credits or other allowances shown on such invoice and agreed to prior to the applicable Purchase Date).
“OFAC” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.
“Originator” means each Person from time to time party to the Sale Agreement as an Originator.
“Other Taxes” means all present or future stamp, excise, court or documentary, intangible, recording, filing or similar taxes that arise from any payment made under, from the execution, origination, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Transaction Document (including this Agreement) or Purchased Receivable.
“Outstanding Purchase Amount” means, as of any time of determination and with respect to any or all of the Purchased Receivables, (x) the Net Invoice Amount for such Purchased Receivables, minus (y) the aggregate amount of all Collections with respect to such Purchased Receivables and Related Security that has been deposited
into the Collection Accounts as of such time. When such term is used without reference to any specific Purchased Receivables, it shall constitute a reference to all Purchased Receivables.
“Overdue Payment Rate” means the Prime Rate plus 2.00% per annum changing when and as the Prime Rate changes; provided, however, that such Overdue Payment Rate shall not at any time exceed the maximum rate permitted by Applicable Law.
“Overnight Bank Funding Rate” means for any day, the rate comprised of both overnight federal funds and overnight eurocurrency borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the Federal Reserve Bank of New York, as set forth on its public website from time to time, and as published on the next succeeding Business Day as the overnight bank funding rate by the Federal Reserve Bank of New York (or by such other recognized electronic source (such as Bloomberg) selected by the Administrative Agent for the purpose of displaying such rate); provided, that if such day is not a Business Day, the Overnight Bank Funding Rate for such day shall be such rate on the immediately preceding Business Day; provided, further, that if such rate shall at any time, for any reason, no longer exist, a comparable replacement rate determined by the Administrative Agent at such time (which determination shall be conclusive absent manifest error). If the Overnight Bank Funding Rate determined as above would be less than zero, then such rate shall be deemed to be zero. The rate of interest charged shall be adjusted as of each Business Day based on changes in the Overnight Bank Funding Rate without notice to the Seller.
“PATRIOT Act” has the meaning set forth in Section 13(l).
“Performance Guarantor” means Smithfield.
“Performance Guaranty” means a performance guaranty entered into by the Performance Guarantor in favor of the Administrative Agent for the benefit of the Buyers.
“Person” means an individual, partnership, sole proprietorship, corporation (including a business trust), limited liability company, limited partnership, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
“PNC” has the meaning set forth in the preamble hereto.
“Portfolio Report” means a report updated and delivered at such times set forth herein with respect to the Purchased Receivables in substantially the form attached hereto as Schedule I.
“Portfolio Report Signatory” means each of the individuals set forth on Schedule III, which the Seller has authorized to certify Portfolio Reports delivered pursuant to clause (f) of Exhibit D (as such Schedule III may be updated by the Seller in writing from time to time with the consent of the Administrative Agent, such consent not to be unreasonably withheld).
“Prime Rate” means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime commercial lending rate or base rate in effect at its principal office for loans in the United States of America, with each change in the Prime Rate being effective on the date such change is publicly announced as effective (it being understood and agreed that the Prime Rate is a reference rate used by the Administrative Agent in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged on any extension of credit by the Administrative Agent to any debtor).
“Principal Office” means the main banking office of the Administrative Agent in Pittsburgh, Pennsylvania.
“Pro Rata Share” shall mean, with respect to any Buyer,
(i) with respect to each Proposed Receivable and Related Security, (x) if the applicable Account Debtor is H.E. Butt Grocery Company, 100% with respect to PNC and 0% with respect to Rabobank and, (y)
otherwise, an amount (expressed as a percentage) equal to (A) such Buyer’s Facility Share, divided by (B) the aggregate Facility Share of all of the Buyers, and
(ii) for all other purposes under this Agreement, an amount (expressed as a percentage) equal to (x) the aggregate Purchase Prices of all Purchased Receivables and Related Security paid by such Buyer, divided by (y) the aggregate Purchase Prices of all Purchased Receivables and Related Security paid by all of the Buyers.
“Proposed Receivables” has the meaning set forth in Section 1(a)(ii) hereof.
“Purchase Date” means each date on which the Buyers purchase Receivables.
“Purchase Price” means, with respect to any Purchased Receivable, the Net Invoice Amount thereof.
“Purchase Price Adjustment” has the meaning set forth in Section 1(c)(i) hereof.
“Purchase Sublimit” means, with respect to each Approved Account Debtor, the dollar amount set forth on Schedule II to this Agreement as the “Purchase Sublimit,” as such Schedule may be modified or supplemented from time to time, as approved in advance by the Administrative Agent and each Buyer in writing in their sole and absolute discretion.
“Purchased Receivables” means, without duplication, (i) the Eligible Receivables purchased hereunder on the Initial Funding Date as provided in Section 1(a)(i) and (ii) Eligible Receivables purchased hereunder during the Acquisition Period as provided in Sections 1(a)(ii) and (iii). Without limiting the Seller’s obligations under Section 5(b) to repurchase a Receivable that is not an Eligible Receivable on the Initial Funding Date or the applicable Purchase Date, as applicable, any reference to Purchased Receivables herein shall include any Receivable sold or purported to be sold on the Initial Funding Date or any Purchase Date, in each case unless and until repurchased in accordance with Section 5(b).
“Rabobank” means Coöperatieve Rabobank U.A., New York Branch.
“Receivable” means (i) all indebtedness and other obligations owed to an Originator (at the times it arises, and before giving effect to any transfer or conveyance under this Agreement or the Securitization Documents) (including any indebtedness, obligation or interest constituting an account, chattel paper, instrument or general intangible) arising in connection with the sale of goods or the rendering of services by such Originator and further includes the obligation to pay any Finance Charges with respect thereto and (ii) all rights of an Originator under a Contract to collect or receive amounts that become due and payable under such Contract upon the delivery and acceptance of In-Transit Collateral pursuant to such Contract.
“Records” means, with respect to any Receivable, all Contracts and other documents, books, records and other information (including computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such Receivable, any Related Security therefor and the related Account Debtor.
“Related Securitization Assets” means with respect to any Securitized Receivables, (i) all Related Security with respect to such Securitized Receivable, (ii) all Securitized Receivable Collections relating thereto and (iii) all proceeds of, and all amounts received or receivable under any or all of, the foregoing.
“Related Security” means, with respect to any Receivable:
(i) all of the Seller’s interest in the Related Security (under and as defined in the Sale Agreement);
(ii) all of the Seller’s right, title and interest in, to and under the Sale Agreement in respect of such Receivable;
(iii) all of the Seller’s right, title and interest in, to and under the Performance Undertaking (as defined in the Credit and Security Agreement);
(iv) all rights, remedies, powers, privileges, title and interest (but not obligations) in and to each Lock-Box and Collection Account, into which any Collections or other proceeds with respect to such Receivable may be deposited, and any related investment property acquired with any such Collections or other proceeds (as such term is defined in the applicable UCC); and
(v) all proceeds of any of the foregoing.
“Reportable Compliance Event” means that: (a) any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint, or similar charging instrument, arraigned, custodially detained, penalized or the subject of an assessment for a penalty, or enters into a settlement with a Governmental Authority in connection with any economic sanctions or other Anti-Terrorism Law or Anti-Corruption Law, or any predicate crime to any Anti-Terrorism Law or Anti-Corruption Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations represents a material violation of any Anti-Terrorism Law or Anti-Corruption Law; (b) any Covered Entity engages in a transaction that has caused or may cause Buyer to be in violation of any Anti-Terrorism LawsLaw or Anti-Corruption Law, including a Covered Entity’s use of any proceeds of the purchases hereunder to fund any operations in, finance any investments or activities in, or, make any payments to, directly or indirectly, a Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws or Anti-Corruption Laws; (c) any Purchased Receivable or Related Security becomes EmbargoedBlocked Property; or (d) any Covered Entity otherwise violates, or reasonably believes that it will violate, any of the representations, warranties or covenants set forth in clauses (q) or (r) of Exhibit C or clause (n) of Exhibit D of this Agreement.
“Reporting Date” means, with respect to any Settlement Date, the second Business Day preceding such Settlement Date.
“Repurchase Events” has the meaning set forth in Section 5(b) hereof.
“Required Buyers” means Buyers holding in the aggregate more than fifty percent (50%) of the Facility Shares; provided, that at any time when there are two or fewer Buyers, “Required Buyers” shall mean all of the Buyers.
“Sale Agreement” means that certain Fifth Amended and Restated Receivables Sale Agreement, dated as of the Closing Date, among the Seller, the Originators and Smithfield, as servicer, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Sanctioned Jurisdiction” means any country, territory, or region that is the subject of comprehensive country- or territory-wide sanctions administered by OFAC.
“Sanctioned Person” means (a) a Person that is the subject of sanctions administered by OFAC or the U.S. Department of State (“State”), including by virtue of being (i) named on OFAC’s list of “Specially Designated Nationals and Blocked Persons”; (ii) organized under the Applicable Laws of, ordinarily resident in, or physically located in a Sanctioned Jurisdiction; (iii) owned or controlled 50% or more in the aggregate, by one or more Persons that are the subject of sanctions administered by OFAC; (b) a Person that is the subject of sanctions maintained by the European Union (“E.U.”), including by virtue of being named on the E.U.’s “Consolidated list of persons, groups and entities subject to E.U. financial sanctions” or other, similar lists; (c) a Person that is the subject of sanctions maintained by the United Kingdom (“U.K.”), including by virtue of being named on the “Consolidated List Of Financial Sanctions Targets in the U.K.” or other, similar lists; or (d) a Person that is the subject of sanctions imposed by any Governmental Authority of a jurisdiction whose Applicable Laws apply to this Agreement.
“Securitization Agent” means PNC, as the administrative agent under the Securitization Documents.
“Securitization Documents” means the Credit and Security Agreement, the Sale Agreement and the other Transaction Documents (as defined in the Credit and Security Agreement).
“Securitized Receivable” means any Receivable (as such term is defined in the Credit and Security Agreement).
“Securitized Receivable Collections” means, with respect to any Securitized Receivable, all cash collections and other cash proceeds in respect of such Securitized Receivable, including all Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Monetized Assets; provided, however, that the term “Securitized Receivable Collections” shall not include any payment made for the account of the Servicer, a third-party service provider or sub-contractor whose services were not included in the amount invoiced for the applicable Securitized Receivable.
“Seller” has the meaning set forth in the preamble hereto.
“Seller-Related Party” means each of the Seller, the Servicer, the Performance Guarantor, Smithfield, the Originators and any other Affiliate of Smithfield from time to time party to any Transaction Document.
“Seller’s Account” means the account specified as such in Exhibit G hereto, or such other bank account identified in writing by the Seller to the Administrative Agent from time to time.
“Servicer” has the meaning set forth in Section 4(a) hereof.
“Servicer Termination Event” means an event specified in Exhibit F hereto.
“Settlement Date” means (i) the Initial Funding Date and (ii) each 25th day of each month after the Initial Funding Date (or, if such day, is not a Business Day, the next succeeding Business Day).
“Settlement Period” means (i) with respect to the Initial Funding Date, the period beginning on (and including) the Initial Funding Date and ending on (but excluding) the next succeeding Settlement Date and (ii) with respect to any other Settlement Date, the period beginning on (and including) such Settlement Date and ending on (but excluding) the next succeeding Settlement Date.
“Smithfield” means Smithfield Foods, Inc., a Virginia corporation.
“SOFR” shall mean, for any day, a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Adjustment” shall mean 0.10%.
“SOFR Floor” shall mean 0.00%.
“Solvent” means, with respect to any Person and as of any particular date, (i) the present fair market value (or present fair saleable value) of the assets of such Person is not less than the total amount required to pay the probable liabilities of such Person on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured, (ii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business, (iii) such Person is not incurring debts or liabilities beyond its ability to pay such debts and liabilities as they mature and (iv) such Person is not engaged in any business or transaction, and is not about to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged.
“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock of each class or other interests having ordinary voting power (other than stock or other interests having such power only by reason of the happening of a contingency) to elect a majority of the Board of Directors or other managers of such entity are at the time owned, or management of which is otherwise controlled:
(a) by such Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and one or more Subsidiaries of such Person.
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Rate” shall mean, for any Settlement Period or Initial Discount Period, the interest rate per annum determined by the Administrative Agent to be the Term SOFR Reference Rate for a tenor comparable to such Settlement Period or Initial Discount Period, as such rate is published by the Term SOFR Administrator on the day (the “Term SOFR Determination Date”) that is two (2) Business Days prior to the first day of such Settlement Period or Initial Discount Period. If the Term SOFR Reference Rate for the applicable tenor has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (Pittsburgh, Pennsylvania time) on the Term SOFR Determination Date, then the Term SOFR Reference Rate, for purposes of the preceding sentence, shall be the Term SOFR Reference Rate for such tenor on the first Business Day preceding such Term SOFR Determination Date for which such Term SOFR Reference Rate for such tenor was published in accordance herewith, so long as such first preceding Business Day is not more than three (3) Business Days prior to such Term SOFR Determination Date. If the Term SOFR Rate, determined as provided above, would be less than the SOFR Floor, then the Term SOFR Rate shall be deemed to be the SOFR Floor. The Term SOFR Rate shall be adjusted automatically without notice to the Seller on and as of the first day of each Settlement Period. Notwithstanding the foregoing, if the applicable Settlement Period or Initial Discount Period does not correspond to any available rate term, then the Term SOFR Rate shall be the Term SOFR Rate with a term equal to the shortest period for which the Term SOFR Rate is available that exceeds such Settlement Period or Initial Discount Period at such time.
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Transaction Documents” means this Agreement, the Fee Letter, any Performance Guaranty, each Deposit Account Control Agreement, each Portfolio Report, each Credit Default Certification and all other documents and agreements to be executed and delivered by the Seller, the Servicer or the Performance Guarantor in connection with any of the foregoing, in each case, as amended, supplemented or otherwise modified from time to time.
“Transaction Taxes” has the meaning set forth in Section 5(f).
“UCC” means the Uniform Commercial Code in effect in the State of New York from time to time; provided, if by reason of mandatory provisions of Applicable Law, the perfection, the effect of perfection or non-perfection or the priority of the security interests of the Administrative Agent is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.
“U.S. Government Securities Business Day” means any day except for (a) a Saturday or Sunday or (b) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
B. Other Interpretive Matters.
All accounting terms defined directly or by incorporation in this Agreement shall have the defined meanings when used in any certificate or other document delivered pursuant thereto unless otherwise defined therein. For purposes of this Agreement and all such certificates and other documents, unless the context otherwise requires: (a) except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP or IFRS, as in effect from time to time; (b) terms defined in Article 9 of the UCC and not otherwise defined in such agreement are used as defined in such Article; (c) references to any amount as on deposit or outstanding on any particular date means such amount at the close of business on such day; (d) the words “hereof,” “herein” and “hereunder” and words of similar import refer to such agreement (or the certificate or other document in which they are used) as a whole and not to any particular provision of such agreement (or such certificate or document); (e) references to any Section, Schedule or Exhibit are references to Sections, Schedules and
Exhibits in or to such agreement (or the certificate or other document in which the reference is made), and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (f) the term “including” means “including without limitation”; (g) references to any Applicable Law refer to that Applicable Law as amended from time to time and include any successor Applicable Law; (h) references to any agreement refer to that agreement as from time to time amended, restated, extended or supplemented or as the terms of such agreement are waived or modified in accordance with its terms; (i) references to any Person include that Person’s permitted successors and assigns; (j) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof; (k) unless otherwise provided, in the calculation of time from a specified date to a later specified date, the term “from” means “from and including,” and the terms “to” and “until” each means “to but excluding”; (l) terms in one gender include the parallel terms in the neuter and opposite gender; and (m) the term “or” is not exclusive.
Exhibit B
Conditions Precedent for Effectiveness
Each of the following, in form and substance satisfactory to the Administrative Agent:
(a) A fully executed counterpart of this Agreement.
(b) A fully executed counterpart of the Intercreditor Agreement.
(c) A counterpart of a Performance Guaranty fully executed by Smithfield.
(d) A certificate (long form, if available) issued by the Secretary of State of the State of Delaware as to the legal existence and good standing of the Seller.
(e) A certificate of the Secretary or Assistant Secretary of the Seller certifying attached copies of the charter and by-laws of the Seller and all documents evidencing necessary corporate action to be taken by and governmental approvals, if any, to be obtained by the Seller with respect to this Agreement and the names and true signatures of the incumbent officers of the Seller authorized to sign this Agreement and any other documents to be delivered by it hereunder or thereunder or in connection herewith or therewith.
(f) A certificate (long form, if available) issued by the Secretary of State of the Commonwealth of Virginia as to the legal existence and good standing of Smithfield.
(g) A certificate of the secretary of Smithfield certifying attached copies of the articles of incorporation of Smithfield and all documents evidencing necessary corporate action to be taken by and governmental approvals, if any, to be obtained by such Person with respect to its Performance Guaranty and the names and true signatures of the incumbent officers of such Person authorized to sign such Performance Guaranty, as applicable, and any other documents to be delivered by it hereunder or thereunder or in connection herewith or therewith.
(h) UCC, tax and judgment lien searches, bankruptcy and pending lawsuit searches or equivalent reports or searches, each of a recent date listing all effective financing statements, lien notices or comparable documents that name the Seller as debtor and that are filed in those state and county jurisdictions in which the Seller is organized or maintains its principal place of business or chief executive office and such other searches that the Administrative Agent deems necessary or appropriate.
(i) Acknowledgment copies of proper amendments or termination statements (Form UCC-3) and any other relevant filings necessary to evidence the release of all security interests, ownership and other rights of any Person previously granted by the Seller in the Proposed Receivables.
(j) Evidence of a proper financing statement (showing the Seller as “debtor/seller” and the Administrative Agent as “secured party/buyer”) duly filed on or prior to the date hereof.
(k) Favorable opinions of legal counsel to the Seller and the Servicer in form and substance satisfactory to the Administrative Agent, including, without limitation, as to general corporate matters, enforceability, security interest perfection and true sale.
(l) Proof of payment of all fees owing to the Administrative Agent and the Buyers under the Fee Letter on the date hereof and all reasonable and documented attorneys’ fees and disbursements incurred by the Administrative Agent and the Buyers.
Exhibit C
Representations and Warranties
(a) Each of the Seller, the Servicer and the Performance Guarantor is duly organized under the laws of its jurisdiction and no other state or jurisdiction, and such jurisdiction must maintain a public record showing the organization to have been organized. Each of the Seller, the Servicer and the Performance Guarantor is validly existing and in good standing under the laws of its state of organization. Each of the Seller, the Servicer and the Performance Guarantor is duly qualified to do business and is in good standing as a foreign entity, and has and holds all organizational power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except, in the case of the Servicer or the Performance Guarantor, where the failure to so qualify or so hold would not reasonably be expected to have a Material Adverse Effect
(b) The execution and delivery by the Seller, Servicer and Performance Guarantor of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, in the case of the Seller, the Seller’s use of the proceeds of purchases made hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which the Seller, Servicer and Performance Guarantor is a party have been duly executed and delivered by such Person.
(c) The execution and delivery by each of the Seller, Servicer and Performance Guarantor of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Person or its Subsidiaries (except as created hereunder) except, in any case, where such contravention or violation would not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law.
(d) Each Transaction Document to which the Seller, Servicer or Performance Guarantor is party has been duly executed and delivered by such Person.
(e) Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any Person or any Governmental Authority is required for the due execution and delivery by any of the Seller, Servicer and Performance Guarantor of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder.
(f) This Agreement and each other Transaction Document to which the Seller, the Servicer or the Performance Guarantor is a party constitute the legal, valid and binding obligations of such Person enforceable against such Person in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(g) Except as disclosed in the filings made by the Servicer with the Securities and Exchange Commission, there are no actions, suits or proceedings pending, or to the best of the Seller’s, the Servicer’s or the Performance Guarantor’s knowledge, threatened, against or affecting such Person, or any of its properties, in or before any court, arbitrator or other body, that would reasonably be expected to have a Material Adverse Effect. None of the Seller, the Servicer or the Performance Guarantor is in default with respect to any order of any court, arbitrator or Governmental Authority.
(h) The Seller, Servicer and Performance Guarantor is Solvent and no Insolvency Event has occurred with respect to the Seller, Servicer or Performance Guarantor.
(i) Since January 2, 2022, no Material Adverse Effect or event which, individually or in the aggregate, is reasonably likely to result in a Material Adverse Effect has occurred with respect to the Seller, Servicer or Performance Guarantor.
(j) No Change of Control has occurred.
(k) All assets of the Seller are free and clear of any Adverse Claim in favor of the Internal Revenue Service or any other Governmental Authority other than inchoate tax liens resulting from an assessment of the Seller.
(l) All information heretofore furnished by the Seller, the Servicer or the Performance Guarantor or any of their respective Affiliates to the Administrative Agent or the Buyers for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by the Seller, the Servicer or the Performance Guarantor or any of their respective Affiliates to the Administrative Agent or the Buyers will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain, when furnished, any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein, in light of the circumstances in which they were made, not materially misleading; provided, that with respect to projected financial information, such Person represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time delivered.
(m) None of the Seller, the Servicer or the Performance Guarantor is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.
(n) The Seller has continuously treated and shall continue to treat each sale of Purchased Receivables and Related Security hereunder as a sale for all purposes, including federal and state income tax, reporting and accounting purposes.
(o) The Securitization Agent has a first priority perfected security interest over each Collection Account, subject to the customary banker’s liens, deduction and set-off rights of the applicable depositary bank for such Collection Account, in each case, as permitted by the applicable Deposit Account Control Agreement.
(p) No event has occurred and is continuing and no condition exists, or would result from any sale or assignment of any Purchased Receivable and Related Security, that constitutes or may reasonably be expected to constitute, individually or in the aggregate, a Servicer Termination Event.
(q) The Purchase Price payable for each Purchased Receivable and Related Security by the Buyers will represent fair consideration and reasonably equivalent value therefore.
(r) No: (a) Covered Entity, nor any employees, officers, directors, or to the knowledge of a Covered Entity, any affiliates, or agents acting on a Covered Entity’s behalf in connection with this Agreement: (i) is a Sanctioned Person; (ii) directly, or indirectly through any third party, is engaged in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, or any transactions or other dealings that otherwise are prohibited by any Anti-Terrorism Laws or (b) Purchased Receivable or Related Security is EmbargoedBlocked Property.
(s) Each Covered Entity has (a) conducted its business in compliance with all Anti-Corruption Laws and (b) has instituted and maintains policies and procedures reasonably designed to ensure compliance with such Applicable Laws.
(t) As of December 22, 2022, the information included in the Beneficial Ownership Certification is true and correct in all respects.
Exhibit D
Covenants
Until the Final Collection Date:
(a) Compliance with Laws and Preservation of Corporate Existence. Each of the Seller and the Servicer will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. Each of the Seller and the Servicer will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where its business is conducted, except where the failure to so preserve and maintain or qualify would not reasonably be expected to have a Material Adverse Effect.
(b) Books and Records. Each of the Seller and the Servicer will (and will cause each Originator to) maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Purchased Receivables (including, without limitation, records adequate to permit the immediate identification of each new Purchased Receivable and all Collections of and adjustments to each existing Purchased Receivable). Each of the Seller and the Servicer will (and will cause each Originator to) give the Administrative Agent notice of any material change in the administrative and operating procedures referred to in the previous sentence.
(c) Sales, Liens. The Seller will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Purchased Receivable or Related Security or any Collection Account (except in the case of any Collection Account, in favor of the Securitization Agent in accordance with the terms of the Intercreditor Agreement), or assign any right to receive income with respect thereto, and the Seller will defend the right, title and interest of the Buyers in, to and under any of the foregoing property, against all claims of third parties claiming through or under the Seller, any Originator or the Securitization Agent.
(d) Modifications to Contracts and Credit and Collection Policy. Neither the Seller nor the Servicer will, and will not permit any Originator to, make any change to the Credit and Collection Policy (other than any change expressly permitted by the Sale Agreement). Other than as permitted by Section 5(a) and only to the extent the Seller deposits the Deemed Collection to a Collection Account in accordance with the terms thereof, neither the Seller nor the Servicer will, and will not permit any Originator to, extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy. Other than as permitted by Section 5(a) and only to the extent the Seller deposits the Deemed Collection to a Collection Account in accordance with the terms thereof, neither the Seller nor the Servicer will take, or cause to be taken, any action that reduces the amount payable of any Purchased Receivable or materially impairs the full and timely collection thereof.
(e) Audits. Each of the Seller and the Servicer will furnish to the Administrative Agent and each Buyer from time to time such information with respect to it and the Purchased Receivables as the Administrative Agent or any Buyer may reasonably request. Each of the Seller and the Servicer will, from time to time during regular business hours as requested by the Administrative Agent or any Buyer upon reasonable notice and at the sole cost of the Seller or the Servicer, as applicable, permit the Administrative Agent or such Buyer, or their agents or representatives (and shall cause each Originator to permit the Administrative Agent or such Buyer or their agents or representatives): (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Person relating to the Purchased Receivables and Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Person for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Person’s financial condition or the Purchased Receivables and Related Security or any Person’s performance under any of the Transaction Documents or the Securitization Documents or any Person’s performance under the Contracts and, in each case, with any of the officers or employees of the Seller or the Servicer having knowledge of such matters (each of the foregoing examinations and visits, a “Review”); provided, however, that, so long as no Servicer Termination Event has occurred and is continuing, the Seller and Servicer shall only be responsible for the costs and expenses of one (1) Review requested by the
Administrative Agent in any one calendar year; provided, further, that no Review (as defined in the Securitization Documents) shall constitute a Review under this clause (e) regardless of the identity of the Securitization Agent.
(f) Reporting Requirements. The Seller and Servicer will provide to the Administrative Agent the following:
(i) no later than the next occurring Reporting Date, written notice in reasonable detail, of any Adverse Claim or Dispute asserted or claim made against a Purchased Receivable;
(ii) immediately (and in no event later than three (3) Business Days following knowledge or notice thereof), written notice in reasonable detail, of the occurrence of any Servicer Termination Event;
(iii) as soon as possible and in any event within three (3) days after knowledge or notice of the occurrence thereof, written notice of any matter that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect;
(iv) a fully updated Portfolio Report, certified in writing by a Portfolio Report Signatory, (x) on the Reporting Date with respect to each Settlement Date which Portfolio Report shall be prepared as of the close of business on the Business Day immediately preceding such Reporting Date, (y) no later than the second Business Day following the termination of the Acquisition Period which Portfolio Report shall be prepared as of the last day of the Acquisition Period and (z) at such other times (not to exceed one additional Portfolio Report per Settlement Period) as may be reasonably requested by the Administrative Agent or any Buyer following the occurrence of a Servicer Termination Event; and
(v) to the extent any Buyer or Affiliate of a Buyer is not a Lender (as defined in the Credit and Security Agreement), all notices and other documents delivered to the Securitization Agent and the Co-Agents and Lenders (as defined in the Credit and Security Agreement) pursuant to the Securitization Documents simultaneously with delivery to the Securitization Agent and the Co-Agents and Lenders (as defined in the Credit and Security Agreement).
(g) Further Assurances. The Seller will, at its expense, promptly execute and deliver all further instruments and documents, and take all further action that the Administrative Agent or any Buyer may reasonably request, from time to time, in order to perfect, protect or more fully evidence the full and complete ownership and security interest in the Purchased Receivables, or to enable the Administrative Agent or any Buyer to exercise or enforce the rights of the Administrative Agent (on behalf of the Buyers) or such Buyer hereunder or under or in connection with the Purchased Receivables.
(h) Taxes. Each of the Seller and the Servicer will file all income and material tax returns and will pay any and all taxes shown on such tax returns, other than any taxes that the Seller or the Servicer is contesting in good faith and for which adequate reserves have been taken. The Seller will pay any and all taxes (excluding each Buyer’s net income taxes) relating to the transactions contemplated under this Agreement, including but not limited to the sale, transfer and assignment of each Purchased Receivable.
(i) Compliance with Contracts and Credit and Collection Policy. Each of the Seller and the Servicer will (and will cause each Originator to) timely and fully (i) perform and comply in all material respects with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Purchased Receivables, and (ii) comply in all material respects with the Credit and Collection Policy in regard to each Receivable and the related Contract.
(j) Not Adversely Affect the Buyers’ Rights. The Seller and Servicer will refrain from any act or omission which might, individually or in the aggregate, in any material way prejudice, diminish or limit the Buyers’ rights under or with respect to any of the Purchased Receivables and Related Security or this Agreement.
(k) Maintenance of Records. The Seller and Servicer will maintain internal records sufficient for it to identify at all times the Eligible Receivables required to be sold hereunder on each Additional Purchase Date (and identify the Eligible Receivables so sold hereunder).
(l) Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws. Each of the Seller and Servicer covenants and agrees that:
(i) it shall immediately notify the Administrative Agent and each Buyer in writing upon the occurrence of a Reportable Compliance Event;
(ii) if, at any time, any Purchased Receivable or Related Security becomes EmbargoedBlocked Property, then, in addition to all other rights and remedies available to the Administrative Agent and each Buyer, upon request by the Administrative Agent or any Buyer, the Seller or the Servicer shall provide a substitute Purchased Receivable and Related Security acceptable to the Administrative Agent that is not EmbargoedBlocked Property;
(iii) it shall, and shall require each other Covered Entity to, conduct its business in compliance with all Anti-Corruption Laws and maintain policies and procedures reasonably designed to ensure compliance with such Applicable Laws;
(iv) it and its Subsidiaries will not: (A) take any action that could reasonably be expected to result in it becoming a Sanctioned Person or allow any employees, officers, directors, affiliates, or agents acting on its behalf in connection with this Agreement to becometake any action that could reasonably be expected to result in any such person becoming a Sanctioned Person; (B) directly, or indirectly through a third party, engage in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, including any use of the proceeds of the purchases hereunder to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, (C) directly or indirectly provide, use or make available the proceeds of any purchase hereunder (x) in any manner that could result in a violation by any Person of any Anti-Corruption Law (including the Administrative Agent or any Buyer underwriter, advisor, investor, or otherwise) or (y) in violation of any applicable Anti-Corruption Law; (D) pay or repay of its obligations hereunder with EmbargoedBlocked Property or funds derived from any unlawful activity; (DE) permit any Purchased Receivable or Related Security to become EmbargoedBlocked Property; or (EF) cause the Administrative Agent or any Buyer to violate any Anti-Terrorism Law; and
(v) it will not, and will not permit any its Subsidiaries to, directly or indirectly, use the Purchase Prices or any proceeds thereof for any purpose which would breach any Anti-Corruption Laws in any jurisdiction in which any Covered Entity conducts business.
(m) Administrative Agent’s and Buyers’ Reliance. The Seller acknowledges that the Administrative Agent and the Buyers are entering into the transactions contemplated by this Agreement in reliance upon the Seller’s identity as a legal entity that is separate from each Originator. Therefore, from and after the date of execution and delivery of this Agreement, the Seller shall take all reasonable steps, including, without limitation, all steps that the Administrative Agent or any Buyer may from time to time reasonably request, to maintain the Seller’s identity as a separate legal entity and to make it manifest to third parties that the Seller is an entity with assets and liabilities distinct from those of each Originator and any Affiliates thereof (other than the Seller) and not just a division of any Originator or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, the Seller will:
(i) maintain books, financial records and bank accounts in a manner so that it will not be difficult or costly to segregate, ascertain and otherwise identify the assets and liabilities of the Seller;
(ii) not commingle any of its assets, funds, liabilities or business functions with the assets, funds, liabilities or business functions of any other person or entity;
(iii) observe all appropriate limited liability company procedures and formalities;
(iv) pay its own liabilities, losses and expenses only out of its own funds;
(v) maintain separate annual and quarterly financial statements prepared in accordance with generally accepted accounting principles, consistently applied, showing its assets and liabilities separate and distinct from those of any other person or entity;
(vi) pay or bear the cost (or if such statements are consolidated, the pro-rata cost) of the preparation of its financial statements;
(vii) not guarantee or become obligated for the debts or obligations of any other entity or person;
(viii) not hold out its credit as being available to satisfy the debts or obligations of any other person or entity;
(ix) hold itself out as an entity separate and distinct from any other person or entity (including its Affiliates);
(x) correct any known misunderstanding regarding its separate identity;
(xi) use separate stationery, invoices, checks and the like bearing its own name;
(xii) compensate all consultants, independent contractors and agents from its own funds for services provided to it by such consultants, independent contractors and agents;
(xiii) to the extent that the Seller and any of its Affiliates occupy any premises in the same location, allocate fairly, appropriately and nonarbitrarily any rent and overhead expenses among and between such entities with the result that the Seller bears its fair share of all such rent and expenses;
(xiv) to the extent that the Seller and any of its Affiliates share the same officers, allocate fairly, appropriately and nonarbitrarily any salaries and expenses related to providing benefits to such officers between or among such entities, with the result that the Seller will bear its fair share of the salary and benefit costs associated with all such common or shared officers;
(xv) to the extent that the Seller and any of its Affiliates jointly contract or do business with vendors or service providers or share overhead expenses, allocate fairly, appropriately and nonarbitrarily any costs and expenses incurred in so doing between or among such entities, with the result that the Seller bears its fair share of all such costs and expenses;
(xvi) to the extent the Seller contracts or does business with vendors or service providers where the goods or services are wholly or partially for the benefit of its Affiliates, allocate fairly, appropriately and nonarbitrarily any costs incurred in so doing to the entity for whose benefit such goods or services are provided, with the result that the Seller bears its fair share of all such costs;
(xvii) not make any loans to any person or entity (other than such intercompany loans between the Seller and each Originator contemplated by the Securitization Documents) or buy or hold any indebtedness issued by any other person or entity (except for cash and investment-grade securities);
(xviii) conduct its own business in its own name;
(xix) hold all of its assets in its own name;
(xx) maintain an arm’s-length relationship with its Affiliates and enter into transactions with Affiliates only on a commercially reasonable basis;
(xxi) not pledge its assets for the benefit of any other Person;
(xxii) not identify itself as a division or department of any other entity;
(xxiii) maintain adequate capital in light of its contemplated business operations and in no event less than the Required Capital Amount (as defined in the Sale Agreement) and refrain from making any dividend, distribution, redemption of capital stock or payment of any subordinated indebtedness which would cause the Required Capital Amount to cease to be so maintained;
(xxiv) conduct transactions between the Seller and third parties in the name of the Seller and as an entity separate and independent from each of its Affiliates;
(xxv) cause representatives and agents of the Seller to hold themselves out to third parties as being representatives or agents, as the case may be, of the Seller;
(xxvi) not enter into or be a party to, any transaction with its members or Affiliates except in the ordinary course of its business and on terms which are intrinsically fair and are substantially similar to those which would be obtained in a comparable arm’s-length transaction with an unrelated third party;
(xxvii) not acquire or assume the obligations or acquire the securities of its Affiliates or owners, including partners of its Affiliates; provided, however, that notwithstanding the foregoing, the Seller is authorized to engage in and consummate each of the transactions contemplated by each Transaction Document and the Seller is authorized to perform its obligations under each Transaction Document;
(xxviii) maintain its limited liability company status in conformity with this Agreement, such that (A) it does not amend, restate, supplement or otherwise modify its Certificate of Formation or Limited Liability Company Agreement in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents or the Securitization Documents, including, without limitation, clause (m) of Exhibit D of this Agreement; and (B) its corporate charter requires that the Board of Directors of the Seller shall at all times include at least one “Independent Director” as such term is defined in the Credit and Security Agreement.
(xxix) maintain its corporate separateness such that it does not merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions, and except as otherwise contemplated herein) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, nor at any time create, have, acquire, maintain or hold any interest in any Subsidiary; and
(xxx) take such other actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinion issued by Hogan Lovells US LLP, as counsel for the Seller, issued as of the date hereof and relating to substantive consolidation issues, and in the certificates accompanying such opinion, remain true and correct in all material respects at all times.
(n) Securitization Eligibility. Each of the Seller and the Servicer covenants and agrees that it shall ensure that Receivables owing by Approved Account Debtors shall not constitute “Eligible Receivables” in accordance with the terms of the Securitization Documents.
(o) Beneficial Ownership Rule. Promptly (but in any event no later than the next Reporting Date) following any change in the information included in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners or control parties identified in parts (c) or (d) of such certification, the Seller shall execute and deliver to the Administrative Agent an updated Beneficial Ownership Certification.
Promptly following any request therefor, the Seller shall deliver to the Administrative Agent all documentation and other information required by bank regulatory authorities requested by a Buyer for purposes of compliance with applicable “know your customer” requirements under the PATRIOT Act, the Beneficial Ownership Rule or other applicable anti-money laundering laws, rules and regulations.
Exhibit E
Eligibility Criteria
(a) Such Receivable has been originated by the Seller in the ordinary course of its business from the bona fide sale of goods or services to an Account Debtor, an invoice for such Receivable has been delivered to and accepted by such Account Debtor and revenue for such Receivable has been or may be recognized by the Seller under GAAP or IFRS, as applicable, and Applicable Law.
(b) The related Account Debtor has been instructed to make payments on such Receivable only to a Collection Account.
(c) The related Account Debtor (i) is an Approved Account Debtor, (ii) is a resident of the United States of America and has provided the Seller with a billing address in the United States of America, (iii) is neither a Governmental Authority nor a Sanctioned Person, (iv) is not (A) a material supplier to the Seller or its Affiliates or (B) an Affiliate of a material supplier to the Seller or its Affiliates, (v) is not an Affiliate of the Seller, the Servicer or the Performance Guarantor and (vi) is not a natural person.
(d) Such Receivable and the related Contract is in full force and effect and is the valid and binding obligation of the related Account Debtor due on the applicable Due Date, enforceable in accordance with its terms, and constitutes the related Account Debtor’s legal, valid and binding obligation to pay the Seller the amount thereof, subject, as to enforcement of the related Account Debtor’s payment obligation, to bankruptcy, insolvency, reorganization, arrangement, moratorium and other laws of general applicability relating to or affecting creditors’ rights and Insolvency Events.
