LORILLARD TOBACCO
COMPANY,
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.,
FIRST SUPPLEMENTAL
INDENTURE
8.125% Senior Notes due
June 23, 2019
Supplemental to Indenture dated
June 23, 2009
THIS
FIRST SUPPLEMENTAL INDENTURE (the “First Supplemental
Indenture”) is made the 23rd day of June, 2009, among
LORILLARD TOBACCO COMPANY, a corporation duly incorporated and
existing under the laws of Delaware and having its principal
executive office at 714 Green Valley Road, Greensboro, North
Carolina 27408 (the “Company”), LORILLARD, INC., a
corporation duly incorporated and existing under the laws of
Delaware and having its principal executive office at 714 Green
Valley Road, Greensboro, North Carolina 27408 (the
“Guarantor”) and THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., a national banking association, as Trustee (the
“Trustee”).
WHEREAS,
the Company entered into an Indenture, dated June 23, 2009
with the Trustee (the “Original Indenture,” and
together with this First Supplemental Indenture, referred to herein
as the “Indenture”) (all capitalized terms used in this
First Supplemental Indenture and not otherwise defined herein have
the meanings assigned to such terms in the Original Indenture), for
the purposes of issuing its Securities, evidencing its senior
unsecured indebtedness, unlimited as to principal amount, to bear
such rates of interest, to mature at such time or times, to be
issued in one or more series and to have such other provisions as
authorized by or pursuant to the authority granted in one or more
resolutions of the Board of Directors of the Company;
and
WHEREAS,
Section 901 of the Original Indenture provides that without
the consent of the Holders of the Securities of any series issued
under the Original Indenture, the Company, when authorized by a
Board Resolution, and the Trustee may, in certain circumstances,
enter into one or more indentures supplemental to the Original
Indenture; and
WHEREAS,
the Company proposes to issue a series of Securities designated as
its 8.125% Senior Notes due June 23, 2019, the terms of which
shall be set forth in and in the form of Exhibit A hereto,
or determined in the manner provided in, an Officers’
Certificate of the Company as provided in Section 301 of the
Original Indenture (such senior notes being referred to herein as
the “Notes” and all references to Securities in the
Original Indenture shall be deemed to refer also to the Notes
unless the context otherwise provides) which such Notes shall be
guaranteed by the Guarantor in the form of Exhibit B
hereto; and
WHEREAS,
the entry into this First Supplemental Indenture by the parties
hereto is in all respects authorized by the provisions of the
Original Indenture; and
WHEREAS,
all conditions necessary to authorize the execution and delivery of
this First Supplemental Indenture and to make it a valid and
binding obligation of the Company have been done or performed;
and
NOW,
THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For
and in consideration of the premises and the purchase of the Notes
by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Notes, as
follows:
Section 1. The Original Indenture is hereby amended
solely with respect to the Notes as follows:
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(A)
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Definitions . By amending Section 101 to
insert the following definitions in their entirety in the
appropriate alphabetical order as follows:
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“Change
of Control” means the occurrence of any of the
following:
(1) the
direct or indirect sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one
or more series of related transactions, of all or substantially all
of the Company’s assets and the assets of its Subsidiaries,
taken as a whole, to any “person,” other than to
Lorillard, Inc. or one of its Subsidiaries;
(2) the
consummation of any transaction (including, without limitation, any
merger or consolidation) the result of which is that any person
becomes the beneficial owner (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, of more than
50% of the Company’s outstanding Voting Stock or other Voting
Stock into which the Company’s Voting Stock is reclassified,
consolidated, exchanged or changed, measured by voting power rather
than the number of shares;
(3) the
Company consolidates with, or merges with or into, any person, or
any person consolidates with, or merges with or into, the Company,
in any such event pursuant to a transaction in which any of the
Company’s outstanding Voting Stock is converted into or
exchanged for cash, securities or other property, other than any
such transaction where the shares of the Company’s Voting
Stock outstanding immediately prior to such transaction constitute,
or are converted into or exchanged for, a majority of the Voting
Stock of the surviving person or any direct or indirect parent
company of the surviving person immediately after giving effect to
such transaction;
(4) the
first day on which a majority of the members of the Company’s
Board of Directors are not Continuing Directors; or
(5) the
adoption of a plan relating to the Company’s liquidation or
dissolution (other than the Company’s liquidation into a
newly formed holding company).
