As filed with the Securities and Exchange Commission on November 20, 2001
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
DIMON INCORPORATED
(Exact name of registrant as specified in its charter)
VIRGINIA 5159 54-1746567
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation) Classification Code Number)
512 Bridge Street
Danville, Virginia 24541
(434) 792-7511
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
James A. Cooley
Senior Vice President and Chief Financial Officer
DIMON Incorporated
512 Bridge Street
Danville, Virginia 24541
(434) 792-7511
(Name, address, including zip code, and telephone
number, including area code, of agent for service
of process)
Copies to:
Thurston R. Moore
Randall S. Parks
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219
(804) 788-8200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO
THE PUBLIC: As soon as practicable after the effective date of
this Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, 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, 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.[_]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Amount to be Maximum Offering Maximum Aggregate Amount of
Securities to be Registered Registered(1) Price Per Unit Offering Price Registration Fee
--------------------------- ------------- -------------- -------------- ----------------
9 5/8% Senior Notes due 2011 $200,000,000 N/A N/A $ 50,000
(1) The Registration Statement covers the maximum principal amount of notes of
the Registrant which may be issued in connection with the transaction described
herein.
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 THE REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
SUBJECT TO COMPLETION, DATED NOVEMBER 20, 2001
The information in this prospectus is not complete and may be changed. This
prospectus is not an offer to sell these securities or the solicitation of an
offer to buy these securities in any jurisdiction where such offer or sale is
not permitted.
Prospectus
[DIMON LOGO]
OFFER TO EXCHANGE
up to $200,000,000 Principal Amount Outstanding
9 5/8% Senior Notes due 2011
for
a like Principal Amount of
9 5/8% Senior Notes due 2011
That Have Been Registered under the Securities Act of 1933
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON ___________, 2001
We are offering to exchange up to $200,000,000 of our 9 5/8% Exchange
Notes due 2011 (the "Exchange Notes"), which have been registered under the
Securities Act of 1933 for our existing 9 5/8% Notes due 2011 (the "Old Notes").
We are offering to issue the Exchange Notes to satisfy our obligations contained
in the registration rights agreement entered into when the Old Notes were sold
in transactions pursuant to Rule 144A under the Securities Act and therefore not
registered with the SEC.
The terms of the Exchange Notes are substantially identical in all
material respects to the Old Notes that we issued on October 30, 2001, except
for the Exchange Notes have been registered under the Securities Act, and
certain transfer restrictions and registration rights relating to the Old Notes
do not apply to the Exchange Notes.
Interest on the Exchange Notes will accrue from October 30, 2001 and we
will pay interest twice a year, beginning April 15, 2002.
We cannot redeem the Exchange Notes before October 15, 2006. On and after
that date, we may redeem them at certain specified prices. However, on or before
October 15, 2004, we can redeem up to 35% of the original principal amount of
the Exchange Notes at 109.625% of their principal amount, plus interest, with
money we raise in certain public equity offerings.
If we experience certain changes of control, we must offer to purchase the
Exchange Notes at 101% of their principal amount, plus interest.
To exchange your Old Notes for Exchange Notes:
. You must complete and send the letter of transmittal that
accompanies this prospectus to the Exchange Agent, SunTrust Bank,
by 5:00 p.m., New York time, on ______, 2001.
. If your Old Notes are held in book-entry form at the Depository
Trust Company ("DTC"), you must instruct DTC through your signed
letter of transmittal that you wish to exchange your Old Notes for
Exchange Notes. When the exchange offer closes, your DTC account
will be changed to reflect your exchange of Old Notes for Exchange
Notes.
. You should read the section called "The Exchange Offer" for
additional information on how to exchange your Old Notes for
Exchange Notes.
CONSIDER CAREFULLY THE "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS
PROSPECTUS.
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved the Exchange Notes to be distributed in the exchange
offer, nor have these organizations determined that this prospectus is accurate
or complete. Any representation to the contrary is a criminal offense.
- --------------------------------------------------------------------------------
The date of this prospectus is ______ __, 2001
TABLE OF CONTENTS
Page
----
INDUSTRY AND MARKET DATA....................................................................................... ii
WARNING REGARDING FORWARD-LOOKING STATEMENTS................................................................... ii
PROSPECTUS SUMMARY............................................................................................. 1
SUMMARY OF THE EXCHANGE OFFER.................................................................................. 3
SUMMARY OF THE EXCHANGE NOTES.................................................................................. 6
RISK FACTORS................................................................................................... 8
USE OF PROCEEDS................................................................................................ 16
CAPITALIZATION................................................................................................. 16
SELECTED CONSOLIDATED FINANCIAL DATA........................................................................... 17
THE EXCHANGE OFFER............................................................................................. 20
DESCRIPTION OF EXCHANGE NOTES.................................................................................. 26
BOOK-ENTRY; DELIVERY AND FORM.................................................................................. 55
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS................................................................ 57
PLAN OF DISTRIBUTION........................................................................................... 58
LEGAL MATTERS.................................................................................................. 59
EXPERTS........................................................................................................ 59
WHERE YOU CAN FIND MORE INFORMATION............................................................................ 59
i
INDUSTRY AND MARKET DATA
We obtained the market and competitive position data used throughout this
prospectus from our own research, surveys or studies conducted by third parties
and industry or general publications. Unless otherwise indicated, market data
are estimates based on information collected by us in the ordinary course of
business. The cited industry publications and surveys do not guarantee the
accuracy and completeness of such information. While we believe that these
studies and publications are reliable, we have not independently verified such
data, and make no representation as to the accuracy of such information.
WARNING REGARDING FORWARD-LOOKING STATEMENTS
This prospectus may include "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. You can generally identify forward-looking
statements by phrases such as "we expect," "we anticipate" or words of similar
meaning. Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we can give no assurance that such
expectations will prove to be correct. Some of the things that could cause our
actual results to differ substantially from our expectations are described under
the heading "Risk Factors" and in documents incorporated by reference in this
prospectus.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
You should carefully read this prospectus in its entirety. It contains
information that you should consider when making your investment decision.
ii
PROSPECTUS SUMMARY
This summary highlights some of the information from this prospectus. It
may not contain all of the information that is important to you. To understand
this offering fully, you should read this entire prospectus carefully, including
the risk factors and the financial statements. The term "Old Notes" refers to
the unregistered 9 5/8% notes due 2011 that were issued on October 30, 2001 to
qualified institutional buyers in a Rule 144A private placement. The term
"Exchange Notes" refers to the registered 9 5/8% notes due 2011 that are offered
pursuant to this prospectus. References in this prospectus to "DIMON'" "the
Company," "we," "us," "our" or "our company" refer to DIMON Incorporated and its
subsidiaries combined, unless the context clearly indicates otherwise.
The Exchange Offering
On October 30, 2001, we completed the private offering of an aggregate
principal amount of $200,000,000 of Old Notes. We entered into a registration
rights agreement with the initial purchasers (the "Registration Rights
Agreement") in which we agreed, among other things, to deliver to you this
prospectus and to offer to exchange your Old Notes for Exchange Notes with
substantially identical terms. If the exchange offer is not completed by June
11, 2002, we will be required to pay you liquidated damages. You should read the
discussion under the heading "Description of Exchange Notes" for further
information regarding the Exchange Notes.
We believe the Exchange Notes issued in the exchange offer may be resold
by you without compliance with the registration and prospectus delivery
provisions of the Securities Act, subject to certain conditions. You should read
the discussion under the heading "The Exchange Offer" for further information
regarding the exchange offer and resale of the Exchange Notes.
The Company
We are the second largest independent leaf tobacco merchant in the world
with an estimated 30% share of the market for internationally-traded leaf
tobacco. We select, purchase, process, store, pack, and ship tobacco grown in 39
countries, servicing manufacturers of cigarettes and other consumer tobacco
products sold in approximately 90 countries around the world. Our revenues
primarily comprise sales of processed tobacco and fees charged for processing
and related services to manufacturers of tobacco products. We deal primarily in
flue-cured, burley, and oriental tobaccos that are used in international brand
cigarettes. We do not manufacture cigarettes or other consumer tobacco products.
For the year ended June 30, 2001, our total sales and other revenue was $1.4
billion and our EBITDA was $131.8 million.
We have developed an extensive international network through which we
purchase, process and sell leaf tobacco grown throughout the world. We maintain
a presence, and in some cases a leading position, in most tobacco growing
regions in the world, including the principal export markets for flue-cured and
burley tobacco: the United States, Brazil, Zimbabwe and Malawi. We process
tobacco in 24 facilities around the world. Each type of tobacco is separated
into different grades based on quality and then blended to meet each customer's
specifications. The tobacco is processed through a complex mechanized threshing
and separating operation and then dried to meet precise moisture levels in
accordance with the customer's specification. The processing of leaf tobacco is
an essential service to our customers because the quality of processed leaf
tobacco substantially affects the cost and quality of the manufacturer's end
product.
We sell our processed tobacco primarily to large multinational cigarette
manufacturers, including Philip Morris, Japan Tobacco, Lorillard, RJR Tobacco,
Reemtsma, British American Tobacco and others. In fiscal 2001, we delivered
approximately 31% of our tobacco sales to customers in the U.S., approximately
36% to customers in Europe and the remainder to customers located in Asia,
Africa and elsewhere. Our customers generally pay the carrying and shipping
costs for all committed tobacco after our initial receipt, substantially
reducing carrying costs associated with a large portion of our inventory.
Through our predecessor companies, we have a long operating history in the leaf
tobacco industry and have maintained relationships with many of our major
customers for over 50 years, with some of these relationships beginning in the
early 1900s. We were formed through the 1995 merger of Dibrell Brothers,
Incorporated, founded in 1873, and Monk-Austin, Inc., founded in 1907.
1
---------------------------
Our executive and administrative offices are located at 512 Bridge Street,
Danville, Virginia 24541. Our telephone number is (434) 792-7511.
2
SUMMARY OF THE EXCHANGE OFFER
Securities to be Exchanged.............. On October 30, 2001, we issued $200
million in aggregate principal
amount of Old Notes to the initial
purchasers in a transaction exempt
from the registration requirements
of the Securities Act of 1933. The
terms of the Exchange Notes and the
Old Notes are substantially
identical in all material respects,
except for certain transfer
restrictions. See "Description of
Exchange Notes."
The Exchange Offer...................... We are offering $1,000 principal
amount of Exchange Notes in exchange
for each $1,000 principal amount of
Old Notes. As of the date hereof,
Old Notes representing $200 million
in aggregate principal amount are
outstanding.
Based on interpretations by the
staff of the Securities and Exchange
Commission, as set forth in no-
action letters issued to certain
third parties unrelated to us, we
believe that Exchange Notes issued
pursuant to the exchange offer in
exchange for Old Notes may be
offered for resale, resold or
otherwise transferred by holders
thereof (other than any holder which
is our "affiliate" within the
meaning of Rule 405 promulgated
under the Securities Act of 1933, or
a broker-dealer who purchased Old
Notes directly from us to resell
pursuant to Rule 144A or any other
available exemption promulgated
under the Securities Act of 1933),
without compliance with the
registration and prospectus delivery
requirements of the Securities Act
of 1933; provided that such Exchange
Notes are acquired in the ordinary
course of such holders' business and
such holders have no arrangement
with any person to engage in a
distribution of such Exchange Notes.
However, we have not submitted a no-
action letter to the Securities and
Exchange Commission. We cannot be
sure that the staff of the
Securities and Exchange Commission
would make a similar determination
with respect to the exchange offer
as in such other circumstances.
Furthermore, each holder, other than
a broker-dealer, must acknowledge
that it is not engaged in, and does
not intend to engage in, a
distribution of such Exchange Notes
and has no arrangement or
understanding to participate in a
distribution of Exchange Notes. Each
broker-dealer that receives Exchange
Notes for its own account pursuant
to the exchange offer must
acknowledge that it will comply with
the prospectus delivery requirements
of the Securities Act of 1933 in
connection with any resale of such
Exchange Notes directly from us and
not as a result of market-making
activities or other trading
activities, may not rely on the
staff's interpretations discussed
above or participate in the exchange
offer, and must comply with the
prospectus delivery requirements of
the Securities Act of 1933 in order
to resell the Exchange Notes.
Registration Rights Agreement........... We sold the Old Notes on October 30,
2001 in a private placement in
reliance on Section 4(2) of the
Securities Act of 1933. The Old
Notes were immediately resold by the
initial purchasers in reliance on
Rule 144A and Regulation S under the
Securities Act of 1933.
In connection with the sale, we
entered into a registration rights
agreement with the initial
purchasers of the Old Notes
requiring us to make the exchange
offer. The registration rights
agreement also provides that we must
use our reasonable best efforts to
(i) cause the registration statement
with respect to the exchange offer
to be declared effective
3
within 180 days of the date on which
we issued the Old Notes and (ii)
consummate the exchange offer by the
30/th/ business day after the
exchange offer registration
statement is declared effective. See
"The Exchange Offer."
Expiration Date......................... The exchange offer will expire at
5:00 p.m., New York City time, on
_____________, 2001, or such later
date and time to which it is
extended.
Withdrawal.............................. The tender of the Old Notes pursuant
to the exchange offer may be
withdrawn at any time prior to 5:00
p.m., New York City time, on
_____________, 2001, or such later
date and time to which we extend the
offer. Any Old Notes not accepted
for exchange for any reason will be
returned to the tendering holder
thereof as soon as practicable after
the expiration or termination of the
exchange offer.
Interest on the Exchange Notes and the
Old Notes............................... Interest on the Exchange Notes will
accrue from October 30, 2001 or from
the date of the last payment of
interest on the Old Notes, whichever
is later. No additional interest
will be paid on Old Notes tendered
and accepted for exchange.
Conditions to the Exchange Offer........ The exchange offer is subject to
certain customary conditions,
certain of which may be waived by
us. See "The Exchange Offer--
Conditions to Exchange Offer."
Procedures for Tendering Old Notes...... Each holder of the Old Notes wishing
to accept the exchange offer must
complete, sign and date the letter
of transmittal, or a copy thereof,
in accordance with the instructions
contained in this prospectus and
therein, and mail or otherwise
deliver the letter of transmittal,
or the copy, together with the Old
Notes and all other required
documentation, to the exchange agent
at the address set forth in this
prospectus. Anyone holding the Old
Notes through the Depository Trust
Company ("DTC") and wishing to
accept the exchange offer must do so
pursuant to the DTC's Automated
Tender Offer Program, by which each
tendering holder will agree to be
bound by the letter of transmittal.
By executing or agreeing to be bound
by the letter of transmittal, each
holder will represent to us that,
among other things:
. the Exchange Notes acquired
pursuant to the exchange offer
are being obtained in the
ordinary course of business of
the person receiving such
Exchange Notes, whether or not
such person is the registered
holder of the Old Notes;
. the holder is not engaging in
and does not intend to engage
in a distribution of such
Exchange Notes;
. the holder does not have an
arrangement or understanding
with any person to participate
in a distribution of such
Exchange Notes; and
. the holder is not an
"affiliate," as defined under
Rule 405 under the Securities
Act of 1933, of the Company.
Pursuant to the registration rights
agreement, if:
4
. we determine that we are not
permitted to effect the
exchange offer as contemplated
by this prospectus because of
any change in law or
Securities and Exchange
Commission policy;
. the Registered Exchange Offer
is not consummated within 30
business days of the date the
exchange offer registration
statement became effective; or
. any holder of Transfer
Restricted Securities, as that
term is defined in the
Registration Rights Agreement
filed as an exhibit to this
registration statement,
notifies us within 20 days
after consummation of the
exchange offer:
. that such Holder is not
eligible to participate
in the Registered
Exchange Offer, if such
Holder is not an
Affiliate of the Company;
. that the Exchange Notes
such Holder would receive
would not be freely
tradeable; or
. that it is a broker-
dealer and owns Old Notes
acquired directly from us
or one of our affiliates,
we may be required to file a "shelf"
registration statement for a
continuous offering pursuant to Rule
415 under the Securities Act of 1933
in respect of the Old Notes.
We will accept for exchange any and
all Old Notes which are properly
tendered (and not withdrawn) in the
exchange offer prior to 5:00 p.m.,
New York City time, on ____________,
2001. The Exchange Notes issued
pursuant to the exchange offer will
be delivered promptly following the
expiration date. See "The Exchange
Offer--Acceptance of Old Notes for
Exchange; Delivery of Exchange
Notes."
Exchange Agent.......................... SunTrust Bank is serving as exchange
agent in connection with the
exchange offer.
Federal Income Tax Considerations....... The exchange of Old Notes for
Exchange Notes pursuant to the
exchange offer should not constitute
a sale or an exchange for federal
income tax purposes. See "Material
U.S. Federal Income Tax
Considerations."
Effect of Not Tendering................. Old Notes that are not tendered or
that are tendered but not accepted
will, following the completion of
the exchange offer, continue to be
subject to the existing restrictions
upon transfer. Except as noted
above, we will have no further
obligation to provide for the
registration under the Securities
Act of 1933 of such Old Notes. See
"Risk Factors--Holders That Do Not
Exchange Old Notes Hold Restricted
Securities."
5
SUMMARY OF THE EXCHANGE NOTES
The form and terms of the Exchange Notes to be issued in the exchange
offer are the same as the form and terms of the Old Notes except that the
Exchange Notes will be registered under the Securities Act and, accordingly,
will not bear legends restricting their transfer. The Exchange Notes issued in
the exchange offer will evidence the same debt as the Old Notes, and both the
Old Notes and the Exchange Notes are governed by the same indenture. Certain of
the terms and conditions described below are subject to important limitations
and exceptions. The "Description of Exchange Notes" section of this prospectus
beginning on page 26 contains a more detailed description of the terms and
conditions of the Exchange Notes.
Securities Offered...................... $200 million principal amount of 9
5/8% Senior notes due 2011
Issuer.................................. DIMON Incorporated
Maturity Date........................... October 15, 2011
Interest Payment Dates.................. April 15 and October 15 of each
year, beginning on April 15, 2002
Optional Redemption..................... We may redeem:
. all or part of the original
principal amount of the Exchange
Notes beginning on October 15,
2006, at the redemption prices
stated in "Description of Exchange
Notes--Redemption," plus accrued
and unpaid interest on the
Exchange Notes to be redeemed; and
. up to 35% of the Exchange Notes at
any time prior to October 15, 2004
at a price of 109.625% of the
principal amount of the Exchange
Notes, plus accrued and unpaid
interest, with the proceeds of
certain public equity offerings of
our company.
Ranking................................. The Exchange Notes will be unsecured
senior obligations of the Company.
The Exchange Notes will rank equal in
right of payment with all our other
existing and future senior unsecured
obligations. The Exchange Notes will
effectively rank behind any of our
future indebtedness that is secured
by any of our assets to the extent of
the value of such assets, even if
such indebtedness expressly provides
that it is not senior to the Exchange
Notes. In the future, we may issue
debt that ranks equal or subordinate
to the Exchange Notes. The Exchange
Notes will also effectively rank
behind any of the debt and
liabilities of our subsidiaries,
except for any Note Guarantors.
Change of Control....................... Upon a change in control, defined as
the acquisition by any persons of
beneficial ownership of 30% or more
of the outstanding shares of our
common stock, transfers of
substantially all of our assets,
certain substantial changes in our
Board of Directors and certain
consolidations or mergers of the
Company involving a significant
change in shareholdings, the Company
will be required to make an offer to
repurchase outstanding Exchange Notes
at 101% of the aggregate principal
amount thereof plus accrued and
unpaid interest to the date of
purchase. See "Description of
Exchange Notes--Change of Control."
Note Guarantees......................... Each Material Domestic Subsidiary
will be required to be a Note
Guarantor. As of the date hereof,
there are no Note Guarantors.
6
Basic Indenture Covenants............... The Indenture (as defined herein)
will contain certain covenants that,
among other things, limit our ability
to (i) transfer or issue shares of
capital stock of subsidiaries to
third parties, (ii) pay dividends or
make certain other payments, (iii)
incur additional indebtedness, (iv)
issue preferred stock, (v) incur
liens to secure our indebtedness,
(vi) apply net proceeds from certain
asset sales, (vii) enter into certain
transactions with affiliates, (viii)
merge with or into any other person
or (ix) enter into certain sale and
leaseback transactions. See
"Description of Exchange Notes--
Certain Covenants."
Exchange Offer; Registration Rights..... We agreed to offer to exchange the
Old Notes for a new issue of
identical debt securities registered
under the Securities Act of 1933 as
evidence of the same underlying
obligation of indebtedness. This
exchange offer is in satisfaction of
that agreement. We have also agreed
to provide a shelf registration
statement to cover resales of the
outstanding notes under certain
circumstances. If we fail to satisfy
these obligations, we have agreed to
pay liquidated damages to holders of
the outstanding notes under specified
circumstances until we satisfy our
obligations.
Use of Proceeds......................... We will not receive any proceeds upon
the completion of the exchange offer.
See "Use of Proceeds."
7
RISK FACTORS
An investment in the Exchange Notes involves a high degree of risk. You
should carefully consider the risks described below in addition to all other
information provided to you in this prospectus before making an investment in
the Exchange Notes. You should also carefully consider the information entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," incorporated by reference in this prospectus. The following factors
contain certain forward-looking statements involving risks and uncertainties.
Our actual results may differ materially from the results anticipated in these
forward-looking statements.
Risks Relating to the Exchange Offer
Holders That Do Not Exchange Old Notes Hold Restricted Securities.