(e) Neither the Seller nor the related Account Debtor is delinquent or in default in the performance of any of the payment or other material provisions of the related Contract with respect to such Receivable and no Credit Default Certification has been delivered with respect to such Account Debtor. The Seller is in compliance in all material respects with the Contract relating to the Purchased Receivables and such Receivable satisfies all applicable requirements of the Credit and Collection Policy.
(f) The Seller has delivered to the related Account Debtor all property or fully performed all services required to be so delivered or performed by the terms of the Contract and the payments due with respect to such Receivable are not contingent upon the Seller’s or any other Person’s fulfillment of any further act or obligation.
(g) The Contract giving rise to such Receivable is governed by the law of one of the States of the United States.
(h) As of the related Purchase Date, immediately prior to the sale hereunder, the Seller has good and marketable title to, and is the sole legal and beneficial owner of, such Receivable and Related Security free and clear of any Adverse Claim (except with respect to the Securitized Receivables and Related Securitized Assets, in favor of the Securitization Agent pursuant to the Securitization Documents), such Receivable is not subject to a Dispute, the amount owed under such Receivable is free of any amounts that would constitute Dilution not reflected in the Net Invoice Amount, and such Receivable has not been previously sold, assigned, pledged or otherwise transferred by the Seller to any other Person.
(i) No effective financing statement or other instrument similar in effect covering any part of such Receivable is on file in any recording office (other than any financing statement naming the Securitization Agent as secured party).
(j) Such Receivable (i) is denominated and payable only in Dollars in the United States, (ii) does not have an original term to maturity that exceeds sixty (60) days and (iii) is not payable in installments.
(k) The sale, pledge or assignment of such Receivable pursuant to this Agreement does not (i) violate or contravene any Applicable Law or the related Contract, (ii) require notice thereof to the related Account
Debtor or any consent therefrom or (iii) require any notice thereof or any consent from any Governmental Authority that has not been obtained.
(l) Such Receivable is an “account” or “payment intangible” within the meaning of Article 9 of the UCC of all applicable jurisdictions and is not evidenced by instruments or chattel paper.
(m) Such Receivable, together with the related Contract, does not contravene any Applicable Law (including laws relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy).
(n) Such Receivable, together with the Contract related thereto, has not been modified, waived or restructured since its creation except in accordance with the Credit and Collection Policy.
(o) Such Receivable is not a Receivable which arose as a result of the sale of consigned goods or finished goods that have incorporated any consigned goods into such finished goods or a sale in which the Seller or Servicer acted as a bailee, consignee or agent of any other Person or otherwise not as principal or otherwise in respect of deferred or unearned revenues.
(p) Such Receivable does not constitute a re-billed amount arising from a deduction taken by the related Account Debtor with respect to a previously arising Receivable.
(q) As of the related Purchase Date, no Insolvency Event has occurred with respect to the related Account Debtor
(r) The sale of such Receivable and Related Security to the Buyers hereunder constitutes the absolute and irrevocable sale and transfer of all right, title and interest of the Seller in such Receivable and Related Security to the Buyers and no further action, including any filing or recording of any document or any notice to, license from or approval from any Governmental Authority is necessary in order to establish the ownership interest of the Buyers effected by such sale or to permit the Administrative Agent (for the benefit of the Buyers) to service, enforce or otherwise collect such Receivable from the related Account Debtor.
Exhibit F
Servicer Termination Events
Each of the following shall constitute a “Servicer Termination Event” for purposes of this Agreement:
(a) Any of the representations and warranties made by the Seller or Servicer in this Agreement or any Portfolio Report (including with respect to the Proposed Receivables), or by the Performance Guarantor in any Performance Guaranty, shall fail to be true, accurate and correct in all material respects as of the date made or, in the case of any representation or warranty which speaks as to a particular date or period, as of that particular date or period, or the information in any Portfolio Report taken as a whole proves to be incorrect in any material respect.
(b) An amount due for payment by the Seller or Servicer to the Administrative Agent or any Buyer pursuant to this Agreement or any other Transaction Document (including interest on any overdue amount as provided for in Section 8 hereof) or by the Performance Guarantor pursuant to any Performance Guaranty shall remain outstanding for more than two (2) Business Days from the due date therefor.
(c) The Seller or Servicer shall fail to be in compliance with any of its covenants and other obligations under this Agreement or any other Transaction Document to which each such Person is a party (other than any such failure which would constitute a Servicer Termination Event under any other clause or sub-clause of this Exhibit F) and such failure shall remain unremedied for 15 days after the earlier of (i) an Executive Officer of any of the Seller or Servicer obtaining knowledge thereof, or (ii) written notice thereof shall have been given to the Seller or Servicer by the Administrative Agent.
(d) The Performance Guarantor shall fail to be in compliance in all material respects with any of its obligations under any Performance Guaranty.
(e) The Seller shall fail to be in compliance in all material respects with any of its obligations under the Intercreditor Agreement.
(f) An Insolvency Event shall have occurred with respect to the Seller, Servicer or Performance Guarantor.
(g) There shall have occurred any event that materially adversely impairs, in the reasonable discretion of the Administrative Agent, the collectability of the Purchased Receivables generally or any material portion thereof.
(h) This Agreement or any security interest granted pursuant to this Agreement or any other Transaction Document shall for any reason cease to create, or for any reason cease to be, a valid and enforceable first priority perfected security interest in favor of the Buyers with respect to the Purchased Receivables and Related Security, free and clear of any Adverse Claim (except with respect to the Collection Accounts, in favor of the Securitization Agent pursuant to the Securitization Documents).
(i) Any event shall occur which has, or would be reasonably expected to have, a Material Adverse Effect.
(j) A Change of Control shall have occurred.
(k) Any “Event of Default” or similar event shall occur under the Securitization Documents (whether or not waived under and in accordance with the Securitization Documents).
(l) Any Transaction Document shall, in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of any party thereto other than the Administrative Agent or any Buyer or any such party shall, directly or indirectly, contest in any manner the effectiveness, validity, binding nature or enforceability of such Transaction Document.
Exhibit 10.6
EXECUTION VERSION
FIFTH AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
Dated as of December 22, 2022
AMONG
SMITHFIELD FOODS, INC.,
SFFC, INC.,
SMITHFIELD SUPPORT SERVICES CORP.,
SMITHFIELD FRESH MEATS SALES CORP., SMITHFIELD FRESH MEATS CORP.,
SMITHFIELD DIRECT, LLC, SMITHFIELD BIOSCIENCE, INC.
AND SMITHFIELD PACKAGED MEATS SALES CORP.
AS ORIGINATORS,
AND
SMITHFIELD RECEIVABLES FUNDING LLC,
AS BUYER
| | | | | | | | | | | |
| ARTICLE I AMOUNTS AND TERMS OF THE PURCHASE | 2 |
| | | |
| Section 1.1 | Commencement Date; Initial Transfer and Contribution of Receivables | 2 |
| | | |
| Section 1.2 | Purchase of Receivables. | 4 |
| | | |
| Section 1.3 | Payment of Purchase Price | 6 |
| | | |
| Section 1.4 | Settlement Date; Adjustments | 8 |
| | | |
| Section 1.5 | Payments and Computations, Etc | 9 |
| | | |
| Section 1.6 | License of Software. | 10 |
| | | |
| Section 1.7 | Characterization | 11 |
| | | |
| Section 1.8 | Excluded Originator | 11 |
| | | |
| Section 1.9 | Restructuring Transactions. | 12 |
| | | |
| Section 1.10 | Amendment and Restatement | 12 |
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| ARTICLE II REPRESENTATIONS AND WARRANTIES | 12 |
| | | |
| Section 2.1 | Representations and Warranties | 12 |
| | | |
| ARTICLE III CONDITIONS OF PURCHASE | 18 |
| | | |
| Section 3.1 | Conditions Precedent to Purchase | 18 |
| | | |
| Section 3.2 | Conditions Precedent to Subsequent Payments | 18 |
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| ARTICLE IV COVENANTS | 19 |
| | | |
| Section 4.1 | Affirmative Covenants | 19 |
| | | |
| Section 4.2 | Negative Covenants | 24 |
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| ARTICLE V TERMINATION EVENTS | 27 |
| | | |
| Section 5.1 | Termination Events | 27 |
| | | |
| Section 5.2 | Remedies | 28 |
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| ARTICLE VI INDEMNIFICATION | 29 |
| | | |
| Section 6.1 | Indemnities | 29 |
| | | |
| Section 6.2 | Other Costs and Expenses | 32 |
| | | |
| ARTICLE VII MISCELLANEOUS | 32 |
| | | |
| Section 7.1 | Waivers and Amendments. | 32 |
| | | |
| Section 7.2 | Notices | 33 |
| | | |
| Section 7.3 | Protection of Ownership Interests of Buyer | 33 |
| | | |
| Section 7.4 | Confidentiality. | 34 |
| | | |
| Section 7.5 | Bankruptcy Petition. | 35 |
| | | |
| Section 7.6 | Limitation of Liability | 35 |
| | | |
| | | | | | | | | | | |
| Section 7.7 | Choice of Law | 35 |
| | | |
| Section 7.8 | Consent to Jurisdiction | 35 |
| | | |
| Section 7.9 | Waiver of Jury Trial | 36 |
| | | |
| Section 7.10 | Integration; Binding Effect; Survival of Terms. | 36 |
| | | |
| Section 7.11 | Counterparts; Severability; Section References | 37 |
EXHIBITS AND SCHEDULES
| | | | | | | | |
| Exhibit I | - | Definitions |
| | |
| Exhibit II | - | Principal Place of Business; Location(s) of Records; Federal Employer Identification Number; Other Names |
| | |
| Exhibit III | - | [Reserved] |
| | |
| Exhibit IV | - | Form of Compliance Certificate |
| | |
| Exhibit V | - | Credit and Collection Policy |
| | |
| Exhibit VI | - | Form of Subordinated Note |
| | |
| Exhibit VII | - | Form of Purchase Report |
| | |
| Exhibit VIII | - | Restructuring Transactions |
FIFTH AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
THIS FIFTH AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT, dated as of December 22, 2022, is by and among:
(a)Smithfield Foods, Inc., a Virginia corporation (“Smithfield”);
(b)SFFC, Inc., a Delaware corporation (“SFFC”);
(c)Smithfield Support Services Corp., a Delaware corporation (“Smithfield Support”);
(d)each of Smithfield Fresh Meats Sales Corp., a Delaware corporation (formerly known as Smithfield Farmland Sales Corp., “Fresh Sales”), , Smithfield Fresh Meats Corp., a Delaware corporation (“Fresh Meats”), Smithfield Direct, LLC, a Delaware limited liability company (formerly known as Armour-Eckrich Meats LLC, “Smithfield Direct”), and Smithfield Packaged Meats Sales Corp., a Delaware corporation (formerly known as SFC Employee New Company, “Packaged Sales”) and Smithfield Bioscience, Inc., an Ohio corporation (“Smithfield Bioscience”) and such other Originators that may become party to this Agreement with the consent of the Required Committed Lenders (each, unless excluded from this Agreement as an Excluded Originator in accordance herewith, an “Originator”); and
(e)Smithfield Receivables Funding LLC, a Delaware limited liability company (“Buyer”),
and amends and restates in its entirety that certain Fourth Amended and Restated Receivables Sale Agreement dated as of November 21, 2018, by and among Smithfield, SFFC, Smithfield Support, Fresh Sales, Smithfield Packaged Meats Corp., Fresh Meats, Smithfield Specialty Foods Group, LLC, Smithfield Direct, Packaged Sales, and Buyer, as amended through the date hereof (the “Original Agreement”).
Unless defined elsewhere herein, capitalized terms used in this Agreement shall have the meanings assigned to such terms in Exhibit I hereto.
PRELIMINARY STATEMENTS
WHEREAS, each of the Originators acquires and originates, or will acquire and originate, from time to time, Receivables and certain rights relating thereto.
WHEREAS, the Originators wish to sell, contribute or otherwise convey the Receivables, Related Security and associated Collections to the Buyer, from time to time, and the Buyer is willing to purchase or otherwise acquire Receivables, Related Security and associated Collections from the Originators, on the terms and subject to the conditions set forth herein.
WHEREAS, each of the Originators, SFFC and Buyer intend the conveyance of Receivables contemplated hereby to be true sales or contributions of the applicable Receivables to Buyer by each such Originator or SFFC, as the case may be, providing Buyer with the full
benefits of ownership of such Receivables and Related Security, and none of the Originators, SFFC and Buyer intends such conveyances to be, or for any purpose to be characterized as, loans from Buyer to such Originator or SFFC, as the case may be.
WHEREAS, the Originators and Buyer acknowledge that a lien and security interest in the Receivables and the Related Security and associated Collections sold, contributed or otherwise conveyed by the Originators to Buyer hereunder, together with the Buyer’s rights and interests under the Performance Undertaking, has been granted and assigned by Buyer pursuant to that certain Fifth Amended and Restated Credit and Security Agreement dated as of December 22, 2022 (as amended, restated and/or otherwise modified from time to time in accordance with the terms thereof, the “Credit and Security Agreement”) among Buyer, Smithfield, as initial Servicer, each of the lenders and co-agents from time to time party thereto, Coöperatieve Rabobank U.A., New York Branch (“Rabobank”), as a letter of credit issuer and PNC Bank, National Association, as administrative agent (in such last capacity, the “Administrative Agent”) and as a letter of credit issuer (together with Rabobank in such capacity, the “Letter of Credit Issuers” and each, a “Letter of Credit Issuer”).
NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASE
Section 1.1Commencement Date; Initial Transfer and Contribution of Receivables. (a) None of the Originators shall have any obligation to contribute or sell, and Buyer shall have no obligation to accept or purchase, any of the Receivables, Related Security or associated Collections until the applicable Commencement Date (as defined herein) occurs. The obligation of Smithfield, SFFC, and the Originators to sell, contribute, and convey the Receivables shall commence on the applicable Commencement Date. On the Commencement Date relating to the US Originators:
(i)Buyer shall provide to each of the other parties a notice (the “Transfer Notice”) specifying in respect of each US Originator the aggregate Outstanding Balance of the Initial Transferred Assets of such US Originator that shall constitute Initial Contributed Assets and the aggregate Outstanding Balance of the Initial Transferred Assets of such US Originator that shall constitute Initial Purchased Assets.
(ii)Each of the US Originators agrees to transfer and convey to Smithfield its Initial Contributed Assets.
(iii)Smithfield agrees to contribute, assign, transfer, set-over and otherwise convey to SFFC, and SFFC agrees to accept from Smithfield, the Aggregate Initial Contributed Assets as a contribution to the capital of SFFC.
(iv)SFFC agrees to contribute, assign, transfer, set-over and otherwise convey to Buyer, and Buyer agrees to accept from SFFC, the Aggregate Initial Contributed Assets contributed to SFFC pursuant to Section 1.1(a)(ii) as a contribution to the capital of Buyer.
(b)It is the intention of the parties hereto that (i) each of the conveyances described in Section 1.1(a)(ii) constitute an outright assignment of Initial Contributed Assets and (ii) each of the conveyances described in Sections 1.1(a)(iii) and (iv) constitute an outright assignment of the Aggregate Initial Contributed Assets, which assignments are absolute and irrevocable and which assignments collectively provide Buyer, upon completion of the transactions described in Sections 1.1(a)(ii), (iii), and (iv), with the full benefits of ownership of the Aggregate Initial Contributed Assets.
(c)The transfer to Smithfield of Initial Contributed Assets by each US Originator is made without recourse to such US Originator, and the contribution of the Aggregate Initial Contributed Assets by Smithfield to SFFC, and by SFFC to Buyer, is made without recourse to Smithfield or SFFC, as applicable; provided, however, that (i) each US Originator remains liable to Smithfield for all representations, warranties, covenants and indemnities made by such US Originator hereunder and under the other Transaction Documents to which such US Originator is party, (ii) Smithfield remains liable to SFFC for all representations, warranties, covenants and indemnities made by Smithfield hereunder and under the other Transaction Documents to which Smithfield is party; (iii) SFFC remains liable to Buyer for all representations, warranties, covenants and indemnities made by SFFC hereunder and under the other Transaction Documents to which SFFC is party, and (iv) such transfer and contribution do not constitute, and will not, and are not intended to, result in, an assumption by Buyer of any obligation of such US Originator or any other Person arising in connection with the Initial Contributed Assets or any other obligations of such US Originator. Each of the US Originators, Smithfield and SFFC agrees that it has marked, or will mark within thirty (30) days of the Commencement Date, its master data processing records relating to the Initial Contributed Assets originated (or, in the case of Smithfield or SFFC, contributed) by it with a legend acceptable to Buyer and to the Administrative Agent, evidencing that Buyer acquired the Aggregate Initial Contributed Assets and to note in its financial statements that the Initial Contributed Assets have been transferred to Smithfield and that the Aggregate Initial Contributed Assets have been contributed to SFFC’s capital and subsequently Buyer’s capital. Upon the request of Buyer or the Administrative Agent, each of the US Originators, and each of Smithfield and SFFC, will execute and file such financing or continuation statements, or amendments thereto or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to perfect and maintain the perfection of Buyer’s ownership interest in the Aggregate Initial Contributed Assets to the
extent that any such assets remain in existence on the applicable Commencement Date.
(d)On the first Settlement Date following the Commencement Date relating to the US Originators, the exact amounts of the Outstanding Balances of the Initial Contributed Assets and the Initial Purchased Assets for each US Originator shall be determined, based on information provided to Buyer and Servicer by each US Originator, in the following manner. With respect to each US Originator, the Receivables included in the Initial Transferred Assets will be listed in descending order of Outstanding Balance, with the Receivable having the largest Outstanding Balance listed first. Such list will then be divided into two portions in descending order, with the portion including the Receivables from the largest Outstanding Balance to and including the Receivable that causes the total Outstanding Balance of such portion to equal or exceed the amount specified in the Transfer Notice as the amount of Initial Contributed Assets for such US Originator being designated as the Initial Contributed Assets of such US Originator, and the remaining Initial Transferred Assets being treated as the Initial Purchased Assets of such US Originator. The actual amounts of Initial Contributed Assets and Initial Purchased Assets for such US Originator will then be adjusted accordingly.
Section 1.2Purchase of Receivables.
(a)On the terms and subject to the conditions set forth herein, each of the Originators hereby sells, assigns, transfers, sets-over and otherwise conveys to Buyer on the applicable Commencement Date, without recourse (except to the extent expressly provided herein), and Buyer hereby purchases from each of the Originators on the applicable Commencement Date, all of each Originator’s right, title and interest, in, to and under such Originator’s Initial Purchased Assets.
(b)Prior to the commencement of each Calculation Period, each Originator shall prepare and deliver to Buyer a report (each, an “Estimated Sales Report”) setting forth its good faith estimate of the aggregate Outstanding Balance of all Receivables that, together with all Related Security and Collections relating thereto, are anticipated to be sold and transferred to Buyer by such Originator on each day of such Calculation Period.
(c)On each Purchase Date until and including the applicable Termination Date, each Receivable (other than any Excluded Receivable), together with all Related Security and Collections relating thereto existing at the opening of the applicable Originator’s business on such Purchase Date, shall be hereby be, and be deemed to have been, sold, assigned, transferred, set-over and otherwise conveyed to Buyer, and purchased by Buyer (and without further action by any Person).
(d)On the eighteenth (18th) Business Day following the end of the fiscal month in which the applicable Commencement Date occurs, and on each Monthly Reporting Date thereafter, each Originator shall (or shall cause Smithfield, as Servicer, under the Credit and Security Agreement to) deliver to Buyer a report in substantially the form of Exhibit VII hereto (each such report being herein called a “Purchase Report”) with respect to the actual aggregate Outstanding Balance of the Receivables sold by such Originator to Buyer during the Calculation Period then most recently ended. In addition to, and not in limitation of, the foregoing, in connection with the payment of the Purchase Price for any Receivables purchased hereunder, Buyer may request that the applicable Originator deliver, and such Originator shall deliver, such approvals, opinions, information or documents as Buyer or the Administrative Agent may reasonably request.
(e)It is the intention of the parties hereto that the purchase of Receivables from each Originator pursuant to this Section 1.2 shall constitute a sale, which sale is absolute and irrevocable and provides Buyer with the full benefits of ownership of such Receivables. Except for the Purchase Price Credits owed by such Originator pursuant to Section 1.4, the sale of Receivables hereunder by each Originator is made without recourse to such Originator; provided, however, that (i) such Originator shall be liable to Buyer for all representations, warranties, covenants and indemnities made by such Originator pursuant to the terms of the Transaction Documents to which such Originator is a party, and (ii) such sale does not constitute and is not intended to result in an assumption by Buyer of any obligation of such Originator or any other Person arising in connection with such Receivables, the related Contracts and/or other Related Security or any other obligations of such Originator. In view of the intention of the parties hereto that the sale of Receivables by each Originator pursuant to this Section 1.2 shall constitute a sale of such Receivables rather than loans secured thereby, each Originator agrees that it has marked (or will, on or prior to the date hereof and in accordance with Section 4.1(e)(ii), mark) its master data processing records relating to the Receivables originated by it with a legend acceptable to Buyer and to the Administrative Agent, evidencing that Buyer has purchased such Receivables and to note in its financial statements that its Receivables have been sold to Buyer. Upon the request of Buyer or the Administrative Agent, each Originator will execute and file such financing or continuation statements, or amendments thereto, financing change statements or assignments thereof, and such other instruments or notices, as may be necessary or appropriate to perfect and maintain the perfection of Buyer’s ownership interest in the Receivables purchased by Buyer pursuant to this Section 1.2 and the Related Security and Collections with respect thereto, or as Buyer or the Administrative Agent may reasonably request.
Section 1.3Payment of Purchase Price.
(a)On each Purchase Date, the Purchase Price payable by Buyer to any Originator in respect of the purchase of any Receivables and the Related Security and Collections related thereto from such Originator pursuant to Section 1.2 (the “Purchase Price”) on such Purchase Date shall be an amount equal to the product of (x) the estimated Outstanding Balance of such Receivables on the applicable Purchase Date indicated in the Estimated Sales Report for the Calculation Period within which such Purchase Date occurs, multiplied by (y) one minus the Discount Factor in effect on such Purchase Date.
(b)The Purchase Price with respect to the Receivables purchased by Buyer on any Purchase Date in accordance with the applicable Estimated Sales Report shall be reconciled on the applicable Settlement Date based on the information contained in the applicable Purchase Report, in the following manner:
(i)by wire transfer of immediately available funds to such Originator on such Purchase Date or Settlement Date, as applicable, to the extent that Buyer has funds available for such purpose after satisfying Buyer’s obligations under the Credit and Security Agreement that are then due and payable;
(ii)at the request of one or more Originators, by causing any Letter of Credit Issuer to issue a Letter of Credit, subject to the terms and conditions (including any limitations therein on the amount of any such issuance) for issuing Letters of Credit under the Credit and Security Agreement, in favor of one or more beneficiaries selected by such Originator(s) in the stated amount requested by such Originator(s) (or, if applicable and permitted by the Credit and Security Agreement, by causing the expiration date of an existing Letter of Credit to be extended at the request of such Originator(s)), in which event the face amount of each such Letter of Credit shall be applied as a payment of the Purchase Price payable by Buyer to such Originator(s) and, in the event of a request by more than one such Originator, such payment shall be applied pro rata in proportion to the amounts of the Purchase Prices payable to such Originators that are satisfied by delivery of each such Letter of Credit;
(iii)on the applicable Settlement Date, by delivery of the proceeds of a subordinated revolving loan from such Originator to Buyer (a “Subordinated Loan”) in an amount not to exceed the lowest of (A) the remaining unpaid portion of the aggregate Purchase Price for the Receivables sold by such Originator during the applicable Calculation Period (after giving effect to clauses (i) and (ii) above), (B) the maximum Subordinated Loan that could be borrowed without rendering Buyer’s Net Worth less than the Required Capital Amount and (C) an amount equal to the Subordinated Note Limit with respect to such Originator. Each
Originator is hereby authorized by Buyer to, on each Settlement Date, endorse on the schedule attached to its Subordinated Note an appropriate notation evidencing the date and amount of advances made thereunder on such Settlement Date, as well as the date and amount of each payment with respect thereto during the Calculation Period to which such Settlement Date relates; provided that the failure to make such notation shall not affect any obligation of Buyer thereunder; and
(iv)on each Settlement Date, by Buyer (A) accepting a contribution to Buyer’s capital from SFFC (which capital contributions, SFFC hereby agrees to make) in an amount equal to the remaining unpaid portion of such Purchase Price for such Receivables (after giving effect to clauses (i), (ii), and (iii) above) and (B) paying (or causing SFFC to pay on Buyer’s behalf) such remaining unpaid portion of such Purchase Price to the applicable Originator(s) from the proceeds of such capital contribution (which payment may be made in cash, by wire transfer or by book-entry).
In the event that Buyer does not have sufficient cash available to pay the estimated Purchase Price payable on any Purchase Date based on the Estimated Sales Report, Buyer shall be entitled to defer its obligation to pay some or all of the shortfall until a later Purchase Date in such Calculation Period to the extent Buyer has surplus cash available on such later Purchase Date.
(c)Buyer shall be permitted to offset against the Purchase Price payable by it to any Originator in respect of the purchase of any Receivables and the Related Security and Collections related thereto from such Originator pursuant to Section 1.2 any credits and adjustments arising under Section 1.3(d) or Section 1.4 and any other amounts owed by such Originator to Buyer hereunder and which have become due but remain unpaid.
(d)In the event one or more Originators request that any purchases hereunder be paid for by the issuance or extension of Letters of Credit as described herein, such Originator(s) shall, on a timely basis, provide Buyer with such information as is necessary for Buyer to obtain or extend such Letter of Credit from the applicable Letter of Credit Issuer pursuant to the Credit and Security Agreement. No Originator shall have a reimbursement obligation in respect of any such Letter of Credit. In the event that any Letter of Credit expires without being fully drawn or is surrendered for cancellation without being fully drawn, Buyer shall pay to the applicable Originator(s) on the next succeeding Settlement Date an amount equal to the undrawn balance of such Letter of Credit as of the date of such expiration or surrender; provided that in the event such Letter of Credit was requested by more than one Originator, Buyer shall pay to each such Originator an amount equal to such Originator’s proportionate share of such undrawn balance of such Letter of Credit that was allocated hereunder to such Originator. Such payment may be paid in cash when Buyer has and to the
extent of funds that are not needed to satisfy Buyer’s obligations under the Credit and Security Agreement (to the extent then due and payable) or, at Buyer’s election, by using the proceeds of a Subordinated Loan from such Originator(s). On each Settlement Date with respect to a Calculation Period during which a Letter of Credit is outstanding, the applicable Originator(s) shall pay to Buyer the Letter of Credit Fees (as defined in the Credit and Security Agreement) payable by the Buyer on such date with respect to the Letters of Credit issued on behalf of such Originator(s); provided that in the event any such Letter of Credit was requested by more than one Originator, each such Originator shall pay to the Buyer its proportionate share of such Letter of Credit Fees based on the amount of such Letter of Credit that is allocable to each such Originator. Buyer shall be entitled, at its election, to offset the amount of such Letter of Credit Fees against the principal balance of the Subordinated Note related to such Originator(s) or against the amount of cash next payable with respect to the purchase of Receivables from such Originator(s).
(e)Subject to the limitations set forth in Section 1.3(b)(iii), each Originator irrevocably agrees to advance each Subordinated Loan requested by Buyer on or prior to the applicable Termination Date. The related Subordinated Loans owing to each Originator shall be evidenced by, and shall be payable in accordance with the terms and provisions of its related Subordinated Note and shall be payable solely from cash available to Buyer after payment of all amounts due in respect of the related Senior Claim (as defined in the related Subordinated Note) or to become due in respect of the related Senior Claim within thirty (30) days of the date of proposed payment on the related Subordinated Note.
(f)From and after the applicable Termination Date, no Originator shall be obligated to (but may, at its option) sell Receivables to Buyer.
Section 1.4Settlement Date; Adjustments.
(a)The Purchase Price for each Receivable coming into existence after the Business Day immediately preceding the applicable Commencement Date shall be due and payable in full by Buyer to the applicable Originator on the date and in the manner set forth in Section 1.3(b). Notwithstanding the foregoing, on each Settlement Date, Buyer and each Originator shall effect a settlement of all amounts paid by Buyer and all Receivables purchased by Buyer during the Calculation Period (based on the information contained in the Purchase Report for such Calculation Period) to which such Settlement Date relates. On the Settlement Date, the positive difference (if any) (i) owing to an Originator shall be paid by Buyer pursuant to the methods of payment described in Section 1.3(b) or (ii) owing to Buyer shall be applied by Buyer to reduce the balance (if any) owing under the applicable Originator’s Subordinated Note, with any remaining balance being repaid to Buyer.
(b)In addition to the adjustments described in Section 1.4(a), if (x) on any Purchase Date any of the representations and warranties set forth in Sections 2.1(i), (j), (l), (r), (s), (t), (u) and the second sentence of Section 2.1(q) is not true when made or deemed made with respect to the applicable Receivable or (y) on any day the Outstanding Balance of the applicable Receivable purchased from any Originator is:
(i)reduced as a result of any defective, rejected or returned goods or services (including any In-Transit Collateral that is returned or not accepted by the relevant Obligor), any cash discounts, any volume discounts or any adjustment or otherwise by such Originator or any Affiliate thereof (other than as a result of a charge-off of such Receivable or cash Collections applied to such Receivable);
(ii)reduced or canceled as a result of a setoff in respect of any claim by any Person (whether such claim arises out of the same or a related transaction or an unrelated transaction);
(iii)reduced on account of the obligation of such Originator or any Affiliate thereof to pay to the related Obligor any rebate or refund; or
(iv)on the date of its sale, equal to an amount that is less than the amount reflected in the applicable Purchase Report
then, in such event, Buyer shall be entitled to a credit (each, a “Purchase Price Credit”), on the Settlement Date related to the Calculation Period when the applicable Purchase Date or reduction or cancellation of Outstanding Balance occurs, against the Purchase Price otherwise payable to the applicable Originator hereunder in respect of such Receivable equal to (A) in the case clauses (y)(i) through (iv) above, the amount of such reduction or cancellation or the difference between the Outstanding Balance of such Receivable and the amount included with respect to such Receivable in calculating the then applicable Net Pool Balance, as applicable, and (B) in the case of clause (x) above, an amount equal to the amount of the Outstanding Balance of such Receivable on the relevant Purchase Date. On such Settlement Date, the applicable Originator shall pay the amount of such Purchase Price Credit to Buyer in cash immediately; provided that if the applicable Termination Date has not occurred, such Originator shall be allowed to deduct the amount of such Purchase Price Credit from any indebtedness owed to it under its Subordinated Note.
Section 1.5Payments and Computations, Etc. All amounts required to be paid by Buyer hereunder shall be paid in accordance with the terms hereof on the day when due in immediately available funds to the account of the applicable Originator designated from time to time by such Originator or as otherwise directed by such Originator. In the event that any payment owed by any Person hereunder becomes due on a day that is not a Business Day, then such payment shall be made on the next succeeding Business Day. If any Person fails to pay any
amount due and payable by it hereunder when due, such Person agrees to pay, on demand, interest on such amount calculated at a rate of interest equal to the Default Rate from the date such payment was due until paid in full. All computations of interest payable hereunder shall be made on the basis of the actual number of days (including the first but excluding the last day) elapsed and a year of 360 days. For the purpose of disclosure pursuant to the Interest Act (Canada) to the extent relevant hereunder, the yearly rate of interest to which any rate of interest payable that is calculated on any basis other than a full calendar year is equivalent may be determined by multiplying such rate by a fraction the numerator of which is the actual number of days in the calendar year in which such yearly rate of interest is to be ascertained and the denominator of which is the number of days comprising such other basis. The parties further agree that for the purposes of the Interest Act (Canada), (i) the principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement, and (ii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields.
Section 1.6License of Software.
(a)To the extent that any software used by any Originator to account for the Receivables originated by it is non-transferable, such Originator hereby grants to each of Buyer, the Administrative Agent and Smithfield an irrevocable, non-exclusive license to use, without royalty or payment of any kind, all such software used by such Originator to account for such Receivables, to the extent necessary to administer such Receivables, whether such software is owned by such Originator or is owned by others and used by such Originator under license agreements with respect thereto; provided that should the consent of any licensor of such software be required for the grant of the license described herein, to be effective, such Originator hereby agrees that upon the request of Buyer, such Originator will use its reasonable efforts to obtain the consent of such third-party licensor. If any software used by any Originator to account for the Receivables originated by it prohibits such Originator from granting the license to use described herein, or if, after reasonable efforts, the consent of any licensor of such software for the grant of the license described herein is not obtained, there shall be no transfer of such software hereunder or any grant by such Originator of the license to use described herein. The license granted hereby shall be irrevocable until the later to occur of (i) indefeasible payment in full of the Obligations, and (ii) the date on which each of this Agreement and the Credit and Security Agreement terminates in accordance with its terms.
(b)Each Originator (i) shall take such action requested by Buyer and/or the Administrative Agent, from time to time hereafter, that may be necessary or appropriate to ensure that Buyer has an enforceable ownership interest in the Records relating to the Receivables purchased from such Originator hereunder, and (ii) shall use its reasonable efforts to ensure that Buyer, the Administrative Agent and Smithfield each has an enforceable right (whether by license or
sublicense or otherwise) to use all of the computer software used to account for such Receivables and/or to recreate such Records.
Section 1.7Characterization. If, notwithstanding the intention of the parties expressed in Section 1.1(c) and Section 1.2(e), any (a) transfer by a US Originator of Receivables to Smithfield, (b) contribution of Receivables by Smithfield to SFFC or by SFFC to Buyer, or (c) sale by an Originator to Buyer of Receivables hereunder shall be characterized as a secured loan and not a sale or contribution, or such transfer shall for any reason be ineffective or unenforceable, then this Agreement shall be deemed to constitute a security agreement under the UCC and other applicable law. The parties have structured the transactions contemplated by this Agreement as an absolute and irrevocable sale, and the parties agree to treat each such transaction as a “true sale” for all purposes under Applicable Law and accounting principles, including, without limitation, in their respective books, records, computer files, tax returns (federal, state and local), regulatory and governmental filings (and shall reflect such sale in their respective financial statements). For this purpose and without being in derogation of the parties’ intention that each conveyance of Receivables by an Originator or Smithfield hereunder shall constitute a true sale or other absolute assignment thereof, as applicable: (i) each of Smithfield and SFFC hereby grants to Buyer a security interest in all of its right, title and interest in and to the Aggregate Initial Contributed Assets and all proceeds thereof to secure the prompt and complete payment of a loan deemed to have been made in an amount equal to the Buyer’s paid-in capital and capital surplus booked at the time of the issuance to SFFC or Smithfield, as applicable, of Buyer’s Equity Interests, together with all other obligations of SFFC or Smithfield, as applicable, to Buyer hereunder, which security interest shall be prior to all other Adverse Claims (except as created under the Transaction Documents and the Monetization Documents), and (ii) each Originator and Smithfield Support hereby grants to the Buyer a security interest in all of such Originator’s or Smithfield Support’s, as applicable, right, title and interest in, to and under all Receivables of such Originator which are now existing or hereafter arising, all Collections and Related Security with respect thereto, each Lock-Box and Collection Account (other than any FX Collection Accounts and the related Lock-Boxes), all other rights and payments relating to such Receivables and all proceeds of the foregoing to secure the prompt and complete performance by Smithfield Support of its obligations under the Transaction Documents and payment in full of a loan deemed to have been made in an amount equal to the Purchase Price owing to such Originator. Buyer shall have, in addition to the rights and remedies which it may have under this Agreement, all other rights and remedies provided to a secured creditor under the UCC and other applicable law, which rights and remedies shall be cumulative.
Section 1.8Excluded Originator. Subject to the Buyer's obligations under the Credit and Security Agreement, Buyer shall be permitted to, at any time and from time to time after the date hereof, terminate an Originator under this Agreement (such Originator, an “Excluded Originator”) by delivery of prior written notice to each of the other parties hereto and the Administrative Agent, which notice shall specify the effective date (the “Effective Date”) of such termination (such Effective Date not to occur earlier than the end of the Calculation Period during which such notice is given). With effect from the Effective Date set forth in such notice, Buyer, Smithfield, SFFC and each of the other Originators hereby release and discharge the Excluded Originator from any future obligations arising under this Agreement, including the
obligation to sell Receivables to the Buyer, and each Receivable originated by such Excluded Originator shall be deemed to be an Excluded Receivable; provided, that (a) all of such Excluded Originator's then existing obligations, indebtedness and liabilities arising hereunder and the other Transaction Documents to which it is a party in respect of Receivables that were sold pursuant hereto prior to the Effective Date and (b) the provisions described in Section 7.10(d) as they relate to such Excluded Originator shall survive such termination. Solely to the extent relating to Excluded Receivables, Buyer shall terminate or amend any UCC financing statement filed naming the Buyer as secured party and the Excluded Originator as debtor, (a) terminate any Collection Account Agreement governing any Lock-Box or Collection Account relating solely to such Excluded Originator and (b) take any other actions as may be appropriate to evidence or record the termination of such Excluded Originator contemplated hereby. Each Excluded Originator agrees that this Agreement and the other Transaction Documents may be amended or otherwise modified after the effective date of such release without the consent or approval of such Excluded Originator and the Excluded Originator shall no longer be considered a party thereto (except with respect to (a) such Excluded Originators obligation's, indebtedness and liabilities arising under this Agreement the other Transaction Documents to which it is a party in respect of Receivables sold hereunder prior to the Effective Date and existing as of the Effective Date and (b) the provisions described in Section 7.10(d) as they relate to such Excluded Originator); provided that no such amendment or other modification that could reasonably be expected to adversely affect the rights and protections afforded to such Excluded Originator under this Section 1.8 shall be effective unless agreed to in writing by such Excluded Originator.
