Proxy Statement
Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
INTERNATIONAL HOME FOODS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which the transaction applies:
Common Stock, par value $.01 per share, of International Home Foods,
Inc.
(2) Aggregate number of securities to which transaction applies: 85,346,051
(representing the number of shares of International Home Foods, Inc.
common stock and stock options outstanding as of May 31, 2000)
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
The filing fee of $352,582 was calculated pursuant to Exchange Act Rule
0-11(c)(1) by multiplying 1/50th of 1% by the value of the
International Home Foods common stock to be received by ConAgra, Inc.
in the transaction. The per unit price of $20.656 was calculated
pursuant to Rule 0-11(c) and (a)(4) based on the average trading price
of common stock of International Home Foods, Inc. on June 23, 2000.
(4) Proposed maximum aggregate value of transaction: $1,762,908,030
(5) Total fee paid: $352,582
[ ] Fee paid previously with preliminary materials.
[X] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: $217,563
(2) Form, Schedule or Registration Statement No.: S-4
(3) Filing Party: ConAgra, Inc.
(4) Date Filed: June 30, 2000
<PAGE>
Subject to Completion
[International Home Foods Logo]
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
TO THE STOCKHOLDERS OF INTERNATIONAL HOME FOODS
The board of directors of International Home Foods, Inc. has approved a
merger with ConAgra, Inc. We believe the merger with ConAgra, one of the world's
largest food companies, is advisable and in the best interests of the
International Home Foods stockholders.
In the merger, you will receive a targeted value of $22.00 per share of
your International Home Foods common stock, half of which will be paid in cash
and half of which will be paid in ConAgra common stock. The number of shares of
ConAgra common stock you will receive is based on an exchange ratio that is
subject to limited adjustment and is initially established at .55 of a share of
ConAgra common stock per each share of your International Home Foods common
stock. Adjustments to the exchange ratio are subject to a "collar" that adjusts
based on the average closing price of ConAgra common stock for the ten trading
days ending on the fifth trading day prior to the closing of the merger. The
"collar" provides an adjustment limit of between .50 and .61111 of a share of
ConAgra common stock with the exchange ratio being .61111 if the average closing
price of ConAgra common stock is $18.00 or less and .50 if the average closing
price is $22.00 or more.
ConAgra and International Home Foods common stock are listed on the New
York Stock Exchange under the trading symbols "CAG" and "IHF," respectively. On
__________, 2000, the last reported trading price of ConAgra common stock was
$_____ and the last reported trading price of International Home Foods common
stock was $_____.
This document provides you with detailed information about the proposed
merger, including how the exchange ratio will be used to compute the number of
ConAgra shares you will receive in the merger. The actual exchange ratio will
not be known until shortly before the merger occurs. You may call 1-8__-___-____
after ___________, 2000 during normal business hours to obtain the expected
exchange ratio.
The merger requires the approval of the International Home Foods
stockholders. Therefore, we have scheduled a special meeting of the
International Home Foods stockholders on ____________, 2000 to vote on the
merger.
Whether or not you plan to attend the meeting, please take the time to
complete and mail the enclosed proxy card to International Home Foods. Your vote
is very important.
This document is the proxy statement of International Home Foods for its
special meeting and the prospectus of ConAgra for the ConAgra common stock to be
issued in the merger.
In addition, you may obtain information about International Home Foods and
ConAgra from documents that we have previously filed with the Securities and
Exchange Commission. Please see "Where You Can Find More Information" on page
__. We encourage you to read the entire document carefully.
C. Dean Metropoulos
Chairman of the Board and Chief Executive Officer
International Home Foods, Inc.
See "Risk Factors" beginning on page ___ for a discussion of certain risks
to be considered in connection with the proposed merger.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
This proxy statement/prospectus is dated ___________, 2000 and is first being
mailed to stockholders on ____________, 2000.
<PAGE>
International Home Foods, Inc.
1633 Littleton Road
Parsippany, New Jersey 07054
Notice Of Special Meeting Of Stockholders
To Be Held _________________, 2000
To the stockholders of International Home Foods:
A special meeting of the stockholders of International Home Foods, Inc., a
Delaware corporation, will be held at _________________________________ on
______________, 2000 at _____ _.m., local time for the following purposes:
1. To consider and vote upon a proposal to adopt the Agreement and Plan of
Merger dated as of June 22, 2000, among International Home Foods,
ConAgra, Inc., a Delaware corporation, and CAG Acquisition Sub, Inc., a
Delaware corporation and a wholly-owned subsidiary of ConAgra. The
merger agreement is attached to this document as Annex A.
2. To transact other business as may properly come before the special
meeting.
The International Home Foods board of directors has set the close of
business on _________, 2000 as the record date for the determination of
stockholders entitled to vote at the special meeting. Your vote is important.
Adoption of the merger agreement will require the affirmative vote of the
holders of a majority of the issued and outstanding shares of International Home
Foods common stock.
All shares represented by properly executed proxies will be voted in
accordance with the specifications on the proxy card. If no such specifications
are made, proxies will be voted FOR adoption of the merger agreement.
Under Delaware law, stockholders of International Home Foods are entitled
to appraisal rights under Section 262 of the Delaware General Corporation Law if
the conditions set forth in Section 262 are satisfied. In order to exercise your
appraisal rights, you must not vote in favor of adoption of the merger agreement
and you must otherwise strictly comply with the appraisal rights procedures or
you will lose your appraisal rights. The appraisal rights procedures are
described in this document, and a copy of Section 262 of Delaware General
Corporation Law is attached as Annex C. See "The Merger - Appraisal Rights."
You are urged to read this document carefully. It is very important that
your shares be represented at the special meeting. Whether or not you can attend
the special meeting, please complete, sign, date and mail the enclosed proxy
card promptly so that it will be received no later than _____________, 2000. If
you attend the special meeting, you may vote in person if you wish, even though
you have previously returned your proxy. Action may be taken on the merger
proposal at the special meeting on the date specified above or on any dates to
which the special meeting may be adjourned or postponed.
C. Dean Metropoulos
Chairman of the Board and
Chief Executive Officer
International Home Foods, Inc.
Parsippany, New Jersey
_______________, 2000
<PAGE>
Reference to Additional Information
This document incorporates important business and financial information
about ConAgra and International Home Foods that is not included in this
document. That information is described under "Where You Can Find More
Information."
We will provide the information incorporated into this document without
charge to you upon written or oral request, to the extent it does not already
accompany this document. Requests should be made in writing or by telephone to
the following:
ConAgra, Inc. International Home Foods, Inc.
Investor Relations Investor Relations
One ConAgra Drive 1633 Littleton Road
Omaha, Nebraska 68102-5001 Parsippany, New Jersey 07054
Tel: (402) 595-4154 Tel: (973) 359-9920
If you would like to request documents from us, please do so by [5th
business day before meeting], 2000 to receive them before the special meeting.
<PAGE>
Table of Contents
SUMMARY........................................................................1
THE COMPANIES...............................................................1
WHAT YOU WILL RECEIVE IN THE MERGER.........................................1
WHAT YOU SHOULD DO NOW......................................................1
BOARD RECOMMENDATION........................................................2
THE SPECIAL MEETING.........................................................2
RISK FACTORS MERITING SPECIAL ATTENTION.....................................2
THE MERGER AND THE MERGER AGREEMENT.........................................3
INTERESTS OF PERSONS THAT DIFFER FROM YOUR INTERESTS........................4
SELECTED HISTORICAL FINANCIAL DATA OF CONAGRA...............................6
SELECTED HISTORICAL FINANCIAL DATA OF INTERNATIONAL HOME FOODS..............7
UNAUDITED SELECTED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION.......9
COMPARATIVE PER SHARE DATA OF CONAGRA AND INTERNATIONAL HOME FOODS.........10
MARKET PRICES AND DIVIDENDS................................................13
RECENT DEVELOPMENTS........................................................15
RISK FACTORS..................................................................18
YOU WILL RECEIVE SHARES OF CONAGRA COMMON STOCK BASED ON AN EXCHANGE
RATIO THAT IS DETERMINED BY THE MARKET VALUE OF CONAGRA COMMON STOCK......18
THERE IS NO GUARANTEE THAT THE ISSUANCE OF CONAGRA COMMON STOCK TO
INTERNATIONAL HOME FOODS STOCKHOLDERS WILL BE TAX-FREE....................18
THE EXECUTIVE OFFICERS AND DIRECTORS OF INTERNATIONAL HOME FOODS WILL
RECEIVE CERTAIN BENEFITS IN THE MERGER WHICH OTHER STOCKHOLDERS DO
NOT RECEIVE...............................................................19
THE APPROVAL OF THE MERGER IS VERY LIKELY BECAUSE OF A VOTING AGREEMENT
WITH STOCKHOLDERS WHO WILL RECEIVE PAYMENTS AND OTHER BENEFITS IF THE
MERGER IS COMPLETED.......................................................19
THE EXPECTED BENEFITS FROM THE MERGER MAY NOT BE REALIZED..................20
IF THE MERGER DOES NOT OCCUR, THE COMPANIES WILL NOT BENEFIT FROM THE
EXPENSES THEY HAVE INCURRED IN THE PURSUIT OF THE MERGER..................20
FORWARD-LOOKING STATEMENTS....................................................20
THE SPECIAL MEETING...........................................................21
DATE, TIME AND PLACE.......................................................21
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING............................21
INTERNATIONAL HOME FOODS BOARD RECOMMENDATION..............................21
VOTE REQUIRED..............................................................21
RECORD DATE, STOCK ENTITLED TO VOTE AND QUORUM.............................21
VOTING OF PROXIES..........................................................22
REVOCABILITY OF PROXIES....................................................22
SOLICITATION OF PROXIES....................................................23
2001 ANNUAL MEETING OF STOCKHOLDERS OF INTERNATIONAL HOME FOODS............23
THE COMPANIES.................................................................24
CONAGRA....................................................................24
INTERNATIONAL HOME FOODS...................................................25
THE MERGER....................................................................26
GENERAL....................................................................26
FORM OF THE MERGER.........................................................26
MERGER CONSIDERATION.......................................................26
EFFECTIVE TIME OF THE MERGER...............................................26
BACKGROUND OF THE MERGER...................................................27
CONAGRA'S REASONS FOR THE MERGER...........................................32
INTERNATIONAL HOME FOODS' REASONS FOR THE MERGER...........................32
OPINION OF INTERNATIONAL HOME FOODS' FINANCIAL ADVISOR.....................34
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.....................41
INTERESTS OF PERSONS THAT DIFFER FROM YOUR INTERESTS.......................45
OWNERSHIP INTEREST OF INTERNATIONAL HOME FOODS STOCKHOLDERS AFTER
THE MERGER................................................................46
TREATMENT OF EXISTING INTERNATIONAL HOME FOODS STOCK OPTIONS...............46
STOCK EXCHANGE LISTING.....................................................48
DELISTING AND DEREGISTRATION OF INTERNATIONAL HOME FOODS COMMON STOCK......48
ACCOUNTING TREATMENT.......................................................48
GOVERNMENT AND REGULATORY APPROVALS........................................48
EXCHANGE PROCEDURES........................................................49
RESALES OF CONAGRA COMMON STOCK............................................50
APPRAISAL RIGHTS...........................................................50
THE MERGER AGREEMENT..........................................................53
GENERAL....................................................................53
REPRESENTATIONS AND WARRANTIES.............................................53
CONDUCT OF BUSINESS PENDING THE MERGER.....................................53
INDEMNIFICATION, INSURANCE AND RELEASE.....................................55
NO SOLICITATION............................................................55
BOARD RECOMMENDATION.......................................................56
AFFILIATE AGREEMENTS.......................................................56
CONDITIONS TO THE COMPLETION OF THE MERGER.................................56
TERMINATION................................................................57
TERMINATION FEES AND EXPENSES..............................................57
AMENDMENT..................................................................58
WAIVER.....................................................................58
VOTING AGREEMENTS.............................................................59
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS...................60
PRO FORMA COMBINED CONDENSED STATEMENTS OF EARNINGS........................61
PRO FORMA COMBINED CONDENSED BALANCE SHEET.................................63
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS.......64
DESCRIPTION OF CONAGRA CAPITAL STOCK..........................................67
GENERAL....................................................................67
DIVIDENDS ON CONAGRA CAPITAL STOCK.........................................67
CONAGRA COMMON STOCK.......................................................67
VOTING RIGHTS IN SPECIFIC CASES............................................67
RIGHTS DIVIDEND............................................................69
BUSINESS COMBINATIONS UNDER DELAWARE LAW...................................70
TRANSFER AGENT.............................................................70
COMPARISON OF RIGHTS OF HOLDERS OF CONAGRA COMMON STOCK AND INTERNATIONAL
HOME FOODS COMMON STOCK.....................................................71
GENERAL....................................................................71
AUTHORIZED CAPITAL STOCK...................................................71
RIGHTS PLAN................................................................71
DIVIDENDS AND DISTRIBUTIONS................................................72
PROVISIONS RELATING TO BUSINESS COMBINATIONS...............................72
NUMBER OF DIRECTORS AND TERM...............................................72
AMENDMENTS TO CERTIFICATE OF INCORPORATION.................................72
ADVANCE NOTICE FOR RAISING BUSINESS OR MAKING NOMINATIONS AT MEETINGS......73
EXPERTS.......................................................................74
LEGAL MATTERS.................................................................74
WHERE YOU CAN FIND MORE INFORMATION...........................................74
ANNEX A AGREEMENT AND PLAN OF MERGER
ANNEX B OPINION OF CHASE SECURITIES INC.
ANNEX C SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
<PAGE>
SUMMARY
This summary highlights selected information from this document and may not
contain all the information that is important to you. To understand the merger
fully and for a more complete description of the legal terms of the merger, you
should read this entire document carefully. See "Where You Can Find More
Information" on page ___.
The Companies
ConAgra, Inc.
One ConAgra Drive
Omaha, Nebraska 68102
402-595-4000
ConAgra is one of the world's largest food companies. ConAgra competes in
multiple segments of the food business and focuses on adding value for customers
in the retail foods, foodservice, and agricultural products channels.
International Home Foods, Inc.
1633 Littleton Road
Parsippany, New Jersey 07054
973-359-9920
International Home Foods manufactures and markets a diversified portfolio
of shelf-stable food products with popular brand names.
What You Will Receive in the Merger
In the merger, you will receive a value targeted at $22, half of which will
be paid in cash and half of which will be paid in ConAgra common stock, for each
of your shares of International Home Foods common stock. The per share value
that you receive from ConAgra will consist of $11 in cash and a fraction of a
share of ConAgra common stock. The fractional share of ConAgra common stock will
be determined by an exchange ratio. All stockholders will receive the same
merger consideration. Stockholders have no right to elect a different mix of
cash and stock.
The exchange ratio will be determined by dividing $11 by the average
closing price of ConAgra common stock on the New York Stock Exchange for the
ten-trading-day period ending on the fifth full trading day prior to the merger.
However, you will receive no less than .50000 and no more than .61111 of a share
of ConAgra common stock for each share of your International Home Foods common
stock.
For example, if you own 100 International Home Foods shares and the
exchange ratio is .55000, then you would receive $1,100 in cash and 55 ConAgra
common shares in the merger.
The following chart sets forth examples of the exchange ratios for various
average closing prices of ConAgra common stock.
If the average
closing price of Then the
ConAgra common exchange ratio
stock is: will be:
$18 or less .61111
$19 .57895
$20 .55000
$21 .52381
$22 or more .50000
We anticipate that the merger will occur on _______, 2000. You may call
1-8__-___-____ after _______, 2000 for the expected exchange ratio.
What You Should Do Now
You should mail your signed and dated proxy as soon as possible to ensure
that your shares of International Home Foods common stock will be represented at
the special meeting. You should not send in your share certificates at this
time. If the merger occurs, you will receive written instructions for exchanging
your International Home Foods share certificates for ConAgra share certificates.
Board Recommendation
The International Home Foods board members present at a special meeting
unanimously approved the merger agreement and determined that the merger is
advisable and in the best interests of International Home Foods and its
stockholders, and recommends that International Home Foods stockholders vote for
the adoption of the merger agreement.
The International Home Foods board believes the merger provides its
stockholders the opportunity to realize a significant premium for their shares
over the average trading price of the International Home Foods common stock at
the time the agreement with ConAgra was reached. In determining to approve the
merger agreement, the International Home Foods board also considered that
International Home Foods is permitted to accept alternative takeover proposals
under specified circumstances.
The Special Meeting
Purpose (see page __). International Home Foods will hold a special meeting
for its stockholders to adopt the merger agreement.
When; Where (see page __). The special meeting will be held on
______________, 2000 at ________ __.m. at __________________.
Who May Vote (see page __). If you are an International Home Foods
stockholder of record at the close of business on __________, 2000, then you are
entitled to vote at the special meeting and to cast one vote for each share that
you own. On __________, 2000 there were _______ shares of International Home
Foods common stock entitled to be voted at the special meeting. ConAgra
stockholders will not vote on the merger.
Required Vote; Effect of Broker Non-Vote and Abstention (see page __).
Adoption of the merger agreement will require an affirmative vote by holders of
a majority of the shares of International Home Foods common stock issued and
outstanding as of _________, 2000. International Home Foods' directors,
executive officers and their affiliates held a total of approximately ___% of
the shares of the International Home Foods common stock outstanding on the
record date. A broker non-vote, a failure to vote or an abstention will have the
effect of a vote against the adoption of the merger agreement.
Agreements to Vote (see page __). C. Dean Metropoulos and three investment
limited partnerships controlled by Hicks, Muse, Tate & Furst Incorporated hold
an aggregate of 31,963,001 shares of International Home Foods common stock,
representing approximately 43.1% of the outstanding International Home Foods
common stock. The investment limited partnerships and Mr. Metropoulos entered
into voting agreements with ConAgra to vote all of their shares for adoption of
the merger agreement. Accordingly, adoption of the merger agreement is very
likely to be approved.
Risk Factors Meriting Special Attention
Before you decide to vote for adoption of the merger agreement, you should
consider the following risk factors, which are more fully described in the "Risk
Factors" section beginning on page __ of this document.
o you will receive shares of ConAgra common stock based on an exchange
ratio that will change as the market value of the ConAgra common stock
changes before the merger closes;
o the amount of ConAgra common stock to be received pursuant to the
exchange ratio may result in your receipt of less than the targeted
value of $22 for each share of International Home Foods common stock;
in addition, International Home Foods does not have the right to
terminate the merger agreement if the average closing price of ConAgra
common stock for the valuation period is less than $18;
o you will not know whether the issuance of ConAgra common stock in the
merger will be a taxable event to you at the time you vote at the
International Home Foods special meeting;
o the management of International Home Foods will receive benefits in
the merger which you will not receive;
o the merger is very likely to be approved because of voting agreements
with stockholders of International Home Foods who will, or whose
controlling persons will, receive additional cash payments if the
merger is completed; and
o the expected benefits of the merger may not be realized.
The Merger and the Merger Agreement
The merger agreement is attached as Annex A to this document. We encourage
you to read the merger agreement in its entirety as it is the legal document
that governs the merger.
Material United States Federal Income Tax Consequences (see page ___).
ConAgra and International Home Foods intend, if possible, for the merger to
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended. If the merger qualifies as a reorganization,
then the holders of International Home Foods common stock will not recognize a
gain or loss for U.S. federal income tax purposes as a result of the merger,
except gain to the extent of the cash received, as part of the merger
consideration, in lieu of fractional shares or upon the exercise of appraisal
rights.
The completion of the merger as a reorganization under Section 368(a) is
conditioned on receipt of a tax opinion from International Home Foods' counsel.
The tax opinion is conditioned, among other things, on the value of the ConAgra
common stock issued in the merger being 40% or more of the total consideration
paid for the International Home Foods common stock.
In the event that a tax opinion is not delivered as contemplated by the
merger agreement or, even if the tax opinion is delivered, ConAgra reasonably
determines, in good faith, that the cash portion of the merger consideration
could exceed 60% of the total fair market value of the aggregate merger
consideration, then ConAgra has the right to cause the merger to be effected in
a manner that would not be a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code.
Even if the tax opinion is delivered and ConAgra does not exercise the
above election, there can be no assurance that the merger will qualify as a
reorganization. If the merger is not a reorganization, then you will generally
realize taxable capital gain or loss equal to the difference of:
o the sum of the cash you receive plus the fair market value of the
ConAgra common stock you receive and
o your adjusted tax basis in your International Home Foods common stock.
However, if your average realized gain is less than $11 per share, the U.S.
federal income tax consequences to you may be the same whether or not the merger
is a reorganization within the meaning of Section 368(a). (See page __.)
Conditions to the Merger (see page ___). The completion of the merger depends on
a number of conditions being met, including the following:
o obtaining approval of International Home Foods stockholders;
o ConAgra and International Home Foods materially performing their
obligations under the merger agreement; and
o expiration of the waiting periods applicable to the merger under the
Hart-Scott-Rodino Antitrust Improvements Act, the Competition Act of
Canada and the Mexican Federal Economic Competition Law.
Any condition to the merger, other than the approval of International Home
Foods stockholders, may be waived by the company entitled to assert the
condition.
Appraisal Rights (see page ___). International Home Foods stockholders are
entitled to rights of appraisal under applicable Delaware law in connection with
the merger.
Termination of the Merger Agreement (see page ___). ConAgra and
International Home Foods can agree in writing to terminate the merger agreement
at any time without completing the merger. In addition, either company can
terminate the merger agreement without completing the merger, if, among other
things, any of the following occurs:
o the merger is not completed by November 30, 2000;
o the International Home Foods stockholders do not adopt the merger
agreement;
o any governmental entity prevents completion of the merger; or
o the other party materially breaches the merger agreement.
ConAgra may also terminate the merger agreement if the International Home
Foods board:
o fails to convene a meeting to adopt the merger agreement by _________,
2000;
o fails to recommend adoption of the merger agreement to the
International Home Foods stockholders; or
o withdraws, amends or modifies its recommendation of the merger in a
manner adverse to ConAgra.
International Home Foods may also terminate the merger agreement in
connection with entering into a definitive agreement for a business combination
that the International Home Foods board determines is superior to the merger
with ConAgra.
Termination Fees (see page ___). The merger agreement requires
International Home Foods to pay ConAgra a termination fee of $50,000,000 if the
merger agreement is terminated under specified circumstances.
No Solicitation of Third Parties (see page ___). Under the merger
agreement, International Home Foods cannot engage in discussions or exchange
information with a third party about a takeover proposal. However, International
Home Foods may respond to an unsolicited takeover proposal if the International
Home Foods board determines in good faith that the proposal is, or could
reasonably be expected to lead to a proposal that is, superior to the merger
with ConAgra.
Accounting Treatment (see page ___). The merger will be accounted for as a
purchase in accordance with generally accepted accounting principles.
Regulatory Approvals (see page ___). The initial filings under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976 were made on June 23, 2000,
the initial filings under the Competition Act of Canada were made on __________,
2000 and the initial filings under the Mexican Federal Economic Competition Law
were made on ________, 2000. As of the date of this document, we have not yet
received all of the required approvals. Although we expect to obtain the
necessary approvals, we cannot be certain we will obtain them.
Transferability of ConAgra Common Stock (see page ___). All shares of
ConAgra common stock issued in connection with the merger will be freely
tradable on the New York Stock Exchange. However, transfers of shares held by
persons deemed to be "affiliates" are subject to securities law limitations.
Interests of Persons That Differ From Your Interests
International Home Foods' management has interests in the merger that are
different from or in addition to your interests. For example:
o stock options, including stock options held by International Home
Foods management, to purchase International Home Foods common stock
will be cashed out in part and converted in part into options to
acquire shares of ConAgra common stock;
o all unvested stock options held by International Home Food employees
will become fully exercisable at the time of the merger;
o a number of International Home Foods employees, including executive
officers, have rights to severance payments that may be triggered if
their employment is terminated after the merger; and
o directors and executive officers of International Home Foods have
customary rights to indemnification against specified liabilities, and
ConAgra has agreed to maintain directors' and officers' liability
insurance for them and has released them from liabilities under the
merger agreement.
Stockholders, or parties controlling stockholders, holding approximately
43.1% of the International Home Foods common stock, and who have entered into
voting agreements to vote in favor of the merger, have interests in the merger
that are different from or in addition to your interest. For example:
o pursuant to a 1999 employment agreement, C. Dean Metropoulos will have
the right to receive a $6.1 million severance payment upon completion
of the merger;
o pursuant to a 1996 financial advisory agreement, Hicks, Muse & Co.
Partners, L.P. will receive a cash fee of $10 million if the merger is
completed; and
o International Home Foods will transfer a lease of office facilities
and related improvements and personal property to an entity, in which
Hicks Muse or C. Dean Metropoulos may have an interest, in return for
the entity's assumption of all obligations under the lease. Mr.
Metropoulos will have use of the leased facilities. The transferred
assets have a net book value of approximately $1 million.
<PAGE>
Selected Historical Financial Data of ConAgra
You should read the following selected historical financial data in
conjunction with the historical financial statements and accompanying notes that
ConAgra has included in its annual report on Form 10-K for the year ended May
30, 1999 and its quarterly report on Form 10-Q for the thirty-nine weeks ended
February 27, 2000. The annual report on Form 10-K and quarterly report on Form
10-Q are incorporated by reference herein. See "Where You Can Find More
Information" on page __.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Thirty-Nine Weeks
Ended
Feb. 27 Feb. 28 Fiscal Year Ended May
2000(1) 1999 1999(2) 1998 1997 1996(3) 1995
---- ---- ---- ---- ---- ---- ----
(In Millions, Except Per Share Data)
OPERATING DATA:
Net sales .................. $18,994.3 $18,581.1 $24,594.3 $24,219.5 $24,445.2 $24,321.3 $23,829.8
Income from
continuing operations .... 432.5 499.7 358.4 641.8 637.9 211.8 512.2
Income per basic share
from continuing
operations ............... $.91 $1.06 $.76 $1.38 $1.36 $.43 $1.04
Income per diluted
share from continuing
operations ............... $.90 $1.05 $.75 $1.35 $1.34 $.43 $1.02
Cash dividends per
share .................... $.5855 $.5133 $.6918 $.6050 $.5275 $.4600 $.4013
BALANCE SHEET
DATA:
Total assets ............... $13,115.3 $13,536.9 $12,146.1 $11,808.5 $11,451.8 $11,364.2 $10,969.2
Long-term obligations,
excluding current
installments, and
redeemable preferred
stock ................... 2,621.7 2,638.0 2,543.1 2,503.5 2,378.5 2,286.3 2,551.5
</TABLE>
----------------------------
(1) ConAgra's financial data for the thirty-nine weeks ended February 27,
2000, includes non-recurring charges of $236.1 million before tax ($146.4
million after tax). If these charges were excluded, basic earnings per share for
the thirty-nine weeks ended February 27, 2000 would be $1.22 and diluted
earnings per share would be $1.21.
(2) ConAgra financial data for fiscal 1999 includes non-recurring charges
of $440.8 million before tax ($337.9 million after tax). If these charges were
excluded, basic earnings per share for fiscal 1999 would be $1.48 and diluted
earnings per share would be $1.46.
(3) ConAgra financial data for fiscal 1996 includes non-recurring charges
of $507.8 million before tax ($356.3 million after tax). If these charges were
excluded, basic earnings per share for fiscal 1996 would be $1.19 and diluted
earnings per share would be $1.17.
<PAGE>
Selected Historical Financial Data of International Home Foods
You should read the following selected historical financial data in
conjunction with the historical financial statements and accompanying notes that
International Home Foods has included in its annual report on Form 10-K for the
year ended December 31, 1999 and its quarterly report on Form 10-Q for the three
months ended March 31, 2000. The annual report on Form 10-K and quarterly report
on Form 10-Q are incorporated by reference herein. See "Where You Can Find More
Information" on page __.
