CREDIT SUISSE FIRST BOSTON CAPITAL LLC CREDIT SUISSE FIRST BOSTON LLC 11 Madison Avenue New York, NY 10010 VARIABLE PREPAID FORWARD CONFIRMATION Date: June 30, 2004 To: Wendell H. Murphy, Sr. From: Credit Suisse First Boston Capital LLC Re: Variable...
CREDIT SUISSE FIRST BOSTON CAPITAL LLC
CREDIT SUISSE FIRST BOSTON LLC
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
VARIABLE PREPAID FORWARD CONFIRMATION
Date: June 30, 2004
To: Xxxxxxx X. Xxxxxx, Xx.
From: Credit Suisse First Boston Capital LLC
Re: Variable Prepaid Forward
Transaction ID: SFD#01C
External ID: 50050604
Dear Xx. Xxxxxx, Xx.:
The purpose of this letter agreement (this "Confirmation") is to
confirm the terms and conditions of the transaction (the "Transaction") entered
into between us on the Trade Date specified below. This Confirmation constitutes
a "Confirmation" as referred to in the Variable Prepaid Forward Agreement (the
"Agreement") between you ("Counterparty") and Credit Suisse First Boston Capital
LLC, a Delaware limited liability company, ("CSFB Capital") dated as of June 19,
2003, with respect to certain Transactions as defined therein.
This Confirmation supplements, forms part of, and is subject to the
Agreement. All provisions contained in the Agreement govern this Confirmation
except as expressly modified below.
1
General Terms:
Trade Date: June 30, 2004
Scheduled Valuation Date: July 2, 2007 (unless such date is not
an Exchange Business Day, in which case
the Scheduled Valuation Date shall be
the next succeeding Exchange Business
Day).
Selling Shareholder: Counterparty
Forward Purchaser: CSFB Capital
Issuer: Smithfield Foods, Inc.
Shares (Ticker): Shares of common stock of the Issuer
(SFD)
Exchange: New York Stock Exchange
Base Number of Shares: Initially 287,860 Shares, subject to
Calculation Agent Adjustment.
Floor: Initially 100.0% of Initial Price =
$29.6189, subject to Calculation Agent
Adjustment.
Cap: Initially 120.0% of Initial Price =
$35.5427, subject to Calculation Agent
Adjustment.
Participation above Cap: 0%
Initial Price: $29.6189
Prepaid Percentage: 89.0%
Purchase Price: $7,588,225.93 (Initial Price x Base
Number of Shares x Prepaid Percentage).
Payment Date: Three (3) Business Days after the later
of the day on which Transaction
Documents executed by Counterparty are
received by CSFB Capital and the day on
which CSFB Capital receives from
Counterparty a number of Shares as
Collateral equal to the number of
Shares specified in the Pledge of
Collateral provision below.
2
Valuation:
Averaging Date Final Price: The Volume Weighted Average Price per
Share, as displayed on Bloomberg Page
"AQR" for the Issuer, on each Averaging
Date in respect of the period from 9:30
a.m. to 4:00 p.m. (New York City time)
on such Averaging Date, or if such
Volume Weighted Average Price is not
available, the market value of one (1)
Share on such date as determined by the
Calculation Agent.
Valuation Date: Scheduled Valuation Date, subject to
extension upon the occurrence of an
Averaging Date Market Disruption.
Averaging Period: A period consisting of (the "Averaging
---------
Dates") ten (10) Exchange Business Days
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prior to and including the Scheduled
Valuation Date.
Averaging Date Market Disruption: If (i) a Market Disruption Event occurs
on an Averaging Date during the
Averaging Period, then, for each such
Averaging Date on which such an
impairment occurs, Calculation Agent
shall extend the Averaging Period and
the Valuation Date by one (1) Exchange
Business Day or (ii) a Blackout Period
or a Suspension Period commences on an
Averaging Date during the Averaging
Period, then the Averaging Period shall
be tolled until the end of such
Blackout Period or Suspension Period,
as applicable, and the Valuation Date
shall be extended accordingly.