Section 1.9Restructuring Transactions.
(a)The parties acknowledge that Smithfield and certain of its Affiliates undertook, or caused to be undertaken, the actions set forth on Exhibit VIII hereto prior to the date hereof (collectively, the “Restructuring Transactions”).
(b)The parties further acknowledge that the undertaking by Smithfield and its Affiliates of the Restructuring Transactions, and the consummation thereof, did not cause and shall not be deemed to have constituted (i) a breach of any representation, warranty or covenant contained herein, (ii) a Material Adverse Effect, (iii) a Termination Event, or (iv) an Unmatured Termination Event.
Section 1.10Amendment and Restatement. The parties acknowledge and agree that this Agreement does not constitute a novation or termination of the existing obligations under the Original Agreement and that such obligations, including the grant of the security interest in respect of the contribution and sale of Receivables, Related Security and related Collections, are in all respects continued and outstanding as obligations under this Agreement with only the terms being modified from and after the date hereof as provided herein.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1Representations and Warranties. Each of Smithfield, Smithfield Support and SFFC hereby represents and warrants to Buyer on the date hereof, and each
Originator hereby represents and warrants to Smithfield, Smithfield Support, SFFC and Buyer on the date hereof, the applicable Commencement Date and each Purchase Date after such Commencement Date, that:
(a)Existence and Power. Such Transferor’s jurisdiction of organization is correctly set forth in the preamble to this Agreement unless notice of a change in its jurisdiction of organization has been provided in accordance with Section 4.2(a). Each Transferor and Smithfield Support is duly organized under the laws of that jurisdiction and no other state or jurisdiction, and such jurisdiction must maintain a public record showing the organization to have been organized. Each Transferor and Smithfield Support is validly existing and in good standing under the laws of its jurisdiction of organization. Each Transferor and Smithfield Support is duly qualified to do business and is in good standing as a foreign entity, and has and holds all organizational power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except where the failure to so qualify or so hold could not reasonably be expected to have a Material Adverse Effect.
(b)Power and Authority; Due Authorization, Execution and Delivery. The execution and delivery by such Person of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder, and, in the case of any Originator, such Originator’s use of the proceeds of the sale of any Receivables, Related Security or related Collections made by it hereunder, are within its organizational powers and authority and have been duly authorized by all necessary organizational action on its part. This Agreement and each other Transaction Document to which any Transferor or Smithfield Support is a party have been duly executed and delivered by such Transferor or Smithfield Support, as applicable.
(c)No Conflict. The execution and delivery by each Transferor and Smithfield Support of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not result in the creation or imposition of any Adverse Claim on the assets of such Transferor or Smithfield Support, as applicable, or contravene or violate (i) its Organizational Documents, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property (except as created under the Transaction Documents) except, in any case, where such contravention or violation could not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law.
(d)Governmental Authorization. Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any Person or Governmental Authority is required for the due execution and delivery by any Transferor or Smithfield Support of this Agreement and each other Transaction Document to which it is a party and the performance by it of its obligations hereunder and thereunder.
(e)Litigation and Contingent Obligations. Except as disclosed in the filings made by Smithfield, any Transferor or Smithfield Support with the Securities and Exchange Commission, there are no actions, suits or proceedings pending or, to the best knowledge of each of the Transferors and Smithfield Support, threatened against or affecting such Transferor or Smithfield Support, as applicable, or any of its properties, in or before any court, arbitrator or other body, that could reasonably be expected to have a material adverse effect on (i) the business, properties, financial condition or results of operations of such Transferor, its Subsidiaries and Smithfield Support, taken as a whole, (ii) the ability of such Transferor or Smithfield Support, as applicable, to perform its obligations under the Transaction Documents, or (iii) the validity or enforceability of any of the Transaction Documents or the rights or remedies of the Buyer hereunder. Such Transferor does not have any material Contingent Obligations not provided for or disclosed in the financial statements referred to in Section 4.1(a).
(f)Binding Effect. Each of the Transaction Documents to which any Transferor or Smithfield Support is a party constitutes the legal, valid and binding obligation of such Transferor or Smithfield Support, as applicable, enforceable against such Transferor or Smithfield Support, as applicable, in accordance with its respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(g)Accuracy of Information. All information heretofore furnished by such Transferor or any of its Affiliates to Buyer for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by such Transferor or any of its Affiliates to Buyer will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain, when furnished, any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein, taken as a whole, and in light of the circumstances in which they were made, not misleading; provided that, with respect to projected financial information, such Transferor represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time delivered.
(h)Use of Proceeds. No portion of any Purchase Price payment hereunder will be used (i) for a purpose that violates, or would be inconsistent with, any law, rule or regulation applicable to such Transferor or (ii) to acquire any security in any transaction which is subject to Section 12, 13 or 14 of the Securities Exchange Act of 1934, as amended.
(i)Good Title. Immediately prior to (i) the transfer by each Originator of the applicable Initial Contributed Assets to Smithfield and (ii) the sale by each Originator of Receivables (other than Excluded Receivables) on the applicable Commencement Date and each Purchase Date thereafter, such Originator (x) is the legal and beneficial owner of all right, title and interest in such Initial Contributed Assets or such Receivables, as applicable and (y) is the legal and beneficial owner of the Related Security with respect to such Receivables or possesses
a valid and perfected first priority security interest therein, in each case, free and clear of any Adverse Claim, except as created by the Transaction Documents and the Monetization Documents. Immediately prior to Smithfield’s and SFFC’s contribution of the Aggregate Initial Contributed Assets to SFFC’s and Buyer’s capital, respectively, Smithfield or SFFC, as applicable, will be the legal and beneficial owner of the Aggregate Initial Contributed Assets, free and clear of any Adverse Claim, except as created by the Transaction Documents and the Monetization Documents.
(j)Perfection. This Agreement, together with the filing of financing statements and assignments contemplated hereby, is effective to transfer to Buyer (and Buyer shall acquire from such Transferor, directly or indirectly): (i) legal and equitable title to, with the right to sell and encumber, each Receivable (other than any Excluded Receivable) originated by such Originator, whether now existing and hereafter arising, together with the Collections with respect thereto, and (ii) all of such Originator’s right, title and interest in the Related Security associated with each such Receivable, in each case, free and clear of any Adverse Claim, except in favor of Buyer, the Administrative Agent for the benefit of the Secured Parties, pursuant to the Transaction Documents or, with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents. There have been duly filed all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer’s ownership interest in such Receivables, the Related Security and the Collections. Such Transferor’s jurisdiction of organization is a jurisdiction whose law generally requires information concerning the existence of a nonpossessory security interest to be made generally available in a filing, record or registration system as a condition or result of such a security interest’s obtaining priority over the rights of a lien creditor which respect to collateral.
(k)Places of Business and Locations of Records. The principal place of business and chief executive office of each Transferor and Smithfield Support and the offices where it keeps all of its Records are located at the address(es) listed on Exhibit II or such other locations of which Buyer has been notified in accordance with Section 4.2(a) in jurisdictions where all action required by Section 4.2(a) has been taken and completed. Each Transferor’s and Smithfield Support’s Federal Employer Identification Number or Business Number, as applicable is correctly set forth on Exhibit II.
(l)Collections. The conditions and requirements set forth in Section 4.1(i) have at all times been satisfied and duly performed.
(i)Subject to such changes permitted by clause (ii) below and by Section 4.2(b), the names and addresses of all Collection Banks, together with the account numbers of the Collection Accounts at each Collection Bank and the post office box number of each Lock-Box, are listed on Schedule D to the Credit and Security Agreement. None of the Originators nor Smithfield Support has granted to any Person, other than Buyer, the Administrative Agent and, with respect to the Monetized Receivables and Related Monetized Assets, the Receivables Agent, dominion and control of any Lock-Box or Collection Account, or
the right to take dominion and control of any such Lock-Box or Collection Account at a future time or upon the occurrence of a future event.
(ii)On or prior to the Post-Closing Date, the Collection Accounts will be novated from each of Smithfield Direct and Smithfield Support to, in both cases, the Buyer.
(m)Material Adverse Effect. Since January 2, 2022, no event has occurred that would have a Material Adverse Effect.
(n)Names. Unless notice of a change in its name has been provided in accordance with Section 4.2(a), the name in which such Transferor has executed this Agreement is identical to the name of such Transferor as indicated on the public record of its jurisdiction of organization which shows such Transferor to have been organized. In the past five (5) years, such Transferor has not used any corporate names, trade names or assumed names other than the name in which it has executed this Agreement and as listed on Exhibit II.
(o)Ownership of Buyer. Smithfield owns, directly or indirectly, one hundred percent (100%) of the issued and outstanding Equity Interests of each Originator, SFFC and, after giving effect to the transactions on the Closing Date, Buyer. Such Equity Interests are validly issued, fully paid and nonassessable, and there are no options, warrants or other rights to acquire securities of Buyer, SFFC or any Originator.
(p)Not an Investment Company. Such Transferor is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended, or any successor statute.
(q)Compliance with Law. Each of such Transferor and Smithfield Support has complied in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Receivable, together with the Contract related thereto, does not contravene any laws, rules or regulations applicable thereto (including laws, rules and regulations relating to truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy), and no part of such Contract is in violation of any such law, rule or regulation, except where such contravention or violation could not reasonably be expected to have a Material Adverse Effect.
(r)Compliance with Credit and Collection Policy. Such Transferor has complied in all material respects with the Credit and Collection Policy with regard to each Receivable originated or contributed by it that was reflected in any Purchase Report as an Eligible Receivable and was an Eligible Receivable on the date of its acquisition by Buyer hereunder, and with regard to each Contract with respect to such Receivable, and has not made any material change to such Credit and Collection Policy, except such material change as to which Buyer has been notified in accordance with Section 4.1(b)(ii).
(s)Payments to such Originator. With respect to each Receivable originated by such Originator and sold to Buyer hereunder, the Purchase Price payable by Buyer in respect thereof constitutes reasonably equivalent value, in consideration therefor. No transfer hereunder by such Originator of any Receivable originated by such Originator is or may be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C. §§ 101 et seq.), as amended.
(t)Enforceability of Contracts. Each Contract with respect to each Receivable that was reflected in any Purchase Report as an Eligible Receivable and was an Eligible Receivable on the date of its acquisition by Buyer hereunder is effective to create, and has created, a legal, valid and binding obligation of the related Obligor to pay the Outstanding Balance of the Receivable created thereunder and any accrued interest thereon, enforceable against the Obligor in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(u)Eligible Receivables. Each Receivable reflected in any Purchase Report as an Eligible Receivable was an Eligible Receivable on the date of its acquisition by Buyer hereunder.
(v)Accounting. The manner in which such Originator accounts for the transactions contemplated by this Agreement in its financial statements does not jeopardize the characterization of the transactions contemplated herein as being true sales.
(w)Taxes. Each of Smithfield, SFFC, Smithfield Support and each Originator has filed or caused to be filed all Tax returns which are required to be filed by it and has paid all Taxes required to be paid by it, except (i) Taxes that are being contested in good faith by appropriate proceedings and for which Smithfield, SFFC, Smithfield Support or such Originator, as applicable, has set aside on its books adequate reserves or (ii) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
(x)ERISA. Except as could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (a) Smithfield, SFFC, Smithfield Support, each US Originator and each of their respective ERISA Affiliates is in compliance with the applicable provisions of ERISA and of the US Internal Revenue Code of 1986, as amended (the “Tax Code”) relating to Plans and the regulations and published interpretations thereunder, and (b) no ERISA Event has occurred or is reasonably expected to occur. The minimum funding standards of ERISA and the Tax Code with respect to each Plan have been satisfied, except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect.
(y)Sanctions and other Anti-Terrorism Laws. No: (a) Covered Entity, nor any employees, officers, directors, or to the knowledge of a Covered Entity, any affiliates or agents acting on a Covered Entity’s behalf in connection with this Agreement: (i) is a Sanctioned Person; (ii) directly, or indirectly through any third party, is engaged in any transactions or other
dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, or any transactions or other dealings that otherwise are prohibited by any Anti-Terrorism Laws; (b) Collateral is Embargoed Property.
(z)Anti-Corruption Laws. Each Covered Entity has (a) conducted its business in compliance with all Anti-Corruption Laws and (b) has instituted and maintains policies and procedures reasonably designed to ensure compliance with such Laws.
ARTICLE III
CONDITIONS OF PURCHASE
Section 3.1Conditions Precedent to Purchase. The obligations of Buyer to purchase Receivables, Related Security and associated Collections from each Originator under this Agreement is subject to the satisfaction or waiver by Buyer of the conditions precedent that (a) Collection Account Agreements for each Lock-Box and Collection Account (other than any FX Collection Account) (or amendments to or assignments of existing Collection Account Agreements) in favor of PNC Bank, National Association, as Administrative Agent shall have been executed by the parties thereto and delivered to Buyer; (b) all of the conditions to effectiveness of the Credit and Security Agreement shall have been satisfied on or before the closing date thereunder or waived in accordance with the terms thereof; and (c) the Commencement Date shall have occurred with respect to such Originator.
Section 3.2Conditions Precedent to Subsequent Payments. Buyer’s obligation to pay the Purchase Price in respect of any Receivables on any Purchase Date shall be subject to the satisfaction or waiver by Buyer of the further conditions precedent that: (a) as of such Purchase Date, the Facility Termination Date shall not have occurred under the Credit and Security Agreement; (b) Buyer shall have received such other approvals, opinions or documents as it may reasonably request, and (c) on the date such Receivable came into existence, the following statements shall be true (and acceptance of the proceeds of any payment for such Receivable shall be deemed a representation and warranty by such Originator that such statements are then true):
(a)the representations and warranties set forth in Article II are true and correct on and as of the date such Receivable came into existence as though made on and as of such date; and
(b)no event has occurred and is continuing that will constitute a Termination Event or an Unmatured Termination Event.
Notwithstanding the foregoing conditions precedent, upon payment of the Purchase Price for any Receivable in the manner provided in Section 1.3, title to such Receivable and the Related Security and Collections with respect thereto shall vest in Buyer, whether or not the conditions precedent to Buyer’s obligation to pay for such Receivable were in fact satisfied or waived. The failure of an Originator to satisfy any of the foregoing conditions precedent, however, shall give rise to (x) a right of Buyer to rescind the purchase of the applicable Receivables and (y) an
obligation of such Originator to pay to Buyer an amount equal to the Purchase Price received by it in respect of such Receivables.
ARTICLE IV
COVENANTS
Section 4.1Affirmative Covenants. Until the date on which this Agreement terminates in accordance with its terms:
(a)Financial Reporting. Smithfield agrees that it will maintain, for itself and each of its Subsidiaries, a system of accounting established and administered in accordance with GAAP, and Smithfield will, and, as applicable, will cause each Originator to, furnish to Buyer upon request:
(i)Annual Reporting. Within 90 days after the end of each fiscal year of Smithfield, Smithfield’s audited consolidated balance sheet and audited consolidated condensed statements of income, stockholders’ equity and cash flows as of the end of and for such year, and related notes thereto, setting forth in each case in comparative form the corresponding figures for (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all reported on by Ernst & Young LLP or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception (other than a “going concern” qualification or exception solely as a result of the upcoming maturity of the Debt outstanding under the Parent Credit Agreement and except for qualifications solely relating to changes in accounting principles or practices reflecting changes in GAAP and required or approved by Smithfield’s independent certified public accountant) and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of Smithfield and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied.
(ii)Quarterly Reporting. Within 45 days after the end of each of the first three (3) fiscal quarters of each fiscal year of Smithfield, Smithfield’s unaudited consolidated balance sheet and unaudited consolidated condensed statements of income and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by the Financial Officer of Smithfield as presenting fairly in all material respects the financial condition and results of operations of Smithfield and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes.
(iii)Compliance Certificate. Together with the financial statements required to be delivered pursuant to Section 4.1(a)(i) and (ii) or, if not requested, with respect to the relevant accounting period, as applicable, a compliance certificate in substantially the form of Exhibit IV signed by a Financial Officer of Smithfield and dated the date of such
annual financial statement or such quarterly financial statement, or the end of such relevant accounting period, as the case may be.
(iv)[Reserved].
(v)Auditors Reports and Management Letters. Concurrently with any delivery of financial statements under paragraph (a)(i) and (ii) above (i) a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any default relating to Sections 7.10 or 7.11 of the Parent Credit Agreement (which certificate may be limited to the extent required by accounting rules or guidelines) and (ii) copies of any letters to the management of Smithfield from such accounting firm.
(b)Other Notices and Information. Each Transferor, if applicable, will deliver to Buyer:
(i)ERISA. Promptly following receipt thereof, copies of any documents described in Sections 101(k) or 101(l) of ERISA that any Transferor or any ERISA Affiliate may request with respect to any Multiemployer Plan; provided that if such Transferor or any of the ERISA Affiliates have not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Buyer or the Administrative Agent, the Transferors and/or the ERISA Affiliates shall promptly make a request for such documents or notices from such administrator or sponsor and such Transferor shall provide copies of such documents and notices promptly to the Buyer or the Administrative Agent after receipt thereof, and further provided that the rights granted to the Buyer or the Administrative Agent in this section shall be exercised not more than once during a 12-month period.
(ii)Change in Credit and Collection Policy. At least thirty (30) days prior to the effectiveness of any material change in or material amendment to the Credit and Collection Policy, a copy of the Credit and Collection Policy then in effect and a notice (A) indicating such proposed change or amendment, and (B) if such proposed change or amendment would be reasonably likely to materially adversely affect the collectability of the Receivables or decrease the credit quality of any newly created Receivables, requesting Buyer’s (and the Administrative Agent’s) consent thereto.
(iii)Other Information. Promptly, from time to time, such other information, documents, records or reports relating to the Receivables originated or contributed by such Transferor or the condition or operations, financial or otherwise, of such Originator as Buyer may from time to time reasonably request in order to protect the interests of Buyer under or as contemplated by this Agreement.
(iv)Termination Events or Unmatured Termination Events. The occurrence of each Termination Event and each Unmatured Termination Event, by a statement of a Financial Officer of such Transferor.
(v)Downgrade of Transferor. Promptly after the occurrence thereof, any downgrade in the rating of any rated Debt of any Transferor by S&P or by Moody’s, setting forth the Debt affected and the nature of such change.
(vi)Material Events. With respect to (i) any Transferor other than Smithfield, promptly upon learning thereof, the occurrence of any event or condition that has had, or could reasonably be expected to have, a Material Adverse Effect and (ii) Smithfield, a copy of each notice delivered pursuant to Section 6.02 of the Parent Credit Agreement as and when such notice is delivered thereunder.
(c)Compliance with Laws and Preservation of Existence. Each Transferor will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Each Transferor will preserve and maintain its legal existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign entity in each jurisdiction where its business is conducted, except where the failure to so qualify or remain in good standing could not reasonably be expected to have a Material Adverse Effect.
(d)Audits. Each Transferor will furnish to Buyer such information with respect to it and the Receivables sold or contributed by it as may be reasonably requested by Buyer from time to time. Each Transferor will, from time to time during regular business hours as requested by Buyer upon reasonable notice and at the sole cost of such Transferor, permit Buyer, or its agents or representatives: (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Transferor relating to the Receivables and Related Security, including the related Contracts, and (ii) to visit the offices and properties of such Transferor for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Transferor’s financial condition or the Receivables and the Related Security or such Transferor’s performance under any of the Transaction Documents or the Monetization Documents or any Person’s performance under the Contracts and, in each case, with any of the officers or employees of such Transferor having knowledge of such matters (each of the foregoing examinations and visits, a “Review”); provided, however, that, so long as no Event of Default (under and as defined in the Credit and Security Agreement) has occurred and is continuing, the Transferors shall only be responsible for the costs and expenses of the first Review conducted in each calendar year.
(e)Keeping and Marking of Records and Books.
(i)Such Transferor will maintain and implement administrative and operating procedures (including an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Receivables (including records adequate to permit the immediate identification of each new Receivable and all Collections of and adjustments to each existing Receivable). Such Transferor will give Buyer notice of any material change in the administrative and operating procedures referred to in the previous sentence.
(ii)Such Transferor will (A) on or prior to the date hereof, mark its master data processing records and other books and records relating to the Receivables with a legend, acceptable to Buyer, describing Buyer’s ownership interests in the Receivables and further describing the interest of the Administrative Agent (on behalf of the Lenders) under the Credit and Security Agreement and (B) upon the request of Buyer: (x) mark each Contract with a legend describing Buyer’s ownership interests in the Receivables originated by such Transferor and further describing the interest of the Administrative Agent (on behalf of the Lenders) and (y) after the occurrence of a Termination Event, deliver to Buyer all Contracts (including all multiple originals of any such Contract) relating to such Receivables.
(f)Compliance with Contracts and Credit and Collection Policy. Such Transferor will timely and fully (i) perform and comply with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Receivables originated by it, except to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect and (ii) comply in all respects with the Credit and Collection Policy in regard to each such Receivable and the related Contract.
(g)Ownership. Such Transferor will take all necessary action to establish and maintain, irrevocably in Buyer, (A) legal and equitable title to the Receivables (other than the Excluded Receivables) originated by such Transferor and the Collections and (B) all of such Transferor’s right, title and interest in the Related Security associated with the Receivables (other than Excluded Receivables) originated by such Transferor, in each case, free and clear of any Adverse Claims (other than Adverse Claims of (i) Buyer, (ii) the Administrative Agent, for the benefit of the Secured Parties, pursuant to the Transaction Documents and (iii) with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers, pursuant to the Monetization Documents) (including the filing of all financing statements or other similar instruments or documents necessary under the UCC (or any comparable law) of all appropriate jurisdictions to perfect Buyer’s ownership interest in such Receivables, Related Security and Collections and such other action to perfect, protect or more fully evidence the interest of Buyer as Buyer may reasonably request).
(h)Lenders’ Reliance. Such Transferor acknowledges that the Administrative Agent and the Lenders are entering into the transactions contemplated by the Credit and Security Agreement in reliance upon Buyer’s identity as a legal entity that is separate from such Transferor and any Affiliates thereof. Therefore, from and after the date of execution and delivery of this Agreement, such Transferor will take all reasonable steps, including all steps that Buyer may from time to time reasonably request, to maintain Buyer’s identity as a separate legal entity and to make it manifest to third parties that Buyer is an entity with assets and liabilities distinct from those of such Transferor and any Affiliates thereof and not just a division of such Transferor or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, such Transferor (i) will not hold itself out to third parties as liable for the debts of Buyer nor purport to own any of the Receivables and other assets acquired by Buyer, (ii) will take all other actions necessary on its part to ensure that Buyer is at all times in compliance with the “separateness covenants” set forth in Section 7.1(i) of the Credit
and Security Agreement and (iii) will cause all tax liabilities arising in connection with the transactions contemplated herein or otherwise to be allocated between such Transferor and Buyer on an arm’s-length basis and in a manner consistent with the procedures set forth in U.S. Treasury Regulations §§1.1502-33(d) and 1.1552-1.
(i)Collections. From and after the Commencement Date, such Transferor will cause (1) all proceeds from all Lock-Boxes to be directly deposited by a Collection Bank into a Collection Account and (2) each Collection Account (other than any FX Collection Account) and, to the extent required by the relevant Collection Bank, each Lock-Box to be subject at all times to a Collection Account Agreement that is in full force and effect; provided, that amounts received in respect of any Excluded Receivables shall not be deposited in any Lock-Box or Collection Account. In the event any payments relating to Receivables are remitted directly to such Transferor or any Affiliate of such Transferor (including Smithfield Support), such Transferor or Smithfield Support will remit (or will cause all such payments to be remitted) directly to a Collection Bank and deposit into a Collection Account within two (2) Business Days following receipt thereof and, at all times prior to such remittance, such Transferor or Smithfield Support will itself hold or will cause such payments to be held in trust for the exclusive benefit of Buyer. From and after the Commencement Date, each Transferor and Smithfield Support will transfer exclusive ownership, dominion and control of each Lock-Box to Buyer and, will not grant the right to take dominion and control of any Lock-Box at a future time or upon the occurrence of a future event to any Person, except to Buyer as contemplated by this Agreement and the Credit and Security Agreement.
(j)Taxes. Such Transferor will file all Tax returns and reports required by law to be filed by it and promptly pay all Taxes and governmental charges at any time owing, except any such Taxes which are not yet delinquent or are being contested in good faith by appropriate and timely proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. Such Transferor will pay when due any and all present and future stamp, documentary, and other similar taxes and governmental charges payable in connection with the Receivables originated by it, and hold Buyer harmless from and against any and all liabilities (including penalties, interest and expenses) with respect to or resulting from any delay or omission to pay such Taxes and governmental charges.
(k)Additional Covenants of Smithfield Support.
(i)Smithfield Support will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply could not reasonably be expected to have a Material Adverse Effect. Smithfield Support will preserve and maintain its legal existence, rights, franchises and privileges in the jurisdiction of its organization, and qualify and remain qualified in good standing as a foreign entity in each jurisdiction where its business is conducted, except where the failure to so qualify or remain in good standing could not reasonably be expected to have a Material Adverse Effect.
(ii)Smithfield Support will furnish to Buyer such information with respect to it as may be reasonably requested by Buyer from time to time.
(l)Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws. Each Transferor covenants and agrees that:
(i)it shall immediately notify each of the Agents in writing upon the occurrence of a Reportable Compliance Event;
(ii)if, at any time, any Collateral becomes Embargoed Property, then, in addition to all other rights and remedies available to each of the Agents, upon request by any of the Agents, such Loan Party shall (or shall cause the Buyer to) provide substitute Collateral acceptable to the Administrative Agent that is not Embargoed Property; and
(iii)it shall, and shall require each other Covered Entity to, conduct its business in compliance with all Anti-Corruption Laws and maintain policies and procedures reasonably designed to ensure compliance with such Laws.
Section 4.2Negative Covenants. Until the date on which this Agreement terminates in accordance with its terms, each Transferor and Smithfield Support, as applicable, hereby covenants that:
(a)Name Change, Offices and Records. Such Transferor will not change its (i) jurisdiction of organization, (ii) name, (iii) identity or structure (within the meaning of Article 9 of any applicable enactment of the UCC), unless it shall have: (i) given the Buyer (and the Administrative Agent) at least forty-five (45) days’ prior written notice thereof and (ii) delivered to the Administrative Agent all financing statements, instruments and other documents requested by the Administrative Agent in connection with such change or relocation.
(b)Change in Payment Instructions to Obligors. Each Transferor and Smithfield Support, as applicable, will not add or terminate any bank as a Collection Bank, or make any change in the instructions to Obligors regarding payments to be made to any Lock-Box or Collection Account, unless Buyer shall have received, at least ten (10) days before the proposed effective date therefor, (i) written notice of such addition, termination or change and (ii) with respect to the addition of a Collection Bank or a Collection Account (other than any FX Collection Account) or Lock-Box (other than any Lock-Box associated with a FX Collection Account), an executed Collection Account Agreement with respect to the new Collection Account or Lock-Box; provided, however, that such Transferor and Smithfield Support may make changes in instructions to Obligors regarding payments if such new instructions require such Obligor to make payments to another existing Collection Account, including any Collection Account relating to Smithfield Support.
(c)Modifications to Contracts and Credit and Collection Policy. Such Transferor will not make any change to the Credit and Collection Policy that would impair the collectability of any Receivable originated by it or reasonably be expected to have a Material Adverse Effect without the consent of the Buyer and the Administrative Agent. Except as otherwise permitted in its capacity as Servicer pursuant to the Credit and Security Agreement, such Transferor will not extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy.
(d)Sales, Liens. Each Transferor and Smithfield Support will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including the filing of any financing statement) or with respect to, any Receivable (other than any Excluded Receivable), Related Security or Collections, or upon or with respect to any Contract under which any such Receivable arises, or any Lock-Box or Collection Account, or assign any right to receive income with respect thereto (other than, in each case, (i) the creation of the ownership interests therein in favor of Buyer provided for herein, (ii) the creation of the security interest therein in favor of the Administrative Agent as provided for in the Transaction Documents or, (iii) with respect to the Monetized Receivables and Related Monetized Assets, the creation of the ownership interests therein in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents), and each Transferor and Smithfield Support will defend the right, title and interest of Buyer in, to and under any of the foregoing property, against all claims of third parties claiming through or under such Transferor or Smithfield Support, as applicable.
(e)Accounting for Purchase. Such Transferor will not, and will not permit any Affiliate to, financially account (whether in financial statements or otherwise) for the transactions contemplated hereby in any manner other than the sale or other outright conveyance by such Transferor to Buyer of the Receivables originated by such Transferor and the associated Related Security or in any other respect account for or treat the transactions contemplated hereby in any manner other than as a sale of such Receivables and Related Security by such Transferor to Buyer except to the extent that such transactions are not recognized on account of consolidated financial reporting in accordance with GAAP.
(f)ERISA Compliance. Each of Smithfield and such Transferor will not, and will not permit any Subsidiary of Smithfield and such Transferor to, fail to satisfy the minimum funding standard under Section 412 of the Tax Code or Section 302 of ERISA, whether or not waived, or incur any liability under Section 4062 of ERISA to PBGC established thereunder in connection with any Plan except as would not have a Material Adverse Effect.
(g)Merger; Consolidation. Subject to the limitations of Section 7.1(i) of the Credit and Security Agreement, no Transferor will, nor will it permit any of its Non-Excluded Subsidiaries to, merge into, amalgamate with or consolidate with any other Person, or permit any other Person to merge into, amalgamate with or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of its assets, or all or substantially all of the stock of any of its Non-Excluded Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no Termination Event shall have occurred and be continuing:
(i)any Subsidiary (other than the Buyer) may merge, consolidate or amalgamate with Smithfield in a transaction in which Smithfield is the surviving entity pursuant to documentation reasonably satisfactory to the Administrative Agent;
(ii)any Transferor (other than Smithfield) and any other Person may merge into or amalgamate or consolidate with any Transferor in a transaction in which a
Transferor is the surviving corporation, or, concurrently with the consummation of such transaction, the surviving entity becomes a Transferor;
(iii)any entity (other than Smithfield or the Buyer) may merge into or amalgamate with any other entity (other than Smithfield or the Buyer);
(iv)any Non-Excluded Subsidiary may sell, transfer, lease or otherwise dispose of its assets, including all or substantially all of the stock of any of its Non-Excluded Subsidiaries, to Smithfield or another Non-Excluded Subsidiary;
(v)any Non-Excluded Subsidiary may liquidate or dissolve if Smithfield determines in good faith that such liquidation or dissolution is in the best interests of Smithfield and is not materially disadvantageous to the Lenders; and
(vi)any Transferor or any Non-Excluded Subsidiary may sell, transfer, lease or otherwise dispose of (including pursuant to any merger, amalgamation or consolidation) its assets (including for the avoidance of doubt any Excluded Receivable and all or substantially all of the stock of any of its Non-Excluded Subsidiaries) in any manner expressly permitted by any Transaction Document or if permitted under Section 7.06 or Section 7.07 of the Parent Credit Agreement.
(h)Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws. Such Transferor covenants and agrees that:
(i)it and its Subsidiaries will not: (A) take any action that could reasonably be expected to result in it becoming a Sanctioned Person or allow any employees, officers, directors, affiliates or agents acting on its behalf in connection with this Agreement to become a Sanctioned Person; (B) directly, or indirectly through a third party, engage in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, including any use of the proceeds of the Purchase Price to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws; (C) pay or repay any Obligations with Embargoed Property or funds derived from any unlawful activity; (D) permit any Collateral to become Embargoed Property; or (E) cause any Agent, Conduit or Committed Lender to violate any Anti-Terrorism Law; and
(ii)it will not, and will not permit any its Subsidiaries to, directly or indirectly, use the Purchase Price or any proceeds thereof for any purpose which would breach any Anti-Corruption Laws in any jurisdiction in which any Covered Entity conducts business.
ARTICLE V
TERMINATION EVENTS
Section 5.1Termination Events. The occurrence of any one or more of the following events shall constitute a Termination Event:
(a)Any Transferor or Smithfield Support shall fail to make any payment required hereunder when due and such failure shall continue for two (2) consecutive Business Days.
(b)Any Transferor or Smithfield Support shall fail to observe or perform any covenant or agreement contained in Section 4.1(b)(iv) or 4.2.
(c)Any Transferor or Smithfield Support shall fail to observe or perform any covenant or agreement contained in this Agreement (other than those referred to in Sections 5.1(a) and (b)), and such failure shall remain unremedied for fifteen (15) days after the earlier of (i) an Executive Officer of any of the Transferors and Smithfield Support obtaining knowledge thereof, or (ii) written notice thereof shall have been given to any of the Transferors and Smithfield Support by Buyer.
(d)Any representation, warranty, certification or statement made by any Transferor or Smithfield Support in this Agreement, any other Transaction Document or in any other document delivered pursuant hereto or thereto shall prove to have been incorrect in any material respect when made or deemed made; provided that the materiality threshold in the preceding clause shall not be applicable with respect to any representation or warranty which itself contains a materiality threshold and provided, further, that any misrepresentation or certification for which Buyer has actually received a Purchase Price Credit shall not constitute a Termination Event hereunder.
(e)Any of the Transferors, Smithfield Support or any of the Non-Excluded Subsidiaries shall become unable, admit in writing its inability or fail generally to pay its Debts as they become due.
(f)An Event of Bankruptcy shall occur with respect to Smithfield, SFFC, Smithfield Support or any Originator.
(g)A Change of Control shall occur.
(h)(i) An ERISA Event shall have occurred or (ii) such other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) and (ii) such event or condition, when taken together with all other such events or conditions, if any, that have occurred, is reasonably likely to result in a Material Adverse Effect;
(i)One or more judgments for the payment of money in an aggregate amount in excess of $150,000,000 (to the extent not adequately covered by insurance as to which the insurer has not denied or contested coverage) shall be rendered against Smithfield, any
Subsidiary of Smithfield (other than any Excluded Subsidiary), any Originator, any Subsidiary of an Originator (other than any Excluded Subsidiary) or any combination thereof and the same shall remain unpaid or undischarged for a period of 45 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of Smithfield, any Subsidiary of Smithfield, any Originator or any Subsidiary of any Originator (other than any Excluded Subsidiary) to enforce any such judgment, or Smithfield, any Subsidiary of Smithfield (other than any Excluded Subsidiary), any Originator or any Subsidiary of any Originator (other than any Excluded Subsidiary) shall fail within 45 days to discharge one or more non-monetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgments or orders, in any such case, are not stayed on appeal or otherwise being appropriately contested in good faith by proper proceedings diligently pursued.
(j)A Subordinated Lender shall fail to make any Subordinated Loan under the applicable subordinated loan agreement following the Buyer’s request therefor.
(k)Any Transaction Document ceases to be in full force and effect or the validity or enforceability thereof is disaffirmed by or on behalf of any Transferor or any Non-Excluded Subsidiary, or at any time it is or becomes unlawful for any Transferor or any Non-Excluded Subsidiary to perform or comply with its obligations under any Transaction Document, or the obligations of any of the Transferors or any Non-Excluded Subsidiary under any Transaction Document are not, or cease to be, legal, valid and binding on any of the Transferors or any Non-Excluded Subsidiary.
(l)A regulatory, tax or accounting body has ordered that the activities of any Originator or any Affiliate of such Originator contemplated hereby be terminated or, as a result of any other event or circumstance, the activities of such Originator or any Affiliate of such Originator contemplated hereby may reasonably be expected to cause such Originator or any of its respective Affiliates to suffer materially adverse regulatory, accounting or tax consequences.
(m)There shall occur any loss, termination, cancellation or other material impairment of any governmental license, certificate, or permit by any Transferor or any Non-Excluded Subsidiary which is reasonably likely to have a Material Adverse Effect.
Section 5.2Remedies. Upon the occurrence of a Termination Event, Buyer may take any of the following actions: (i) declare the applicable Termination Date to have occurred, whereupon the applicable Termination Date shall forthwith occur, without demand, protest or further notice of any kind, all of which are hereby expressly waived by each Transferor; provided, however, that upon the occurrence of a Termination Event described in Section 5.1(f) with respect to any Transferor, or of an actual or deemed entry of an order for relief with respect to any Transferor under the Bankruptcy Code, the applicable Termination Date shall automatically occur, without demand, protest or any notice of any kind, all of which are hereby expressly waived by each Transferor and (ii) to the fullest extent permitted by applicable law, declare that the Default Rate shall accrue with respect to any amounts then due and owing by such Transferor to Buyer. The aforementioned rights and remedies shall be without limitation and shall be in addition to all other rights and remedies of Buyer otherwise available
under any other provision of this Agreement, by operation of law, at equity or otherwise, all of which are hereby expressly preserved, including all rights and remedies provided under the UCC, all of which rights shall be cumulative.