International Home Foods' financial data for 1999, 1998 and 1997 includes
the effects of business acquisitions and disposals. In 1999, International Home
Foods acquired two businesses with combined net sales of $180.4 million from
their respective dates of acquisition. In 1998, International Home Foods
acquired three businesses with combined net sales of $161.4 million from their
respective dates of acquisition. In 1997, International Home Foods acquired four
businesses with combined net sales of $228.3 million from their respective dates
of acquisition. In November 1997, International Home Foods completed the
issuance of 12.1 million shares of common stock, through an initial public
offering, resulting in net proceeds of $224.9 million. Also, effective November
1, 1996, International Home Foods entered into a $770 million credit agreement
and issued $400 million of 10.375% Senior Subordinated Notes in connection with
a leveraged recapitalization of the company. The credit agreement was
subsequently amended on September 16, 1998 to increase the facility to $996.3
million. Prior to November 1, 1996, International Home Foods was a wholly-owned
subsidiary of American Home Products Corporation and did not maintain a credit
facility and accordingly did not incur any interest expense.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Three Months Ended
Mar. 31 Mar. 31 Fiscal Year Ended December 31
2000 1999(1) 1999 (2) 1998(3) 1997 1996 1995
---- ---- ---- ---- ---- ---- ----
(In Millions, Except Per Share Data)
OPERATING DATA:
Net sales ................. $561.4 $514.2 $2,144.4 $1,699.6 $1,222.4 $942.8 $818.9
Income from
continuing
operations .............. 26.5 32.5 103.4 16.5 23.9 83.0 39.2
Income per basic share
from continuing
operations .............. $.36 $.44 $1.41 $.22 $.38 $1.34 $--
Income per diluted
share from continuing
operations .............. $.35 $.43 $1.36 $.21 $.36 $1.34 $--
Cash dividends per
share ................... $.-- $.-- $.-- $.-- $.-- $.-- $--
BALANCE SHEET
DATA:
Total assets .............. $1,571.8 $1,471.3 $1,549.4 $1,446.2 $1,262.1 $968.3 $463.6
Long-term debt, excluding
current installments ...... 962.7 1,060.9 1,024.4 1,102.8 942.6 1,044.0 --
</TABLE>
----------------------------
<PAGE>
(1) In February 1999, International Home Foods sold its Polaner business
for $30.0 million resulting in a gain of $15.8 million before tax ($9.6 million
after tax). Excluding the gain on the sale of the Polaner business, basic income
per share for the quarter ended March 31, 1999 would be $.31 and diluted income
per share would be $.30.
(2) Excluding the gain on the sale of the Polaner business and a non-cash
deferred tax restructuring charge of $20.6 million, basic income per share for
the year ended December 31, 1999 would be $1.56, and diluted income per share
would be $1.50
(3) In 1998, International Home Foods incurred non-recurring charges of
$118.1 million before tax ($75.3 million after tax). If these charges were
excluded, basic earnings per share for the year ended December 31, 1998 would be
$1.20 and diluted income per share would be $1.15.
<PAGE>
Unaudited Selected Pro Forma Combined Condensed Financial Information
In the table below, we provide you with unaudited selected pro forma
combined condensed financial information for ConAgra as if its merger with
International Home Foods had been completed at the beginning of the earliest
period presented for income statement purposes and on February 27, 2000 for
balance sheet purposes. For purposes of the unaudited pro forma data, ConAgra's
consolidated statements of earnings for the year ended May 30, 1999 and the
thirty-nine weeks ended February 27, 2000 have been combined with International
Home Foods' consolidated statements of income recasted for a twelve-month period
ended June 30, 1999 and a nine-month period ended March 31, 2000, and ConAgra's
consolidated balance sheet as of February 27, 2000 has been combined with
International Home Foods' consolidated balance sheet as of March 31, 2000.
This unaudited selected pro forma combined condensed financial information
should be read together with the separate historical financial statements and
accompanying notes of ConAgra and International Home Foods, which we incorporate
by reference in this proxy statement/prospectus and the unaudited pro forma
combined condensed financial statements and accompanying notes included
elsewhere in this proxy statement/prospectus. The unaudited pro forma combined
condensed financial statements do not give effect to any potential cost savings
or other operating efficiencies that we expect to result from this transaction.
For copies of the information we incorporate by reference, see "Where You Can
Find More Information" on page __. You should not rely on the unaudited selected
pro forma condensed financial information as an indication of the results of
operations or financial position that ConAgra would have achieved if the
International Home Foods merger had taken place earlier or of the results of
operations or financial position of ConAgra after the completion of the
International Home Foods merger.
<TABLE>
<S> <C> <C>
Thirty-Nine Weeks
Ended Year Ended
Feb. 27, 2000(1) May 30, 1999(2)
------------------------ ----------------------
(In Millions, Except Per Share Data)
UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT DATA:
Net sales $20,390.0 $26,231.5
Income from continuing operations 452.5 324.1
Income per basic common share from
continuing operations $.88 $.63
Income per diluted common share from
continuing operations $.87 $.62
Feb. 27, 2000
----------------------
UNAUDITED PRO FORMA COMBINED
CONDENSED BALANCE SHEET DATA:
Total assets $16,271.8
Long-term obligations, excluding current installments, 4,490.0
and redeemable preferred stock
Common stockholders' equity 3,963.1
</TABLE>
---------------------
(1) ConAgra's financial data for the thirty-nine weeks ended February 27,
2000, includes non-recurring charges of $236.1 million before tax ($146.4
million after tax). If these non-recurring items were excluded, unaudited pro
forma basic earnings per share for the thirty-nine weeks ended February 27, 2000
would be $1.16 and unaudited pro forma diluted earnings per share would be
$1.15.
(2) ConAgra's financial data for fiscal 1999 includes non-recurring charges
of $440.8 million before tax ($337.9 million after tax). International Home
Foods financial data for the twelve-month period ended June 30, 1999 includes
non-recurring charges and gain on sale of the Polaner business of $102.3 million
before tax ($65.7 million after tax). If these non-recurring items were
excluded, unaudited pro forma basic earnings per share for fiscal 1999 would be
$1.42 and unaudited pro forma diluted earnings per share would be $1.40.
<PAGE>
Comparative Per Share Data of ConAgra and International Home Foods
We are providing the following comparative per share information to aid you
in your analysis of the financial aspects of the merger. You should read this
information in conjunction with the selected historical financial data included
on pages ____ and ____, and the separate historical financial statements and
accompanying notes of ConAgra and International Home Foods contained in reports
that the companies have previously filed with the SEC and the unaudited pro
forma combined condensed financial statements and accompanying notes beginning
on page ____.
The ConAgra unaudited pro forma condensed per share data presented reflects
the purchase method of accounting of the per share results of the businesses of
ConAgra and International Home Foods as if the acquisition had occurred at the
earliest of the periods presented for income statement purposes and as of
February 27, 2000 for balance sheet purposes . The results are not necessarily
indicative of the results that would have actually occurred if the companies had
been combined for the periods indicated.
ConAgra has a fiscal year ending on the last Sunday of May and
International Home Foods has a fiscal year ending December 31. Accordingly, the
unaudited pro forma financial data for the periods presented combines ConAgra's
consolidated statements of earnings for the year ended May 30, 1999 and the
thirty-nine weeks ended February 27, 2000 with International Home Foods'
unaudited consolidated statements of income recasted for a twelve-month period
ended June 30, 1999 and a nine-month period ended March 31, 2000, and ConAgra's
consolidated balance sheet as of February 27, 2000 with International Home Foods
unaudited consolidated balance sheet as of March 31, 2000.
The International Home Foods unaudited pro forma equivalent per share data
equals an assumed exchange ratio of .55 multiplied by the ConAgra unaudited pro
forma condensed per share data. The assumed exchange ratio was determined by
dividing $11 by ConAgra's assumed average closing price of $20, the midpoint of
the exchange ratio provided for in the merger agreement. The actual exchange
ratio will be determined by the average closing price on the ten trading days
ending on the fifth full trading day immediately preceding the merger with the
adjustment of the exchange ratio being limited to a range of .50000 and .61111
of a share of ConAgra common stock. The exchange ratio will be .61111 if the
average closing price of ConAgra common stock is $18.00 or less and .50000 if
the average closing price is $22.00 or more. The unaudited pro forma per share
data are not necessarily indicative of the results that would have occurred,
your financial interest in such results, or the future results that will occur
after the merger.
All basic earnings per share data are computed using the weighted average
number of shares of common stock outstanding during the period. All diluted
earnings per share data are computed using the weighted average number of shares
of common stock outstanding and dilutive potential common stock outstanding
during the period. All book value per share data are based upon the number of
shares of common stock outstanding at the end of the related period.
<PAGE>
<TABLE>
<S> <C> <C>
Thirty-Nine Weeks Fiscal Year
Ended Ended
Feb. 27, 2000(1) May 30, 1999(2)
------------------- ------------------
CONAGRA - HISTORICAL:
Historical per common share:
Income per basic share from continuing
operations................................... $.91 $.76
Income per diluted share from continuing
operations................................... $.90 $.75
Cash dividends per share........................ $.5855 $.6918
Book value per share............................ $6.49 $6.18
Nine Months Twelve Months
Ended Mar. 31, Ended June 30,
2000 1999(3)
------------------- ------------------
INTERNATIONAL HOME FOODS - HISTORICAL:
Historical per common share:
Income per basic share from continuing
operations.................................. $.97 $.47
Income per diluted share from continuing
operations................................... $.94 $.45
Cash dividends per share........................ -- --
Book value per share............................ $2.31 $1.25
Thirty-Nine Weeks Fiscal Year
Ended Ended
Feb. 27, 2000(4) May 30, 1999(5)
------------------- ------------------
CONAGRA - UNAUDITED PRO FORMA CONDENSED:
Unaudited pro forma condensed per share of ConAgra
common stock:
Income per basic share from continuing
operations................................... $.88 $.63
Income per diluted share from continuing
operations................................... .87 .62
Cash dividends per share........................ $.5855 $.6918
Book value per share............................ $7.66
INTERNATIONAL HOME FOODS -
UNAUDITED PRO FORMA EQUIVALENT:
Unaudited pro forma condensed per share of ConAgra
common stock:
Income per basic share from continuing
operations................................... $.48 $.35
Income per diluted share from continuing
operations................................... .48 .34
Cash dividends per share........................ $.32 $.38
Book value per share............................ $4.21
</TABLE>
-------------------------
(1) ConAgra's financial data for the thirty-nine weeks ended February 27,
2000, includes non-recurring charges of $236.1 million before tax ($146.4
million after tax). If these charges were excluded, basic earnings per share for
the thirty-nine weeks ended February 27, 2000 would be $1.22 and diluted
earnings per share would be $1.21.
(2) ConAgra's financial data for fiscal 1999 includes non-recurring charges
of $440.8 million before tax ($337.9 million after tax). If these charges were
excluded, basic earnings per share for fiscal 1999 would be $1.48 and diluted
earnings per share would be $1.46.
(3) International Home Foods financial data for the twelve-month period
ended June 30, 1999 includes non-recurring charges and gain on sale of the
Polaner business of $102.3 million before tax ($65.7 million after tax). If
these non-recurring items were excluded, basic earnings per share for the
twelve-month period ended June 30, 1999 would be $1.35 and diluted earnings per
share would be $1.30.
(4) ConAgra's financial data for the thirty-nine weeks ended February 27,
2000, includes non-recurring charges of $236.1 million before tax ($146.4
million after tax). If these charges were excluded, unaudited pro forma and pro
forma equivalent basic earnings per share for the thirty-nine weeks ended
February 27, 2000 would be $1.16 and $.64, respectively, and unaudited pro forma
and pro forma equivalent diluted earnings per share would be $1.15 and $.63,
respectively.
(5) ConAgra's financial data for fiscal 1999 includes non-recurring charges
of $440.8 million before tax ($337.9 million after tax). International Home
Foods financial data for the twelve-month period ended June 30, 1999 includes
non-recurring charges and gain on sale of the Polaner business of $102.3 million
before tax ($65.7 million after tax). If these non-recurring items were
excluded, unaudited pro forma and pro forma equivalent basic earnings per share
for fiscal 1999 would be $1.42 and $.78, respectively, and unaudited pro forma
and pro forma equivalent diluted earnings per share would be $1.40 and $.77,
respectively.
<PAGE>
Market Prices and Dividends
The table below sets forth, for the fiscal quarters indicated, dividends
and the high and low sales prices per share reported by the New York Stock
Exchange Composite Transactions List for the ConAgra common stock and the
International Home Foods common stock. ConAgra's fiscal year ends on the last
Sunday in May each year and International Home Foods' fiscal year ends on
December 31 each year. International Home Foods has not declared or paid
dividends on the International Home Foods common stock.
<TABLE>
<S> <C> <C> <C>
ConAgra Common Stock
High Low Dividends
Fiscal year:
1999
First Quarter ended August 30, 1998: $33.25 $22.56 $.15625
Second Quarter ended November 29, 1998: 32.44 24.63 .17850
Third Quarter ended February 28, 1999: 34.38 29.25 .17850
Fourth Quarter ended May 30, 1999: 31.25 23.13 .17850
2000
First Quarter ended August 29, 1999: $28.13 $24.06 $.17850
Second Quarter ended November 28, 1999: 26.50 21.50 .20350
Third Quarter ended February 27, 2000: 24.63 15.88 .20350
Fourth Quarter ended May 28, 2000: 23.25 15.06 .20350
2001
First Quarter (through _________):
International Home Foods Common Stock
High Low Dividends
Fiscal year:
1998
First Quarter ended March 31, 1998: $34.50 $25.25 $--
Second Quarter ended June 30, 1998: 32.13 22.75 --
Third Quarter ended September 30, 1998: 25.63 12.88 --
Fourth Quarter ended December 31, 1998: 20.19 10.38 --
1999
First Quarter ended March 31, 1999: $20.50 $14.06 $--
Second Quarter ended June 30, 1999: 18.44 13.81 --
Third Quarter ended September 30, 1999: 20.56 17.44 --
Fourth Quarter ended December 31, 1999: 20.00 15.00 --
2000
First Quarter ended March 31, 2000: $17.50 $14.00 $--
Second Quarter ended June 30, 2000: _____ _____ ___
Third Quarter (through __________):
</TABLE>
<PAGE>
The following chart sets forth the last reported sale prices per share of
ConAgra common stock and International Home Foods common stock as reported on
the New York Stock Exchange Composite Transactions List on: o June 22, 2000, the
last trading day prior to the announcement of the merger agreement; and o
__________, 2000, the latest practicable date prior to the printing of this
document.
<TABLE>
<S> <C> <C>
Stock Price Preceding Stock Price Preceding
Announcement Printing
ConAgra $19.88 $_______
International Home Foods $15.38 $_______
</TABLE>
<PAGE>
Recent Developments
On June 29, 2000, ConAgra issued a press release with respect to earnings
for its fourth quarter and fiscal year ended May 28, 2000. Sales and earnings
for the fourth quarter and fiscal year ended May 28, 2000 and the fourth quarter
and fiscal year ended May 30, 1999 are set forth below:
<TABLE>
<S> <C> <C> <C>
Fourth Quarter - Thirteen Weeks Ended
----------------------------------------------
(In millions except per share amounts)
Percent
May 28, 2000 May 30, 1999 Change
------------ ------------ ------
Net sales................................................ $6,391.5 $6,013.2 6%
------- -------
Costs and expenses
Cost of goods sold *................................... 5,346.9 5,005.6 7
Selling, administrative and general expenses*.......... 745.8 635.8 17
Interest expense, net.................................. 69.5 61.2 14
Restructuring/impairment charges....................... 260.8 440.8 (41)
------- -------
6,423.0 6,143.4 5
------- -------
Income (loss) before income taxes........................ (31.5) (130.2) 76
Income taxes............................................. (12.0) 11.1 (208)
-------- -------
Net income (loss)........................................ $(19.5) $(141.3) 86%
======== =======
Income (loss) per share - basic.......................... $(0.04) $(0.30) 87%
======== ========
Weighted average shares outstanding...................... 476.8 470.7 1%
===== =====
Income (loss) per share - diluted........................ $(0.04) $(0.30) 87%
======= =======
Weighted average shares and share
equivalents outstanding................................ 478.3 470.7 2%
===== =====
</TABLE>
*Restructuring/impairment charges for the thirteen weeks ended May 28, 2000
total $260.8 million. Other restructuring-related items for the thirteen weeks
ended May 28, 2000 include accelerated depreciation of $23.9 million included in
cost of goods sold, inventory markdowns of $73.1 million included in cost of
goods sold, $.5 million of accelerated depreciation included in selling,
administrative and general expenses and $27.0 million of restructuring plan
implementation costs included in selling, administrative and general expenses.
ConAgra incurred a total of $385.3 million in restructuring and
restructuring-related charges across all classifications for the quarter
compared with $440.8 million during the comparable period last year.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Fiscal Year - Fifty-Two Weeks Ended
------------------------------------------------
(In millions except per share amounts)
Percent
May 28, 2000 May 30, 1999 Change
------------ ------------ ------
Net sales................................................ $25,385.8 $24,594.3 3%
--------- ---------
Costs and expenses
Cost of goods sold*.................................... 21,205.9 20,556.2 3
Selling, administrative and general expenses*.......... 2,888.2 2,598.4 11
Interest expense, net.................................. 303.4 316.6 (4)
Restructuring/impairment charges....................... 322.2 440.8 (27)
---------- ----------
24,719.7 23,912.0 3
-------- --------
Income before income taxes............................... 666.1 682.3 (2)
Income taxes............................................. 253.1 323.9 (22)
--------- ---------
Net income............................................... $413.0 $358.4 15%
====== ======
Income per share - basic................................. $0.87 $0.76 15%
===== =====
Weighted average shares outstanding...................... 475.7 470.0 1%
===== =====
Income per share - diluted............................... $0.86 $0.75 15%
===== =====
Weighted average shares and share
equivalents outstanding................................ 478.6 476.7 0%
===== =====
</TABLE>
*Restructuring/impairment charges for fiscal 2000 total $322.2 million. Other
restructuring-related items for fiscal 2000 include accelerated depreciation of
$108.3 million included in cost of goods sold, inventory markdowns of $114.5
million included in cost of goods sold, $30.8 million of accelerated
depreciation included in selling, administrative and general expenses and $45.6
million of restructuring plan implementation costs included in selling,
administrative and general expenses. ConAgra incurred a total of $621.4 million
in restructuring and restructuring-related charges across all classifications
for fiscal 2000, compared with $440.8 million for fiscal 1999.
ConAgra's fiscal 2000 diluted earnings per share increased to $.86, up from
$.75 for fiscal 1999. Consolidated sales grew 3% to $25,385.8 million and
operating profit rose 2% to $1,288.3 million. Exclusive of restructuring
charges, operating profit rose 12% to $1,909.7 million. Net income was $413.0
million, compared to last year's net income of $358.4 million. Exclusive of
restructuring charges, diluted earnings per share increased 14% to $1.67 from
$1.46 for fiscal 1999, and net income was $798.3 million, 15% growth over last
year's net income of $696.3 million.
ConAgra's fiscal 2000 fourth quarter net loss was $19.5 million or $.04 per
diluted share, compared to a net loss of $141.3 million, or $.30 per diluted
share, during the comparable period last year. Total sales grew 6% to $6,391.5
million and operating profit was $115.8 million compared with an operating loss
of $1.5 million in the prior year. Exclusive of restructuring charges, operating
profit was $501.1 million, an increase of 14% over last year. Exclusive of
restructuring charges, ConAgra's fiscal 2000 fourth quarter diluted earnings per
share increased 12 % to $.46 per diluted share from $.41 per diluted share last
year, and net income rose 12% to $219.4 million.
Fourth quarter sales for ConAgra's Packaged Foods segment grew 7% to
$1,969.6 million and operating profit declined 37% to $133.4 million. Exclusive
of restructuring charges, operating profit rose 18% to $293.6 million. For the
full fiscal year, Packaged Foods sales increased 4% to $7,713.5 million and
operating profit declined 17% to $778.4 million. Exclusive of restructuring
charges, operating profit gained 11% to $1,087.9 million, primarily driven by
double-digit sales and profit growth for the company's core foodservice
business. Profit growth for frozen foods and shelf-stable grocery products also
favorably influenced full-year results.
Refrigerated Foods fourth quarter sales grew 8% to $3,245.3 million and
operating loss was $9.4 million compared with an operating loss of $252.5
million for the comparable period of the prior year. Exclusive of restructuring
charges, operating income increased 14% to $120.9 million for the quarter. For
the full fiscal year, sales rose 8% to $12,522.2 million and operating profit
improved to $322.7 million from $9.4 million in 1999. Exclusive of restructuring
charges, operating profit gained 33% to $490.7 million. ConAgra attributed the
year's profit growth to strong demand for fresh red meat, operating
improvements, and a solid performance from its prepared meat operations. The
company's poultry operations generated operating profit for fiscal 2000, but at
a lower rate than that produced in fiscal 1999 due to oversupply in the poultry
industry.
Fourth quarter sales for the Agricultural Products segment grew 1% to
$1,176.6 million while operating profit declined from $40.4 million in 1999 to
an operating loss of $8.2 million in 2000. Exclusive of restructuring charges,
operating profit grew 4% to $86.6 million. For the full fiscal year, sales
declined 8% to $5,150.1 million and operating profit decreased 41% to $187.2
million. Exclusive of restructuring charges, operating profit decreased 8% to
$331.1 million. Fiscal year results were positively influenced by growth in
sales and profits from ConAgra's United Agri-Products, North America's largest
distributor of crop inputs and provider of agricultural yield enhancement
services, and by an improved performance from the company's grain processing
business. Fiscal year results for the ConAgra Trade Group were negatively
impacted by the effect of lower grain volumes and prices.
<PAGE>
RISK FACTORS
In addition to the other information included in this document, the risk
factors described below should be considered by you in determining how to vote
at the special meeting.
You will receive shares of ConAgra common stock based on an exchange ratio that
is determined by the market value of ConAgra common stock.
The target value you receive in the merger for each of your International
Home Foods shares is $22, consisting of $11 in cash and a fraction of a share of
ConAgra common stock which is targeted to have a value of $11. An exchange ratio
will be used to determine the fraction of a share of ConAgra common stock you
will receive for each of your shares of International Home Foods common stock.
The exchange ratio will be determined by dividing $11 by the average closing
price of ConAgra shares for the ten trading days ending on the fifth full
trading day prior to the merger.
The exchange ratio is limited so that you will receive:
o no more than .61111 ConAgra shares for each of your International Home
Foods shares even if the market price of the ConAgra shares at the
time of the merger is less than $18; and
o no less than .50000 ConAgra shares for each of your International Home
Foods shares even if the market price of the ConAgra shares at the
time of the merger is more than $22.
If the market price of the ConAgra shares at the time of the merger exceeds
$22 per share, you will receive a fraction of ConAgra common stock with a value
greater than $11 and as a consequence you will receive a value of greater than
$22 for each of your International Home Foods shares. If the market price of the
ConAgra shares at the time of the merger is less than $18, you will receive a
fraction of ConAgra common stock with a value of less than $11 and as a
consequence you will receive a value of less than $22 for each of your
International Home Foods shares. International Home Foods does not have the
right to terminate the merger agreement if the average closing price of ConAgra
common stock for the valuation period is less than $18.00.
We cannot predict the market prices for the ConAgra common stock and we
encourage you to obtain current market quotations of the ConAgra common stock,
which is listed on the New York Stock Exchange under the symbol "CAG."
There is no guarantee that the issuance of ConAgra common stock to International
Home Foods stockholders will be tax-free.
You will not know whether, for U.S. federal income tax purposes, the
issuance of ConAgra common stock in the merger will be a taxable event to you at
the time you vote at the International Home Foods special meeting.
ConAgra and International Home Foods intend, if possible, for the merger to
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended. If the merger qualifies as a reorganization,
then the holders of International Home Foods common stock will not recognize a
gain or loss for U.S. federal income tax purposes as a result of the merger,
except gain to the extent of cash received as part of the merger consideration,
in lieu of fractional shares or because of the exercise of appraisal rights.
There can be no assurance that the conditions will occur that are necessary
for the merger to be a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code. Further, ConAgra may also elect to change the
structure of the merger to a reverse merger based on its good faith
determination that the merger will not be a Section 368(a) reorganization. If
the merger is not a Section 368(a) reorganization or if the merger is structured
as a reverse merger, then the issuance of ConAgra common stock to the
International Home Foods stockholders will be a taxable event for the
International Home Foods stockholders.
The completion of the merger as a Section 368(a) reorganization is
conditioned on, among other things, the receipt of an opinion from Vinson &
Elkins L.L.P., counsel for International Home Foods, that the merger will
qualify as a Section 368(a) reorganization. An opinion of counsel represents
counsel's best legal judgment and is not binding on the Internal Revenue
Service, and there can be no assurance that following the merger the Internal
Revenue Service will not challenge the qualification of the merger as a Section
368(a) reorganization.
See "The Merger - Material United States Federal Income Tax Consequences -
United States Federal Income Tax Consequences of Reverse Merger Structure."
The executive officers and directors of International Home Foods will receive
certain benefits in the merger which other stockholders do not receive.
The directors and executive officers of International Home Foods have
interests in the merger that are different from yours. Because of the following
benefits, these persons may be influenced to vote in favor of or to recommend
the merger. These benefits include:
o options to purchase International Home Foods common stock, including
any stock option held by any executive officer or director of
International Home Foods, will become fully exercisable and will be
cashed out in part and converted in part into options to acquire
ConAgra common stock;
o a number of International Home Foods employees, including executive
officers, have agreements with International Home Foods that provide
for severance payments that may be triggered upon termination of their
employment after completion of the merger; and
o directors and executive officers of International Home Foods have
customary rights to indemnification against specified liabilities, and
ConAgra has agreed to maintain directors' and officers' liability
insurance for them and has released them from liabilities under the
merger agreement.
The approval of the merger is very likely because of a voting agreement with
stockholders who will receive payments and other benefits if the merger is
completed.
C. Dean Metropoulos and three investment limited partnerships controlled by
Hicks, Muse, Tate & Furst Incorporated, or Hicks Muse, own an aggregate of
approximately 43.1% of the outstanding International Home Foods common stock.
The approval of the merger is very likely because Hicks Muse and Mr. Metropoulos
have agreed to vote for the approval of the merger, which requires an
affirmative vote by holders of a majority of the shares of International Home
Foods common stock.
C. Dean Metropoulos will have the right to receive a $6.1 million severance
payment upon completion of the merger. If the merger is completed, Hicks Muse &
Co. Partners, L.P., an affiliate of Hicks Muse, will receive a fee of $10
million pursuant to its financial advisory agreement with International Home
Foods.
International Home Foods will transfer a lease of office facilities and
related improvements and personal property to an entity, in which Hicks Muse or
C. Dean Metropoulos may have an interest, in return for the entity's assumption
of all obligations under the lease. Mr. Metropoulos will have use of the leased
facilities. The transferred assets have a net book value of approximately $1
million.
See "The Merger - Interests of Persons That Differ From Your Interests" on
page __.
The expected benefits from the merger may not be realized.
ConAgra entered into the merger agreement with the expectation that the
merger will result in certain benefits, including, without limitation, cost
savings, operating efficiencies, revenue enhancements and other synergies.
Achieving the benefits of the merger will depend in part upon the integration of
International Home Foods in an effective manner. ConAgra expects the merger will
be accretive to earnings for fiscal year 2001, although the merger would have
had a dilutive effect on ConAgra's earnings per share on a pro forma combined
basis for recent prior periods. No assurances can be given that the merger will
in fact be accretive to earnings in the future or that the benefits expected by
ConAgra in the merger will be realized. See "Unaudited Pro Forma Combined
Condensed Financial Statements" beginning on page ____.
If the merger does not occur, the companies will not benefit from the expenses
they have incurred in the pursuit of the merger.
The merger may not be completed. If the merger is not completed, ConAgra
and International Home Foods will have incurred substantial expenses for which
no ultimate benefit will have been received by either ConAgra or International
Home Foods. Additionally, if the merger agreement is terminated under specified
circumstances, International Home Foods will be required to pay ConAgra a
$50,000,000 termination fee. See "The Merger Agreement - Termination Fees and
Expenses."
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements, including statements in
the documents incorporated by reference in this document. The statements reflect
ConAgra management's and International Home Foods management's current views and
estimates of future economic circumstances, industry conditions, company
performance and financial results. The statements are based on many assumptions
and factors including availability and prices of raw materials, product pricing,
competitive environment and related market conditions, operating efficiencies,
access to capital and actions of governments. Any changes in these assumptions
or factors could produce significantly different results.
