AMENDED AND RESTATED NOTE EXCHANGE AGREEMENT
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AND NOTE AMENDMENT
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This AMENDED AND RESTATED NOTE EXCHANGE AGREEMENT AND NOTE AMENDMENT
(the "Agreement"), is made and entered into as of March 16, 2001, by and among
Philip Morris Companies Inc., a Virginia corporation ("PM"), PM Holdings of
Delaware LLC, a Delaware limited liability company ("LLC"), and Kraft Foods
North America, Inc. (formerly Kraft Foods, Inc.), a Delaware corporation
("KFNA").
RECITALS
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WHEREAS, KFNA, as successor in interest to Kraft, Inc., has issued to
PM (i) a promissory note dated April 1, 1989, and amended March 30, 1999, in the
amount of $5,000,000,000 (the "KFNA $5 Billion Note"), (ii) a promissory note
dated December 1, 2000, in the amount of $11,000,000,000 (the "KFNA $11 Billion
Note"), and (iii) a promissory note dated December 11, 2000, in the amount of
$4,000,000,000 (the "KFNA $4 Billion Note" and, collectively with the KFNA $5
Billion Note and the KFNA $11 Billion Note, the "KFNA Notes").
WHEREAS, pursuant to the Note Exchange Agreement, dated as of December
15, 2000, among PM, LLC and KFNA (the "Note Exchange Agreement"), PM assigned
and transferred its rights under the KFNA Notes to LLC, its wholly owned
subsidiary, in exchange for the issuance by LLC to PM of (i) a promissory note
dated December 15, 2000 in the amount of $5,000,000,000 (the "LLC $5 Billion
Note"), (ii) a promissory note dated December 15, 2000 in the amount of
$11,000,000,000 (the "LLC $11 Billion Note") and (iii) a promissory note dated
December 15, 2000 in the amount of $4,000,000,000 (the "LLC $4 Billion Note"
and, collectively with the LLC $5 Billion Note and the LLC $11 Billion Note, the
"LLC Notes").
WHEREAS, KFNA consented to such assignment and transfer of the KFNA
Notes by PM to LLC and acknowledged LLC as the assignee of PM with respect to
the KFNA Notes and to make the other agreements set forth herein.
WHEREAS, PM, LLC and KFNA wish to amend certain provisions of the KFNA
Notes and to amend and restate the Note Exchange Agreement.
NOW, THEREFORE, in consideration of the Recitals and of the covenants
and agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby agreed
that:
1. Exchange. (a) PM hereby agrees to assign, and LLC hereby agrees to
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accept such assignment, effective for all purposes as of December 15, 2000 (the
"Exchange Date"), of PM's rights under the KFNA Notes, including without
limitation PM's right to receive principal and interest payments thereunder;
provided that all interest accruing under the KFNA Notes up to but not including
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the Exchange Date shall be for the account of PM and LLC shall be obligated,
upon receipt from KFNA, to pay such amount to PM.
(b) LLC agrees to issue the LLC Notes to PM effective as
of the Exchange Date.
2. Consent and Acknowledgment of KFNA. KFNA hereby consents
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to the assignment of the KFNA Notes by PM to LLC and acknowledges LLC's rights
under the KFNA Notes as the assignee of PM.
3. Mandatory Prepayment of Kraft Notes.
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(a) The parties agree that until the KFNA Notes have
been repaid in full, an amount equal to the net proceeds of any external
financings of any kind conducted by KFNA or Kraft Foods Inc., whether through
the issuance of debt or equity (the "Prepayment Amount"), shall be payable by
KFNA to LLC or its assignees as a mandatory prepayment of principal of the KFNA
Notes in the priority set forth in Section 3(b) immediately upon receipt of such
Prepayment Amount by KFNA or Kraft Foods Inc. Notwithstanding the foregoing, no
prepayment of the KFNA Notes shall be required in respect of (i) any short-term
debt, (ii) any compensation-related equity issuance, (iii) the portion of the
net proceeds of any external long-term debt financings issued after the date
hereof ("New Debt") up to an amount equal to the portion of the aggregate
principal amount of external long-term debt of Kraft Foods Inc. and its
consolidated subsidiaries outstanding on the date hereof ("Existing Debt")
having scheduled maturities within the same calendar year as such New Debt
issuance, or (iv) New Debt issued within the same calendar year as maturing New
Debt up to the amount such maturing New Debt was used to refinance Existing Debt
pursuant to clause (iii) above. In the event multi-tranche New Debt is issued
and only a portion of the proceeds thereof is used to refinance maturing
Existing Debt pursuant to clause (iii) above or New Debt pursuant to clause (iv)
above, such portion shall be deemed to have matured first, on the earliest
maturity date of such refinancing and thereafter, any balance remaining shall be
deemed to have matured on the next earliest maturity date of such refinancing
until such portion is fully allocated.