Notwithstanding
the foregoing, a transaction will not be deemed to involve a Change
of Control if (i) the Company becomes a direct or indirect
wholly-owned subsidiary of a holding company and (ii) (A) the
direct or indirect holders of the Voting Stock of such holding
company immediately following that transaction are substantially
the same as the holders of the Company’s Voting Stock
immediately prior to that transaction or (B) immediately following
that transaction no person (other than a holding
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company) is the
beneficial owner, directly or indirectly, of more than 50% of the
Voting Stock of such holding company.
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“Change of Control Triggering
Event” means the occurrence of both (1) a Change of
Control and (2) a Ratings Event.
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“Continuing Directors”
means, as of any date of determination, any member of the
Company’s Board of Directors who (1) was a member of
such Board of Directors on the Issue Date of the Notes or
(2) was nominated for election, elected or appointed to such
Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at
the time of such nomination, election or appointment (either by a
specific vote or by approval of the Company’s proxy statement
in which such member was named a nominee for election as a
director, without objection to such nomination).
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“Investment Grade” means
a rating equal to or higher than Baa3 (or the equivalent) by
Moody’s; a rating equal to or higher than BBB- (or the
equivalent) by S&P; and the equivalent investment grade credit
rating from any Substitute Rating Agency or Rating Agencies
selected by the Company.
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“Issue Date” means
June 23, 2009.
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“Moody’s” means
Moody’s Investors Service, Inc., a subsidiary of
Moody’s Corporation, and its successors.
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“person” has the meaning
given thereto in Section 13(d)(3) of the Exchange
Act.
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“Rating Agencies” means
(1) each of Moody’s and S&P; and (2) if
Moody’s or S&P ceases to rate the Notes or fails to make
a rating of the Notes publicly available for reasons outside of the
Company’s control, a Substitute Rating Agency.
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“Ratings Event” means
the Notes cease to be rated Investment Grade by each of the Rating
Agencies on any day within the 60-day period (which 60-day period
will be extended so long as the rating of the Notes is under
publicly announced consideration for a possible downgrade by any of
the Rating Agencies) after the earlier of (1) the occurrence
of a Change of Control and (2) public notice of the occurrence
of a Change of Control or the Company’s intention to effect a
Change of Control.
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“S&P” means Standard
& Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors.
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“Substitute Rating
Agency” means a “nationally recognized statistical
rating organization” registered under Section 15E of the
Exchange Act for
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the classes of
credit ratings described in clauses (i) through (v) of
Section 3(a)(62)(B) of the Exchange Act selected by us (as
certified by our Chief Executive Officer, Chief Financial Officer
or Treasurer) as a replacement agency for Moody’s or S&P,
or both of them, as the case may be.
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“Voting Stock” means,
with respect to any specified “person” (as that term is
used in Section 13(d)(3) of the Exchange Act) as of any date,
the capital stock of such person that is at the time entitled to
vote generally in the election of the board of directors of such
person.
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(B)
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Events of Default
. By replacing
Sections 501 and 502 of the Original Indenture as
follows:
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SECTION 501 Events of
Default.
“
Event of Default ” wherever used herein with respect
to the Notes means any one of the following events and such other
events as may be established with respect to the Notes as
contemplated by Section 301 (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary
or be effected by operation of law pursuant to any judgment, decree
or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the
payment of any installment of interest on the Notes when it becomes
due and payable, and continuance of such default for a period of
30 days; or
(2) default in the
payment of principal of, or premium, if any, on the Notes at
Maturity; or
(3) default in the
performance of, or breach of, any covenant or warranty of the
Company in respect of the Notes contained in the Indenture, in this
First Supplemental Indenture or in the Notes (other than a covenant
or warranty a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with) and continuance
of such default or breach for a period of 90 days after there
has been given, by registered or certified mail, to the Company by
the Trustee for the Notes or to the Company and such Trustee by the
Holders of at least 25% in principal amount of the Notes, a written
notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a “Notice of
Default” hereunder; or
(4) the Company
shall commence any case or proceeding seeking to have an order for
relief entered on its behalf as debtor or to adjudicate it as
bankrupt or insolvent or seeking reorganization, liquidation,
dissolution, winding-up, arrangement, composition or readjustment
of its debts or any other relief under any bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement, composition,
readjustment of debt or
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other similar
act or law of any jurisdiction, domestic or foreign, now or