If you do not exchange your Old Notes for Exchange Notes, your ability to
sell the Old Notes will be restricted.
If you do not exchange your Old Notes for the Exchange Notes in the
exchange offer, you will continue to be subject to the restrictions on transfer
described in the legend on your Old Notes. The restrictions on transfer of your
Old Notes arise because we issued the Old Notes in a transaction not subject to
the registration requirements of the Securities Act of 1933, as amended, and
applicable state securities laws. In general, you may only offer or sell the Old
Notes if they are registered under the Securities Act and applicable state
securities laws, or offered and sold pursuant to an exemption from such
requirements. If you are still holding any Old Notes after the expiration date
of the exchange offer and the exchange offer has been consummated, you will not
be entitled to have such Old Notes registered under the Securities Act or to any
similar rights under the Registration Rights Agreement (subject to limited
exceptions, if applicable). After the exchange offer is completed, we will not
be required, and we do not intend, to register the Old Notes under the
Securities Act. In addition, if you exchange your Old Notes in the exchange
offer for the purpose of participating in a distribution of the Exchange Notes,
you may be deemed to have received restricted securities and, if so, will be
required to comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction. To the extent Old
Notes are tendered and accepted in the exchange offer, the trading market, if
any, for the Old Notes would be adversely affected.
Holders Responsible for Compliance with Exchange Offer Procedures.
If you do not comply with the exchange offer procedures, you will be
unable to obtain the Exchange Notes.
We will issue the Exchange Notes in exchange for the Old Notes only after
we have timely received your Old Notes, along with a properly completed and duly
executed Letter of Transmittal and all other required documents. Therefore, if
you want to tender your Old Notes in exchange for Exchange Notes, you should
allow sufficient time to ensure timely delivery. Neither the Exchange Agent nor
DIMON is under any duty to give notification of defects or irregularities in the
tender of Old Notes for exchange. The exchange offer will expire at 5:00 p.m.,
New York City time, on ___________, 2001, or on a later extended date and time
as we may decide (the "Expiration Date").
The Exchange Notes and any Old Notes which remain outstanding after the
exchange offer will vote together as a single class for purposes of determining
whether the required percentage of holders have taken certain actions or
exercised certain rights under the Indenture.
Requirements for Transfer of Exchange Notes
Even the Exchange Notes, in your hands, may not be freely tradeable.
Based on interpretations by the SEC staff set forth in no-action letters
issued to third parties, we believe that you may offer for resale, resell and
otherwise transfer the Exchange Notes without compliance with the registration
and prospectus delivery provisions of the Securities Act, subject to certain
limitations. These limitations include that you are not an "affiliate" of ours
within the meaning of Rule 405 under the Securities Act, that you acquired your
Exchange Notes in the ordinary course of your business and that you have no
arrangement with any person to participate in the distribution of such Exchange
Notes. However, we have not submitted a no-action letter to the SEC regarding
this exchange offer and we cannot assure you that the SEC would make a similar
determination with respect to this exchange offer. If you are an affiliate of
DIMON, are engaged in or intend to engage in or have any
8
arrangement or understanding with respect to a distribution of the Exchange
Notes to be acquired pursuant to the exchange offer, you will be subject to
additional limitations. See "The Exchange Offer--Resale of the Exchange Notes."
Risks Relating To Our Indebtedness and The Old Notes and Exchange Notes
We have substantial debt which may adversely affect us by limiting future
sources of financing, interfering with our ability to pay interest and principal
on the Old Notes and Exchange Notes and subjecting us to additional risks.
Following this offering, we will have a significant amount of indebtedness
and debt service obligations. As of September 30, 2001, on a pro forma basis as
adjusted for this offering, we would have had approximately $588.9 million of
indebtedness. In addition, the Indenture governing the Old Notes and Exchange
Notes allows us to incur additional indebtedness under certain circumstances. If
we add new indebtedness to our current indebtedness levels, the related risks
that we now face could increase. See "Capitalization," "Selected Consolidated
Financial Data" and "Description of Exchange Notes--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock."
Our substantial debt will have important consequences, including:
. our indebtedness may limit our ability to obtain additional
financing on satisfactory terms and to otherwise fund working
capital, capital expenditures, debt refinancing, acquisitions and
other general corporate requirements;
. a significant portion of our cash flow from operations must be
dedicated to paying interest on and the repayment of the
principal of our indebtedness. This reduces the amount of cash we
have available for other purposes and makes us more vulnerable to
a decrease in demand for leaf tobacco or to increases in our
operating costs;
. our failure to comply with the financial and other covenants
applicable to our debt could result in an event of default,
which, if not cured or waived, could have a material adverse
effect on us; and
. our ability to adjust to changing market conditions and to
compete with other global leaf tobacco merchants may be hampered
by the amount of debt we owe.
A court could declare the Old Notes and Exchange Notes junior in right of
payment or take other actions under fraudulent transfer statutes that are
detrimental to you.
Under federal or state fraudulent transfer laws, an unpaid creditor or
representative of creditors, including a trustee in bankruptcy, could file a
lawsuit claiming that the issuance of the Old Notes and Exchange Notes
constituted a fraudulent conveyance. If a court were to find that there has been
a fraudulent conveyance, it could:
. avoid all or a portion of our obligations to you under the Old
Notes and Exchange Notes and the Indenture, including any Note
Guarantee;
. subordinate our obligations to you under the Old Notes and
Exchange Notes or any Note Guarantee to our obligations to our
other existing and future creditors, entitling other creditors to
be paid in full before any payment is made on the Old Notes and
Exchange Notes or any Note Guarantee; and
. take other action detrimental to you, including, in some
circumstances, invalidating the Old Notes and Exchange Notes or
any Note Guarantee.
If a court were to take any of those actions, we cannot assure you that
you would ever be repaid.
We may not have sufficient funds to repay the Old Notes and Exchange Notes
upon a change of control.
If we experience certain changes of control, you will have the right to
require us to purchase your Old Notes and Exchange Notes at a purchase price
equal to 101% of the principal amount of your Old Notes and Exchange
9
Notes plus accrued and unpaid interest. In such circumstances, we may also be
required to repay our other outstanding debts or obtain consents that may be
required to permit us to purchase your Old Notes and Exchange Notes. If we
cannot repay our debts or obtain the needed consents, we may be unable to
purchase the Old Notes and Exchange Notes. This would be an event of default
under the Indenture. Upon a change of control, we cannot guarantee you that we
will have sufficient funds to make any required payments, including purchases of
the Old Notes and Exchange Notes, as described above. See "Description of
Exchange Notes--Change of Control."
The events that qualify as a change of control under the Indenture may
also be events of default under other indebtedness. If we cannot repay such
borrowings when due, the lenders could proceed against any collateral securing
such indebtedness.
There may be no active trading market for the Exchange Notes to be issued
in the exchange offer.
There is no existing market for the Exchange Notes. We cannot assure you
with respect to:
. the liquidity of any market for the Exchange Notes that may
develop;
. your ability to sell Exchange Notes; or
. the price at which you will be able to sell the Exchange Notes.
If a public market were to exist, the Exchange Notes could trade at prices
that may be higher or lower than their principal amount or purchase price,
depending on many factors, including prevailing interest rates, the market for
similar notes and our financial performance. We do not intend to list the
Exchange Notes to be issued to you in the exchange offer on any securities
exchange or to seek approval for quotations through any automated quotation
system. No active market for the Exchange Notes is currently anticipated. The
initial purchasers of the Old Notes have advised us that they currently
anticipate making a secondary market for the Exchange Notes, but they are not
obligated to do so. We cannot assure you that an active or liquid public trading
market will develop for the Exchange Notes.
Our holding company structure means that the Old Notes and Exchange Notes
will be effectively subordinated to the creditors of our subsidiaries.
Because a substantial part of our assets consists of the capital stock of
our subsidiaries, our creditors, including the holders of the Old Notes and
Exchange Notes, will effectively rank junior to all creditors (including
unsecured creditors) of our subsidiaries, other than any Note Guarantors, with
respect to the assets of such subsidiaries, notwithstanding that the Old Notes
and Exchange Notes will be senior obligations of our company. Our ability to
meet our debt service and principal repayment obligations will depend upon
receiving cash flow from our subsidiaries. Approximately 58.8% of our revenues
for the year ended June 30, 2001 were attributable to our subsidiaries. In
addition, our right to receive the assets of any of these subsidiaries upon
liquidation or reorganization of such subsidiary (and the consequent right of
the holders of the Old Notes and Exchange Notes to participate in those assets)
will be effectively subordinated to the claims of that subsidiary's creditors,
including trade creditors. As of September 30, 2001, on a pro forma basis after
giving effect to the offering and the use of the proceeds thereof, the aggregate
amount of our indebtedness would be approximately $588.9 million of which
approximately $35.9 million is secured and of which approximately $179.6 million
represents indebtedness of our subsidiaries which is structurally senior to the
Old Notes and Exchange Notes.
Risks Relating To Our Operations
Our financial results will vary according to growing conditions, customer
indications and other factors, which also reduces your ability to gauge our
performance and increases the risk of an investment in our securities.
Our financial results, particularly the quarterly financial results, may
be significantly affected by fluctuations in tobacco growing seasons and crop
sizes. The cultivation period for tobacco is dependent upon a number of factors,
including the weather and other natural events, such as hurricanes or tropical
storms, and our processing schedule and results of operations can be
significantly altered by these factors.
10
Further, the timing and unpredictability of customer indications, orders
and shipments causes us to keep tobacco in inventory, increases our risk and
results in variations in quarterly and annual financial results. We may from
time to time in the ordinary course of business keep a significant amount of
processed tobacco in inventory for our customers to accommodate their inventory
management and other needs. Sales recognition by us and our subsidiaries is
based on the passage of ownership, usually with shipment of product. Since
individual shipments may represent significant amounts of revenue, our quarterly
and annual financial results may vary significantly depending on our customers'
needs and shipping instructions. In particular, because significant deliveries
of Brazilian tobacco are made at the end of our fourth fiscal quarter of each
year or the beginning of the first quarter of the following year, significant
amounts of sales and operating profits may shift from fiscal year to fiscal
year.
These fluctuations result in varying volumes and sales in given periods,
which also reduces your ability to compare our financial results in different
periods or in the same periods in different years.
Our adoption and application of certain standards in financial accounting
could cause our annual and quarterly financial results to vary and will reduce
your ability to gauge our performance, increasing the risk of an investment in
our securities.
Effective July 1, 2000, we adopted Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging
Activities. As a result of adoption of SFAS No. 133, we recognize all derivative
financial instruments, such as interest rate swap contracts and foreign exchange
contracts, in the consolidated financial statements at fair value regardless of
the purpose or intent for holding the instrument. We use forward contracts to
mitigate our exposure to changes in foreign currency exchange rates on
forecasted transactions. Generally, the effective portion of unrealized gains
and losses associated with forward contracts and the intrinsic value of option
contracts are deferred as a component of accumulated other comprehensive income
until the underlying hedge transactions are reported on our consolidated
statement of earnings. We have traditionally used interest rate swaps to
mitigate our exposure to changes in interest rates related to certain debt
agreements. The swaps convert floating-rate debt to fixed-rate debt. Interest
rate swaps, to the extent they are effective hedges, are accounted for as cash
flow hedges, with the changes in the fair values of these instruments being
recorded in accumulated other comprehensive income net of deferred taxes.
Changes in the fair values of derivatives not qualifying as hedges are reported
in income. As a result of fluctuations in interest rates and volatility in
market expectations, the fair market value of interest rate swap instruments can
be expected to appreciate or depreciate over time. We plan to continue the
practice of economically hedging various components of our debt. However, as a
result of SFAS No. 133, such swap instruments may now create volatility in
future reported earnings.
In addition, when we apply SFAS No. 142, Goodwill and Other Intangible
Assets, beginning in the first quarter of fiscal 2003 we will no longer amortize
goodwill and intangible assets, resulting in increased earnings. However, if we
determine that there has been a material impairment to goodwill or other
intangible assets with indefinite lives, we will recognize the amount of that
impairment as a charge to earnings in the applicable reporting period. This
could cause variances in our reported earnings in different quarters and years,
which may impair your ability to compare results in those periods. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Accounting Matters" and Notes F and R to our Consolidated Financial
Statements incorporated by reference in this prospectus.
The shift to direct buying of green tobacco by many of our U.S. customers
will affect your ability to compare our quarter to quarter or year to year
results and could have an adverse effect on our results of operations.
Comparability of our sales revenues will be affected by the shift to
direct contract buying in the United States. Traditionally in the United States,
we have taken ownership of all green tobaccos we purchase, then process and
resell that tobacco to our customers. Concurrent with the shift from an auction
system to a direct contract buying system in the United States, beginning with
the 2000 U.S. burley crop, certain major U.S. customers have begun purchasing
green tobacco directly from the growers. Although we expect that the tobacco
purchased directly from growers by our customers will continue to be processed
in our U.S. facilities, we may no longer take ownership of that tobacco and may
no longer record revenues associated with its resale. With the shift to direct
contract buying, our sales and other operating revenues is estimated to decrease
$180 million to $200 million in fiscal year 2002 from fiscal year 2001. We
expect to continue to earn and record service revenues for the processing of all
such tobaccos for our customers. We do not expect that our gross profit will be
materially affected by the shift to direct contract
11
buying by our customers, although sales revenues will be reduced and our profit
margin may improve. In addition, although we expect to purchase the majority of
our 2001 flue-cured and burley crop requirements through direct contract buying,
we will still need to maintain buying personnel in the residual auction markets,
which could affect our ability to manage our costs.
Our extension of credit to tobacco growers could have an adverse effect on
our financial condition.
We make advances to tobacco growers in many countries to finance their
growing of tobacco for sale to us. Crop advances to growers are generally
secured by the grower's agreement to deliver green tobacco. In the event of crop
failure, recovery of advances could be delayed until deliveries of future crops
or indefinitely. The temporary or permanent loss of these advances to growers
could have a material adverse effect on our financial condition or results of
operations.
Competition could adversely affect our operating results.
The leaf tobacco industry is highly competitive. Competition among leaf
tobacco merchants is based primarily on the price charged for products and
services as well as the firm's ability to meet customer specifications in the
buying, processing and financing of tobacco. In addition, there is competition
in all countries to buy the available tobacco. There are three major global
competitors in the leaf tobacco industry, and they are dependent upon a few
large tobacco manufacturing customers. The number of manufacturers has declined
in recent years due to consolidation. The loss of, or a substantial reduction in
the services provided to, any large or significant customer could have a
material adverse effect on our financial condition or results of operations.
Our reliance on a small number of significant customers may adversely
affect our results of operations.
Our customers are manufacturers of cigarette and tobacco products in
several countries around the world. Several of these customers individually
account for a significant portion of our sales in a normal year. Of our
consolidated tobacco sales in 2001, 2000 and 1999, approximately 45%, 35% and
37%, respectively, represented sales to various tobacco customers which we
believe are owned by or under common control of Japan Tobacco Inc., Philip
Morris Companies Inc., or R. J. Reynolds Tobacco Company, Inc. In addition,
tobacco product manufacturers are currently experiencing a period of
consolidation, and further consolidation among our customers could decrease such
customer's demand for our leaf tobacco or processing services. The loss of any
one or more of such customers could have a material adverse effect on our
financial condition or results of operations.
We face increased risks of doing business due to the extent of our
international operations.
We do business in over 30 countries, many of which do not have stable
economies or governments. Our international operations are subject to
international business risks, including unsettled political conditions,
expropriation, import and export restrictions, exchange controls, inflationary
economies and currency risks and risks related to the restrictions on
repatriation of earnings or proceeds from liquidated assets of foreign
subsidiaries. These risks are exacerbated in countries where we have advanced
substantial sums or guaranteed local loans or lines of credit in substantial
amounts for the purchase of tobacco from growers.
We have expanded our international operations in areas where the export of
tobacco has increased due to increased demand for lower priced tobacco. We have
significant investments in our purchasing, processing and exporting operations
in Brazil, Indonesia, Thailand and the African countries of Malawi, Tanzania and
Zimbabwe. In particular, we derive significant operating profit from our
operations in Brazil and Zimbabwe. In recent years, these countries' economic
problems have received wide publicity related to devaluation of the local
currency and inflation. While devaluation can affect our purchase costs of
tobacco and our processing costs, it has not and is not expected to affect
adversely our ability to export tobacco from these countries.
Specifically, Zimbabwe is experiencing a period of civil unrest in
combination with a deteriorating economy. If the current political situation
continues, we could experience disruptions and delays associated with our
operations in that country which could have a material adverse effect on our
financial condition or results of operations.
Fluctuations in foreign currency exchange rates could adversely affect our
results of operations.
12
Our business is generally conducted in U.S. dollars, as is the business of
the tobacco industry as a whole. However, local country operating costs,
including the purchasing and processing costs for tobaccos, are subject to the
effects of exchange fluctuations of the local currency against the U.S. dollar.
We attempt to minimize such currency risks by matching the timing of our working
capital borrowing needs against the tobacco purchasing and processing funds
requirements in the currency of the country where the tobacco is grown.
Fluctuations in the value of foreign currencies can significantly affect our
operating results.
In addition, the devaluation of foreign currencies, particularly Asian and
Eastern European currencies, has resulted and may in the future result in
reduced purchasing power from customers in these areas. We may incur a loss of
business as a result of the devaluation of these currencies now or in the
future.
The September 11, 2001 terrorist attacks on the United States may have
unpredictable adverse effects on global economic conditions, the financial
markets and our business and results of operations.
The September 11, 2001 terrorist attacks on the World Trade Center in New
York and the Pentagon in Washington, D.C., have caused uncertainty and
volatility in the U.S. and international economies and financial markets, and
coincided with an overall weakening of economic conditions. In addition, there
can be no assurance that there will not be further terrorists attacks against
the United States or U.S. businesses operating abroad. We cannot predict what
effect these events, including the retaliatory measures that have been taken,
and those that may be taken in the future, may have on global economic
conditions, the financial markets, or on our business and results of operations.
We also cannot predict what future effects these events may have on investors'
perceptions of the risks of investing in non-investment grade debt securities.
Risks Relating to the Tobacco Industry
Reductions in demand for consumer tobacco products could adversely affect
our results of operations.
The tobacco industry, both in the United States and abroad, continues to
face a number of issues that may reduce the consumption of cigarettes and
adversely affect our business, sales volume, results of operations, cash flows
and financial condition.
These issues, some of which are more fully discussed below, include:
. governmental actions seeking to ascribe to tobacco
product manufacturers liability for adverse health
effects associated with smoking and exposure to
environmental tobacco smoke;
. smoking and health litigation and against tobacco product
manufacturers;
. possible tax increases on consumer tobacco products;
. current and potential actions by state attorneys general
to enforce the terms of the Master Settlement Agreement
("MSA") between state governments in the United States
and tobacco product manufacturers;
. governmental and private bans and restrictions on smoking;
. actual and proposed price controls and restrictions on imports in
certain jurisdictions outside the United States;
. restrictions on tobacco product manufacturing, marketing,
advertising and sales;
. the diminishing social acceptance of smoking;
. increased pressure from anti-smoking groups; and
. other tobacco product legislation that may be considered by
Congress, the states and other countries.
Tobacco product manufacturer litigation may reduce demand for our
services.
13
Our primary customers, the leading cigarette manufacturers, face hundreds
of lawsuits brought throughout the United States and, to a lesser extent, the
rest of the world. The effects of the lawsuits on our customers could reduce
their demand for tobacco from us. These lawsuits have been brought by
plaintiffs, including (1) individuals and classes of individuals alleging
personal injury, (2) governments (including governmental and quasi-governmental
entities in the United States and abroad) seeking recovery of health care costs
allegedly caused by cigarette smoking, and (3) other groups seeking recovery of
health care expenditures allegedly caused by cigarette smoking, including
third-party health care payors, such as unions and health maintenance
organizations. Damages claimed in some of the smoking and health cases range
into the billions of dollars. In September 1999, the United States Department of
Justice filed a lawsuit against the leading cigarette manufacturers, seeking to
recover billions of dollars in alleged federal smoking-related health care
costs. Additional plaintiffs continue to file lawsuits.
There have been several jury verdicts in tobacco product litigation during
the past three years. For example, in July 2000, the jury in the Engle smoking
and health class action in Florida returned a verdict against the cigarette
manufacturer defendants for approximately $145 billion in punitive damages. The
Engle case is being appealed. More recently, a California jury in an individual
smoker case returned a verdict against Philip Morris Incorporated for $3 billion
in punitive damages. The judge in the case reduced the award to $100 million.
Philip Morris Incorporated has stated publicly its intention to appeal the case.
In November 1998, certain United States tobacco product manufacturers
entered into the MSA with 46 states, the District of Columbia, the Commonwealth
of Puerto Rico, Guam, the United States Virgin Islands, American Samoa and the
Northern Marianas to settle asserted and unasserted health care cost recovery
and other claims. These manufacturers had previously settled similar claims
brought by Mississippi, Florida, Texas and Minnesota and an environmental
tobacco smoke and health class action brought on behalf of airline flight
attendants. The MSA has received final judicial approval in all 52 settling
jurisdictions.