ARTICLE VI
INDEMNIFICATION
Section 6.1Indemnities. Without limiting any other rights that Buyer may have hereunder or under applicable law, each Transferor and Smithfield Support hereby agrees to indemnify (and pay upon demand to) Buyer, and its officers, directors, agents and employees (each an “Indemnified Party”) from and against any and all damages, losses, claims, taxes, liabilities, costs, expenses and for all other amounts payable, including reasonable attorneys’ fees (which attorneys may be employees of Buyer) and disbursements and, to the extent such Transferor or Smithfield Support does not timely pay such indemnity, any additional liability (including penalties, interest and expenses) arising from or with respect to any of the foregoing (all of the foregoing being collectively referred to as “Indemnified Amounts”) awarded against or incurred by any of them arising out of or as a result of this Agreement or the acquisition, either directly or indirectly, by Buyer of an interest in the Receivables originated by such Transferor, provided, however, that the indemnification obligations of each Transferor and Smithfield Support hereunder shall expressly exclude:
(a)Indemnified Amounts to the extent a final judgment of a court of competent jurisdiction holds that such Indemnified Amounts resulted from gross negligence or willful misconduct on the part of the Indemnified Party seeking indemnification;
(b)Indemnified Amounts to the extent the same includes losses in respect of Receivables originated by such Transferor that are uncollectible on account of the insolvency, bankruptcy or lack of creditworthiness of the related Obligor or the intentional non-payment of amounts due by the related Obligor in breach of its obligations in respect of such Receivable; or
(c)taxes imposed on or measured by such Indemnified Party’s net income, and franchise taxes and branch profit taxes imposed on it, by the jurisdiction under the laws of which such Indemnified Party is organized or any political subdivision thereof, and taxes imposed on or measured by such Indemnified Party’s net income, and franchise taxes and branch profit taxes imposed on it, by the jurisdiction in which such Indemnified Party’s principal executive office is located or any political subdivision thereof;
provided, however, that nothing contained in this sentence shall limit the liability of such Transferor or Smithfield Support or limit the recourse of each Indemnified Party to such Transferor or Smithfield Support for amounts otherwise specifically provided to be paid by such Transferor under the terms of this Agreement. Without limiting the generality of the foregoing indemnification, but subject in each case to clauses (a), (b) and (c) above, each Transferor and
Smithfield Support, as applicable, shall indemnify each Indemnified Party for Indemnified Amounts relating to or resulting from:
(i)any representation or warranty made by such Transferor (or any officer of such Transferor) or Smithfield Support (or any officer of Smithfield Support) under or in connection with any Purchase Report, this Agreement, any other Transaction Document or any other information or report delivered by such Transferor or Smithfield Support pursuant hereto or thereto for which Buyer has not received a Purchase Price Credit that shall have been false or incorrect when made or deemed made;
(ii)the failure by such Transferor, to comply with any applicable law, rule or regulation with respect to any Receivable or Contract related thereto, or the nonconformity of any Receivable or Contract included therein with any such applicable law, rule or regulation or any failure of such Transferor to keep or perform any of its obligations, express or implied, with respect to any Contract;
(iii)any failure of such Transferor or Smithfield Support to perform its duties, covenants or other obligations in accordance with the provisions of this Agreement or any other Transaction Document;
(iv)any products liability, personal injury or damage, suit or other similar claim arising out of or in connection with merchandise, insurance or services that are the subject of any Contract or any Receivable;
(v)any dispute, claim, offset or defense (other than a defense related to the financial condition, or discharge in bankruptcy, of the Obligor) of the Obligor to the payment of any Receivable (including a defense based on such Receivable or the related Contract not being a legal, valid and binding obligation of such Obligor enforceable against it in accordance with its terms), or any other claim resulting from the sale of the merchandise or service related to such Receivable or the furnishing or failure to furnish such merchandise or services or any reduction of the Outstanding Balance of any Receivable due to PASA;
(vi)the commingling of Collections of Receivables at any time with other funds;
(vii)any investigation, litigation or proceeding related to or arising from this Agreement or any other Transaction Document, the transactions contemplated hereby, such Transferor’s use of the proceeds of the purchase from it hereunder, the ownership of the Receivables originated by such Transferor or any other investigation, litigation or proceeding relating to such Transferor or Smithfield Support in which any
Indemnified Party becomes involved as a result of any of the transactions contemplated hereby;
(viii)any inability to litigate any claim against any Obligor in respect of any Receivable as a result of such Obligor being immune from civil and commercial law and suit on the grounds of sovereignty or otherwise from any legal action, suit or proceeding;
(ix)any Termination Event;
(x)any failure to vest and maintain vested in Buyer, or to transfer to Buyer, legal and equitable title to, and ownership of, the Receivables originated by such Transferor and the associated Collections, and all of such Transferor’s right, title and interest in the Related Security associated with such Receivables, in each case, free and clear of any Adverse Claim (except any Adverse Claim in favor of the Buyer, the Administrative Agent, for the benefit of the Secured Parties or, with respect to the Monetized Receivables and Related Monetized Assets, in favor of the Receivables Agent for the benefit of the Receivables Buyers pursuant to the Monetization Documents);
(xi)the failure to have filed, or any delay in filing, financing statements, continuation statement, financing change statement or other similar instruments or documents under the UCC or comparable laws of any applicable jurisdiction or other applicable laws with respect to any Receivable originated by such Transferor, the Related Security and Collections with respect thereto, and the proceeds thereof, whether at the time of the purchase thereof from such Transferor hereunder or at any subsequent time;
(xii)any action or omission by such Transferor which reduces or impairs the rights of Buyer with respect to any Receivable or the value of any such Receivable;
(xiii)any attempt by any Person to void any purchase of Receivables from such Transferor hereunder under statutory provisions or common law or equitable action;
(xiv)any civil penalty or fine assessed by OFAC against, and all reasonable costs and expenses (including counsel fees and disbursements) incurred in connection with defense thereof by the Buyer as a result of any action of such Transferor;
(xv)the failure of any Receivable reflected as an Eligible Receivable on any Purchase Report prepared by such Transferor to be an Eligible Receivable at the time acquired by Buyer;
(xvi)any In-Transit Receivable included in the calculation of the Net Pool Balance as an Eligible Receivable ceasing to be deemed to be an Eligible Receivable; and
(xvii)any liability under Section 10.2(b) of the Credit and Security Agreement, or any breach of Sections 5.1(z)(ii) or 7.2(l) of the Credit and Security Agreement;
provided, further, that the foregoing clauses (ii), (iv), (v), (viii), (x), (xi), (xii), (xiii), (xv) and (xvi) shall not be applicable to Smithfield Support.
Notwithstanding the foregoing, (i) the foregoing indemnification is not intended to, and shall not, constitute a guarantee of the collectability or payment of the Receivables conveyed hereunder; and (ii) nothing in the Section 6.1 shall require a Transferor or Smithfield Support to indemnify any Indemnified Party for Receivables which are not collected, not paid or otherwise uncollectible on account of the insolvency, bankruptcy, creditworthiness or financial inability to pay of the applicable Obligor or the intentional non-payment of amounts due by the related Obligor in breach of its obligations in respect of such Receivable.
Section 6.2Other Costs and Expenses. Each Transferor shall pay to Buyer on demand all costs and out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder. Each Transferor shall pay to Buyer on demand any and all costs and expenses of Buyer, if any, including reasonable counsel fees and expenses actually incurred in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following a Termination Event.
ARTICLE VII
MISCELLANEOUS
Section 7.1Waivers and Amendments.
(a)No failure or delay on the part of Buyer in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other further exercise thereof or the exercise of any other power, right or remedy. The rights and remedies herein provided shall be cumulative and nonexclusive of any rights or remedies provided by law. Any waiver of this Agreement shall be effective only in the specific instance and for the specific purpose for which given.
(b)No provision of this Agreement may be amended, supplemented, modified or waived except in writing signed by each Transferor, Smithfield Support and Buyer and, to the extent required under the Credit and Security Agreement, the Administrative Agent and the Committed Lenders or the Required
Committed Lenders. Any material amendment, supplement, modification or waiver will require satisfaction of the Rating Agency Condition.
Section 7.2Notices. All communications and notices provided for hereunder shall be in writing (including bank wire, telecopy or electronic facsimile transmission or similar writing) and shall be given to the other parties hereto at their respective addresses or telecopy numbers set forth on the signature pages hereof or at such other address or telecopy number as such Person may hereafter specify for the purpose of notice to each of the other parties hereto. Each such notice or other communication shall be effective (a) if given by telecopy, upon the receipt thereof, (b) if given by mail, five (5) Business Days after the time such communication is deposited in the mail with first class postage prepaid or (c) if given by any other means, when received at the address specified in this Section 7.2.
Section 7.3Protection of Ownership Interests of Buyer.
(a)Each Transferor agrees that from time to time, at its expense, it will promptly execute and deliver all instruments and documents, and take all actions, that may be necessary or desirable, or that Buyer may request, to perfect, protect or more fully evidence the interest of Buyer hereunder and the interest of the Administrative Agent (on behalf of the Lenders) under the Credit and Security Agreement, or to enable Buyer to exercise and enforce their rights and remedies hereunder. At any time, Buyer may, at such Transferor’s sole cost and expense, direct such Transferor to notify the Obligors of Receivables of the ownership interests of Buyer under this Agreement and may also direct that payments of all amounts due or that become due under any or all Receivables be made directly to Buyer or its designee.
(b)If any Transferor fails to perform any of its obligations hereunder, Buyer may (but shall not be required to) perform, or cause performance of, such obligations, and Buyer’s costs and expenses incurred in connection therewith shall be payable by such Transferor as provided in Section 6.2. Each Transferor irrevocably authorizes Buyer at any time and from time to time in the sole discretion of Buyer, and appoints Buyer as its attorney(ies)-in-fact, to act on behalf of such Transferor (i) to execute on behalf of such Transferor as debtor and to file financing statements or other applicable recording documents necessary or desirable in Buyer’s sole discretion to perfect and to maintain the perfection and priority of the interest of Buyer in the Receivables originated by such Transferor and the associated Related Security and Collections and (ii) to file a carbon, photographic or other reproduction of this Agreement or any financing statement or other applicable recording document with respect to the Receivables as a financing statement or as otherwise applicable in such offices as Buyer in their sole discretion deem necessary or desirable to perfect and to maintain the perfection and priority of Buyer’s interest in such Receivables. This appointment is coupled with an interest and is irrevocable. If any Transferor fails to perform any of its obligations hereunder: (A) such Transferor hereby authorizes Buyer to
file financing statements and other filing or recording documents with respect to the Receivables and Related Security (including any amendments thereto, or continuation or termination statements thereof), without the signature or other authorization of such Transferor, in such form and in such offices as Buyer reasonably determines appropriate to perfect or maintain the perfection of the ownership or security interests of Buyer hereunder, (B) such Transferor acknowledges and agrees that it is not authorized to, and will not, file financing statements or other filing or recording documents with respect to the Receivables or Related Security (including any amendments thereto, or continuation or termination statements thereof), without the express prior written approval by the Administrative Agent, consenting to the form and substance of such filing or recording document, and (C) such Transferor approves, authorizes and ratifies any filings or recordings made by or on behalf of the Administrative Agent in connection with the perfection of the ownership or security interests in favor of Buyer or the Administrative Agent, respectively.
Section 7.4Confidentiality.
(a)Each Transferor and Buyer shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Fee Letter and the other confidential or proprietary information with respect to the Administrative Agent and the Lenders and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that such Transferor and its officers and employees may disclose such information to such Transferor’s external accountants, attorneys and other advisors and as required by any applicable law or order of any judicial or administrative proceeding.
(b)Each Transferor hereby consents to the disclosure of any nonpublic information with respect to it (i) to Buyer, any Agent or the Lenders by each other, (ii) to any prospective or actual assignee or participant of any of the Persons described in clause (i), and (iii) to any rating agency, Commercial Paper dealer or provider of a surety, guaranty or credit or liquidity enhancement to a Lender or any entity organized for the purpose of purchasing, or making loans secured by, financial assets for which any Co-Agent or one of its Affiliates acts as the administrative agent and to any officers, directors, employees, outside accountants and attorneys of any of the foregoing; provided each such Person described in the foregoing clauses (ii) and (iii) is informed of the confidential nature of such information. In addition, the Lenders and the Administrative Agent may disclose any such nonpublic information pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law).
Section 7.5Bankruptcy Petition.
(a)Each Transferor, Smithfield Support and Buyer each hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior indebtedness of a Lender, it will not institute against, or join any other Person in instituting against, such Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
(b)Each Transferor and Smithfield Support covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding obligations of Buyer under the Credit and Security Agreement, it will not institute against, or join any other Person in instituting against, Buyer any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
Section 7.6Limitation of Liability. Except with respect to any claim arising out of the willful misconduct or gross negligence of any Transferor, Buyer, any Lender or any Agent, no claim may be made by any such Person (or its Affiliates, directors, officers, employees, attorneys or agents) against any such other Person (or its Affiliates, directors, officers, employees, attorneys or agents) for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, or any act, omission or event occurring in connection therewith; and each of the parties hereto, on behalf of itself and its Affiliates, directors, officers, employees, attorneys, agents, successors and assigns, hereby waives, releases, and agrees not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.
Section 7.7CHOICE OF LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (EXCEPT IN THE CASE OF THE OTHER TRANSACTION DOCUMENTS, TO THE EXTENT OTHERWISE EXPRESSLY STATED THEREIN) AND EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE OWNERSHIP INTEREST OF ANY TRANSFEROR OR THE BUYER, IN ANY OF THE COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 7.8CONSENT TO JURISDICTION. EACH TRANSFEROR AND SMITHFIELD SUPPORT HEREBY IRREVOCABLY SUBMITS TO THE NON EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ANY TRANSFEROR OR SMITHFIELD SUPPORT PURSUANT TO THIS AGREEMENT AND EACH TRANSFEROR AND SMITHFIELD SUPPORT HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF BUYER TO BRING PROCEEDINGS AGAINST ANY TRANSFEROR OR SMITHFIELD SUPPORT IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY TRANSFEROR OR SMITHFIELD SUPPORT AGAINST BUYER OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY ANY TRANSFEROR OR SMITHFIELD SUPPORT PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN THE STATE OF NEW YORK.
Section 7.9WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY TRANSFEROR OR SMITHFIELD SUPPORT PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
Section 7.10Integration; Binding Effect; Survival of Terms.
(a)This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings.
(b)This Agreement shall be binding upon and inure to the benefit of the Transferors, Smithfield Support, Buyer and their respective successors and permitted assigns (including any trustee in bankruptcy).
(c)None of the Transferors nor Smithfield Support may assign any of its rights and obligations hereunder or any interest herein without the prior written consent of Buyer. Buyer may assign at any time its rights and obligations hereunder and interests herein to any other Person without the consent of any Transferor or Smithfield Support. Without limiting the foregoing, each Transferor and Smithfield Support acknowledges that Buyer, pursuant to the Credit and Security Agreement, may assign to the Administrative Agent, for the benefit of the Lenders, its rights, remedies, powers and privileges hereunder and that the Administrative Agent may further assign such rights, remedies, powers and privileges to the extent permitted in the Credit and Security Agreement. Each Transferor and Smithfield Support agrees that the Administrative Agent shall, subject to the terms of the Credit and Security Agreement, have the right to enforce this Agreement and to exercise directly all of Buyer’s rights and remedies under this Agreement (including the right to give or withhold any consents or
approvals of Buyer to be given or withheld hereunder) and each Transferor and Smithfield Support agrees to cooperate fully with the Administrative Agent in the exercise of such rights and remedies.
(d)This Agreement shall create and constitute the continuing obligations of the parties hereto in accordance with its terms and shall remain in full force and effect until terminated in accordance with its terms; provided, however, that the rights and remedies with respect to (i) any breach of any representation and warranty made by any Transferor pursuant to Article II; (ii) the indemnification and payment provisions of Article VI; and (iii) Section 7.5 shall be continuing and shall survive any termination of this Agreement.
Section 7.11Counterparts; Severability; Section References. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Unless otherwise expressly indicated, all references herein to “Article,” “Section,” “Schedule” or “Exhibit” shall mean articles and sections of, and schedules and exhibits to, this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.
| | | | | | | | | | | | | | |
| | | SMITHFIELD FOODS, INC. |
| | | | |
| | | By: | /s/Jenifer Byrd |
| | | Name: | Jenifer Byrd |
| | | Title: | Vice President and Corporate Treasurer |
| | | | |
| | | Address: | Smithfield Foods, Inc. |
| | | | 200 Commerce Street |
| | | | Smithfield, VA 23430 |
| | | | Attention: Jenifer Byrd |
| | | | and Mark Hall |
| | | | |
| | | | |
| | | SFFC, INC. |
| | | | |
| | | By: | /s/ Jeffrey A. Porter |
| | | Name: | Jeffrey A. Porter |
| | | Title: | President, Assistant Treasurer and Assistant Secretary |
| | | | |
| | | Address: | c/o Smithfield Foods, Inc. |
| | | | 200 Commerce Street |
| | | | Smithfield, VA 23430 |
| | | | Attention: Jenifer Byrd |
| | | | and Mark Hall |
5th A&R Receivables Sales Agreement (Smithfield)
| | | | | | | | | | | | | | |
| | | SMITHFIELD BIOSICENCE, INC. |
| | | as Originator |
| | | | |
| | | By: | /s/Scott Webster |
| | | Name: | Scott Webster |
| | | Title: | Managing Director |
| | | | |
| | | Address: | c/o Smithfield Foods, Inc. |
| | | | 200 Commerce Street |
| | | | Smithfield, VA 23430 |
| | | | Attention: Jenifer Byrd |
| | | | and Mark Hall |
| | | | |
| | | | |
| | | SMITHFIELD FRESH MEATS SALES CORP. |
| | | as Originator |
| | | | |
| | | By: | /s/ Jenifer Byrd |
| | | Name: | Jenifer Byrd |
| | | Title: | Vice President and Corporate Treasurer |
| | | | |
| | | Address: | c/o Smithfield Foods, Inc. |
| | | | 200 Commerce Street |
| | | | Smithfield, VA 23430 |
| | | | Attention: Jenifer Byrd |
| | | | and Mark Hall |
5th A&R Receivables Sales Agreement (Smithfield)
| | | | | | | | | | | | | | |
| | | SMITHFIELD FRESH MEATS CORP. |
| | | as Originator |
| | | | |
| | | By: | /s/ Jenifer Byrd |
| | | Name: | Jenifer Byrd |
| | | Title: | Vice President and Treasurer |
| | | | |
| | | Address: | c/o Smithfield Foods, Inc. |
| | | | 200 Commerce Street |
| | | | Smithfield, VA 23430 |
| | | | Attention: Jenifer Byrd |
| | | | and Mark Hall |
| | | | |
| | | | |
| | | SMITHFIELD DIRECT, LLC |
| | | as Originator |
| | | | |
| | | By: | /s/ Jenifer Byrd |
| | | Name: | Jenifer Byrd |
| | | Title: | Vice President and Treasurer |
| | | | |
| | | Address: | c/o Smithfield Foods, Inc. |
| | | | 200 Commerce Street |
| | | | Smithfield, VA 23430 |
| | | | Attention: Jenifer Byrd |
| | | | and Mark Hall |
5th A&R Receivables Sales Agreement (Smithfield)
| | | | | | | | | | | | | | |
| | | SMITHFIELD PACKAGED MEATS SALES CORP. |
| | | as Originator |
| | | | |
| | | By: | /s/ Jenifer Byrd |
| | | Name: | Jenifer Byrd |
| | | Title: | Vice President and Treasurer |
| | | | |
| | | Address: | c/o Smithfield Foods, Inc. |
| | | | 200 Commerce Street |
| | | | Smithfield, VA 23430 |
| | | | Attention: Jenifer Byrd |
| | | | and Mark Hall |
| | | | |
| | | | |
| | | SMITHFIELD RECEIVABLES FUNDING LLC |
| | | as Buyer |
| | | | |
| | | By: SFFC, Inc., its managing member |
| | | | |
| | | By: | /s/ Jeffrey A. Porter |
| | | Name: | Jeffrey A. Porter |
| | | Title: | President, Assistant Treasurer and Assistant Secretary |
| | | | |
| | | Address: | 3411 Silverside Rd, 103 Baynard Bldg |
| | | | Wilmington, DE 19810 |
| | | | Attention: Jeffrey A. Porter |
| | | | |
| | | | With a copy to: |
| | | | |
| | | | c/o Smithfield Foods, Inc. |
| | | | 200 Commerce Street |
| | | | Smithfield, VA 23430 |
| | | | Attention: Jenifer Byrd |
5th A&R Receivables Sales Agreement (Smithfield)
| | | | | | | | | | | | | | |
| | | SMITHFIELD SUPPORT SERVICES CORP. |
| | | | |
| | | By: | /s/ Jenifer Byrd |
| | | Name: | Jenifer Byrd |
| | | Title: | Vice President and Treasurer |
| | | | |
| | | Address: | c/o Smithfield Foods, Inc. |
| | | | 200 Commerce Street |
| | | | Smithfield, VA 23430 |
| | | | Attention: Jenifer Byrd |
| | | | and Mark Hall |
5th A&R Receivables Sales Agreement (Smithfield)
Exhibit I
Definitions
This is Exhibit I to the Agreement (as hereinafter defined).
(a) Capitalized terms used and not otherwise defined in the Agreement or this Exhibit have the meanings attributed thereto in the Credit and Security Agreement.
(b) As used in the Agreement and the Exhibits and Schedules thereto, capitalized terms have the meanings set forth in this Exhibit I (such meanings to be equally applicable to the singular and plural forms thereof).
(c) Any references in the Agreement or this Exhibit I to any Person includes such Persons successors and permitted assigns.
(d) The words “hereof,” “herein” and “hereunder” and words of similar import refer to this Agreement.
(e) The term “including” means “including without limitation”.
(f) References to any agreement refer to that agreement as from time to time amended or restated.
“Administrative Agent” has the meaning provided in the Preliminary Statements to the Agreement.
“Adverse Claim” means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement).
“Affiliates” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person or any Subsidiary of such Person. A Person shall be deemed to control another Person (a) if the controlling Person owns 10-50% of any class of voting securities of the controlled Person only if it also possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise, or (b) if the controlling Person owns more than 50% of any class of voting securities of the controlled Person.
“Aggregate Initial Contributed Assets” means, collectively, the Initial Contributed Assets of all US Originators.
“Agreement” means the Fifth Amended and Restated Receivables Sale Agreement, dated as of December 22, 2022, among Smithfield, Originators and Buyer, as the
same may be amended, restated and/or otherwise modified from time to time in accordance with the terms thereof.
“Anti-Corruption Laws” has the meaning provided in the Credit and Security Agreement.
“Anti-Terrorism Law” has the meaning provided in the Credit and Security Agreement.
“Business Day” means any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed, or are in fact closed, for business in Pittsburgh, Pennsylvania (or, if otherwise, the Lending Office of the Administrative Agent); provided that, when used in connection with an amount that bears interest at a rate based on SOFR or any direct or indirect calculation or determination of SOFR, the term “Business Day” means any such day that is also a U.S. Government Securities Business Day.
“Buyer” has the meaning provided in the preamble to the Agreement.
“Calculation Period” means, with respect to any Originator, each fiscal calendar month of such Originator or portion thereof which elapses during the term of the Agreement. The first Calculation Period shall commence on the applicable Commencement Date and the final Calculation Period shall terminate on the applicable Termination Date.
“Capitalized Lease” means any lease the obligation for rentals with respect to which is required to be capitalized on a balance sheet of the lessee in accordance with GAAP.
“Change of Control” means 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), directly or indirectly, of more than 50% of Smithfield’s Voting Stock (or its successor by merger, consolidation or purchase of all or substantially all of its assets).
“Collection Account” has the meaning provided in the Credit and Security Agreement.
“Collection Account Agreement” has the meaning provided in the Credit and Security Agreement.
“Collection Bank” has the meaning provided in the Credit and Security Agreement.
“Collections” means, with respect to any Receivable, all cash collections and other cash proceeds in respect of such Receivable, including all Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Security with respect to such Receivable; provided, however, that the term “Collections” shall not include any payment made for the account of the Servicer, a third-party service provider or sub-contractor whose services were not included in the amount invoiced for the applicable Receivable.
“Commencement Date” means, (i) with respect to the US Originators, June 21, 2011, being the date set forth in the notice from Buyer to the US Originators, Smithfield and SFFC, with a copy to the Administrative Agent, dated June 15, 2011 and stating that Buyer is prepared to accept the contribution of the Initial Contributed Assets on such date, (ii) with respect to Fresh Sales, April 28, 2014, (iii) with respect to Smithfield Support, October 30, 2017, (iv) with respect to Packaged Sales and Fresh Meats, January 1, 2018, and (vi) with respect to Smithfield Bioscience, April 1, 2019.
“Commercial Paper” means promissory notes issued by a Conduit in the commercial paper market.
“Contract” means, with respect to any Receivable, any and all instruments, agreements, invoices or other writings pursuant to which such Receivable arises or which evidences such Receivable.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies, or the dismissal or appointment of the management, of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.
“Controlled Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
“Covered Entity” has the meaning provided in the Credit and Security Agreement.
“Credit and Collection Policy” means the credit and collection policies and practices relating to Contracts and Receivables existing on the date hereof and summarized in Exhibit V, as modified from time to time in accordance with the Agreement.
“Credit and Security Agreement” has the meaning provided in the Preliminary Statements to the Agreement.
“Debt” means, with respect to any Person at any date, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (iv) all obligations of such Person as lessee under Capitalized Leases, (v) all obligations of such Person to purchase securities (or other property) which arise out of or in connection with the sale of the same or substantially similar securities or property, (vi) all obligations of such Person to reimburse any bank or other person in respect of amounts paid under a letter of credit or similar instrument, (vii) all Debt of others secured by a lien on any asset of such Person to the extent of the fair market value of such asset, whether or not such Debt is assumed by such Person, (viii) all Synthetic Lease Liabilities of such Person, and (ix) all Debt of others guaranteed by such Person to the extent such Debt represents a liability of such Person;
provided that liabilities resulting from the recognition of other post-retirement benefits required by Financial Accounting Standard No. 106 shall not constitute “Debt.”
“Discount Factor” means a percentage calculated to provide Buyer with a reasonable return on its investment in the Receivables purchased from each Originator after taking account of (i) the time value of money based upon the anticipated dates of collection of such Receivables and the cost to Buyer of financing its investment in such Receivables during such period, (ii) the risk of nonpayment by the Obligors, (iii) servicing costs, and (iv) factoring expenses. Each Originator and Buyer may agree from time to time to change the Discount Factor based on changes in one or more of the items affecting the calculation thereof; provided that any change to the Discount Factor shall take effect as of the commencement of a Calculation Period, shall apply only prospectively and shall not affect the Purchase Price payment made prior to the Calculation Period during which such Originator and Buyer agree to make such change.
“Effective Date” has the meaning provided in Section 1.8.
“Embargoed Property” has the meaning provided in the Credit and Security Agreement.
“Equity Interests” means, with respect to any Person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or non-voting), of capital of such Person, including, if such Person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership, whether outstanding on the date hereof or issued after the date of this Agreement.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with any Originator or Smithfield, is treated as a single employer under Section 414(b) or (c) of the Tax Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Tax Code, is treated as a single employer under Section 414(m) of the Tax Code.
“Estimated Sales Report” has the meaning provided in Section 1.2(b).
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Excluded Originator” has the meaning provided in Section 1.8.
“Excluded Receivable” shall mean, with respect to any Excluded Originator, any Receivable originated by such Excluded Originator on or after the related Effective Date.
“Excluded Subsidiary” has the meaning provided in the Parent Credit Agreement.
“Executive Officer” shall mean with respect to any Person, the Chief Executive Officer, President, Vice Presidents (if elected by the Board of Directors of such Person), Chief Financial Officer, Treasurer, Secretary and any Person holding comparable offices or duties (if elected by the Board of Directors of such Person).
“Finance Charges” means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Obligor pursuant to such Contract.
“Financial Officer” means with respect to Smithfield, any of the Chief Financial Officer, Vice President of Finance, and Treasurer.
“FX Collection Account” has the meaning provided in the Credit and Security Agreement.
“Governmental Authority” has the meaning provided in the Credit and Security Agreement.
“Indemnified Amounts” has the meaning provided in Section 6.1.
“Indemnified Party” has the meaning provided in Section 6.1.
“Initial Contributed Assets” means, in respect of each US Originator, that portion of the Initial Transferred Assets of such US Originator that has an aggregate Outstanding Balance as of 11:59 pm on the Business Day immediately preceding the applicable Commencement Date equal to the amount designated in the Transfer Notice as the amount of Initial Contributed Assets for such US Originator, which portion of the Initial Transferred Assets shall be identified more particularly on the first Settlement Date following such Commencement Date in accordance with Section 1.1(d).
“Initial Purchased Assets” means, in respect of each Originator, that portion of the Initial Transferred Assets of such Originator that has an aggregate Outstanding Balance as of 11:59 pm on the Business Day immediately preceding the Commencement Date equal to the amount designated in the Transfer Notice, as the amount of Initial Purchased Assets for such Originator, which portion of the Initial Transferred Assets shall be identified more particularly on the first Settlement Date following such Commencement Date in accordance with Section 1.1(d).
“Initial Transferred Assets” means, in respect of each Originator, all of the Receivables and the associated Related Security and Collections owned by such Originator as of 11:59 pm on the Business Day immediately preceding the applicable Commencement Date and to be transferred to Buyer by way of contribution or sale, as applicable, on such Commencement Date.
“Letter of Credit Issuer” has the meaning provided in the Preliminary Statements.
“Lock-Box” has the meaning provided in the Credit and Security Agreement.
“Material Adverse Effect” means (i) any material adverse effect on the business, operations, financial condition or assets of Smithfield and its Non-Excluded Subsidiaries, taken as a whole, (ii) any material adverse effect on the ability of any Transferor to perform its obligations under the Transaction Documents to which it is a party, (iii) any material adverse effect on the legality, validity or enforceability of the Agreement or any other Transaction Document, (iv) any material adverse effect on any Transferor’s, Buyer’s, the Administrative Agent’s or any Lender’s interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto, or (v) any material adverse effect on the collectability of the Receivables generally or of any material portion of the Receivables.
“Monetization Documents” has the meaning provided in the Credit and Security Agreement.
“Monetized Receivables” has the meaning provided in the Credit and Security Agreement.
“Monetized Receivables Collections” has the meaning provided in the Credit and Security Agreement.
“Monthly Reporting Date” has the meaning provided in the Credit and Security Agreement.
“Net Worth” means as of the last Business Day of each Calculation Period preceding any date of determination, the excess, if any, of (a) the aggregate Outstanding Balance of the Receivables at such time plus cash-on-hand, over (b) the sum of (i) the Aggregate Principal outstanding at such time, plus (ii) the aggregate outstanding principal balance of the Subordinated Loans (including any Subordinated Loan proposed to be made on the date of determination).
“Non-Excluded Subsidiary” means a Subsidiary that is not an Excluded Subsidiary.
“Obligor” means a Person that is or becomes obligated to make payments pursuant to a Contract.
“Organizational Documents” means, for any Person, the documents for its formation and organization, which, for example, (a) for a corporation are its corporate charter or articles of incorporation, as applicable, and bylaws, (b) for a partnership are its certificate of partnership (if applicable) and partnership agreement, (c) for a limited liability company are its certificate of formation or organization and its operating agreement, regulations or the like and (d) for a trust is the trust agreement, declaration of trust, indenture or bylaws under which it is created.
“Original Agreement” has the meaning provided in the recitals to this Agreement.
“Originator” has the meaning provided in the preamble to this Agreement.
“Outstanding Balance” of any Receivable at any time means the then outstanding principal balance thereof or, in the case of any Receivable described in clause (ii) of the definition of “Receivable” herein, the principal amount to become due and payable under the relevant Contract in respect of the relevant In-Transit Collateral.
“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.
“Permitted Holders” means WH Group or any of its Controlled Affiliates and any “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing are members; provided that, in the case of such group and without giving effect to the existence of such group or any other group, such Persons, collectively, have direct or indirect beneficial ownership of more than 50% of the Voting Stock of Smithfield.
“Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
“PNC” means PNC Bank, National Association.
“Post-Closing Date” has the meaning provided in the Credit and Security Agreement.
“Prime Rate” means a rate per annum equal to the prime rate of interest announced from time to time by PNC (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes.
“Purchase Date” means any date on or after the applicable Commencement Date on which the Buyer purchases Receivables and associated Related Security and related Collections (other than the Initial Purchased Assets) pursuant to Section 1.2.
“Purchase Price” has the meaning provided in Section 1.3(a).
“Purchase Price Credit” has the meaning provided in Section 1.4.
“Purchase Report” has the meaning provided in Section 1.2(d).
“Rabobank” means Coöperatieve Rabobank U.A., New York Branch.
“Receivable” means (i) all indebtedness and other obligations owed to an Originator (at the times it arises, and before giving effect to any transfer or conveyance under this Agreement) (including any indebtedness, obligation or interest constituting an account, chattel paper, instrument or general intangible) arising in connection with the sale of goods or the rendering of services by such Originator and further includes the obligation to pay any Finance
Charges with respect thereto and (ii) all rights of an Originator under a Contract to collect or receive amounts that become due and payable under such Contract upon the delivery and acceptance of In-Transit Collateral pursuant to such Contract; provided, however, that the term “Receivable” shall exclude any indebtedness or other obligations owed or that become payable to an Originator by an Affiliate that is 100% owned, directly or indirectly, by an Originator or the Buyer; provided, further, that the term “Receivable” shall also exclude any Receivable owing to an Originator from Rotary Vortex Limited or WHG Trading Limited, each a limited company incorporated in Hong Kong. Indebtedness and other rights and obligations arising from any one transaction, including indebtedness and other rights and obligations represented by an individual invoice, shall constitute a Receivable separate from a Receivable consisting of the indebtedness and other rights and obligations arising from any other transaction; provided, further, that any indebtedness, rights or obligations referred to in the immediately preceding sentence shall be a Receivable regardless of whether the account debtor or such Originator treats such indebtedness, rights or obligations as a separate payment obligation.
“Receivables Agent” has the meaning provided in the Credit and Security Agreement.
“Receivables Buyers” has the meaning provided in the Credit and Security Agreement.
“Records” means, with respect to any Receivable, all Contracts and other documents, books, records and other information (including computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such Receivable, any Related Security therefor and the related Obligor.
“Related Monetized Assets” has the meaning provided in the Credit and Security Agreement.
“Related Security” means, with respect to any Receivable:
(i) (a) in the case of an In-Transit Receivable, a security interest in the applicable Originator’s In-Transit Collateral relating thereto or (b) in the case of a Receivable other than an In-Transit Receivable, all of the applicable Originator’s interest in the inventory and goods (including returned or repossessed inventory or goods), if any, the sale, financing or lease of which by such Originator gave rise to such Receivable, and, in either case, all insurance contracts with respect thereto,
(ii) all other security interests or liens and property subject thereto from time to time, if any, purporting to secure payment of such Receivable, whether pursuant to the Contract related to such Receivable or otherwise, together with all financing statements and security agreements describing any collateral securing such Receivable,
(iii) all guaranties, letters of credit, insurance and other agreements or arrangements of whatever character from time to time supporting or securing payment of
such Receivable whether pursuant to the Contract related to such Receivable or otherwise,
(iv) all service contracts and other contracts and agreements associated with such Receivable,
(v) all Records related to such Receivable,
(vi) all of the applicable Originator’s and Smithfield Support’s, to the extent applicable, right, title and interest in each Lock-Box and each Collection Account (other than any FX Collection Account), and
(vii) all proceeds of any of the foregoing.
“Required Capital Amount” means, as of any date of determination, an amount equal to the greater of (a) 3% of the Aggregate Commitment under the Credit and Security Agreement, and (b) the product of (i) 1.5 times the product of the Default Ratio times the Default Horizon Ratio, each as determined from the most recent Monthly Report received from Smithfield under the Credit and Security Agreement, and (ii) the Outstanding Balance of all Receivables as of such date, as determined from the most recent Monthly Report received from Smithfield in its capacity as Servicer.
“Restructuring Transactions” has the meaning provided in Section 1.9.
“Review” has the meaning provided in Section 4.1(d).
“Sanctioned Person” has the meaning provided in the Credit and Security Agreement.
“Sanctioned Jurisdiction” has the meaning provided in the Credit and Security Agreement.
“SEC” means the Securities and Exchange Commission or any Governmental Authority succeeding to any of its principal functions.
“Secured Parties” has the meaning provided in the Credit and Security Agreement.
“Senior Notes” has the meaning provided in the Parent Credit Agreement.
“Senior Notes Documents” means any agreement or instrument governing or evidencing any of the Senior Notes.
“Servicer” means at any time the Person (which may be the Administrative Agent) then authorized pursuant to the Credit and Security Agreement to service administer and collect Receivables.
“Settlement Date” means, with respect to each Calculation Period, the eighteenth (18th) Business Day immediately following the end of such Calculation Period.
“SFFC” has the meaning provided in the preamble to this Agreement.
“Smithfield” has the meaning provided in the preamble to this Agreement.
“Smithfield Bioscience” means Smithfield Bioscience, Inc., an Ohio corporation.
“Smithfield Support” means Smithfield Support Services Corp., a Delaware corporation.
“Subordinated Lender” means, with respect to any Subordinated Loan, the related Originator.
“Subordinated Loan” has the meaning provided in Section 1.3(b)(iii).
“Subordinated Note” means, with respect to any Subordinated Loan, the related promissory note in substantially the form of Exhibit VI hereto as more fully described in Section 1.3, pertaining to such Subordinated Loan, as the same may be amended, restated, supplemented or otherwise modified from time to time, and shall include any Subordinated Note issued hereunder.
“Subordinated Note Limit” means, as to any Originator and with respect to the Settlement Date for any Calculation Period, an amount equal to the product of (x) a percentage (in no event in excess of 25%) equal to (i) 0.1 divided by (ii) the percentage of the aggregate Outstanding Balance of Receivables sold by all Originators during such Calculation Period that were sold by such Originator, multiplied by (y) the aggregate Outstanding Balance of Receivables owned by Buyer as of the last day of such Calculation Period, multiplied by (z) the percentage of the aggregate Outstanding Balance of Receivables sold by all Originators during such Calculation Period that were sold by such Originator.
“Subsidiary” of a Person means (i) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (ii) any partnership, association, limited liability company, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.
“Synthetic Lease Liabilities” of a Person means any liability under any tax retention operating lease or so-called “synthetic” lease transaction, or any obligations arising with respect to any other similar transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the consolidated balance sheets of such Person and its Subsidiaries (other than leases which do not have an attributable interest component that are not Capitalized Leases).
“Tax Code” has the meaning provided in Section 2.1(x).