hereafter existing; or the Company shall apply for a receiver,
custodian or trustee (other than any trustee appointed as a
mortgagee or secured party in connection with the issuance of
indebtedness for borrowed money of the Company) of it or for all or
a substantial part of its property; or the Company shall make a
general assignment for the benefit of creditors; or the Company
shall take any corporate action in furtherance of any of the
foregoing; or
(5) an involuntary
case or other proceeding shall be commenced against the Company
with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect seeking the
appointment of a trustee, receiver, liquidator, custodian or
similar official of it or any substantial part of its property; and
such case or other proceeding (A) results in the entry of an
order for relief or a similar order against it or (B) shall
continue unstayed and in effect for a period of 60 consecutive
days; or
(6) the Guarantor
shall commence any case or proceeding seeking to have an order for
relief entered on its behalf as debtor or to adjudicate it as
bankrupt or insolvent or seeking reorganization, liquidation,
dissolution, winding-up, arrangement, composition or readjustment
of its debts or any other relief under any bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement, composition,
readjustment of debt or other similar act or law of any
jurisdiction, domestic or foreign, now or hereafter existing; or
the Guarantor shall apply for a receiver, custodian or trustee
(other than any trustee appointed as a mortgagee or secured party
in connection with the issuance of indebtedness for borrowed money
of the Guarantor) of it or for all or a substantial part of its
property; or the Guarantor shall make a general assignment for the
benefit of creditors; or the Guarantor shall take any corporate
action in furtherance of any of the foregoing; or
(7) an involuntary
case or other proceeding shall be commenced against the Guarantor
with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect seeking the
appointment of a trustee, receiver, liquidator, custodian or
similar official of it or any substantial part of its property; and
such case or other proceeding (a) results in the entry of an
order for relief or a similar order against it or (b) shall
continue unstayed and in effect for a period of 60 consecutive
days; or
(8) the guarantee
of the Notes by the Guarantor is determined to be unenforceable or
invalid or shall for any reason cease to be in full force and
effect except as permitted by the Indenture and the Guarantee, or
the Guarantor repudiates its obligations under such
guarantee.
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SECTION 502 Acceleration of
Maturity; Rescission and Annulment.
If an Event of
Default with respect to any particular series of Securities occurs
and is continuing (other than an Event of Default described in
Section 501(4) or 501(5)), then and in every such case either
the Trustee for the Securities of such series or the Holders of not
less than 25% in principal amount of the Outstanding Securities of
that series may declare the entire principal amount (or, in the
case of (i) OID Securities, such lesser amount as may be
provided for in the terms of that series or (ii) Indexed
Securities, the amount determined in accordance with the specified
terms of those Securities) of all the Securities of that series to
be due and payable immediately, by a notice in writing to the
Company (and to such Trustee if given by Holders), and upon any
such declaration of acceleration such principal or such lesser
amount, as the case may be, together with accrued interest and all
other amounts owing hereunder, shall become immediately due and
payable, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived.
If any Event of
Default specified in Section 501(4), 501(5), 501(7) or 501(8)
occurs with respect to the Company, all of the unpaid principal
amount (or, if the Securities of any series then outstanding are
(i) OID Securities, such lesser amount as may be provided for
in the terms of that series or (ii) Indexed Securities, the
amount determined in accordance with the specified terms of those
Securities) and accrued interest on all Securities of each series
then Outstanding shall ipso facto become and be immediately
due and payable without any declaration or other act by the Trustee
or any Holder.
Notwithstanding
anything herein to the contrary, to the extent elected by the
Company, the sole remedy for an Event of Default relating to the
failure by the Company to comply with the obligation set forth in
Section 704 will, for the first 120 days after the
occurrence of such an Event of Default, consist exclusively of the
right for Holders of each series of Securities to receive
additional interest on the Securities of that particular series
equal to 0.25% per annum of the principal amount of the Securities
of such series. If the Company so elects, such additional interest
will be payable in the same manner and on the same dates as the
stated Interest Payment Dates on the Securities of that particular
series. The additional interest will accrue on all outstanding
Securities from and including the date on which such Event of
Default first occurs to, but not including, the 120th day
thereafter (or such earlier date on which such Event of Default
shall have been cured or waived by Holders as provided in
Section 513). On such 120th day after such Event of Default
(if the Event of Default relating to such obligation is not cured
or waived by Holders as provided in Section 513 prior to such
120th day), such additional interest will cease to accrue and the
Securities will be subject to acceleration as provided above. The
provisions of this paragraph will not affect the rights of Holders
in the
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event of the
occurrence of any other Event of Default. In the event the Company
does not elect to pay the additional interest upon such Event of
Default in accordance with this paragraph, the Securities will be
subject to acceleration as provided above.