Key provisions of the MSA are as follows:
. payments of approximately $206 billion over 25 years from the
cigarette manufacturers to the states;
. marketing and advertising restrictions, including bans on cartoon
characters, point-of-sale advertising, billboards, bus and taxi
placards and sponsorships of most sporting events by brand names;
. disbanding the Tobacco Institute, the Council for Tobacco
Research and the Council for Indoor Air Research;
. eliminating vending machine sales and requiring that all tobacco
products be behind a counter; and
. making payments of $1.7 billion for educational efforts about the
dangers of smoking and to discourage youth smoking.
Other state settlement agreements include provisions relating to
advertising and marketing restrictions, public disclosure of industry documents,
limitations on challenges to tobacco product control and underage use laws,
lobbying activities and other provisions.
It is not possible to predict the outcome of the litigation pending
against the U.S. cigarette manufacturers, or the extent to which these actions
might adversely affect our customers, their demand for our product and our
business generally. Unfavorable outcomes in pending cases could encourage the
commencement of additional litigation. Adverse legislative, regulatory,
political and other developments concerning cigarette smoking and the tobacco
product industry continue to receive widespread media attention. These
developments may negatively affect the perception of potential judges and juries
with respect to the tobacco product industry, possibly affecting the outcome of
litigation. Although we are not a party to the litigation against the tobacco
product manufacturers, the Master Settlement Agreement or the State Settlement
Agreements, determinations that are adverse to the manufacturers could adversely
affect their purchases as our customers.
Legislative and regulatory initiatives could reduce consumption of
consumer tobacco products and demand for our services.
14
In recent years, members of Congress have introduced legislation, some of
which has been the subject of hearings or floor debate, that would subject
cigarettes to various regulations under the Department of Health and Human
Services or regulation under the Consumer Products Safety Act, establish anti-
smoking educational campaigns or anti-smoking programs, or provide additional
funding for governmental anti-smoking activities, further restrict the
advertising of cigarettes, including requiring additional warnings on packages
and in advertising, provide that the Federal Cigarette Labeling and Advertising
Act and the Smoking Education Act could not be used as a defense against
liability under state statutory or common law, allow state and local governments
to restrict the sale and distribution of cigarettes, and further restrict
certain advertising of cigarettes and eliminate or reduce the tax deductibility
of tobacco product advertising. It is not possible to determine the outcome of
these regulatory initiatives, or to predict what, if any, other foreign or
domestic governmental legislation or regulations will be adopted relating to the
manufacturing, advertising, sale or use of cigarettes, or to the tobacco
industry generally. However, if any or all of the foregoing were to be
implemented, our business, volume, results of operations, cash flows and
financial condition could be materially adversely affected.
Reports with respect to the harmful physical effects of cigarette smoking
have been publicized for many years, and the sale, promotion and use of
cigarettes continue to be subject to increasing governmental regulation. Since
1964, the Surgeon General of the United States and the Secretary of Health and
Human Services have released a number of reports linking cigarette smoking with
a broad range of health hazards, including various types of cancer, coronary
heart disease and chronic lung disease, and recommending various governmental
measures to reduce the incidence of smoking. The 1988, 1990, 1992 and 1994
reports focus upon the addictive nature of cigarettes, the effects of smoking
cessation, the decrease in smoking in the United States, the economic and
regulatory aspects of smoking in the Western Hemisphere, and cigarette smoking
by adolescents, particularly the addictive nature of cigarette smoking in
adolescence.
A number of foreign nations also have taken steps to restrict or prohibit
cigarette advertising and promotion, to increase taxes on cigarettes and to
discourage cigarette smoking. In some cases, such restrictions are more onerous
than those in the United States. For example, advertising and promotion of
cigarettes has been banned or severely restricted for a number of years in
Australia, Canada, Finland, France, Italy, Singapore and other countries. It is
impossible to predict the extent to which these and any additional restrictions
might affect our business.
In addition, from time to time, the leaf tobacco industry has been the
subject of government investigations regarding trade practices. In September
1998, we and several of our employees received subpoenas relating to an
investigation by the Antitrust Division of the United States Department of
Justice into certain buying practices alleged to have occurred in the industry.
We have received notice that this investigation has been concluded without any
action taken against us. In addition, we are currently defending a purported
class action brought on behalf of U.S. tobacco growers alleging that cigarette
manufacturers and certain leaf tobacco merchants violated U.S. antitrust laws by
bid-rigging at tobacco auctions and conspiring to undermine the tobacco quota
and price support program. See "Our Business--Legal Proceedings" incorporated
by reference in this prospectus.
Due to the present litigation, regulatory and legislative environment, a
substantial risk exists that past growth trends in tobacco product sales may not
continue and that existing sales may decline. It is not possible to predict the
extent to which any of these issues may affect our business.
15
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the Exchange
Notes. In consideration for issuing the Exchange Notes as contemplated in this
prospectus, we will receive in exchange the Old Notes in like principal amounts,
which we will cancel. Accordingly, there will not be an increase in our
outstanding indebtedness.
CAPITALIZATION
The following table sets forth our capitalization as of September 30,
2001, on an actual basis and as adjusted to give effect to the offering of the
Old Notes. You should read this table in conjunction with our consolidated
financial statements and the related notes to our consolidated financial
statements incorporated by reference in this prospectus. See "Use of Proceeds,"
"Selected Consolidated Financial Data," and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," incorporated by
reference in this prospectus.
As of September 30, 2001
------------------------
Actual As Adjusted
---------- ------------
(dollars in thousands)
Long-term debt (including current portion):
Seasonally adjusted lines of credit (1)....................... $258,376 $163,876
Existing senior credit facility............................... 100,000 --
New senior credit facility (1)................................ -- --
Existing 8 7/8% senior notes.................................. 125,000 125,000
9 5/8% Notes offered.......................................... -- 200,000
Other debt.................................................... 26,730 26,730
Convertible subordinated debentures........................... 73,328 73,328
-------- ----------
Total debt............................................ 583,434 588,934
Total shareholders' equity........................................... 413,405 413,405
-------- ----------
Total capitalization................................... $996,839 $1,002,339
======== ==========
___________
(1) On an as adjusted basis, as of September 30, 2001, and including the new
senior credit facility, we would have had approximately $165 million of
additional borrowing available under our new senior credit facility and
approximately $346 million of additional borrowing available under our
seasonally adjusted lines of credit.
16
SELECTED CONSOLIDATED FINANCIAL DATA
Our selected historical consolidated financial data is set forth below.
You should read this information in conjunction with our consolidated financial
statements and related notes. This selected consolidated financial data as of
and for each of the years in the five-year period ended June 30, 2001 have been
derived from our audited consolidated financial statements. The selected
consolidated financial data as of and for the three months ended September 30,
2001 and 2000 have been derived from our unaudited consolidated quarterly
financial statements. The consolidated balance sheets as of June 30, 2001 and
2000 and the consolidated statements of operations for each of the years in the
three-year period ended June 30, 2001, and the independent auditors' reports
thereon, are incorporated by reference in this prospectus.
Three Months
Ended September 30, Fiscal Year Ended June 30
------------------ ------------------------------------------------------------------
2001 2000 2001 2000 1999 1998 1997(1)
----- ---- ---- ---- ---- ---- -------
(unaudited)
(dollars in thousands) (dollars in thousands)
Statement of Operations Data:
Sales and other operating
revenue........................... $ 288,721 $ 198,901 $ 1,400,955 $ 1,473,630 $ 1,815,223 $ 2,171,803 $ 2,125,739
Cost of goods and services
sold............................. 236,109 162,071 1,209,931 1,286,128 1,657,984 1,911,843 1,851,547
--------- --------- ----------- ----------- ----------- ----------- -----------
Gross profit....................... 52,612 36,830 191,024 187,502 157,239 259,960 274,192
Selling, administrative,
and general expenses.............. 26,191 23,854 103,537 106,657 117,826 120,202 103,705
Restructuring (recovery) and
asset impairment costs............ -- (238) (1,384) (211) 25,932 -- 3,864
Recovery from litigation
settlement........................ -- -- (3,923) -- (15,353) -- --
--------- --------- ----------- ----------- ----------- ----------- -----------
Operating income................... 26,421 13,214 92,794 81,056 28,834 139,758 166,623
Interest expense................... 11,329 14,432 53,574 57,704 66,123 83,769 50,518
Current charge for derivative
financial instruments............. 9,602 1,265 4,680 -- -- -- --
--------- --------- ----------- ----------- ----------- ----------- -----------
Income (loss) from continuing
operations before income
taxes, equity in net income
(loss) of investee companies,
cumulative effect of accounting
changes and income from
discontinued operations........... 5,490 (2,483) 34,540 23,352 (37,289) 55,989 116,105
Income taxes (benefit)............. 1,459 (571) 9,272 5,381 (8,923) 14,725 44,063
--------- --------- ----------- ----------- ----------- ----------- -----------
Income (loss) from continuing
operations before equity in
net income (loss) of investee
companies, cumulative effect of
accounting changes and income
from discontinued operations...... 4,031 (1,912) 25,268 17,971 (28,366) 41,264 72,042
Equity in net income (loss) of
investee companies (net of
income tax)....................... (113) (70) (271) 17 (12) 565 526
--------- --------- ----------- ----------- ----------- ----------- -----------
Income (loss) from continuing
operations before cumulative
effect of accounting changes
and income from discontinued
operations......................... 3,918 (1,982) 24,997 17,988 (28,378) 41,829 72,568
Cumulative effect of
accounting changes (net of
income taxes) (2)
Reporting period of subsidiaries.. -- 284 284 -- -- -- --
Derivative financial instruments.. -- (387) (387) -- -- -- --
Discontinued business:
Income (loss) from operations,
net of income tax................ -- -- -- -- (841) 1,820 4,605
Gain on disposal, net of income
tax.............................. -- -- -- -- 23,753 -- --
--------- --------- ----------- ----------- ----------- ----------- -----------
Net income (loss).................. $ 3,918 $ (2,085) $ 24,894 $ 17,988 $ (5,466) $ 43,649 $ 77,173
========= ========= =========== =========== =========== =========== ===========
Other Data:
EBITDA (3)......................... $ 36,966 $ 23,343 $ 131,797 $ 124,831 $ 84,554 $ 183,234 $ 207,678
Depreciation and amortization...... 10,545 10,367 44,310 43,986 45,141 43,476 37,191
Capital expenditures............... 6,834 4,397 19,061 11,962 32,156 61,168 60,860
EBITDA margin...................... 12.8% 11.7% 9.4% 8.5% 4.7% 8.4% 9.8%
Ratio of EBITDA to interest
expense........................... 3.3 1.6 2.5 2.2 1.3 2.2 4.1
Ratio of earnings to fixed
charges (4)....................... 1.45 -- 1.6 1.4 -- 1.7 3.2
17
Balance Sheet Data:
Working capital (5).................. $ 190,904 $ 431,292 $ 172,863 $ 433,735 $ 443,602 $ 706,384 $ 699,993
Total tobacco inventory.............. 532,748 645,046 398,236 383,881 486,620 588,143 583,579
Total assets......................... 1,290,612 1,459,040 1,182,089 1,266,749 1,479,194 1,797,478 1,987,603
Total debt........................... 583,434 691,206 529,799 677,600 835,923 1,090,085 1,192,639
Total liabilities.................... 876,329 1,059,764 769,590 862,674 1,082,129 1,375,068 1,578,342
Minority interest.................... 878 568 960 571 526 480 998
Stockholders' equity................. 413,405 398,708 411,539 403,504 396,539 421,930 408,263
___________
(1) See Note C in the Notes to Consolidated Financial Statements for a
discussion of an acquisition in 1997, incorporated by reference in
this prospectus.
(2) See the pro forma information presented on the Statement of
Consolidated Income and Comprehensive Income, incorporated by
reference in this prospectus.
(3) EBITDA is defined as net income from continuing operations before
income taxes, interest expense, depreciation, amortization and other
non-cash charges, restructuring costs and non-recurring items and
extraordinary gains and losses. You should not consider EBITDA in
isolation or as a substitute for net earnings, operating cash flows
or other cash flow statement data determined in accordance with
generally accepted accounting principles. EBITDA, as presented, may
not be comparable to similarly titled measures of other companies.
(4) In 1999, fixed charges exceeded earnings by approximately $30.3
million and $2.6 million at September 30, 2000.
(5) The reduction in working capital as of June 30, 2001 reflects the
maturing of our existing $250 million senior credit facility, which
has an initial term expiring June 27, 2002, and the classification
of that amount as current debt.
18
THE COMPANY
We are the second largest independent leaf tobacco merchant in the world
with an estimated 30% share of the market for internationally-traded leaf
tobacco. We select, purchase, process, store, pack, and ship tobacco grown in 39
countries, servicing manufacturers of cigarettes and other consumer tobacco
products sold in approximately 90 countries around the world. Our revenues
primarily comprise sales of processed tobacco and fees charged for processing
and related services to manufacturers of tobacco products. We deal primarily in
flue-cured, burley, and oriental tobaccos that are used in international brand
cigarettes. We do not manufacture cigarettes or other consumer tobacco products.
For the year ended June 30, 2001, our total sales and other revenue was $1.4
billion and our EBITDA was $131.8 million.
We have developed an extensive international network through which we
purchase, process and sell leaf tobacco grown throughout the world. We maintain
a presence, and in some cases a leading position, in most tobacco growing
regions in the world, including the principal export markets for flue-cured and
burley tobacco: the United States, Brazil, Zimbabwe and Malawi. We process
tobacco in 24 facilities around the world. Each type of tobacco is separated
into different grades based on quality and then blended to meet each customer's
specifications. The tobacco is processed through a complex mechanized threshing
and separating operation and then dried to meet precise moisture levels in
accordance with the customer's specification. The processing of leaf tobacco is
an essential service to our customers because the quality of processed leaf
tobacco substantially affects the cost and quality of the manufacturer's end
product.
We sell our processed tobacco primarily to large multinational cigarette
manufacturers, including Philip Morris, Japan Tobacco, Lorillard, RJR Tobacco,
Reemtsma, British American Tobacco and others. In fiscal 2001, we delivered
approximately 31% of our tobacco sales to customers in the U.S., approximately
36% to customers in Europe and the remainder to customers located in Asia,
Africa and elsewhere. Our customers generally pay the carrying and shipping
costs for all committed tobacco after our initial receipt, substantially
reducing carrying costs associated with a large portion of our inventory.
Through our predecessor companies, we have a long operating history in the leaf
tobacco industry and have maintained relationships with many of our major
customers for over 50 years, with some of these relationships beginning in the
early 1900s. We were formed through the 1995 merger of Dibrell Brothers,
Incorporated, founded in 1873, and Monk-Austin, Inc., founded in 1907.
19
THE EXCHANGE OFFER
Terms of the Exchange Offer
Upon the terms and subject to the conditions set forth in this prospectus
and in the Letter of Transmittal, DIMON will accept for exchange Old Notes that
are properly tendered on or prior to the Expiration Date and not withdrawn.
"Expiration Date" means 5:00 p.m., New York City time, on __________, 2001, or,
if DIMON has extended the period of time for the exchange offer, the latest time
and date to which the exchange offer is extended.
As of the date of this prospectus, $200 million aggregate principal amount
of the Old Notes was outstanding. This prospectus, together with the Letter of
Transmittal, is first being sent on or about the date set forth on the cover
page to all holders of Old Notes at the addresses set forth in the securities
register with respect to Old Notes maintained by DTC. DIMON's obligation to
accept Old Notes for exchange pursuant to the exchange offer is subject to
certain conditions set forth below. See "--Conditions to Exchange Offer."
DIMON expressly reserves the right, at any time or from time to time, to
extend the period during which the exchange offer is open, and thereby delay
acceptance for exchange of any Old Notes, by mailing written notice of such
extension to the holders as described below. During any extension, all Old Notes
previously tendered will remain subject to the exchange offer and may be
accepted for exchange by DIMON. Any Old Notes not accepted for exchange for any
reason will be returned without expense to the holder as promptly as practicable
after the expiration or termination of the exchange offer.
Old Notes tendered in the exchange offer must be $1,000 in principal
amount or any integral multiple thereof.
The Company will mail written notice of any extension, amendment,
non-acceptance or termination to the holders of the Old Notes as promptly as
practicable, such notice to be mailed to the holders of record of the Old Notes
no later than 9:00 a.m. New York City time, on the next business day after the
previously scheduled Expiration Date or other event giving rise to such notice
requirement.
Procedures For Tendering Old Notes
Letter of Transmittal. The tender to DIMON of Old Notes by a holder as set
forth below and the acceptance of the tender by DIMON will constitute a binding
agreement between the tendering holder and DIMON upon the terms and subject to
the conditions set forth in this prospectus and in the Letter of Transmittal.
Except as set forth below, a holder who wishes to tender Old Notes for exchange
must transmit a properly completed and executed Letter of Transmittal, together
with all other documents required by such Letter of Transmittal, to the Exchange
Agent at the address set forth below under "-- Exchange Agent" on or prior to
the Expiration Date.
Other Documents. In addition,
. the Exchange Agent must receive certificates for the Old Notes
along with the Letter of Transmittal,
. the Exchange Agent must receive prior to the Expiration Date a
timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of the Old Notes, if such procedure is available,
into the Exchange Agent's account at the DTC pursuant to the
procedure for book-entry transfer described below, or
. the holder must comply with the guaranteed delivery procedures
described in "-- Guaranteed Delivery Procedures," below.
The method of delivery of Old Notes, Letters of Transmittal and all other
required documents is at the election and risk of the holders. If the delivery
is by mail, it is recommended that registered mail, properly insured, with
return receipt requested, be used in all cases. Sufficient time should be
allowed to assure timely delivery. No Letters of Transmittal or Old Notes should
be sent to DIMON.
20
Signatures. Signatures on a Letter of Transmittal or a notice of
withdrawal must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (1) by a registered holder of the Old Notes who
has not completed the box entitled "Special Issuance Instructions" on the Letter
of Transmittal or (2) for the account of an Eligible Institution (as defined
below). If signatures on a Letter of Transmittal or a notice of withdrawal are
required to be guaranteed, the guarantees must be by a firm that is an eligible
guarantor institution (bank, stockbroker, national securities exchange,
registered securities association, savings and loan association or credit union
with membership in a signature medallion program) pursuant to Exchange Act Rule
17Ad-15 (collectively, "Eligible Institutions"). If Old Notes are registered in
the name of a person other than the person signing the Letter of Transmittal,
the Old Notes surrendered for exchange must be endorsed by, or be accompanied
by, a written instrument or instruments of transfer or exchange, in satisfactory
form as determined by DIMON, duly executed by the registered holder, with the
signature guaranteed by an eligible Institution.
Powers of Attorney. If the Letter of Transmittal is signed by a person or
persons other than the registered holder or holders of Old Notes, the Old Notes
must be endorsed or accompanied by appropriate powers of attorney, in either
case signed exactly as the name or names of the registered holder or holders
that appear on the Old Notes.
Representatives, Trustees, Guardians, Etc. If the Letter of Transmittal or
any Old Notes or powers of attorney are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and unless waived by DIMON, proper evidence satisfactory
to DIMON of their authority to so act must be submitted with the Letter of
Transmittal.
Required Acknowledgments; Resales by Broker-Dealers. By tendering Old
Notes, each holder, other than a broker-dealer, must acknowledge that it is not
engaged in, and does not intend to engage in, a distribution of Exchange Notes.
If any holder of Old Notes is an "affiliate" of DIMON, as defined in Rule 405
under the Securities Act, or is engaged in or intends to engage in or has any
arrangement with any person to participate in the distribution of the Exchange
Notes to be acquired pursuant to the exchange offer, the holder:
. cannot rely on the applicable interpretations of the SEC staff,
and
. must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale
transaction.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Old Notes must acknowledge that the Old Notes were acquired by the
broker-dealer as a result of market-making activities or other trading
activities and that it will deliver a prospectus in connection with any resale
of the Exchange Notes. Any such broker-dealer may be deemed to be an
"underwriter" under the Securities Act. See "Plan of Distribution." The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
Acceptance of Old Notes For Exchange; Delivery of Exchange Notes
The Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the Exchange Notes promptly after acceptance of
the Old Notes. For each Old Note accepted for exchange, the holder of the Old
Note will receive an Exchange Note having a principal amount equal to that of
the surrendered Old Note. The Exchange Notes will bear interest from the most
recent date on which interest has been paid on the Old Notes or, if no interest
has been paid, from October 30, 2001. Old Notes accepted for exchange will cease
to accrue interest from and after the date of completion of the exchange offer,
except as set forth in the immediately preceding sentence. Holders of Old Notes
whose Old Notes are accepted for exchange will not receive any payment in
respect of interest on the Old Notes otherwise payable on any interest payment
date the record date for which occurs on or after completion of the exchange
offer.
In all cases, issuance of Exchange Notes for Old Notes that are accepted
for exchange pursuant to the exchange offer will be made only after timely
receipt by the Exchange Agent of:
21
. certificates for the Old Notes or a timely Book-Entry Confirmation
of the transfer of the Old Notes into the Exchange Agent's account
at DTC;
. a properly completed and duly executed Letter of Transmittal; and
. all other required documents.
If any tendered Old Notes are not accepted for any reason set forth in the
terms and conditions of the exchange offer or if certificates representing Old
Notes are submitted for a greater principal amount than the holder desires to
exchange, certificates representing the unaccepted or non-exchanged Old Notes
will be returned without expense to the tendering holder thereof (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at DTC pursuant to the book-entry transfer procedures described below,
the non-exchanged Old Notes will be credited to an account maintained with DTC)
as promptly as practicable after the expiration or termination of the exchange
offer.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
DIMON in its sole discretion, which determination shall be final and binding.