<PAGE>
THE SPECIAL MEETING
Date, Time and Place
This document is being furnished to the holders of International Home Foods
common stock in connection with the solicitation of proxies by the International
Home Foods board for use at the special meeting of International Home Foods
stockholders to be held on _________, 2000, at
_________________________________, commencing at ______ _.m.. local time.
Matters to be Considered at the Special Meeting
At the special meeting, International Home Foods stockholders will be asked
to consider and vote upon the adoption of the merger agreement and such other
matters as may be properly brought before the special meeting, or any
adjournment or postponement thereof.
International Home Foods Board Recommendation
The International Home Foods board members present at a special meeting
declared that the merger agreement is advisable, unanimously approved the merger
and the merger agreement and recommend that the International Home Foods
stockholders vote for the adoption of the merger agreement.
Vote Required
The adoption of the merger agreement will require the affirmative vote of
the holders of a majority of the shares of International Home Foods common stock
issued and outstanding as of the record date. International Home Foods
directors, executive officers and their affiliates held a total of approximately
___% of the shares of International Home Foods common stock outstanding on the
record date. A broker nonvote, a failure to vote or an abstention will have the
effect of a vote against the adoption of the merger agreement. C. Dean
Metropoulos and three investment limited partnerships controlled by Hicks Muse,
holding in aggregate approximately 43.1% of the outstanding voting power of
International Home Foods common stock, entered into a voting agreement and have
agreed to vote all of their International Home Foods shares in favor of the
adoption of the merger agreement. See "Voting Agreements."
Record Date, Stock Entitled to Vote and Quorum
The International Home Foods board has fixed the close of business on
___________, 2000 as the record date for the determination of the International
Home Foods stockholders entitled to notice of and to vote at the special
meeting. Accordingly, only International Home Foods stockholders of record as of
the record date will be entitled to notice of and to vote at the International
Home Foods special meeting.
As of the record date, there were outstanding and entitled to vote
___________ shares of International Home Foods common stock, constituting all of
the voting stock of International Home Foods, which shares were held by
approximately ___ holders of record. Each holder of record of shares of
International Home Foods common stock as of the record date is entitled to cast
one vote per share, which may be cast either in person or by properly executed
proxy, at the special meeting.
The presence, in person, or by properly executed proxy, of the holders of a
majority of the outstanding shares of International Home Foods common stock
entitled to vote at the special meeting is necessary to constitute a quorum at
the special meeting. Shares of International Home Foods common stock represented
in person or by proxy will be counted for the purpose of determining whether a
quorum is present at the special meeting. Broker nonvotes and shares that are
present and entitled to vote which abstain from voting as to a particular matter
will be treated as shares that are present and entitled to vote at the special
meeting for purposes of determining whether a quorum exists.
Voting of Proxies
Although you may not be able to attend the special meeting in person, you
have the opportunity to vote by using the proxy solicited by the International
Home Foods board which is enclosed with this document. Your vote is important.
Please complete, sign and return your proxy form. The individuals designated as
proxies will vote your shares according to your instructions. If you sign and
return your proxy and do not specify your choice, your shares will be voted for
adoption of the merger agreement. If you prefer, you may also vote by ballot at
the special meeting, which will cancel any proxy you previously gave.
Shares of International Home Foods common stock represented at the special
meeting by a properly executed, dated and returned proxy will be treated as
present at the special meeting for purposes of determining a quorum, without
regard to whether the proxy is marked as casting a vote or abstaining.
If you return a signed proxy indicating that you abstain from voting or if
you attend the special meeting but choose to abstain from voting on the
proposal, you will be considered present at the meeting for purposes of
determining if a quorum is present and not voting in favor of the adoption of
the merger agreement. Because adoption of the merger agreement requires the
affirmative vote of a majority of the outstanding voting power of International
Home Foods common stock, your abstention will have the same effect as if you had
voted against the proposal. In addition, if a broker or other nominee holds your
shares, but is not empowered to vote your shares in favor of or against adoption
of the merger agreement, it will have the same effect as if you voted against
the adoption of the merger agreement.
If you return a signed proxy, you will also be providing the individuals
set forth in the enclosed proxy card with the power to vote for one or more
adjournments of the special meeting, including for the purpose of permitting
further solicitations of proxies in favor of adoption of the merger agreement,
although no proxy that is voted against the adoption of the merger agreement
will be voted in favor of any such adjournment.
Revocability of Proxies
After you have signed and returned the enclosed proxy card, you may revoke
it at any time until it is voted at the special meeting. You can revoke your
proxy by:
o submitting to the Secretary of International Home Foods a written
notice of revocation bearing a later date;
o submitting a signed proxy bearing a later date; or
o voting by ballot at the International Home Foods special meeting,
although attendance at the special meeting will not, in and of itself,
constitute a revocation of a proxy.
Any written notice of revocation or subsequently dated proxy should be
mailed or delivered to M. Kelley Maggs, Secretary, International Home Foods,
Inc., 1633 Littleton Road, Parsippany, New Jersey 07054 , so as to be received
by the Secretary prior to the date of the special meeting.
Solicitation of Proxies
International Home Foods will bear the cost of the solicitation of proxies
from its stockholders and ConAgra will bear the costs of preparing, filing,
printing and distributing this proxy statement/prospectus. In addition to
solicitation by mail, the directors, officers and employees of International
Home Foods may solicit proxies from stockholders of International Home Foods by
telephone or telegram or by other means of communication. International Home
Foods directors, officers and employees will not be compensated but may be
reimbursed for reasonable out-of-pocket expenses in connection with such
solicitation. Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation material
to the beneficial owners of International Home Foods common stock, and
International Home Foods will reimburse such custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses. In addition,
International Home Foods has engaged Corporate Investor Communications, Inc. to
assist in the solicitation of proxies. International Home Foods anticipates that
it will incur total fees of approximately $________, plus reimbursement of
out-of-pocket expenses for this service.
You should not send International Home Foods stock certificates with your
proxy cards. If the merger is completed, the exchange agent will send you
transmittal forms and instructions for exchanging your stock certificates.
2001 Annual Meeting of Stockholders of International Home Foods
International Home Foods will hold the 2001 annual meeting of stockholders
only if the merger is not consummated. In the event of such a meeting, any
stockholder proposals intended to be presented at the meeting must be received
at International Home Foods' principal executive offices on or before November
30, 2000 in order to be included in International Home Foods' proxy materials
relating to that meeting.
<PAGE>
THE COMPANIES
ConAgra
ConAgra is one of the world's largest food companies. As North America's
largest food service manufacturer and second-largest retail food supplier,
ConAgra competes in multiple segments of the food business and focuses on adding
value for customers in the retail food, foodservice, and agricultural products
channels. ConAgra reports its financial results in three main segments: Packaged
Foods, Refrigerated Foods, and Agricultural Products.
In the Packaged Foods segment, ConAgra produces shelf-stable foods, frozen
foods and dairy case products for retail and foodservice markets. Shelf-stable
products include tomato products, cooking oils, popcorn, soup, puddings, meat
snacks, canned beans, cocoa mixes, peanut butter and ethnic products. Frozen
foods include dinners, entrees, potato products, snacks and seafood. Dairy case
products include tablespreads, cheeses, egg alternatives and dessert toppings.
Packaged Foods brands include Act II, Banquet, Blue Bonnet, County Line,
Fleischmann's, Healthy Choice, Hunt's, La Choy, Marie Callender's, Orville
Redenbacher's, Parkay, Peter Pan, Reddi-wip, Slim Jim, Snack Pack, Swiss Miss,
Van Camp's and Wesson.
In the Refrigerated Foods segment, ConAgra produces and markets branded
processed meats and deli meats, fresh meat and poultry products for retail,
foodservice and export markets. ConAgra's processed and deli meat products
include hot dogs, bacon, ham, sausages, cold cuts, turkey products and kosher
products. ConAgra's fresh meat products include beef, pork and lamb. ConAgra's
poultry businesses include chicken and turkey products. Refrigerated Foods
brands include Armour, Butterball, Cook's Country Pride, Decker, Eckrich,
Healthy Choice, Hebrew National and Swift Premium. ConAgra owns Australia Meat
Holdings Pty Ltd., a major Australian beef processor and exporter.
In the Agricultural Products segment, ConAgra's major crop inputs business
distributes crop protection chemicals, fertilizers and seeds at wholesale and
retail levels. In the ingredients sector, ConAgra primarily processes,
distributes and trades ingredients for food products and meat and poultry
production. ConAgra's ingredient processing businesses include flour, oat and
dry corn milling, barley malting, and specialty food ingredient manufacturing
and marketing. ConAgra internationally trades grain, dry edible beans and peas,
fertilizer and other commodities. ConAgra has Agricultural Products operations
in Canada, Australia, Europe, Asia and Latin America, as well as in the U.S.
Acquisitions have contributed substantially to ConAgra's sales and earnings
growth, both in the years of acquisition and in subsequent years. Major
acquisitions have included United Agri Products, Banquet Foods, Country Pride
Foods, Peavey Company, Monfort of Colorado, Morton, Chun King and Patio frozen
foods businesses, SIPCO (formerly Swift Independent Packing Company), the assets
of Armour Food Company, Pillsbury's grain merchandising business, eight U.S.
flour mills acquired from International Multifoods, Beatrice Company, the assets
of Elders' beef, malt and wool business in Australia, Golden Valley Microwave
Foods, Universal Frozen Foods, MC Retail Foods, Van Camp's canned bean and Wolf
Brand chili businesses, Canada Malting Company, Gilroy Foods, GoodMark Foods,
Nabisco's margarine and egg alternative businesses, and Seaboard Poultry.
ConAgra anticipates that it will continue to grow internally and through
acquisitions.
ConAgra is a Delaware corporation with executive offices located at One
ConAgra Drive, Omaha, Nebraska 68102-5001, telephone (402) 595-4000.
<PAGE>
International Home Foods
International Home Foods manufactures and markets a diversified portfolio
of shelf-stable food products including entrees, side dishes, snacks, canned
fish, canned meats and refrigerated surimi. International Home Foods sells its
products primarily in the United States, Canada and Mexico.
International Home Foods has three reportable business segments: Branded
Products, Seafood and Private Label and Foodservice. Branded Products includes
U.S. grocery sales for the following brands: Chef Boyardee, Libby's canned
meats, Southwest brands (Luck's, Ro*Tel, Dennison's and Ranch Style), Specialty
brands (PAM, Gulden's, Maypo, Wheatena, Maltex and G. Washington's) and Snack
brands (Crunch `n Munch, Jiffy pop and Campfire). Seafood includes all sales for
the Bumble Bee, Orleans, Libby's, Clover Leaf, Paramount and Louis Kemp brands
of seafood products as well as private label and foodservice seafood sales.
Private Label and Foodservice includes all private label canned pasta, cooking
spray, fruit snacks, ready-to-eat cereals, wholesome snack bars, pie crust and
personal care products and the sales to foodservice distributors.
Chef Boyardee(R), Bumble Bee(R), Louis Kemp(R), PAM(R), Franklin Crunch `n
Munch(R), Spreadables(R), Gulden's(R), Campfire(R), Ranch Style(R), Luck's(R),
Dennison's(R), Ro*Tel(R), Jiffy pop(R), Puritan(R), Fraser Farms(R), Grist
Mill(R), Orleans(R), Clover Leaf(R), Paramount(R), Seafest(R), Captain Jac(R),
Pacific Mate(R), Harris(R), Broadcast(R), Wheatena(R), Maypo(R), Maltex(R), and
G. Washington's(R) are registered trademarks. Libby's(R) is a registered
trademark licensed to International Home Foods through 2013.
International Home Foods is a Delaware corporation located at 1633
Littleton Road, Parsippany, New Jersey 07054, telephone (973) 359-9920.
<PAGE>
THE MERGER
General
This section of the document describes the material terms of the proposed
merger. You should carefully read this entire document and the other documents
to which we refer for a more complete understanding of the merger. A copy of the
merger agreement is attached as Annex A and incorporated by reference in this
document.
Form of the Merger
ConAgra will acquire International Home Foods in either a forward merger or
a reverse merger:
o in a forward merger structure, International Home Foods will be merged
into a ConAgra subsidiary and International Home Foods will cease to
exist as a corporation and the ConAgra subsidiary will acquire all of
the rights, privileges and obligations of International Home Foods;
and
o in a reverse merger structure, the ConAgra subsidiary will be merged
into International Home Foods, and International Home Foods will
continue to exist as a corporation but will be a wholly-owned
subsidiary of ConAgra.
See "The Merger - Material United States Federal Income Tax Consequences"
below for a summary of possible tax consequences to you in the event a forward
merger structure or reverse merger structure is used in the merger.
Merger Consideration
International Home Foods common stock will be converted into the right to
receive $11 in cash and a fraction of a share of ConAgra common stock determined
by the exchange ratio.
The exchange ratio will be determined by dividing $11 by the average
closing price of ConAgra common stock for the ten trading days ending on the
fifth full trading day prior to the merger. If the average trading price is
greater than $22, then $22 will be used as the average trading price in the
exchange ratio calculation. If the average trading price is less than $18, then
$18 will be used as the average trading price in the exchange ratio calculation.
As a consequence, you will receive $11 in cash and between .50000 and .61111 of
a share of ConAgra common stock for every share of International Home Foods
common stock that you own.
The ConAgra common stock you will receive will be delivered in whole
shares. You will receive cash in lieu of a fractional share of ConAgra common
stock that you would otherwise receive based on the closing price of the ConAgra
common stock on the day of the merger.
Effective Time of the Merger
The merger will be effective when the certificate of merger is filed with
the Delaware Secretary of State. The filing of the certificate of merger will
occur at the same time as, or immediately after, the closing.
Background of the Merger
Beginning in late 1998, the board of directors of International Home Foods
directed senior management and representatives of its financial advisor, Hicks,
Muse & Co. Partners, L.P. to explore and analyze International Home Foods'
strategic alternatives in order to maximize stockholder value. Among other
considerations, International Home Foods' board directed International Home
Foods' management and Hicks, Muse & Co. Partners to explore and analyze (1)
possible acquisitions by International Home Foods of complementary companies in
the foods industry and (2) a possible sale of all or part of International Home
Foods. After discussions with International Home Foods' senior management and
financial advisor, the board determined that, in order to increase stockholder
value, International Home Foods needed to significantly increase the scale of
its operations, either by means of one or more large strategic acquisitions or
by being acquired by a significantly larger strategic buyer. In order to
accomplish this strategy, the board directed senior management and Hicks, Muse &
Co. Partners to actively seek out large acquisition targets and to informally
determine the level of interest of potential large strategic buyers in acquiring
International Home Foods. Hicks, Muse & Co. Partners commenced identifying
potential acquisition targets and strategic buyers. In addition, Hicks, Muse &
Co. Partners communicated to several large investment banking firms that
International Home Foods would be receptive to inquiries by potential acquirors
and introductions to potential target candidates. International Home Foods,
however, did not formally engage any of those investment banking firms.
From early 1999 through June 22, 2000, International Home Foods, through
its senior management and financial advisor, conducted discussions with eight
strategic companies regarding either the sale of International Home Foods to
those companies or the acquisition of those companies by International Home
Foods. Of those alternatives, discussions with four of those companies
progressed to more detailed discussions or negotiations.
In December 1998, ConAgra's financial advisor contacted a representative of
International Home Foods and inquired whether International Home Foods would be
receptive to an acquisition inquiry by ConAgra. The two companies executed a
confidentiality agreement on December 2, 1998 and International Home Foods
subsequently provided non-public information to ConAgra for its review. On
February 3, 1999, Messrs. C. Dean Metropoulos, Charles W. Tate, Michael J.
Levitt, Andrew S. Rosen and Louis Pellicano, acting on behalf of International
Home Foods, met with Messrs. Bruce Rohde and Dwight Goslee of ConAgra and the
parties discussed the possibility of ConAgra acquiring International Home Foods.
On or about February 17, 1999, Mr. Levitt had a telephone conversation with
ConAgra's financial advisor, during which ConAgra's financial advisor presented
to Mr. Levitt an oral indication of ConAgra's preliminary interest in acquiring
International Home Foods at a price of $19 to $20 per share of International
Home Foods common stock, payable in ConAgra common stock. The International Home
Foods board was subsequently informed of ConAgra's indication of interest. After
discussions with International Home Foods' senior management and financial
advisor, the board of directors of International Home Foods determined that
ConAgra's valuation of International Home Foods did not include any value for
marketing initiatives that International Home Foods had recently put into place
and did not place a sufficient value on recent International Home Foods
acquisitions that had not yet been fully integrated. In addition, the board of
directors of International Home Foods determined that the indicated price range
did not represent a sufficient premium for International Home Foods' common
stock. After representatives of International Home Foods informed ConAgra of the
board's determination, the parties agreed that it was not feasible to continue
any further discussion at that time.
In early 1999, International Home Foods initiated informal discussions with
a company regarding the potential acquisition of that company by International
Home Foods. The two companies, however, could not reach agreement regarding the
respective values of the companies and the discussions were terminated.
In the Spring of 1999, Mr. Pellicano, on behalf of International Home
Foods, initiated informal discussions with another strategic buyer regarding the
possible acquisition of International Home Foods by that company. The two
companies continued informal discussions for approximately six months at various
intervals. In the Fall of 1999, the company indicated an informal valuation for
International Home Foods based upon a five times multiple of International Home
Foods' EBITDA. International Home Foods did not believe that the proposal was
sufficient and determined not to pursue further discussions.
In April 1999, Mr. Pellicano, on behalf of International Home Foods,
contacted senior management of another potential strategic buyer to initiate
informal discussions regarding the acquisition of International Home Foods by
that company. The strategic buyer expressed an interest in International Home
Foods and requested public information regarding International Home Foods, which
International Home Foods provided. An informal dialogue continued between the
two companies at various intervals during the next 12 months.
In late 1999, International Home Foods contacted representatives of another
company regarding the potential acquisition of that company. On January 11,
2000, the parties entered into a confidentiality agreement and exchanged
non-public information . During January and February of 2000, representatives of
International Home Foods and that company conducted discussions regarding the
respective values of the companies and the general terms of the proposed
acquisition. Subsequently, the target company ceased negotiations with
International Home Foods when it suffered significant declines in the market
price of its common stock.
In early 2000 Mr. Pellicano, on behalf of International Home Foods,
contacted senior management at another company regarding International Home
Foods' interest in acquiring a large division of that company. The two parties
conducted informal dialogues, but the other party ultimately determined that it
was not feasible to pursue a transaction with International Home Foods at that
time. Subsequently, negotiations between the two companies ceased.
On March 28, 2000, Mr. Pellicano spoke with the chief financial officer of
the strategic buyer first contacted in April 1999, who indicated that the
company was very interested in exploring the acquisition of International Home
Foods. On April 10, 2000, the parties signed a confidentiality agreement and
International Home Foods subsequently provided the strategic buyer with
non-public information, including its projections for the remainder of 2000, a
breakdown of sales by each of its major brand-name products and anticipated
synergies of the combined company.
On April 11, 2000, Messrs. Metropoulos and Pellicano met with the strategic
buyer's chief executive officer and chief financial officer. At that meeting,
the strategic buyer's chief executive officer said that the company was
interested in acquiring International Home Foods, but did not want to acquire
the Seafood division. He also said that his company needed to review further
information regarding International Home Foods. Mr. Metropoulos responded by
requesting an indication of the value that the strategic buyer would consider
paying for International Home Foods based upon the public information previously
provided. On April 14, 2000, the company proposed a cash offer of $17 per share
for the International Home Foods common stock without the Seafood division.
Subsequently, Mr. Metropoulos discussed this proposal with the
International Home Foods' board of directors. After discussing the proposal with
International Home Foods' financial advisor, the board of directors determined
that the discussions should continue and that Mr. Metropoulos should inform the
potential buyer that its offer was inadequate and that it needed to increase its
offer to at least $20 per share. The board of directors also directed
International Home Foods' financial advisor and senior management to explore the
feasibility and resulting value to the stockholders of spinning off the Seafood
division as a new stand-alone public company. On April 19, 2000, Mr. Metropoulos
communicated the board's position to the chief executive officer of the
strategic buyer. On April 29, 2000, the chief executive officer of the strategic
buyer contacted Mr. Metropoulos and proposed a cash offer of $20 per share of
International Home Foods common stock, conditioned on satisfactory resolution of
further due diligence inquiries.
Subsequently, Mr. Metropoulos informed the board of directors of
International Home Foods of the increased proposal and the need of the buyer to
conduct further due diligence. The board directed International Home Foods'
senior management to inform the buyer that it had an additional 10-day period in
which to conduct additional due diligence. In addition, the board instructed
International Home Foods' senior management to discuss the offer with
International Home Foods' outside legal counsel and instruct counsel to evaluate
the feasibility, from a legal standpoint, of the proposed spin off of the
Seafood division and to evaluate any antitrust issues presented by the potential
acquisition. During that 10-day period, International Home Foods, acting through
senior management and its financial advisor, provided the strategic buyer with
additional information and made a presentation to management of the strategic
buyer on May 9, 2000. Also, during this period, International Home Foods' senior
management and financial advisor continued to analyze the feasibility of the
proposed spin off of the Seafood division and the value of the spin off to
International Home Foods' stockholders. In addition, during this period,
International Home Foods and the potential buyer, through their respective legal
counsel, exchanged information concerning potential antitrust issues.
On May 26, 2000, the strategic buyer's chief executive officer and chief
financial officer called Mr. Metropoulos and said that, according to their
analysis, the proposed transaction would be dilutive to the strategic buyer and
decreased the proposal to a cash price of between $16 to $17 per share of
International Home Foods without the Seafood division. Mr. Metropoulos informed
the International Home Foods board of the buyer's reduced proposal.
Subsequently, the board, after discussing with International Home Foods'
financial advisor the reduced price and the feasibility and value of the
proposed spin off of the Seafood division, and after discussing potential
antitrust issues with International Home Foods' legal counsel, concluded not to
pursue further negotiations with that buyer.
On May 16, 2000, while International Home Foods was negotiating with the
strategic buyer described in the immediately preceding paragraphs, Mr.
Pellicano, on behalf of International Home Foods, contacted another strategic
buyer. On May 20, 2000, the two companies signed a confidentiality agreement and
International Home Foods provided this strategic buyer with non-public company
information, including its projections for the remainder of 2000, a breakdown of
sales by each of its major brand-name products and anticipated synergies of the
combined company. On May 23, 2000, a telephone conference was held between
Messrs. Metropoulos, Pellicano and Lawrence Hathaway, on behalf of International
Home Foods, and the chief executive officer and the chief financial officer of
the strategic buyer. During that call, the parties discussed in detail different
aspects of the proposed combination. On May 24, 2000, the chief financial
officer of the strategic buyer called Mr. Pellicano to inform him that the buyer
had calculated a total enterprise value for International Home Foods of only
$2.0 billion or $11 per share. As senior management of International Home Foods
considered this valuation to be seriously deficient, negotiations between the
two companies ceased at that point.
On May 17, 2000, Mr. Pellicano, on behalf of International Home Foods,
contacted an investment banker who represented another strategic buyer regarding
a possible combination of the two companies. After several days, however, the
investment banker informed Mr. Pellicano that, although the buyer was interested
in acquiring International Home Foods, it was unable to pursue the opportunity
at that time.
On May 17, 2000, Mr. Pellicano, on behalf of International Home Foods,
contacted senior management at ConAgra regarding a possible interest of ConAgra
in acquiring International Home Foods. On May 23, 2000, senior management of
ConAgra said that they were interested and would give a response through its
financial advisor. Subsequently, ConAgra's senior management and its financial
advisor met with Mr. Michael Levitt and communicated ConAgra's interest in
acquiring International Home Foods at $20 per share of International Home Foods'
common stock for consideration consisting of one-half cash and one-half ConAgra
common stock, if satisfactory transaction terms could be negotiated.
On June 1, 2000, the International Home Foods board held a telephonic
meeting and, after discussions with International Home Foods' financial advisor,
they determined that the offer of $20 per share was insufficient. International
Home Foods' board instructed Mr. Levitt to inform ConAgra that it needed to
increase its proposal to an all cash offer of $22 per share.
On June 5, 2000, ConAgra's financial advisor contacted Mr. Levitt and
proposed a purchase price of $22 per share, consisting of one-half cash and
one-half ConAgra common stock. ConAgra's proposal was conditioned upon a
termination fee of $50,000,000 and the execution of voting agreements by
investment partnerships controlled by Hicks, Muse, Tate & Furst Incorporated,
which own approximately 42.5% of the outstanding common stock of International
Home Foods, and Mr. Metropoulos, who owns approximately 0.6% of the outstanding
common stock, obligating those stockholders to vote in favor of the proposed
merger. Mr. Levitt informed International Home Foods' board of ConAgra's
proposal.
On June 8, 2000, the board of directors of International Home Foods held a
telephonic special meeting during which the board was presented with management
analysis of the proposed ConAgra transaction along with detailed information
concerning the background of International Home Foods' discussions with ConAgra,
the proposed terms of the merger and the potential effects of the proposed
merger on International Home Foods. At this meeting, International Home Foods'
legal counsel discussed with the board their fiduciary duties. At this meeting,
the board agreed that International Home Foods, acting through its senior
management and financial advisor, should continue negotiations with ConAgra and
should attempt to reach an understanding with respect to the methodology to be
used in determining the amount of ConAgra common stock to be received. In
addition, the board approved the engagement of Chase Securities Inc. to analyze
the ConAgra proposal from a fairness standpoint and, if requested, provide an
opinion concerning whether the consideration to be received in the merger by
International Home Foods' stockholders is fair from a financial point of view.
On June 9, 2000, the two companies executed an amendment to their 1998
confidentiality agreement. From June 9 through June 15, 2000, representatives of
International Home Foods and ConAgra held a series of discussions concerning the
methodology to be used in determining the amount of ConAgra common stock that
would comprise the merger consideration. On June 16, 2000, Mr. Levitt informed
the International Home Foods' board of a proposal that would establish an
exchange ratio that would provide for limited adjustment based upon the average
closing price of ConAgra common stock for the ten trading days ending on the
fifth trading day prior to the closing of the merger. The adjustment provisions
would be based upon the closing price for ConAgra common stock on the last
trading date prior to the entering into any merger agreement and would not
provide any termination rights based on stock price in favor of either
International Home Foods or ConAgra.
From June 9 through June 21, 2000, the parties continued to conduct their
respective due diligence reviews in person, telephonically and by facsimile.
On the evening of June 9, 2000, legal counsel for International Home Foods
received from ConAgra's legal counsel an initial draft of a proposed merger
agreement. From June 9 through June 12, 2000, International Home Foods and its
legal counsel analyzed the proposed terms and conditions of the merger and
developed International Home Foods' response to ConAgra's proposal. On the
evening of June 12, 2000, International Home Foods' counsel delivered to ConAgra
and its counsel a detailed mark-up of the proposed merger agreement and related
documents reflecting International Home Foods' comments.
From June 13, 2000 through June 22, 2000, the respective working groups of
International Home Foods and ConAgra continued negotiations of the merger
agreement and related documents.
On June 13, 2000, the board of directors of International Home Foods held a
telephonic special meeting during which the board discussed due diligence
efforts by both parties. In addition, the board discussed the terms of the
proposed transaction in detail with its management, financial advisor and legal
counsel.
On June 16, 2000, the board of directors of International Home Foods held a
special meeting during which it discussed in detail with its management,
financial advisor and legal counsel the terms of the proposed merger agreement
and related documentation. Subsequently, representatives from Chase presented a
financial overview of the proposed transaction. The presentation included an
overview of each of International Home Foods and ConAgra, together with a
valuation of the equity of International Home Foods, applying various
methodologies. Chase also presented its financial analysis of the proposed
merger consideration to the board.
On June 20, 2000, the board of directors of International Home Foods held a
telephonic special meeting during which the board discussed the terms of the
proposed merger agreement and related documentation and the board's position on
outstanding issues.
On June 22, 2000, beginning at 2:00 p.m. Eastern Time, the board of
directors of ConAgra held a special meeting to discuss the proposed merger.
Following the discussions, the members of the ConAgra board present unanimously
approved adoption of the merger agreement and related documents and authorized
its management to complete negotiations of the merger transaction on the basis
approved by the board.