“Termination Date” means, as to each Originator, the earliest to occur of (i) the Business Day immediately prior to the occurrence of a Termination Event set forth in Section 5.1(f) with respect to such Originator, (ii) the Business Day specified in a written notice (with the prior written consent of the Administrative Agent) from Buyer to such Originator following the occurrence of any other Termination Event, and (iii) the date which is 10 Business Days after Buyer’s and Administrative Agent’s receipt of written notice from such Originator that the facility evidenced by this Agreement has been terminated in accordance with the Transaction Documents insofar as the facility relates to such Originator.
“Termination Event” has the meaning provided in Section 5.1.
“Transaction Documents” has the meaning provided in the Credit and Security Agreement.
“Transfer Notice” has the meaning provided in Section 1.1(a)(i).
“Transferor” means (a) as to the Initial Contributed Assets, each Originator, SFFC and Smithfield, and (b) as to all other Receivables, together with the associated Related Security and Collections, the applicable Originator.
“Unmatured Termination Event” means an event which, with the passage of time or the giving of notice, or both, would constitute a Termination Event.
“US Originator” means any Originator other than Fresh Sales, Packaged Sales, Fresh Meats and Smithfield Bioscience.
“Voting Stock” of an entity means all classes of Equity Interests 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.
“WH Group” means WH Group Ltd., an exempted company incorporated with limited liability status under the laws of Cayman Islands.
All accounting terms not specifically defined herein shall be construed in accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are used herein as defined in such Article 9 as the context requires.
Exhibit 10.7
EXECUTION VERSION
MASTER RECEIVABLES PURCHASE AGREEMENT
among
SMITHFIELD RECEIVABLES FUNDING LLC,
as Seller,
SMITHFIELD FOODS, INC.,
as Servicer,
THE BUYERS FROM TIME TO TIME PARTY HERETO,
and
PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent,
Dated as of December 22, 2022
TABLE OF CONTENTS
| | | | | | | | | | | |
| | | Page |
| | | |
1. | Sale and Purchase | 1 |
| | | |
| (a) | Sales of Receivables | 1 |
| (b) | Additional Funding of Purchase Price | 3 |
| (c) | Purchase Price Adjustments | 4 |
| (d) | UNCOMMITTED ARRANGEMENT | 4 |
| (e) | Conditions to Effectiveness | 4 |
| (f) | Conditions Precedent to Each Purchase | 4 |
| (g) | Payment of Funding Amounts | 5 |
| (h) | True Sale; No Recourse | 5 |
| (i) | Benchmark Replacement Setting | 5 |
| | | |
2. | Representations and Warranties | 9 |
| | | |
3. | Covenants | 9 |
| | | |
4. | Servicing Activities | 9 |
| | | |
| (a) | Appointment of Servicer | 9 |
| (b) | Collection Accounts; Deposit Account Control Agreements | 9 |
| (c) | Distribution of the Amount on Deposit in Collection Accounts | 10 |
| (d) | Identifying Collections | 11 |
| (e) | No Changes to Receivables | 11 |
| (f) | Servicer Indemnification | 11 |
| (g) | Replacement of Servicer | 12 |
| (h) | The Administrative Agent as Attorney-in-Fact | 12 |
| | | |
5. | Deemed Collections; Repurchase Events; Indemnities and Set-Off | 12 |
| | | |
| (a) | Deemed Collections | 12 |
| (b) | Repurchase Event | 12 |
| (c) | Credit Default Certification | 13 |
| (d) | Defaulted Receivables | 13 |
| (e) | Seller Indemnification | 14 |
| (f) | Tax Matters | 15 |
| (g) | Set-Off | 15 |
| (h) | UCC | 15 |
| | | |
6. | Notices | 15 |
| | | |
7. | Expenses | 17 |
| | | |
8. | Interest on Overdue Amounts | 17 |
| | | |
9. | Governing Law | 17 |
| | | |
10. | No Non-Direct Damages | 17 |
| | | |
11. | Administrative Agent | 17 |
| | | |
| (a) | Authorization and Action | 17 |
| (b) | Delegation of Duties | 18 |
| (c) | Exculpatory Provisions 18 | 18 |
| (d) | Reliance by Administrative Agent | 18 |
| (e) | Non-Reliance on Administrative Agent and Other Buyers | 19 |
| (f) | Reimbursement and Indemnification | 19 |
| (g) | Administrative Agent in its Individual Capacity | 19 |
| (h) | UCC Filings | 19 |
| (i) | Enforcement | 19 |
TABLE OF CONTENTS
(continued)
| | | | | | | | | | | |
| (j) | Successor Administrative Agent | 20 |
| | | |
12. | Erroneous Payments | 20 |
| | | |
13. | General Provisions | 22 |
| (a) | Final Agreement | 22 |
| (b) | Severability | 22 |
| (c) | Execution; Counterparts | 22 |
| (d) | Termination | 22 |
| (e) | Calculation of Interest | 22 |
| (f) | Waiver of Jury Trial | 22 |
| (g) | Consent to Jurisdiction | 22 |
| (h) | Captions and Cross References | 22 |
| (i) | No Party Deemed Drafter | 23 |
| (j) | PATRIOT Act | 23 |
| (k) | Term SOFR Notification | 23 |
| (l) | Register | 23 |
| (m) | Ratable Payments | 24 |
| (n) | Bankruptcy Petition | 24 |
| (o) | Intercreditor Agreement | 24 |
| | | | | | | | |
| Schedule I | – | Form of Portfolio Report |
| Schedule II | – | Approved Account Debtors |
| Schedule III | – | Portfolio Report Signatories |
| Exhibit A | – | Certain Defined Terms |
| Exhibit B | – | Conditions Precedent for Effectiveness |
| Exhibit C | – | Representations and Warranties |
| Exhibit D | – | Covenants |
| Exhibit E | – | Eligibility Criteria |
| Exhibit F | – | Servicer Termination Events |
| Exhibit G | – | Accounts |
MASTER RECEIVABLES PURCHASE AGREEMENT
This MASTER RECEIVABLES PURCHASE AGREEMENT (this “Agreement”) is entered into as of December 22, 2022, by and among SMITHFIELD RECEIVABLES FUNDING LLC, a Delaware limited liability company (the “Seller”), SMITHFIELD FOODS, INC., a Virginia corporation, as servicer (in such capacity, the “Servicer”), each buyer from time to time party hereto (each, in such capacity, a “Buyer” and collectively, the “Buyers”), and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as administrative agent (in such capacity, the “Administrative Agent”).
RECITALS
WHEREAS, the Seller desires to sell certain of its Eligible Receivables and the corresponding Related Security from time to time, and the Buyers may be willing to purchase from the Seller such Eligible Receivables and Related Security, in which case the terms set forth herein shall apply to such purchase. Each capitalized term used but not defined herein shall have the meaning set forth in, or by reference in, Exhibit A hereto, and the interpretive provisions set out in Exhibit A hereto shall be applied in the interpretation of this Agreement.
Accordingly, the parties hereto agree as follows:
1. Sale and Purchase.
(a) Sales of Receivables.
(i) Sale of Receivables on the Initial Funding Date. Subject to the terms and conditions hereof, on the Initial Funding Date, the Seller shall sell to the Buyers, and the Buyers shall, subject to the satisfaction of the conditions set forth in clause (e) below, purchase from the Seller, their respective Pro Rata Shares of all of the Seller’s right, title and interest (but none of the Seller’s underlying obligations to the applicable Account Debtor) in and to the Eligible Receivables and Related Security specified on the Initial Funding Date Portfolio Report (the “Initial Proposed Receivables”) in the order of priority set forth in clause (iv) below until the sale of the next such Eligible Receivable would cause the occurrence of any of the events specified in Section 1(a)(ii)(x), (y) or (z). The Purchase Price for each Eligible Receivable and Related Security acquired on the Initial Funding Date shall be the Net Invoice Amount of such Eligible Receivable (the aggregate of the Purchase Prices for such Eligible Receivables and Related Security acquired on the Initial Funding Date, the “Initial Purchase Amount”). The Initial Purchase Amount minus the aggregate Initial Discounts applicable to the Eligible Receivables acquired on the Initial Funding Date (the “Initial Funding Amount”) shall be paid as provided in Section 1(g) below.
(ii) Sales of Receivables on Additional Purchase Dates. On each Additional Purchase Date, at 5:00 p.m. New York time, the Seller shall sell to the Buyers, and the Buyers shall, subject to the satisfaction of the conditions set forth in clause (f) below, purchase from the Seller, their respective Pro Rata Shares of each Eligible Receivable and Related Security available and owned by the Seller at such time (the “Additional Proposed Receivables” and together with the Initial Proposed Receivables, the “Proposed Receivables”) in the order of priority set forth in clause (iv) below until the sale of the next such Eligible Receivable would cause:
(x) the aggregate Purchase Prices of all Eligible Receivables and Related Security acquired on such Additional Purchase Date pursuant to this clause (ii) to exceed an amount equal to the Amount on Deposit in the Collection Accounts plus any amount deposited by the Buyers into the Seller’s Account on such Additional Purchase Date in accordance with Section 1(b);
(y) the Outstanding Purchase Amount to exceed the Maximum Outstanding Purchase Amount; or
(z) the Outstanding Purchase Amount with respect to any Buyer to exceed such Buyer’s Facility Share.
The Purchase Price for each Eligible Receivable and Related Security acquired on an Additional Purchase Date pursuant to this clause (ii) shall be paid (A) first, from any amount deposited by the Buyers into Seller’s Account on such Additional Purchase Date in accordance with Section 1(b) and (B) second, from available Amounts on Deposit in the Collection Accounts as provided in Section 4(c)(i)(1) (it being understood that such Eligible Receivables and Related Security purchased using Amounts on Deposit in the Collection Accounts shall be sold on such Additional Purchase Date irrespective of whether the Seller distributes the Purchase Prices therefor from the Collection Accounts on such date).
(iii) Sales of Receivables on Additional Purchase Dates in Exchange for Amounts Owing by Seller. In addition to the foregoing, but only after giving effect to clause (ii) above, at 5:00 p.m. New York time on each Additional Purchase Date, if the Seller owes any amount to the Buyers pursuant to Section 5 (including with respect to any Defaulted Receivable), the Seller shall sell to the Buyers, and the Buyers shall, subject to the satisfaction of the conditions set forth in clause (e) below, purchase from the Seller, their respective Pro Rata Shares of each Eligible Receivable and Related Security available and owned by the Seller at such time in the order of priority set forth in clause (iv) below until the sale of the next such Eligible Receivable from the Seller would cause:
(x) the aggregate Purchase Prices of all such Eligible Receivables and Related Security acquired on such Additional Purchase Date pursuant to this clause (iii) to exceed the amount owing by the Seller on such date under Section 5;
(y) the Outstanding Purchase Amount to exceed the Maximum Outstanding Purchase Amount; or
(z) the Outstanding Purchase Amount with respect to any Buyer to exceed such Buyer’s Facility Share.
The Purchase Price for each Eligible Receivable and Related Security acquired on each Additional Purchase Date pursuant to this clause (iii) shall be deemed paid by way of a set-off against, and in satisfaction of, the corresponding amount owing by the Seller pursuant to Section 5 on such Additional Purchase Date.
(iv) Order of Priority of Sales of Eligible Receivables. The Eligible Receivables to be sold on each Additional Purchase Date pursuant to clauses (i), (ii) and (iii) above, respectively, shall be sold by the Seller in the following order of priority:
(A) Eligible Receivables shall be sold, assigned and purchased in the priority set forth in Schedule II with respect to the Approved Account Debtors with respect to such Eligible Receivables; provided, that, in each case, the Outstanding Purchase Amount with respect to the Purchased Receivables payable by any Approved Account Debtor shall not exceed such Approved Account Debtor’s Purchase Sublimit;
(B) in the case of Eligible Receivables that are owed by the same Approved Account Debtor, such Eligible Receivables shall be sold, assigned and purchased in the order of the date on which they were originated (i.e., on first-in, first-out basis);
(C) in the case of Eligible Receivables that are owed by the same Approved Account Debtor and that are originated on the same day, such Eligible Receivables shall be sold, assigned and purchased in descending order of the Net Invoice Amount thereof, with the Eligible Receivable with the highest Net Invoice Amount being sold first and the Eligible Receivable with the lowest Net Invoice Amount being sold last;
(D) in the case of Eligible Receivables that are owed by the same Account Debtor, that are originated on the same day and that have the same Net Invoice Amount, such Eligible Receivables shall be sold, assigned and purchased in ascending order of invoice number, with the lower invoice number being sold first and the highest invoice number being sold last;
provided, that for purposes of determining the priority of Eligible Receivables to be sold in accordance with this clause (iv), any Eligible Receivable not permitted to be purchased as the result of applicable Purchase Sublimits as provided in the proviso of each of clause (A) above shall be disregarded, and the determination of priority shall continue on to the next Eligible Receivable (if any) permitted to be purchased under such clause (A).
(b) Additional Funding of Purchase Price.
(i) If the Buyer Amount Balance as of any Settlement Date occurring during the Acquisition Period (after giving effect to any distributions pursuant to Section 4(c) on such Settlement Date) is less than the Maximum Outstanding Purchase Amount as of such Settlement Date (after giving effect to any reductions thereof on such Settlement Date) and the Amounts on Deposit in the Collection Accounts as of such Settlement Date (excluding any Additional Funding Amount requested with respect to such Settlement Date) would be insufficient to allow the Buyers to purchase all of the Eligible Receivables and Related Security that would otherwise be subject to purchase in accordance with Sections 1(a)(ii) and (iii) on such Settlement Date but for such insufficiency, then, so long as the Acquisition Period has not been terminated, the Seller may, by written notice to the Administrative Agent and each Buyer (each a “Funding Notice”) delivered no later than the second Business Day prior to such Settlement Date (each such Settlement Date as to which such a request is received being referred to herein as an “Additional Funding Date”), request that the Buyers fund an aggregate amount of additional Purchase Price (an “Additional Funding Amount”) not to exceed the lesser of (x) such insufficiency or (y) the maximum amount which, when added to the then-outstanding Buyer Amount Balance, would not exceed the then-applicable Maximum Outstanding Purchase Amount.
(ii) Following timely receipt of a Funding Notice in accordance with clause (i) above, and so long as the Acquisition Period has not been terminated as of such Additional Funding Date, each Buyer shall deposit its Pro Rata Share of the applicable Additional Funding Amount into the Seller’s Account in accordance with Section 1(g) below to be applied to the purchase of Eligible Receivables and Related Security as provided in Section 1(a)(ii); provided, that (i) if the Additional Funding Amount deposited in the Seller’s Account exceeds the aggregate Purchase Prices of Eligible Receivables and Related Security to be purchased on such Additional Funding Date pursuant to Section 1(a)(ii), the Seller shall deposit such excess into a Collection Account no later than the next succeeding Business Day and (ii) if the Maximum Outstanding Purchase Amount hereunder is reduced after the delivery of a Funding Notice but on or prior to the funding of the Additional Funding Amount on the Additional Funding Date for such Funding Notice, and the Buyer Amount Balance would, after giving effect to the funding of the applicable Additional Funding Amount, exceed the Maximum Outstanding Purchase Amount as so reduced, the Additional Funding Amount shall be adjusted to eliminate any such excess. If on any Settlement Date any Buyer fails to deposit its Pro Rata Share of the applicable Additional Funding Amount into the Seller’s Account in accordance with Section 1(g) below, the Seller shall immediately return all funds received from the other Buyers on such Settlement Date and the applicable Funding Notice shall be deemed cancelled.
(c) Purchase Price Adjustments.
(i) Purchase Price Adjustment. In order to provide the Buyers with an acceptable yield on their investment for having paid the Seller the Purchase Price of Purchased Receivables and Related Security, the Buyer Amount Balance shall be adjusted in advance of each Settlement Period (the “Purchase Price Adjustment”) by the addition of a discount payable by the Seller on each Settlement Date for the
Settlement Period beginning on such Settlement Date. The Purchase Price Adjustment will be applied to the funds remitted between the Seller and the Buyers on each Settlement Date. The Purchase Price Adjustment shall be calculated in accordance with the following formula (subject to any adjustment on account of any Breakage Amounts in accordance with Section 4(c)(ii)):
Purchase Price Adjustment = BAB*(Term SOFR + M)*T/360 where:
BAB = the Buyer Amount Balance as of such Settlement Date;
Term SOFR = Adjusted Term SOFR for such Settlement Period;
M = Applicable Margin; and
T = the number of days in the applicable Settlement Period for which the Purchase Price Adjustment is calculated.
(ii) Payment of Purchase Price Adjustment. The Purchase Price Adjustment (as adjusted on account of any Breakage Amount in accordance with Section 4(c)(ii)) in respect of each applicable Settlement Period shall be payable by the Seller in advance to the Buyers on each Settlement Date. For the avoidance of doubt, the Seller’s obligation to pay the Purchase Price Adjustment is a separate obligation of the Seller, apart from any other payment obligations the Seller may have under this Agreement.
(d) UNCOMMITTED ARRANGEMENT. THE SELLER ACKNOWLEDGES THAT THIS IS AN UNCOMMITTED ARRANGEMENT, THAT THE SELLER HAS NOT PAID, NOR IS REQUIRED TO PAY, A COMMITMENT FEE OR COMPARABLE FEE TO THE BUYERS. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, THE SELLER EXPRESSLY AGREES THAT THE BUYERS WILL NOT BE OBLIGATED TO PURCHASE ANY RECEIVABLE FROM THE SELLER, AND ANY BUYER MAY REFUSE, FOR ANY REASON OR FOR NO REASON, TO PURCHASE ANY RECEIVABLE OFFERED FOR PURCHASE BY THE SELLER REGARDLESS OF WHETHER THE VARIOUS CONDITIONS TO PURCHASE SET FORTH IN THIS AGREEMENT HAVE BEEN SATISFIED.
(e) Conditions to Effectiveness. This Agreement shall become effective, concurrent with the effectiveness of the Securitization Documents, at such time as each of the conditions precedent set forth on Exhibit B to this Agreement has been satisfied to the satisfaction of the Administrative Agent.
(f) Conditions Precedent to Each Purchase. The Buyers shall not purchase the Proposed Receivables and Related Security on any Purchase Date unless:
(i) solely with respect to the Initial Funding Date, the Administrative Agent shall have received a Portfolio Report for the Proposed Receivables to be purchased on the Initial Funding Date prepared as of a date not more than two (2) Business Days prior to the Initial Funding Date and certified in writing by a Portfolio Report Signatory;
(ii) each of the representations and warranties made by the Seller, the Servicer and the Performance Guarantor in this Agreement and each of the other Transaction Documents is true and correct in all material respects as of such Purchase Date or, in the case of any representation or warranty that speaks as to a particular date or period, as of that particular date or period;
(iii) each Proposed Receivable is an Eligible Receivable; and
(iv) no Servicer Termination Event shall have occurred and no Servicer Termination Event shall exist immediately following the Buyers’ purchase of such Proposed Receivables and Related Security.
(g) Payment of Funding Amounts.
(i) On the Initial Funding Date, subject to the terms and conditions of this Agreement, each Buyer shall pay to the Seller an amount equal to its Pro Rata Share of the Initial Funding Amount by wire transfer of immediately available funds to the Seller’s Account.
(ii) On each Additional Funding Date, each Buyer shall pay to the Seller an amount equal to its Pro Rata Share of the Additional Funding Amount for such Additional Funding Date (as such Additional Funding Amount may be adjusted in accordance with Section 1(b)) by wire transfer of immediately available funds to the Seller’s Account no later than 3:00 p.m. New York time on the applicable Settlement Date.
(h) True Sale; No Recourse. Except as otherwise provided in this Agreement, each purchase of the Purchased Receivables and Related Security is made without recourse to the Seller and the Seller shall have no liability to the Buyers for the failure of any Account Debtor to pay any Purchased Receivable when it is due and payable under the terms applicable thereto. The Buyers and the Seller have structured the transactions contemplated by this Agreement as an absolute and irrevocable sale, and the Buyers and the Seller agree to treat each such transaction as a “true sale” for all purposes under Applicable Law and accounting principles, including, without limitation, in their respective books, records, computer files, tax returns (federal, state and local), regulatory and governmental filings (and shall reflect such sale in their respective financial statements). The Seller will advise all Persons inquiring about the ownership of any Purchased Receivable and Related Security that all Purchased Receivables and Related Security have been sold to the Buyers. In the event that, contrary to the mutual intent of the parties hereto, any purchase of Purchased Receivables and Related Security is not characterized as a sale, the Seller shall, effective as of the date hereof, be deemed to have granted to the Buyers (and the Seller hereby does grant to the Buyers), in addition to and not in substitution for the rights and remedies described in Section 4(g) hereof, a first priority security interest in and to any and all present and future Purchased Receivables and Related Security and the proceeds thereof to secure all obligations of the Seller arising in connection with this Agreement and each of the other Transaction Documents, whether now or hereafter existing, due or to become due, direct or indirect, absolute or contingent. This Agreement shall be deemed to be a security agreement under Applicable Law. The Administrative Agent, as representative of the Buyers, shall file a UCC financing statement evidencing the sale of the Purchased Receivables and Related Security as well as the foregoing grant of security. With respect to such grant of a security interest, the Administrative Agent may (and, upon direction of the Required Buyers, the Administrative Agent shall) at its option exercise from time to time any and all rights and remedies available to it, for the benefit of the Buyers, hereunder, under the UCC or otherwise. The Seller agrees that ten (10) days shall be reasonable prior notice to the Seller of the date of any public or private sale or other disposition of all or any of the Purchased Receivables and Related Security.
(i) Several Obligations. The obligations of the Buyers hereunder are several and not joint, and no Buyer shall be responsible for the obligations of any other Buyer hereunder. Nothing contained herein or in any other Transaction Document, and no action taken by the Buyers pursuant hereto or thereto, shall be deemed to constitute the Buyers as a partnership, an association, a joint venture or any other kind of entity.
(j) Benchmark Replacement Setting.
(i) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Transaction Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to any setting of the then-current Benchmark, then such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Transaction Document in respect of any Benchmark setting at or after 5:00 p.m. New York time on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Buyers without any amendment to, or further
action or consent of any other party to, this Agreement or any other Transaction Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Buyers comprising the Required Buyers.
(ii) Benchmark Replacement Conforming Changes. In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Administrative Agent may, in consultation with the Seller, make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Transaction Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Transaction Document.
(iii) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Seller and the Buyers of (A) the implementation of any Benchmark Replacement, and (B) the effectiveness of any Conforming Changes in connection with the use, administration, adoption or implementation of a Benchmark Replacement. The Administrative Agent will notify the Seller of (x) the removal or reinstatement of any tenor of a Benchmark pursuant to paragraph (iv) below and (y) the commencement of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Buyer (or group of Buyers) pursuant to this Section, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Transaction Document except, in each case, as expressly required pursuant to this Section.
(iv) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Transaction Document, at any time (including in connection with the implementation of a Benchmark Replacement), (A) if the then-current Benchmark is a term rate and either (I) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (II) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definitions of “Settlement Period” or “Initial Discount Period” (or any similar or analogous definition) for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor; and (B) if a tenor that was removed pursuant to clause (A) above either (I) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (II) is not, or is no longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definitions of “Settlement Period” or “Initial Discount Period” (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such previously removed tenor.
(v) Benchmark Unavailability Period. During a Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the Overdue Payment Rate and all Initial Discounts and Purchase Price Adjustments shall be calculated by reference to the Prime Rate.
(vi) Certain Defined Terms. As used in this Section 1(j):
“Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate or is based on a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an Initial Discount Period or Settlement Period pursuant to this Agreement or (y) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark
pursuant to this Agreement, in each case, as of such date and not including, for the avoidance of doubt, any tenor of such Benchmark that is then-removed from the definitions of “Settlement Period” or “Initial Discount Period” pursuant to clause (iv) of this Section.
“Benchmark” means, initially, the Term SOFR Rate; provided that if a Benchmark Transition Event has occurred with respect to the Term SOFR Rate or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to this Section.
“Benchmark Replacement” means, with respect to any Benchmark Transition Event, the sum of (A) the alternate benchmark rate that has been selected by the Administrative Agent and the Seller, giving due consideration to (x) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (y) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement to the then-current Benchmark for U.S. dollar-denominated non-recourse or partial recourse receivables purchase facilities at such time and (B) the related Benchmark Replacement Adjustment; provided that if the Benchmark Replacement as determined above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Transaction Documents; and provided further, that any Benchmark Replacement shall be administratively feasible as determined by the Administrative Agent in its sole discretion.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Seller, giving due consideration to (A) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated non-recourse or partial recourse receivables purchase facilities at such time.
“Benchmark Replacement Date” means a date and time determined by the Administrative Agent, which date shall be no later than the earliest to occur of the following events with respect to the then-current Benchmark:
(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (A) the date of the public statement or publication of information referenced therein and (B) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date determined by the Administrative Agent, which date shall promptly follow the date of the public statement or publication of information referenced therein.
For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence
of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means, the occurrence of one or more of the following events, with respect to the then-current Benchmark:
(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(2) a public statement or publication of information by an Relevant Governmental Body having jurisdiction over the Administrative Agent, the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) or an Relevant Governmental Body having jurisdiction over the Administrative Agent announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in accordance with this Section 1(j) titled “Benchmark Replacement Setting” and (y) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Transaction Document in accordance with this Section 1(j) titled “Benchmark Replacement Setting.”.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to the Term SOFR Rate or, if no floor is specified, zero.
“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or any successor thereto.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
2. Representations and Warranties. The Seller and the Servicer represent and warrant to the Administrative Agent and the Buyers on the date hereof and on each Purchase Date that (i) the representations and warranties set forth on Exhibit C hereto are true and correct in all material respects as of such Purchase Date or, in the case of any representation or warranty that speaks as to a particular date or period, as of that particular date or period and (ii) each Proposed Receivable is an Eligible Receivable.
The Seller and the Servicer also represent and warrant to the Administrative Agent and the Buyers that as of the delivery of each Portfolio Report each Purchased Receivable is specified in such Portfolio Report and all other information set forth therein is true and correct in all respects.
3. Covenants. The Seller and the Servicer agree to perform each of the covenants set forth on Exhibit D hereto.
4. Servicing Activities.
(a) Appointment of Servicer. Each Buyer appoints Smithfield as its servicer and agent (the “Servicer”) for the administration and servicing of its Purchased Receivables sold by the Seller to such Buyer hereunder, and Smithfield hereby accepts such appointment and agrees to assume the duties and the administration and servicing obligations as the Servicer, and perform all necessary and appropriate commercial servicing and collection activities in arranging the timely payment of amounts due and owing by any Account Debtor (including the identification of the proceeds of the Purchased Receivables and Related Security and related record-keeping that shall be made available to the Administrative Agent and/or any Buyer upon its reasonable request) all in accordance with Applicable Laws, with reasonable care and diligence, including, without limitation, diligently and faithfully performing all servicing and collection actions (including, if necessary, acting as party of record in foreign jurisdictions); provided, however, that such appointment as Servicer shall not release Seller from any of its duties, responsibilities, liabilities and obligations resulting from or arising hereunder. In connection with its servicing obligations, the Servicer will perform its duties under the Contract related to the Purchased Receivables with the same care and applying the same policies as it applies to its own Receivables generally and would exercise and apply if it owned the Purchased Receivables and shall act to maximize Collections thereon.
(b) Collection Accounts; Deposit Account Control Agreements. The Seller and Servicer covenant and agree (i) to direct each Account Debtor to pay all amounts owing under such Purchased Receivables only to a Collection Account, (ii) not to change such payment instructions while any Purchased Receivable remains outstanding, (iii) to take any and all other reasonable actions, including actions requested by the Administrative Agent, to ensure that all amounts owing under the Purchased Receivables will be deposited exclusively to such Collection Account and (iv) to hold in trust as the Buyers’ exclusive property and safeguard for the benefit of the Buyers all Collections and other amounts remitted or paid to the Seller or Servicer (or any of their respective Affiliates) in respect of Purchased Receivables (including all Collections to the extent that such amounts are not used to pay the Purchase Price on an Additional Purchase Date in accordance with Section 1(b)) for prompt deposit into a Collection Account. The Seller shall be permitted to close the Collection Account appearing below its name that is marked with an asterisk on Exhibit G and any Lock-Box related thereto, so long as the Seller, has given the Buyers and the Administrative Agent not less than ten (10) days’ prior written notice thereof, certifying that (x) it has instructed all relevant Account Debtors to make payments relating to Purchased Receivables originated by it to another existing Collection Account, and (y) payments relating to Purchased Receivables originated by it are no longer being deposited in such Collection Account. Subject to the terms of the Intercreditor Agreement, the Seller hereby grants to the Administrative Agent,
for the benefit of the Buyers, a security interest in each Collection Account as additional collateral to secure the payment and performance of the Seller’s obligations to the Buyers hereunder and under each of the other Transaction Documents or as may be determined in connection therewith by Applicable Law. Each Collection Account shall at all times be subject to a Deposit Account Control Agreement. Prior to the occurrence of any Servicer Termination Event, the Seller (or the Servicer on its behalf) shall be permitted to make withdrawals and distributions from each Collection Account. After the occurrence of any Servicer Termination Event, the Administrative Agent will be authorized to (and, upon direction of the Required Buyers, the Administrative Agent shall) instruct the Securitization Agent to give notice of exclusive control under each Deposit Account Control Agreement and, upon giving such notice (each, an “Activation Notice”), the Securitization Agent will have exclusive authority to make withdrawals and distributions from each Collection Account in accordance with, and subject to, the terms of this Agreement, until the Final Collection Date.
(c) Distribution of the Amount on Deposit in Collection Accounts. The parties hereto acknowledge that although maintained in the Seller’s name, the Collection Accounts are segregated accounts maintained by the Seller for the benefit of the Buyers and, to the extent that the Intercreditor Agreement remains in full force and effect, the Securitization Agent (with respect to the Securitized Receivable Collections) and that the Seller has no right or interest (other than bare legal title) in any amounts on deposit in the Collection Accounts (other than those amounts identified in clauses (i) and (ii) of the proviso to the definition of Amount on Deposit in the Collection Accounts). In furtherance of the foregoing, the Seller and Servicer agrees that it shall hold all Amounts on Deposit in the Collection Accounts in the Collection Accounts in trust for the Buyers and shall not transact any business in or with respect to the Amount on Deposit in the Collection Accounts in the Collection Accounts other than as expressly provided herein. In order to facilitate the payment of Purchase Prices and the reduction of the Buyer Amount Balance, the Buyers hereby and pursuant to the terms of the applicable Deposit Account Control Agreement authorize the Seller and Servicer acting on the Seller’s behalf (until the delivery of an Activation Notice) to effect distributions from the Collection Accounts strictly in accordance with Sections 4(c) and 5(d).
(i) During the Acquisition Period. Subject to Section 5(d), prior to the end of the Acquisition Period, on each Business Day, the Seller shall make the following payments and allocations in the following order:
(1) on each Business Day, the Seller may distribute (or cause to be distributed) available Amounts on Deposit in the Collection Accounts to the Seller to pay unpaid Purchase Prices owing to the Seller pursuant to Section 1(a)(ii);
(2) on each Settlement Date, to the extent the Buyer Amount Balance exceeds the Maximum Outstanding Purchase Amount as of such date (after giving effect to any distributions made or required to be made on such date pursuant to clause (1) above), the Seller shall distribute ratably to the Buyers according to their respective Pro Rata Shares any remaining Amounts on Deposit in the Collection Accounts until the amount of such excess is reduced to zero; and
(3) on each Settlement Date, upon at least two (2) Business Days’ prior notice to the Administrative Agent and each Buyer, the Seller may distribute ratably to the Buyers according to their respective Pro Rata Shares available Amounts on Deposit in the Collection Accounts (after giving effect to any other distributions made or required to be made on such day pursuant to this clause (i)) in reduction of the Buyer Amount Balance.
(ii) Upon Termination of the Acquisition Period. On each Settlement Date and on each Business Day that is not otherwise a Settlement Date (each such Business Day, a “Daily Amortization Date”), in each case, occurring on or after the termination of the Acquisition Period (including any early termination thereof), all Amounts on Deposit in the Collection Accounts as of such Daily Amortization Date shall be distributed ratably to the Buyers according to their respective Pro Rata Shares until the Buyer Amount Balance has been reduced to zero and the Seller has paid or distributed to the Buyers all accrued and unpaid
Purchase Price Adjustments and all amounts owing to the Buyers pursuant to Section 5(d)(ii). Notwithstanding any other provision of this Agreement to the contrary, Breakage Amounts shall be calculated with respect to all payments in reduction of the Buyer Amount Balance made on Daily Amortization Dates occurring during each Settlement Period, and the amount of Purchase Price Adjustment payable by the Seller on the next Settlement Date following such Settlement Period shall (x) in the case of each Breakage Amount for such a Daily Amortization Date occurring during such Settlement Period that is a positive number, be increased by an amount equal to the absolute value of such Breakage Amount and (y) in the case of each Breakage Amount for such a Daily Amortization Date occurring during such Settlement Period that is a negative number, be decreased by an amount equal to the absolute value of such Breakage Amount; provided, however, that if the Buyer Amount Balance will be reduced to zero upon any distribution on a Daily Amortization Date or Settlement Date, the applicable Breakage Amounts not yet applied on a Settlement Date as provided above will be added to or subtracted from, as applicable, the amount to be distributed to the Buyers in reduction of the Buyer Amount Balance.
(iii) Payments Not Representing Collections. If any amount is deposited into or held in the Collection Accounts which the Seller or Servicer, in good faith and with full accounting thereof, has identified as an amount specified in clause (y) of the definition of Amount on Deposit in the Collection Accounts, the Seller may, so long as no Servicer Termination Event shall have occurred and be continuing, distribute such amount to the Seller; provided, that any such amount not distributed due to the continuance of a Servicer Termination Event shall be distributed from any remaining balance in the Collection Accounts after the Buyer Amount Balance has been reduced to zero and all other amounts due and owing to the Administrative Agent and the Buyers hereunder have been paid in full.
(iv) No Other Distributions. Subject to the terms of the Intercreditor Agreement, except as provided in this Section 4(c) or Section 5(d), neither the Seller nor the Servicer shall have any right to effect any distributions from the Collection Accounts, and the Seller and the Servicer shall refrain from making any such unauthorized distributions. Notwithstanding anything to the contrary set forth herein, nothing in this Agreement shall restrict or prohibit the Seller (or the Servicer on its behalf) from (x) making withdrawals and distributions from each Collection Account with respect to those amounts identified in clauses (i) and (ii) of the proviso to the definition of Amount on Deposit in the Collection Accounts (until the delivery of an Activation Notice) or (y) transferring any amounts from one Collection Account to another Collection Account.
(d) Identifying Collections. Pursuant to its servicing obligations under Section 4(a) hereof, the Servicer shall be responsible for identifying, matching and reconciling any payments received from Account Debtors with the Receivable associated with such payment. Any payment by an Account Debtor in respect of any indebtedness owed by it to an Originator shall, except as otherwise specified by such Account Debtor (including by reference to a particular invoice), or required by the related contracts or law, be applied in the following order of priority: first, as a Collection of any Receivables of such Account Debtor then outstanding in the order of the age of such Receivables and second, to other indebtedness of such Account Debtor to such Originator (if any), or in any event in accordance with the terms of the Intercreditor Agreement.
(e) No Changes to Receivables. Neither the Seller nor the Servicer shall compromise or settle any Purchased Receivable or extend the Due Date with respect thereto without the consent of the Administrative Agent except as otherwise expressly provided for in Section 4(a) hereof.
(f) Servicer Indemnification. The Servicer hereby agrees to indemnify and hold harmless the Administrative Agent and each Buyer and their respective officers, directors, agents, representatives, shareholders, counsel, employees and each of their respective Affiliates, successors and assigns (each, an “Indemnified Person”) from and against any and all damages, claims, losses, costs, expenses and liabilities (including, without limitation, reasonable and documented attorneys’ fees and expenses) (all of the foregoing being collectively referred to as “Indemnified Amounts”) arising out of or resulting from or related to (i) any failure by the Servicer to perform its duties or obligations as Servicer hereunder in accordance with this Agreement or to comply with any Applicable Law,
(ii) any breach of the Servicer’s representations, warranties or covenants under any Transaction Document or (iii) any claim brought by any Person other than an Indemnified Person arising from the Servicer’s servicing or collection activities with respect to the Purchased Receivables; provided, however, that in all events there shall be excluded from the foregoing indemnification any damages, claims, losses, costs, expenses or liabilities to the extent resulting solely from (x) the gross negligence or willful misconduct of an Indemnified Person as determined in a final non-appealable judgment by a court of competent jurisdiction or (y) the failure of an Account Debtor to pay any sum due under its Purchased Receivables by reason of the financial or credit condition of such Account Debtor (including, without limitation, the occurrence of an Insolvency Event with respect to the applicable Account Debtor). Any amount due and payable pursuant to this Section shall be paid to the Administrative Agent’s Account or the applicable Buyer’s Account, as applicable, in immediately available funds by no later than the second (2nd) Business Day following demand therefor by the Administrative Agent or any Buyer.
(g) Replacement of Servicer. Following the occurrence of a Servicer Termination Event, the Administrative Agent, at the direction of the Required Buyers, may replace the Servicer with itself or any agent for the Administrative Agent with respect to any and all Purchased Receivables. The Seller shall be responsible for all reasonable costs and expenses incurred in connection with such replacement and shall promptly reimburse the Administrative Agent with respect to same.