The Company reserves the absolute right to reject any and all tenders of any
particular Old Notes not properly tendered or not to accept any particular Old
Notes if acceptance might, in the judgment of DIMON or its counsel, be unlawful.
See "--Conditions to Exchange Offer." The Company also reserves the absolute
right in its sole discretion to waive any defects or irregularities or
conditions of the exchange offer as to any particular Old Notes either before or
after the Expiration Date (including the right to waive the ineligibility of any
holder who seeks to tender Old Notes in the exchange offer). The interpretation
of the terms and conditions of the exchange offer as to any particular Old Notes
either before or after the Expiration Date (including the Letter of Transmittal
and the instructions thereto) by DIMON shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Notes for exchange must be cured within a reasonable period of time that
DIMON shall determine. Neither DIMON, the Exchange Agent nor any other person
shall be required to give notice of any defect or irregularity regarding any
tender of Old Notes for exchange, nor shall any of them incur any liability for
failure to give notice.
The Exchange Agent has established an account with respect to the Old
Notes at DTC for purposes of the exchange offer and any financial institution
that is a participant in DTC's systems may make book-entry delivery of Old Notes
by causing DTC to transfer the Old Notes into the Exchange Agent's account at
DTC in accordance with DTC's procedures for transfer.
================================================================================
Although delivery of Old Notes may be effected through book-entry transfer at
DTC, the Letter of Transmittal or a facsimile thereof, with any required
signature guarantees and any other required documents, must, in any case, be
transmitted to and received by the Exchange Agent at the address set forth below
under "Exchange Agent" on or prior to the Expiration Date, or the guaranteed
delivery procedures described below must be complied with.
================================================================================
Guaranteed Delivery Procedures
If a registered holder of Old Notes desires to tender the Old Notes and
the Old Notes are not immediately available, or time will not permit the
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if:
. the tender is made through an Eligible Institution;
. prior to the Expiration Date, the Exchange Agent receives from the
Eligible Institution a properly completed and duly executed Letter
of Transmittal (or a facsimile thereof) and a Notice of Guaranteed
Delivery, substantially in the form provided by DIMON (by
telegram, telex, facsimile transmission,
22
mail or hand delivery), setting forth the name and address of the
holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within
five New York Stock Exchange ("NYSE") trading days after the date
of execution of the Notice of Guaranteed Delivery, the
certificates for all Old Notes will be physically tendered in
proper form for transfer, or a Book-Entry Confirmation, as the
case may be, and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the
Exchange Agent; and
. the certificates for all Old Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and all other
documents required by the Letter of Transmittal, are received by
the Exchange Act within five NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
Withdrawal Rights
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m., New
York City time, on the Expiration Date. For a withdrawal to be effective, a
written or facsimile notice of withdrawal must be received by the Exchange Agent
at the address set forth below under "-- Exchange Agent." Any notice of
withdrawal must specify the name of the person having tendered the Old Notes to
be withdrawn, identify the Old Notes to be withdrawn (including the principal
amounts of such Old Notes), and (where certificates for Old Notes have been
transmitted) specify the name in which such Old Notes are registered, if
different from that of the withdrawing holder.
If certificates for Old Notes have been delivered or otherwise identified
to the Exchange Agent, then, prior to the release of such certificates, the
withdrawing holder must also submit the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution unless the holder is an Eligible
Institution. If Old Notes have been tendered pursuant to the procedure for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawn Old Notes and otherwise
comply with the procedures of the facility. All questions as to the validity,
form and eligibility (including time of receipt) of the notices will be
determined by DIMON, whose determination shall be final and binding on all
parties. Certificates for any Old Notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the exchange offer. Any Old
Notes that have been tendered for exchange but which are not exchanged for any
reason will be returned to the holder thereof without cost to the holder (or, in
the case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at DTC pursuant to the book-entry transfer procedures described above,
the Old Notes will be credited to an account maintained with DTC for the Old
Notes) as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn Old Notes may be
retendered by following one of the procedures described under "-- Procedures for
Tendering Old Notes," at any time on or prior to the Expiration Date.
Conditions to Exchange Offer
Notwithstanding any other provision of the exchange offer, we are not
required to accept for exchange, or to issue Exchange Notes in exchange for, any
Old Notes and may terminate or amend the exchange offer if, at any time before
the acceptance of such Old Notes in exchange or the exchange of the Exchange
Notes for such Old Notes, we determine that the exchange offer violates
applicable law, any applicable interpretation of the staff of the SEC or any
order of any governmental agency or court of competent jurisdiction.
The foregoing conditions are for our sole benefit and may be asserted by
us regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in our sole
discretion. Our failure to exercise any of the foregoing rights at any time
shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.
In addition, we will not accept for exchange any Old Notes tendered, and
no Exchange Notes will be issued in exchange for any such Old Notes, if at such
time any stop order shall be threatened or in effect with respect to the
registration statement of which this prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended. In any event, we are required to use every reasonable effort to obtain
the withdrawal of any stop order at the earliest possible time.
23
Exchange Agent
All executed Letters of Transmittal should be directed to the Exchange
Agent at the address set forth below. Questions and requests for assistance,
requests for additional copies of this prospectus or of the Letter of
Transmittal and requests for Notices of Guaranteed Delivery should be directed
to the Exchange Agent, addressed as follows:
By Registered or Certified Mail:
SunTrust Bank
Attention: Jim McManus
Corporate Trust Department
10th Floor, HDQ 5310
919 E. Main Street
Richmond, Virginia 23219
By Overnight Courier or By Hand:
SunTrust Bank
Attention: Jim McManus
Corporate Trust Department
10th Floor, HDQ 5310
919 E. Main Street
Richmond, Virginia 23219
By Facsimile Transmission: (804) 782-7855
Confirm Facsimile Transmission by Telephone: (804) 782-5726
================================================================================
Delivery of the Letter of Transmittal to an address other than as set forth
above or transmission or instructions via facsimile other than as set forth
above does not constitute a valid delivery of the Letter of Transmittal.
================================================================================
Fees and Expenses
The Company will not make any payment to brokers-dealers or others
soliciting acceptances of the exchange offer.
Transfer Taxes
Holders who tender Old Notes for exchange will not be obligated to pay any
transfer tax in connection therewith, except that Holders who instruct DIMON to
register Exchange Notes in the name of, or request that Old Notes not tendered
or not accepted in the exchange offer be returned to, a person other than the
registered tendering Holder will be responsible for the payment of any
applicable transfer tax.
Appraisal Rights
Holders of Old Notes will not have dissenters' rights or appraisal rights
in connection with the exchange offer.
Resale of the Exchange Notes
Based on interpretations by the SEC staff issued to third parties,
Exchange Notes issued in exchange for Old Notes may be offered for resale,
resold or otherwise transferred by holders thereof without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that:
24
. the Exchange Notes are acquired in the ordinary course of the
holders' business;
. the holders have no arrangement with any person to participate in
the distribution of the Exchange Notes; and
. the holder is not an "affiliate" of DIMON as defined in Rule 405
under the Securities Act.
Each holder, other than a broker-dealer, must acknowledge that it is not
engaged in, and does not intend to engage in, a distribution of Exchange Notes.
This analysis is based upon the SEC's position in no-action letters issued
regarding other transactions that were substantially similar to this exchange
offer. Although the SEC has not indicated that it has changed its position on
this issue, DIMON has not sought its own interpretive letter from the SEC. There
is no assurance that the SEC would make a similar determination with respect to
the resale of the Exchange Notes. See "Risk Factors -- Requirements for Transfer
of Exchange Notes."
If any holder is an affiliate of DIMON, or if any holder is engaged in or
intends to engage in or has any arrangement or understanding with respect to the
distribution of the Exchange Notes to be acquired pursuant to the exchange
offer, the holder
. can not rely on the applicable interpretations of the SEC staff;
and
. must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale
transaction.
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus meeting the requirements under the Securities Act in connection with
any resale of Exchange Notes. The Letter of Transmittal states that by so
acknowledging and delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter' within the meaning of the Securities Act. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes where the Old
Notes exchanged for such Exchange Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities. We have agreed
to use our best efforts to make this prospectus available for a period not to
exceed 180 days to any participating broker-dealer for use in connection with
any such resale. See "Plan of Distribution." However, to comply with the
securities laws of certain jurisdictions, if applicable, the Exchange Notes may
not be offered or sold unless they have been registered or qualified for sale in
such jurisdictions or an exemption from registration or qualification is
available.
Same-Day Funds Settlement and Payment
We will make all payments of principal and interest in respect of Exchange
Notes in book-entry form in immediately available funds to the accounts
specified in DTC.
Secondary trading in long-term notes and notes of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, the Exchange
Notes will trade in DTC's Same-Day Funds Settlement System until maturity or
until the Exchange Notes are issued in certificated form, and secondary market
trading activity in the Exchange Notes will therefore be required by DTC to
settle in immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on trading activity
in the Exchange Notes.
Concerning the Trustee
SunTrust Bank is the trustee under the Indenture. We may maintain deposit
accounts or conduct other banking transactions with the Trustee in the ordinary
course of business. Notice to the Trustee should be directed to Corporate Trust
Department, 919 East Main Street, Richmond, Virginia 23219, attention: James
McManus.
25
DESCRIPTION OF EXCHANGE NOTES
General
We will issue the Exchange Notes under an Indenture dated as of October
30, 2001 between us and SunTrust Bank, as trustee (the "Trustee"). The terms of
the Exchange Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act").
We summarize below certain material provisions of the Indenture, but do
not restate the Indenture in its entirety. We urge you to read the Indenture
because it defines your rights. You can obtain a copy of the Indenture and a
form of the Exchange Notes from us or the Initial Purchasers.
Key terms used in this section are defined under "--Certain Definitions."
When we refer in this section to:
. the "Company," we mean DIMON Incorporated and not its subsidiaries;
and
. "Notes," we mean Old Notes originally issued on the Issue Date,
Exchange Notes issued therefor and Additional Notes:
Overview of the Notes
The Exchange Notes will:
. be general unsecured senior obligations of the Company;
. rank equal in right of payment with all other existing and future
senior unsecured obligations of the Company;
. rank senior in right of payment to all other existing and future
subordinated indebtedness of the Company, if any;
. be unconditionally guaranteed on a general unsecured senior basis
by all of the Company's Material Domestic Subsidiaries;
. be effectively subordinated to all existing and future indebtedness
of all Subsidiaries other than Material Domestic Subsidiaries; and
. be limited in aggregate principal amount to $300 million, of which
$200 million principal amount will be issued on the Issue Date.
As described in the consolidated financial information included elsewhere
in this prospectus:
. after giving effect to this offering and the use of proceeds
thereof, at September 30, 2001, our total indebtedness would have
been approximately $588.9 million;
. the Company would have had approximately $35.9 million of secured
indebtedness; and
. our Subsidiaries, none of which have guaranteed the Exchange Notes,
would have had approximately $179.6 million of indebtedness.
The amounts of such indebtedness fluctuate seasonally as discussed above
under the caption "Risk Factors--Risks Relating To Our Indebtedness and The Old
Notes and Exchange Notes." The terms of the Indenture will permit us and our
Subsidiaries to incur additional indebtedness, subject to certain limitations,
including indebtedness that may be secured by liens on our property and that of
our Subsidiaries. See the discussion below under the captions "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock" and
"--Certain Covenants--Liens."
26
Additional Notes
Subject to the limitations set forth under "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock," the
Company may incur additional indebtedness. At our option, this additional
Indebtedness may consist of additional Notes ("Additional Notes") of up to $100
million issued in one or more transactions, which have identical terms as Old
Notes and Exchange Notes. Holders of Additional Notes would have the right to
vote together with Holders of Old Notes and Exchange Notes as one class.
Note Guarantees
If any Person becomes a Material Domestic Subsidiary, we will cause that
Material Domestic Subsidiary concurrently to become a Note Guarantor by
executing a supplemental indenture and providing the Trustee with an Officers'
Certificate and Opinion of Counsel. Each Note Guarantor will unconditionally
guarantee the performance of all Obligations of the Company under the Indenture,
the Notes and the Registration Rights Agreement. Each Note Guarantee will rank
equal in right of payment to all senior indebtedness of the relevant Note
Guarantor. The Obligations of each Note Guarantor in respect of its Note
Guarantee will be limited to the maximum amount as will result in the
Obligations not constituting a fraudulent conveyance or fraudulent transfer
under U.S. federal or state law.
A Note Guarantor will be released and relieved of its Obligations under
its Note Guarantee in the event:
(1) there is a Legal Defeasance of the Notes as described under "--Legal
Defeasance and Covenant Defeasance;" or
(2) there is a sale or other disposition of Capital Stock of such Note
Guarantor following which such Note Guarantor is no longer a direct or
indirect Material Domestic Subsidiary of the Company;
provided that the transaction is carried out pursuant to and in accordance with
the applicable provisions of the Indenture. On the date hereof, there are no
Note Guarantors.
Principal, Maturity and Interest
We will issue $200 million aggregate principal amount of Exchange Notes in
denominations of $1,000 and integral multiples of $1,000. The Exchange Notes
will mature on October 15, 2011. The Exchange Notes will not be entitled to the
benefit of any mandatory sinking fund.
Interest on the Exchange Notes will accrue at the rate per annum set forth
on the cover page of this prospectus and will be payable semi-annually in
arrears on April 15, and October 15, commencing on April 15, 2002, to Holders of
record on the immediately preceding April 1, and October 1.
Interest on the Exchange Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, October 30, 2001.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months. Principal, premium, if any, and interest on the Exchange Notes
will be payable at our office or agency maintained for such purpose within the
City and State of New York or, at our option, payment of interest may be made by
check mailed to the Holders of the Exchange Notes at their respective addresses
set forth in the register of Holders of Exchange Notes; provided that all
payments with respect to the Global Note and Certificated Notes (as such terms
are defined below under the caption "Book-Entry; Delivery and Form") the Holders
of which have given wire transfer instructions to us will be required to be made
by wire transfer of immediately available funds to the accounts specified by the
Holders thereof. Until otherwise designated by us, our office or agency in New
York will be in the office of the Trustee maintained for such purpose. The
Exchange Notes will be issued only in fully registered form, without coupons.
Effect of Corporate Structure
The Exchange Notes are our obligations. Because a major portion of our
operations are currently conducted through subsidiaries, however, the cash flow
and the consequent ability to service our indebtedness, including the Exchange
Notes, are dependent, in part, upon the earnings of our subsidiaries and the
distribution of those earnings
27
to us or upon loans or other payments of funds by those subsidiaries to us. Our
subsidiaries are separate and distinct legal entities and, except for any Note
Guarantors, have no obligation, contingent or otherwise, to pay any amounts due
pursuant to the Exchange Notes or to make any funds available therefor, whether
by dividends, loans or other payments. In addition, the payment of dividends and
the making of loans and advances to us by our subsidiaries may be subject to
statutory or contractual restrictions, are contingent upon the earnings of those
subsidiaries and are subject to various business considerations. All of our
significant subsidiaries are located outside of the United States.
Although the Indenture limits the incurrence of indebtedness by us and our
subsidiaries (see the discussion below under the caption "-- Certain Covenants--
Incurrence of Indebtedness and Issuance of Preferred Stock"), the Exchange Notes
will be effectively subordinated to all indebtedness and other liabilities,
including both long-term and current liabilities, of our subsidiaries, other
than Note Guarantors. Any right of ours to receive assets of any of such
subsidiaries upon liquidation or reorganization of such subsidiary (and the
consequent right of the Holders of the Exchange Notes to participate in those
assets) will be effectively subordinated to the claims of that subsidiary's
creditors (including trade creditors).
Redemption
Optional Redemption. Except as provided below, the Exchange Notes will not
be redeemable at our option prior to October 15, 2006. Thereafter, the Exchange
Notes will be subject to redemption at our option, in whole or in part, upon not
less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
interest thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on October 15 of the years indicated below:
Year Percentage
---- ----------
2006 ....................................... 104.813 %
2007 ....................................... 103.208 %
2008 ....................................... 101.604 %
2009 and thereafter ........................ 100.000 %
Optional Redemption upon Equity Offerings. On one or more occasions prior
to October 15, 2004, we may, at our option, use the net cash proceeds of one or
more Public Equity Offerings (as defined below) to redeem up to 35% of the sum
of (i) the initial aggregate principal amount of the Old Notes originally issued
under the Indenture in this offering and (ii) the respective initial aggregate
principal amounts of Exchange Notes issued under the Indenture after the Issue
Date, at a redemption price of 109.625% of the principal amount thereof, plus
accrued and unpaid interest (including Additional Interest, if any) thereon to
the date of redemption; provided that:
(1) at least 65% of the aggregate principal amount of the sum of (i) the
initial aggregate principal amount of the Exchange Notes originally
issued under the Indenture in this offering and (ii) the respective
initial aggregate principal amounts of Exchange Notes issued under the
Indenture after the Issue Date, remains outstanding immediately after
any such redemption; and
(2) we make such redemption not more than 90 days after the consummation of
any such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Capital Stock of the Company other than
Disqualified Stock pursuant to an effective registration statement (other than a
registration statement filed on Form S-4 or S-8) filed with the Commission in
accordance with the Securities Act, or any successor statute.
Optional Redemption Procedures. If less than all of the Exchange Notes are
to be redeemed at any time, selection of Exchange Notes for redemption will be
made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Exchange Notes are listed,
or, if the Exchange Notes are not so listed, on a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate; provided that no
Exchange Notes of $1,000 or less shall be redeemed in part. Notices of
redemption shall be mailed by first
28
class mail at least 30 but not more than 60 days before the redemption date to
each Holder of Exchange Notes to be redeemed at its registered address. If any
Exchange Note is to be redeemed in part only, the notice of redemption that
relates to such Exchange Note shall state the portion of the principal amount
thereof to be redeemed. A new Exchange Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Exchange Note. On and after the redemption date,
interest ceases to accrue on Exchange Notes or portions of them called for
redemption.
Mandatory Redemption. The Company is not required to make mandatory
redemption or sinking fund payments with respect to the Exchange Notes.
Change of Control
Upon the occurrence of a Change of Control (as defined herein), each
Holder of Exchange Notes will have the right to require the Company to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Exchange Notes pursuant to the offer described below (the "Change
of Control Offer") at a purchase price (the "Change of Control Purchase Price")
in cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest thereon to the date of purchase (the "Change of Control Payment
Date").
Under the terms of the Indenture, a Change of Control is defined as such
time as
(i) any Person or group (within the meaning of Section 13(d) or
14(d) of the Exchange Act, but excluding any Wholly Owned Subsidiary of
the Company) has become, directly or indirectly, the beneficial owner, by
way of merger, consolidation or otherwise, of 30% or more of the voting
power of the Voting Stock of the Company on a fully-diluted basis, after
giving effect to the conversion and exercise of all outstanding warrants,
options and other securities of the Company convertible into or
exercisable for Voting Stock of the Company (whether or not such
securities are then currently convertible or exercisable);
(ii) the sale, lease or transfer of all or substantially all of the
consolidated assets of the Company to any Person or group (other than a
Wholly Owned Subsidiary of the Company);
(iii) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company, together with any new members of such Board of
Directors whose election by such Board of Directors or whose nomination
for election by the stockholders of the Company was approved by a vote of
a majority of the members of such Board of Directors then still in office
who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved, cease for
any reason to constitute a majority of the directors of the Company then
in office; or
(iv) the Company consolidates with or merges with or into another
Person or any Person consolidates with, or merges with or into, the
Company (in each case, whether or not in compliance with the terms of this
Indenture), in any such event pursuant to a transaction in which
immediately after the consummation thereof Persons owning a majority of
the Voting Stock of the Company immediately prior to such consummation
shall cease to own a majority of the Voting Stock of the Company or the
surviving entity if other than the Company.
Within 30 days after the date of any Change of Control, we, or the Trustee
at our request and expense, will mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Exchange Notes pursuant to the procedures required by the
Indenture and described in such notice. The Change of Control Payment Date shall
be a business day not less than 30 days nor more than 60 days after such notice
is mailed.
On the Change of Control Payment Date, we will:
(i) accept for payment all Exchange Notes or portions thereof
properly tendered pursuant to the Change of Control Offer;
29
(ii) deposit with the Paying Agent an amount equal to the Change of
Control Purchase Price in respect of all Exchange Notes or portions
thereof so tendered; and
(iii) deliver or cause to be delivered to the Trustee the Exchange
Notes so tendered together with an officers' certificate stating the
aggregate principal amount of Exchange Notes or portions thereof being
purchased by the Company.
The Paying Agent will promptly mail to each Holder of Exchange Notes so
tendered the Change of Control Purchase Price for such Exchange Notes, and the
Trustee will promptly authenticate and deliver to each Holder a new Note equal
in principal amount to any unpurchased portion of the Exchange Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. We will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
Except as described above with respect to a Change of Control, the
Indenture does not contain provisions that permit the Holders of the Exchange
Notes to require that we repurchase or redeem the Exchange Notes in the event of
a takeover, recapitalization or similar restructuring. Although the existence of
a Holder's right to require us to repurchase the Exchange Notes in respect of a
Change of Control may deter a third party from acquiring us in a transaction
that constitutes a Change of Control, the provisions of the Indenture relating
to a Change of Control in and of themselves may not afford Holders of the
Exchange Notes protection in the event of a highly leveraged transaction,
reorganization, recapitalization, restructuring, merger or similar transaction
involving the Company that may adversely affect Holders, if such transaction is
not the type of transaction included within the definition of a Change of
Control.
