CONFORMED COPY
AGREEMENT WITH SHAREHOLDERS
This Agreement with Shareholders is made and entered into as of May 7,
1999, by and between SMITHFIELD FOODS, INC., a Virginia corporation (the
"Company"), and each of JEFFREY S. MATTHEWS, CARROLL M. BAGGETT and JAMES O.
MATTHEWS (each an "Investor" and collectively the "Investors").
W I T N E S S E T H :
WHEREAS, the Company, the Investors and certain entities wholly-owned by
the Investors are parties to an Acquisition Agreement dated as of May 3, 1999
(the "Acquisition Agreement"); and
WHEREAS, upon the closing of the transactions contemplated by the
Acquisition Agreement, such Investors will then respectively hold 2,185,333,
2,185,333 and 2,185,334 shares of Common Stock (as defined below); and
WHEREAS, pursuant to the Acquisition Agreement and simultaneously with the
execution of this Agreement, the Company and the Investors are entering into a
Registration Rights Agreement and an Escrow Agreement;
NOW, THEREFORE, for good and valuable consideration, the delivery and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following capitalized terms
shall have the meanings ascribed to them below:
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, controls, is controlled by or is under common control
with such person. For purposes of this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting stock, by contract or otherwise.
"Common Stock" means the Common Stock, par value $.50 per share, of
the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Lockup Shares" means as to each Investor (i) initially, 700,000
shares of Common Stock issued to such Investor upon the closing under the
Acquisition Agreement on the date hereof, and (ii) upon the making of the
post-closing adjustments required by the Acquisition Agreement, such 700,000
shares (a) plus one-half the number of shares of Common Stock additionally
issued by the Company to such Investor or (b) minus one-half the number of
shares of Common Stock returned by such Investor or the escrow agent to the
Company, as the case may be, pursuant to such adjustments.
"Person" means an individual, partnership, joint venture,
corporation, trust, unincorporated organization or government or any department
or agency thereof.
"Voting Securities" means any shares of any class of securities
entitled to, or that may be entitled to, vote, including without limitation the
Common Stock.
ARTICLE II
AGREEMENTS
2.1 Standstill Agreement. None of the Investors will, during the one-year period
subsequent to the date hereof, without the written consent of the Company,
singly or as part of a "partnership, limited partnership, syndicate or other
group" (within the meaning of Section 13(d)(3) of the Exchange Act), directly or
indirectly, individually, together with any other Investor, through one or more
Affiliates, associates or intermediaries or otherwise:
(a) make or in any way participate, directly or indirectly, in the making of any
"solicitation" of "proxies" (as such terms are defined or used in Regulation 14A
under the Exchange Act) to vote Voting Securities at any meeting of Company
shareholders or become a "participant" in any "election contest" (as such terms
are defined or used in Rule 14a-11 under the Exchange Act) with respect to the
Company, or initiate, propose or otherwise solicit holders of Voting Securities
for the approval of one or more shareholder proposals with respect to the
Company as described in Rule 14a-8 under the Exchange Act;
(b) oppose, or form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) opposing, any proposal
presented by Company management at any meeting of Company shareholders; or
(c) acquire or substantially affect the control of the Company, or directly or
indirectly participate in the formation of any "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) which seeks to acquire beneficial
ownership of more than 15% of the outstanding shares of any class of Voting
Securities of the Company or to acquire or substantially affect control of the
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Company; otherwise act, directly or indirectly, alone or in concert with others,
to seek to control the Board of Directors of the Company; or solicit, seek to
effect, negotiate with or provide any information to any other party with
respect to, or make any statement or proposal, whether written or oral, to the
Board of Directors of the Company or any director or officer of the Company, or
otherwise make any public announcement of any proposal, with respect to any form
of business combination transaction involving the Company, including, without
limitation, a merger, exchange offer or sale of the Company's assets or
instigate any third party to do any of the foregoing.