(h) The Administrative Agent as Attorney-in-Fact. Each of the Seller and the Servicer hereby appoints the Administrative Agent as the true and lawful attorney-in-fact of such Person, with full power of substitution, coupled with an interest, and hereby authorize and empower the Administrative Agent in the name and on behalf of such Person at any time following removal of Smithfield as Servicer pursuant to Section 4(g), to take such actions, and execute and deliver such documents, as the Administrative Agent deems necessary or advisable in connection with any applicable Purchased Receivable and Related Security (i) to perfect the purchase and sale of such Purchased Receivable and Related Security, including, without limitation, to send a notice of such purchase and sale to the Account Debtor of the transfers contemplated hereby and the sale of such Purchased Receivable and Related Security or (ii) to make collection of and otherwise realize the benefits of such Purchased Receivable and Related Security. At any time that Smithfield is no longer serving as Servicer hereunder, the Administrative Agent shall have the right to bring suit, in the Administrative Agent’s or the Seller’s name, and generally have all other rights of an owner and holder respecting each applicable Purchased Receivable and Related Security, including without limitation the right to accelerate or extend the time of payment, settle, compromise, release in whole or in part any amounts owing on such Purchased Receivables and issue credits in its own name or the name of the Seller. At any time following removal of Smithfield as Servicer, the Administrative Agent may (and, upon direction of the Required Buyers, the Administrative Agent shall) endorse or sign the Administrative Agent’s or the Seller’s name on any checks or other instruments with respect to any applicable Purchased Receivables and Related Security or the goods covered thereby. The Administrative Agent shall not be liable for any actions taken by it in accordance with this Section unless such actions constitute the gross negligence or willful misconduct of the Administrative Agent as determined by a court of competent jurisdiction in a final and non-appealable judgment. This power of attorney, being coupled with an interest, is irrevocable and shall not expire until the Final Collection Date.
(i) Netting of Payments. The parties hereto agree that on each Settlement Date, for administrative convenience, the parties shall net the obligations of each Buyer to the Seller with respect to the payment of the applicable Purchase Price against the obligations of the Seller to such Buyer and transfer the net amount via a single wire payment. To the extent that the obligations of the Seller to a Buyer described in the foregoing sentence exceed the obligations of such Buyer to the Seller described in the foregoing sentence, the Seller shall transfer the net amount to such Buyer in accordance with Section 4(c); to the extent that the obligations of the Buyer to a Seller described in the foregoing sentence exceed the obligations of the Seller to such Buyer in the foregoing sentence, such Buyer shall transfer the net amount to the Seller in accordance with Section 1(b). Such amounts shall be determined by the Administrative Agent and all such determinations shall be conclusive absent manifest error.
5. Deemed Collections; Repurchase Events; Indemnities and Set-Off.
(a) Deemed Collections. If, on any day, the outstanding balance of a Purchased Receivable is reduced (but not cancelled) as a result of any Dilution, the Seller shall be deemed to have received on such day a Collection of such Purchased Receivable in the amount of such reduction. If on any day a Purchased Receivable is cancelled (or reduced to zero) as a result of any Dilution, the Seller shall be deemed to have received on such day a Collection of such Purchased Receivable in the amount of the Outstanding Purchase Amount of such Purchased Receivable (as determined immediately prior to such Dilution). Any amount deemed to have been received under this Section 5(a) shall constitute a “Deemed Collection.” In the event of any such Deemed Collection, the Seller shall deposit an amount equal to such Deemed Collection into a Collection Account by no later than the first Settlement Date after the Seller or Servicer obtains knowledge or notice thereof.
(b) Repurchase Event. If any of the following events (each, a “Repurchase Event”) occurs with respect to a Purchased Receivable:
(i) such Purchased Receivable was not an Eligible Receivable at the time of purchase;
(ii) the Seller or Servicer fails to perform or observe any other term, covenant or agreement with respect to such Purchased Receivable set forth in any Transaction Document or any related Contract and such failure shall or could reasonably be expected to have an adverse effect on the timely payment, validity or enforceability of such Purchased Receivable;
(iii) the Seller or the Servicer instructs the related Account Debtor to pay any amount with respect to such Purchased Receivable to an account other than a Collection Account; or
(iv) a Dispute has arisen with respect to any Purchased Receivable,
then the Seller shall deliver notice thereof to the Administrative Agent no later than the next occurring Reporting Date and, on the Settlement Date related to such Reporting Date, repurchase such Purchased Receivable and Related Security. The repurchase price for a Purchased Receivable shall be the amount equal to the Outstanding Purchase Amount relating to such Purchased Receivable and Related Security at such time and shall be paid to a Collection Account in immediately available funds. Upon the payment in full of the repurchase price with respect to a Purchased Receivable and Related Security, such Purchased Receivable and Related Security shall hereby be, and be deemed to be, repurchased by the Seller from the Buyers without recourse to or warranty by the Buyers (other than that no Buyer has pledged or assigned such Purchased Receivable and Related Security).
(c) Credit Default Certification. If any applicable Account Debtor has not paid in cash all or any portion of any Purchased Receivable by the ninetieth (90th) day after the Due Date thereof, then the Seller shall on or prior to such day (or, if such day, is not a Business Day, the next succeeding Business Day), either (x) fund the Collection Accounts with the amount of the unpaid Purchased Receivable (or apply the corresponding amount as set-off against the Purchase Price for additional Purchased Receivables in lieu of such funding of the Collection Accounts pursuant to (and to the extent permitted by) Section 1(a)(iii)) or (y) certify to the Administrative Agent and each Buyer in writing that the unpaid portion of the Purchased Receivable is payable and that the missed payment is a result of a credit default by such Account Debtor and not as a result of an event that would require the Seller to repurchase the Receivable pursuant to Section 5(b) or otherwise repay the Buyers in accordance with their respective Pro Rata Shares pursuant to Section 5(a) (a “Credit Default Certification”); provided that no such certification may be delivered if such Account Debtor has objected to the payment of the applicable Receivable based on any assertion (whether valid or not) that such Receivable is subject to a Dispute or which, if true, would require that the Seller repurchase such Receivable pursuant to Section 5(b). The failure to duly deliver a Credit Default Certification shall be deemed an irrevocable admission by the Seller that the cause of the missed payment is not the result of a credit default by the applicable Account Debtor. If the Seller anticipates that it will be required to repurchase any Purchased Receivables
as provided in Section 5(b) above, the Seller may effect such repurchase prior to the date required above by depositing the applicable amount into the Collection Accounts (or applying the corresponding amount as set-off against the Purchase Price for additional Purchased Receivables in lieu of such deposit pursuant to (and to the extent permitted by) Section 1(a)(iii)). Notwithstanding the foregoing, the Seller may deliver a Credit Default Certification even if the applicable Account Debtor has objected to the payment of unpaid Purchased Receivables if the Seller believes in good faith that the missed payment is the result of a credit default by the applicable Account Debtor and not the result of an event that would give rise to an obligation of the Seller under Section 5(a) or (b) so long as the Seller funds the full amount of such missed payment into the Collection Accounts and references such missed payment and the amount thereof in its Credit Default Certification. If it is subsequently finally determined that (x) such Purchased Receivables or any portion thereof were not subject to a repurchase obligation pursuant to Section 5(b) and (y) the failure of such Purchased Receivables or relevant portion thereof to be paid was the result of a credit default by the applicable Account Debtor (either by a written acknowledgement from the applicable Account Debtor to such effect, a final judgment by a court of competent jurisdiction that such amount is payable by such Account Debtor or the allowance of a claim in respect thereof in an Insolvency Event of the applicable Account Debtor), then each Buyer shall reimburse the Seller the excess, if any, of (A) the amount that such Buyer received as a result of the Seller having funded the Collection Accounts as provided above with respect to the applicable portion over (B) the amount such Buyer would have received had the Seller not been required to so fund the Collection Accounts with respect to the applicable portion. Such reimbursement shall be made as promptly as practicable following the date such amount can be reasonably finally determined.
(d) Defaulted Receivables. If (x) the Seller provides a Credit Default Certification with respect to an Account Debtor as to which there are any outstanding Purchased Receivables as permitted pursuant to Section 5(c) or (y) any Account Debtor becomes subject to an Insolvency Event, all outstanding Purchased Receivables with respect to such Account Debtor (each such Account Debtor, a “Defaulted Account Debtor”) shall be considered “Defaulted Receivables”. Upon the occurrence of an event described in clause (x) or (y) (such occurrence, a “Defaulted Receivables Event”) (it being agreed that any Credit Default Certification shall be deemed to be effective upon the delivery of such Credit Default Certification):
(i) the Maximum Outstanding Purchase Amount shall be reduced by an amount equal to the Purchase Sublimit of the Defaulted Account Debtor(s),
(ii) all Collections on or with respect to the Defaulted Receivables shall be distributed ratably to the Buyers in accordance with their respective Pro Rata Shares promptly upon receipt and identification thereof by the Seller or Servicer, and
(iii) the Buyer Amount Balance shall be reduced by an amount equal to the aggregate Outstanding Purchase Amount of the Defaulted Receivables.
In addition to the foregoing, the Administrative Agent may (and, upon direction of the Required Buyers, the Administrative Agent shall), with respect to the Defaulted Receivables, elect to enforce on behalf of itself and the Seller all remedies and take such actions against the Defaulted Account Debtor as the Administrative Agent deems necessary to collect the Defaulted Receivables. In connection with any such enforcement by the Administrative Agent, the Seller shall provide to the Administrative Agent any information reasonably available to the Seller as may be necessary to enable the Administrative Agent to take such actions, including providing copies of the applicable invoices and legal names and addresses of the applicable Defaulted Account Debtors. Notwithstanding anything to the contrary in this Section 5(d) or otherwise, the occurrence of a Defaulted Receivables Event shall not limit Seller’s obligations under Section 5(a) or 5(b) above.
(e) Seller Indemnification. The Seller hereby agrees jointly and severally to indemnify each Indemnified Person and hold each Indemnified Person harmless from and against any and all Indemnified Amounts arising out of or resulting from or related to this Agreement or any other Transaction Document or the ownership, maintenance or funding, directly or indirectly, of the Purchased Receivable and Related Security (or any of them) or otherwise arising out of or resulting from the actions or inactions of the Seller or any of its Affiliates, including,
without limitation, any of the following: (i) any representation or warranty made or deemed made by the Seller (or any of its officers) under or in connection with this Agreement or any other Transaction Document that shall have been incorrect when made; (ii) the failure by the Seller to perform any of its covenants or obligations under any Transaction Document; (iii) the failure by the Seller or any Purchased Receivable, Related Security or Contract to comply with any Applicable Law; (iv) the failure to vest in the Buyers ownership of, and a first-priority perfected security interest (within the meaning of the UCC) in, each Purchased Receivable and Related Security and all Collections in respect thereof, free and clear of any Adverse Claim; (v) without duplication of the Seller’s other payment obligations hereunder with respect thereto, any Dispute, Dilution or any other claim resulting from the services performed or merchandise furnished in connection with any Purchased Receivable or the furnishing or failure to furnish such services or merchandise or relating to collection activities with respect to any Purchased Receivable; (vi) any suit or claim related to any Purchased Receivable and Related Security, any Contract or any Transaction Document; (vii) the failure of the Seller to notify any Account Debtor of the sale of the Purchased Receivables to the Buyers pursuant to this Agreement or (viii) the commingling by the Seller of Collections at any time with other funds of the Seller or any other Person; provided, however, that in all events there shall be excluded from the foregoing indemnification any Indemnified Amounts to the extent resulting solely from (x) the gross negligence or willful misconduct of an Indemnified Person as determined in a final non-appealable judgment by a court of competent jurisdiction or (y) the failure of an Account Debtor to pay any sum due under its Purchased Receivables by reason of the financial or credit condition of such Account Debtor (including, without limitation, the occurrence of an Insolvency Event with respect to the applicable Account Debtor). Any amount due and payable pursuant to this Section shall be paid to the Administrative Agent’s Account or the applicable Buyer’s Account, as applicable, in immediately available funds by no later than the second (2nd) Business Day following demand therefor by the Administrative Agent or any Buyer.
(f) Tax Matters.
(i) Tax Indemnification. All payments on the Purchased Receivables or otherwise made hereunder from the Account Debtors, the Servicer and the Seller will be made free and clear of any present or future taxes, levies, imposts, energy surcharges, duties, deductions, withholdings, assessments, fees or other charges whatsoever, including any interest, additions to tax or penalties applicable thereto, but excluding any taxes resulting from (1) a Buyer’s failure to comply with clause (ii) below or (2) a Buyer’s assignment of its interests under this Agreement (and for the avoidance of doubt not including taxes imposed upon each Buyer with respect to its overall net income), including whether imposed on the making of such a payment or whether arising by reason of the sale of the Purchased Receivables to each Buyer or relating to the underlying transactions between the applicable Originator and the related Account Debtors that gave rise to such Purchased Receivables (any such taxes, “Transaction Taxes”) and Other Taxes, and the sum payable to each Buyer shall be increased to the extent necessary to ensure that, after the making any withholding or payment of Transaction Taxes and Other Taxes, if any, each Buyer receives on the due date and retains (free from any liability in respect of any Transaction Taxes and Other Taxes) a net sum equal to what it would have received and so retained, had no such withholding or payment of Transaction Taxes and Other Taxes been present, imposed, required or made. The Seller and the Servicer jointly and severally will indemnify each Buyer and hold each Buyer harmless from any Transaction Taxes and Other Taxes, whether or not such taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. Any amount due and payable pursuant to this section shall be paid to the applicable Buyer’s Account in immediately available funds by no later than the second (2nd) Business Day following demand therefor by any Buyer.
(ii) Form Delivery. Each Buyer will deliver any properly completed and executed documentation reasonably requested by the Seller or the Servicer as will allow the Seller or the Servicer to satisfy its tax reporting or withholding obligations to the extent such Buyer is legally entitled to do so and the completion, execution and submission of such documentation would not in such Buyer’s judgment subject such Buyer to any unreimbursed cost or expense or would prejudice the legal or commercial position of such Buyer.
(iii) Other Taxes. The Seller shall timely pay to the relevant Governmental Authority in accordance with Applicable Law, or at the option of the Buyer timely reimburse it for the payment of, any Other Taxes.
(g) Set-Off. The Seller and Servicer hereby irrevocably instruct and authorize the Administrative Agent and each Buyer to setoff, appropriate and apply (without presentment, demand, protest or other notice which are hereby expressly waived) any deposits and any other indebtedness held or owing by the Administrative Agent or any Buyer or any branch, agency or Affiliate thereof, including the payment of the Purchase Price for any Proposed Receivables and Related Security, to, or for the account of, the Seller, the Servicer or any of their respective Affiliates against amounts owing by the Seller or Servicer hereunder or under any other Transaction Document (even if contingent or unmatured).
(h) UCC. The rights granted to the Administrative Agent hereunder are in addition to all other rights and remedies afforded to the Administrative Agent as a secured party under the UCC.
6. Notices. Unless otherwise provided herein, all communications by any party to any other party hereunder or any other Transaction Document shall be in a writing personally delivered or sent by a recognized overnight delivery service, or certified mail, postage prepaid, return receipt requested, or by email to such party, as the case may be, at its address set forth below:
| | | | | |
| If to the Seller: | Smithfield Receivables Funding LLC |
| 3411 Silverside Rd, 103 Baynard Bldg |
| Wilmington, DE 19810 |
| Attention: Jeffrey Porter |
| |
| With a copy to: |
| |
| c/o Smithfield Foods, Inc. |
| 200 Commerce Street |
| Smithfield, VA 23430 |
| Attention: Jenifer Byrd |
| |
| |
| If to the Servicer: | Smithfield Foods, Inc. |
| 200 Commerce Street |
| Smithfield, VA 23430 |
| Attention: Jenifer Byrd |
| and Mark Hall |
| |
| If to the Administrative Agent | |
| (other than | |
| Funding Notices): | PNC Bank, National Association |
| The Tower at PNC Plaza |
| 300 Fifth Avenue, 11th Floor |
| Pittsburgh, PA 15222 |
| Attention: Brian Stanley |
| | | | | | | | |
| | |
| If to the Administrative Agent | |
| (Funding Notices only) | |
| also add: | PNC Bank, National Association |
| | | | | | | | |
| The Tower at PNC Plaza |
| 300 Fifth Avenue, 11th Floor |
| Pittsburgh, PA 15222 |
| Attention: | Brian Stanley |
| | |
| |
The Seller and Servicer agree that the Administrative Agent and each Buyer may presume the authenticity, genuineness, accuracy, completeness and due execution of any email bearing a facsimile or scanned signature resembling a signature of an authorized Person of the Seller or Servicer without further verification or inquiry by the Administrative Agent or any Buyer. Notwithstanding the foregoing, the Administrative Agent or any Buyer in its sole discretion may elect not to act or rely upon such a communication and shall be entitled (but not obligated) to make inquiries or require further Seller or Servicer action to authenticate any such communication.
Any Portfolio Report, and any supporting documentation in connection herewith or therewith, such as copies of invoices, may be sent by the Seller or Servicer by electronic mail attachment in portable document format (.pdf).
A party may change the address at which it is to receive notices hereunder by written notice in the foregoing manner given to the other parties hereto.
7. Expenses. The Seller hereby agrees to reimburse the Administrative Agent and each Buyer within 15 days of demand (together with a reasonably detailed invoice therefor) for all reasonable and documented costs and out-of-pocket expenses in connection with the preparation, execution, delivery and administration of this Agreement, the transactions contemplated hereby and the other documents to be delivered hereunder, including without limitation, the reasonable fees and out-of-pocket expenses of legal counsel for the Administrative Agent and the Buyers with respect thereto and with respect to advising the Administrative Agent and the Buyers as to their respective rights and remedies under this Agreement and all Other Taxes. The Seller shall pay to the Administrative Agent and the Buyers on demand any and all costs and expenses of the Administrative Agent and the Buyers, if any, including reasonable and documented counsel fees and expenses actually incurred in connection with the enforcement of this Agreement and the other documents delivered hereunder and in connection with any restructuring or workout of this Agreement or such documents, or the administration of this Agreement following a Servicer Termination Event. Notwithstanding anything to the contrary contained herein, the parties hereto agree that (A) in no event shall the Seller be obligated to pay the fees and expenses of more than one legal counsel in respect of the Buyers and the Administrative Agent (and, if necessary, one local counsel in each material jurisdiction for the Administrative Agent and the Buyers (taken as a whole) and, solely in the case of a conflict of interest, one additional counsel as necessary to the parties actually affected by such conflict (taken as a whole)), and (B) in the absence of a Servicer Termination Event, such legal counsel under the foregoing clause (A) shall be shared with the Indemnified Parties (as such term is defined under the Securitization Documents) under the Securitization Documents.
8. Interest on Overdue Amounts. All amounts due for payment by the Seller or Servicer to the Administrative Agent or any Buyer pursuant to this Agreement shall accrue interest at the Overdue Payment Rate from the date on which payment thereof is due until the date on which payment thereof is made in accordance with the terms of this Agreement.
9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF (EXCEPT IN THE CASE OF THE OTHER TRANSACTION DOCUMENTS, TO THE EXTENT OTHERWISE EXPRESSLY STATED THEREIN) AND EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE OWNERSHIP INTEREST OF THE BUYERS
IN ANY OF THE PURCHASED RECEIVABLES OR RELATED SECURITY IS GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
10. No Non-Direct Damages. To the fullest extent permitted by Applicable Law, the Seller and Servicer shall not assert, and the Seller hereby waives, any claim against any Indemnified Person, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Transaction Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby. No Indemnified Person shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Transaction Documents or the transactions contemplated hereby or thereby; provided that the waiver provided for in this sentence shall not apply to damages resulting directly from such Indemnified Person’s own gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and non-appealable judgment.
11. Administrative Agent.
(a) Authorization and Action.
(i) Each Buyer hereby irrevocably designates and appoints PNC Bank, National Association as Administrative Agent hereunder and under the Transaction Documents to which the Administrative Agent is a party, and each Buyer that becomes a party to this Agreement hereafter ratifies such designation and appointment and authorizes the Administrative Agent to take such action on its behalf under the provisions of the Transaction Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of the Transaction Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall have no duties or responsibilities, except those expressly set forth in the Transaction Documents to which it is a party, or any fiduciary relationship with any Buyer, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of the Administrative Agent shall be read into any Transaction Document or otherwise exist against the Administrative Agent. In addition, the Administrative Agent is hereby authorized by each Buyer to consent to any amendments or restatements to the Certificate of Incorporation of the Seller to the extent such amendments or restatements are not prohibited by clause (m)(xxviii) of Exhibit D of this Agreement.
(ii) The provisions of this Section 11 are solely for the benefit of the Administrative Agent and the Buyers, and none of the Seller or the Servicer shall have any rights as a third-party beneficiary or otherwise under any of the provisions of this Section 11 (other than Section 11(j)), except that this Section 11 shall not affect any obligations which the Administrative Agent or any Buyer may have to any of the Seller or the Servicer under the other provisions of this Agreement.
(iii) In performing its functions and duties hereunder, the Administrative Agent shall act solely as the agent of the Buyers and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for any of the Seller or the Servicer or any of their respective successors and assigns.
(b) Delegation of Duties. The Administrative Agent may execute any of its duties under each Transaction Document to which it is a party by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.
(c) Exculpatory Provisions. None of the Administrative Agent or any of its directors, officers, agents or employees shall be (i) liable for any action lawfully taken or omitted to be taken by it or them under or in connection with this Agreement or any other Transaction Document (except for its, their or such Person’s own gross negligence or willful misconduct), or (ii) responsible in any manner to any of the Buyers for any recitals, statements,
representations or warranties made by the Seller or the Servicer contained in this Agreement, any other Transaction Document or any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, this Agreement, or any other Transaction Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement, or any other Transaction Document or any other document furnished in connection herewith or therewith, or for any failure of the Seller or the Servicer to perform its obligations hereunder or thereunder, or for the satisfaction of any condition specified in Section 1(g), or for the perfection, priority, condition, value or sufficiency of any collateral pledged in connection herewith. The Administrative Agent shall be under no obligation to any Buyer to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, this Agreement or any other Transaction Document, or to inspect the properties, books or records of the Seller or the Servicer. The Administrative Agent shall not be deemed to have knowledge of any Servicer Termination Event unless the Administrative Agent has received notice from the Seller, the Servicer or a Buyer.
(d) Reliance by Administrative Agent.
(i) The Administrative Agent shall in all cases be entitled to rely, and shall be fully protected in relying, upon any document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Seller or the Servicer), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent shall in all cases be fully justified in failing or refusing to take any action under this Agreement or any other Transaction Document unless it shall first receive such advice or concurrence of such of the Buyers as it deems appropriate; provided that unless and until the Administrative Agent shall have received such advice, the Administrative Agent may take or refrain from taking any action, as the Administrative Agent shall deem advisable and in the best interests of the Buyers.
(ii) The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, in accordance with a request of the Required Buyers or all of the Buyers, as applicable, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Buyers.
(iii) Any action taken by the Administrative Agent in accordance with this clause (d) shall be binding upon all of the Buyers.
(e) Non-Reliance on Administrative Agent and Other Buyers. Each Buyer expressly acknowledges that none of the Administrative Agent or other Buyers, nor any of their respective officers, directors, employees, agents, attorneys-in-fact or affiliates, has made any representations or warranties to it and that no act by the Administrative Agent or any other Buyer hereafter taken, including, without limitation, any review of the affairs of the Seller or the Servicer, shall be deemed to constitute any representation or warranty by the Administrative Agent or such other Buyer. Each Buyer represents and warrants to the Administrative Agent that it has made and will make, independently and without reliance upon the Administrative Agent or any other Buyer and based on such documents and information as it has deemed appropriate, its own appraisal of and investigation into the business, operations, property, prospects, financial and other conditions and creditworthiness of the Seller and the Servicer and made its own decision to enter into the Transaction Documents and all other documents related thereto.
(f) Reimbursement and Indemnification. Each of the Buyers agree to reimburse and indemnify the Administrative Agent and its officers, directors, employees, representatives and agents ratably in accordance with their respective Pro Rata Shares, to the extent not paid or reimbursed by the Seller or the Servicer (i) for any amounts for which the Administrative Agent, acting in its capacity as Administrative Agent is entitled to reimbursement by the Seller or the Servicer hereunder and (ii) for any other expenses incurred by the Administrative Agent, in its capacity as Administrative Agent and acting on behalf of the Buyers, in connection with the administration and enforcement of the Transaction Documents.
(g) Administrative Agent in its Individual Capacity. Each of the Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Seller or Servicer or any Affiliate of the Seller or Servicer as though the Administrative Agent were not the Administrative Agent hereunder. With respect to purchase of Receivables pursuant to this Agreement, the Administrative Agent shall have the same rights and powers under the Transaction Documents in its individual capacity as any Buyer and may exercise the same as though it were not the Administrative Agent, and the term “Buyer” shall include the Administrative Agent in its individual capacity.
(h) UCC Filings. Each of the Buyers hereby expressly recognizes and agrees that the Administrative Agent may be listed as the assignee or secured party of record on the various UCC filings required to be made under the Transaction Documents in order to perfect their respective interests in the Purchased Receivables and Related Security, that such listing shall be for administrative convenience only in creating a record or nominee holder to take certain actions hereunder on behalf of the Buyers and that such listing will not affect in any way the status of the Buyers as the true parties in interest with respect to the Purchased Receivables and Related Security. In addition, such listing shall impose no duties on the Administrative Agent other than those expressly and specifically undertaken in accordance with this Section 11.
(i) Enforcement. Notwithstanding anything to the contrary contained herein or in any other Transaction Document, the authority to enforce rights and remedies hereunder and under the other Transaction Documents against the Seller and the Servicer shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent for the benefit of all the Buyers; provided that the foregoing shall not prohibit (i) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Transaction Documents or (ii) any Buyer from exercising setoff rights in accordance with Section 5(g) (subject to the terms of Section 13(m)); provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Transaction Documents, then (x) the Required Buyers shall have the rights otherwise provided to the Administrative Agent and (y) in addition to the matters set forth in clauses (ii) and (iii) of the preceding proviso and subject to Section 13(m), any Buyer may, with the consent of the Required Buyers, enforce any rights or remedies available to it and as authorized by the Required Buyers.
(j) Successor Administrative Agent. The Administrative Agent or, upon five (5) days’ notice to the Seller, the Servicer and the Buyers, may voluntarily resign and may be removed at any time, with or without cause, by Buyers holding in the aggregate at least sixty-six and two-thirds percent (66 2/3%) of the Facility Shares, the Seller and the Servicer. If the Administrative Agent shall voluntarily resign or be removed as Administrative Agent under this Agreement, then the Required Buyers during such five-day period shall appoint, with the consent of the Seller and the Servicer from among the remaining Buyers, a successor Administrative Agent, whereupon such successor Administrative Agent or shall succeed to the rights, powers and duties of the Administrative Agent. The term “Administrative Agent” shall mean such successor agent, effective upon its appointment, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement. Upon resignation or replacement of the Administrative Agent in accordance with this clause (i), the retiring Administrative Agent shall execute such UCC-3 assignments and amendments, and assignments and amendments of the Transaction Documents, as may be necessary to give effect to its replacement by a successor Administrative Agent. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement.
12. Erroneous Payments.
(a) If the Administrative Agent notifies a Buyer, or any Person who has received funds on behalf of a Buyer (any Buyer or other recipient, a “Payment Recipient”) that the Administrative Agent has determined in its sole discretion (whether or not after receipt of any notice under immediately succeeding clause (b)) that any funds received by such Payment Recipient from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Payment Recipient (whether or
not known to such Buyer or other Payment Recipient on its behalf) (any such funds, whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise, individually and collectively, an “Erroneous Payment”) and demands the return of such Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain the property of the Administrative Agent and shall be segregated by the Payment Recipient and held in trust for the benefit of the Administrative Agent, and such Buyer shall (or, with respect to any Payment Recipient who received such funds on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two (2) Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made, in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Payment Recipient to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Overnight Bank Funding Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect. A notice of the Administrative Agent to any Payment Recipient under this clause (a) shall be conclusive, absent manifest error.
(b) Without limiting immediately preceding clause (a), each Buyer, or any Person who has received funds on behalf of a Buyer, hereby further agrees that if it receives a payment, prepayment or repayment (whether received as a payment, prepayment or repayment of principal, interest, fees, distribution or otherwise) from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such Buyer, or other such recipient, otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) in each case:
(i) (A) in the case of immediately preceding clauses (x) or (y), an error shall be presumed to have been made (absent written confirmation from the Administrative Agent to the contrary) or (B) an error has been made (in the case of immediately preceding clause (z)), in each case, with respect to such payment, prepayment or repayment; and
(ii) such Buyer shall (and shall cause any other recipient that receives funds on its respective behalf to) promptly (and, in all events, within one Business Day of its knowledge of such error) notify the Administrative Agent of its receipt of such payment, prepayment or repayment, the details thereof (in reasonable detail) and that it is so notifying the Administrative Agent pursuant to this Section 12(b).
(c) Each Buyer hereby authorizes the Administrative Agent to set off, net and apply any and all amounts at any time owing to such Buyer under any Transaction Document, or otherwise payable or distributable by the Administrative Agent to such Buyer from any source, against any amount due to the Administrative Agent under immediately preceding clause (a) or under the indemnification provisions of this Agreement.
(d) In the event that an Erroneous Payment (or portion thereof) is not recovered by the Administrative Agent for any reason, after demand therefor by the Administrative Agent in accordance with immediately preceding clause (a), from any Buyer that has received such Erroneous Payment (or portion thereof) (and/or from any Payment Recipient who received such Erroneous Payment (or portion thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return Deficiency”), upon the Administrative Agent’s notice to such Buyer at any time, (i) such Buyer shall be deemed to have assigned its Purchased Receivables and Related Security (but not its Facility Share) in an amount equal to the Erroneous Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify) (such assignment of the Purchased Receivables and Related Security (but not Facility Share), the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid interest (with the assignment fee to be waived by the Administrative Agent in such instance), and is hereby (together with the Seller and the Servicer) deemed to execute and deliver an assignment agreement with respect to such Erroneous Payment Deficiency Assignment, (ii) the Administrative Agent as the assignee Buyer shall be deemed to acquire the Erroneous Payment Deficiency Assignment, (iii) upon such deemed acquisition, the
Administrative Agent as the assignee Buyer shall become a Buyer hereunder with respect to such Erroneous Payment Deficiency Assignment and the assigning Buyer shall cease to be a Buyer hereunder with respect to such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its obligations under the indemnification provisions of this Agreement and its applicable Facility Share which shall survive as to such assigning Buyer and (iv) the Administrative Agent may reflect in the Register its ownership interest in the Purchased Receivables and Related Security subject to the Erroneous Payment Deficiency Assignment. The Administrative Agent may, in its discretion, sell any Purchased Receivable and Related Security acquired pursuant to an Erroneous Payment Deficiency Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return Deficiency owing by the applicable Buyer shall be reduced by the net proceeds of the sale of such Purchased Receivable (or portion thereof) and Related Security, and the Administrative Agent shall retain all other rights, remedies and claims against such Buyer (and/or against any recipient that receives funds on its respective behalf). For the avoidance of doubt, no Erroneous Payment Deficiency Assignment will reduce the Facility Share of any Buyer and such Facility Share shall remain available in accordance with the terms of this Agreement. In addition, each party hereto agrees that, except to the extent that the Administrative Agent has sold a Purchased Receivable (or portion thereof) and Related Security acquired pursuant to an Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative Agent may be equitably subrogated, the Administrative Agent shall be contractually subrogated to all the rights and interests of the applicable Buyer under the Transaction Documents with respect to each Erroneous Payment Return Deficiency (the “Erroneous Payment Subrogation Rights”).
(e) The parties hereto agree that an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any obligations of the Seller or the Servicer; provided that this Section 12 shall not be interpreted to increase (or accelerate the due date for), or have the effect of increasing (or accelerating the due date for), the obligations of the Seller or the Servicer relative to the amount (and/or timing for payment) of the obligations that would have been payable had such Erroneous Payment not been made by the Administrative Agent; provided, further, that for the avoidance of doubt, this clause (e) shall not apply to the extent any such Erroneous Payment is, and solely with respect to the amount of such Erroneous Payment that is, comprised of funds received by the Administrative Agent from the Seller or the Servicer for the purpose of making such Erroneous Payment.
(f) To the extent permitted by Applicable Law, no Payment Recipient shall assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payment received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
(g) Each party’s obligations, agreements and waivers under this Section 12 shall survive the resignation or replacement of the Administrative Agent, the termination of this Agreement and/or the repayment, satisfaction or discharge of all obligations of the Seller and the Servicer (or any portion thereof) under any Transaction Document.
13. General Provisions.
(a) Final Agreement; Assignment. This Agreement and each other Transaction Document contain the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof superseding all prior oral or written understandings. No provision of this Agreement may be amended or waived except by a writing signed by the parties hereto. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns (including any trustee in bankruptcy); provided, however, that neither the Seller nor the Servicer may assign any of its rights hereunder without the Administrative Agent’s prior written consent, given or withheld in the Administrative Agent’s sole discretion. Each Buyer shall have the right, without the consent of or notice to the Seller, to sell, transfer, negotiate, or grant participations in all or any part of, or any interest in, such Buyer’s obligations, rights and benefits hereunder (including in any Purchased Receivables and Related Security); provided, that the Seller may continue to communicate and deal exclusively with such Buyer and shall not be required to communicate or otherwise deal with the participant; provided, further that Buyer agrees that any agreement between such Buyer and any such participant
in respect of such participating interest shall not restrict such Buyer’s right to agree to any amendment, supplement, waiver or modification to this Agreement.
(b) Severability. Any provisions of this Agreement which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
(c) Execution; Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by electronic mail attachment in portable document format (.pdf) shall be effective as delivery of a manually executed counterpart of this Agreement.
(d) Termination. This Agreement, including all covenants, representations and warranties, repurchase obligations and indemnities made herein shall continue in full force and effect until the Final Collection Date. Each of the Buyers hereby authorizes the Administrative Agent, and the Administrative Agent hereby agrees, promptly after the Final Collection Date to execute and deliver to the Seller such UCC termination statements as may be necessary to terminate any UCC financing statements evidencing the sale of the Purchased Receivables and Related Security as well as the grant of security pursuant to Section 1(h), all at the Seller’s expense. The Seller’s and Servicer’s obligations to indemnify the Administrative Agent and each Buyer with respect to the expenses, damages, losses, costs and liabilities shall survive until the later of (x) the Final Collection Date and (y) all applicable statute of limitations periods with respect to actions that may be brought by the Administrative Agent or any Buyer under the Transaction Documents have run.
(e) Calculation of Interest. All interest amounts calculated on a per annum basis hereunder are calculated on the basis of a year of three hundred and sixty (360) days.
(f) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY LOAN PARTY PURSUANT TO THIS AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
(g) CONSENT TO JURISDICTION. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO THIS AGREEMENT, AND EACH SUCH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY BUYER TO BRING PROCEEDINGS AGAINST THE SELLER OR THE SERVICER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE SELLER OR THE SERVICER AGAINST THE ADMINISTRATIVE AGENT OR ANY BUYER OR ANY AFFILIATE OF THE ADMINISTRATIVE AGENT OR ANY BUYER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY THE SELLER OR SERVICER PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW YORK.
(h) Captions and Cross References. The various captions in this Agreement are provided solely for convenience of reference and shall not affect the meaning or interpretation of any provision of this Agreement. Unless otherwise indicated, references in this Agreement to any Section, Schedule or Exhibit are to such Section of or Schedule or Exhibit to this Agreement, as the case may be, and references in any Section, subsection, or clause to any subsection, clause or subclause are to such subsection, clause or subclause of such Section, subsection or clause.
(i) No Party Deemed Drafter. The Servicer, the Seller, the Administrative Agent and each Buyer agree that no party hereto shall be deemed to be the drafter of this Agreement.
(j) PATRIOT Act. The Administrative Agent and each Buyer hereby notify the Seller and the Servicer that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “PATRIOT Act”), it may be required to obtain, verify and record information that identifies the Seller and the Servicer, which information includes the name, address, tax identification number and other information regarding the Seller and the Servicer that will allow them to identify the Seller and the Servicer in accordance with the PATRIOT Act. This notice is given in accordance with the requirements of the PATRIOT Act. The Seller and the Servicer agree to provide the Administrative Agent and each Buyer, from time to time, with all documentation and other information required by bank regulatory authorities under “know your customer” and anti-money laundering rules and regulations, including, without limitation, the PATRIOT Act.
(k) Term SOFR Notification. Section 1(j) of this Agreement provides a mechanism for-determining an alternative rate of interest in the event that the Term SOFR Rate is no longer available or in certain other circumstances. The Administrative Agent does not warrant or accept any responsibility for and shall not have any liability with respect to, the administration, submission or any other matter related to the Term SOFR Rate or with respect to any alternative or successor rate thereto, or replacement rate therefor.
(l) Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Seller, shall maintain a register (the “Register”) on which it shall record the rights of the Buyers and any assignee or participant of the Buyers with respect to the rights under this Agreement and any Purchased Receivable and Related Security, and each assignment or participation. The Register shall include the names and addresses of the Buyers, assignees, participants or successors and the percentage or portion of such rights and obligations assigned or participated. The entries in the Register shall be conclusive absent manifest error; provided, however, that a failure to make any such recordation, or any error in such recordation shall not affect the Seller’s obligations in respect of such rights.
(m) Ratable Payments. If any Buyer, whether by set off or otherwise, has payment made to such Buyer (other than payments received pursuant to Section 7) in a greater proportion than that received by any other Buyer entitled to receive a ratable share of such obligations, such Buyer agrees, promptly upon demand, to purchase for cash without recourse or warranty a portion of such obligations held by the other Buyers so that after such purchase such Buyer will hold its Pro Rata Share of such obligations; provided that, if all or any portion of such excess amount is thereafter recovered from such Buyer, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest.
(n) Bankruptcy Petition. Each party hereto hereby covenants and agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior Debt of the Seller, it will not institute against, or join any other Person in instituting against, the Seller any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States.
(o) Intercreditor Agreement. Each Buyer hereby acknowledges that it has received and reviewed the Intercreditor Agreement and agrees to be bound by the terms thereof. Each Buyer (and each Person that becomes a Buyer under this Agreement after the date hereof) hereby authorizes and directs the Administrative Agent to enter into the Intercreditor Agreement on behalf of such Buyer and agrees that the Administrative Agent may take such actions on its behalf as is contemplated by the terms of the Intercreditor Agreement. To the extent
that any terms or provisions herein are inconsistent with any terms or provisions of the Intercreditor Agreement, the Intercreditor Agreement shall govern. In addition, each Buyer and the Administrative Agent acknowledge and agree that the rights and remedies of the Administrative Agent and the Buyers hereunder and under the other Transaction Documents are subject to the Intercreditor Agreement.