On June 22, 2000, at 5:00 p.m. Eastern Daylight Savings time, the board of
directors of International Home Foods held a special telephonic meeting during
which International Home Foods management, financial advisor and legal counsel
reviewed with the board the terms of the merger agreement and the status of
negotiations with ConAgra, including the status of outstanding issues. At this
meeting, Chase updated its financial analysis of the merger consideration.
After the International Home Foods board meeting, ConAgra contacted
representatives of International Home Foods to convey ConAgra's proposed
resolution to the outstanding issues. This proposal included using, for purposes
of the exchange ratio adjustment, a per share price of $20 for ConAgra's common
stock rather than the June 22 closing price of $19.88.
On June 22, 2000, at 11:00 p.m. Eastern Daylight Savings time, the
International Home Foods board held a special telephonic meeting during which
management and legal counsel updated the board regarding ConAgra's proposal for
resolving the outstanding issues. Chase delivered its written opinion to the
board, to the effect that, as of the date of the opinion and based upon and
subject to the matters stated in its opinion, the proposed merger consideration
was fair, from a financial point of view, to the holders of International Home
Foods common stock. See "Opinion of International Home Foods' Financial
Advisor." After further deliberation and discussion, the members of the board
present for the special meeting unanimously approved the merger agreement and
related transactions and instructed International Home Foods' senior management
and legal counsel to finalize and execute the merger agreement on behalf of
International Home Foods. Additionally, the members of the International Home
Foods board present for the special meeting unanimously voted to recommend that
the International Home Foods stockholders adopt the merger agreement with
ConAgra.
Subsequent to the International Home Foods board meeting, legal counsel for
International Home Foods and ConAgra finalized the merger agreement and related
documents, and early on the morning of June 23, 2000, International Home Foods
and ConAgra executed the merger agreement. The transaction was announced prior
to the commencement of trading on June 23, 2000.
ConAgra's Reasons for the Merger
The board of directors of ConAgra believes the merger fits with ConAgra's
strategy of seeking growth opportunities across the food chain. The ConAgra
board believes the merger will benefit ConAgra by:
o enhancing ConAgra's presence in the shelf stable branded products
retail category with the acquisition of the Chef Boyardee, PAM,
Libby's, Dennison's, Ro*Tel, Ranch Style, Luck's, Gulden's, Crunch `n
Munch, Jiffy pop, Campfire, Bumble Bee, Orleans, Clover Leaf,
Paramount and Louis Kemp brands;
o raising from 27 to 33 the number of ConAgra brands with annual retail
sales exceeding $100 million;
o joining the complementary products of ConAgra and International Home
Foods, with potential for growth in both retail and food service
markets, including
ConAgra International Home Foods
Ketchup Mustard
Frozen Meals Shelf Stable Meals
Chicken Fish
Deli Meats Canned Meats
o Capitalizing on the business acquisition experience of both ConAgra
and International Home Foods, with each company having integrated ten
or more acquisitions during the past four years; and
o providing the opportunity to increase earnings per share through the
realization of available synergies, including plant consolidations and
reduction of overhead, which synergies ConAgra estimates at more than
$37.5 million in fiscal 2001.
The ConAgra board believes that both ConAgra and International Home Foods
have records of successful participation and growth in the food industry, which
factors should enhance long-term values for ConAgra stockholders. At a special
board meeting on June 22, 2000, the ConAgra board determined that the merger was
in the best interest of stockholders of ConAgra and approved the merger
agreement and the related documents.
International Home Foods' Reasons for the Merger
THE MEMBERS OF THE INTERNATIONAL HOME FOODS BOARD PRESENT AT THE JUNE 22ND
SPECIAL MEETING UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR THE ADOPTION OF THE
MERGER AGREEMENT.
The International Home Foods Board believes that the terms of the merger
agreement and the merger are advisable to and in the best interests of
International Home Foods and its stockholders. Accordingly, the members of the
International Home Foods board present at the June 22nd special meeting have
unanimously approved the merger agreement and the merger and recommend that you
adopt the merger agreement. In reaching its determination to recommend the
merger agreement, the board considered a number of factors, including the
following material factors:
1. The International Home Foods board considered the value of the
consideration to be received by International Home Foods' stockholders in the
merger. The board considered the historical market prices and trading
information for the common stock of International Home Foods and ConAgra, the
price per share offered by ConAgra, the certainty of value provided by the cash
portion of the consideration, and the opportunity for International Home Foods
stockholders to participate, as holders of ConAgra common stock, in a larger,
more diversified food company, including participating in the value that may be
generated through the combination of the two companies. In addition, the
International Home Foods board considered the fact that the per share merger
consideration represented a significant premium over the market prices at which
International Home Foods' common stock had previously traded, including the fact
that the targeted $22 per share merger consideration represented a 43% premium
over the $15 3/8 closing price on June 22, 2000, the last trading day before
International Home Foods announced the proposed merger.
2. As described above under "The Merger - Background of the Merger," the
International Home Foods board noted that the merger consideration and the
ultimate selection of the ConAgra proposal was the result of an extensive
process that resulted in discussions with a substantial number of potential
buyers.
3. The International Home Foods board considered information concerning
International Home Foods' financial performance, financial condition, business
operations and prospects. The board considered the prospects of continuing to
operate International Home Foods as an independent public company and the
possibility that International Home Foods' future performance might not in the
foreseeable future lead to a trading price for International Home Foods common
stock having a higher present value than the merger consideration. The
International Home Foods board considered the nature and extent of the interests
of International Home Foods executive management in the transaction that were
different from or in addition to the interest of the stockholders in general.
4. The International Home Foods board considered the terms and conditions
of the merger agreement and related agreements, including the amount and form of
consideration to be received by International Home Foods' stockholders, the
voting agreements, the restrictions relating to solicitation of third party
proposals and the board's ability to consider and accept an unsolicited superior
proposal, the termination provisions, including that International Home Foods
has no right to terminate the merger agreement if the average trading price of
ConAgra common stock decreases to a level at which there is no adjustment to the
exchange ratio, and the size, nature and events that would trigger the payment
of the $50 million termination fee under the merger agreement, and the impact
that the termination fee provision and the provisions limiting International
Home Foods from soliciting or encouraging alternative proposals could have on
the likelihood that a third party would make a competing offer to acquire
International Home Foods.
5. The International Home Foods board considered the financial condition,
cash flows and results of operations of ConAgra, on both a historical and
prospective basis and the historical market prices and trading information with
respect to ConAgra common stock. In addition, the board considered the fact that
ConAgra has historically paid cash dividends to its stockholders.
6. The International Home Foods board considered the fact that ConAgra
recently implemented a restructuring program providing it with the opportunity
to achieve significant cost savings in its operations during the next few years.
7. The International Home Foods board considered its belief that the shares
of International Home Foods common stock have historically been undervalued due
in part to the multi-segment nature of International Home Foods' businesses,
making it more expensive, and thus exceedingly difficult, for International Home
Foods to continue its strategy of achieving growth through acquisitions of other
companies and businesses, and making it more difficult for International Home
Foods to achieve growth levels consistent with those historically achieved by
International Home Foods.
8. The International Home Foods board considered its expectation that the
addition of International Home Foods' operations to ConAgra would likely
increase the overall value and profitability of ConAgra, tending to produce
greater stockholder value for International Home Foods' stockholders.
9. The International Home Foods board considered the consents and approvals
required to consummate the merger, including regulatory clearance under the
Hart-Scott-Rodino Act and foreign antitrust laws, and the prospects for
receiving those consents and approvals. The International Home Foods board also
considered that the merger agreement placed the burden and risk upon ConAgra to
obtain the required approvals under the Hart-Scott-Rodino Act and Canadian and
Mexican anti-trust laws.
10. The International Home Foods board considered the opportunity of the
combined company to reduce costs through economies of scale that would not have
been readily achievable by International Home Foods independently, and the
elimination of redundant operations and duplicate administrative functions.
11. The International Home Foods board considered the opinion of Chase
dated June 22, 2000, as to the fairness, from a financial point of view, of the
merger consideration as of the date of the opinion and subject to matters stated
in the opinion, to the holders of International Home Foods' common stock, and
further considered the related financial analysis performed by Chase, as
described below under "The Merger - Opinion of International Home Foods'
Financial Advisor." The board considered the assumptions applicable to Chases's
opinion, including the assumption that ConAgra's average per share trading value
during the calculation period remains within the $18.00 to $22.00 collar band.
The foregoing discussion of factors considered by the International Home
Foods board is not exhaustive, but International Home Foods believes it includes
the material factors considered by the board. The board did not quantify or
otherwise attempt to assign relative weights to the specific factors the board
considered in reaching its determination to recommend the merger. Rather, the
board viewed its position and recommendation as being based on the total
information presented to and considered by the board.
Opinion of International Home Foods' Financial Advisor
On June 22, 2000, Chase Securities Inc. delivered its written opinion to
the board of directors of International Home Foods to the effect that, as of
that date, and based upon the assumptions made, matters considered and limits of
review set forth in its opinion, the merger consideration was fair to the
holders of International Home Foods common stock from a financial point of view.
The full text of Chase's opinion, which sets forth the assumptions made,
matters considered and various limitations on the scope of review undertaken by
Chase is attached as Annex B to this proxy statement/prospectus and is
incorporated by reference in this document. International Home Foods
stockholders are urged to read the opinion in its entirety. Chase's opinion was
provided for the use and benefit of International Home Foods' board of directors
in its evaluation of the merger, was directed only to the fairness of the merger
consideration to the holders of International Home Foods common stock from a
financial point of view, and does not constitute a recommendation to any
International Home Foods stockholder as to how that stockholder should vote, or
agree to vote, with respect to the merger. The summary of Chase's opinion set
forth in this proxy statement/prospectus is qualified in its entirety by
reference to the full text of its opinion.
In arriving at its opinion, Chase, among other things:
o reviewed a draft of the merger agreement in the form provided to it
and assumed that the final form of the agreement would not vary in any
regard that is material to Chase's analysis;
o reviewed publicly available business and financial information that
Chase deemed relevant relating to International Home Foods and ConAgra
and the respective industries in which they operate;
o reviewed specific internal non-public financial and operating data
provided to Chase by the management of International Home Foods
relating to its business, including specific forecast and projection
information as to the future financial results of the business;
o discussed with members of the senior management of International Home
Foods and ConAgra, International Home Foods' and ConAgra's operations,
historical financial statements and future prospects, before and after
giving effect to the merger, as well as their views of the business,
operational and strategic benefits and other implications of the
merger and other matters Chase deemed necessary or appropriate;
o compared the financial and operating performance of International Home
Foods and ConAgra with publicly available information concerning
certain other companies Chase deemed comparable and reviewed the
relevant historical stock prices of the common stock of International
Home Foods, the common stock of ConAgra and specific publicly traded
securities of those other companies;
o reviewed the financial terms of certain recent business combinations
and acquisition transactions Chase deemed reasonably comparable to the
merger and otherwise relevant to its inquiry; and
o made other analyses and examinations as Chase deemed necessary or
appropriate.
Chase assumed and relied upon, without assuming any responsibility for
verification, the accuracy and completeness of all of the financial and other
information provided to, discussed with, or reviewed by or for it, or publicly
available, for purposes of its opinion and further relied upon the assurances of
the managements of International Home Foods and ConAgra that they are not aware
of any facts that would make that information inaccurate or misleading. Chase
neither made nor obtained any independent evaluations or appraisals of the
assets or liabilities of International Home Foods or ConAgra, nor did Chase
conduct a physical inspection of the properties and facilities of International
Home Foods or ConAgra. Chase assumed that the financial forecast and projection
information provided to or discussed with it by or on behalf of International
Home Foods and ConAgra were reasonably determined on bases reflecting the best
currently available estimates and judgments of the managements of International
Home Foods and ConAgra as to the future financial performance of these
companies, including after giving effect to the merger. Chase further assumed
that, in all material respects, these forecasts and projections would be
realized in the amounts and times indicated. Chase expressed no view as to such
forecast or projection information or the assumptions upon which they were
based.
For purposes of rendering its opinion, Chase assumed, in all respects
material to its analysis, that the representations and warranties of each party
contained in the merger agreement are true and correct, that each party would
perform all of the covenants and agreements required to be performed by it under
the merger agreement and that all conditions to the consummation of the merger
would be satisfied without waiver thereof. Chase also assumed that all material
governmental, regulatory or other consents and approvals would be obtained and
that in the course of obtaining any necessary governmental, regulatory or other
consents and approvals, or any amendments, modifications or waivers to any
documents to which either of International Home Foods or ConAgra is a party, as
contemplated by the merger agreement, no restrictions would be imposed or
amendments, modifications or waivers made that would have any material adverse
effect on the contemplated benefits to International Home Foods or ConAgra of
the merger. Chase also assumed that the merger would be consummated under
circumstances where the actual average closing price of ConAgra common stock on
the NYSE Composite Transactions List for the ten full trading days ending on the
fifth full trading day immediately preceding the closing date of the merger
would not be less than the defined "Average Trading Price" used under the merger
agreement to calculate the exchange ratio, as a result of the limitation
establishing the maximum exchange ratio under the merger agreement.
In connection with the preparation of its opinion, Chase was not authorized
by International Home Foods or by the board of directors of International Home
Foods to solicit, nor did Chase solicit, third-party indications of interest for
the acquisition of all or any part of International Home Foods. Chase's opinion
was necessarily based on market, economic and other conditions as they existed
and could be evaluated on the date of its opinion. Chase's opinion was limited
to the fairness, from a financial point of view, to the holders of International
Home Foods common stock of the merger consideration in the merger, and Chase
expressed no opinion as to the merits of the underlying decision by
International Home Foods to engage in the merger. Chase expressed no opinion on
matters of a tax, accounting or legal nature related to the merger. Chase's
opinion does not constitute a recommendation to any stockholder of International
Home Foods as to how the stockholder should vote, or agree to vote, with respect
to the merger, or any other matters relating to the merger. In addition, Chase
expressed no opinion as to the prices at which International Home Foods common
stock or ConAgra common stock would trade following the announcement or the
consummation of the merger.
The following is a summary of various financial and comparative analyses
performed by Chase and reviewed with the board of directors of International
Home Foods in connection with Chase's presentation and its opinion to the board.
Transaction Overview.
Chase presented an overview of the proposed transaction including the key
financial terms of the transaction and the implied valuation of International
Home Foods based on the price negotiated by International Home Foods and ConAgra
of $22.00 per share, assuming ConAgra's average per share trading value during
the calculation period remains within the $18.00 to $22.00 collar band, and
73.918 million basic common shares of International Home Foods outstanding as of
June 21, 2000 and 11.000 million in-the-money options outstanding as per
management estimates. Chase noted that the equity value based on the price of
$22 per share would be approximately $1,737.3 million. Chase further noted that
after taking into account net debt of $1,190.8 million for International Home
Foods, the enterprise value, calculated as the sum of equity value, total debt,
preferred equity and minority interest minus cash and cash equivalents would be
$2,928.2 million.
The enterprise value of $2,928.2 million represents a 1.34x multiple to
International Home Foods' last twelve months, referred to as LTM revenue, a
1.28x multiple to International Home Foods' estimated fiscal year 2000 revenue,
a 1.24x multiple to International Home Foods' estimated fiscal year 2001
revenue, an 8.8x multiple to International Home Foods' LTM earnings before
interest, taxes, depreciation and amortization, referred to as EBITDA, an 8.1x
multiple to International Home Foods' estimated fiscal year 2000 EBITDA, and a
7.8x multiple to International Home Foods' estimated fiscal year 2001 EBITDA.
The calculations for revenue and EBITDA were based on projections provided by
International Home Foods' management.
Comparable Publicly-Traded Companies Analysis
The purpose of this analysis was to compare the merger consideration in the
merger with the implied merger consideration range derived by valuing
International Home Foods based on the trading multiples of a peer group of
publicly traded companies. Chase compared specific financial ratios for
International Home Foods and ConAgra to those for selected publicly traded
companies in the food industry. These comparisons were based in part on
information provided by International Home Foods to Chase and publicly available
information for the selected publicly traded comparable companies as well as
ConAgra.
International Home Foods was compared to the following group of 19
companies and separately to a subset of the group which are small to mid-cap
companies, indicated by asterisk below:
o The Procter & Gamble Company
o PepsiCo, Inc.
o Philip Morris Companies, Inc.
o BESTFOODS
o Sara Lee Corporation
o H. J. Heinz Company
o Nabisco Holdings Corp.
o Campbell Soup Company
o General Mills, Inc.
o Kellogg Company
o The Quaker Oats Company
o Hershey Foods Corporation
o Keebler Foods Company*
o Hormel Foods Corporation*
o McCormick & Company, Incorporated*
o Suiza Foods Corporation*
o Dean Foods Company*
o Aurora Foods Inc.*
o Vlasic Foods International, Inc.*
Estimated financial data for the group was derived from equity research
reports published by Wall Street Brokerages, adjusted as necessary to reflect a
fiscal year ending as of December.
Chase noted that the enterprise value as a multiple of estimated calendar
year 2000 EBITDA ranged from 4.0x to 15.7x for the group with a median of 9.0x
and ranged from 5.3x to 9.7x for the small to mid-cap group with a median of
7.0x. Using these multiples Chase derived a range of enterprise value as a
multiple of estimated calendar year 2000 EBITDA of 6.5x to 7.5x for
International Home Foods and then calculated an implied enterprise value for
International Home Foods of $2,348.7 million to $2,710.1 million based on its
estimated calendar year 2000 EBITDA of $361.3 million, corresponding to an
implied price per International Home Foods share of $15.10 to $19.80.
Chase analyzed the share price as of June 21, 2000 of each of the companies
in the group, as a multiple of calendar year 2000 estimated earnings per share,
referred to as EPS. Estimated financial data for the group was derived from the
International Brokers Estimate System, referred to as I/B/E/S, as of June 21,
2000. Chase noted that the share price to estimated calendar year 2000 EPS
ranged from 3.9x to 34.4x for the group with a median of 16.2x and ranged from
3.9x to 21.4x for the small to mid-cap group with a median of 11.8x. Using these
multiples, Chase derived a range of share price to estimated calendar year 2000
EPS of 10.0x to 12.0x for International Home Foods and then calculated an
implied equity value for International Home Foods of $1,377.5 million to
$1,653.1 million based on estimated calendar year 2000 net income of $137.8
million, corresponding to an implied price per International Home Foods share of
$17.95 to $21.55.
Chase noted that the enterprise value as a multiple of LTM EBITDA ranged
from 4.2x to 16.9x for the large-cap companies in the group with a median of
10.6x and ranged from 5.9x to 11.2x for the small to mid-cap group with a median
of 8.6x. Using these multiples, Chase derived a range of enterprise value as a
multiple of LTM EBITDA of 7.50x to 8.25x for International Home Foods and then
calculated an implied enterprise value for International Home Foods of $2,483.4
million to $2,731.8 million based on its LTM EBITDA of $335.4 million,
corresponding to an implied price per International Home Foods share of $16.85
to $20.10.
Chase's analysis and calculations for all the analyses performed were, to
the extent relevant, based on:
o International Home Foods' closing share price as of June 21, 2000;
o International Home Foods' net debt calculated as the sum of total
debt, preferred equity and minority interest minus cash and cash
equivalents, as reported by International Home Foods in its quarterly
report filed with the SEC on March 31, 2000; and
o International Home Foods' basic common shares outstanding as of June
21, 2000 of 73.918 million and outstanding, in-the-money options of
11.000 million, as provided by the International Home Foods
management.
None of the companies in the group was identical to International Home
Foods, and accordingly, an analysis of these companies necessarily involves
complex consideration and judgements concerning differences in the financial and
operational characteristics of the companies involved and other factors that
could affect the companies compared to International Home Foods.
Comparable Transactions Analysis
The purpose of this analysis was to compare the merger consideration in the
merger with the implied merger consideration range derived by valuing
International Home Foods based on comparable acquisitions of public companies in
the food industry. Chase examined 15 selected larger acquisition transactions,
referred to as the large transaction group, from April 1988 through the present
with estimated transaction values ranging from approximately $24,362.6 million
to $2,300.0 million and Chase examined 11 selected smaller acquisition
transactions, referred to as the smaller transaction group, from September 1992
through January 2000 with estimated transaction values ranging from
approximately $1,786.2 million to $376.8 million.
<TABLE>
<S> <C>
Large Transaction Group Smaller Transaction Group
o Unilever PLC's acquisition of BESTFOODS o The Quaker Oats Company's acquisition of
o Philip Morris Companies, Inc.'s acquisition of Snapple Beverage Corp.
Kraft Foods, Inc. o Hicks Muse Tate & Furst Incorporated's
Grand Metropolitan Public Limited Company's acquisition of American Food Products, Inc.
acquisition of The Pillsbury Company o Kraft General Foods (IL)'s acquisition of
o Nestle SA's acquisition of Rowntree PLC Freia Marabou AS
o Kohlberg Kravis Roberts & Co.'s acquisition of o Nestle SA's acquisition of Spillers Petfoods
Borden, Inc. (Dalgety Plc)
o Sandoz Ltd.'s acquisition of Gerber Products o Groupe Danone SA's acquisition of McKesson
Company Water Products (subsidiary of McKesson HBOC)
o Philip Morris Companies, Inc.'s acquisition of o Campbell Soup Company's acquisition of Pace
Jacobs Suchard AG Foods Ltd.
o PepsiCo, Inc.'s acquisition of Tropicana o General Mills Inc.'s acquisition of the
Products Inc. Branded Cereal and Snack businesses of Ralcorp
o Grand Metropolitan Public Limited Company's Holdings Inc.
acquisition of Pet Incorporated o New World Pasta LLC's acquisition of Hershey
o Nestle SA's acquisition of Source Perrier SA Foods Corporation's US Pasta division
o Finalrealm's acquisition of United Biscuits o Keebler Foods Company's acquisition of
(Holdings) plc President Baking Company, a unit of President
o Groupe BSN SA's acquisition of the assets of Enterprise Corp.
Nabisco Europe NV o Aurora Foods Inc.'s purchase of the trademark
o Cadbury-Schweppes plc's acquisition of Dr. "Duncan Hines" from The Procter & Gamble Company
Pepper/Seven-Up Companies, Inc. o Eagle Family Foods' acquisition of North
o Unilever PLC's acquisition of Slim-Fast Foods American Grocery Products business from Borden
Company Foods Corp.
o The Procter & Gamble Company's acquisition of
IAMs Co.
</TABLE>
Chase analyzed the transaction value of each acquisition as a multiple of
EBITDA of the target for the last twelve months. Chase noted that enterprise
value as a multiple of LTM EBITDA ranged from 8.3x to 17.3x for the large
transaction group with the median of 12.3x and ranged from 5.7x to 22.9x for the
smaller transaction group with a median of 10.0x. Using these multiples, Chase
derived a range of enterprise value as a multiple of LTM EBITDA of 7.0x to 8.5x
for International Home Foods and then calculated an implied enterprise value for
International Home Foods of $2,317.9 million to $2,814.5 million based on its
LTM EBITDA of $335.4 million, corresponding to an implied price per
International Home Foods share of $14.70 to $21.20.
Because the market conditions, rationale and circumstances surrounding the
selected transactions utilized in Chase's comparable transactions analysis were
specific to each transaction and vary between transactions and because of
inherent differences between the businesses, operations and prospects of
International Home Foods and the companies involved in the selected
transactions, Chase believes that a purely quantitative analysis of the selected
transactions, without considering qualitative judgments concerning differences
between the characteristics of the selected transactions would not be
particularly meaningful in the context of the merger.
Discounted Cash Flow Analysis
The purpose of this analysis was to compare the merger consideration in the
merger with the implied net share price value range derived by valuing
International Home Foods based on the present value of International Home Foods'
projected free cash flows, calculated as the sum of operating earnings after
tax, depreciation, tax deductible amortization, change in working capital and
changes in deferred taxes minus capital expenditures, and terminal value
calculated as a multiple of estimated fiscal year 2005 EBITDA. Chase calculated
the implied present enterprise value of International Home Foods by discounting
the following:
o Estimated free cash flow for the period June 30, 2000 through December
31, 2000;
o Estimated free cash flow for the fiscal years ending December 31, 2001
through December 31, 2005; and
o Estimated terminal enterprise value of International Home Foods at the
end of fiscal year ending December 31, 2005 based on:
o A range of estimated enterprise value to EBITDA multiples of 6.0x
to 7.0x; and
o Estimated EBITDA for fiscal year ending December 31, 2005 of
$424.2 million.
Chase assumed a range of discount rates of 9.0% to 10.0% based on
International Home Foods' estimated weighted average cost of capital and
estimated weighted average cost of capital of comparable food companies.
Using the present value of International Home Foods' estimated free cash
flows for the above-mentioned periods and its terminal value at December 31,
2005 based on a mid-year convention, Chase calculated an implied enterprise
value for International Home Foods of $2,568.6 million to $2,935.9 million,
corresponding to an implied price per International Home Foods share of $18.00
to $22.75.
Other Analyses
Among other analyses performed and factors considered by Chase in
connection with its opinion, Chase reviewed the historical trading price of
International Home Foods common stock based on closing sale prices for the
period from June 19, 1998 through June 20, 2000 and observed that the two-year
low and high of International Home Foods common stock ranged from $10.38 to
$25.63, with a two-year average of $17.53 and a three-month average of $15.69,
as compared to the ConAgra's implied per share offer price of $22.00, assuming
ConAgra's average per share trading value during the calculation period remains
within the $18.00 to $22.00 collar band.
The summary set forth above does not purport to be a complete description
of the analyses performed by Chase in arriving at its opinion. Arriving at a
fairness opinion is a complex process not necessarily susceptible to partial
analysis or summary description. Chase believes that its analyses must be
considered as a whole and that selecting portions of analyses and of the factors
considered by it, without considering all these factors and analyses, could
create a misleading view of the processes underlying its opinion. Chase did not
assign relative weights to any of its analyses in preparing its opinion. The
matters considered by Chase in its analyses were based on numerous
macroeconomic, operating and financial assumptions with respect to industry
performance, general business and economic conditions and other matters, many of
which are beyond International Home Foods' and ConAgra's control and involve the
application of complex methodologies and educated judgment. Any estimates
incorporated in the analyses performed by Chase are not necessarily indicative
of actual past or future results or values, which may be significantly more or
less favorable than these estimates. Estimated values do not purport to be
appraisals and do not necessarily reflect the prices at which businesses or
companies may be sold in the future, and these estimates are inherently subject
to uncertainty.
Pursuant to a letter agreement, dated as of May 12, 2000, International
Home Foods has agreed to pay Chase a fee of $2,000,000 for its services, of
which $500,000 was payable upon delivery of its opinion, and $1,500,000 is
contingent upon the closing of the transaction. International Home Foods has
also agreed to reimburse Chase for its reasonable out-of-pocket expenses
including fees of its counsel and to indemnify Chase against certain liabilities
relating to or arising out of its engagement.
Chase, as part of its financial advisory business, is continually engaged
in the valuation of businesses and their securities in connection with mergers
and acquisitions and valuations for estate, corporate and other purposes.
International Home Foods selected Chase to act as its financial advisor on the
basis of its experience and expertise.
The Chase Manhattan Corporation and its affiliates, including Chase, in the
ordinary course of business, have from time to time provided, and in the future
may continue to provide, for customary compensation, commercial and investment
banking services to International Home Foods, Hicks, Muse, Tate & Furst
Incorporated and ConAgra and their respective affiliates. In the ordinary course
of business, Chase or its affiliates may own, manage or trade in the debt and
equity securities of International Home Foods and ConAgra and their respective
affiliates for its own accounts and for the accounts of its customers and,
accordingly, may at any time hold a long or short position in those securities.
Material United States Federal Income Tax Consequences
General
The following discussion is a summary of the material United States federal
income tax consequences of the merger to you. This summary is based on the
Internal Revenue Code of 1986, as amended, Treasury regulations, administrative
rulings and court decisions in effect as of the date of this document, all of
which may change at any time, possibly with retroactive effect. The discussion
below does not address the effects of any state, local or foreign tax laws on
the merger. Your tax treatment may vary depending on your particular situation,
and certain International Home Foods stockholders may be subject to special
rules not discussed below, including foreign persons, financial institutions,
tax-exempt organizations, insurance companies, dealers in securities,
individuals who acquired their shares of International Home Foods common stock
pursuant to the exercise of stock options or otherwise as compensation, and
persons who hold their shares as part of a hedge, straddle or conversion
transaction, or persons who do not hold their International Home Foods shares as
capital assets.