The New Credit Facility provides that a Change of Control would constitute
a default thereunder. Any future credit agreements or other agreements that
would replace the New Credit Facility may contain similar restrictions and
provisions.
Certain Covenants
Set forth below are certain covenants contained in the Indenture.
During any period of time that (i) the Exchange Notes have an Investment
Grade Rating and (ii) no Default or Event of Default has occurred and is
continuing under the Indenture with respect to the Exchange Notes, the Company
and our Subsidiaries will not be subject to the provisions of the Indenture with
respect to the Exchange Notes described below under "--Limitation on Asset
Sales," "--Limitation on Restricted Payments," "--Incurrence of Indebtedness and
Issuance of Preferred Stock," "--Dividend and Other Payment Restrictions
Affecting Subsidiaries" and clause (iii) of "--Merger, Consolidation or Sale of
Assets" (collectively, the "Suspended Covenants").
In the event that we and our Subsidiaries are not subject to the Suspended
Covenants with respect to the Exchange Notes for any period of time as a result
of the preceding paragraph and, subsequently, either S&P or Moody's withdraws
its rating or assigns the Exchange Notes a rating below an Investment Grade
Rating, we and our Subsidiaries will thereafter again be subject to the
Suspended Covenants, and compliance with the Suspended Covenant with respect to
Restricted Payments made after the time of such withdrawal or assignment will be
calculated in accordance with the terms of the covenant described below under
"--Limitation on Restricted Payments" as if such covenant had been in effect
during the entire period of time from the Issue Date with respect to the
Exchange Notes.
Limitation on Asset Sales
We will not, and will not permit any of our Subsidiaries to, directly or
indirectly, make an Asset Sale (except an Exempt Asset Sale, as defined below)
unless:
(i) we (or such Subsidiary of ours) receives consideration at the
time of such Asset Sale at least equal to the fair market value of the
assets sold or otherwise disposed of, and in the case of a lease of
assets, a lease providing for rent and other conditions which are no less
favorable to the Company (or such Subsidiary) in any
30
material respect than the then prevailing market conditions, evidenced in
each case by a resolution of the Board of Directors of such entity set
forth in an officers' certificate delivered to the Trustee, and
(ii) at least 75% (100% in the case of lease payments) of the
consideration therefor received by the Company or such Subsidiary is in
the form of cash or Cash Equivalents.
An "Exempt Asset Sale" means an Asset Sale on or after the date of the
Indenture (i) the Net Proceeds of which plus the Net Proceeds of all other Asset
Sales concurrently or previously made on or after the date of the Indenture do
not exceed $25.0 million and (ii) the Net Proceeds of which plus the Net
Proceeds of all other Asset Sales concurrently or previously made in the same
fiscal year do not exceed $10.0 million.
We may apply, and may permit our Subsidiaries to apply, Net Proceeds of an
Asset Sale (other than an Exempt Asset Sale), at our option, within 270 days
after the consummation of such an Asset Sale:
(a) to permanently reduce any of our outstanding Indebtedness (and
to correspondingly reduce the commitments, if any) that ranks equal in
right of payment with the Exchange Notes or, in the case of Net Proceeds
of an Asset Sale by any Subsidiary, to permanently reduce (i) any of our
outstanding Indebtedness (and to correspondingly reduce the commitments,
if any) that ranks equal in right of payment with the Exchange Notes or
(ii) any outstanding Indebtedness (which in the case of Note Guarantors
ranks equal in right of payment to the relevant Note Guarantees) of such
Subsidiary (and to correspondingly reduce the commitments, if any, with
respect thereto);
(b) to acquire another business or other long-term assets, in each
case, in, or used or useful in, the same or a similar line of business as
us or any of our Subsidiaries was engaged in on the date of the Indenture
and which has not been discontinued on or prior to the date of such
acquisition or any reasonable extensions or expansions thereof (including
the Capital Stock of another Person engaged in such business, provided
that such other Person is, or immediately after giving effect to any such
acquisition shall become, a Wholly Owned Subsidiary of the Company or the
Investment in such Person otherwise constitutes an Investment in a Joint
Venture permitted by the provisions described below in the next to the
last paragraph under the caption "--Limitation on Restricted Payments");
or
(c) to reimburse us or our Subsidiaries for expenditures made, and
costs incurred, to repair, rebuild, replace or restore property subject to
loss, damage or taking to the extent that the Net Proceeds consist of
insurance proceeds received on account of such loss, damage or taking.
Pending the final application of any such Net Proceeds, we may (a) use
such Net Proceeds to reduce temporarily any of our outstanding Indebtedness that
ranks equal in right of payment with the Exchange Notes or, in the case of Net
Proceeds of an Asset Sale by any Subsidiary of ours, to reduce temporarily (i)
any of our outstanding Indebtedness that ranks equal in right of payment with
the Exchange Notes or (ii) any outstanding Indebtedness of such Subsidiary or
(b) otherwise invest such Net Proceeds temporarily in Cash Equivalents.
Any Net Proceeds from Asset Sales (other than Exempt Asset Sales) that are
not applied as provided in the preceding paragraph within 270 days after the
consummation of such an Asset Sale will be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0 million,
we will be required to make an offer to all Holders of Notes and 2006 Senior
Notes then outstanding (an "Asset Sale Offer") to purchase, on a pro rata basis,
the principal amount of Notes and 2006 Senior Notes equal in amount to the
Excess Proceeds (and not just the amount thereof that exceeds $10.0 million), at
a purchase price in cash in an amount equal to 100% of the principal amount
thereof plus accrued and unpaid interest thereon to the date of purchase, in
accordance with the procedures set forth in the applicable indenture. If the
aggregate principal amount of Notes and 2006 Senior Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall first select
2006 Senior Notes to be purchased and, if any Excess Proceeds remain, shall then
select Notes to be purchased, in each case, on a pro rata basis. If the
aggregate principal amount of Notes and 2006 Senior Notes tendered pursuant to
such Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds following the completion of the Asset Sale Offer for
general corporate purposes (subject to the other provisions of the Indenture),
and the amount of Excess Proceeds then required to be otherwise applied in
accordance with this covenant shall be reset to zero, subject to any subsequent
Asset Sale. These provisions will not apply to a
31
transaction consummated in compliance with the provisions of the Indenture
described below under the caption "--Merger, Consolidation or Sale of Assets."
In the event of the transfer of substantially all (but not all) of our
property and assets and our Subsidiaries as an entirety to a Person in a
transaction permitted under the caption "--Merger, Consolidation or Sale of
Assets" below, the successor corporation shall be deemed to have sold our
properties and assets and those of our Subsidiaries not so transferred for
purposes of this covenant, and shall comply with the provisions of this covenant
with respect to such deemed sale as if it were an Asset Sale. In addition, the
fair market value of such properties and assets of the Company or our
Subsidiaries deemed to be sold shall be deemed to be Net Proceeds for purposes
of this covenant.
If at any time any non-cash consideration received by us or any Subsidiary
of ours in connection with any Asset Sale is converted into or sold or otherwise
disposed of for cash, then such conversion or disposition shall be deemed to
constitute an Asset Sale hereunder and the Net Proceeds thereof shall be applied
in accordance with this covenant.
We will comply with the requirements of Section 14(e) of, and Rule 14e-1
under, the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Notes as a result of a Change of Control or an Asset Sale.
We may use Net Proceeds from Exempt Asset Sales for general corporate
purposes (subject to the other provisions of the Indenture).
Ownership of and Liens on Capital Stock of Subsidiaries
We (i) will not permit any Person (other than the Company or any Wholly
Owned Subsidiary of the Company) to own any Capital Stock of any Subsidiary of
ours or any Lien thereon;
(ii) will not, and will not permit any Subsidiary of ours to, transfer,
convey, sell or otherwise dispose of any shares of Capital Stock of such
Subsidiary or any other Subsidiary (except to us or to a Wholly Owned Subsidiary
of ours); and
(iii) will not permit any Subsidiary of ours to issue Capital Stock or
securities convertible into, or warrants, rights or options to subscribe for or
purchase shares of, its Capital Stock to any Person (except to us or to a Wholly
Owned Subsidiary of the Company) or create, incur, assume or suffer to exist any
Lien thereon, in each case except
(a) directors' qualifying shares;
(b) shares of Capital Stock issued prior to the time such Person
became a Subsidiary of ours, provided that such Capital Stock was not
issued in anticipation of such transaction;
(c) if such Subsidiary merges with any other of our Subsidiaries;
(d) if such Subsidiary ceases to be a Subsidiary of ours as a result
of the sale of all of the issued and outstanding shares of Capital Stock
of such Subsidiary owned by us or any Subsidiary of ours;
(e) for purposes of clause (i) above, shares of Capital Stock of our
Subsidiaries that are not Wholly Owned Subsidiaries of ours on the date of
the Indenture, which shares are not owned by us or any Wholly Owned
Subsidiary of ours, as set forth in Schedule A to the Indenture; and
(f) for purposes of clauses (i) and (iii) above, Liens on Capital
Stock of any Subsidiary of ours granted in accordance with the provisions
of the Indenture described below in the first sentence under the caption
"--Liens."
Limitation on Restricted Payments
We will not, and will not permit any of our Subsidiaries to, directly or
indirectly, take any of the following actions:
32
(i) declare or pay any dividend or make any distribution of any kind
or character (whether in cash, securities or other property) on
account of any class of ours or any of our Subsidiaries' Equity
Interests or to the holders thereof (including, without
limitation, any payment to our stockholders in connection with a
merger or consolidation involving us), other than (a) dividends
or distributions payable solely in our Equity Interests (other
than Disqualified Stock) or (b) dividends or distributions
payable solely to us or any Wholly Owned Subsidiary of ours and,
if such Subsidiary is not a Wholly Owned Subsidiary of ours,
payable simultaneously to its minority shareholders on a pro
rata basis;
(ii) purchase, repurchase, redeem or otherwise acquire or retire for
value any Equity Interests of ours or any Subsidiary or other
Affiliate of ours (other than any such Equity Interests owned by
us or any Wholly Owned Subsidiary of ours);
(iii) make any principal payment on, or purchase, repurchase, redeem,
defease or otherwise acquire or retire for value any
Indebtedness of the Company or any Note Guarantor that ranks
equal in right of payment with or that is subordinated to the
Exchange Notes or the relevant Note Guarantees prior to any
scheduled repayment date, sinking fund payment date or final
maturity date, except (w) the prepayment of our Indebtedness or
that of any of our Subsidiaries from proceeds from the issuance
of the Exchange Notes within 30 days after the date on which we
receive such proceeds, (x) the repayment of Indebtedness from
Net Proceeds of Asset Sales in accordance with the provisions
described above under the caption "--Limitation on Asset Sales,"
(y) the repayment of Indebtedness under the New Credit Facility
or (z) the purchase, redemption or acquisition by us of
Indebtedness of the Company or any Note Guarantor through the
issuance in exchange therefor of our Equity Interests (other
than Disqualified Stock); or
(iv) make any Investment (other than Permitted Investments) (all such
payments and other actions set forth in clauses (i) through (iv)
being collectively referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such
Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) at the time of such Restricted Payment and after giving pro
forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter
period, we would have been permitted to incur at least
$1.00 of additional Indebtedness pursuant to the
Consolidated Interest Coverage Ratio test set forth in the
first paragraph of the covenant described below under the
caption "--Incurrence of Indebtedness and Issuance of
Preferred Stock;" and
(c) such Restricted Payment, together with the aggregate amount
of all other Restricted Payments declared or made by us and
our Subsidiaries on or after April 1, 1996 (excluding
Restricted Payments permitted by clauses (ii), (iii), and
(iv) of the next paragraph and excluding Restricted
Payments permitted by the next to the last paragraph under
this caption), is less than the sum of
(i) $20.0 million, plus
(ii) 50% of the Consolidated Net Income of the Company
for the period (taken as one accounting period) from
the beginning of the fiscal quarter commencing April
1, 1996 to the end of our most recently ended fiscal
quarter for which internal financial statements are
available at the time of such Restricted Payment
(or, if such Consolidated Net Income for such period
is a deficit, less 100% of such deficit), plus
(iii) 100% of the aggregate net cash proceeds received by
us from the issue or sale after May 29, 1996 of
Equity Interests of the Company or of debt
securities of the Company that have been converted
into such Equity Interests (other than Equity
Interests (or convertible
33
debt securities) sold to a Subsidiary of ours and
other than Disqualified Stock or debt securities that
have been converted into Disqualified Stock).
The foregoing clauses (b) and (c), however, will not prohibit (i) the
payment of any dividend on any class of Capital Stock of the Company or any
Subsidiary of ours, within 60 days after the date of declaration thereof, if on
the date when such dividend was declared such payment would have complied with
the provisions of the Indenture; (ii) the making of any Investment in exchange
for, or out of the proceeds of, the substantially concurrent sale (other than by
a subsidiary of the Company) of other Equity Interests of the Company (other
than any Disqualified Stock), provided that any net cash proceeds that are used
for any such Investment, and any Net Income resulting therefrom, shall be
excluded from clause (c) of the preceding paragraph; (iii) the redemption,
repurchase or other acquisition or retirement of any Equity Interest in the
Company in exchange for, or out of the proceeds of, the substantially concurrent
sale (other than a subsidiary of the Company) of other Equity Interests of the
Company (other than any Disqualified Stock); provided that any net cash proceeds
that are used for such redemption, repurchase retirement or other acquisition,
and any Net Income resulting therefrom, shall be excluded from clause (c) of the
preceding paragraph, or (iv) the defeasance, redemption or repurchase of
Indebtedness equal in rank with the Exchange Notes or any Note Guarantees, as
the case may be, or subordinated to the Exchange Notes or any Note Guarantees,
as the case may be, with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness; provided that any net cash proceeds that are used for
any such defeasance, redemption or repurchase shall be excluded from clause (c)
of the preceding paragraph.
The foregoing clause (c), however, will not prohibit us or any of our
Subsidiaries from making any Investment in Joint Ventures in the tobacco
business on or after the date of the Indenture provided that the amount of any
such Investment, together with the aggregate amount of all other such
Investments in Joint Ventures made on or after April 1, 1996, shall not at any
time exceed 15% of the Consolidated Tangible Net Worth of the Company as of the
last day of the quarterly period most recently ended prior to the date of such
Investment for which internal financial statements of the Company are available.
The amount of all Restricted Payments (other than cash) shall be the fair
market value (evidenced by a resolution of the Board of Directors set forth in
an officers' certificate delivered to the Trustee) on the date of the Restricted
Payment of the asset(s) proposed to be transferred by us or such Subsidiary, as
the case may be, pursuant to the Restricted Payment. Not later than the date of
making any Restricted Payment, we will deliver to the Trustee an officers'
certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by the covenant described under
this caption were computed, which calculations may be based upon the Company's
latest available financial statements.
Incurrence of Indebtedness and Issuance of Preferred Stock
We will not, and will not permit any of our Subsidiaries to, directly or
indirectly, create, incur, issue, assume, guarantee or otherwise become directly
or indirectly liable, contingently or otherwise, with respect to (collectively,
"incur") any Indebtedness (including Acquired Indebtedness) and we will not
issue any Disqualified Stock and will not permit any of our Subsidiaries to
issue any shares of preferred stock; provided, however, that the Company and any
Note Guarantor may incur Indebtedness (including Acquired Indebtedness) and the
Company may issue shares of Disqualified Stock if:
(i) the Consolidated Interest Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued
would have been at least 2.75 to 1.0, determined on a pro forma basis
(including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock
had been issued, as the case may be, at the beginning of such four-quarter
period; and
(ii) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; provided that no
guarantee may be incurred pursuant to this paragraph, unless the
guaranteed Indebtedness is incurred by us pursuant to this paragraph.
The foregoing provisions will not apply to:
34
(i) the incurrence (a) by us of Permitted Refinancing
Indebtedness in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund, any outstanding
Indebtedness incurred pursuant to the first paragraph of this covenant,
2006 Senior Notes, Debentures or Old Notes or Exchanged Notes permitted
under clause (ii) below, or (b) by Note Guarantors of Guarantees of
Permitted Refinancing Indebtedness incurred by us pursuant to this clause
(i) except in respect of the Debentures;
(ii) the incurrence (a) by us of Indebtedness represented by the
Old Notes and Exchange Notes issued therefor, or (b) by Note Guarantors of
any Note Guarantees in respect thereof or in respect of Additional Notes
incurred in accordance with the Indenture;
(iii) the incurrence by us of Indebtedness under the New Credit
Facility in an aggregate principal amount at any time outstanding (with
letters of credit being deemed to have a principal amount equal to the
maximum potential liability of the Company and our Subsidiaries
thereunder) not to exceed $175 million, less the aggregate amount of all
Net Proceeds of Asset Sales applied to permanently reduce the outstanding
amount of such Indebtedness (and to correspondingly reduce the
commitments, if any, with respect thereto) pursuant to the covenant
described above under the caption "--Limitation on Asset Sales," it being
understood that any amounts outstanding under the New Credit Facility on
the Issue Date are deemed to be incurred under this clause (iii) and no
amounts may be borrowed under the New Credit Facility unless all
borrowings under the Existing Credit Facility have been paid in full.
(iv) the incurrence by us or any of our Subsidiaries of
Indebtedness in an aggregate principal amount at any time outstanding not
to exceed the sum of (a) 50% of Eligible Inventory, plus (b) 75% of
Eligible Receivables; provided that (I) the aggregate principal amount of
any such Indebtedness incurred by our Subsidiaries at any time outstanding
shall not exceed the greater of (X) the aggregate principal amount of
Advances on Purchases of Tobacco outstanding at such time and (Y) the sum
of (A) 50% of Eligible Inventory of all such Subsidiaries, plus (B) 75% of
Eligible Receivables of all such Subsidiaries, (II) no more than $50.0
million of such Indebtedness may be secured by Liens on assets or property
of our Subsidiaries and (III) none of such Indebtedness may be secured by
Liens on assets or properties of the Company;
(v) the incurrence by us or any of our Subsidiaries of
Indebtedness used to fund Advances on Purchases of Tobacco, but only to
the extent that the aggregate principal amount of such advances
outstanding at any time, including Advances outstanding on the Issue Date,
to any Person and such Person's Affiliates does not exceed 15% of the
Consolidated Tangible Net Worth of the Company for the most recently ended
fiscal quarter for which internal financial statements are available;
(vi) the incurrence by us or any of our Subsidiaries of
Indebtedness represented by Purchase Money Obligations or Capital Lease
Obligations, in each case incurred for the purpose of financing all or any
part of the purchase price or cost of construction or improvement of
property used in the business of the Company or such Subsidiary, or any
Permitted Refinancing Indebtedness thereof; provided that (a) the
aggregate principal amount of any such Indebtedness does not exceed 100%
of the purchase price or cost of the property to which such Indebtedness
relates, (b) the Indebtedness is incurred within 180 days (or 360 days, in
the case of such Indebtedness incurred to finance property used in the
business of any of our Subsidiaries that is not organized under the laws
of the United States of America, any state thereof or the District of
Columbia) of the acquisition, construction or improvement of such property
and (c) the aggregate principal amount of such Indebtedness outstanding,
together with the aggregate principal amount of Attributable Indebtedness
with respect to Sale and Leaseback Transactions permitted under clause
(vii) below, at any time shall not exceed $15.0 million;
(vii) Attributable Indebtedness with respect to Sale and Leaseback
Transactions permitted under the caption below "--Limitation on Sale and
Leaseback Transactions;" provided that the aggregate principal amount of
such Indebtedness outstanding, together with the aggregate principal
amount of Indebtedness permitted under clause (vi) above, at any time
shall not exceed $15.0 million;
(viii) (a) the incurrence by us or any of our Wholly Owned
Subsidiaries of intercompany Indebtedness owing to the Company or any of
our Subsidiaries, (b) the incurrence by any Subsidiary of ours that is not
a Wholly Owned Subsidiary of Indebtedness owing to the Company or any of
our Wholly Owned Subsidiaries,
35
or (c) the incurrence by us or any of our Subsidiaries of Indebtedness in
an aggregate principal amount outstanding at any time not to exceed $5.0
million for the purpose of making advances to Subsidiaries that are not
Wholly Owned Subsidiaries of the Company or to Joint Ventures in which the
Company or any of our Subsidiaries owns an interest; provided that
Indebtedness may be incurred pursuant to clauses (b) and (c) only if and
to the extent that the Investment constituting such Indebtedness shall be
permitted above under the caption "--Limitation on Restricted Payments;"
and provided further that, for purposes of clauses (a) and (b), (I) in the
case of Indebtedness of the Company, such obligations and any trade
payables owed by the Company to any of our Subsidiaries shall be unsecured
and subordinated in case of an Event of Default in all respects to the
Company's obligations pursuant to the Exchange Notes; and (II)(X) any
subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than the Company or a
Wholly Owned Subsidiary of the Company and (Y) any sale or other transfer
of any such Indebtedness to a Person that is not either the Company or a
Wholly Owned Subsidiary of the Company shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Subsidiary, as the case may be, to which this clause (viii) no longer
applies;
(ix) the incurrence by us or any of our Subsidiaries of Hedging
Obligations;
(x) the incurrence by us or any of our Subsidiaries of Indebtedness
with respect to letters of credit issued to customers to secure an
obligation to deliver tobacco for which the customer has prepaid the
purchase price in cash, but only to the extent of the amount of such cash
prepayment; and
(xi) the incurrence by us or any of our Subsidiaries of
Indebtedness (in addition to Indebtedness permitted by any other clause of
this paragraph) in an aggregate principal amount at any time outstanding
not to exceed $15.0 million.