In order to
elect to pay the additional interest as the sole remedy during the
first 120 days after the occurrence of an Event of Default
relating to the failure by the Company to comply with the
obligation set forth in Section 704 in accordance with the
immediately preceding paragraph, the Company must notify all
Holders of each series of Securities, the Trustee for the
Securities of such series and the Paying Agent for the Securities
of such series of such election by delivering to the Trustee an
Officers’ Certificate as provided below on or before the
close of business on the date on which such Event of Default first
occurs. Upon the Company’s failure to deliver such
Officers’ Certificate or pay the additional interest
specified in the immediately preceding paragraph, the Securities
will be subject to acceleration as provided above.
If the Company
elects to pay additional interest, the Company shall deliver to the
Trustee an Officers’ Certificate to that effect stating that
(i) the amount of such additional interest that is payable and
(ii) the date on which such additional interest is payable.
Unless and until a Responsible Officer of the Trustee receives such
certificate, the Trustee may assume without inquiry that no
additional interest is payable. If the Company has paid additional
interest directly to the Persons entitled to it, the Company shall
deliver to the Trustee an Officers’ Certificate setting forth
the particulars of such payment.
At any time
after such a declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained
by the Trustee for the Securities of any series as hereinafter in
this Article provided, the Holders of a majority in principal
amount of the Outstanding Securities of that series, by written
notice to the Company and such Trustee, may rescind and annul such
declaration and its consequences if:
(1) the
Company has paid or deposited with such Trustee a sum sufficient to
pay in the currency or currency unit in which the Securities of
such series are payable (except as otherwise specified pursuant to
Section 301 for the Securities of such series and except as
provided in Section 311(c)):
(A) all overdue
interest, if any, on all Securities of that series;
(B) the principal
of, and premium, if any, on any Securities of that series which
have become due otherwise than by such declaration of acceleration
and interest thereon from the date such principal became
due
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at a rate per
annum equal to the rate borne by the Securities of such series (or,
in the case of (i) OID Securities, the Securities’ Yield
to Maturity or (ii) Indexed Securities, the rate determined in
accordance with the specified terms of those Securities), to the
extent that the payment of such interest shall be legally
enforceable;
(C) to the extent
that payment of such interest is lawful, interest upon overdue
interest at a rate per annum equal to the rate borne by the
Securities of such series (or, in the case of (i) OID
Securities, the Securities’ Yield to Maturity or
(ii) Indexed Securities, the rate determined in accordance
with the specified terms of those Securities); and
(D) all sums paid
or advanced by such Trustee hereunder and the reasonable
compensation, expenses, disbursements and advances of such Trustee,
its agents and counsel and all other amounts due to such Trustee
under Section 607;
(2) all
Events of Default with respect to the Securities of such series,
other than the nonpayment of the principal of Securities of that
series which has become due solely by such acceleration, have been
cured or waived as provided in Section 513.
No such
rescission shall affect any subsequent default or impair any right
consequent thereon.
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(C)
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Limitation on Liens
. By replacing Section
1007(b) of the Original Indenture in its entirety as
follows:
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(b) The
Company and/or any Subsidiary may create, assume or incur, or
suffer to be created, assumed or incurred, liens which would
otherwise be prohibited by Subsection (a) of this
Section 1007, provided that the indebtedness secured thereby,
plus the aggregate value of the Sale and Leaseback Transactions
permitted by the provisions of Subsection (b) of
Section 1008, does not at the time exceed 15% of Consolidated
Net Tangible Assets.
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(D)
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Sale and Leaseback
Transactions . By replacing Section 1008(b) of
the Original Indenture in its entirety as follows:
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(b) The
Company or a Subsidiary may enter into a Sale and Leaseback
Transaction which would otherwise be prohibited by Subsection
(a) of this Section 1008, provided that the value
thereof plus the aggregate indebtedness permitted to be secured
under the provisions of paragraph (b) of Section 1007 does not
at the time exceed 15% of Consolidated Net Tangible
Assets.
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(E)
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Interest Rate Adjustment
. By adding
Section 1010 to the Original Indenture in its entirety as
follows:
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Section 1010 . Interest Rate Adjustment
(a) The
interest rate payable on the Notes shall be subject to adjustments
from time to time if either Moody’s or S&P or, in either
case, any Substitute Rating Agency thereof downgrades (or
subsequently upgrades) the debt rating assigned to the Notes, in
the manner described in this Section 1010.
(b) If the
rating from Moody’s (or any Substitute Rating Agency thereof)
of the Notes is decreased to a rating set forth in the immediately
following table, the interest rate on the Notes shall increase such
that it shall equal the interest rate payable on the Notes on their
Issue Date plus the percentage set forth opposite the ratings from
the table below:
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Percentage
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Moody’s
Rating *
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Points
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0.25
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0.50
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0.75
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1.00
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