You should be aware that the tax consequences to each person may vary.
Therefore, we urge you to consult a tax advisor regarding the particular
consequences of the merger, including the effects of state, local, foreign and
other tax laws.
The United States federal income tax consequences of the merger to you will
not be determined until the date of the completion of the merger.
Summary
The U.S. federal income tax consequences to you of the merger may differ
depending on whether the forward merger structure or the reverse merger
structure is used. See "The Merger - Form of the Merger" for a description of
the forward merger and reverse merger structures.
o If the forward merger structure is used and other assumptions are met,
International Home Foods will deliver an opinion from its counsel,
Vinson & Elkins L.L.P., based on specified representations and
assumptions, to ConAgra to the effect that the merger will qualify as
a reorganization under Section 368(a) of the Internal Revenue Code.
o If the reverse merger structure is used, the merger will not
constitute a reorganization under Section 368(a) of the Internal
Revenue Code. Instead, it will be treated as a taxable sale of
International Home Foods stock, in exchange for ConAgra common stock
and cash.
The gain or loss you will realize on your shares of International Home Foods
common stock, if any, is generally the difference by which the value of the cash
and ConAgra common stock you receive in the merger exceeds your adjusted tax
basis in your shares. Your adjusted tax basis in your shares of International
Home Foods is generally the price you paid for the shares including any
brokerage commissions. In the event of a forward merger, any gain realized on
your shares is recognized only to the extent of any cash you receive pursuant to
the merger, and you are not allowed to recognize any loss realized on your
shares.
o If you have no realized loss with respect to any of your shares of
International Home Foods common stock and your average realized gain
per share is less than $11, then the U.S. federal income tax
consequences to you will generally be the same whether a forward
merger structure or a reverse merger structure is used, since the $11
cash portion of the merger consideration is taxable, to the extent you
have realized gain, under either structure.
o If you have realized loss with respect to some of your shares of
International Home Foods common stock or your average realized gain
per share is greater than $11 per share, then the tax consequences to
you may be different if a forward merger is used rather than a reverse
merger.
We will not know until the closing of the merger whether the forward merger
structure or the reverse merger structure will be used. As a result, you will
not know the tax consequences of the merger at the time you vote on it.
The purpose of using the reverse merger structure is to avoid the
substantial corporate level tax that would result if the merger were to be
structured as a forward merger and were to fail to satisfy the requirements for
a tax-free reorganization under Section 368(a) of the Internal Revenue Code. One
of the requirements that must be satisfied in order for the forward merger to
qualify as a reorganization under Section 368(a) of the Internal Revenue Code is
the continuity of stockholder interest requirement. This requirement will be
satisfied if the International Home Foods stockholders exchange a substantial
portion of their proprietary interests in International Home Foods for
proprietary interests in ConAgra.
The Internal Revenue Service takes the position for advance ruling purposes
that the continuity of stockholder interest requirement is satisfied in a
reorganization if the value of the acquiring corporation's stock received in the
reorganization by the acquired corporation's stockholders equals or exceeds 50%
of the total consideration paid for the stock of the acquired corporation in the
reorganization. In the opinion of Vinson & Elkins L.L.P., the continuity of
stockholder interest requirement will be satisfied under applicable case law if
the value of the ConAgra common stock received in the reorganization by the
International Home Foods' stockholders equals or exceeds 40% of the total
consideration paid for the stock of International Home Foods in the
reorganization. An opinion of counsel represents counsel's best legal judgment
and is not binding on the Internal Revenue Service, and there can be no
assurance that following the merger the Internal Revenue Service will not
challenge the qualification of the merger as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code.
The merger agreement contains a mechanism to ensure that the forward merger
structure will be used only if the mix of stock and cash received by the
International Home Foods stockholders is such that it satisfies this 40%
continuity of stockholder interest threshold . Pursuant to the merger agreement,
the continuity of interest requirement will be deemed satisfied if, on the date
of the merger, the fair market value of the ConAgra common stock to be delivered
in connection with the merger is greater than or equal to 40% of the total
consideration delivered to International Home Foods stockholders in the merger.
Whether this requirement will be satisfied depends on certain variables,
including the closing price of the ConAgra common stock on the New York Stock
Exchange at the time of closing and the consideration received by International
Home Foods stockholders who exercise appraisal rights. Because these variables
will not be determined until the date of the merger, we will not know at the
time of the special meeting whether the merger will qualify as a reorganization
under Section 368(a) of the Internal Revenue Code and, therefore, whether the
forward merger structure or the reverse merger structure will be used.
United States Federal Income Tax Consequences of the Forward Merger
Structure
If the total value of the ConAgra common stock expected to be delivered in
connection with the merger is greater than or equal to 40% of the sum of
o the total value of the stock at the time of the merger,
o the cash consideration payable to the International Home Foods
stockholders,
o the cash payable in respect of any shares for which appraisal rights
are sought, and
o the cash payable in respect of fractional shares,
and
o if Vinson & Elkins L.L.P. delivers a tax opinion in writing as of the
date of the merger,
and
o if the merger is not structured as a reverse merger pursuant to a
right of election of ConAgra, which ConAgra may exercise if ConAgra
determines in good faith that the cash payable in connection with the
merger could exceed 60% of the above items,
then the merger will be structured as a forward merger.
If the merger is structured as a forward merger, you will recognize gain,
but not loss, for U.S. federal income tax purposes only up to the lesser of
o the amount of cash you received, or
o the excess of the sum of the fair market value of your ConAgra common
stock and the amount of cash you received in the merger over your
adjusted tax basis in your shares of International Home Foods common
stock surrendered in the exchange.
Ordinarily, the gain will be capital gain, provided that the International
Home Foods common stock is held as a capital asset. The capital gain will be
long-term capital gain and, in the case of an individual stockholder, subject to
a tax rate of 20%, if the holding period for the International Home Foods common
stock is greater than one year at the time of the merger. If you own ConAgra
common stock, actually or constructively, within the meaning of the Internal
Revenue Code, at the time of the merger, special rules may cause gain recognized
by you to be taxed as a dividend rather than a capital gain. You should consult
your own tax advisor with respect to the tax consequences of the forward merger.
The adjusted tax basis of the shares of ConAgra common stock received by
you will be the same as the adjusted tax basis of the shares of International
Home Foods stock exchanged for those shares, increased by the amount of gain
recognized, and decreased by the amount of cash received. The holding period of
the shares of ConAgra common stock will include the holding period of the shares
of International Home Foods common stock surrendered in the exchange, provided
that the International Home Foods common stock was held by you as a capital
asset on the date of the merger.
United States Federal Income Tax Consequences of the Reverse Merger
Structure
If the total value of the ConAgra common stock expected to be delivered in
connection with the merger is less than 40% of the sum of
o the total value of the stock at the time of the merger,
o the cash consideration payable to the International Home Foods
stockholders,
o the cash payable in respect of any shares for which appraisal rights
are sought, and
o the cash payable in respect of fractional shares,
or,
o if Vinson & Elkins L.L.P. fails to deliver a tax opinion in writing
on the date of the merger and ConAgra elects to change the structure
of the merger to a reverse merger,
then the merger will be structured as a reverse merger.
Even if Vinson & Elkins L.L.P. delivers its tax opinion as of the date of
the merger, ConAgra may also elect to change the structure of the merger to a
reverse merger based on its good faith determination that the cash payable in
connection with the merger could exceed 60% of the sum of the items listed in
the preceding paragraph.
If the merger is structured as a reverse merger, you will recognize gain or
loss equal to the difference between
o the sum of the fair market value of the ConAgra common stock and the
amount of cash you received in the merger, including cash received for
fractional shares, and
o your adjusted tax basis in your shares of International Home Foods
common stock surrendered in the exchange.
The gain or loss generally will be capital gain or loss provided that the
International Home Foods common stock is held as a capital asset. The capital
gain or loss will be long-term capital gain or loss and, in the case of gain
recognized by an individual stockholder, subject to a tax rate of 20%, if the
holding period for the International Home Foods common stock is greater than one
year at the time of the merger. For this purpose, you must calculate gain or
loss separately for each identifiable block of shares surrendered in the
exchange. If, at the time of the merger, you own shares of ConAgra common stock,
you should consult your tax advisor with respect to the impact of the reverse
merger structure.
The adjusted tax basis of ConAgra common stock received by you in the
merger will be equal to the fair market value of the stock at the completion of
the merger, and the holding period for the stock will commence upon its receipt.
In addition, the information reporting and backup withholding requirements
described below will apply to the merger.
Receipt of Cash for Fractional Shares
Any cash received by you for a fractional share of ConAgra common stock
will be treated as the receipt of the fractional share and then the redemption
of the fractional share by ConAgra. You generally should recognize capital gain
or loss equal to the excess of the amount of cash received for a fractional
share of ConAgra common stock over the portion of the adjusted tax basis in your
International Home Foods common stock allocable to the fractional share of
ConAgra common stock. The capital gain or loss will be long-term capital gain or
loss if the holding period for the International Home Foods common stock is
greater than one year at the time of the merger.
Receipt of Cash on Exercise of Appraisal Rights
Generally, if you exercise appraisal rights with respect to your shares of
International Home Foods common stock, you will recognize capital gain, or loss,
on the receipt of cash from the exercise of appraisal rights if you hold your
International Home Foods common stock as a capital asset and if, after
exercising appraisal rights, you own no shares of ConAgra common stock, either
actually or constructively, within the meaning of the Internal Revenue Code. If
you own shares of ConAgra common stock as described above, you should consult
with your tax advisor with respect to the impact of a cash payment on your
situation.
Information Reporting and Back-Up Withholding
Cash payments made to you may be subject to information reporting to the
IRS and to a 31% backup withholding tax. Backup withholding will not apply to a
payment to you if you complete and sign the substitute Form W-9 which will be
included as part of the transmittal letter, or otherwise prove to the surviving
corporation that you are exempt from backup withholding. If you are a foreign
person, you must complete and sign a Form W-8, Certificate of Foreign Status, in
order to be exempt from backup withholding. If you are subject to the 31% backup
withholding, the tax withheld will be credited against your federal income tax
liability. If you receive ConAgra common stock in a forward merger, you must
also comply with the information reporting requirements of the Treasury
regulations under Section 368 of the Internal Revenue Code.
Interests of Persons That Differ From Your Interests
In considering the recommendation of the International Home Foods board to
vote for adoption of the merger agreement, you should be aware that members of
International Home Foods executive management and the International Home Foods
board have interests in the merger that are different from, and in addition to,
the interests of other International Home Foods stockholders.
Severance Agreements. The employment agreement of C. Dean Metropoulos,
Chief Executive Officer and a director of International Home Foods, effective
February 22, 1999 for a three-year term, provides that he will receive severance
pay following termination of his employment by International Home Foods without
cause or by Mr. Metropolous upon a change in control of International Home
Foods. The severance payment, of approximately $6.1 million, is equal to the
greater of:
o one and one-half times his annual salary and bonus at the time of
termination; or
o the amount of salary and bonus he would have earned during the
remainder of his employment agreement at the time of termination.
The employment agreement of Lawrence Hathaway, President and Chief
Operating Officer and a director of International Home Foods, effective January
3, 2000 for a three-year term, provides that in the event of employment
termination without cause, or if he terminates with good reason, he would
receive a severance payment of approximately $2.3 million, equal to one and
one-half times his annual salary and bonus upon termination. The employment
agreement of Craig Steeneck, Senior Vice President and Chief Financial Officer
of International Home Foods, effective October 27, 1999, provides that in the
event of employment termination without cause, he would receive a severance
amount not to exceed $330,000. The employment agreement of M. Kelley Maggs,
Senior Vice President, Secretary and General Counsel, provides that in the event
of employment termination without cause, he would receive a severance payment of
$292,000. See "Where You Can Find Additional Information" on page ___ with
respect to International Home Foods' reports filed with the SEC that provide
additional details with respect to these agreements.
Stock Options. All unvested options to purchase International Home Foods
common stock granted under its stock plans will become fully exercisable
immediately prior to the merger. At the time of the merger each unexercised
option will be cashed out in part and converted in part into options to acquire
shares of ConAgra common stock. See "The Merger - Treatment of Existing
International Home Foods Stock Options" on page ___ for a more detailed
discussion of the treatment of International Home Foods options under the merger
agreement.
Indemnification and Release. ConAgra and International Home Foods have
agreed that all rights to indemnification and limitations on liability under the
International Home Foods charter documents and indemnity agreements will survive
the merger. Subject to limitations, directors' and officers' liability insurance
coverage substantially equivalent to levels of coverage currently in effect
under International Home Foods' existing directors' and officers' liability
insurance will be maintained for six years. ConAgra has agreed to release
stockholders, directors and officers of International Home Foods from any
liability or obligation under the merger agreement, voting agreements or
registration rights agreement except to the extent that any such person is an
express signatory party and except for claims for specific intentional
misrepresentations. See "The Merger Agreement - Indemnification, Insurance and
Release" on page ___.
Registration Rights Agreement. Thomas O. Hicks, Michael J. Levitt, C. Dean
Metropoulos and three limited investment partnerships controlled by Hicks Muse
have entered into a registration rights agreement with ConAgra covering the
shares of ConAgra common stock that they will receive in the merger. ConAgra has
agreed to file a shelf registration statement on Form S-3 and to use its
reasonable best efforts to have the registration statement declared effective by
the SEC immediately after the closing of the merger for all shares of ConAgra
common stock received by these holders in the merger. The offer and resale of
these shares will be pursuant to a plan of distribution proposed by these
holders, but will not include an underwritten public offering. ConAgra will
maintain the effectiveness of the shelf registration on Form S-3 for a period of
one year.
Financial Advisory Services. Hicks, Muse & Co. Partners, L.P. , or "Hicks
Muse Partners", an affiliate of Hicks Muse, provides financial advisory services
to International Home Foods pursuant to an agreement entered into in November
1996. The financial advisory agreement provides that Hicks Muse Partners will
receive a fee equal to 1.5% of the value of merger and similar transactions
involving International Home Foods. In connection with the signing of the merger
agreement, Hicks Muse Partners and International Home Foods amended the
financial advisory agreement to reduce Hicks Muse Partners' fee under that
agreement for the merger to $10 million. Hicks Muse is also entitled under the
financial advisory agreement, as amended, to reimbursements of its reasonable
disbursements and out-of-pocket expenses incurred prior to the time the merger
is completed.
Executive Offices and Assets. International Home Foods will transfer a
lease of office facilities and related improvements and personal property to an
entity, in which Hicks Muse or C. Dean Metropoulos may have an interest, in
return for the entity's assumption of all obligations under the lease. Mr.
Metropoulos will have use of the leased facilities. The transferred assets have
a net book value of approximately $1 million.
The International Home Foods board was aware of each of these interests and
considered them along with the other matters described above under "The Merger -
Background of the Merger" beginning on page ___.
Ownership Interest of International Home Foods Stockholders After the Merger
Based on 74,130,049 shares of International Home Foods common stock
outstanding as of May 31, 2000 and an assumed exchange ratio of .55000, there
will be approximately 533,118,894 shares of ConAgra common stock outstanding at
the completion of the merger, of which the former International Home Foods
stockholders will own an aggregate of approximately 7.65%.
Treatment of Existing International Home Foods Stock Options
The merger agreement provides that holders of International Home Foods
stock options will receive the economic value of their options to purchase
International Home Foods common stock in part in cash and in part in options to
purchase ConAgra common stock. The economic value of an option to purchase a
share of International Home Foods will be the difference between $22 and the
option exercise price.
Options representing one-half of the economic value of all of a holder's
options will be cancelled and cashed out. The holder will receive cash for each
of the cashed out options in an amount equal to $22 less the option exercise
price.
The holder's options which are not cashed out, approximately the remaining
one-half of the options, will be assumed by ConAgra as options to purchase
shares of ConAgra common stock. The options to purchase ConAgra common stock,
including options held by International Home Foods' management and the
International Home Foods board, will have material terms and provisions
substantially the same as the options to purchase International Home Foods
common stock. The holder of the assumed portion of the options to purchase
ConAgra common stock will be entitled to purchase:
o the number of shares of ConAgra common stock that equals two times the
product of the exchange ratio multiplied by the number of shares of
International Home Foods common stock subject to the assumed portion
of the options;
o at an option exercise price determined by dividing the option exercise
price prior to the merger by the quotient of (1) $22 divided by (2)
the average trading price used to determine the exchange ratio.
The exchange ratio will be determined by market prices of ConAgra common
stock prior to merger and is described under "The Merger - Merger Consideration"
on page __.
Not all of the International Home Foods stock options are currently
exercisable. International Home Foods will amend the terms of the International
Home Foods stock options so that all of the options will be exercisable in full
immediately prior to the merger.
The following example illustrates the manner in which International Home
Foods stock options will be treated in the merger, assuming for the purposes of
this example that the option is exercisable for 100 shares of International Home
Foods common stock, the exercise price is $12.00, the exchange ratio is .55000,
and the average trading price used to determine the exchange ratio is $20.
One-half of the economic value of the option, assumed equivalent to 50
shares, will be cashed out for $500, calculated by subtracting the $12 option
exercise price from the $22 target merger value and multiplying that figure by
the 50 shares. The remaining economic value of the option, assumed equivalent to
the remaining 50 shares, will be assumed by ConAgra as follows:
<TABLE>
<S> <C> <C>
One-Half Economic Value of
International Home Foods Post-Merger
Stock Options ConAgra Stock Option
-------------------------- --------------------
Number of shares............. 50 55
Exercise price............... $12 per share $10.91 per share
Exercisable for.............. International Home Foods ConAgra
common stock common stock
Exercise Times............... Various Immediately Exercisable
</TABLE>
The 55 shares of ConAgra common stock in the above example is calculated by
multiplying 50 shares of International Home Foods common stock by 1.1, which is
two times the assumed exchange ratio of .55. The $10.91 exercise price in the
above example is calculated by dividing the exercise price of $12.00 by 1.1, the
quotient of $22 divided by $20, the assumed average trading price used to
determine the exchange ratio.
At May 31, 2000, there were outstanding options to acquire an aggregate of
approximately 11,216,002 shares of International Home Foods common stock.
Stock Exchange Listing
ConAgra has agreed to cause the shares of ConAgra common stock issued in
connection with the merger and upon exercise of the assumed options to be listed
on the New York Stock Exchange. See "The Merger Agreement - Conditions to the
Completion of the Merger" on page ___.
Delisting and Deregistration of International Home Foods Common Stock
If the merger is completed, the common stock of International Home Foods
will be delisted from the New York Stock Exchange and will be deregistered under
the Securities Exchange Act of 1934. The stockholders of International Home
Foods will become stockholders of ConAgra, and their rights as stockholders will
be governed by ConAgra's certificate of incorporation and ConAgra's bylaws. See
the section entitled "Comparison of Rights of Holders of ConAgra Common Stock
and International Home Foods Common Stock" on page ___.
Accounting Treatment
The merger will be accounted for as a purchase in accordance with generally
accepted accounting principles. As a result, ConAgra will record the tangible
and intangible assets and liabilities of International Home Foods at their
estimated fair values and will record as goodwill the excess of the purchase
price over the estimated fair values. From the date of the merger, the operating
results of International Home Foods will be combined with the results of
ConAgra.
Government and Regulatory Approvals
Under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended,
and the accompanying rules, ConAgra and International Home Foods may not
complete the merger until they have filed the required notifications with the
Federal Trade Commission and the Antitrust Division of the U.S. Department of
Justice, and have waited a specified period of time. On June 23, 2000, ConAgra
and International Home Foods filed the notifications required under the
Hart-Scott-Rodino Act. The waiting period under the Hart-Scott-Rodino Act in
this transaction is 30 days, and will expire at 11:59 p.m. on July 23, 2000
unless terminated prior to that time by the FTC and the Justice Department.
Until the waiting period expires or is terminated, ConAgra and International
Home Foods may not complete the merger. Either the FTC or the Justice Department
may extend the waiting period by requesting additional information. The FTC and
the Justice Department could take action under the antitrust laws that they deem
necessary to prevent harm to competition. This action could include seeking to
enjoin the merger or seeking ConAgra's divestiture of specific businesses.
Private parties, state antitrust agencies, and foreign governmental authorities
may also take legal action under the antitrust laws.
In addition, ConAgra and International Home Foods filed a short-form
premerger notification with the Competition Bureau in Canada on __________,
2000. The application waiting period under the Competition Act of Canada
will expire on __________, 2000.
ConAgra and International Home Foods also made initial filings with the
Mexican Federal Economic Competition Commission on __________, 2000. The
application waiting period under the Mexican Federal Economic Competition Law
will expire on __________, 2000.
Based on the information available, ConAgra and International Home Foods
believe that the merger will comply with all significant federal, state and
foreign antitrust laws. ConAgra has agreed to take all action as may be required
to obtain clearance under the Hart-Scott-Rodino Act, the Competition Act of
Canada and the Mexican Federal Economic Competition Law in order to complete the
merger. ConAgra's failure to obtain such clearance by _______, 2000 is deemed a
material breach of the merger agreement. ConAgra and International Home Foods
cannot assure you, however, that there will not be a challenge to the merger on
antitrust grounds or that, if this type of challenge were made, ConAgra and
International Home Foods would prevail.
Exchange Procedures
Detailed instructions, including a transmittal letter, will be mailed to
International Home Foods stockholders promptly following the merger as to the
method of exchanging certificates formerly representing shares of International
Home Foods common stock. International Home Foods stockholders should not send
certificates representing their shares to anyone prior to the receipt of the
transmittal letter.
ConAgra will designate a bank or trust company to act as exchange agent
under the merger agreement. Immediately following the merger, ConAgra will
deliver, in trust, to the exchange agent, certificates evidencing the shares of
ConAgra common stock issuable and cash payable pursuant to the merger agreement.
At the effective time of the merger, all shares of International Home Foods
common stock will be cancelled and will cease to exist. At the effective time,
the stock transfer books of International Home Foods will be closed and no
transfer of shares of International Home Foods common stock will subsequently be
made. As soon as practicable after the effective time, ConAgra will cause the
exchange agent to mail to each holder of record of International Home Foods
certificates:
o a letter of transmittal specifying that delivery will be effected, and
risk of loss and title to the International Home Foods certificates
will pass, only upon proper delivery of the International Home Foods
certificates to the exchange agent; and
o instructions for use in surrendering the International Home Foods
certificates in exchange for the cash and ConAgra common stock to be
received in the merger.
Upon surrender of an International Home Foods certificate for cancellation
to the exchange agent, together with a completed letter of transmittal, the
holder of an International Home Foods certificate will be entitled to receive
$11 in cash per share of International Home Foods common stock and the number of
shares of ConAgra common stock equal to the product of the exchange ratio
multiplied by the number of shares of International Home Foods common stock
formerly represented by the surrendered International Home Foods certificate.
No certificate representing any fractional shares of ConAgra common stock
will be issued upon the surrender of International Home Foods certificates.
International Home Foods stockholders will receive cash in lieu of any
fractional share of ConAgra common stock. No dividend or distribution will be
payable on the fractional shares, and the fractional share interests will not
entitle the owner to vote or enjoy any other rights of a ConAgra stockholder.
No dividends or other distributions, if any, payable to holders of ConAgra
common stock, shall be payable to any person who has not surrendered his or her
International Home Foods certificates. Subject to applicable law, if ConAgra
declares a dividend or other distribution after the effective time, former
International Home Foods stockholders will be entitled to receive that payment.
In no event will the person entitled to receive dividends or other distributions
be entitled to receive interest on those payments.
If any cash is to be paid to or ConAgra certificate issued in a name other
than that in which the surrendered International Home Foods certificate is
registered, the surrendered International Home Foods certificate must be
properly endorsed and otherwise in proper form for transfer. The person
requesting the exchange also must pay to the exchange agent any applicable
transfer or other taxes.
ConAgra or the exchange agent will be entitled to deduct and withhold from
the consideration payable in the merger to any holder of International Home
Foods common stock any amounts as are required under any tax law. Any withheld
amounts will be treated for all purposes of the merger agreement as having been
paid to the holder of International Home Foods common stock.
Resales of ConAgra Common Stock
All shares of ConAgra common stock issued in the merger will be freely
transferable, except that SEC rules will restrict sales of shares received by
any person who may be deemed to be an "affiliate" of International Home Foods
prior to the merger. International Home Foods will identify the persons who fall
within the definition of "affiliate." Under the SEC rules, during the-one year
period following the merger, affiliates of International Home Foods may resell
publicly the ConAgra common stock received in the merger subject to certain
volume and manner of sale restrictions. After one year, if that person is not an
affiliate of ConAgra and ConAgra is current in the filing of its periodic
securities law reports, a former affiliate of International Home Foods may
freely resell the ConAgra common stock received in connection with the merger
without limitation. After two years from the merger, if that person is not an
affiliate of ConAgra at the time of sale or for at least three months prior to
the sale, that person may freely resell the ConAgra common stock, without
limitation.
International Home Foods will use its reasonable best efforts to cause each
affiliate to deliver to ConAgra an executed affiliate agreement prior to the
completion of the merger, providing that he or she will only dispose of any
shares of ConAgra common stock issued to that person in the merger:
o under an effective registration statement; or
o in compliance with the SEC rules.
ConAgra has agreed to register shares of ConAgra common stock received by
specified International Home Foods stockholders for resales following the
merger. See "The Merger - Interests of Persons That Differ From Your Interests"
above.
Appraisal Rights
Delaware law entitles the holders of record of shares of International Home
Foods common stock who follow the procedures specified in Section 262 of the
Delaware General Corporation Law to have their shares appraised by the Delaware
Court of Chancery and to receive the "fair value" of those shares as of the
completion of the merger as determined by the court in place of the merger
consideration. In order to exercise these rights, a stockholder must demand and
perfect the rights in accordance with Section 262. The following is a summary of
the material portions of Section 262 and is qualified in its entirety by
reference to Section 262, a copy of which is attached as Annex C to this proxy
statement/prospectus. Stockholders should carefully review Section 262 as well
as information discussed below.
If a stockholder of International Home Foods elects to exercise the right
to an appraisal under Section 262, that stockholder must do all of the
following:
o file with International Home Foods at its main office in Greenwich,
Connecticut, a written demand for appraisal of shares of International
Home Foods common stock held, which demand must identify the
stockholder and expressly request an appraisal, before the vote is
taken on the merger agreement at the special meeting; this written
demand for appraisal must be in addition to and separate from any
proxy or vote against the merger agreement; neither voting against,
abstaining from voting nor failing to vote on the merger agreement
will constitute a demand for appraisal within the meaning of Section
262;
o not vote in favor of the merger agreement; a failure to vote or
abstaining from voting will satisfy this requirement, but a vote in
favor of the merger agreement, by proxy or in person, or the return of
a signed proxy that does not specify an abstention or a vote against
adoption of the merger agreement, will constitute a waiver of the
stockholder's right of appraisal and will nullify any previously filed
written demand for appraisal; and
o continuously hold the shares of record until the completion of the
merger.
All written demands for appraisal should be addressed to International Home
Foods, Inc., 100 Northfield Street, Greenwich, Connecticut 06830, before the
vote is taken on the merger agreement at the special meeting. The demand must
reasonably inform International Home Foods of the identity of the stockholder
and that the stockholder is demanding appraisal of his or her shares of
International Home Foods common stock.
The written demand for appraisal must be executed by or for the record
holder of shares of International Home Foods common stock, fully and correctly,
as the holder's name appears on the certificate(s) for his or her shares. If the
shares of International Home Foods common stock are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian, execution of
the demand must be made in that capacity, and if the shares are owned of record
by more than one person, such as in a joint tenancy or tenancy in common, the
demand must be executed by or for all joint owners. An authorized agent,
including one of two or more joint owners, may execute the demand for appraisal
for a holder of record; however, the agent must identify the record owner(s) and
expressly disclose the fact that, in executing the demand, the agent is acting
as agent for the record owner(s).