2.2 Restrictions on Transfer of Common Stock. During the one-year period
subsequent to the date hereof, without the written consent of the Company, which
shall not be unreasonably withheld:
(a) no Investor will, individually or together with any other Investor, sell,
transfer, donate, pledge, hypothecate, encumber, or otherwise agree or arrange
to transfer, to one Person or "group" (within the meaning of Section 13(d)(3) of
the Exchange Act) shares of Common Stock aggregating 5% or more of the
outstanding Common Stock; and
(b) each Investor will hold his or her Lockup Shares without sale, transfer,
donation, pledge, hypothecation, encumbrance or any other agreement or
arrangement of transfer, and without any exercise of any registration rights
with respect thereto;
provided, however, that any Investor may pledge any or all of his or her shares
of Common Stock (including Lockup Shares) to a financial institution or
investment bank in connection with obtaining a loan or effecting a "collar"
transaction or other substantially similar derivative security or other such
transaction; and provided further, it is understood that simply placing such
shares in "street name" or the name of a nominee would not violate this
provision, provided beneficial ownership remains with such Investor or
Investors.
ARTICLE III
MISCELLANEOUS
3.1 Amendments and Waivers. This Agreement may be amended only by the written
consent of all of the parties hereto.
3.2 Successors, Assigns and Transferees. No rights under this Agreement may be
assigned or transferred to any Person, other than with the prior written consent
of all of the parties hereto.
3.3 Integration. This Agreement, the Acquisition Agreement, the Escrow
Agreement, the Registration Rights Agreement and any other documents referred to
herein or delivered pursuant hereto that form a part hereof contain the entire
understanding of the parties hereto with respect to its subject matter. There
are no restrictions, agreements, promises, rights, representations, warranties,
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covenants or undertakings with respect to the subject matter hereof other than
those expressly set forth herein. This Agreement supersedes all prior agreements
and understandings of the parties hereto with respect to its subject matter.
3.4 Notices. All notices and other communications provided for hereunder shall
be in writing and shall be sent by first class mail, telex, telecopier or hand
delivery.
if to the Company, to:
Smithfield Foods, Inc.
200 Commerce Street
Smithfield, Virginia 23430
Attention: Secretary
Telecopier: (757) 365-3017
Telephone Confirmation: (757) 365-3004
with copies to:
McGuire, Woods, Battle & Boothe LLP
One James Center
901 E. Cary Street
Richmond, VA 23219
Attention: Sam Young Garrett
Telecopier: (804) 775-1061
Telephone Confirmation: (804) 775-4384
If to any of the Investors, to their respective addresses, initially
those set forth below:
Jeffrey S. Matthews
Carroll M. Baggett
James O. Matthews
Post Office Box 707
Warsaw, North Carolina 28398
with a copy to:
Ward and Smith, P.A.
1001 College Court
P. O. Box 867
New Bern, North Carolina 28563-0867
Attention: J. Troy Smith, Jr.
Telecopier: (252) 636-2121
Telephone Confirmation: (252) 633-1000
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All such notices and communications shall be deemed to have been given or
made (i) when delivered by hand or by Federal Express or any other nationally
recognized courier service, (ii) seven days after being deposited in the mail,
postage prepaid, (iii) when telexed answer-back received or (iv) when
telecopied, receipt acknowledged.
3.5 Termination. This Agreement will terminate upon the first anniversary of the
date hereof.
3.6 Descriptive Headings. The headings in this Agreement are for convenience of
reference only and shall not limit, expand or otherwise affect the meaning of
the terms contained herein.
3.7 Severability. In the event that one or more of the provisions, paragraphs,
words, clauses, phrases or sentences contained herein, or the application
thereof in any circumstances, is held invalid, illegal or unenforceable in any
respect for any reason, the validity, legality and enforceability of any such
provision, paragraph, word, clause, phrase or sentence in every other respect
and of the remaining provisions, paragraphs, words, clauses, phrases or
sentences hereof shall not be in any way impaired, it being intended that all
rights, powers and privileges of the Company and the Investors shall be
enforceable to the fullest extent permitted by law.
3.8 Governing Law. This Agreement shall be governed by the internal law of the
Commonwealth of Virginia, without regard to principles of conflicts of law.
3.9 Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same instrument. Any party's
execution of this Agreement may be evidenced by physical delivery or by
telecopier, facsimile or other written communication thereof to the other
parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
SMITHFIELD FOODS, INC.
By: /s/ Aaron D. Trub
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Name: Aaron D. Trub
Title: Vice President, CFO & Secretary
THE INVESTORS
/s/ Jeffrey S. Matthews
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Jeffrey S. Matthews
/s/ Carroll M. Baggett
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Carroll M. Baggett
/s/ James O. Matthews
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James O. Matthews