Blackout Period: Any period during which the
Counterparty would be precluded from
purchasing or selling Shares by reason
of possession of material non-public
information concerning the Issuer
within the meaning of Rule 10b-5 under
the Securities Exchange Act.
Immediately upon becoming aware of a
Blackout Period, Counterparty shall
notify CSFB Capital by telephone and in
writing thereof. Such notice shall not
specify, and the Counterparty shall not
otherwise communicate to CSFB Capital,
the reason for the Counterparty's
declaration of a Blackout Period.
3
Suspension Period: Any period during which CSFB Capital
concludes, in its sole discretion, that
it is appropriate with respect to any
legal, regulatory or self-regulatory
requirements or related policies and
procedures (whether or not such
requirements, policies or procedures
are imposed by law or have been
voluntarily adopted by CSFB Capital),
for it to refrain from purchasing or
selling Shares.
CSFB Capital shall notify the
Counterparty upon designating a
Suspension Period and shall
subsequently notify the Counterparty on
the day CSFB Capital believes that it
may resume purchasing Shares. CSFB
Capital need not communicate to the
Counterparty the reason for CSFB
Capital's exercise of its rights
pursuant to this provision.
Settlement Terms:
Physical Settlement:
Averaging Date Deliverable
Number of Shares: In respect of each Averaging Date, a
number of Shares equal to the lesser of
A or B, where:
"A" is the result of the Base Number of
Shares divided by the number of
Averaging Dates; and
"B" is the product of C multiplied by
D, where:
"C" is the result of the Base Number of
Shares divided by the number of
Averaging Dates, and
"D" is the result of (x) divided by
(y), where:
"(x)" is the sum, determined as of the
Valuation Date, of
(i) the Floor (expressed as an amount)
and
(ii) the product of (a) one (1) minus
the Participation Above Cap and (b) any
amount by which the corresponding
Averaging Date Final Price exceeds the
Cap (expressed as an amount); and
"(y)" is the corresponding Averaging
Date Final Price.
Total Deliverable Number of The sum of the Averaging Date
Shares: Deliverable Number of Shares for all of
the Averaging Dates.
Net Stock Settlement: Counterparty will deliver the Total
Deliverable Number of Shares to CSFB
Capital on the Share Delivery Date,
unless Counterparty elects the Cash
Settlement Option, in which case, in
lieu of delivering Shares, Counterparty
will pay the Cash Settlement Amount on
the Cash Settlement Payment Date.
4
Share Delivery Date: The third Exchange Business Day
following the Valuation Date.
Cash Settlement Option; Eligible Counterparty will have the right to
Contract Participant: cash settle the Transaction; on the
third Business Day following each
Averaging Date (each a "Cash Settlement
Payment Date") Counterparty shall pay
to CSFB Capital an amount equal to the
applicable Cash Settlement Amount;
provided that Counterparty shall not
have the right to cash settle the
Transaction unless CSFB Capital has
received written notice of
Counterparty's intention to cash settle
the Transaction on or before the 30th
Business Day prior to the Scheduled
Valuation Date.
Counterparty represents and warrants as
of the date hereof and as of the date
of any amendment or modification to
this Transaction or the Agreement that
(i) it is an "eligible contract
participant" as defined in Commodity
Exchange Act, as amended; and (ii)
Counterparty is entering into this
Transaction in order to manage the risk
associated with an asset owned or a
liability incurred, or reasonably
likely to be owned or incurred, by
Counterparty.
Cash Settlement Amount: In respect of each Cash Settlement
Payment Date, an amount in U.S.
dollars, determined as of the relevant
Averaging Date, equal to the product of
(i) the applicable Averaging Date
Deliverable Number of Shares multiplied
by (ii) each corresponding Averaging
Date Final Price.