A beneficial owner of shares of International Home Foods common stock held
in "street name" who desires appraisal should take actions as may be necessary
to ensure that a timely and proper demand for appraisal is made by the record
holder of the shares. Shares of International Home Foods common stock held
through brokerage firms, banks and other financial institutions are frequently
deposited with and held of record in the name of a nominee of a central security
depository, such as Cede & Co. and others. Any beneficial owner desiring
appraisal who holds shares of International Home Foods common stock through a
brokerage firm, bank or other financial institution is responsible for ensuring
that the demand for appraisal is made by the record holder. The beneficial
holder of the shares should instruct the firm, bank or institution that the
demand for appraisal should be made by the record holder of the shares which may
be the nominee of a central security depository if the shares have been so
deposited. As required by Section 262, a demand for appraisal must reasonably
inform International Home Foods of the identity of the holder(s) of record,
which may be a nominee as described above, and of the holder's intention to seek
appraisal of the shares of International Home Foods common stock.
A record holder, such as a broker, fiduciary, depository or other nominee,
who holds shares of International Home Foods common stock as a nominee for
others, may exercise appraisal rights with respect to the shares held for all or
less than all beneficial owners of the shares as to which the person is the
record owner. In that case, the written demand must set forth the number of
shares of International Home Foods common stock covered by the demand. Where the
number of shares is not expressly stated, the demand will be presumed to cover
all shares of International Home Foods common stock outstanding in the name of
the record owner.
Within ten days after the completion of the merger, the surviving
corporation of the merger will give written notice of the date of the completion
of the merger to each stockholder of International Home Foods who has properly
demanded appraisal and satisfied the requirements of Section 262, referred to in
this document as a dissenting stockholder. Within 120 days after the completion
of the merger, the surviving corporation or any dissenting stockholder may file
a petition in the Delaware chancery court demanding a determination of the fair
value of the shares of International Home Foods common stock that are held by
all dissenting stockholders. Any dissenting stockholder desiring to file this
petition is advised to file the petition on a timely basis unless the dissenting
stockholder receives notice that a petition has already been filed by the
surviving corporation or another dissenting stockholder.
If a petition for appraisal is timely filed, the court will determine which
stockholders are entitled to appraisal rights and will determine the fair value
of the shares of International Home Foods common stock held by dissenting
stockholders, exclusive of any element of value arising from the accomplishment
or expectation of the merger, together with a fair rate of interest, if any, to
be paid on the amount determined to be fair value. In determining fair value,
the court shall take into account all relevant factors. The court may determine
fair value to be more than, less than or equal to the consideration that the
dissenting stockholder would otherwise be entitled to receive pursuant to the
merger agreement. If a petition for appraisal is not timely filed, then the
right to an appraisal shall cease. The costs of the appraisal proceeding shall
be determined by the court and taxed against the parties as the court determines
to be equitable under the circumstances. Upon application of a stockholder, the
court may order all or a portion of the expenses incurred by any stockholder in
connection with the appraisal proceeding, including reasonable attorneys' fees
and the fees and expenses of experts, to be charged pro rata against the value
of all shares of International Home Foods common stock entitled to appraisal.
From and after the completion of the merger, no dissenting stockholder
shall have any rights of an International Home Foods stockholder with respect to
that holder's shares for any purpose, except to receive payment of its fair
value and to receive payment of dividends or other distributions on the holder's
shares of International Home Foods common stock, if any, payable to
International Home Foods stockholders of record as of a date prior to the
completion of the merger. If a dissenting stockholder delivers to the surviving
corporation a written withdrawal of the demand for an appraisal within 60 days
after the completion of the merger or subsequently with the written approval of
the surviving corporation, or, if no petition for appraisal is filed within 120
days after the completion of the merger, then the right of that dissenting
stockholder to an appraisal will cease and the dissenting stockholder will be
entitled to receive only the merger consideration. Once a petition for appraisal
is filed with the Delaware court, the appraisal proceeding may not be dismissed
as to any stockholder without the approval of the court.
If you wish to exercise your appraisal rights, you must not vote in favor
of the merger agreement and must strictly comply with the procedures set forth
in Section 262 of the Delaware General Corporation Law.
If you fail to take any required step in connection with the exercise of
appraisal rights, it will result in the termination or waiver of these rights.
<PAGE>
THE MERGER AGREEMENT
General
The following description summarizes additional material provisions of the
merger agreement. You should carefully read the merger agreement, which is
attached as Annex A to this document and incorporated by reference in this
document.
Representations and Warranties
The merger agreement contains various representations and warranties of
ConAgra, its acquisition subsidiary and International Home Foods including those
concerning:
<TABLE>
<S> <C>
o corporate organization and similar corporate o government approvals and required consents
matters
o documents and other reports filed with the SEC
o certificate of incorporation and bylaws
o absence of specified changes or events
o capitalization
o information provided in this document
o corporate authority
o absence of undisclosed liabilities
o compliance with laws
o employee benefit plans and ERISA
o non-contravention of existing arrangements
o absence of common stock ownership
The merger agreement also contains additional representations and
warranties of International Home Foods including those concerning:
o subsidiaries o environmental matters
o actions and legal proceedings o affiliate transactions
o specified contracts and arrangements o financial advisor's opinion
o taxes o brokers
o intellectual property o fees
</TABLE>
Conduct of Business Pending the Merger
International Home Foods has agreed that, prior to the completion of the
merger, it and its subsidiaries will generally:
o conduct their business as usual;
o preserve their present business organization;
o keep available the services of their officers and key employees; and
o preserve their existing business relationships.
The merger agreement precludes International Home Foods and its
subsidiaries from a number of corporate acts prior to the completion of the
merger, without the prior written consent of ConAgra, including the following
actions:
o amending organizational documents;
o changing its capital stock;
o paying any dividends;
o acquiring any of its capital stock;
o issuing or encumbering any shares or options except upon the exercise
of currently existing options;
o acquiring another business entity or disposing of assets outside the
ordinary course of business;
o making any loans or investments, except for intracompany transactions,
existing obligations or in the ordinary course of business in excess
of $5,000,000;
o incurring any debt, except in the ordinary course of business;
o paying any material obligations other than in the ordinary course of
business or pursuant to an existing contract;
o modifying any benefit of a non-competition agreement;
o entering into any new material line of business or incurring any
capital expenditures, other than in the ordinary course of business;
o voluntarily permitting any insurance policy to terminate, other than
in the ordinary course of business;
o increasing any compensation or adopting, changing or terminating any
benefits, employee plans or agreements for any director, officer or
employee, or making contributions to employee plans except in the
ordinary course of business or pursuant to an existing agreement;
o making any change in accounting or tax policies, except as required by
law or to comply with generally accepted accounting principles;
o changing International Home Foods' fiscal year;
o making any material tax election, other than in the ordinary course of
business;
o taking any action with knowledge that the action could reasonably be
expected to result in a breach of a condition to the merger agreement;
o arranging any severance or change of control payment, or amending any
existing severance or change of control agreement;
o entering into any material contract, except for contracts expressly
permitted pursuant to the merger agreement; or
o agreeing to take any of the above actions.
The merger agreement also precludes ConAgra from engaging in the following
acts prior to the completion of the merger, without the prior written consent of
International Home Foods:
o amending or changing its organizational documents;
o paying any dividend or other distribution except for regular quarterly
cash dividends;
o making any change in accounting policies, except in the ordinary
course of business, as required by generally accepted accounting
principles or as required by any other governmental entity; or
o taking any action with knowledge that the action could reasonably be
expected to result in a breach of a condition to the merger agreement.
Indemnification, Insurance and Release
ConAgra and International Home Foods have agreed that the indemnification
and limitations on liability under International Home Foods' and its
subsidiaries' charter documents and indemnity agreements will continue following
the merger. To the extent permitted by the Delaware General Corporation Law ,
the advancement of expenses and costs to the indemnified persons will be
mandatory and not permissive.
ConAgra further agreed that for six years after the completion of the
merger, directors and officers liability and fiduciary liability insurance
policies will be maintained covering persons indemnified by International Home
Foods. ConAgra will not be required to incur an annual premium in excess of 150%
of the annual premium paid by International Home Foods. If equivalent insurance
coverage is not obtainable, the best coverage available for the maximum premium
will be obtained.
ConAgra has agreed to release the stockholders, directors and officers of
International Home Foods from any liability or obligation in connection with or
under the merger agreement, voting agreements or registration rights agreement
except to the extent any of them are express signatories to the agreements. The
release of liability does not apply to claims for intentional misrepresentations
by any of them to International Home Foods' independent auditors or included in
documents filed by International Home Foods with the SEC which would cause the
financial information of the company to be materially misstated.
No Solicitation
International Home Foods has agreed that it will not:
o solicit, initiate any inquiry or initiate the making of any proposal
regarding any takeover proposal;
o engage in negotiations with or provide information to any person with
respect to any takeover proposal; or
o enter into any agreement, arrangement or understanding with respect to
any takeover proposal or other arrangement that would require
International Home Foods to not complete the merger.
A "takeover proposal" means an inquiry or a proposal regarding a business
combination with, or the sale of all or a substantial portion of the assets or
15% or more of the capital stock of, International Home Foods and its
subsidiaries. International Home Foods has agreed that it will immediately cease
any existing discussions or negotiations with any party with respect to any
takeover proposal.
Notwithstanding the foregoing, the International Home Foods board may
furnish information to or negotiate or engage in discussions with any person in
response to an unsolicited written takeover proposal, if the board determines in
good faith and after consulting with counsel and its financial advisers, that
the takeover proposal is or could reasonably be expected to lead to a superior
proposal. The International Home Foods board can withdraw, modify or change its
approval or recommendation for the merger and may recommend a superior proposal
from another person if the board determines in good faith after consulting with
counsel, that it must do so to comply with its fiduciary obligations. A
"superior proposal" is any written and unsolicited takeover proposal for 50% or
more of International Home Foods capital stock or 75% or more of its assets
which the International Home Foods board determines in good faith, after
consulting with financial advisors and counsel, to be more favorable to its
stockholders from a financial point of view than the merger with ConAgra and to
be reasonably capable of being completed.
Board Recommendation
Except as required to comply with its fiduciary obligations, the
International Home Foods board has agreed to:
o recommend that the International Home Foods stockholders adopt the
merger agreement;
o include its recommendation in this proxy statement/prospectus; and
o take all reasonable action to solicit and obtain approval of the
merger.
Affiliate Agreements
International Home Foods will provide ConAgra with a list of those persons
who are "affiliates" within the meaning of SEC rules. International Home Foods
will use its reasonable best efforts to cause each affiliate to deliver an
executed affiliate agreement to ConAgra prior to the completion of the merger.
Under these agreements, each International Home Foods affiliate will agree not
to dispose of his or her shares of ConAgra common stock received in the merger
except pursuant to an effective registration statement or in compliance with SEC
rules. ConAgra will be entitled to place appropriate legends on the certificates
evidencing any ConAgra common stock to be received by the International Home
Foods affiliates pursuant to the terms of the merger agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the ConAgra
common stock, consistent with the terms of the affiliate agreements. ConAgra has
agreed to register shares of ConAgra common stock received by specified
International Home Foods stockholders for resales following the merger. See "The
Merger - Interests of Persons That Differ From Your Interests" on page ____.
Conditions to the Completion of the Merger
Completion of the merger is subject to the conditions set forth in the
merger agreement. The obligations of both ConAgra and International Home Foods
are subject to the satisfaction or waiver of each of the following conditions:
o adoption of the merger agreement by the holders of a majority of the
outstanding shares of International Home Foods common stock;
o the receipt of all necessary government authorizations and approvals;
o the expiration or termination of the waiting period under the Hart-
Scott-Rodino Act, the Competition Act of Canada and the Mexican
Federal Economic Competition Law;
o continued effectiveness of the registration statement of which this
document is a part;
o the absence of any court order, injunction or law that would make the
merger or voting agreement illegal or prohibit the completion of the
merger.
o the representations and warranties of the other party being true and
correct in all material respects; and
o the performance by the other party in all material respects of all
obligations required to be performed by it under the merger agreement.
The obligation of International Home Foods to consummate the merger is
further conditioned on the listing on the New York Stock Exchange of the ConAgra
common stock to be issued in the merger and ConAgra's compliance with its
obligations under the registration rights agreement.
Termination
ConAgra and International Home Foods can mutually consent in writing to
terminate the merger agreement any time before the merger is completed.
In addition, either ConAgra or International Home Foods can, without the
consent of the other, terminate the merger agreement if:
o the merger is not completed by November 30, 2000;
o the requisite number of International Home Foods stockholders do not
adopt the merger agreement; or
o a governmental entity permanently enjoins, orders or prohibits the
completion of the merger; provided, however, that the party seeking to
terminate the merger agreement has used its reasonable best efforts to
overturn the action.
ConAgra can terminate the merger agreement if:
o there is a material breach of International Home Foods'
representations, warranties, covenants or agreements, which, in the
case of a breach of representations and warranties, would have a
material adverse effect on International Home Foods and the breach
after notice is not cured or curable within 15 days;
o the International Home Foods board:
o fails to convene a meeting to adopt the merger agreement by
__________, 2000;
o fails to recommend the adoption of the merger agreement to the
International Home Foods stockholders; or
o withdraws, amends or modifies its recommendation of the merger
agreement in a manner adverse to ConAgra, or fails to reconfirm its
recommendation within two business days of a written request by
ConAgra.
International Home Foods can terminate the merger agreement if:
o prior to the time that the stockholders adopt the merger agreement,
International Home Foods enters into a definitive agreement for a
superior proposal; or
o there is a material breach of ConAgra's representations, warranties,
covenants or agreements which, in the case of a breach of
representations and warranties, would have a material adverse effect
on ConAgra, and the breach after notice is not cured or curable within
15 days.
Termination Fees and Expenses
International Home Foods will pay ConAgra a termination fee of $50,000,000
if:
o ConAgra terminates the merger agreement because the International Home
Foods board:
o fails to convene a meeting to adopt the merger agreement by
__________, 2000;
o fails to recommend the adoption of the merger agreement to the
International Home Foods stockholders;
o withdraws, amends or modifies its recommendation of the merger
agreement in a manner adverse to ConAgra, or fails to reconfirm its
recommendation within two business days of a written request by
ConAgra; or
o International Home Foods terminates the merger agreement prior to the
time that the stockholders adopt the merger agreement, because
International Home Foods entered into a definitive agreement for a
superior proposal; or
o ConAgra or International Home Foods terminates the merger agreement
because the International Home Foods stockholders do not adopt the
merger agreement, and within 12 months of the termination
International Home Foods consummates a takeover proposal or enters
into a definitive agreement to consummate a takeover proposal.
ConAgra and International Home Foods will each pay their own expenses, fees
and costs incurred in the merger.
Amendment
The merger agreement may be amended, modified or supplemented at any time
prior to the completion of the merger only by the written agreement of ConAgra
and International Home Foods. After adoption of the merger agreement by the
International Home Foods stockholders, however, no amendment, modification or
supplementation that under applicable law requires further stockholder approval
will be made without such further required approval of the International Home
Foods stockholders.
Waiver
At any time prior to the completion of the merger, ConAgra or International
Home Foods may:
o extend the time for the performance of any of the obligations or other
acts of the other;
o waive any inaccuracies in the representations and warranties of the
other contained in the merger agreement or other documents
contemplated pursuant to the merger; and
o waive compliance by the other with any of the agreements or conditions
contained in the merger agreement which may legally be waived.
Any extension or waiver will be valid only if set forth in a written instrument
specifically referring to the merger agreement and signed on behalf of the party
granting the extension or waiver.
<PAGE>
VOTING AGREEMENTS
In connection with the merger agreement, ConAgra and International Home
Foods entered into voting agreements with C. Dean Metropoulos and three
investment limited partnerships, the Hicks Muse group, controlled by Hicks Muse.
As of the International Home Foods record date, the Hicks Muse group and Mr.
Metropoulos owned an aggregate of 31,963,001 shares of International Home Foods
common stock, representing approximately 43.1% of the voting power of the
outstanding International Home Foods common stock. Mr. Metropoulos also holds
currently exercisable options to acquire 1,853,581 shares of International Home
Foods common stock. The Hicks Muse group and Mr. Metropoulos entered into the
voting agreements with ConAgra and International Home Foods with respect to the
shares they own or may acquire, including by exercising options, prior to the
merger, and:
o agreed to revoke any previous proxies for voting their shares of
International Home Foods common stock;
o irrevocably agreed to vote all of their shares of International Home
Foods common stock for the adoption of the merger agreement and
against any takeover transaction or other action likely to adversely
affect the merger; and
o granted ConAgra an irrevocable proxy to vote their shares of
International Home Foods common stock in accordance with the terms of
the voting agreements.
The Hicks Muse group and Mr. Metropoulos agreed that they will not transfer
any of their shares of International Home Foods common stock, grant any proxies
with respect to their shares or enter into any contract or agreement with
respect to their shares or take any other action with respect to their shares
which would constitute a violation of the voting agreements.
The Hicks Muse group and Mr. Metropoulos further agreed, in their capacity
as International Home Foods stockholders, that, prior to the effective time,
they will not directly or indirectly:
o solicit or initiate any proposal for a takeover proposal involving
International Home Foods; or
o negotiate or otherwise engage in discussions or enter into agreements
with any person, other than ConAgra and its representatives, regarding
a takeover proposal involving International Home Foods.
Each of the Hicks Muse group and Mr. Metropoulos agreed that
o in the event the merger agreement is terminated and as a consequence
ConAgra is paid the $50,000,000 termination fee, and
o International Home Foods is acquired in a transaction superior to the
transaction with ConAgra that is entered into within 12 months
following the termination, then
o the Hicks Muse group and Mr. Metropoulos each will pay ConAgra 50% of
the consideration received by them in excess of $22 for each of their
shares of International Home Foods common stock.
The voting agreements terminate on the earlier of (1) the merger or (2) the
termination of the merger agreement in accordance with its terms. See "The
Merger Agreement - Termination" on page ____. However, the obligations of the
Hicks Muse group and Mr. Metropolous to pay ConAgra 50% of the consideration
they receive in excess of $22 per share of common stock for subsequent superior
transactions survive the termination of the voting agreements.
<PAGE>
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma combined condensed financial statements
give effect to the merger using the purchase method of accounting, after giving
effect to the pro forma adjustments described in the accompanying notes. The
unaudited pro forma combined condensed financial statements should be read in
conjunction with the audited and unaudited historical consolidated financial
statements and notes of ConAgra and International Home Foods, which are
incorporated by reference in this document. You may obtain the information
incorporated by reference into this proxy statement/prospectus without charge by
following the instructions in the section entitled "Where You Can Find More
Information" on page __ of this proxy statement/prospectus.
The unaudited pro forma combined condensed statements of earnings give
effect to the merger as if it had occurred at the beginning of the earliest
period presented. ConAgra's fiscal year ended on May 30, 1999 and International
Home Foods' fiscal year ended on December 31, 1999. The unaudited pro forma
combined condensed statements of earnings for the year ended May 30, 1999 and
the thirty-nine weeks ended February 27, 2000 combine the historical
consolidated statements of earnings of ConAgra with the recasted unaudited
consolidated statements of income of International Home Foods for the
twelve-month period ended June 30, 1999 and the nine-month period ended March
31, 2000, respectively. For purposes of presenting unaudited pro forma combined
condensed statements of earnings, International Home Foods' fiscal year has been
recasted to June 30, 1999, by including the unaudited reported financial
statements for the quarter ended June 30, 1999 and the three previous quarters
ended March 31, 1999, December 31, 1998 and September 30, 1998. International
Home Foods' statements of income for the nine-months ended March 31, 2000
include unaudited reported financial data for the quarter ended March 31, 2000,
December 31, 1999 and September 30, 1999. The unaudited pro forma combined
condensed balance sheet gives effect to the merger as if it had occurred on
February 27, 2000 and combines ConAgra's consolidated balance sheet as of
February 27, 2000 with International Home Foods' consolidated balance sheet as
of March 31, 2000.
The unaudited pro forma adjustments described in the accompanying notes are
based upon preliminary estimates and assumptions that the managements of ConAgra
and International Home Foods believe are reasonable. The pro forma adjustments
are based on the information and assumptions available at the time of the
mailing of this document. The purchase price allocation will be finalized
subsequent to the closing of the transaction and finalization of asset and
liability valuations. The unaudited pro forma combined condensed financial
statements are presented for illustrative purposes only and do not purport to be
indicative of the operating results or financial position that would have
actually occurred if the merger had been in effect on the dates indicated, nor
is it necessarily indicative of future operating results or financial position
of the merged companies. The unaudited pro forma combined condensed financial
statements do not give effect to any potential cost savings or other operating
efficiencies that we expect to result from the transaction.
<PAGE>
CONAGRA, INC.
INTERNATIONAL HOME FOODS, INC.
Pro Forma Combined Condensed Statements of Earnings
For the Thirty-Nine Weeks Ended February 27, 2000
(Unaudited)
(Amounts in Millions, Except Per Share Data)
<TABLE>
<S> <C> <C> <C> <C>
ConAgra International
Thirty-Nine Weeks Home Foods
Ended Nine Months Ended Pro Forma
Feb. 27, 2000(1) March 31, 2000(2) Adjustments(5) Combined(7)
------------- -------------- ----------- --------
Net Sales......................... $18,994.3 $ 1,679.0 ($283.3) $20,390.0
Costs and Expenses
Cost of goods sold.............. 15,859.0 880.3 -- 16,739.3
Selling, administrative and
general expenses............. 2,142.4 573.4 (254.0) 2,461.8
Interest expense................ 233.9 75.6 35.5 345.0
Restructuring/Impairment
charges...................... 61.4 -- -- 61.4
--------- ---- ---------- ----
18,296.7 1,529.3 (218.5) 19,607.5
--------- ------- ------- --------
Income before income taxes........ 697.6 149.7 (64.8) 782.5
Income taxes...................... 265.1 78.4 (13.5) 330.0
--------- ------- ------- -------
Net Income ....................... $ 432.5 $ 71.3 ($51.3) $452.5
======= ======= ======= ======
Income per share - basic (6): $ .91 $ .97 $.88
======= ======= ====
Income per share - diluted (6): $ .90 $ .94 $.87
======= ======= ====
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
<PAGE>
CONAGRA, INC.
INTERNATIONAL HOME FOODS, INC.
Pro Forma Combined Condensed Statements of Earnings
For the Year-Ended May 30, 1999
(Unaudited)
(Amounts in Millions, Except Per Share Data)
<TABLE>
<S> <C> <C> <C> <C>
ConAgra International Home Foods
Fiscal Year Fiscal Year Pro Forma
Ended Ended ----------------------------
May 30, 1999(1) June 30, 1999(2) Adjustments(5) Combined(7)
------------ ------------- ----------- --------
Net Sales......................... $24,594.3 $1,935.5 ($298.3) $26,231.5
Costs and Expenses:
Cost of goods sold.............. 20,556.2 1,034.7 -- 21,590.9
Selling, administrative and
general expenses............. 2,598.4 637.1 (259.2) 2,976.3
Interest expense................ 316.6 99.8 48.3 464.7
Non-recurring charges .......... 440.8 102.3 -- 543.1
------- ------- -------- --------
23,912.0 1,873.9 (210.9) 25,575.0
-------- ------- ------- --------
Income before income taxes........ 682.3 61.6 (87.4) 656.5
Income taxes...................... 323.9 26.9 (18.4) 332.4
------- ------- ------- --------
Net Income ....................... $ 358.4 $ 34.7 ($69.0) $ 324.1
======= ======= ======= =======
Income per share - basic(6): $ .76 $ .47 $ .63
====== ======= =======
Income per share - diluted(6): $ .75 $ .45 $ .62
====== ======= =======
</TABLE>
See notes to unaudited pro forma combined condensed financial statements.
<PAGE>
CONAGRA, INC.
INTERNATIONAL HOME FOODS, INC.
Pro Forma Combined Condensed Balance Sheet
(Unaudited)
(Amounts in Millions, Except Share Data)
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ASSETS ConAgra International Home Foods Pro Forma
Feb. 27, 2000(1) March 31, 2000(2) Adjustments(4) Combined
Current assets --------------- ------------------------ -------------- --------
Cash and cash equivalents....... $ 17.4 $ 16.4 $ -- $ 33.8
Receivables, net................ 1,973.9 181.5 -- 2,155.4
Inventories..................... 4,236.7 307.1 -- 4,543.8
Other current assets............ 307.3 48.2 -- 355.5
--------- --------- ------- -------
Total current assets.......... 6,535.3 553.2 -- 7,088.5
--------- --------- ------- -------
Property, plant and equipment..... $ 6,766.1 -- -- --
Less accumulated depreciation... (3,013.3) -- -- --
---------- --------- ------- -------
Property, plant and equipment, net 3,752.8 312.0 -- 4,064.8
---------- --------- ------- -------
Brands, trademarks and goodwill, net 2,404.2 434.5 1,563.7 4,402.4
Other assets...................... 423.0 272.1 21.0 716.1
---------- --------- ------- -------
$13,115.3 $1,571.8 $ 1,584.7 $16,271.8
========== ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable................... $2,406.3 $ -- $ -- $2,406.3
Revolving credit facility ...... -- 118.0 -- 118.0
Current installments of long-term
debt......................... 19.0 83.3 -- 102.3
Accounts payable................ 2,130.3 83.1 (21.0) 2,192.4
Advance on sales................ 156.2 -- -- 156.2
Other accrued liabilities....... 1,354.9 125.9 -- 1,480.8
-------- ----- ------- -------
Total current liabilities..... 6,066.7 410.3 (21.0) 6,456.0
-------- ----- ------- -------
Senior long-term debt, excluding
current installments............ 1,871.7 962.7 905.6 3,740.0
Other non-current liabilities..... 809.5 28.2 -- 837.7
Subordinated debt................. 750.0 -- -- 750.0
Preferred securities of subsidiary
company......................... 525.0 -- -- 525.0
Common stockholders' equity
Common stock ................... 2,620.6 .8 203.1 2,824.5
Additional paid-in capital...... 38.3 63.6 603.2 705.1
Retained earnings............... 1,537.2 164.5 (164.5) 1,537.2
Treasury stock, at cost......... (759.3) (57.2) 57.2 (759.3)
Accumulated other
comprehensive loss .......... (79.5) (1.1) 1.1 (79.5)
-------- ------ ------ -------
3,357.3 170.6 700.1 4,228.0
Less unearned restricted stock and
common shares held in
Employee Equity Fund............ (264.9) -- -- (264.9)
--------- ------ ------ -------
Total common shareholders' equity 3,092.4 170.6 700.1 3,963.1
--------- ------ ------ -------
$13,115.3 $1,571.8 $ 1,584.7 $ 16,271.8
========= ======== ========= ==========
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See notes to unaudited pro forma combined condensed financial statements.
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CONAGRA, INC.
INTERNATIONAL HOME FOODS, INC.
Notes to Unaudited Pro Forma Combined Condensed Financial Statements
(Amounts in Millions, Except Per Share Data)
On June 22, 2000, ConAgra signed an agreement to acquire all of the issued
and outstanding shares of common stock and stock options of International Home
Foods in a transaction to be accounted for as a purchase business combination.
The assets acquired and liabilities assumed will be assigned a portion of the
purchase price equal to their respective fair market values at the date of
acquisition. The unaudited pro forma financial statements are based on the
following:
1. The historical consolidated financial statements of ConAgra.
2. The historical consolidated financial statements of International Home
Foods' recasted for the nine-month period ended March 31, 2000 and the
twelve-month period ended June 30, 1999.
3. a. The consideration paid for International Home Foods common stock
will be $22, consisting of $11 in cash and a fraction of a share
of ConAgra common stock valued at $11 per share. The common stock
portion of the merger consideration is calculated as follows:
International Home Foods common stock outstanding
at May 31, 2000 74.13
Assumed exchange ratio 0.55
-------
ConAgra common stock assumed to be issued in exchange
for International Home Foods common stock 40.77
Average price of ConAgra common stock $20.00
------
Total common stock consideration $815.4
======
The assumed exchange ratio of .55 shares of ConAgra common stock
for each share of International Home Foods common stock
outstanding was determined by dividing $11 by ConAgra's assumed
average closing price of $20, the midpoint of the exchange ratio
provided for in the merger agreement. The actual exchange ratio
will be determined by the average closing price of ConAgra's
common stock on the ten trading days ending on the fifth full
trading day immediately preceding the merger.
b. ConAgra will assume approximately 6.2 million common stock options
and pay approximately $55.2 million in cash in exchange for all of
the International Home Foods outstanding stock options.
c. The cash portion of the purchase price, including transaction
costs, will be provided by increased borrowings of ConAgra under
its existing credit facilities. In addition, ConAgra intends to
replace International Home Foods credit facilities and long-term
debt with borrowings under ConAgra's credit facilities and other
long-term debt.