The Company shall not, and shall not permit any Note Guarantor to,
directly or indirectly in any event incur any Indebtedness that by its terms (or
by the terms of any agreement governing such Indebtedness) is subordinated to
any other Indebtedness of the Company, unless such Indebtedness is also by its
terms (or by the terms of any agreement governing such Indebtedness) made
expressly subordinate in right of payment to the Exchange Notes or the relevant
Note Guarantee to the same extent and in the same manner as such Indebtedness is
subordinated pursuant to subordination provisions that are most favorable to the
holders of any other Indebtedness of the Company or the relevant Note Guarantor.
Liens
The Company shall not, and shall not permit any Note Guarantor to,
directly or indirectly, create, incur, assume or suffer to exist any Lien on any
of our assets, now owned or hereafter acquired, securing any Indebtedness unless
the Exchange Notes, in the case of the Company, or the Note Guarantees, in the
case of the Note Guarantors, are secured equally and ratably with such other
Indebtedness; provided that, if such Indebtedness is by its terms subordinate to
the Exchange Notes or the relevant Note Guarantees, the Lien securing such
subordinate or junior Indebtedness shall be subordinate and junior to the Lien
securing the Exchange Notes or the relevant Note Guarantees with the same
relative priority as such subordinated or junior Indebtedness shall have with
respect to the Exchange Notes or the relevant Note Guarantees. The foregoing
restrictions shall not apply to the following Liens:
(i) Liens securing only Existing Indebtedness, in an aggregate
principal amount not greater than $3.2 million;
(ii) Liens securing only the Exchange Notes or Note Guarantees;
(iii) Liens in favor of the Company;
(iv) Liens to secure Indebtedness incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of the property subject to such Liens and permitted by the
provisions of the Indenture described above under clause (vi) of the
second sentence under the caption "--Incurrence of Indebtedness and
Issuance of Preferred Stock;" provided that such Lien does not extend to
or cover any property other than such item of property and any
improvements on such item;
36
(v) Liens on property existing immediately prior to the time of
acquisition thereof (and not created in anticipation or contemplation of
such acquisition or the financing of such acquisition) and securing
Acquired Indebtedness; provided that such Lien does not extend to or cover
any property other than such item of property and any improvements on such
item;
(vi) Liens on property of a Person existing at the time such
Person is merged with or into or consolidated with the Company or any Note
Guarantor (and not created in anticipation or contemplation thereof) and
securing Acquired Indebtedness; provided that such Lien does not extend to
or cover any property other than such item of property and any
improvements on such item;
(vii) Liens securing Attributable Indebtedness of the Company
incurred with respect to Sale and Leaseback Transactions; provided that
such Lien does not extend to or cover any property other than the property
sold and leased back pursuant to such Sale and Leaseback Transaction; and
(viii) Liens to secure Permitted Refinancing Indebtedness of any
Indebtedness secured by Liens referred to in the foregoing clause (i),
(iv), (v) or (vi) so long as such Lien does not extend to any other
property.
Dividend and Other Payment Restrictions Affecting Subsidiaries
We will not, and will not permit any of our Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any of our Subsidiaries to
(i) (a) pay dividends or make any other distributions to the
Company or any of our Subsidiaries on its Capital Stock or with respect to
any other interest or participation in, or measured by, its profits, or
(b) pay any Indebtedness or other obligation owed to the Company or any of
our Subsidiaries;
(ii) make loans or advances to the Company or any of our
Subsidiaries;
(iii) sell, lease or transfer any of its properties or assets to
the Company or any of our Subsidiaries; or
(iv) guarantee the obligations of the Company evidenced by the
Exchange Notes or any renewals, refinancings, exchanges, refundings or
extensions thereof, except for such encumbrances or restrictions existing
under or by reason of (a) the Indenture and the Exchange Notes, (b)
applicable law, (c) any instrument governing Acquired Indebtedness or
Capital Stock of a Person acquired by the Company or any of our
Subsidiaries as in effect at the time of such acquisition (except to the
extent such Acquired Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so
acquired, provided that the Consolidated Net Income of such Person is not
taken into account in determining whether such acquisition was permitted
by the terms of the Indenture, (d) any document or instrument governing
Indebtedness incurred pursuant to clause (vi) or (vii) of the second
paragraph under the caption "--Incurrence of Indebtedness and Issuance of
Preferred Stock" above, provided that any such restriction contained
therein relates only to the asset or assets constructed or acquired in
connection therewith, or (e) Permitted Refinancing Indebtedness of
Indebtedness described in clause (c) hereof, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those contained in
the agreements governing the Indebtedness being refinanced.
Merger, Consolidation or Sale of Assets
We will not, and will not permit any of our Subsidiaries to, in a single
transaction or series of related transactions, consolidate or merge with or into
(other than the consolidation or merger of a Wholly Owned Subsidiary of the
Company with another Wholly Owned Subsidiary of the Company or into the
Company), whether or not the Company or such Subsidiary is the surviving
corporation, or directly and/or indirectly through our Subsidiaries sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of the properties or
37
assets of the Company and our Subsidiaries (determined on a consolidated basis
for the Company and our Subsidiaries taken as a whole) in one or more related
transactions to, another corporation, Person or entity unless
(i) either (a) the Company, in the case of a transaction
involving the Company, or such Subsidiary, in the case of a transaction
involving a Subsidiary of ours, is the surviving corporation or (b) in the
case of a transaction involving the Company, the entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or
existing under the laws of the United States of America, any state thereof
or the District of Columbia or Bermuda and expressly assumes all the
obligations of the Company under the Exchange Notes and the Indenture
pursuant to a supplemental indenture in a form reasonably satisfactory to
the Trustee;
(ii) immediately prior to and after such transaction no Default
or Event of Default exists;
(iii) the Company or, if other than the Company, the entity or
Person formed by or surviving any such consolidation or merger, or to
which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made (a) will have a Consolidated Net Worth
immediately after the transaction equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the
transaction and (b) will, at the time of such transaction and after giving
pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Consolidated
Interest Coverage Ratio test set forth in the first paragraph of the
covenant described above under the caption "--Incurrence of Indebtedness
and Issuance of Preferred Stock;"
(iv) if, as a result of any such transaction, property or assets
of the Company would become subject to a Lien securing Indebtedness not
excepted from the provisions of the Indenture described above under the
caption "--Liens," the Company or the Surviving Entity, as the case may
be, shall have secured the Exchange Notes as required by such provisions;
and
(v) each Note Guarantor (including Persons that become Note
Guarantors as a result of the transaction) shall have confirmed by
supplemental indenture that its Note Guarantee shall apply for the
Obligations of the surviving entity in respect of the Indenture and the
Exchange Notes; and
(vi) the Company shall have delivered to the Trustee an officers'
certificate and, except in the case of a merger of a Subsidiary of ours
into the Company or into a Wholly Owned Subsidiary of the Company, an
opinion of counsel, each stating that such consolidation, merger,
conveyance, lease or disposition and any supplemental indenture with
respect thereto, comply with all of the terms of this covenant and that
all conditions precedent provided for in this provision relating to such
transaction or series of transactions have been complied with.
In the event that the surviving entity under this covenant is organized or
existing under Bermuda law, the Company will be required to pay to Holders
additional amounts for certain withholding taxes or deductions to the extent
applicable to the Exchange Notes on the conditions set forth in the Indenture.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries of the
Company the Capital Stock of which constitutes all or substantially all of the
properties and assets of the Company, shall be deemed to be the transfer of all
or substantially all of the properties and assets of the Company.
Each Note Guarantor will not, and the Company will not cause or permit any
Note Guarantor to, consolidate with or merge into, or sell or dispose of all or
substantially all of its assets to, any Person (other than the Company) that is
not a Note Guarantor unless:
(1) such Person (if such Person is the surviving entity) assumes all of the
obligations of such Note Guarantor in respect of its Note Guarantee by
executing a supplemental indenture and providing the Trustee with an
Officers' Certificate and Opinion of Counsel, and such transaction is
otherwise in compliance with the Indenture;
38
(2) such Note Guarantee is to be released as provided under "Note
Guarantees;" or
(3) such sale or other disposition of substantially all of such Note
Guarantor's assets is made in accordance with "--Limitation on Sale
of Assets."
Limitation on Sale and Leaseback Transactions
We will not, and will not permit any of our Subsidiaries to, enter
into any Sale and Leaseback Transaction unless
(a) after giving pro forma effect to any such Sale and Leaseback
Transaction, we or such Subsidiary, as the case may be, could incur
the Attributable Indebtedness relating to such Sale and Leaseback
Transaction under the covenants described above under the captions
"-- Incurrence of Indebtedness and Issuance of Preferred Stock" and
"-- Liens;"
(b) the gross cash proceeds of such Sale and Leaseback
Transaction are at least equal to the fair market value of such
property, as determined by the Board of Directors of the Company,
such determination to be evidenced by a resolution of the Board of
Directors of the Company;
(c) the aggregate rent payable by the Company or such Subsidiary
in respect of such Sale and Leaseback Transaction is not in excess of
the fair market rental value of the property leased pursuant to such
Sale and Leaseback Transaction; and
(d) the Company applies the Net Proceeds of the property sold
pursuant to the Sale and Leaseback Transaction as provided above
under the caption "--Limitation on Asset Sales."
Transactions with Affiliates
We will not, and will not permit any of our Subsidiaries to, directly
or indirectly, after the date of the Indenture, in any one transaction or
a series of related transactions, sell, lease, transfer or otherwise
dispose of any of its properties, assets or services to, or make any
payment to, or purchase any property, assets or services from, or enter
into or make any agreement, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), other than Exempt Affiliate Transactions, unless
(i) such Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Subsidiary than those that
would have been obtained in a comparable arm's length transaction by
the Company or such Subsidiary with a Person that is not an Affiliate
and
(ii) the Company delivers to the Trustee (a) with respect to any
Affiliate Transaction entered into after the date of the Indenture
involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors of the Company set forth in an
officers' certificate certifying that such Affiliate Transaction
complies with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of such
Board of Directors and (b) with respect to any Affiliate Transaction
involving aggregate consideration in excess of $5.0 million, a
written opinion from an independent financial advisor (as defined
below) that such Affiliate Transaction is fair to the Company or such
Subsidiary, as the case may be, from a financial point of view.
"Independent financial advisor" means a nationally recognized
accounting, appraisal or investment banking firm that is, in the
reasonable judgment of the Board of Directors of the Company, qualified to
perform the task for which such firm has been engaged and disinterested
and independent with respect to the Company.
Reports
Whether or not required by the rules and regulations of the
Commission, so long as any Exchange Notes are outstanding, we will furnish
to the Holders of Exchange Notes and to broker-dealers making a market in
the
39
Exchange Notes, and file with the Trustee, within 15 days after we are, or would
have been, required to be filed such with the Commission:
(i) all quarterly and annual financial information that is or
would be required to be contained in a filing with the Commission on Forms
10-Q and 10-K if we are or were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" and, with respect to the annual information only, a report
thereon by our certified independent accountants; and
(ii) all current reports that are or would be required to be
filed with the Commission on Form 8-K if we are or were required to file
such reports. In addition, whether or not required by the rules and
regulations of the Commission, we will file a copy of all such information
and reports with the Commission for public availability (unless the
Commission will not accept such a filing) and make such information
available to securities analysts and prospective investors upon written
request.
In addition, at any time when we are not current in our reporting
obligations, we will make available, upon request, to any holder and prospective
purchaser of Exchange Notes the information required pursuant to Rule 144A(d)(4)
under the Securities Act.
Events of Default and Remedies
The following are "Events of Default:"
(i) default for 30 days in the payment when due of interest on
the Notes;
(ii) default in payment when due of the principal of or premium,
if any, on the Notes;
(iii) failure by the Company to comply with the provisions
described under the captions "--Note Guarantees," "--Change of Control,"
"--Certain Covenants--Limitation on Asset Sales," "--Certain Covenants--
Ownership of and Liens on Capital Stock of Subsidiaries," "--Certain
Covenants--Limitation on Restricted Payments," "--Certain Covenants--
Incurrence of Indebtedness and Issuance of Preferred Stock," or "--Certain
Covenants--Merger, Consolidation or Sale of Assets;"
(iv) failure by the Company to comply with any of its other
agreements or covenants in the Indenture or in the Notes for 30 days after
written notice by the Trustee or Holders of at least 25% of the aggregate
principal amount of the Notes outstanding;
(v) default under any mortgage, indenture or instrument
(including without limitation, the New Credit Facility) under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of our Subsidiaries
(or the payment of which is guaranteed by the Company or any of our
Subsidiaries) whether such Indebtedness or guarantee now exists, or is
created after the date of the Indenture, which default:
(a) is caused by a failure to pay principal of such
Indebtedness at final maturity thereof (a "Payment Default"); or
(b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of
any such Indebtedness, together with the principal amount of any
other such Indebtedness as to which there has been a Payment
Default or the maturity of which has been so accelerated, exceeds
in the aggregate $5.0 million;
(vi) the rendering of a final judgment or judgments or an order
or orders against the Company or any of our Subsidiaries for the payment of
money not fully covered by insurance in an amount in excess of $10.0 million in
the aggregate and either:
(a) a creditor commences an enforcement proceeding upon
any such judgment or order; or
40
(b) any such judgment or order remains undischarged or
unstayed for a period of 45 days after the date on which the right
to appeal has expired;
(vii) certain events of bankruptcy, insolvency or reorganization
with respect to the Company, any Material Domestic Subsidiary or any
Material Foreign Subsidiary or the approval by stockholders of the Company
of any plan or proposal for the liquidation or dissolution of the Company;
or
(viii) except as permitted by the Indenture, any Note Guarantee is
held to be unenforceable or invalid in a judicial proceeding or ceases for
any reason to be in full force and effect or any Note Guarantor, or any
Person acting on behalf of any Note Guarantor, denies or disaffirms such
Note Guarantor's obligations under its Note Guarantee.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of all of the then
outstanding Notes may declare by written notice to the Company all the Notes to
be due and payable immediately. After such acceleration, but before a judgment
or decree based on acceleration, the Holders of a majority in aggregate
principal amount of outstanding Notes may, under certain circumstances, rescind
and annul such acceleration if all Events of Default, other than the non-payment
of principal, interest or premium that have become due solely because of such
acceleration, have been cured or waived as provided in the Indenture.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to the Company or any
Material Domestic Subsidiary or Material Foreign Subsidiary, all outstanding
Notes will become due and payable without any declaration or other act by the
Trustee or any Holder. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The Indenture provides
that if a Default occurs and is continuing, generally the Trustee must, within
90 days after the occurrence of such Default, give to the Holders thereof notice
of such Default. The Trustee may withhold from the Holders notice of any
continuing Default or Event of Default (except a Default or Event of 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 Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest or premium on, or the principal of, any Note, except a payment default
resulting from an acceleration that has been rescinded, or in respect of a
provision that cannot be amended or waived without the consent of the Holder of
each outstanding Note. See the discussion below under the caption "--Amendment,
Supplement and Waiver."
No Holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such Holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and unless the Holders of at least 25% in aggregate principal amount of
the outstanding Notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as Trustee, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 30 days.
However, such restrictions do not apply to a suit instituted by a Holder of a
Note for enforcement of payment of the principal of and premium, if any, or
interest on such Note on or after the respective due dates expressed in such
Note.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Notes or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of a Note by
accepting the 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
41
be effective to waive liabilities under the federal securities laws and it is
the view of the Commission that such waiver is against public policy.
Legal Defeasance and Covenant Defeasance
We may, at our option and at any time, elect to have all of the
obligations of the Company discharged with respect to the outstanding Notes
("Legal Defeasance") except for:
(i) the rights of Holders of outstanding Notes to receive
payments in respect of the principal of, premium, if any, and interest on
such Notes when such payments are due from the trust referred to below;
(ii) our obligations with respect to the Notes concerning issuing
temporary Notes, registration of Notes, mutilated, destroyed, lost or
stolen Notes and the maintenance of an office or agency for payment;
(iii) the rights, powers, trusts, duties and immunities of the
Trustee, and our obligations in connection therewith; and
(iv) the Legal Defeasance provisions of the Indenture.
In addition, we may, at our option and at any time, elect to have our
obligations released with respect to certain covenants that are described in the
Indenture, some of which are described above ("Covenant Defeasance"), and
thereafter any omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including nonpayment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance,
(i) we must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders of the Notes, cash in U.S. dollars, noncallable
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 outstanding Notes on the stated maturity or on the
applicable redemption date, as the case may be, and we must specify
whether the Notes are being defeased to maturity or to a particular
redemption date;
(ii) in the case of Legal Defeasance, we shall have delivered to
the Trustee an opinion of counsel acceptable to the Trustee confirming
that
(a) we have received from, or there has been published by,
the Internal Revenue Service a ruling; or
(b) since the date of the 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
Holders of the outstanding 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;
(iii) in the case of Covenant Defeasance, we shall have delivered
to the Trustee an opinion of counsel acceptable to the Trustee confirming
that the Holders of the outstanding 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 and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit)
42
or insofar as Events of Default from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the date
of deposit;
(v) such Legal Defeasance or Covenant Defeasance will not result
in a breach or violation of, or constitute a default under, any material
agreement or instrument to which we or any of our Subsidiaries is a party
or by which we or any of our Subsidiaries is bound;
(vi) we must deliver to the Trustee an officers' certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders of Notes over other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others;
(vii) such Legal Defeasance or Covenant Defeasance shall not
result in the trust arising from such deposit constituting an investment
company within the meaning of the Investment Company Act of 1940, as
amended, unless such trust shall be registered under such Act or exempt
from registration thereunder; and
(viii) we must deliver to the Trustee an officers' certificate and
an opinion of counsel, each stating that all conditions precedent to Legal
Defeasance or Covenant Defeasance, as the case may be, have been complied
with.
Transfer and Exchange
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Trustee will act as paying agent and registrar for the Notes. We, the
registrar and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents, and we may require a Holder to
pay any taxes and fees required by law or permitted by the Indenture. We are not
required to transfer or exchange any Note selected for redemption. Also, we are
not required to transfer or exchange any Note for a period of 15 days before a
selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
Amendment, Supplement and Waiver
Except as provided in the next two succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a tender offer or exchange offer for the
Notes), and any existing Default or compliance with any provision of the
Indenture or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the Notes then outstanding, including consents
obtained in connection with a tender offer or exchange offer for the Notes.
Without the consent of each Holder, an amendment or waiver may not:
(i) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
(ii) reduce the principal of or premium on or change the fixed
maturity of any Note or alter the provisions with respect to the
redemption of the Notes (other than provisions relating to the covenants
described above under the caption "--Change of Control" and "--Certain
Covenants");
(iii) reduce the rate of or change the time for payment of
interest on any Note;
(iv) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on any Note (except a
rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration);
(v) make any Note payable in money other than that stated in the
Notes;
43
(vi) make any change in the provisions of the Indenture relating
to waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or premium, if any, or interest on the Notes;
(vii) waive a redemption payment with respect to any Note (other
than a payment required by one of the covenants described above under the
captions "--Change of Control" and "--Certain Covenants");
(viii) modify the ranking or priority of the Notes;
(ix) release the Company from any of our obligations under the
Indenture other than in accordance with the terms of the Indenture;
(x) eliminate or modify in any manner a Note Guarantor's
obligations with respect to its Note Guarantee which adversely affects
Holders in any material respect, except as contemplated in the Indenture;
or
(xi) make any change in the foregoing amendment and waiver
provisions.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
we, the Note Guarantors and the Trustee may amend or supplement the Indenture or
the Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of Certificated Notes, to
provide for the assumption of our obligations to Holders of Notes in the case of
a merger or consolidation, to add Note Guarantees, to issue Additional Notes,
and to make any change that would provide any additional rights or benefits to
the Holders of Notes or that does not adversely affect the interests of the
Holders in any material respect, or to comply with requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the Trust Indenture Act.
Payments for Consent
Neither we nor any of our Subsidiaries shall, directly or indirectly, pay
or cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder of any Notes for or as an inducement to any consent,
waiver or amendment of any terms or provisions of the Notes, unless such
consideration is offered to be paid or agreed to be paid to all Holders of the
Notes which so consent, waive or agree to amend in the time frame set forth in
the solicitation documents relating to such consent, waiver or agreement.
Concerning the Trustee
The Indenture and provisions of the Trust Indenture Act incorporated by
reference therein contain certain limitations on the rights of the Trustee,
should it become our creditor, to obtain payment of claims in certain cases, or
to realize on certain property received in respect of any such claim as security
or otherwise. The Trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest it must eliminate such conflict
within 90 days, apply to the Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
Additional Information
Anyone who receives this Prospectus may obtain a copy of the Indenture
without charge by writing to DIMON Incorporated, 512 Bridge Street, Danville,
Virginia 24541, Attention: Secretary.
Governing Law
The Indenture and the Exchange Notes will be governed by the law of the
State of New York.
44
Certain Definitions
Set forth below are certain defined terms used in the Indenture.
"2006 Senior Notes" means the $125 million aggregate principal amount of
8?% Senior Notes due 2006 issued by the Company on May 29, 1996.