(p) Confidentiality.
(i) Each of the Seller, the Servicer and each Buyer shall maintain and shall cause each of its employees and officers to maintain the confidentiality of the Fee Letter and the other confidential or proprietary information with respect to the Administrative Agent and the Buyers and their respective businesses obtained by it or them in connection with the structuring, negotiating and execution of the transactions contemplated herein, except that the Seller, the Servicer and such Buyer and its officers and employees may disclose such information to such Person’s external accountants and attorneys and as required by any Applicable Law or order of any judicial or administrative proceeding.
(ii) Each of the Buyers and the Administrative Agent shall maintain and shall cause each of its officers, directors, employees, investors, potential investors, credit enhancers, outside accountants, attorneys and other advisors to maintain the confidentiality of, and not disclose to any other Person, any nonpublic information with respect to the Seller and the Servicer, except that any of the foregoing may disclose such information (i) to any party to this Agreement, (ii) to its Affiliates and its insurers and reinsurers (iii) to the outside accountants, attorneys and other advisors of any Person described in clause (i) above, (iv) to any prospective or actual assignee or participant of the Administrative Agent or any Buyer, (v) to any other entity organized for the purpose of purchasing, or making loans secured by, financial assets for which any Buyer (or one of its Affiliates) acts as the administrative agent and to any officers, directors, employees, outside accountants and attorneys of each of the foregoing; provided that each Person described in the foregoing clause (ii) through (v) is informed of the confidential nature of such information and, in the case of a Person described in clauses (ii) or (iii) is subject to customary obligations of confidentiality, and in the case of a Person described in clause (iv), agrees in writing to maintain the confidentiality of such information in accordance with this Section 13(p); (vi) as required pursuant to any law, rule, regulation, direction, request or order of any judicial, administrative or regulatory authority or proceedings (whether or not having the force or effect of law); and (vii) in connection with the exercise of any remedies hereunder or under any other Transaction Document or any action or proceeding relating to this Agreement or any other Transaction Document or the enforcement of rights hereunder or thereunder. Notwithstanding the foregoing, the Administrative Agent and the Buyers shall have no obligation of confidentiality in respect of any information which may be generally available to the public or becomes available to the public through no fault of theirs or their respective Affiliates.
(iii) Notwithstanding any other express or implied agreement to the contrary, the parties hereto hereby agree and acknowledge that each of them and each of their employees, representatives, and other agents may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to any of them relating to such tax treatment and tax structure, except to the extent that confidentiality is reasonably necessary to comply with U.S. federal or state securities laws. For purposes of this Section 13(p), the terms “tax treatment” and “tax structure” have the meanings specified in Treasury Regulation section 1.6011-4(c).
[Signatures Commence on the Following Page]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.
| | | | | | | | | | | | | | | | | |
| SMITHFIELD RECEIVABLES FUNDING LLC, |
| as Seller |
| | | | | |
| By: | SFFC, Inc., its managing member | |
| | | | | |
| | | | | |
| By: | /s/ Jeffrey A. Porter | |
| Name: | Jeffrey A. Porter | |
| Title: | President, Assistant Treasurer and Assistant Secretary |
| | | | | |
| SMITHFIELD FOODS, INC., |
| as Servicer |
| | | | | |
| | | | | |
| By: | /s/ Jenifer Byrd | |
| Name: | Jenifer Byrd | |
| Title: | Vice President and Corporate Treasurer |
Signature Page 1 o f 3
Receivables Purchase Agreement (Smithfield)
| | | | | | | | | | | | | | | | | |
| PNC BANK, NATIONAL ASSOCIATION, |
| as Administrative Agent |
| | | | | |
| | | | | |
| By: | /s/ Peter J. Loescher | |
| Name: | Peter J. Loescher | |
| Title: | Senior Vice President |
| | | | | |
| PNC BANK, NATIONAL ASSOCIATION, |
| as a Buyer |
| | | | | |
| | | | | |
| By: | /s/ Peter J. Loescher | |
| Name: | Peter J. Loescher | |
| Title: | Senior Vice President |
Signature Page 2 o f 3
Receivables Purchase Agreement (Smithfield)
| | | | | | | | | | | | | | | | | |
| COÖPERATIEVE RABOBANK, U.A., NEW YORK
BRANCH, |
| as a Buyer |
| | | | | |
| By: | /s/ Christopher Lew | |
| Name: | Christopher Lew | |
| Title: | Managing Director | |
| | | | | |
| By: | /s/ Jinyang Wang | |
| Name: | Jinyang Wang | |
| Title: | Executive Director | |
Signature Page 3 o f 3
Receivables Purchase Agreement (Smithfield)
Exhibit A
Certain Defined Terms
A. Defined Terms.
As used herein, the following terms shall have the following meanings:
“Account Debtor” means, with respect to any Receivable, the Person that is obligated to make payments in respect of such Receivable pursuant to the applicable Contract or invoice therefor.
“Acquisition Period” means the period beginning on the Initial Funding Date and ending on the Acquisition Period Termination Date.
“Acquisition Period Termination Date” means the date specified by any Buyer in a written notice to the Seller and the Administrative Agent or by the Seller in a written notice to the Administrative Agent and the Buyers, in each case, delivered at such Person’s discretion, terminating the Acquisition Period (an “Acquisition Period Termination Notice”), which date shall not be earlier than the date that is one (1) Business Day after the delivery of such Acquisition Period Termination Notice to the other party; provided that (i) the delivery of an Acquisition Period Termination Notice by any Buyer shall cause the Maximum Outstanding Purchase Amount to be reduced to an amount equal to the Buyer Amount Balance as of the date such Acquisition Period Termination Notice is delivered, (ii) the Acquisition Period Termination Date shall be deemed to have occurred upon the occurrence of the Servicer Termination Event specified in clause (e) of Exhibit F and (iii) the Administrative Agent or any Buyer may immediately terminate the Acquisition Period by written notice to the Seller if any other Servicer Termination Event shall have occurred and be continuing.
“Activation Notice” has the meaning set forth in Section 4(b) hereof.
“Additional Funding Amount” has the meaning set forth in Section 1(b)(i) hereof.
“Additional Funding Date” has the meaning set forth in Section 1(b)(i) hereof.
“Additional Proposed Receivables” has the meaning set forth in Section 1(a)(ii) hereof.
“Additional Purchase Date” means each Business Day during the Acquisition Period (other than the Initial Funding Date).
“Adjusted Term SOFR”: At any time for any calculation, the rate per annum equal to (a) the Term SOFR Rate, plus (b) the SOFR Adjustment.
“Administrative Agent’s Account” means the deposit account specified as such in Exhibit G hereto, or such other bank account identified in writing by the Administrative Agent to the Seller from time to time.
“Adverse Claim” means any ownership interest or claim, mortgage, deed of trust, pledge, lien, security interest, hypothecation, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including, but not limited to, any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security; it being understood that any thereof in favor of, or assigned to, the Buyers shall not constitute an Adverse Claim.
“Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person or any Subsidiary of such Person. A Person shall be deemed to control another Person if (a) the controlling Person owns 10-50% of any class of voting securities of the controlled Person only if it also possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise, or (b) if the controlling Person owns more than 50% of any class of voting securities of the controlled Person.
“Agreement” has the meaning set forth in the preamble hereto.
“Amount on Deposit in the Collection Accounts” as of any date, (x) the amounts on deposit in the Collection Accounts as of such date (including any amounts deposited therein by the Buyers on such date pursuant to Section 1(b)) minus (y) the aggregate of Purchase Prices payable pursuant to Section 1(a)(ii) for Purchased Receivables and Related Security purchased prior to such date but not theretofore distributed from the Collection Accounts pursuant to Section 4(c)(i)(1), as applicable; provided, that in calculating the Amount on Deposit in the Collection Accounts on any date, such calculation shall disregard (without duplication) (i) any amount not representing Collections or amounts paid in respect of Purchased Receivables (including (A) any Collections or amounts paid with respect to any Receivable after the Seller has repurchased such Receivable in accordance with Section 5(b) and (B) any Collections with respect to Receivables retained by the Seller and subject to the Securitization Documents), (ii) any Collections or amounts paid by the applicable Account Debtor with respect to any Purchased Receivable as to which the Seller has made a payment pursuant to Section 5(a) to the extent that the sum of such payment by the Seller plus the amounts so collected from or paid by the applicable Account Debtor with respect to such Purchased Receivable exceeds the original Purchase Price paid on the applicable Purchase Date for such Purchased Receivable and Related Security and (iii) any proceeds of Defaulted Receivables and Related Security.
“Anti-Corruption Laws” means the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010, and any other similar anti-corruption Applicable Laws or regulations administered or enforced in any jurisdiction in which Smithfield or any of its Subsidiaries conduct business.
“Anti-Terrorism Law” means any Applicable Law in force or hereinafter enacted related to terrorism, money laundering, or economic sanctions, including the Bank Secrecy Act, 31 U.S.C. § 5311 et seq., the USA PATRIOT Act, any such Applicable Law administered or enforced by the Netherlands, the International Emergency Economic Powers Act, 50 U.S.C. 1701, et seq., the Trading with the Enemy Act, 50 U.S.C. App. 1, et seq., 18 U.S.C. § 2332d, and 18 U.S.C. § 2339B.
“Applicable Law” means any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any Governmental Authority, foreign or domestic.
“Applicable Margin” means, with respect to each Approved Account Debtor, the percentage set forth on Schedule II to this Agreement as the “Applicable Margin,” as such Schedule may be modified or supplemented from time to time, as approved in advance by the Seller, the Administrative Agent and each Buyer in writing in their sole and absolute discretion.
“Approved Account Debtor” means a Person listed as an Account Debtor on Schedule II to this Agreement, as such Schedule may be modified or supplemented from time to time, as approved in advance by the Administrative Agent and each Buyer in writing in their sole and absolute discretion.
“Beneficial Ownership Certification” means, for the Seller, a certification regarding beneficial ownership as required by the Beneficial Ownership Rule.
“Beneficial Ownership Rule” means 31 C.F.R. § 1010.230.
“Breakage Amount” means, with respect to any distribution to the Buyers made pursuant to Section 4(c)(ii) on any Daily Amortization Date, the amount, if any, by which (A) the additional Purchase Price Adjustment (calculated without taking into account any Breakage Amount or any shortened duration of the applicable Breakage Period pursuant to the definition thereof) which would have accrued during such Breakage Period on the reduction of the Buyer Amount Balance relating to such Breakage Period had such reduction not been made, exceeds (B) the income, if any, received by such Buyer (or likely to be realized by such Buyer (as reasonably determined by the Buyer)) from the investment of the proceeds of such reduction of the Buyer Amount Balance. A certificate as to the
amount of any Breakage Amount (including the computation of such amount) shall be submitted by the applicable Buyer to the Seller and shall be conclusive and binding for all purposes, absent manifest error.
“Breakage Period” means, with respect to any Daily Amortization Date, the period beginning on (and including) such Daily Amortization Date and ending on (but excluding) the next succeeding Settlement Date.
“Business Day” means any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed, or are in fact closed, for business in Pittsburgh, Pennsylvania (or, if otherwise, the Lending Office of the Administrative Agent); provided that, when used in connection with an amount that bears interest at a rate based on SOFR or any direct or indirect calculation or determination of SOFR, the term “Business Day” means any such day that is also a U.S. Government Securities Business Day.
“Buyer” has the meaning set forth in the preamble hereto.
“Buyer’s Account” means, with respect to any Buyer, the deposit account specified as such in Exhibit G hereto, or such other bank account identified in writing by such Buyer to the Seller from time to time.
“Buyer Amount Balance” means, as of any date of determination, the net of: (i) the Initial Funding Amount, plus (ii) the cumulative Additional Funding Amounts, if any, paid by the Buyers pursuant to Section 1(b) after the date hereof through such date of determination, minus (iii) the cumulative amounts distributed to the Buyers pursuant to Section 4(c) after the date hereof through such date of determination (including, without limitation, amounts distributed to the Buyers with respect to Deemed Collections and the repurchase price for Purchased Receivables repurchased in accordance with Section 5(b)), minus (iv) the cumulative amount of Defaulted Receivables after the date hereof through such date of determination.
“Change of Control” means a “Change of Control” (as defined under the Securitization Documents) has occurred.
“Closing Date” means December 22, 2022.
“Collection Account” means each deposit account specified as such in Exhibit G hereto; provided, that each Collection Account shall be novated to the Seller on or prior to the Post-Closing Date (as such term is defined in the Credit and Security Agreement) .
“Collections” means, with respect to any Receivable: (a) all funds that are received by the Seller, Servicer or any other Person on their behalf in payment of any amounts owed in respect of such Receivable (including purchase price, finance charges, interest and all other charges), or applied to amounts owed in respect of such Receivable (including insurance payments and net proceeds of the sale or other disposition of repossessed goods or other collateral or property of the related Account Debtor or any other Person directly or indirectly liable for the payment of such Receivable and available to be applied thereon), (b) all Deemed Collections, (c) all proceeds of all Related Security with respect to such Receivable and (d) all other proceeds of such Receivable.
“Conforming Changes” means, with respect to the Term SOFR Rate or any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Initial Discount Rate,” the definition of “Overdue Payment Rate,” the definition of “Business Day,” the definition of “Initial Discount Period,” the definition of “Settlement Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides in consultation with the Seller may be appropriate to reflect the adoption and implementation of the Term SOFR Rate or such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of the Term SOFR Rate or the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent
decides in consultation with the Seller is reasonably necessary in connection with the administration of this Agreement and the other Transaction Documents).
“Contract” means, with respect to any Receivable, any and all instruments, agreements, invoices or other writings pursuant to which such Receivable arises or which evidences such Receivable.
“Covered Entity” means (a) each of the Seller, the Servicer, the Performance Guarantor and their respective Subsidiaries, and (b) each Person that, directly or indirectly, controls a Person described in clause (a) above. For purposes of this definition, control of a Person means the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise.
“Credit and Collection Policy” means, as the context may require, those receivables credit and collection policies and practices of the Seller and the Servicer in effect on the date hereof as modified in compliance with this Agreement.
“Credit and Security Agreement” means that certain Fifth Amended and Restated Credit and Security Agreement, dated as of the date hereof, among the Seller, as borrower, Smithfield, as servicer, the various lenders, l/c participants and co-agents from time to time party thereto, Rabobank, as a letter of credit issuer and PNC, as administrative and letter of credit issuer, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Credit Default Certification” has the meaning set forth in Section 5(c).
“Daily Amortization Date” has the meaning set forth in Section 4(c)(ii).
“Debt” means as to any Person at any time, without duplication, all obligations for money borrowed or raised, all obligations (other than accounts payable and other similar items arising in the ordinary course of business) for the deferred payment of the purchase price of property, all capital lease obligations, all direct or contingent obligations under letters of credit and similar instruments, all net obligations under derivatives contracts and all guarantees (whether contingent or otherwise) of such Person guaranteeing the Debt of any other Person, whether directly or indirectly (other than endorsements for collection or deposit in the ordinary course of business).
“Deemed Collection” has the meaning set forth in Section 5(a) hereof.
“Defaulted Account Debtors” has the meaning set forth in Section 5(d) hereof.
“Defaulted Receivables” has the meaning set forth in Section 5(d) hereof.
“Defaulted Receivables Event” has the meaning set forth in Section 5(d) hereof.
“Deposit Account Control Agreement” means (i) that certain Deposit Account Control Agreement, dated as of the Closing Date, by and among the Servicer, the Seller, the Securitization Agent and Bank of America, N.A., as depositary bank and (ii) each other deposit account control agreement executed from time to time among the Servicer, the Seller, the Securitization Agent and a depositary bank.
“Dilution” means on any date after the related Purchase Date, an amount equal to the sum, without duplication, of the aggregate reduction effected on such day in the outstanding balance of any Purchased Receivable attributable to any non-cash items including credits, rebates, billing errors, sales or similar taxes, cash discounts, volume discounts, allowances, chargebacks, returned or repossessed goods, sales and marketing discounts, warranties, any unapplied credit memos and other adjustments or reductions that are made in respect of Account Debtors; provided, however, that (a) write-offs to the extent related to the financial or credit condition of an Account
Debtor (including the occurrence of an Insolvency Event with respect to the applicable Account Debtor) and (b) Disputes, in each case, shall not constitute Dilution.
“Dispute” means any dispute, discount, deduction, claim, offset, defense, or counterclaim or similar position asserted of any kind relating to one or more Receivables (x) arising on account of the goods relating to such Receivables having been lost or damaged prior to receipt thereof by the related Account Debtor or otherwise not delivered to such Account Debtor in accordance with the Contract related thereto; (y) arising on account of the return of goods by an Account Debtor to the Seller, Servicer, any of their respective Affiliates or successors or assigns (including the Buyer) relating to its obligation to pay an amount due with respect to a Purchased Receivable, or (z) otherwise asserted by the related Account Debtor as being a basis for non-payment in full of the Receivable (other than disputes due only to the applicable Account Debtor’s financial or credit condition or ability to pay); regardless of whether the same (i) is in an amount greater than, equal to or less than the applicable Purchased Receivable concerned or (ii) arises by reason of an act of God, civil strife, war, currency restrictions, foreign political restrictions or regulations, or any other circumstance or event beyond the control of the Seller or the applicable Account Debtor.
“Dollars” means United States Dollars, the lawful currency of the United States of America.
“Due Date” means, with respect to any Purchased Receivable, the date the related Contract provides for timely payment in full of the amounts owing thereunder.
“Eligible Receivable” means a Receivable with respect to which each of the Eligibility Criteria set forth in Exhibit E is satisfied.
“Embargoed Property” means any property; (a) 50% or more beneficially owned, directly or indirectly, by a Sanctioned Person; (b) that is due to or from a Sanctioned Person; (c) in which a Sanctioned Person otherwise holds any property interest; (d) that is located in a Sanctioned Jurisdiction; or (e) that otherwise would cause any actual violation by the Administrative Agent or any Buyer of any applicable Anti-Terrorism Law if the Administrative Agent or any Buyer were to obtain an encumbrance on, lien on, pledge of, or security interest in such property, or provide services in consideration of such property.
“Executive Officer” shall mean with respect to any Person, the Chief Executive Officer, President, Vice Presidents (if elected by the Board of Directors of such Person), Chief Financial Officer, Treasurer, Secretary and any Person holding comparable offices or duties (if elected by the Board of Directors of such Person).
“Facility Share” shall mean, with respect to any Buyer, the amount set forth opposite such Buyer’s name below, or as such amount is modified from time to time.
| | | | | |
| PNC | $125,000,000 | |
| Rabobank | $125,000,000 | |
“Fee Letter” means that certain structuring agent and administrative agent fee letter agreement, dated as of the Closing Date, by and among the Seller, PNC Capital Markets LLC and the Administrative Agent.
“Final Collection Date” means the date following the termination of this Agreement on which the Administrative Agent and each Buyer, as applicable, has received (i) all Collections owing on the Purchased Receivables and (ii) all payments, if any, required to be paid by the Seller or Servicer under this Agreement or any other Transaction Document, including with respect to Repurchase Events and Indemnified Amounts.
“Finance Charges” means, with respect to a Contract, any finance, interest, late payment charges or similar charges owing by an Account Debtor pursuant to such Contract.
“Funding Notice” has the meaning set forth in Section 1(b)(i) hereof.
“GAAP” means generally accepted accounting principles in the United States of America, applied on a consistent basis as set forth in Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and/or in statements of the Financial Accounting Standards Board or the rules and regulations of the U.S. Securities and Exchange Commission and/or their respective successors and that are applied in the circumstances as of the date in question.
“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).
“IFRS” means international accounting standards within the meaning of the IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements and/or any successor standards.
“Indemnified Amounts” has the meaning set forth in Section 4(i) hereof.
“Indemnified Person” has the meaning set forth in Section 4(f) hereof.
“Initial Discount” means, with respect to each Purchased Receivable acquired on the Initial Funding Date, the initial discount cost applied by the Administrative Agent to such Purchased Receivable, equal to the product of (a) the Initial Discount Rate applicable to such Purchased Receivable multiplied by (b) the Net Invoice Amount of such Purchased Receivable as of the applicable Purchase Date.
“Initial Discount Period” means, with respect to any Purchased Receivable acquired on the Initial Funding Date, the number of days from and including (a) the Purchase Date for such Purchased Receivable to, but not including, (b) the first to occur of (i) the date of payment in full of such Purchased Receivable and (ii) the next occurring Settlement Date.
“Initial Discount Rate” means, with respect to any Purchased Receivable acquired on the Initial Funding Date, a rate equal to the product of (a) Adjusted Term SOFR plus the Applicable Margin, determined as of the Purchase Date for such Purchased Receivable, multiplied by (b) the result of (i) the applicable Initial Discount Period, divided by (ii) 360.
“Initial Funding Amount” has the meaning set forth in Section 1(a)(i) hereof.
“Initial Funding Date” means the Business Day determined by the Seller and the Servicer, notified to the Administrative Agent and the Buyers in writing at least three (3) Business Days in advance thereof and agreed to by each Buyer in its sole discretion.
“Initial Funding Date Portfolio Report” means the Portfolio Report delivered not less than two (2) Business Days prior to the Initial Funding Date.
“Initial Proposed Receivables” has the meaning set forth in Section 1(a)(i) hereof.
“Initial Purchase Amount” has the meaning set forth in Section 1(a)(i) hereof.
“Insolvency Event” shall mean (i) with respect to an Account Debtor, the inability of such Account Debtor to pay any amount owed when due in respect of a Purchased Receivable as a result of the bankruptcy, insolvency or other financial inability of such Account Debtor to make such payment and (ii) with respect to any Person (including an Account Debtor), such Person shall fail to pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against such Person seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any Applicable Law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of thirty (30) days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or such Person shall take any action to authorize any of the actions set forth above in this clause (ii).
“In-Transit Collateral” means, as of any date of determination, any inventory of an Originator that (i) is in the process of being transported by such Originator to an Account Debtor pursuant to a Contract that is then expected to be delivered within five (5) or fewer calendar days, (ii) is covered by insurance in accordance with the applicable Originator’s normal business practices, and (iii) upon its receipt and acceptance by such Account Debtor, will give rise to an amount payable by such Account Debtor to such Originator under such Contract.
“Intercreditor Agreement” means the Intercreditor Agreement, dated as of the date hereof, among the Administrative Agent, the Securitization Agent, Smithfield and the Seller, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.
“Lock-Box” means each locked postal box with respect to which a bank who has executed a Deposit Account Control Agreement has been granted exclusive access for the purpose of retrieving and processing payments made on the Receivables.
“Material Adverse Effect” means (i) any material adverse effect on the business, assets, operations, property or financial condition of the Performance Guarantor and its Non-Excluded Subsidiaries (as defined in the Credit and Security Agreement), taken as a whole, (ii) any material adverse effect on the abilities of the Seller, the Servicer and the Performance Guarantor, taken as a whole, to perform their obligations under the Transaction Documents to which they are a party, (iii) any material adverse effect on the legality, validity or enforceability of the Agreement or any other Transaction Document, (iv) any material adverse effect on the Buyers’ interest in the Receivables generally or in any significant portion of the Receivables, the Related Security or Collections with respect thereto, (v) any material adverse effect on the collectability of the Receivables generally or of any material portion of the Receivables and (vi) material adverse effect on the rights of or benefits available to the Administrative Agent or the Buyers.
“Maximum Outstanding Purchase Amount” means $250,000,000.
“Net Invoice Amount” means the amount of the applicable Purchased Receivable shown on the invoice for such Purchased Receivable as the total amount payable by the related Account Debtor (net of any Dilution, discounts, credits or other allowances shown on such invoice and agreed to prior to the applicable Purchase Date).
“OFAC” means the Office of Foreign Assets Control of the U.S. Department of the Treasury.
“Originator” means each Person from time to time party to the Sale Agreement as an Originator.
“Other Taxes” means all present or future stamp, excise, court or documentary, intangible, recording, filing or similar taxes that arise from any payment made under, from the execution, origination, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Transaction Document (including this Agreement) or Purchased Receivable.
“Outstanding Purchase Amount” means, as of any time of determination and with respect to any or all of the Purchased Receivables, (x) the Net Invoice Amount for such Purchased Receivables, minus (y) the aggregate amount of all Collections with respect to such Purchased Receivables and Related Security that has been deposited into the Collection Accounts as of such time. When such term is used without reference to any specific Purchased Receivables, it shall constitute a reference to all Purchased Receivables.
“Overdue Payment Rate” means the Prime Rate plus 2.00% per annum changing when and as the Prime Rate changes; provided, however, that such Overdue Payment Rate shall not at any time exceed the maximum rate permitted by Applicable Law.
“Overnight Bank Funding Rate” means for any day, the rate comprised of both overnight federal funds and overnight eurocurrency borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the Federal Reserve Bank of New York, as set forth on its public website from time to time, and as published on the next succeeding Business Day as the overnight bank funding rate by the Federal Reserve Bank of New York (or by such other recognized electronic source (such as Bloomberg) selected by the Administrative Agent for the purpose of displaying such rate); provided, that if such day is not a Business Day, the Overnight Bank Funding Rate for such day shall be such rate on the immediately preceding Business Day; provided, further, that if such rate shall at any time, for any reason, no longer exist, a comparable replacement rate determined by the Administrative Agent at such time (which determination shall be conclusive absent manifest error). If the Overnight Bank Funding Rate determined as above would be less than zero, then such rate shall be deemed to be zero. The rate of interest charged shall be adjusted as of each Business Day based on changes in the Overnight Bank Funding Rate without notice to the Seller.
“PATRIOT Act” has the meaning set forth in Section 13(l).
“Performance Guarantor” means Smithfield.
“Performance Guaranty” means a performance guaranty entered into by the Performance Guarantor in favor of the Administrative Agent for the benefit of the Buyers.
“Person” means an individual, partnership, sole proprietorship, corporation (including a business trust), limited liability company, limited partnership, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
“PNC” has the meaning set forth in the preamble hereto.
“Portfolio Report” means a report updated and delivered at such times set forth herein with respect to the Purchased Receivables in substantially the form attached hereto as Schedule I.
“Portfolio Report Signatory” means each of the individuals set forth on Schedule III, which the Seller has authorized to certify Portfolio Reports delivered pursuant to clause (f) of Exhibit D (as such Schedule III may be updated by the Seller in writing from time to time with the consent of the Administrative Agent, such consent not to be unreasonably withheld).
“Prime Rate” means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime commercial lending rate or base rate in effect at its principal office for loans in the United States of America, with each change in the Prime Rate being effective on the date such change is publicly announced as effective (it being understood and agreed that the Prime Rate is a reference rate used by the Administrative Agent in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged on any extension of credit by the Administrative Agent to any debtor).
“Principal Office” means the main banking office of the Administrative Agent in Pittsburgh, Pennsylvania.
“Pro Rata Share” shall mean, with respect to any Buyer,
(i) with respect to each Proposed Receivable and Related Security, (x) if the applicable Account Debtor is H.E. Butt Grocery Company, 100% with respect to PNC and 0% with respect to Rabobank and, (y) otherwise, an amount (expressed as a percentage) equal to (A) such Buyer’s Facility Share, divided by (B) the aggregate Facility Share of all of the Buyers, and
(ii) for all other purposes under this Agreement, an amount (expressed as a percentage) equal to (x) the aggregate Purchase Prices of all Purchased Receivables and Related Security paid by such Buyer, divided by (y) the aggregate Purchase Prices of all Purchased Receivables and Related Security paid by all of the Buyers.
“Proposed Receivables” has the meaning set forth in Section 1(a)(ii) hereof.
“Purchase Date” means each date on which the Buyers purchase Receivables.
“Purchase Price” means, with respect to any Purchased Receivable, the Net Invoice Amount thereof.
“Purchase Price Adjustment” has the meaning set forth in Section 1(c)(i) hereof.
“Purchase Sublimit” means, with respect to each Approved Account Debtor, the dollar amount set forth on Schedule II to this Agreement as the “Purchase Sublimit,” as such Schedule may be modified or supplemented from time to time, as approved in advance by the Administrative Agent and each Buyer in writing in their sole and absolute discretion.
“Purchased Receivables” means, without duplication, (i) the Eligible Receivables purchased hereunder on the Initial Funding Date as provided in Section 1(a)(i) and (ii) Eligible Receivables purchased hereunder during the Acquisition Period as provided in Sections 1(a)(ii) and (iii). Without limiting the Seller’s obligations under Section 5(b) to repurchase a Receivable that is not an Eligible Receivable on the Initial Funding Date or the applicable Purchase Date, as applicable, any reference to Purchased Receivables herein shall include any Receivable sold or purported to be sold on the Initial Funding Date or any Purchase Date, in each case unless and until repurchased in accordance with Section 5(b).
“Rabobank” means Coöperatieve Rabobank U.A., New York Branch.
“Receivable” means (i) all indebtedness and other obligations owed to an Originator (at the times it arises, and before giving effect to any transfer or conveyance under this Agreement or the Securitization Documents) (including any indebtedness, obligation or interest constituting an account, chattel paper, instrument or general intangible) arising in connection with the sale of goods or the rendering of services by such Originator and further includes the obligation to pay any Finance Charges with respect thereto and (ii) all rights of an Originator under a Contract to collect or receive amounts that become due and payable under such Contract upon the delivery and acceptance of In-Transit Collateral pursuant to such Contract.
“Records” means, with respect to any Receivable, all Contracts and other documents, books, records and other information (including computer programs, tapes, disks, punch cards, data processing software and related property and rights) relating to such Receivable, any Related Security therefor and the related Account Debtor.
“Related Securitization Assets” means with respect to any Securitized Receivables, (i) all Related Security with respect to such Securitized Receivable, (ii) all Securitized Receivable Collections relating thereto and (iii) all proceeds of, and all amounts received or receivable under any or all of, the foregoing.
“Related Security” means, with respect to any Receivable:
(i) all of the Seller’s interest in the Related Security (under and as defined in the Sale Agreement);
(ii) all of the Seller’s right, title and interest in, to and under the Sale Agreement in respect of such Receivable;
(iii) all of the Seller’s right, title and interest in, to and under the Performance Undertaking (as defined in the Credit and Security Agreement);
(iv) all rights, remedies, powers, privileges, title and interest (but not obligations) in and to each Lock-Box and Collection Account, into which any Collections or other proceeds with respect to such Receivable may be deposited, and any related investment property acquired with any such Collections or other proceeds (as such term is defined in the applicable UCC); and
(v) all proceeds of any of the foregoing.
“Reportable Compliance Event” means that: (a) any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint, or similar charging instrument, arraigned, custodially detained, penalized or the subject of an assessment for a penalty, or enters into a settlement with a Governmental Authority in connection with any economic sanctions or other Anti-Terrorism Law or Anti-Corruption Law, or any predicate crime to any Anti-Terrorism Law or Anti-Corruption Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations represents a material violation of any Anti-Terrorism Law or Anti-Corruption Law; (b) any Covered Entity engages in a transaction that has caused or may cause Buyer to be in violation of any Anti-Terrorism Laws, including a Covered Entity’s use of any proceeds of the purchases hereunder to fund any operations in, finance any investments or activities in, or, make any payments to, directly or indirectly, a Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws; (c) any Purchased Receivable or Related Security becomes Embargoed Property; or (d) any Covered Entity otherwise violates, or reasonably believes that it will violate, any of the representations, warranties or covenants set forth in clauses (q) or (r) of Exhibit C or clause (n) of Exhibit D of this Agreement.
“Reporting Date” means, with respect to any Settlement Date, the second Business Day preceding such Settlement Date.
“Repurchase Events” has the meaning set forth in Section 5(b) hereof.
“Required Buyers” means Buyers holding in the aggregate more than fifty percent (50%) of the Facility Shares; provided, that at any time when there are two or fewer Buyers, “Required Buyers” shall mean all of the Buyers.
“Sale Agreement” means that certain Fifth Amended and Restated Receivables Sale Agreement, dated as of the Closing Date, among the Seller, the Originators and Smithfield, as servicer, as the same may be amended, amended and restated, supplemented or otherwise modified from time to time.
“Sanctioned Jurisdiction” means any country, territory, or region that is the subject of comprehensive country- or territory-wide sanctions administered by OFAC.
“Sanctioned Person” means (a) a Person that is the subject of sanctions administered by OFAC or the U.S. Department of State (“State”), including by virtue of being (i) named on OFAC’s list of “Specially Designated Nationals and Blocked Persons”; (ii) organized under the Applicable Laws of, ordinarily resident in, or physically located in a Sanctioned Jurisdiction; (iii) owned or controlled 50% or more in the aggregate, by one or more Persons that are the subject of sanctions administered by OFAC; (b) a Person that is the subject of sanctions maintained by the European Union (“E.U.”), including by virtue of being named on the E.U.’s “Consolidated list of persons, groups and entities subject to E.U. financial sanctions” or other, similar lists; (c) a Person that is the subject of sanctions maintained by the United Kingdom (“U.K.”), including by virtue of being named on the “Consolidated List Of Financial Sanctions Targets in the U.K.” or other, similar lists; or (d) a Person that is the subject of sanctions imposed by any Governmental Authority of a jurisdiction whose Applicable Laws apply to this Agreement.
“Securitization Agent” means PNC, as the administrative agent under the Securitization Documents.
“Securitization Documents” means the Credit and Security Agreement, the Sale Agreement and the other Transaction Documents (as defined in the Credit and Security Agreement).
“Securitized Receivable” means any Receivable (as such term is defined in the Credit and Security Agreement).
“Securitized Receivable Collections” means, with respect to any Securitized Receivable, all cash collections and other cash proceeds in respect of such Securitized Receivable, including all Finance Charges or other related amounts accruing in respect thereof and all cash proceeds of Related Monetized Assets; provided, however, that the term “Securitized Receivable Collections” shall not include any payment made for the account of the Servicer, a third-party service provider or sub-contractor whose services were not included in the amount invoiced for the applicable Securitized Receivable.
“Seller” has the meaning set forth in the preamble hereto.
“Seller’s Account” means the account specified as such in Exhibit G hereto, or such other bank account identified in writing by the Seller to the Administrative Agent from time to time.
“Servicer” has the meaning set forth in Section 4(a) hereof.
“Servicer Termination Event” means an event specified in Exhibit F hereto.
“Settlement Date” means (i) the Initial Funding Date and (ii) each 25th day of each month after the Initial Funding Date (or, if such day, is not a Business Day, the next succeeding Business Day).
“Settlement Period” means (i) with respect to the Initial Funding Date, the period beginning on (and including) the Initial Funding Date and ending on (but excluding) the next succeeding Settlement Date and (ii) with respect to any other Settlement Date, the period beginning on (and including) such Settlement Date and ending on (but excluding) the next succeeding Settlement Date.
“Smithfield” means Smithfield Foods, Inc., a Virginia corporation.
“SOFR” shall mean, for any day, a rate equal to the secured overnight financing rate as administered by the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“SOFR Adjustment” shall mean 0.10%.
“SOFR Floor” shall mean 0.00%.
“Solvent” means, with respect to any Person and as of any particular date, (i) the present fair market value (or present fair saleable value) of the assets of such Person is not less than the total amount required to pay the probable liabilities of such Person on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured, (ii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business, (iii) such Person is not incurring debts or liabilities beyond its ability to pay such debts and liabilities as they mature and (iv) such Person is not engaged in any business or transaction, and is not about to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged.
“Subsidiary” means, as to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock of each class or other interests having ordinary voting power (other than stock or other interests having such power only by reason of the happening of a contingency) to elect a majority of the Board of
Directors or other managers of such entity are at the time owned, or management of which is otherwise controlled: (a) by such Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and one or more Subsidiaries of such Person.
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Rate” shall mean, for any Settlement Period or Initial Discount Period, the interest rate per annum determined by the Administrative Agent to be the Term SOFR Reference Rate for a tenor comparable to such Settlement Period or Initial Discount Period, as such rate is published by the Term SOFR Administrator on the day (the “Term SOFR Determination Date”) that is two (2) Business Days prior to the first day of such Settlement Period or Initial Discount Period. If the Term SOFR Reference Rate for the applicable tenor has not been published or replaced with a Benchmark Replacement by 5:00 p.m. (Pittsburgh, Pennsylvania time) on the Term SOFR Determination Date, then the Term SOFR Reference Rate, for purposes of the preceding sentence, shall be the Term SOFR Reference Rate for such tenor on the first Business Day preceding such Term SOFR Determination Date for which such Term SOFR Reference Rate for such tenor was published in accordance herewith, so long as such first preceding Business Day is not more than three (3) Business Days prior to such Term SOFR Determination Date. If the Term SOFR Rate, determined as provided above, would be less than the SOFR Floor, then the Term SOFR Rate shall be deemed to be the SOFR Floor. The Term SOFR Rate shall be adjusted automatically without notice to the Seller on and as of the first day of each Settlement Period. Notwithstanding the foregoing, if the applicable Settlement Period or Initial Discount Period does not correspond to any available rate term, then the Term SOFR Rate shall be the Term SOFR Rate with a term equal to the shortest period for which the Term SOFR Rate is available that exceeds such Settlement Period or Initial Discount Period at such time.
“Term SOFR Reference Rate” means the forward-looking term rate based on SOFR.
“Transaction Documents” means this Agreement, the Fee Letter, any Performance Guaranty, each Deposit Account Control Agreement, each Portfolio Report, each Credit Default Certification and all other documents and agreements to be executed and delivered by the Seller, the Servicer or the Performance Guarantor in connection with any of the foregoing, in each case, as amended, supplemented or otherwise modified from time to time.
“Transaction Taxes” has the meaning set forth in Section 5(f).