<PAGE>
4. The pro forma balance sheet adjustments to reflect the effect of the
acquisition accounted for as a purchase business combination are as
follows:
Consideration:
Value of ConAgra common stock $ 815.4
Value of ConAgra common stock options 55.2
Cash issued for common stock and stock options 870.6
Transaction costs 35.0
-------
Total consideration 1,776.2
Net assets acquired 170.6
-------
1,605.6
Preliminary Allocation:
Deferred income taxes 41.9
-------
Goodwill $1,563.7
=======
ConAgra expects to allocate a portion of the purchase price to
buildings, machinery and equipment and other identifiable assets. The
purchase price allocation will be completed after the closing of the
transaction and finalization of asset and liability valuations. In
connection with the acquisition, ConAgra may consolidate certain plants
and will include the associated costs as part of the purchase price
allocation. ConAgra's management has not currently completed its
assessment of such activities .
5. The pro forma statement of earnings adjustments are as follows:
a. Provide depreciation and amortization of the fair values assigned
to all identifiable tangible and intangible assets. The excess of
the purchase price over the net assets acquired has preliminarily
been allocated to nondeductible goodwill and is being amortized
using the straight-line method over 40 years.
ConAgra expects to allocate a portion of the purchase price to
buildings, machinery and equipment and other intangible assets,
including brands. Assuming these assets had a weighted average
life of 20 years, for each $100.0 million allocated to buildings,
machinery and equipment or other intangible assets pro forma
operating expenses would increase by $2.5 million and pro forma
net income would decrease by $.6 million.
b. Reclassification of International Home Foods' trade promotion
expenses from selling, administrative and general expenses to net
sales to conform to ConAgra's presentation.
c. Adjust interest expense relating to (1) additional borrowings
under ConAgra's credit facilities of approximately $905.6 million
for the cash portion of the purchase price and approximately
$778.9 million for the repayment of International Home Foods
credit facilities at an assumed interest rate of 6.85% and (2)
additional long-term borrowings of $385 million at 8.5% for the
repayment of International Home Foods $385 million 10.375% Senior
Secured Notes as follows:
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Thirty-nine Weeks Fifty-two Weeks
Ended Ended
February 27, 2000 May 30, 1999
----------------- ------------
Interest expense on credit facilities $86.6 $115.4
Interest expense on long-term borrowings 24.5 32.7
IHF historical interest expense (75.6) (99.8)
------ ------
Net adjustment $35.5 $48.3
----- -----
</TABLE>
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A .125% change in the interest rate on the new indebtedness would
change annual interest expense by approximately $2.6 million.
d. Change in income tax expense/benefit as a result of pro forma
adjustments which affect taxable income. No pro forma income taxes
have currently been provided on the portion of the purchase price
preliminarily allocated to non-deductible goodwill.
6. The pro forma weighted average shares outstanding for the thirty-nine
weeks ended February 27, 2000 and the year ended May 30, 1999 are as
follows:
2000 1999
Basic:
Historical shares outstanding 475.3 470.0
Shares issued 40.8 40.8
---- ----
516.1 510.8
===== =====
Diluted:
Historical shares and share
equivalents outstanding 478.7 476.7
Shares issued 40.8 40.8
Effect of options assumed 3.3 3.8
--- ---
522.8 521.3
===== =====
7. ConAgra's financial data for the thirty-nine weeks ended February 27,
2000, includes non-recurring charges of $236.1 million before tax
($146.4 million after tax). If these charges were excluded, unaudited
pro forma basic earnings per share for the thirty-nine weeks ended
February 27, 2000 would be $1.16 and unaudited pro forma diluted
earnings per share would be $1.15.
ConAgra's financial data for fiscal 1999 includes non-recurring charges
of $440.8 million before tax ($337.9 million after tax). International
Home Foods financial data for the twelve-month period ended June 30,
1999 includes non-recurring charges and gain on sale of the Polaner
business of $102.3 million before tax ($65.7 million after tax). If
these non-recurring items were excluded, unaudited pro forma basic
earnings per share for fiscal 1999 would be $1.42 and unaudited pro
forma diluted earnings per share would be $1.40.
<PAGE>
DESCRIPTION OF CONAGRA CAPITAL STOCK
General
ConAgra's authorized capital stock consists of 1,200,000,000 shares of
ConAgra common stock, par value $5.00 per share and an aggregate of 18,050,000
shares of various series of preferred stock. The shares of preferred stock are
issuable in one or more series created by the ConAgra board, which in creating
any series is given authority to fix the voting rights, dividend rate,
redemption provisions, liquidation preferences and conversion provisions. On
____________, 2000 there were ____________ shares of ConAgra common stock
outstanding. No shares of preferred stock are currently issued and outstanding.
Dividends on ConAgra Capital Stock
ConAgra Common Stock Dividend Policy. ConAgra has paid cash dividends on
its common stock each year since 1976. ConAgra's present policy is to continue
to pay quarterly cash dividends on its common stock and dividend payments, over
time, are expected to average in the range of 30 to 35 percent of cash earnings.
The payment of dividends and their amount will, however, be dependent upon
ConAgra's earnings, financial position, cash requirements and other factors
deemed relevant by the ConAgra board in its discretion, including the
satisfaction of preferred stock dividend requirements.
Dividend Rights. The ConAgra board may declare and pay dividends on ConAgra
common stock out of surplus or net profits. It is anticipated that any issuance
of preferred stock would contain provisions granting the shares so issued a
preference over the common stock as to the payment of dividends.
ConAgra Common Stock
The holders of ConAgra common stock are entitled to one vote for each
share. Upon liquidation, the holders of ConAgra common stock are entitled to
share ratably in assets available for distribution to stockholders after
satisfaction of any liquidation preferences of any outstanding preferred stock.
The issuance of any shares of any series of preferred stock in future
financings, acquisitions or otherwise may result in dilution of voting power and
relative equity interest of the holders of shares of ConAgra common stock and
will subject the ConAgra common stock to the prior dividend and liquidation
rights of the outstanding shares of the series of preferred stock.
The shares of ConAgra common stock offered under this proxy
statement/prospectus will be fully paid and non-assessable. ConAgra common stock
has no conversion rights nor are there any redemption or sinking fund provisions
with respect to the common stock. Holders of ConAgra common stock have no
pre-emptive right to subscribe for or purchase any additional stock or
securities of ConAgra.
Voting Rights in Specific Cases
Article XIV of the ConAgra certificate of incorporation requires, with
specific exceptions, a 75% affirmative vote of ConAgra's stock to approve (1) a
merger or consolidation with, (2) the issuance or transfer of securities of
ConAgra in exchange for assets, securities or cash to, or (3) the sale of all or
a substantial part of the assets of ConAgra to another person, corporation or
other entity, that owns beneficially, directly or indirectly, 5% or more of
ConAgra's outstanding capital stock entitled to vote generally in the election
of directors. The 75% voting requirement does not apply if a majority of the
outstanding shares of all classes of capital stock of the other corporation
entitled to vote generally in the election of directors, considered as one
class, is owned of record or beneficially by ConAgra or its subsidiaries, the
transaction was approved by a majority of ConAgra's board of directors prior to
the time that the other entity became a beneficial owner of 5% or more of
ConAgra's outstanding shares, or if the transaction is approved by a
three-fourths vote of ConAgra's board of directors at any time prior to its
consummation.
Article XV of the ConAgra certificate of incorporation requires the
approval of 95% of ConAgra's stock entitled to vote in the election of
directors, voting as one class, for any business combination with any other
entity, if, as of the applicable record date, the other entity is the beneficial
owner directly or indirectly of 30% of the outstanding shares of ConAgra stock
entitled to vote. The 95% voting requirements shall be inapplicable if fair
price, dividend, proxy, and other procedures detailed in Article XV have been
observed by the other entity since it acquired 30% control. Article XV cannot be
amended, altered, changed or repealed without a 95% vote of all stockholders of
ConAgra entitled to vote in an election of directors, considered as one class,
unless the amendment, alteration, change or repeal is recommended to the
stockholders by a vote of 80% of the directors who would be eligible to serve as
"continuing directors" as that term is defined in Article XV.
Article XVI of the ConAgra certificate of incorporation prescribes relevant
factors, including social and economic effects on employees, customers,
suppliers and other constituents of ConAgra, to be considered by the board of
directors when reviewing any proposal by another corporation to acquire or
combine with ConAgra.
Article XVII of the ConAgra certificate of incorporation requires that any
action required or permitted to be taken by ConAgra's stockholders must be
effected at a duly called annual or special meeting of the stockholders and may
not be effected by a consent in writing by the stockholders.
Article XVIII of the ConAgra certificate of incorporation provides in
general that any direct or indirect purchase by ConAgra or any subsidiary of
ConAgra of any of its voting stock, as defined in Article XVIII, or rights to
acquire voting stock, known to be beneficially owned by any person or group that
holds more than 3% of a class of its voting stock referred to in this paragraph
as an interested stockholder and that has owned the securities being purchased
for less than two years, must be approved by the affirmative vote of at least a
majority of the votes entitled to be cast by the holders of the voting stock,
excluding voting stock held by an interested stockholder. Article XVIII is
intended to prevent "greenmail," which is a term used to describe the
accumulation of a block of a corporation's stock by a speculator and the
subsequent attempt by the speculator to coerce the corporation into repurchasing
its shares, typically at a substantial premium over the market price.
Article VII requires that the ConAgra board of directors consist of nine to
sixteen members divided into three classes of as nearly equal size as possible.
The terms of the directors are staggered so that the terms of approximately
one-third of the directors expire at each annual election of directors. The
provisions of Article VII may not be amended without (1) the affirmative vote of
80% of all outstanding voting stock or (2) the affirmative vote of a majority of
outstanding voting stock and the affirmative vote of at least 75% of the board
of directors.
Article VII, Article XIV, Article XV, Article XVI, Article XVII and Article
XVIII may be deemed to have anti-takeover effects. These provisions may
discourage or make more difficult an attempt by a stockholder or other entity to
acquire control of ConAgra. These provisions may also make more difficult an
attempt by a stockholder or other entity to remove management. Furthermore, the
provision for a classified board of directors may make more difficult removal of
directors, even when removal is considered desirable.
Rights Dividend
On July 12, 1996, the board of directors of ConAgra declared a dividend of
one preferred share purchase right, referred to in this document as a right for
each outstanding share of ConAgra common stock for stockholders of record on
July 24, 1996 . The one right for each outstanding share of ConAgra common stock
was adjusted to one-half right for each share effective October 1, 1997 as a
result of an adjustment made following a two-for-one stock split of the ConAgra
common stock.
The rights will expire on July 12, 2006. The rights are represented by the
ConAgra common stock certificates and are not exercisable or transferable apart
from the ConAgra common stock certificates except upon the occurrence of events
described below. Pursuant to the rights agreement, the exercise price and the
number of shares of preferred stock or other securities or other property
issuable are subject to adjustment in the event of stock splits, stock dividends
and other distributions and customary antidilution provisions. All shares of
ConAgra common stock issued between July 24, 1996 and the earlier of (1) July
12, 2006, (2) the date on which the rights are redeemed and (3) a date generally
ten days after a share acquisition date, as defined below, will receive rights.
Each right entitles the registered holder to purchase from ConAgra one
one-thousandth of a share of series A junior participating class E preferred
stock, without par value, of ConAgra at a price of $200 per one one-thousandth
of a share of preferred stock , subject to adjustment. The description and terms
of the rights are set forth in a rights agreement dated as of July 12, 1996, as
the same may be amended from time to time , between ConAgra and ChaseMellon
Shareholder Services, L.L.C., as rights agent .
The rights become exercisable on the earlier to occur of (1) ten days
following announcement that a person or group, referred to in this document as
an acquiring person, has acquired 15% or more of the ConAgra common stock, the
date of such announcement being called the "share acquisition date", or (2) ten
business days following the commencement of, or announcement of an intention to
make, a tender offer for 15% or more of the ConAgra common stock.
Shares of preferred stock purchasable upon exercise of the rights will not
be redeemable. Each share of preferred stock will be entitled, when, as and if
declared, to a minimum preferential quarterly dividend payment of $1.00 per
share but will be entitled to an aggregate dividend of 2000 times the dividend
declared per share of ConAgra common stock. In the event of the liquidation,
dissolution or winding up of ConAgra, the holders of the preferred stock will be
entitled to a minimum preferential payment of $100 per share, plus any accrued
but unpaid dividends, but will be entitled to an aggregate payment of 2000 times
the payment made per share of ConAgra common stock. Each share of preferred
stock will have 2000 votes, voting together with the ConAgra common stock. In
the event of any merger, consolidation or other transaction in which outstanding
shares of ConAgra common stock are converted or exchanged, each share of
preferred stock will be entitled to receive 2000 times the amount received per
share of ConAgra common stock.
Because of the nature of the preferred stock's dividend, liquidation,
voting and other rights, the value of the one one-thousandth interest in a share
of preferred stock purchasable upon exercise of each right should approximate
the value of two shares of ConAgra common stock.
In the event that any person or group becomes an acquiring person, the
rights agreement provides that each holder of a right, other than an acquiring
person, will subsequently have the right to receive, upon exercise, shares of
ConAgra common stock having a value of twice the exercise price of the right.
In the event that, after a person or group has become an acquiring person,
(1) ConAgra engages in a merger or other business combination transaction in
which ConAgra is not the surviving company or (2) 50% or more of ConAgra's
assets or earning power is sold, the rights agreement provides that each holder
of a right shall subsequently have the right to receive, upon exercise, shares
of common stock of the acquiring company having a value of twice the exercise
price of the right.
At any time after any person or group becomes an acquiring person and prior
to the earlier of one of the events described in the previous paragraph or the
acquisition by the acquiring person of 50% or more of the outstanding shares of
ConAgra common stock, the board of directors of ConAgra may exchange the rights,
other than rights owned by the acquiring person which will have become void, in
whole or in part, for shares of ConAgra common stock or preferred stock, or a
series of ConAgra's preferred stock having equivalent rights, preferences and
privileges.
At any time on or prior to the share acquisition date, ConAgra may redeem
the rights at a redemption price of $.01 per right.
Business Combinations Under Delaware Law
Delaware law restricts the ability of specified persons to engage in
business combinations with a Delaware corporation.
Section 203 of the Delaware General Corporation Law limits specified
business combinations of Delaware corporations with interested stockholders.
Under the Delaware General Corporation Law, if a person acquires beneficial
ownership of 15% or more of the stock of a Delaware corporation, which makes
that person an interested stockholder, that person generally may not engage in
specified business combinations with the corporation for a period of three years
following the time that the stockholder became an interested stockholder unless
o prior to the time that the person became an interested stockholder,
the corporation's board of directors approved either the acquisition
of stock which resulted in the stockholder becoming an interested
stockholder or the business combination,
o upon consummation of the transaction in which the person became an
interested stockholder, the interested stockholder owned at least 85%
of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding voting stock owned by directors who
are also officers and specified employee stock ownership plans, or
o at or subsequent to the time that the person became an interested
stockholder, the business combination is approved by the board of
directors at an annual or special meeting by the affirmative vote of
66 2/3% of the outstanding voting stock which is not owned by the
interested stockholder.
Transfer Agent
The transfer agent for the ConAgra common stock is Norwest Stockholder
Services.
<PAGE>
COMPARISON OF RIGHTS OF HOLDERS
OF CONAGRA COMMON STOCK
AND INTERNATIONAL HOME FOODS COMMON STOCK
General
ConAgra and International Home Foods are both incorporated under Delaware
law. The rights of ConAgra and International Home Foods stockholders are
currently governed by Delaware law and the respective organizational documents
of each corporation. Upon completion of the merger, the rights of International
Home Foods stockholders who become stockholders of ConAgra in the merger will be
governed by ConAgra's certificate of incorporation and bylaws. The rights of
International Home Foods stockholders under Delaware law will not change upon
completion of the merger.
The following is a comparison of:
o The current rights of International Home Foods stockholders under the
International Home Foods certificate of incorporation and bylaws; and
o The rights International Home Foods stockholders would have as ConAgra
stockholders under the ConAgra certificate of incorporation and bylaws
upon the completion of the merger.
The comparison summarizes the material differences but is not intended to
list all differences between the ConAgra certificate of incorporation and bylaws
and the International Home Foods certificate of incorporation and bylaws. Copies
of ConAgra's certificate of incorporation and bylaws are available for
inspection at the offices of ConAgra and copies will be sent to you upon
request. Copies of International Home Foods' certificate of incorporation and
bylaws are available for inspection at the offices of International Home Foods
and copies will be sent to you upon request.
Authorized Capital Stock
ConAgra. The ConAgra certificate of incorporation authorizes the issuance
of up to 1,200,000,000 shares of ConAgra common stock, par value $5.00 per
share, and an aggregate of 18,050,000 shares of various series of preferred
stock. The shares of preferred stock are issuable in one or more series created
by the ConAgra board, which in creating any series is given the authority to fix
the voting rights, dividend rate, redemption provisions, liquidation preferences
and conversion provisions.
International Home Foods. The International Home Foods certificate of
incorporation authorizes the issuance of up to 300,000,000 shares of
International Home Foods common stock, $.01 par value per share, and 100,000,000
shares of International Home Foods preferred stock, $.01 par value per share.
The International Home Foods board may authorize the issuance of different
classes or series of International Home Foods preferred stock and may fix the
designations, powers, preferences and rights, qualifications, limitations and
restrictions of those shares.
Rights Plan
ConAgra. As discussed in "Description of ConAgra Capital Stock - Rights
Dividend" beginning on page __, each share of ConAgra common stock has attached
to it one-half right issued pursuant to the ConAgra rights plan.
International Home Foods. International Home Foods has not adopted a rights
plan.
Dividends and Distributions
Delaware law provides that the board of directors of ConAgra and
International Home Foods may pay dividends on their common stock out of surplus
or net profits. The payment of dividends is discretionary and subject to the
policies of ConAgra and International Home Foods as described below.
ConAgra's Policy. ConAgra has paid dividends on its common stock each year
since 1976. ConAgra's present policy is to continue to pay quarterly cash
dividends on its common stock. ConAgra expects that its dividend payments will
continue to average in the range of 30 to 35 percent of cash earnings. The
payment of dividends in the future for ConAgra common stock will, however, be
dependent on earnings, financial position, cash requirements and other relevant
factors, including the satisfaction of preferred stock dividend requirements.
International Home Foods' Policy. International Home Foods has not paid
dividends on its common stock, has no present plans to do so and is restricted
by its senior bank facilities from paying dividends.
Provisions Relating to Business Combinations
ConAgra. Provisions of ConAgra's certificate of incorporation may be deemed
to have anti-takeover effects due to heightened voting requirements . A
description is provided in "Description of ConAgra Capital Stock--Voting Rights
in Specific Cases" and "- Rights Dividend" beginning on page ____.
International Home Foods. The International Home Foods certificate of
incorporation and bylaws do not contain similar provisions relating to business
combinations.
Number of Directors and Term
ConAgra. The ConAgra certificate of incorporation provides that the number
of directors of ConAgra will not be less than nine or more than 16. There are
currently 11 persons serving as directors on the ConAgra board. ConAgra's
certificate of incorporation requires the board to be divided into three even
classes, each of which holds a three-year term. Only one class, or one-third of
the directors, come up for election at each annual meeting of ConAgra
stockholders.
International Home Foods. The International Home Foods certificate of
incorporation and bylaws provide that the number of directors of International
Home Foods will not be fewer than three or more than 21. There are currently
seven persons serving as directors on the International Home Foods board. The
International Home Foods certificate of incorporation contains provisions for a
classified board similar to ConAgra's.
Amendments to Certificate of Incorporation
Under Delaware law, the vote of a majority of the outstanding shares
entitled to vote on a proposed amendment is required to amend a company's
certificate of incorporation, unless a greater vote is required by a company's
certificate of incorporation.
ConAgra's Certificate of Incorporation. The ConAgra certificate of
incorporation requires a supermajority vote for specified business combination
transactions with persons owning specified percentages of ConAgra common stock
and to amend provisions relating to ConAgra's classified board. See "Description
of ConAgra Capital Stock - Voting Rights in Specific Cases" on page __ for a
discussion of these provisions.
International Home Foods' Certificate of Incorporation. The International
Home Foods certificate of incorporation requires the affirmative vote of not
less than two-thirds of the holders of shares entitled to vote in an election of
directors to amend the following articles of the International Home Foods
certificate of incorporation:
o Article Fifth, which establishes the number of directors, a classified
board, the term of directors, the filling of vacancies and the removal
of directors;
o Article Sixth, which prohibits stockholders from taking action by
written consent;
o Article Seventh, which provides that only the board may call special
meetings of stockholders and further provides the procedures for
stockholders to propose business and make nominations at annual
meetings;
o Article Eighth, which establishes director powers; and
o Article Eleventh, which limits the personal liability of directors for
breaches of fiduciary duties.
Advance Notice for Raising Business or Making Nominations at Meetings
ConAgra Annual Meetings. Stockholders who want to nominate a person as a
candidate for election to the ConAgra board or propose business at the next
annual meeting must submit a nomination or notice in writing to the Secretary of
ConAgra not less than 90 nor more than 120 days prior to the anniversary of the
immediately preceding annual meeting of stockholders.
International Home Foods Annual Meetings. International Home Foods
stockholders who intend to propose business or nominate a person for election to
the International Home Foods board at an annual meeting must submit a written
notice to International Home Foods no less than the later of 60 days before the
date of the annual meeting or 10 days after the first public notice of the
meeting is sent to stockholders.
ConAgra Special Meetings. Stockholders who want to nominate a person as a
candidate for election to the ConAgra board at a special meeting of stockholders
at which one or more directors are to be elected must submit the nomination in
writing to the Secretary of ConAgra not earlier than 120 days prior to the
special meeting and generally not later than 90 days prior to the special
meeting.
International Home Foods Special Meetings. International Home Foods
stockholders are not permitted to propose business or make nominations to the
International Home Foods board at special meetings, except as otherwise required
by law.
EXPERTS
The financial statements and the related financial statement schedule of
ConAgra as of May 30, 1999 and May 31, 1998, and for each of the three years in
the period ended May 30, 1999, incorporated by reference in this registration
statement have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports, which are incorporated by reference in this
registration statement , and have been so incorporated in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
The financial statements of International Home Foods as of December 31,
1999 and 1998 and for each of the three years in the period ended December 31,
1999, incorporated by reference in this proxy statement/prospectus have been
incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of that firm as experts in
auditing and accounting.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the
shares of ConAgra common stock offered by this proxy statement/prospectus will
be passed upon for ConAgra by McGrath, North, Mullin & Kratz, P.C., Omaha,
Nebraska.
Subject to customary assumptions and representations to be made by ConAgra,
International Home Foods and ConAgra's acquisition subsidiary and the
satisfaction of those conditions described under "The Merger - Material United
States Income Tax Consequences - United States Federal Income Tax Consequences
of the Forward Merger Structure," Vinson & Elkins L.L.P. will give its opinion
that the forward merger will qualify as a reorganization within the meaning of
section 368(a) of the Internal Revenue Code and the discussion of the material
United States federal income tax consequences referred to under the caption "The
Merger - Material United States Federal Income Tax Consequences" is accurate.
WHERE YOU CAN FIND MORE INFORMATION
ConAgra and International Home Foods file annual, quarterly and special
reports, proxy statements and other information with the SEC. You may read and
copy any reports, statements or other information that we file at the SEC's
public reference room at 450 Fifth Street, N.W., Washington D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
room. Our SEC filings are also available to the public from commercial document
retrieval services and at the Internet web site maintained by the SEC at
"http://www.sec.gov." Reports, proxy statements and other information pertaining
to ConAgra and International Home Foods should also be available for inspection
at the offices of the New York Stock Exchange.
ConAgra filed a registration statement on Form S-4 to register with the SEC
the ConAgra common stock to be issued to International Home Foods stockholders
in connection with the merger. This document is a part of that registration
statement and constitutes a prospectus of ConAgra in addition to being a proxy
statement of International Home Foods for its special meeting. As allowed by SEC
rules, this document does not contain all the information you can find in the
registration statement or the exhibits to the registration statement.
The SEC allows us to "incorporate by reference" information into this
document, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this document, except for any
information superseded by information in, or incorporated by reference in, this
document. This document incorporates by reference the documents set forth below
that we have previously filed with the SEC. These documents contain important
information about our companies and their finances.
ConAgra SEC Filings (File No. 1-7275)
Annual Report on Form 10-K Fiscal Year ended May 30, 1999
Quarterly Reports on Form 10-Q Quarters ended August 29, 1999, November
28, 1999 and February 27, 2000
Current Report on Form 8-K Dated June 22, 2000
Registration Statement on Form 8-A,
as amended Filed on October 1, 1997
International Home Foods SEC Filings (File No. 1-13537)
Annual Report on Form 10-K Fiscal Year ended December 31, 1999
Proxy Statement on Schedule 14A
for 2000 Annual Meeting Filed March 29, 2000
Quarterly Report on Form 10-Q Quarter ended March 31, 2000
Current Report on Form 8-K Dated June 22, 2000
We are also incorporating by reference additional documents that we file
with the SEC between the date of this document and the date of the International
Home Foods special meeting.
ConAgra has supplied all information contained or incorporated by reference
in this document relating to ConAgra, and International Home Foods has supplied
all the information relating to International Home Foods.
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us or the SEC.
Documents incorporated by reference are available from us without charge,
excluding all exhibits unless we have specifically incorporated by reference an
exhibit in this document. Stockholders may obtain documents incorporated by
reference in this document by requesting them in writing or by telephone from
the appropriate party at the following address:
ConAgra, Inc. International Home Foods, Inc.
Investor Relations Department Investor Relations Department
One ConAgra Drive 1633 Littleton Road
Omaha, Nebraska 68102 Parsippany, New Jersey 07054
Tel: (800) 595-0244 Tel: (973) 359-9920
If you would like to request documents from us, please do so by [5th
business day before meeting], 2000 to receive them before the International Home
Foods special meeting.
You should rely only on the information contained or incorporated by
reference in this document to vote on the matter or matters presented at the
International Home Foods special meeting of stockholders. We have not authorized
anyone to provide you with information that is different from what is contained
in this document. This document is dated ______________, 2000. You should not
assume that the information contained in the document is accurate as of any date
other than that date, and neither the mailing of this document to International
Home Foods stockholders nor the issuance of ConAgra common stock in connection
with the merger shall create any implication to the contrary.
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
among
CONAGRA, INC.,
CAG ACQUISITION SUB, INC.
and
INTERNATIONAL HOME FOODS, INC.