"Acquired Indebtedness" means, with respect to any specified Person,
(i) any Indebtedness or Disqualified Stock of any other Person
existing at the time such other Person is merged with or into or becomes a
Subsidiary of such specified Person, including, without limitation,
Indebtedness incurred in connection with, or in contemplation of, such
other Person merging with or into or becoming a Subsidiary of such
specified Person, and
(ii) Indebtedness secured by a Lien encumbering any asset acquired
by such specified Person, and in either case for purposes of the
Indenture, shall be deemed to be incurred by such specified Person at the
time such other Person is merged with or into or becomes a Subsidiary of
such specified Person or at the time such asset is acquired by such
specified Person, as the case may be.
"Advances on Purchases of Tobacco" means loans, advances and extensions of
credit made by the Company or any of our Subsidiaries to growers and other
suppliers of tobacco (including Affiliates) and tobacco growers' cooperatives,
whether short-term or long-term, in the ordinary course of business to finance
the growing or processing of tobacco.
"Affiliate" of any specified Person means:
(i) any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such
specified Person, or
(ii) any other Person who is a director or executive officer of (a)
such specified Person or (b) any Person described in the preceding clause
(i).
For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by agreement or otherwise; provided that beneficial ownership of 10% or more of
any class or any series of any class of equity securities of a Person, whether
or not voting, shall be deemed to be control.
"Asset Sale" means, with respect to any Person, the sale, lease,
conveyance or other disposition, that does not constitute a Restricted Payment
or an Investment, by such Person of any of its assets (including, without
limitation, by way of a Sale and Leaseback Transaction and including the
issuance, sale or other transfer of any Equity Interests in any Subsidiary)
other than to the Company (including the receipt of proceeds of insurance paid
on account of the loss of or damage to any asset and awards of compensation for
any asset taken by condemnation, eminent domain or similar proceeding, and
including the receipt of proceeds of business interruption insurance), in each
case, in one or a series of related transactions; provided that notwithstanding
the foregoing, the term "Asset Sale" shall not include:
(i) the sale, lease, conveyance, disposition or other transfer of
all or substantially all of the assets of the Company, in accordance with
the terms of the covenant entitled "--Merger, Consolidation or Sale of
Assets;"
(ii) the sale or lease of equipment, inventory, accounts receivable
or other assets in the ordinary course of business consistent with past
practice;
(iii) a transfer of assets by the Company to a Wholly Owned
Subsidiary of the Company or by a Wholly Owned Subsidiary of the Company
to the Company or to another Wholly Owned Subsidiary of the Company;
(iv) an issuance of Equity Interests by a Wholly Owned Subsidiary
of the Company to the Company or to another Wholly Owned Subsidiary of the
Company, provided that the consideration paid by the Company or
45
such Wholly Owned Subsidiary of the Company for such Equity Interests
shall be deemed to be an Investment; or
(v) the sale or other disposition of cash or Cash Equivalents.
"Attributable Indebtedness" means, in respect of a Sale and Leaseback
Transaction at the time of determination thereof, the greater of:
(i) the capitalized amount in respect of such transaction that
would appear on the face of a balance sheet of the lessee in accordance
with GAAP; and
(ii) the present value (discounted at the interest rate borne by
the Notes, compounded annually) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such
Sale and Leaseback Transaction (including any period for which such lease
has been extended).
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means
(i) in the case of a corporation, capital stock;
(ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of capital stock;
(iii) in the case of a partnership, partnership interests (whether
general or limited); and
(iv) 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, the issuing Person.
"Cash Equivalent" means
(i) securities issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is pledged
in support thereof) having maturities not more than twelve months from the
date of acquisition;
(ii) U.S. dollar denominated (or foreign currency fully hedged)
time deposits, certificates of deposit, Eurodollar time deposits or
Eurodollar certificates of deposit of (i) any domestic commercial bank of
recognized standing having capital and surplus in excess of $500 million
or (ii) any bank whose short-term commercial paper rating from S&P is at
least A-1 or the equivalent thereof or from Moody's is at least P-1 or the
equivalent thereof (any such bank being an "Approved Lender"), in each
case with maturities of not more than twelve months from the date of
acquisition;
(iii) commercial paper issued by any Approved Lender (or by the
parent company thereof) or any variable rate notes issued by, or
guaranteed by, any domestic corporation rated A-1 (or the equivalent
thereof) or better by S&P or P-1 (or the equivalent thereof) or better by
Moody's and maturing within twelve months of the date of acquisition;
(iv) shares of money market mutual funds having assets in excess of
$2 billion; and
(v) deposits, including interest-bearing deposits, maintained in
the ordinary course of business in banks.
"Change of Control" means such time as:
(i) any Person or group (within the meaning of Section 13(d) or
14(d) of the Exchange Act) has become, directly or indirectly, the
beneficial owner, by way of merger, consolidation or otherwise, of 30% or
more of the voting power of the Voting Stock of the Company on a fully-
diluted basis, after giving effect to the
46
conversion and exercise of all outstanding warrants, options and other
securities of the Company convertible into or exercisable for Voting Stock
of the Company (whether or not such securities are then currently
convertible or exercisable); or
(ii) the sale, lease or transfer of all or substantially all of the
consolidated assets of the Company to any Person or group; or
(iii) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company, together with any new members of such Board of
Directors whose election by such Board of Directors or whose nomination
for election by the stockholders of the Company was approved by a vote of
a majority of the members of such Board of Directors then still in office
who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved, cease for
any reason to constitute a majority of the directors of the Company then
in office; or
(iv) the Company consolidates with or merges with or into another
Person or any Person consolidates with, or merges with or into, the
Company (in each case, whether or not in compliance with the terms of the
Indenture), in any such event pursuant to a transaction in which
immediately after the consummation thereof Persons owning a majority of
the Voting Stock of the Company immediately prior to such consummation
shall cease to own a majority of the Voting Stock of the Company or the
surviving entity if other than the Company.
"Consolidated EBITDA" means, with respect to any Person for any period,
the sum, without duplication, of:
(i) the Consolidated Net Income for such period; plus
(ii) the Consolidated Interest Expense for such period; plus
(iii) amortization of deferred financing charges for such period;
plus
(iv) provision for taxes based on income or profits for such period
(to the extent such income or profits were included in computing
Consolidated Net Income for such period); plus
(v) consolidated depreciation, amortization and other noncash
charges of such Person and its Subsidiaries required to be reflected as
expenses on the books and records of such Person; minus
(vi) cash payments with respect to any nonrecurring, noncash
charges previously added back pursuant to clause (v); and excluding
(vii) the impact of foreign currency translations.
Notwithstanding the foregoing, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other noncash charges
of, a Subsidiary of a Person shall be added to Consolidated Net Income to
compute Consolidated EBITDA only to the extent (and in the same proportion) that
the Net Income of such Subsidiary was included in calculating the Consolidated
Net Income of such Person and only if a corresponding amount would be permitted
at the date of determination to be dividended to such Person by such Subsidiary
without prior approval (unless such approval has been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"Consolidated Interest Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated EBITDA of such Person and its
Subsidiaries for such period to the Consolidated Interest Expense of such Person
and its Subsidiaries for such period. If the Company or any of its Subsidiaries
incurs, assumes, guarantees or repays or redeems any Indebtedness (other than
revolving credit borrowings) or issues or redeems preferred stock subsequent to
the commencement of the four-quarter reference period for which the Consolidated
Interest Coverage Ratio is being calculated but on or prior to the date on which
the event for which the calculation of the Consolidated Interest Coverage Ratio
is made (the "Calculation Date"), then the Consolidated Interest Coverage Ratio
shall be calculated giving pro forma effect to such incurrence, assumption,
guarantee, repayment or redemption of Indebtedness, or such issuance or
redemption of preferred stock, as if the same had occurred at the
47
beginning of the applicable four-quarter reference period, provided, however,
that in making such computation on a pro forma basis, the Consolidated Interest
Expense of such Person attributable to interest on any Indebtedness bearing a
floating interest rate and which was not actually outstanding during all or any
part of such four-quarter reference period shall be computed on a pro forma
basis as if the rate in effect on the date of computation (after giving effect
to any hedge in respect of such Indebtedness that will, by its terms, remain in
effect until the earlier of the maturity of such Indebtedness or the date one
year after the date of such determination) had been the applicable rate during
that portion of such four-quarter reference period when such Indebtedness was
not actually outstanding. For purposes of making the computation referred to
above:
(i) acquisitions that have been made by the Company or any of our
Subsidiaries, including through mergers or consolidations and including
any related financing transactions, during the four-quarter reference
period, or subsequent to such reference period and on or prior to the
Calculation Date shall be deemed to have occurred on the first day of the
four-quarter reference period;
(ii) the Consolidated EBITDA attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, shall be excluded;
and
(iii) the Consolidated Interest Expense attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, shall be excluded,
but only to the extent that the obligations giving rise to such
Consolidated Interest Expense will not be obligations of the referent
Person or any of its Subsidiaries following the Calculation Date.
"Consolidated Interest Expense" means, with respect to any Person for any
period the consolidated interest expense of such Person and its Subsidiaries for
such period determined in accordance with GAAP (net of any interest income),
plus, to the extent not included in such interest expense:
(i) amortization of original issue discount, noncash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations and any Attributable Indebtedness, commissions, discounts and
other fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations, but excluding amortization of deferred financing charges for
such period;
(ii) the consolidated interest expense of such Person and its
Subsidiaries that was capitalized during such period;
(iii) any interest expense on Indebtedness of another Person that is
guaranteed by such Person or one of its Subsidiaries or secured by a Lien
on assets of such Person or one of its Subsidiaries (whether or not such
guarantee or Lien is called upon); and
(iv) the product of (a) all cash dividend payments (and noncash
dividend payments in the case of a Person that is a Subsidiary) on any
series of preferred stock of such Person payable to a party other than the
Company or a Wholly Owned Subsidiary, multiplied by (b) a fraction, the
numerator of which is one and the denominator of which is one minus the
then current combined federal, state and local statutory tax rate of such
Person, expressed as a decimal.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that:
(i) the Net Income (but not loss) of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned
Subsidiary thereof;
(ii) the Net Income of any Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (unless
such approval has been obtained) or, directly or
48
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its stockholders;
(iii) the Net Income of any Person acquired in a pooling of
interests transaction for any periods ending on or prior to the date of
such acquisition shall be excluded; and
(iv) the cumulative effect of a change in accounting principles
shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any date,
the sum of (i) the consolidated equity of the common stockholders of such Person
and its consolidated Subsidiaries as of such date plus (ii) the respective
amounts reported on such Person's balance sheet as of such date with respect to
any series of preferred stock (other than Disqualified Stock) that by its terms
is not entitled to the payment of dividends unless such dividends may be
declared and paid only out of net earnings in respect of the year of such
declaration and payment, but only to the extent of any cash received by such
Person upon issuance of such preferred stock, less (x) all write-ups subsequent
to the date of the Indenture in the book value of any asset owned by such Person
or a consolidated Subsidiary of such Person (other than purchase accounting
adjustments made, in connection with any acquisition of any entity that becomes
a consolidated Subsidiary of such Person after the date of the Indenture, to the
book value of the assets of such entity), (y) all investments as of such date in
unconsolidated Subsidiaries and in Persons that are not Subsidiaries (except, in
each case, Permitted Investments), and (z) all unamortized debt discount and
expense and unamortized deferred charges as of such date, all of the foregoing
determined on a consolidated basis in accordance with GAAP.
"Consolidated Tangible Net Worth" means, with respect to any Person as of
any date, the sum of (i) Consolidated Net Worth, minus (ii) the amount of such
Person's intangible assets at such date, including, without limitation, goodwill
(whether representing the excess of cost over book value of assets acquired or
otherwise), capitalized expenses, patents, trademarks, tradenames, copyrights,
franchises, licenses and deferred charges (such as, without limitation,
unamortized costs and costs of research and development), all determined for
such Person on a consolidated basis in accordance with GAAP.
"Debentures" means the $73.3 million aggregate principal amount of 6 1/4%
Convertible Subordinated Debentures due March 31, 2007 issued by the Company on
April 1, 1997.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Disqualified Stock" means:
(i) with respect to any Person, Capital Stock of such Person that,
by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the Holder
thereof, in whole or in part, on or prior to the date which is one year
after the latest date on which the Notes mature; and
(ii) with respect to any Subsidiary of such Person, any Capital
Stock other than any common stock with no preference, privileges, or
redemption or repayment provisions.
"Eligible Inventory" means, as of any date, all inventory of the Company
and any of our Subsidiaries, wherever located, valued in accordance with GAAP
and shown on the balance sheet of the Company for the quarterly period most
recently ended prior to such date for which financial statements of the Company
are available.
"Eligible Receivables" means, as of any date, all accounts receivable of
the Company and any of our Subsidiaries arising out of the sale of inventory in
the ordinary course of business, valued in accordance with GAAP and shown on the
balance sheet of the Company for the quarterly period most recently ended prior
to such date for which financial statements of the Company are available.
49
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock), whether outstanding prior
to, on or after the date of the Indenture.
"Exempt Affiliate Transactions" means:
(i) transactions between or among the Company and/or its Wholly
Owned Subsidiaries;
(ii) advances to officers of the Company or any of our Subsidiaries
in the ordinary course of business to provide for the payment of
reasonable expenses incurred by such persons in the performance of their
responsibilities to the Company or such Subsidiary or in connection with
any relocation;
(iii) fees and compensation paid to and indemnity provided on behalf
of directors, officers or employees of the Company or any of our
Subsidiaries in the ordinary course of business;
(iv) any employment agreement that is in effect on the date of the
Indenture in the ordinary course of business and any such agreement
entered into by the Company or a Subsidiary of ours after the date of the
Indenture in the ordinary course of business of the Company or such
Subsidiary; and
(v) any Restricted Payment that is not prohibited by the covenant
set forth under the caption "Restricted Payments" above.
"Existing Credit Facility" means the Credit Agreement, dated as of June
27, 2000, among the Company as borrower, First Union National Bank, as
administrative agent, and the lenders party thereto, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced, restated or refinanced from time to time.
"Existing Indebtedness" means the Indebtedness of the Company and our
Subsidiaries (other than Indebtedness under the New Credit Facility) in
existence on the date of the Indenture, until such amounts are repaid.
"GAAP" means United States generally accepted accounting principles,
consistently applied, as 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 may be
approved by a significant segment of the accounting profession of the United
States, that are applicable to the circumstances as of the date of
determination, provided that, except as specifically provided in the Indenture,
all calculations made for purposes of determining compliance with the covenants
set forth in Article IV and Section 5.01 of the Indenture (which include the
covenants described above under "Certain Covenants") shall use GAAP, as in
effect as of the date of the Indenture for financial statements for fiscal years
ending on or after September 30, 2001, but that for such purposes of determining
compliance, GAAP shall not include (i) the requirement to recognize any
impairment losses pursuant to Statement of Financial Accounting Standards No.
142 and (ii) the effects of Statements of Financial Accounting Standards Nos.
121 and 133.
"Guarantee" means any obligation, contingent or otherwise, of any Person,
directly or indirectly guaranteeing any Indebtedness of any other Person,
including any such obligation, direct or indirect, contingent or otherwise, of
such Person:
(i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation of such other Person
(whether arising by agreement to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement conditions or
otherwise); or
(ii) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in
part); provided, however, that the term "guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.
The term "guarantee" used as a verb shall have a correlative meaning.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person entered into in the ordinary course of business under (i)
interest rate swap agreements, interest rate cap agreements and interest rate
50
collar agreements and other similar financial agreements or arrangements
designed to protect such Person against, or manage the exposure of such Person
to, fluctuations in interest rates, (ii) forward exchange agreements, currency
swap, currency option and other similar financial agreements or arrangements
designed to protect such Person against, or manage the exposure of such Person
to, fluctuations in foreign currency exchange rates, and (iii) forward
contracts, commodity swap, commodity option and other similar financial
agreements or arrangements designed to protect such Person against, or manage
the exposure of such Person to, fluctuations in commodity prices.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or Attributable Indebtedness with respect
to Sale and Leaseback Transactions, or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable incurred
in the ordinary course of business, if and to the extent any of the foregoing
indebtedness (other than letters of credit and Hedging Obligations) would appear
as a liability upon a balance sheet of such Person prepared in accordance with
GAAP, as well as all indebtedness of others secured by a Lien on any asset of
such Person (whether or not such indebtedness is assumed by such Person) and, to
the extent not otherwise included, the guarantee by such Person of any
indebtedness of any other Person.
"Investment Grade Rating" means an assigned rating of (i) BBB- or higher
by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc. or its successor ("S&P"); and (ii) Baa3 or higher by Moody's Investor
Service, Inc. or its successor ("Moody's").
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the form of direct or indirect
loans (including guarantees of Indebtedness or other obligations), advances or
capital contributions (excluding advances to officers and employees of the type
specified in clause (ii) of the definition of Exempt Affiliate Transactions),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities by
the Company for consideration consisting of common equity securities of the
Company shall not be deemed to be an Investment.
"Joint Venture" means a single-purpose corporation, partnership or other
legal arrangement hereafter formed by the Company or any of our Subsidiaries
with another Person in order to conduct a common venture or enterprise with such
Person through a separate legal entity.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Material Domestic Subsidiary" means any of our Subsidiaries which is
organized under the laws of the United States of America, any state thereof or
the District of Columbia and would constitute a "significant subsidiary" of the
Company as defined in Rule 1.02 of Regulation S-X promulgated by the Commission
except that for purposes of this definition all reference therein to ten (10)
percent shall be deemed to be references to five (5) percent.
"Material Foreign Subsidiary" means any of our Subsidiaries, other than
any Subsidiary which is organized under the laws of the United States of
America, any state thereof or the District of Columbia, which constitutes a
"significant subsidiary" of the Company as defined in Rule 1.02 of Regulation
S-X promulgated by the Commission.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person for such period, determined in accordance with GAAP
and before any reduction in respect of preferred stock dividends, excluding,
however:
51
(i) any gain (but not loss), together with any related provision
for taxes on such gain (but not loss), realized in connection with (a) any
Asset Sale (including, without limitation, dispositions pursuant to any
Sale and Leaseback Transaction) or (b) the disposition of any securities
by such Person or any of its Subsidiaries; or the extinguishment of any
Indebtedness of such Person or any of its Subsidiaries; and
(ii) any extraordinary gain or loss or any non-cash instructuring
charge approved by the Company's Board of Directors, together with any
related provision for taxes on such extraordinary gain or loss.
Notwithstanding anything to the contrary contained herein, net income for
the period from April 1, 1996 to the Issue Date shall be calculated in
accordance with the indenture dated as of May 29, 1996, between and among the
Company, DIMON International, Inc., Florimex Worldwide, Inc. and Crestar Bank as
Trustee.
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of our Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any noncash
consideration received in any Asset Sale), net of the direct costs relating to
such Asset Sale (including, without limitation, legal, accounting and investment
banking fees, and sales commissions), taxes paid or payable as a result thereof,
and any reserve for adjustment in respect of the sale price of such asset or
assets established in accordance with GAAP.
"New Credit Facility" means the Credit Agreement, executed on October 31,
2001, among the Company as borrower thereunder, First Union National Bank, as
administrative agent, and the lenders party thereto, to replace the Existing
Credit Facility, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified, renewed, refunded, replaced, restated or refinanced from time
to time.
"Note Guarantee" means any guarantee of the Company's Obligations under
the Old and Exchange Notes and the Indenture provided by a Material Domestic
Subsidiary pursuant to the Indenture.
"Note Guarantor" means any Material Domestic Subsidiary which provides a
Note Guarantee pursuant to the Indenture until such time as its Note Guarantee
is released in accordance with the Indenture.
"Obligations" means any principal, premiums, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Investments" means:
(i) any Investments in the Company;
(ii) any Investments in Cash Equivalents;
(iii) Investments made as a result of the receipt of noncash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "--Certain
Covenants--Limitation on Asset Sales;"
(iv) Investments (other than Advances on Purchases of Tobacco)
outstanding as of the date of the Indenture;
(v) Investments in Wholly Owned Subsidiaries of the Company and any
entity that:
(a) as engaged in the same or a similar line of business as
the Company or any of our Subsidiaries was engaged in on the date of
the Indenture and which has not been discontinued on or prior to the
date of such Investment or any reasonable extensions or expansions
thereof; and
(b) as a result of such Investment, is a Wholly Owned
Subsidiary of the Company;
(vi) investments made in the ordinary course of business in export
notes, trade credit assignments, bankers' acceptances, guarantees and
instruments of a similar nature issued in connection with the financing of
international trading transactions by:
52
(a) any commercial bank or trust company (or any Affiliate
thereof) organized under the laws of the United States of America, any
state thereof, or the District of Columbia having capital and surplus
in excess of $100 million; or
(b) any international bank of recognized standing ranking among
the world's 100 largest commercial banks in terms of total assets; and
(vii) any Advances on Purchases of Tobacco, but only to the extent
that the aggregate principal amount of such advances outstanding at any
time, including advances outstanding as of the Issue Date, to any Person
and such Person's Affiliates does not exceed 15% of the Consolidated
Tangible Net Worth of the Company for the most recently ended fiscal
quarter for which internal financial statements are available.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of our Subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of our Subsidiaries; provided that: (i) the
principal amount of such Permitted Refinancing Indebtedness does not exceed the
principal amount of the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of reasonable expenses incurred in
connection therewith); (ii) such Permitted Refinancing Indebtedness (x) has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded, (y) does not have a stated maturity earlier than
the stated maturity of the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded, and (z) does not permit redemption or other
retirement (including pursuant to any required offer to purchase to be made by
the Company or a Subsidiary of ours) of such Indebtedness at the option of the
holder thereof prior to the final stated maturity of the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded, other than a
redemption or other retirement at the option of the holder of such Indebtedness
(including pursuant to a required offer to purchase made by the Company or a
Subsidiary of ours) which is conditioned upon a change of control of the Company
pursuant to provisions substantially similar to those contained in the Indenture
described under "--Change of Control" above; (iii) if the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded is subordinated in
right of payment to the Old and Exchange Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Old and Exchange Notes on terms
at least as favorable to the Holders of Old and Exchange Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such Indebtedness
is incurred either by the Company or by the Subsidiary of ours who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.