(b) In the event of a mandatory prepayment pursuant to
Section 3(a), the Prepayment Amount shall be applied toward the prepayment of
the KFNA Notes in the following order of priority:
first, to the prepayment of the KFNA $11 Billion Note;
second, if the KFNA $11 Billion Note has been paid in full,
the balance shall be applied to the prepayment of the KFNA $4
Billion Note; and
third, if the KFNA $4 Billion Note has been paid in full, the
balance shall be applied to the prepayment of the KFNA $5
Billion Note.
(c) The unpaid principal balance of the KFNA Notes,
together with any accrued but unpaid interest on the KFNA Notes, shall become
immediately due and payable, without presentment, demand or other formalities of
any kind, all of which are hereby expressly waived by KFNA, on the date on which
PM ceases to control the vote, directly or indirectly, of shares representing
more than 50% of the aggregate voting power of all the voting stock of KFNA.
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4. Mandatory Prepayment of LLC Notes.
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(a) LLC and PM agree that until the LLC Notes have been
prepaid in full, an amount equal to the Prepayment Amount received by LLC from
KFNA pursuant to Section 3(a) shall be payable by LLC to PM as a mandatory
prepayment of principal of the LLC Notes in the priority set forth in Section
4(b) immediately upon receipt of such payment by LLC.
(b) In the event of a mandatory prepayment pursuant to
Section 4(a), such prepayment shall be applied toward the prepayment of the LLC
Notes in the following order of priority:
first, to the prepayment of the LLC $11 Billion Note;
second, if the LLC $11 Billion Note has been paid in full, the
balance shall be applied to the prepayment of the LLC $4 Billion
Note; and
third, if the LLC $4 Billion Note has been paid in full, the
balance shall be applied to the prepayment of the LLC $5 Billion
Note.
(c) The unpaid principal balance of the LLC Notes,
together with any accrued but unpaid interest on the LLC Notes, shall become
immediately due and payable, without presentment, demand or other formalities of
any kind, all of which are hereby expressly waived by LLC, on the date on which
PM ceases to control the vote, directly or indirectly, of shares representing
more than 50% of the aggregate voting power of all the voting stock of Kraft
Foods Inc.
5. Conflicts. The Kraft Notes and the LLC Notes are governed by
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the provisions of this Agreement. In the event of a conflict, the provisions of
this Agreement shall prevail.
6. Governing Law. The substantive laws of the Commonwealth of
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Virginia shall govern the validity, construction, enforcement and interpretation
of this Agreement. In an event of a dispute involving this Agreement, the
parties irrevocably agree that venue of such dispute shall lie exclusively in
any court of competent jurisdiction in the City of Richmond, Virginia.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed in counterparts as of the day and year first above written.
PHILIP MORRIS COMPANIES INC.
By: /s/ Nancy J. De Lisi
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Name: Nancy J. De Lisi
Title: Vice President Finance and Treasurer
PM HOLDINGS OF DELAWARE LLC
By: /s/ Nancy J. De Lisi
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Name: Nancy J. De Lisi
Title: Manager
KRAFT FOODS NORTH AMERICA, INC.
By: /s/ Betsy D. Holden
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Name: Betsy D. Holden
Title: President and
Chief Executive Officer
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Note Exchange Agreement and Note Amendment - Philip Morris Cos. Inc. and Kraft Foods North America Inc.
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