“UCC” means the Uniform Commercial Code in effect in the State of New York from time to time; provided, if by reason of mandatory provisions of Applicable Law, the perfection, the effect of perfection or non-perfection or the priority of the security interests of the Administrative Agent is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.
“U.S. Government Securities Business Day” means any day except for (a) a Saturday or Sunday or (b) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
B. Other Interpretive Matters.
All accounting terms defined directly or by incorporation in this Agreement shall have the defined meanings when used in any certificate or other document delivered pursuant thereto unless otherwise defined therein. For purposes of this Agreement and all such certificates and other documents, unless the context otherwise requires: (a) except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP or IFRS, as in effect from time to time; (b) terms defined in Article 9 of the UCC and not otherwise defined in such agreement are used as defined in such Article; (c) references to any amount
as on deposit or outstanding on any particular date means such amount at the close of business on such day; (d) the words “hereof,” “herein” and “hereunder” and words of similar import refer to such agreement (or the certificate or other document in which they are used) as a whole and not to any particular provision of such agreement (or such certificate or document); (e) references to any Section, Schedule or Exhibit are references to Sections, Schedules and Exhibits in or to such agreement (or the certificate or other document in which the reference is made), and references to any paragraph, subsection, clause or other subdivision within any Section or definition refer to such paragraph, subsection, clause or other subdivision of such Section or definition; (f) the term “including” means “including without limitation”; (g) references to any Applicable Law refer to that Applicable Law as amended from time to time and include any successor Applicable Law; (h) references to any agreement refer to that agreement as from time to time amended, restated, extended or supplemented or as the terms of such agreement are waived or modified in accordance with its terms; (i) references to any Person include that Person’s permitted successors and assigns; (j) headings are for purposes of reference only and shall not otherwise affect the meaning or interpretation of any provision hereof; (k) unless otherwise provided, in the calculation of time from a specified date to a later specified date, the term “from” means “from and including,” and the terms “to” and “until” each means “to but excluding”; (l) terms in one gender include the parallel terms in the neuter and opposite gender; and (m) the term “or” is not exclusive.
Exhibit B
Conditions Precedent for Effectiveness
Each of the following, in form and substance satisfactory to the Administrative Agent:
(a) A fully executed counterpart of this Agreement.
(b) A fully executed counterpart of the Intercreditor Agreement.
(c) A counterpart of a Performance Guaranty fully executed by Smithfield.
(d) A certificate (long form, if available) issued by the Secretary of State of the State of Delaware as to the legal existence and good standing of the Seller.
(e) A certificate of the Secretary or Assistant Secretary of the Seller certifying attached copies of the charter and by-laws of the Seller and all documents evidencing necessary corporate action to be taken by and governmental approvals, if any, to be obtained by the Seller with respect to this Agreement and the names and true signatures of the incumbent officers of the Seller authorized to sign this Agreement and any other documents to be delivered by it hereunder or thereunder or in connection herewith or therewith.
(f) A certificate (long form, if available) issued by the Secretary of State of the Commonwealth of Virginia as to the legal existence and good standing of Smithfield.
(g) A certificate of the secretary of Smithfield certifying attached copies of the articles of incorporation of Smithfield and all documents evidencing necessary corporate action to be taken by and governmental approvals, if any, to be obtained by such Person with respect to its Performance Guaranty and the names and true signatures of the incumbent officers of such Person authorized to sign such Performance Guaranty, as applicable, and any other documents to be delivered by it hereunder or thereunder or in connection herewith or therewith.
(h) UCC, tax and judgment lien searches, bankruptcy and pending lawsuit searches or equivalent reports or searches, each of a recent date listing all effective financing statements, lien notices or comparable documents that name the Seller as debtor and that are filed in those state and county jurisdictions in which the Seller is organized or maintains its principal place of business or chief executive office and such other searches that the Administrative Agent deems necessary or appropriate.
(i) Acknowledgment copies of proper amendments or termination statements (Form UCC-3) and any other relevant filings necessary to evidence the release of all security interests, ownership and other rights of any Person previously granted by the Seller in the Proposed Receivables.
(j) Evidence of a proper financing statement (showing the Seller as “debtor/seller” and the Administrative Agent as “secured party/buyer”) duly filed on or prior to the date hereof.
(k) Favorable opinions of legal counsel to the Seller and the Servicer in form and substance satisfactory to the Administrative Agent, including, without limitation, as to general corporate matters, enforceability, security interest perfection and true sale.
(l) Proof of payment of all fees owing to the Administrative Agent and the Buyers under the Fee Letter on the date hereof and all reasonable and documented attorneys’ fees and disbursements incurred by the Administrative Agent and the Buyers.
Exhibit C
Representations and Warranties
(a) Each of the Seller, the Servicer and the Performance Guarantor is duly organized under the laws of its jurisdiction and no other state or jurisdiction, and such jurisdiction must maintain a public record showing the organization to have been organized. Each of the Seller, the Servicer and the Performance Guarantor is validly existing and in good standing under the laws of its state of organization. Each of the Seller, the Servicer and the Performance Guarantor is duly qualified to do business and is in good standing as a foreign entity, and has and holds all organizational power and all governmental licenses, authorizations, consents and approvals required to carry on its business in each jurisdiction in which its business is conducted except, in the case of the Servicer or the Performance Guarantor, where the failure to so qualify or so hold would not reasonably be expected to have a Material Adverse Effect
(b) The execution and delivery by the Seller, Servicer and Performance Guarantor of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder and, in the case of the Seller, the Seller’s use of the proceeds of purchases made hereunder, are within its corporate powers and authority and have been duly authorized by all necessary corporate action on its part. This Agreement and each other Transaction Document to which the Seller, Servicer and Performance Guarantor is a party have been duly executed and delivered by such Person.
(c) The execution and delivery by each of the Seller, Servicer and Performance Guarantor of this Agreement and each other Transaction Document to which it is a party, and the performance of its obligations hereunder and thereunder do not contravene or violate (i) its certificate or articles of incorporation or by-laws, (ii) any law, rule or regulation applicable to it, (iii) any restrictions under any agreement, contract or instrument to which it is a party or by which it or any of its property is bound, or (iv) any order, writ, judgment, award, injunction or decree binding on or affecting it or its property, and do not result in the creation or imposition of any Adverse Claim on assets of such Person or its Subsidiaries (except as created hereunder) except, in any case, where such contravention or violation would not reasonably be expected to have a Material Adverse Effect; and no transaction contemplated hereby requires compliance with any bulk sales act or similar law.
(d) Each Transaction Document to which the Seller, Servicer or Performance Guarantor is party has been duly executed and delivered by such Person.
(e) Other than the filing of the financing statements required hereunder, no authorization or approval or other action by, and no notice to or filing with, any Person or any Governmental Authority is required for the due execution and delivery by any of the Seller, Servicer and Performance Guarantor of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder.
(f) This Agreement and each other Transaction Document to which the Seller, the Servicer or the Performance Guarantor is a party constitute the legal, valid and binding obligations of such Person enforceable against such Person in accordance with their respective terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws relating to or limiting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).
(g) Except as disclosed in the filings made by the Servicer with the Securities and Exchange Commission, there are no actions, suits or proceedings pending, or to the best of the Seller’s, the Servicer’s or the Performance Guarantor’s knowledge, threatened, against or affecting such Person, or any of its properties, in or before any court, arbitrator or other body, that would reasonably be expected to have a Material Adverse Effect. None of the Seller, the Servicer or the Performance Guarantor is in default with respect to any order of any court, arbitrator or Governmental Authority.
(h) The Seller, Servicer and Performance Guarantor is Solvent and no Insolvency Event has occurred with respect to the Seller, Servicer or Performance Guarantor.
(i) Since January 2, 2022, no Material Adverse Effect or event which, individually or in the aggregate, is reasonably likely to result in a Material Adverse Effect has occurred with respect to the Seller, Servicer or Performance Guarantor.
(j) No Change of Control has occurred.
(k) All assets of the Seller are free and clear of any Adverse Claim in favor of the Internal Revenue Service or any other Governmental Authority other than inchoate tax liens resulting from an assessment of the Seller.
(l) All information heretofore furnished by the Seller, the Servicer or the Performance Guarantor or any of their respective Affiliates to the Administrative Agent or the Buyers for purposes of or in connection with this Agreement, any of the other Transaction Documents or any transaction contemplated hereby or thereby is, and all such information hereafter furnished by the Seller, the Servicer or the Performance Guarantor or any of their respective Affiliates to the Administrative Agent or the Buyers will be, true and accurate in every material respect on the date such information is stated or certified and does not and will not contain, when furnished, any material misstatement of fact or omit to state a material fact or any fact necessary to make the statements contained therein, in light of the circumstances in which they were made, not materially misleading; provided, that with respect to projected financial information, such Person represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time delivered.
(m) None of the Seller, the Servicer or the Performance Guarantor is an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.
(n) The Seller has continuously treated and shall continue to treat each sale of Purchased Receivables and Related Security hereunder as a sale for all purposes, including federal and state income tax, reporting and accounting purposes.
(o) The Securitization Agent has a first priority perfected security interest over each Collection Account, subject to the customary banker’s liens, deduction and set-off rights of the applicable depositary bank for such Collection Account, in each case, as permitted by the applicable Deposit Account Control Agreement.
(p) No event has occurred and is continuing and no condition exists, or would result from any sale or assignment of any Purchased Receivable and Related Security, that constitutes or may reasonably be expected to constitute, individually or in the aggregate, a Servicer Termination Event.
(q) The Purchase Price payable for each Purchased Receivable and Related Security by the Buyers will represent fair consideration and reasonably equivalent value therefore.
(r) No: (a) Covered Entity, nor any employees, officers, directors, or to the knowledge of a Covered Entity, any affiliates, or agents acting on a Covered Entity’s behalf in connection with this Agreement: (i) is a Sanctioned Person; (ii) directly, or indirectly through any third party, is engaged in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, or any transactions or other dealings that otherwise are prohibited by any Anti-Terrorism Laws or (b) Purchased Receivable or Related Security is Embargoed Property.
(s) Each Covered Entity has (a) conducted its business in compliance with all Anti-Corruption Laws and (b) has instituted and maintains policies and procedures reasonably designed to ensure compliance with such Applicable Laws.
(t) As of December 22, 2022, the information included in the Beneficial Ownership Certification is true and correct in all respects.
Exhibit D
Covenants
Until the Final Collection Date:
(a) Compliance with Laws and Preservation of Corporate Existence. Each of the Seller and the Servicer will comply in all respects with all applicable laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, except where the failure to so comply would not reasonably be expected to have a Material Adverse Effect. Each of the Seller and the Servicer will preserve and maintain its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified in good standing as a foreign corporation in each jurisdiction where its business is conducted, except where the failure to so preserve and maintain or qualify would not reasonably be expected to have a Material Adverse Effect.
(b) Books and Records. Each of the Seller and the Servicer will (and will cause each Originator to) maintain and implement administrative and operating procedures (including, without limitation, an ability to recreate records evidencing Receivables in the event of the destruction of the originals thereof), and keep and maintain all documents, books, records and other information reasonably necessary or advisable for the collection of all Purchased Receivables (including, without limitation, records adequate to permit the immediate identification of each new Purchased Receivable and all Collections of and adjustments to each existing Purchased Receivable). Each of the Seller and the Servicer will (and will cause each Originator to) give the Administrative Agent notice of any material change in the administrative and operating procedures referred to in the previous sentence.
(c) Sales, Liens. The Seller will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any financing statement) or with respect to, any Purchased Receivable or Related Security or any Collection Account (except in the case of any Collection Account, in favor of the Securitization Agent in accordance with the terms of the Intercreditor Agreement), or assign any right to receive income with respect thereto, and the Seller will defend the right, title and interest of the Buyers in, to and under any of the foregoing property, against all claims of third parties claiming through or under the Seller, any Originator or the Securitization Agent.
(d) Modifications to Contracts and Credit and Collection Policy. Neither the Seller nor the Servicer will, and will not permit any Originator to, make any change to the Credit and Collection Policy (other than any change expressly permitted by the Sale Agreement). Other than as permitted by Section 5(a) and only to the extent the Seller deposits the Deemed Collection to a Collection Account in accordance with the terms thereof, neither the Seller nor the Servicer will, and will not permit any Originator to, extend, amend or otherwise modify the terms of any Receivable or any Contract related thereto other than in accordance with the Credit and Collection Policy. Other than as permitted by Section 5(a) and only to the extent the Seller deposits the Deemed Collection to a Collection Account in accordance with the terms thereof, neither the Seller nor the Servicer will take, or cause to be taken, any action that reduces the amount payable of any Purchased Receivable or materially impairs the full and timely collection thereof.
(e) Audits. Each of the Seller and the Servicer will furnish to the Administrative Agent and each Buyer from time to time such information with respect to it and the Purchased Receivables as the Administrative Agent or any Buyer may reasonably request. Each of the Seller and the Servicer will, from time to time during regular business hours as requested by the Administrative Agent or any Buyer upon reasonable notice and at the sole cost of the Seller or the Servicer, as applicable, permit the Administrative Agent or such Buyer, or their agents or representatives (and shall cause each Originator to permit the Administrative Agent or such Buyer or their agents or representatives): (i) to examine and make copies of and abstracts from all Records in the possession or under the control of such Person relating to the Purchased Receivables and Related Security, including, without limitation, the related Contracts, and (ii) to visit the offices and properties of such Person for the purpose of examining such materials described in clause (i) above, and to discuss matters relating to such Person’s financial
condition or the Purchased Receivables and Related Security or any Person’s performance under any of the Transaction Documents or the Securitization Documents or any Person’s performance under the Contracts and, in each case, with any of the officers or employees of the Seller or the Servicer having knowledge of such matters (each of the foregoing examinations and visits, a “Review”); provided, however, that, so long as no Servicer Termination Event has occurred and is continuing, the Seller and Servicer shall only be responsible for the costs and expenses of one (1) Review requested by the Administrative Agent in any one calendar year; provided, further, that no Review (as defined in the Securitization Documents) shall constitute a Review under this clause (e) regardless of the identity of the Securitization Agent.
(f) Reporting Requirements. The Seller and Servicer will provide to the Administrative Agent the following:
(i) no later than the next occurring Reporting Date, written notice in reasonable detail, of any Adverse Claim or Dispute asserted or claim made against a Purchased Receivable;
(ii) immediately (and in no event later than three (3) Business Days following knowledge or notice thereof), written notice in reasonable detail, of the occurrence of any Servicer Termination Event;
(iii) as soon as possible and in any event within three (3) days after knowledge or notice of the occurrence thereof, written notice of any matter that could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect;
(iv) a fully updated Portfolio Report, certified in writing by a Portfolio Report Signatory, (x) on the Reporting Date with respect to each Settlement Date which Portfolio Report shall be prepared as of the close of business on the Business Day immediately preceding such Reporting Date, (y) no later than the second Business Day following the termination of the Acquisition Period which Portfolio Report shall be prepared as of the last day of the Acquisition Period and (z) at such other times (not to exceed one additional Portfolio Report per Settlement Period) as may be reasonably requested by the Administrative Agent or any Buyer following the occurrence of a Servicer Termination Event; and
(v) to the extent any Buyer or Affiliate of a Buyer is not a Lender (as defined in the Credit and Security Agreement), all notices and other documents delivered to the Securitization Agent and the Co-Agents and Lenders (as defined in the Credit and Security Agreement) pursuant to the Securitization Documents simultaneously with delivery to the Securitization Agent and the Co-Agents and Lenders (as defined in the Credit and Security Agreement).
(g) Further Assurances. The Seller will, at its expense, promptly execute and deliver all further instruments and documents, and take all further action that the Administrative Agent or any Buyer may reasonably request, from time to time, in order to perfect, protect or more fully evidence the full and complete ownership and security interest in the Purchased Receivables, or to enable the Administrative Agent or any Buyer to exercise or enforce the rights of the Administrative Agent (on behalf of the Buyers) or such Buyer hereunder or under or in connection with the Purchased Receivables.
(h) Taxes. Each of the Seller and the Servicer will file all income and material tax returns and will pay any and all taxes shown on such tax returns, other than any taxes that the Seller or the Servicer is contesting in good faith and for which adequate reserves have been taken. The Seller will pay any and all taxes (excluding each Buyer’s net income taxes) relating to the transactions contemplated under this Agreement, including but not limited to the sale, transfer and assignment of each Purchased Receivable.
(i) Compliance with Contracts and Credit and Collection Policy. Each of the Seller and the Servicer will (and will cause each Originator to) timely and fully (i) perform and comply in all material respects with all provisions, covenants and other promises required to be observed by it under the Contracts related to the Purchased Receivables, and (ii) comply in all material respects with the Credit and Collection Policy in regard to each Receivable and the related Contract.
(j) Not Adversely Affect the Buyers’ Rights. The Seller and Servicer will refrain from any act or omission which might, individually or in the aggregate, in any material way prejudice, diminish or limit the Buyers’ rights under or with respect to any of the Purchased Receivables and Related Security or this Agreement.
(k) Maintenance of Records. The Seller and Servicer will maintain internal records sufficient for it to identify at all times the Eligible Receivables required to be sold hereunder on each Additional Purchase Date (and identify the Eligible Receivables so sold hereunder).
(l) Sanctions and other Anti-Terrorism Laws; Anti-Corruption Laws. Each of the Seller and Servicer covenants and agrees that:
(i) it shall immediately notify the Administrative Agent and each Buyer in writing upon the occurrence of a Reportable Compliance Event;
(ii) if, at any time, any Purchased Receivable or Related Security becomes Embargoed Property, then, in addition to all other rights and remedies available to the Administrative Agent and each Buyer, upon request by the Administrative Agent or any Buyer, the Seller or the Servicer shall provide a substitute Purchased Receivable and Related Security acceptable to the Administrative Agent that is not Embargoed Property;
(iii) it shall, and shall require each other Covered Entity to, conduct its business in compliance with all Anti-Corruption Laws and maintain policies and procedures reasonably designed to ensure compliance with such Applicable Laws;
(iv) it and its Subsidiaries will not: (A) take any action that could reasonably be expected to result in it becoming a Sanctioned Person or allow any employees, officers, directors, affiliates, or agents acting on its behalf in connection with this Agreement to become a Sanctioned Person; (B) directly, or indirectly through a third party, engage in any transactions or other dealings with or for the benefit of any Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws, including any use of the proceeds of the purchases hereunder to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Person or Sanctioned Jurisdiction in violation of Anti-Terrorism Laws; (C) pay or repay of its obligations hereunder with Embargoed Property or funds derived from any unlawful activity; (D) permit any Purchased Receivable or Related Security to become Embargoed Property; or (E) cause the Administrative Agent or any Buyer to violate any Anti-Terrorism Law; and
(v) it will not, and will not permit any its Subsidiaries to, directly or indirectly, use the Purchase Prices or any proceeds thereof for any purpose which would breach any Anti-Corruption Laws in any jurisdiction in which any Covered Entity conducts business.
(m) Administrative Agent’s and Buyers’ Reliance. The Seller acknowledges that the Administrative Agent and the Buyers are entering into the transactions contemplated by this Agreement in reliance upon the Seller’s identity as a legal entity that is separate from each Originator. Therefore, from and after the date of execution and delivery of this Agreement, the Seller shall take all reasonable steps, including, without limitation, all steps that the Administrative Agent or any Buyer may from time to time reasonably request, to maintain the Seller’s identity as a separate legal entity and to make it manifest to third parties that the Seller is an entity with assets and liabilities distinct from those of each Originator and any Affiliates thereof (other than the Seller) and not just a division of any Originator or any such Affiliate. Without limiting the generality of the foregoing and in addition to the other covenants set forth herein, the Seller will:
(i) maintain books, financial records and bank accounts in a manner so that it will not be difficult or costly to segregate, ascertain and otherwise identify the assets and liabilities of the Seller;
(ii) not commingle any of its assets, funds, liabilities or business functions with the assets, funds, liabilities or business functions of any other person or entity;
(iii) observe all appropriate limited liability company procedures and formalities;
(iv) pay its own liabilities, losses and expenses only out of its own funds;
(v) maintain separate annual and quarterly financial statements prepared in accordance with generally accepted accounting principles, consistently applied, showing its assets and liabilities separate and distinct from those of any other person or entity;
(vi) pay or bear the cost (or if such statements are consolidated, the pro-rata cost) of the preparation of its financial statements;
(vii) not guarantee or become obligated for the debts or obligations of any other entity or person;
(viii) not hold out its credit as being available to satisfy the debts or obligations of any other person or entity;
(ix) hold itself out as an entity separate and distinct from any other person or entity (including its Affiliates);
(x) correct any known misunderstanding regarding its separate identity;
(xi) use separate stationery, invoices, checks and the like bearing its own name;
(xii) compensate all consultants, independent contractors and agents from its own funds for services provided to it by such consultants, independent contractors and agents;
(xiii) to the extent that the Seller and any of its Affiliates occupy any premises in the same location, allocate fairly, appropriately and nonarbitrarily any rent and overhead expenses among and between such entities with the result that the Seller bears its fair share of all such rent and expenses;
(xiv) to the extent that the Seller and any of its Affiliates share the same officers, allocate fairly, appropriately and nonarbitrarily any salaries and expenses related to providing benefits to such officers between or among such entities, with the result that the Seller will bear its fair share of the salary and benefit costs associated with all such common or shared officers;
(xv) to the extent that the Seller and any of its Affiliates jointly contract or do business with vendors or service providers or share overhead expenses, allocate fairly, appropriately and nonarbitrarily any costs and expenses incurred in so doing between or among such entities, with the result that the Seller bears its fair share of all such costs and expenses;
(xvi) to the extent the Seller contracts or does business with vendors or service providers where the goods or services are wholly or partially for the benefit of its Affiliates, allocate fairly, appropriately and nonarbitrarily any costs incurred in so doing to the entity for whose benefit such goods or services are provided, with the result that the Seller bears its fair share of all such costs;
(xvii) not make any loans to any person or entity (other than such intercompany loans between the Seller and each Originator contemplated by the Securitization Documents) or buy or hold any indebtedness issued by any other person or entity (except for cash and investment-grade securities);
(xviii) conduct its own business in its own name;
(xix) hold all of its assets in its own name;
(xx) maintain an arm’s-length relationship with its Affiliates and enter into transactions with Affiliates only on a commercially reasonable basis;
(xxi) not pledge its assets for the benefit of any other Person;
(xxii) not identify itself as a division or department of any other entity;
(xxiii) maintain adequate capital in light of its contemplated business operations and in no event less than the Required Capital Amount (as defined in the Sale Agreement) and refrain from making any dividend, distribution, redemption of capital stock or payment of any subordinated indebtedness which would cause the Required Capital Amount to cease to be so maintained;
(xxiv) conduct transactions between the Seller and third parties in the name of the Seller and as an entity separate and independent from each of its Affiliates;
(xxv) cause representatives and agents of the Seller to hold themselves out to third parties as being representatives or agents, as the case may be, of the Seller;
(xxvi) not enter into or be a party to, any transaction with its members or Affiliates except in the ordinary course of its business and on terms which are intrinsically fair and are substantially similar to those which would be obtained in a comparable arm’s-length transaction with an unrelated third party;
(xxvii) not acquire or assume the obligations or acquire the securities of its Affiliates or owners, including partners of its Affiliates; provided, however, that notwithstanding the foregoing, the Seller is authorized to engage in and consummate each of the transactions contemplated by each Transaction Document and the Seller is authorized to perform its obligations under each Transaction Document;
(xxviii) maintain its limited liability company status in conformity with this Agreement, such that (A) it does not amend, restate, supplement or otherwise modify its Certificate of Formation or Limited Liability Company Agreement in any respect that would impair its ability to comply with the terms or provisions of any of the Transaction Documents or the Securitization Documents, including, without limitation, clause (m) of Exhibit D of this Agreement; and (B) its corporate charter requires that the Board of Directors of the Seller shall at all times include at least one “Independent Director” as such term is defined in the Credit and Security Agreement.
(xxix) maintain its corporate separateness such that it does not merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions, and except as otherwise contemplated herein) all or substantially all of its assets (whether now owned or hereafter acquired) to, or acquire all or substantially all of the assets of, any Person, nor at any time create, have, acquire, maintain or hold any interest in any Subsidiary; and
(xxx) take such other actions as are necessary on its part to ensure that the facts and assumptions set forth in the opinion issued by Hogan Lovells US LLP, as counsel for the Seller, issued as of the date hereof and relating to substantive consolidation issues, and in the certificates accompanying such opinion, remain true and correct in all material respects at all times.
(n) Securitization Eligibility. Each of the Seller and the Servicer covenants and agrees that it shall ensure that Receivables owing by Approved Account Debtors shall not constitute “Eligible Receivables” in accordance with the terms of the Securitization Documents.
(o) Beneficial Ownership Rule. Promptly (but in any event no later than the next Reporting Date) following any change in the information included in the Beneficial Ownership Certification that would result in a change to the list of beneficial owners or control parties identified in parts (c) or (d) of such certification, the Seller shall execute and deliver to the Administrative Agent an updated Beneficial Ownership Certification.
Promptly following any request therefor, the Seller shall deliver to the Administrative Agent all documentation and other information required by bank regulatory authorities requested by a Buyer for purposes of compliance with applicable “know your customer” requirements under the PATRIOT Act, the Beneficial Ownership Rule or other applicable anti-money laundering laws, rules and regulations.
Exhibit E
Eligibility Criteria
(a) Such Receivable has been originated by the Seller in the ordinary course of its business from the bona fide sale of goods or services to an Account Debtor, an invoice for such Receivable has been delivered to and accepted by such Account Debtor and revenue for such Receivable has been or may be recognized by the Seller under GAAP or IFRS, as applicable, and Applicable Law.
(b) The related Account Debtor has been instructed to make payments on such Receivable only to a Collection Account.
(c) The related Account Debtor (i) is an Approved Account Debtor, (ii) is a resident of the United States of America and has provided the Seller with a billing address in the United States of America, (iii) is neither a Governmental Authority nor a Sanctioned Person, (iv) is not (A) a material supplier to the Seller or its Affiliates or (B) an Affiliate of a material supplier to the Seller or its Affiliates, (v) is not an Affiliate of the Seller, the Servicer or the Performance Guarantor and (vi) is not a natural person.
(d) Such Receivable and the related Contract is in full force and effect and is the valid and binding obligation of the related Account Debtor due on the applicable Due Date, enforceable in accordance with its terms, and constitutes the related Account Debtor’s legal, valid and binding obligation to pay the Seller the amount thereof, subject, as to enforcement of the related Account Debtor’s payment obligation, to bankruptcy, insolvency, reorganization, arrangement, moratorium and other laws of general applicability relating to or affecting creditors’ rights and Insolvency Events.
(e) Neither the Seller nor the related Account Debtor is delinquent or in default in the performance of any of the payment or other material provisions of the related Contract with respect to such Receivable and no Credit Default Certification has been delivered with respect to such Account Debtor. The Seller is in compliance in all material respects with the Contract relating to the Purchased Receivables and such Receivable satisfies all applicable requirements of the Credit and Collection Policy.
(f) The Seller has delivered to the related Account Debtor all property or fully performed all services required to be so delivered or performed by the terms of the Contract and the payments due with respect to such Receivable are not contingent upon the Seller’s or any other Person’s fulfillment of any further act or obligation.
(g) The Contract giving rise to such Receivable is governed by the law of one of the States of the United States.
(h) As of the related Purchase Date, immediately prior to the sale hereunder, the Seller has good and marketable title to, and is the sole legal and beneficial owner of, such Receivable and Related Security free and clear of any Adverse Claim (except with respect to the Securitized Receivables and Related Securitized Assets, in favor of the Securitization Agent pursuant to the Securitization Documents), such Receivable is not subject to a Dispute, the amount owed under such Receivable is free of any amounts that would constitute Dilution not reflected in the Net Invoice Amount, and such Receivable has not been previously sold, assigned, pledged or otherwise transferred by the Seller to any other Person.
(i) No effective financing statement or other instrument similar in effect covering any part of such Receivable is on file in any recording office (other than any financing statement naming the Securitization Agent as secured party).
(j) Such Receivable (i) is denominated and payable only in Dollars in the United States, (ii) does not have an original term to maturity that exceeds sixty (60) days and (iii) is not payable in installments.
(k) The sale, pledge or assignment of such Receivable pursuant to this Agreement does not (i) violate or contravene any Applicable Law or the related Contract, (ii) require notice thereof to the related Account Debtor or any consent therefrom or (iii) require any notice thereof or any consent from any Governmental Authority that has not been obtained.
(l) Such Receivable is an “account” or “payment intangible” within the meaning of Article 9 of the UCC of all applicable jurisdictions and is not evidenced by instruments or chattel paper.
(m) Such Receivable, together with the related Contract, does not contravene any Applicable Law (including laws relating to usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy).
(n) Such Receivable, together with the Contract related thereto, has not been modified, waived or restructured since its creation except in accordance with the Credit and Collection Policy.
(o) Such Receivable is not a Receivable which arose as a result of the sale of consigned goods or finished goods that have incorporated any consigned goods into such finished goods or a sale in which the Seller or Servicer acted as a bailee, consignee or agent of any other Person or otherwise not as principal or otherwise in respect of deferred or unearned revenues.
(p) Such Receivable does not constitute a re-billed amount arising from a deduction taken by the related Account Debtor with respect to a previously arising Receivable.
(q) As of the related Purchase Date, no Insolvency Event has occurred with respect to the related Account Debtor
(r) The sale of such Receivable and Related Security to the Buyers hereunder constitutes the absolute and irrevocable sale and transfer of all right, title and interest of the Seller in such Receivable and Related Security to the Buyers and no further action, including any filing or recording of any document or any notice to, license from or approval from any Governmental Authority is necessary in order to establish the ownership interest of the Buyers effected by such sale or to permit the Administrative Agent (for the benefit of the Buyers) to service, enforce or otherwise collect such Receivable from the related Account Debtor.
Exhibit F
Servicer Termination Events
Each of the following shall constitute a “Servicer Termination Event” for purposes of this Agreement:
(a) Any of the representations and warranties made by the Seller or Servicer in this Agreement or any Portfolio Report (including with respect to the Proposed Receivables), or by the Performance Guarantor in any Performance Guaranty, shall fail to be true, accurate and correct in all material respects as of the date made or, in the case of any representation or warranty which speaks as to a particular date or period, as of that particular date or period, or the information in any Portfolio Report taken as a whole proves to be incorrect in any material respect.
(b) An amount due for payment by the Seller or Servicer to the Administrative Agent or any Buyer pursuant to this Agreement or any other Transaction Document (including interest on any overdue amount as provided for in Section 8 hereof) or by the Performance Guarantor pursuant to any Performance Guaranty shall remain outstanding for more than two (2) Business Days from the due date therefor.
(c) The Seller or Servicer shall fail to be in compliance with any of its covenants and other obligations under this Agreement or any other Transaction Document to which each such Person is a party (other than any such failure which would constitute a Servicer Termination Event under any other clause or sub-clause of this Exhibit F) and such failure shall remain unremedied for 15 days after the earlier of (i) an Executive Officer of any of the Seller or Servicer obtaining knowledge thereof, or (ii) written notice thereof shall have been given to the Seller or Servicer by the Administrative Agent.
(d) The Performance Guarantor shall fail to be in compliance in all material respects with any of its obligations under any Performance Guaranty.
(e) The Seller shall fail to be in compliance in all material respects with any of its obligations under the Intercreditor Agreement.
(f) An Insolvency Event shall have occurred with respect to the Seller, Servicer or Performance Guarantor.
(g) There shall have occurred any event that materially adversely impairs, in the reasonable discretion of the Administrative Agent, the collectability of the Purchased Receivables generally or any material portion thereof.
(h) This Agreement or any security interest granted pursuant to this Agreement or any other Transaction Document shall for any reason cease to create, or for any reason cease to be, a valid and enforceable first priority perfected security interest in favor of the Buyers with respect to the Purchased Receivables and Related Security, free and clear of any Adverse Claim (except with respect to the Collection Accounts, in favor of the Securitization Agent pursuant to the Securitization Documents).
(i) Any event shall occur which has, or would be reasonably expected to have, a Material Adverse Effect.
(j) A Change of Control shall have occurred.
(k) Any “Event of Default” or similar event shall occur under the Securitization Documents (whether or not waived under and in accordance with the Securitization Documents).
(l) Any Transaction Document shall, in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of any party thereto other than the Administrative Agent or any Buyer or any such party shall, directly or indirectly, contest in any manner the effectiveness, validity, binding nature or enforceability of such Transaction Document.
SMITHFIELD FOODS, INC. SUBSIDIARY LIST
| | | | | |
Name of Subsidiary: | Jurisdiction of Organization: |
| Ag Protein, Inc. | North Carolina |
| American Skin Food Group LLC | North Carolina |
Beef Liquidation Corp. | Delaware |
| Brown’s Realty Partnership | North Carolina |
| Carroll’s Realty Partnership | North Carolina |
| Celsus Biopharmaceuticals, Inc. | Delaware |
| Celsus Glycoscience, Inc. | Delaware |
| Champ, LLC | Delaware |
Clougherty Packing, LLC | Delaware |
| Duplin Marketing Company, LLC | North Carolina |
| FJ Foodservice, LLC | Delaware |
| Granjas Carroll de México, S. de R.L. de C.V. | Mexico |
| Iowa Quality Meats, Ltd. | Iowa |
| Jonmor Investments, Inc. | Delaware |
| KC2 Real Estate LLC | Delaware |
| MB Grain LLC | Delaware |
| MB Missouri Holdings LLC | Delaware |
| Murphy Farms of Texhoma, Inc. | Oklahoma |
| Murphy-Brown LLC (d/b/a Smithfield Hog Production) | Delaware |
| Murphy-Brown of Missouri LLC (d/b/a Smithfield Hog Production) | Delaware |
| NPD Investments, Inc. | Delaware |
| Patcud Investments, Inc. | Delaware |
| RMHF Liquidation, LLC | Delaware |
| Saag's Products, LLC | Delaware |
| SF Investments, Inc. | Delaware |
| SFFC, Inc. | Delaware |
| SFRMH Liquidation, Inc. | Delaware |
| Smithfield Bioenergy LLC | Delaware |
| Smithfield Bioscience, Inc. | Ohio |
| Smithfield de Colombia SAS | Colombia |
| Smithfield Direct, LLC | Delaware |
| Smithfield Distribution, LLC | Delaware |
| Smithfield Foods International Group de Mexico, S. de R.L. de C.V. | Mexico |
| Smithfield Fresh Holdings, Inc. | Delaware |
| Smithfield Fresh Meats Corp. (d/b/a Smithfield Pet, Smithfield Bioscience) | Delaware |
| Smithfield Fresh Meats Sales Corp. (d/b/a Smithfield Bioscience) | Delaware |
| Smithfield Insurance Co. Ltd. | Bermuda |
| Smithfield International Investments, Inc. | Delaware |
| Smithfield Japan K.K. | Japan |
| | | | | |
| Smithfield of Canada, Ltd. | Canada |
| Smithfield Packaged Meats Corp. | Delaware |
| Smithfield Packaged Meats Sales Corp. | Delaware |
| Smithfield Purchase Corporation | North Carolina |
| Smithfield Receivables Funding, LLC | Delaware |
| Smithfield Specialty Foods Group, LLC | Delaware |
| Smithfield Strategic Sourcing & Service Co., Inc. | Delaware |
| Smithfield Support Services Corp. | Delaware |
| Smithfield Transportation Co., Inc. | Delaware |
| Smithfield-Carroll’s Farms | Virginia |
| Smithfield-Kinston LLC | Delaware |
| Stefano Properties, LLC | North Carolina |
| Tar Heel Turkey Hatchery, Inc. | North Carolina |
| Texas County Land, LLC | Delaware |
| Wilmington Bulk, LLC | North Carolina |
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption "Experts" and to the use of our report dated November 18, 2024, in the Registration Statement (Form S-1) and related Prospectus of Smithfield Foods, Inc. for the registration of its common stock.
/s/ Ernst & Young LLP
Richmond, Virginia
January 6, 2025
Consent to be Named as a Director Nominee
In connection with the filing by Smithfield Foods, Inc. of the Registration Statement on Form S-1 (the “Registration Statement”) with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of Smithfield Foods, Inc. in the Registration Statement and any and all amendments and supplements thereto. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
| | | | | |
| Dated: January 6, 2025 | /s/ Hongwei Wan |
| Hongwei Wan |
Consent to be Named as a Director Nominee
In connection with the filing by Smithfield Foods, Inc. of the Registration Statement on Form S-1 (the “Registration Statement”) with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of Smithfield Foods, Inc. in the Registration Statement and any and all amendments and supplements thereto. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
| | | | | |
| Dated: January 6, 2025 | /s/ Xiaoming Zhou |
| Xiaoming Zhou |
Consent to be Named as a Director Nominee
In connection with the filing by Smithfield Foods, Inc. of the Registration Statement on Form S-1 (the “Registration Statement”) with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of Smithfield Foods, Inc. in the Registration Statement and any and all amendments and supplements thereto. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
| | | | | |
| Dated: January 6, 2025 | /s/ Marie T. Gallagher |
| Marie T. Gallagher |
Consent to be Named as a Director Nominee
In connection with the filing by Smithfield Foods, Inc. of the Registration Statement on Form S-1 (the “Registration Statement”) with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of Smithfield Foods, Inc. in the Registration Statement and any and all amendments and supplements thereto. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
| | | | | |
| Dated: January 6, 2025 | /s/ John A. Quelch |
| John A. Quelch |
Consent to be Named as a Director Nominee
In connection with the filing by Smithfield Foods, Inc. of the Registration Statement on Form S-1 (the “Registration Statement”) with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of Smithfield Foods, Inc. in the Registration Statement and any and all amendments and supplements thereto. I also consent to the filing of this consent as an exhibit to such Registration Statement and any amendments thereto.
| | | | | |
| Dated: January 6, 2025 | /s/ Raymond A. Starling |
| Raymond A. Starling |