"Person" means any individual, corporation, limited or general
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Purchase Money Obligation" of any Person means any obligation of such
Person to any seller or any other Person incurred or assumed to finance the
construction and/or acquisition of real or personal property constituting plant
or equipment to be used in the business of such Person or any of its
Subsidiaries (excluding accounts payable to trade creditors incurred in the
ordinary course of business), which obligation is secured by a Lien on such
property constructed or acquired.
"Sale and Leaseback Transaction" of any Person means an arrangement with
any lender or investor or to which such lender or investor is a party providing
for the leasing by such Person of any property or asset of such Person which has
been or is being sold or transferred by such Person more than 180 days after the
acquisition thereof or the completion of construction or commencement of
operation thereof to such lender or investor or to any Person to whom funds have
been or are to be advanced by such lender or investor on the security of such
property or asset. The stated maturity of such arrangement shall be the date of
the last payment of rent or any other amount due under such arrangement prior to
the first date on which such arrangement may be terminated by the lessee without
payment of a penalty.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or
53
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof) and (ii) any partnership
(a) the sole general partner or the managing general partner of which is such
Person or a Subsidiary of such Person or (b) the only general partners of which
are such Person or of one or more Subsidiaries of such Person (or any
combination thereof).
"U.S. Government Obligations" means (i) securities that are (a) direct
obligations of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (b) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable or redeemable at the
option of the issuer thereof; and (ii) depositary receipts issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian with respect to
any U.S. Government Obligation which is specified in clause (i) above and held
by such bank for the account of the holder of such depositary receipt, or with
respect to any specific payment of principal or interest on any U.S. Government
Obligation which is so specified and held, provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal or interest of the U.S. Government Obligation evidenced by such
depositary receipt.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the product obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payments at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or, in the
case of Subsidiaries that are not organized under the laws of the United States
of America, any state thereof or the District of Columbia, by one or more
nominees of such Person.
54
BOOK-ENTRY; DELIVERY AND FORM
General
Except as set forth below, Notes will be issued in registered, global form
in minimum denominations of $1,000 and integral multiples of $1,000 in excess of
$1,000.
Notes initially will be represented by one or more notes in registered,
global form without interest coupons (collectively, the "Global Notes"). The
Global Notes will be deposited upon issuance with the Trustee as custodian for
The Depository Trust Company ("DTC"), in New York, New York, and registered in
the name of DTC or its nominee, in each case for credit to an account of a
direct or indirect participant in DTC as described below.
Except as set forth below, the Global Notes may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for notes
in certificated form except in the limited circumstances described below. See
"--Exchange of Book-Entry Exchange Notes for Certificated Exchange Notes."
Except in the limited circumstances described below, owners of beneficial
interests in the Global Notes will not be entitled to receive physical delivery
of notes in certificated form.
Depositary Procedures
DTC is a limited-purpose trust company created to hold securities for its
participating organizations (collectively, the "Participants") and to facilitate
the clearance and settlement of transactions in those securities between
Participants through electronic book-entry changes in accounts of its
Participants. The Participants include securities brokers and dealers (including
the initial purchasers), banks, trust companies, clearing corporations and
certain other organizations. Access to DTC's system is also available to other
entities such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly (collectively, the "Indirect Participants"). Persons who are not
Participants may beneficially own securities held by or on behalf of DTC only
through the Participants or the Indirect Participants. The ownership interests
and transfer of ownership interests of each beneficial owner of each security
held by or on behalf of DTC are recorded on the records of the Participants and
Indirect Participants.
Pursuant to procedures established by DTC:
. upon deposit of a Global Note, DTC will credit the accounts
of Participants designated by the initial purchasers with
portions of the principal amount of the Global Notes and
. ownership of such interests in a Global Note will be
maintained by DTC (with respect to the Participants) or by
the Participants and the Indirect Participants (with respect
to other owners of beneficial interests in Global Notes).
Investors in a Global Note may hold their interests therein directly
through DTC, if they are Participants in such system, or indirectly through
organizations (including Euroclear and Clearstream Luxembourg) that are
Participants in such system. Euroclear and Clearstream Luxembourg will hold
interests in a Global Note on behalf of their participants through customers'
securities accounts in their respective names on the books of their respective
depositaries, which are Morgan Guaranty Trust Company of New York, Brussels
office, as operator of Euroclear, and Citibank, N.A., as operator of
Clearstream. The depositaries, in turn, will hold interests in a Global Note in
customers' securities accounts in the depositaries' names on the books of DTC.
All interests in a Global Note, including those held through Euroclear or
Clearstream Luxembourg, will be subject to the procedures and requirements of
DTC. Those interests held through Euroclear or Clearstream Luxembourg will also
be subject to the procedures and requirements of these systems. The laws of some
states require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Note to such persons will be limited to that extent.
Because DTC can act only on behalf of Participants, which in turn act on behalf
of Indirect Participants, the ability of a person having beneficial interests in
a Global Note to pledge such interests to persons or entities that do not
participate in the DTC system, or otherwise take actions in respect of such
interests, may be affected by the lack of a physical
55
certificate evidencing such interests. For certain other restrictions on the
transferability of the Exchange Notes, see "--Exchange of Book-Entry Exchange
Notes for Certificated Exchange Notes."
Except as described below, owners of interests in a Global Note will not
have Exchange Notes registered in their names, will not receive physical
delivery of Exchange Notes in certificated form and will not be considered the
registered owners or holders thereof under the Indenture for any purpose.
Payments in respect of the principal of and premium, if any, and interest
on a Global Note registered in the name of DTC or its nominee will be payable by
the Trustee to DTC in its capacity as the registered holder under the Indenture.
The Company and the Trustee will treat the persons in whose names the Exchange
Notes, including the Global Notes, are registered as the owners thereof for the
purpose of receiving such payments and for any and all other purposes
whatsoever. Consequently, neither the Company, the Trustee nor any agent of the
Company or the Trustee has or will have any responsibility or liability for:
. any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of
beneficial ownership interests in a Global Note, or for
maintaining, supervising or reviewing any of DTC's records or any
Participant's or Indirect Participant's records relating to the
beneficial ownership interests in a Global Note or
. any other matter relating to the actions and practices of DTC or
any of its Participants or Indirect Participants.
DTC has advised the Company that its current practice, upon receipt of any
payment in respect of securities such as the Exchange Notes (including principal
and interest), is to credit the accounts of the relevant Participants with the
payment on the payment date, in amounts proportionate to their respective
holdings in the principal amount of beneficial interests in the relevant
security as shown on the records of DTC unless DTC has reason to believe it will
not receive payment on such payment date. Payments by the Participants and the
Indirect Participants to the beneficial owners of Exchange Notes will be
governed by standing instructions and customary practices and will be the
responsibility of the Participants or the Indirect Participants and will not be
the responsibility of DTC, the Trustee or the Company. Neither the Company nor
the Trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the Exchange Notes, and the Company and the
Trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee for all purposes.
Except for trades involving only Euroclear and Clearstream Luxembourg
participants, interests in a Global Note are expected to be eligible to trade in
DTC's Same-Day Funds Settlement System and secondary market trading activity in
such interests will therefore settle in immediately available funds, subject in
all cases to the rules and procedures of DTC and its Participants.
Transfers between Participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds, and transfers between
participants in Euroclear and Clearstream Luxembourg will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Cross-market transfers between the Participants in DTC, on the one hand,
and Euroclear or Clearstream Luxembourg participants, on the other hand, will be
effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream Luxembourg, as the case may be, by their depositaries. Cross-market
transactions will require delivery of instructions to Euroclear or Clearstream
Luxembourg, as the case may be, by the counterparty in that system in accordance
with the rules and procedures and within the established deadlines (Brussels
time) of that system. Euroclear or Clearstream Luxembourg, as the case may be,
will, if the transaction meets its settlement requirements, deliver instructions
to its respective depositaries to take action to effect final settlement on its
behalf by delivering or receiving interests in a Global Note in DTC, and making
or receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Euroclear and Clearstream Luxembourg participants
may not deliver instructions directly to the depositaries for Euroclear or
Clearstream Luxembourg.
Because of time zone differences, the securities account of a Euroclear or
Clearstream Luxembourg participant purchasing an interest in a Global Note from
a Participant in DTC will be credited and reported to the relevant Euroclear or
Clearstream Luxembourg participant, during the securities settlement processing
day (which must be a
56
business day for Euroclear and Clearstream Luxembourg) immediately following the
settlement date of DTC. DTC has advised the Company that cash received in
Euroclear or Clearstream Luxembourg as a result of sales of interests in a
Global Note by or through a Euroclear or Clearstream Luxembourg participant to a
Participant in DTC will be received with value on the settlement date of DTC but
will be available in the relevant Euroclear or Clearstream Luxembourg cash
account only as of the business day for Euroclear or Clearstream Luxembourg
following DTC's settlement date.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of Exchange Notes only at the direction of one or more
Participants to whose account with DTC interests in a Global Note are credited
and only in respect of such portion of the aggregate principal amount of the
Exchange Notes as to which such Participant or Participants has or have given
such direction. If there is an Event of Default under the Exchange Notes, DTC
reserves the right to exchange a Global Note for Exchange Notes in certificated
form, and to distribute the Notes to its Participants.
Although DTC, Euroclear and Clearstream Luxembourg have agreed to the
foregoing procedures to facilitate transfers of interests in Global Notes among
participants in DTC, Euroclear and Clearstream Luxembourg, they are under no
obligation to perform or to continue to perform such procedures, and the
procedures may be discontinued at any time. Neither the Company nor the Trustee
will have any responsibility for the performance by DTC, Euroclear or
Clearstream Luxembourg or their respective participants or indirect participants
of their respective obligations under the rules and procedures governing their
operations.
The information in this section concerning DTC, Euroclear and Clearstream
Luxembourg and their book-entry systems has been obtained from sources that the
Company believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
Exchange of Book-Entry Exchange Notes for Certificated Exchange Notes
A Global Note is exchangeable for Exchange Notes in registered
certificated form (a "Certificated Exchange Note") if:
. DTC (1) notifies the Company that it is unwilling or unable to
continue as depositary for the Global Note and the Company fails
to appoint a successor depositary or (2) has ceased to be a
clearing agency registered under the Exchange Act,
. the Company, at its option, notifies the Trustee in writing that
it elects to cause the issuance of the Exchange Notes in
certificated form, or
. at the request of DTC, if there shall have occurred and be
continuing an Event of Default with respect to the Exchange
Notes.
In all cases, Certificated Exchange 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) and will bear the
applicable restrictive legend referred to in "Notice to Investors," unless the
Company determines otherwise in accordance with the Indenture and in compliance
with applicable law.
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following summarizes the material federal income tax consequences of
the exchange of Old Notes for Exchange Notes. This summary is based on current
law, which is subject to change at any time, possibly with retroactive effect.
In addition, this summary does not address the tax consequences of the exchange
under applicable state, local or foreign laws.
The exchange of Old Notes for Exchange Notes pursuant to the exchange
offer will not result in any United States federal income tax consequences to
Holders. When a Holder exchanges an Old Note for an Exchange Note pursuant to
the exchange offer, the Holder will have the same adjusted basis and holding
period for the Exchange Note as for the Old Note immediately before the
exchange.
57
Each Holder should consult his own tax advisor as to the particular tax
consequences to it of exchanging Old Notes for Exchange Notes, including the
applicability and effect of any state, local or foreign tax laws.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Old Notes where such Old Notes were acquired as a result of market-
making activities or other trading activities. We have agreed that we will, for
a period of 180 days after the consummation of the exchange offer, make this
prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
We will not receive any proceeds from the sale of Exchange Notes by
broker-dealers. Exchange Notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the Exchange Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such broker-
dealer and/or the purchasers of any such Exchange Notes. Any broker-dealer that
resells Exchange Notes that were received by it for its own account pursuant to
the exchange offer and any broker or dealer that participates in a distribution
of such Exchange Notes may be deemed to be an "underwriter" within the meaning
of the Securities Act and any profit on any such resale of Exchange Notes and
any commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the consummation of the exchange offer, we
will promptly send additional copies of the prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such document
in the Letter of Transmittal. We have agreed to pay all expenses incident to the
exchange offer other than commissions or concessions of any brokers or dealers
and will indemnify the holders of the Exchange Notes, including any
broker-dealers, against certain liabilities, including liabilities under the
Securities Act.
Following consummation of the exchange offer, we may, in our sole
discretion, commence one or more additional exchange offers to holders of Old
Notes who did not exchange their Old Notes for Exchange Notes in the exchange
offer on terms which may differ from those contained in the Registration Rights
Agreement. This prospectus, as it may be amended or supplemented from time to
time, may be used by us in connection with any such additional exchange offers.
Such additional exchange offers will take place from time to time until all
outstanding Old Notes have been exchanged for Exchange Notes pursuant to the
terms and conditions contained herein.
58
LEGAL MATTERS
Certain legal matters in connection with the Exchange Offer will be passed
upon for us by Hunton & Williams.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule as of June 30, 2001 and for the year then
ended included in our Annual Report on Form 10-k, as set forth in their report,
which is incorporated by reference in this prospectus and elsewhere in the
registration statement. Our financial statements and schedule for the year ended
June 30, 2001 are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
The financial statements as of June 30, 2000 and for each of the two years
in the period then ended incorporated in this Prospectus by reference to the
Annual Report on Form 10-k for the year ended June 30, 2001, have been so
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Our SEC filings are also
available to the public at the SEC's web site at http://www.sec.gov. Our common
stock is listed on the New York Stock Exchange. Our reports, proxy statements
and other information can also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
We have filed with the SEC a Registration Statement on Form S-4 (the
"Registration Statement") with respect to the Exchange Notes. This prospectus,
which is a part of the Registration Statement, omits certain information
included in the Registration Statement. Statements made in this prospectus as to
the contents of any contract, agreement or other document are only summaries and
are not complete. We refer you to these exhibits for a more complete description
of the matter involved. Each statement regarding the exhibits is qualified by
the actual documents.
We are "incorporating by reference" the documents listed below that we
have filed with the SEC, which means we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is considered to be a part of this prospectus. We incorporate by
reference (1) our Annual Report on Form 10-K for the year ended June 30, 2001,
(2) our Quarterly Report on form 10-Q for the quarter ended September 30, 2001,
(3) our Current Report on form 8-K filed on October 15, 2001, (4) our Current
Report on form 8-K filed on October 30, 2001 and (5) all documents that we file
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 until all notes have been sold.
You may request a copy of those filings, at no cost, by writing or
telephoning us at the following:
DIMON Incorporated
512 Bridge Street
Danville, Virginia 24541
(434) 792-7511
Information that we file later with the SEC and that is incorporated by
reference in this prospectus will automatically update and supersede information
contained in this prospectus as if that information were included in this
prospectus.
59
[LOGO]
DIMON INCORPORATED
OFFER FOR
ALL OUTSTANDING 9 5/8% SENIOR NOTES DUE 2011
IN EXCHANGE FOR
REGISTERED 9 5/8% SENIOR NOTES DUE 2011
_______________________________
PROSPECTUS
_______________________________
_________ ____, 2001
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
The Virginia Stock Corporation Act permits and the Amended and Restated
Articles of Incorporation of DIMON Incorporated (the "Registrant") require,
indemnification of the directors and officers of the Registrant in a variety of
circumstances, which may include liabilities under the Securities Act. Under
sections 13.1-697 and 13.1-702 of the Virginia Stock Corporation Act, a Virginia
corporation generally is authorized to indemnify its directors and officers in
civil or criminal actions if they acted in good faith and, in the case of
criminal actions, had no reasonable cause to believe that the conduct was
unlawful. The Articles of the Registrant require indemnification of directors
and officers with respect to any liability, expenses incurred by them by reason
of having been a director or officer, except in the case of willful misconduct
or a knowing violation of criminal law. The Articles of the Registrant provide
that, to the full extent, that the Virginia Stock Corporation Act permits
elimination of the liability of directors of officers, no director or officer of
the Registrant shall be liable to the Registrant or its shareholders for any
monetary damages. The Registrant may purchase insurance on behalf of directors,
officers, employees and agents that may cover liabilities under the Securities
Act.
Item 21. Exhibits and Financial Data Schedules
The following is a list of all the exhibits filed herewith or incorporated
by reference as part of the Registration Statement.
Number Description
- ------ -----------
3.1 Amended and Restated Articles of Incorporation of DIMON Incorporated,
(incorporated by reference to Appendix VII to DIMON Incorporated's
Joint Proxy Statement filed pursuant to Rule 424(b) in connection with
DIMON Incorporated's Registration Statement on Form S-4 (File No.
33-89780)).
3.2 Amended and Restated Bylaws, as amended, of DIMON Incorporated
effective February 20, 2001 (incorporated by reference to Exhibit 3 to
DIMON Incorporated's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2001).
4.1 Indenture dated as of October 30, 2001 among DIMON Incorporated, as
issuer, the Guarantors named therein and SunTrust Bank, as trustee.
(incorporated by reference to Exhibit 4.1 to DIMON Incorporated's
Quarterly Report on Form 10-Q for the quarter ended September 30,
2001).
4.2 Registration Rights Agreement, dated October 30, 2001, by and among
DIMON Incorporated, First Union Capital Securities, Inc., Deutsche Banc
Alex. Brown Inc., ING Barings Limited, acting as agent for ING Bank
N.V., and SunTrust Capital Markets, Inc. (incorporated by reference to
Exhibit 4.2 to DIMON Incorporated's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2001).
4.3 Form of Note (included in Exhibit 4.1).
5.1 Opinion of Hunton & Williams as to the legality of the securities.
12.1 Statements regarding computation of ratios.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Hunton & Williams (included in Exhibit 5.1).
24.1 Powers of Attorney (included on signature page to this Registration
Statement)
25.1 Statement of Eligibility of Trustee.
99.1 Letter of Transmittal, with respect to the Old Notes and Exchange
Notes.
99.2 Notice of Guaranteed Delivery, with respect to the Old Notes and
Exchange Notes.
99.3 Instructions to Registered Holder and/or Book-Entry Transfer Facility
Participant from Beneficial Owner.
Item 22. Undertakings
(a)The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement 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.
(b)The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other Items of the applicable form.
(c)The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (b) immediately preceding, or (ii) that purports to meet
the requirements of Sections 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment 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.
(d)The undersigned Registrant hereby undertakes:
(1)To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change in such
information in the registration statement.
(2)That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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.
(3)To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(e)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 Securities and Exchange Commission
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 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.
(f)The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(g)The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Danville, Commonwealth of
Virginia, on November 20, 2001.
DIMON Incorporated
(Registrant)
By: /s/ Brian J. Harker
__________________________________________
Brian J. Harker
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacity indicated on November 20, 2001. Each of
the undersigned officers and directors of the registrant hereby constitutes
Brian J. Harker, James A. Cooley and Thomas G. Reynolds, any of whom may act,
his true and lawful attorneys-in-fact with full power to sign for him and in his
name in the capacities indicated below and to file any and all amendments to the
registration statement filed herewith, making such changes in the registration
statement as the registrant deems appropriate, and generally to do all such
things in his name and behalf in his capacity as an officer and director to
enable the registrant to comply with the provisions of the Securities Act of
1933 and all requirements of the Securities and Exchange Commission.
Signature Title
--------- -----
/s/ Brian J. Harker
- -----------------------------------------
Brian J. Harker President and Chief Executive Officer
(Principal Executive Officer)
/s/ James A. Cooley
- -----------------------------------------
James A. Cooley Senior Vice President - Chief Financial Officer
(Principal Financial Officer)
/s/ Thomas G. Reynolds
- -----------------------------------------
Thomas G. Reynolds Vice President - Controller
(Principal Accounting Officer)
/s/ Joseph L. Lanier, Jr.
- -----------------------------------------
Joseph L. Lanier, Jr. Director
/s/ Albert C. Monk III
- -----------------------------------------
Albert C. Monk III Director
/s/ Thomas F. Keller
- -----------------------------------------
Thomas F. Keller Director
/s/ James E. Johnson, Jr.
- -----------------------------------------
James E. Johnson, Jr. Director
/s/ Norman A. Scher
- -----------------------------------------
Norman A. Scher Director
/s/ Henry F. Frigon
- -----------------------------------------
Henry F. Frigon Director
/s/ John M. Hines
- -----------------------------------------
John M. Hines Director
/s/ R. Stuart Dickson
- -----------------------------------------
R. Stuart Dickson Director
/s/ Martin R. Wade III
- -----------------------------------------
Martin R. Wade III Director