Net Stock Settlement
Requirements: If Counterparty elects Net Stock
Settlement, Counterparty covenants,
represents and warrants that (i) it
will deliver to CSFB Capital only
Shares that are eligible for immediate
resale by Counterparty under Rule 144
or Rule 145 and (ii) it (and each
person whose sales of Shares would be
aggregated with Counterparty's sales
under Rule 144(e)(3)) will not sell any
Shares during the three-month period
ending on the third Exchange Business
Day following the Scheduled Valuation
Date.
Adjustments:
Total Return Option: Inapplicable
Fixed Dividend Level: USD 0.00 (zero) per Share
Method of Adjustment: Calculation Agent Adjustment.
5
Dividend Pass-Through: If as of the earlier of (x) the last
Exchange Business Day of any calendar
quarter during the term of this
Transaction and (y) the Scheduled
Valuation Date, as determined by the
Calculation Agent, there has been a
dividend paid by the Issuer in respect
of the Shares consisting of cash in
U.S. dollars per Share or the value of
any non-cash assets, as determined by
the Calculation Agent, (the "Actual
Dividend") and such Actual Dividend is
greater than the Fixed Dividend Level,
Seller agrees to pay to Buyer within
two (2) Business Days an amount in U.S.
Dollars in immediately available funds
by wire transfer equal to the product
of the Base Number of Shares multiplied
by the difference between the Actual
Dividend and the Fixed Dividend Level
(the "Excess Pass-Through Amount").
If the Actual Dividend is received from
the Issuer by Seller, Seller shall pay
the Excess Pass-Through Amount, if any,
to Buyer within two (2) Business Days
after receipt of the Actual Dividend.
If the Actual Dividend is received from
the Issuer by the Buyer, (a) in the
event that the Actual Dividend is
greater than the Fixed Dividend, the
Seller agrees that in fulfillment of
Seller's obligation hereunder, Buyer
may retain the Excess Pass-Through
Amount from any dividend payment
received by Buyer from the Issuer and
shall pay to Seller the remainder of
such dividend payment (if any), and (b)
in the event that the Fixed Dividend is
greater than the Actual Dividend, the
Buyer agrees to pay the Actual Dividend
to Seller within two Business Days
after receipt of the Actual Dividend.
For the avoidance of doubt:
(a) in making the determination for a
period ending on the Scheduled
Valuation Date, the Calculation
Agent shall treat the Ex-Dividend
Date of any cash dividend
declared during such period but
not yet paid as the payment date
of such cash dividend; and
(b) Buyer shall have no payment
obligation pursuant to this
Dividend Pass-Through provision
for a period ending on the
Scheduled Valuation Date unless a
Ex-Dividend Date occurred during
such period for an Actual
Dividend.
6
Extraordinary Events:
Consequences of Merger Events:
(a) Share-for-Share Additional Termination Event,
Counterparty will be the Affected
Party, provided that, upon mutual
--------
agreement between CSFB Capital and
Counterparty, this Transaction may be
amended or recalculated in terms of New
Shares and shall otherwise continue in
accordance with the terms hereof.
(b) Share-for-Other Additional Termination Event,
Counterparty will be the Affected Party.
(c) Share-for-Combined Additional Termination Event,
Counterparty will be the Affected Party.
Additional Termination Events:
Loss of Economic Stock-Borrow: Additional Termination Event,
Counterparty will be the Affected Party.
Hedging Impairment: An Additional Termination Event will
occur if, in connection with CSFB
Capital's hedge, CSFB Capital's ability
to purchase or sell shares of the
Issuer of the same class as the Shares
is significantly impaired; Counterparty
will be the Affected Party.
Collateral:
Pledge of Collateral: On the Trade Date, Counterparty will
pledge a quantity of Shares equal to
the Base Number of Shares on the Trade
Date to CSFB Capital in accordance with
Section 10 of the Agreement. Throughout
----------
the term of the Transaction the
Counterparty shall maintain a number of
Shares in the Collateral Account equal
to the Base Number of Shares, as
adjusted.
Release of Pledged Collateral: On the Share Delivery Date, CSFB
Capital will release the Collateral to
Counterparty against receipt from
Counterparty of the Total Deliverable
Number of Shares; provided that, if
--------
Counterparty elects the Cash Settlement
Option, the Pledged Securities will be
released to Counterparty against
payment to CSFB Capital of the Cash
Settlement Amount.
7
Additional Representations, Warranties
and Covenants:
Insider: Because Counterparty is an "affiliate"
---------
(as defined in Rule 144 of the
Securities Act of 1933, as amended) of
the Issuer, the Pledged Securities are
restricted stock that can only be
offered and sold pursuant to an
effective registration statement, Rule
144 or other applicable exemption.
Holding Period; Restrictions Counterparty represents and warrants
on Transfer: to CSFB Capital that (i)
Counterparty's "holding period" for
-------- -------
the Shares pledged hereunder,
determined in accordance with Rule
144, commenced on January 28, 2000,
and the Issuer is in compliance with
Rule 144(c)(1) and (ii) other than the
restrictions under Rule 144, such
Shares are free of any contractual or
legal restrictions on transfer.
Manner of Hedging: CSFB Capital represents that it will
execute any initial hedging in Shares
in a manner consistent with paragraph
(e) of Rule 144. Consistent with the
foregoing, Counterparty agrees and
covenants with CSFB Capital that it
(x) will not sell any Shares pursuant
to Rule 144 and (y) will cause each
person whose sales of Shares would be
aggregated with Counterparty's sales
under Rule 144(e)(3) not to sell any
Shares, in each case, without the
written consent of CSFB Capital.
Other Provisions:
Calculation Agent: CSFB Capital, whose determinations and
calculations shall be binding absent
manifest error.
Default Rate: Cost of funding plus 2.00%.
Additional Provisions:
The date and time of this Transaction
will be furnished by CSFB Capital to
Counterparty upon written request
CSFB LLC will furnish to Counterparty
upon written request a statement as to
the source and amount of any
remuneration received or to be
received by CSFB LLC in connection
with any transaction
8
CSFB Capital is not a member of SIPC
(Securities Investor Protection
Corporation).
MATTERS RELATING TO CSFB LLC:
(a) CSFB LLC has no obligation, by
guaranty, endorsement or otherwise,
with respect to performance of CSFB
Capital's and Counterparty's
obligations.
(b) CSFB Capital represents that it is
an "OTC derivatives dealer" as such
term is defined in the Securities
Exchange Act and is an affiliate of a
broker-dealer, CSFB LLC, that is
registered with and fully-regulated by
the Securities and Exchange Commission
("SEC"). CSFB LLC acted as CSFB
Capital's agent in effecting this
Transaction.
Account Details:
Payments to Counterparty: Bank Name: Bank of New York, NY, NY
ABA Routing #: 021 000 018
Name on Account: Pershing LLC
Account #:
For further credit to: Xxxxxxx X.
Xxxxxx, Xx. to Sub Account #:
Payments to CSFB Capital: PAY TO: Citibank N.A., New York
ABA NUMBER: 000-000-000
FOR A/C OF: Credit Suisse First
Boston Capital LLC
ACCOUNT #:
Credit Suisse First Boston LLC
Deliveries to CSFB Capital: DTC: 355
Ref a/c:
REGULATORY DISCLOSURE REPRESENTATION:
The counterparty represents that it
has received from CSFB Capital the
"Risk Disclosure Statement regarding
OTC Derivative Products and Notice of
Regulatory Treatment" and has
reviewed, signed and returned a copy
of such document to CSFB Capital.
9
Please confirm that the foregoing correctly sets forth the terms of
our agreement by executing the copy of this Confirmation enclosed for that
purpose and returning it to us.
CREDIT SUISSE FIRST BOSTON CAPITAL LLC
By:
------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Vice President Operations
CREDIT SUISSE FIRST BOSTON LLC,
solely in its capacity as Agent
By:
-----------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President Operations
COUNTERPARTY-XXXXXXX X. XXXXXX, XX.
----------------------------
Name: Xxxxxxx X. Xxxxxx, Xx.