Dated as of June 22, 2000
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER .....................................................2
Section 1.1 The Merger .....................................................2
Section 1.2 Closing ........................................................3
Section 1.3 Effective Time .................................................3
Section 1.4 Certificate of Incorporation....................................3
Section 1.5 By-Laws.........................................................3
Section 1.6 Directors and Officers..........................................4
ARTICLE II CONVERSION OF SHARES ...........................................4
Section 2.1 Conversion of Shares ...........................................4
Section 2.2 Exchange Procedures ............................................5
Section 2.3 Dividends; Transfer Taxes; Withholding .........................6
Section 2.4 Fractional Shares ..............................................7
Section 2.5 Undistributed Exchange Fund.....................................7
Section 2.6 Dissenting Shares ..............................................7
Section 2.7 Options ........................................................8
Section 2.8 Closing of Transfer Books .....................................10
Section 2.9 Further Assurances ............................................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
THE COMPANY ...................................................10
Section 3.1 Organization and Good Standing ................................11
Section 3.2 Certificate of Incorporation and By-Laws ......................12
Section 3.3 Capitalization ................................................12
Section 3.4 Company Subsidiaries ..........................................13
Section 3.5 Corporate Authority ...........................................13
Section 3.6 Compliance with Applicable Law ................................14
Section 3.7 Non-Contravention .............................................14
Section 3.8 Government Approvals; Required Consents .......................15
Section 3.9 SEC Documents and Other Reports ...............................15
Section 3.10 Absence of Certain Changes or Events ..........................16
Section 3.11 Actions and Proceedings .......................................16
Section 3.12 Absence of Undisclosed Liabilities ............................17
Section 3.13 Certain Contracts and Arrangements ............................17
Section 3.14 Taxes .........................................................18
Section 3.15 Intellectual Property .........................................20
Section 3.16 Information in Disclosure Documents and Registration
Statement .....................................................21
Section 3.17 Employee Benefit Plans; ERISA .................................21
Section 3.18 Environmental Matters .........................................22
Section 3.19 Affiliate Transactions ........................................25
Section 3.20 Opinion of Financial Advisor ..................................25
Section 3.21 Brokers .......................................................25
Section 3.22 Fees...........................................................25
Section 3.23 Lack of Ownership of Parent Common Stock.......................26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB .........................................26
Section 4.1 Organization and Good Standing ................................26
Section 4.2 Certificate of Incorporation and By-Laws ......................27
Section 4.3 Capitalization ................................................27
Section 4.4 Corporate Authority ...........................................28
Section 4.5 Compliance with Applicable Law.................................29
Section 4.6 Non-contravention .............................................29
Section 4.7 Government Approvals; Required Consents .......................30
Section 4.8 SEC Documents and Other Reports ...............................30
Section 4.9 Absence of Certain Changes or Events ..........................31
Section 4.10 Information in Disclosure Schedule and Registration
Statement .....................................................31
Section 4.11 Employee Benefit Plans; ERISA..................................31
Section 4.12 Lack of Ownership of Company Common Stock......................32
Section 4.13 Required Vote of Parent Stockholders...........................32
Section 4.14 Absence of Undisclosed Liabilities.............................32
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER ........................32
Section 5.1 Conduct of Business by the Company Pending the Merger .........32
Section 5.2 Conduct of Business by the Parent Pending the Closing..........35
ARTICLE VI ADDITIONAL AGREEMENTS .........................................36
Section 6.1 Access and Information; Confidentiality .......................36
Section 6.2 No Solicitation ...............................................36
Section 6.3 Third-Party Standstill Agreements .............................38
Section 6.4 Registration Statement ........................................39
Section 6.5 Proxy Statements; Stockholder Approval ........................38
Section 6.6 Compliance with the Securities Act ............................38
Section 6.7 Other Actions..................................................40
Section 6.8 Public Announcements ..........................................42
Section 6.9 Directors' and Officers' Indemnification and Insurance ........42
Section 6.10 Expenses ......................................................43
Section 6.11 Listing Application ...........................................44
Section 6.12 Supplemental Disclosure .......................................44
Section 6.13 Stockholder Litigation.........................................44
Section 6.14 Tax Matters....................................................44
Section 6.15 Investigation and Agreement by the Parties; No Other
Representations or Warranties..................................45
Section 6.16 Resignations...................................................46
Section 6.17 Amendment of Advisory and Oversight Agreement..................46
Section 6.18 Section 16(b) Board Approval...................................46
Section 6.19 Transfer of Assets.............................................47
Section 6.20 Other Registration Statements..................................47
Section 6.21 Opinion of Financial Advisor...................................47
Section 6.22 401(k) Plan Distributions......................................47
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER ......................48
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger ....48
Section 7.2 Conditions to Obligation of Parent and Merger Sub to
Effect the Merger .............................................48
Section 7.3 Conditions to Obligation of the Company to Effect the49
Merger ........................................................49
ARTICLE VIII TERMINATION ...................................................50
Section 8.1 Termination ...................................................50
Section 8.2 Effect of Termination..........................................51
ARTICLE IX GENERAL PROVISIONS ............................................52
Section 9.1 Amendment and Modifications ...................................52
Section 9.2 Waiver ........................................................52
Section 9.3 Survivability; Investigations .................................53
Section 9.4 Notices .......................................................54
Section 9.5 Descriptive Headings; Interpretations
Section 9.6 Entire Agreement ..............................................54
Section 9.7 Governing Law .................................................54
Section 9.8 Enforcement ...................................................54
Section 9.9 Counterparts ..................................................55
Section 9.10 Assignment; Third-Party Beneficiaries .........................55
Section 9.11 No Recourse Against Others.....................................55
Section 9.12 Severability...................................................56
Section 9.13 Attorneys' Fees................................................56
Exhibit "A" Form of Stock Voting Agreement
Exhibit "B" Form of Registration Rights Agreement
Exhibit "C" Form of Option Consent Letter
Exhibit "D" Form of Affiliate Letter
Exhibit "E" Form of Tax Opinion
Exhibit "F" Form of Amendment to Advisory Agreement
Exhibit "G" Form of Amendment to Oversight Agreement
<PAGE>
INDEX OF DEFINED TERMS
"accumulated funding deficiency" has the meaning specified in Section 3.17(b).
"Advisory Agreement" has the meaning specified in Section 3.22(b).
"Advisory Agreement Amendment" has the meaning specified in Section 6.17.
"affiliate" has the meaning specified in Section 6.6.
"Agreement" shall mean this Agreement and Plan of Merger.
"Antitrust Laws" has the meaning specified in Section 6.7(d).
"Applicable Law" has the meaning specified in Section 3.6.
"Average Trading Price" has the meaning specified in Section 2.1(a).
"Benefit Plans" has the meaning specified in Section 3.17(a).
"Cap" has the meaning specified in Section 6.9(b).
"Cashout Options" has the meaning specified in Section 2.7(e)(ii).
"Certificate of Merger" has the meaning specified in Section 1.3.
"Certificate" has the meaning specified in Section 2.1(d).
"Charter Documents" has the meaning specified in Section 3.2.
"Chase" has the meaning specified in Section 3.20.
"Class B Stock" has the meaning specified in Section 4.3(a).
"Class C Stock" has the meaning specified in Section 4.3(a).
"Class D Stock" has the meaning specified in Section 4.3(a).
"Class E Stock" has the meaning specified in Section 4.3(a).
"Closing" has the meaning specified in Section 1.2.
"Closing Date" has the meaning specified in Section 1.2.
"Code" shall have the meaning set forth in the Recitals.
"Company" shall mean International Home Foods, Inc.
"Company Affiliate" has the meaning specified in Section 9.11.
"Company 10-K" has the meaning specified in Section 3.12.
"Company Common Stock" has the meaning specified in Section 2.1(a).
"Company Disclosure Schedule" has the meaning specified in Article III.
"Company Material Adverse Effect" has the meaning specified in Section 3.1.
"Company Multiemployer Plan" has the meaning specified in Section 3.17(b)(ii).
"Company Permits" has the meaning specified in Section 3.6.
"Company Plan" has the meaning specified in Section 3.17(b)(i).
"Company Rule 145 Affiliates" has the meaning specified in Section 6.6.
"Company SEC Documents" has the meaning specified in Section 3.9(a).
"Company Severance Agreements" has the meaning specified in Section 3.13(a).
"Company Stockholder Meeting" has the meaning specified in Section 6.5(a).
"Company Voting Debt" has the meaning specified in Section 3.3(c).
"Confidentiality Agreement" has the meaning specified in Section 6.1(b).
"Consent" has the meaning specified in Section 6.7(b).
"Contract" has the meaning specified in Section 3.7.
"Costs" has the meaning specified in Section 6.9(a).
"DGCL" has the meaning set forth in the Recitals.
"Dissenting Shares" has the meaning specified in Section 2.6.
"DOJ" has the meaning specified in Section 6.7(d).
"Economic Value" has the meaning specified in Section 2.7(e)(iv).
"Effective Time" has the meaning specified in Section 1.3.
"Environmental Claims" has the meaning specified in Section 3.18(g)(i).
"Environmental Laws" has the meaning specified in Section 3.18(g)(ii).
"Environmental Permits" has the meaning specified in Section 3.18(a).
"ERISA" has the meaning specified in Section 3.17(b).
"ERISA Affiliates" has the meaning specified in Section 3.17(b)(iii).
"Exchange Act" has the meaning specified in Section 3.8.
"Exchange Agent" has the meaning specified in Section 2.2(a).
"Exchange Fund" has the meaning specified in Section 2.2(a).
"FTC" has the meaning specified in Section 6.7(d).
"GAAP" has the meaning specified in Section 3.9(a).
"Governmental Entity" has the meaning specified in Section 3.6.
"Hazardous Materials" has the meaning specified in Section 3.18(g)(iii).
"Hicks Muse Stockholders" has the meaning specified in Section 1.1.
"HMCo" has the meaning specified in Section 3.21.
"HSR Act" has the meaning specified in Section 3.8.
"Indemnifiable Claim" has the meaning specified in Section 6.9(a).
"Indemnitee" has the meaning specified in Section 6.9(a).
"Indemnitee Expenses" has the meaning specified in Section 6.9(a).
"Indemnity Agreement" has the meaning specified in Section 6.9(a).
"Intellectual Property" has the meaning specified in Section 3.15.
"IRS" has the meaning specified in Section 3.14(a).
"Liens" has the meaning specified in Section 3.4.
"Material Contracts" has the meaning specified in Section 3.13(a).
"Merger" has the meaning set forth in the Recitals.
"Merger Consideration" has the meaning specified in Section 2.1(a).
"Merger Sub" shall mean CAG Acquisition Sub, Inc.
"Merger Sub Common Stock" has the meaning specified in Section 2.1(b).
"Mexican Commission" has the meaning specified in Section 6.7(d).
"Mexican Law" has the meaning specified in Section 6.7(d).
"multiemployer plan" has the meaning specified in Section 3.17(b)(ii).
"Option Plan" has the meaning specified in Section 2.7(e)(i).
"Options" has the meaning specified in Section 2.7(e)(i).
"Other Subsidiary" has the meaning specified in Section 3.1.
"Oversight Agreement" has the meaning specified in Section 3.22(b).
"Oversight Agreement Amendment" has the meaning specified in Section 6.17.
"Parent" shall mean ConAgra, Inc.
"Parent Capital Stock" has the meaning specified in Section 4.3(a).
"Parent Common Stock" has the meaning specified in Section 2.1(a).
"Parent Disclosure Schedule" has the meaning specified in Article IV.
"Parent Material Adverse Effect" has the meaning specified in Section 4.1.
"Parent Option Plans" has the meaning specified in Section 4.3(a).
"Parent Permits" has the meaning specified in Section 4.5.
"Parent SEC Documents" has the meaning specified in Section 4.8.
"pension plan" has the meaning specified in Section 3.17(b)(i).
"Per Share Cash Consideration" has the meaning specified in Section 2.1(a).
"Per Share Stock Consideration" has the meaning specified in Section 2.1(a).
"person" has the meaning specified in Section 9.5.
"Preferred Stock" has the meaning specified in Section 3.3(a).
"Proxy Statement" has the meaning specified in Section 3.16.
"Registration Rights Agreement" has the meaning set forth in the Recitals.
"Registration Statement" has the meaning specified in Section 3.16.
"Release" has the meaning specified in Section 3.18(g)(iv).
"reportable event" has the meaning specified in Section 3.17(b).
"Reorganization Assumptions" has the meaning specified in Section 6.14.
"Representatives" has the meaning specified in Section 6.2(a).
"Reverse Merger Election" has the meaning specified in Section 1.1.
"Rollover Options" has the meaning specified in Section 2.7(e)(iii).
"SEC" has the meaning specified in Section 3.9(a).
"Securities Act" has the meaning specified in Section 3.8.
"Shares" has the meaning specified in Section 2.1(a).
"Significant Subsidiary" has the meaning specified in Section 3.1.
"Stock Action" has the meaning specified in Section 2.1(e).
"Stock Voting Agreements" has the meaning set forth in the Recitals.
"Subsequent Company SEC Documents" has the meaning specified in Section 3.9(a).
"Subsequent Parent SEC Documents" has the meaning specified in Section 4.8.
"Subsidiary" has the meaning specified in Section 3.1.
"Superior Proposal" has the meaning specified in Section 6.2(b).
"Surviving Corporation" has the meaning specified in Section 1.1.
"Takeover Proposal" has the meaning specified in Section 6.2(a).
"Tax" has the meaning specified in Section 3.14(h).
"Tax Opinion" has the meaning specified in Section 6.14.
"Tax Returns" has the meaning specified in Section 3.14(h).
"Taxes" has the meaning specified in Section 3.14(h).
"Termination Date" has the meaning specified in Section 8.1(b).
"welfare plan" has the meaning specified in Section 3.17(b)(i).
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 22, 2000 (this
"Agreement"), by and among ConAgra, Inc., a Delaware corporation ("Parent"), CAG
ACQUISITION SUB, INC., a Delaware corporation and newly formed, wholly owned
subsidiary of Parent (the "Merger Sub"), and International Home Foods, Inc., a
Delaware corporation (the "Company").
RECITALS:
(a) The Boards of Directors of Parent and the Company
have each approved and deem it advisable and in the
best interests of their respective stockholders for
Parent to acquire the Company upon the terms and
subject to the conditions of this Agreement; and
(b) Subject to the election provided in Section 1.1, it
is intended that the transaction be accomplished by a
merger of the Company with and into Merger Sub, with
Merger Sub continuing as the surviving corporation,
(the "Merger"); and
(c) As a condition and an inducement to Parent and Merger
Sub entering into this Agreement and incurring the
obligations set forth herein, concurrently with the
execution and delivery of this Agreement, certain
stockholders of the Company, who own an aggregate of
approximately 43% of the outstanding shares of
Company Common Stock (as hereinafter defined), are
entering into separate Stock Voting Agreements with
Parent in the form of Exhibit "A" hereto
(collectively, the "Stock Voting Agreements"); and
(d) The Board of Directors of the Company has approved
this Agreement and the Stock Voting Agreements and
the transactions contemplated thereby in accordance
with the provisions of Sections 203 and 251 of the
General Corporation Law of the State of Delaware
("DGCL"), and has resolved, subject to the terms of
this Agreement, to recommend the adoption of this
Agreement by its stockholders in accordance with this
Agreement; and
(e) The Board of Directors of Merger Sub has unanimously
approved this Agreement and the transactions
contemplated hereby and has unanimously resolved,
subject to the terms of this Agreement, to recommend
the adoption of this Agreement by Parent, its sole
shareholder; and
(f) The Board of Directors of Parent has approved the
transactions contemplated hereby as sole shareholder
of Merger Sub; and
(g) Concurrently with the execution and delivery of this
Agreement, Parent is entering into a Registration
Rights Agreement with certain stockholders of the
Company in the form of Exhibit "B" hereto (the
"Registration Rights Agreement").
(h) The parties hereto desire, if possible, that the
Merger will qualify as a reorganization under Section
368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated
thereto, and that this Agreement shall be, and is
hereby, adopted as a plan of reorganization for
purposes of Section 368 of the Code (subject to the
election provided in Section 1.1).
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
contained in this Agreement, and in accordance with the DGCL, at the Effective
Time (as hereinafter defined), the Company shall be merged with and into Merger
Sub, the separate corporate existence of the Company shall thereupon cease, and
Merger Sub shall continue as the surviving corporation (sometimes hereinafter
referred to as the "Surviving Corporation") and shall continue its corporate
existence under the laws of the State of Delaware. In accordance with Section
259 of the DGCL, all of the rights, privileges, powers, immunities, purposes and
franchises of Merger Sub and the Company shall vest in the Surviving Corporation
and all of the debts, liabilities, obligations and duties of Merger Sub and the
Company shall become the debts, liabilities, obligations and duties of the
Surviving Corporation. In lieu of the Company being merged with and into Merger
Sub, if all of the conditions set forth in Article VII (excluding conditions
that, by their terms, cannot be satisfied until the Closing Date (as hereinafter
defined)) have been satisfied or waived, and if either (i) the Tax Opinion (as
hereinafter defined) cannot be, or is not, delivered, or (ii) Parent reasonably
determines in good faith that the combination of (a) the number of Company
Stockholders exercising appraisal rights pursuant to Section 262 of the DGCL,
(b) the trading price of Parent Common Stock immediately prior to the Effective
Time, (c) the cash portion of the Merger Consideration, and (d) the amount of
cash payable in lieu of fractional shares, could result in the cash payable to
or for the benefit of the Company Stockholders as a result of the Merger
exceeding 60% of the total fair market value of the cash and Parent Common Stock
payable and deliverable to the Company Stockholders as a result of the Merger,
then, in either case, Parent shall have the right at any time prior to the
Effective Time to irrevocably elect (the "Reverse Merger Election") by notice
delivered to the Company, and upon the terms and subject to the conditions set
forth in this Agreement, to cause the "Merger" to be a merger of Merger Sub with
and into the Company at the Effective Time, in which case, following the Merger,
the separate corporate existence of Merger Sub shall cease and the Company shall
continue as the Surviving Corporation. If the Reverse Merger Election is made,
the parties acknowledge and agree that the Merger shall not, and shall not be
intended to, qualify as a reorganization under Section 368(a) of the Code.
Section 1.2 Closing. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Vinson & Elkins L.L.P., 1325
Avenue of the Americas, 17th Floor, New York, New York 10019-6026 , at 10:00
a.m., local time, on the second business day after the conditions set forth in
Sections 7.1(a), (c) and (d) have been satisfied or on such other date and at
such other time and place as Parent and the Company shall agree (the date on
which the Closing actually occurs being referred to herein as the "Closing
Date").
Section 1.3 Effective Time. The Merger shall become effective at the
time of filing of, or at such later time specified in, a properly executed
certificate of merger (the "Certificate of Merger"), in the form required by and
executed in accordance with the DGCL, filed with the Secretary of State of the
State of Delaware, in accordance with the provisions of Section 251 of the DGCL.
Such filing shall be made contemporaneously with, or immediately after, the
Closing. When used in this Agreement, the term "Effective Time" shall mean the
date and time at which the Merger shall become effective.
Section 1.4 Certificate of Incorporation. Unless the Reverse Merger
Election is made, from and after the Effective Time, the Certificate of
Incorporation of Merger Sub as in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended in accordance with Applicable Law (as hereinafter defined);
provided, however, that Article I of such Certificate of Incorporation shall be
amended to read in its entirety as follows: "The name of this Corporation is
"International Home Foods, Inc." If the Reverse Merger Election is made, the
Certificate of Incorporation of the Company shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by Applicable Law.
Section 1.5 By-Laws. From and after the Effective Time, the By-Laws of
Merger Sub in effect immediately prior to the Effective Time shall be the
By-Laws of the Surviving Corporation until thereafter amended in accordance with
Applicable Law, provided that if the Reverse Merger Election is made, the
By-Laws of the Company in effect immediately prior to the Effective Time shall
be the By-Laws of the Surviving Corporation until thereafter amended in
accordance with Applicable Law.
Section 1.6 Directors and Officers. From and after the Effective Time,
the directors of Merger Sub immediately prior to the Effective Time shall become
the directors of the Surviving Corporation and shall hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualified in the manner provided in the Certificate of Incorporation or
By-Laws of the Surviving Corporation or as otherwise provided by law. The
officers of the Company at the Effective Time shall become the officers of the
Surviving Corporation and shall hold office from the Effective Time until their
respective successors are duly elected or appointed and qualified in the manner
provided in the Certificate of Incorporation or By-Laws of the Surviving
Corporation or as otherwise provided by law.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of any holder of any shares of
Company Common Stock (as defined herein) or any shares of capital stock of
Merger Sub:
(a) Each share of Common Stock, par value $.01 per share, of the
Company ("Company Common Stock" or "Shares") issued and outstanding immediately
prior to the Effective Time (other than Shares to be cancelled pursuant to
Section 2.1(c) hereof and Dissenting Shares (as defined in Section 2.6)) shall
be converted into the right to receive (i) that number of validly issued, fully
paid and nonassessable shares of Common Stock, par value $5.00 per share, of
Parent ("Parent Common Stock"), determined by dividing $11.00 by the "Average
Trading Price" (the "Per Share Stock Consideration"), which quotient shall be
rounded to the nearest fifth decimal place and (ii) $11.00 in cash (the "Per
Share Cash Consideration"). For purposes of this Agreement, "Average Trading
Price" shall mean the average closing price of Parent Common Stock on the NYSE
Composite Transactions List (as reprinted by The Wall Street Journal) for the
ten (10) full trading days ending on the fifth (5th) full trading day
immediately preceding the Closing Date, provided, however, in no event shall the
Average Trading Price (x) be greater than $22.00; nor (y) be less than $18.00.
For purposes of this Agreement, "Merger Consideration" shall mean the Per Share
Stock Consideration and the Per Share Cash Consideration to which holders of
shares of Company Common Stock are entitled pursuant to this Section 2.1(a).
(b) Each share of common stock, par value $.01, of Merger Sub ("Merger
Sub Common Stock") issued and outstanding immediately prior to the Effective
Time shall be converted into one duly issued, validly authorized, fully paid and
nonassessable share of common stock, par value $.01 per share, of the Surviving
Corporation.
(c) All Shares that are owned by the Company as treasury stock shall
automatically be cancelled and retired and shall cease to exist and no
consideration shall be delivered or deliverable in exchange therefor.
(d) As a result of the Merger and without any action on the part of the
holders thereof, at the Effective Time, all shares of Company Common Stock shall
cease to be outstanding and shall be cancelled and retired and shall cease to
exist, and, except as otherwise provided in Sections 2.1(c) and 2.6, each holder
of a certificate which immediately prior to the Effective Time represented any
such shares of Company Common Stock (a "Certificate") shall thereafter cease to
have any rights with respect to such shares of Company Common Stock, except the
right to receive the applicable Merger Consideration and any dividends or other
distributions to which holders become entitled all in accordance with this
Agreement upon the surrender of such Certificate.
(e) If between the date of this Agreement and the Effective Time, the
Parent shall split, combine or otherwise reclassify the Parent Common Stock, or
pay a stock dividend or other stock distribution in Parent Common Stock, or
otherwise change the Parent Common Stock into other securities, or make any
other such stock dividend or distribution in capital stock of Parent in respect
of the Parent Common Stock (collectively a "Stock Action"), the Average Trading
Price and the maximum and minimum limits on the adjustment of the Average
Trading Price set forth in clauses (x) and (y) of Section 2.1(a), each shall be
correspondingly adjusted to reflect such Stock Action, upon surrender of the
certificate formerly representing Shares in the manner provided in Section 2.2
hereof.
Section 2.2 Exchange Procedures.
(a) Parent shall designate a bank or trust company to act as Exchange
Agent hereunder (the "Exchange Agent"). Immediately following the Effective
Time, but no later than the next business day, Parent shall deliver, in trust,
to the Exchange Agent, for the benefit of the holders of Shares, for exchange in
accordance with this Article II through the Exchange Agent, (i) cash in an
amount necessary to make any cash payment due under Sections 2.1(a) and 2.4
hereof, and (ii) certificates evidencing the shares of Parent Common Stock
issuable pursuant to Section 2.1(a) in exchange for outstanding Shares. The cash
and the certificates evidencing the shares of Parent Common Stock delivered to
the Exchange Agent pursuant to this Section 2.2(a) and comprising the Merger
Consideration shall be hereinafter referred to as the "Exchange Fund". The
Exchange Agent shall invest any cash included in the Exchange Fund in one or
more bank accounts or in high-quality, short-term investments, as directed by
Parent, on a daily basis. Any interest and other income resulting from such
investments will be paid to Parent.
(b) As soon as practicable after the Effective Time, but in no event
more than five business days thereafter, Parent shall cause the Exchange Agent
to mail to each holder of record of Certificates (i) a form of letter of
transmittal specifying that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent, and (ii) instructions for use in
surrendering such Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor (A) that number of shares of Parent
Common Stock equal to the product of the Per Share Stock Consideration
multiplied by the number of Shares formerly represented by the surrendered
Certificate; provided, however, that each holder shall receive cash in lieu of
any fractional share of Parent Common Stock to which such holder would otherwise
be entitled pursuant to Section 2.4 hereof, (B) any amounts to which the holder
is entitled pursuant to Section 2.3 hereof after giving effect to any required
tax withholdings, and (C) payment by check of an amount equal to the product of
the Per Share Cash Consideration multiplied by the number of Shares formerly
represented by the surrendered Certificate, after giving effect to any required
tax withholding, and the Certificate so surrendered shall forthwith be
cancelled. Until surrendered as contemplated by this Section 2.2(b), each
Certificate shall be deemed from and after the Effective Time to represent only
the right to receive upon such surrender the Merger Consideration. In no event
shall the holder of any such surrendered Certificate be entitled to receive
interest on any cash to be received in the Merger.
(c) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by Parent, the posting by such
person of a bond, in such reasonable and customary amount as Parent may direct,
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration.
(d) At the Closing and immediately after the Effective Time, any
Company Rule 145 Affiliate, and any affiliate of any Company Rule 145 Affiliate,
shall be entitled to surrender any Certificates and Options held by such person
in exchange for (i) certificates of Parent Common Stock representing the stock
portion of the Merger Consideration to which such person is entitled, (ii)
payment by wire transfer of immediately available funds of the cash portion of
the Merger Consideration to which such person is entitled and (iii) in respect
of such surrendered Options, the cash that such person is entitled pursuant to
Section 2.7 hereof.
Section 2.3 Dividends; Transfer Taxes; Withholding. No dividends or
other distributions that are declared on or after the Effective Time on Parent
Common Stock, or are payable to the holders of record thereof who became such on
or after the Effective Time, shall be paid to any person entitled by reason of
the Merger to receive certificates representing shares of Parent Common Stock,
until such person shall have surrendered its Certificate(s) as provided in
Section 2.2 hereof. Subject to applicable law, there shall be paid to each
person receiving a certificate representing such shares of Parent Common Stock,
at the time of such surrender or as promptly as practicable thereafter, the
amount of any dividends or other distributions theretofore paid with respect to
the shares of Parent Common Stock represented by such certificate and having a
record date on or after the Effective Time but prior to such surrender and a
payment date on or subsequent to such surrender. In no event shall the person
entitled to receive such dividends or other distributions be entitled to receive
interest on such dividends or other distributions. If any cash or certificate
representing shares of Parent Common Stock is to be paid to or issued in a name
other than that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed and otherwise in proper form for transfer
and that the person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the issuance of such certificate
representing shares of Parent Common Stock and the distribution of such cash
payment in a name other than that of the registered holder of the Certificate so
surrendered, or shall establish to the satisfaction of the Exchange Agent that
such tax has been paid or is not applicable. Parent or the Exchange Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Company Common Stock such amounts as
Parent or the Exchange Agent are required to deduct and withhold under the Code
or any provision of state, local or foreign tax law, with respect to the making
of such payment. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Company Common Stock in
respect of whom such deduction and withholding were made by Parent or the
Exchange Agent.
Section 2.4 Fractional Shares. No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender for
exchange of Certificates, no dividend or distribution with respect to shares
shall be payable on or with respect to any fractional share and such fractional
share interests shall not entitle the owner thereof to vote or to any other
rights of a stockholder of Parent. In lieu of any such fractional share of
Parent Common Stock, Parent shall pay to each former stockholder of the Company
who otherwise would be entitled to receive a fractional share of Parent Common
Stock an amount in cash (without interest) rounded to the nearest whole cent,
determined by multiplying (i) the per share closing price of Parent Common Stock
on the NYSE Composite Transactions List (as reprinted by The Wall Street
Journal) on the date on which the Effective Time shall occur (or, if Parent
Common Stock shall not trade on the NYSE on such date, the first day of trading
in Parent Common Stock thereafter) by (ii) the fractional interest in a share of
Parent Common Stock to which such holder would otherwise be entitled.
Section 2.5 Undistributed Exchange Fund. Any portion of the Exchange
Fund, together with any dividends or distributions payable in respect thereof
pursuant to Section 2.3 hereof, which remains undistributed to the former
holders of Company Common Stock for six months after the Effective Time shall be
delivered to Parent, upon its request, and any such former holders who have not
theretofore surrendered to the Exchange Agent their certificates in compliance
with this Article II shall thereafter look only to Parent for payment of their
claim for the applicable Merger Consideration and any dividends or distributions
with respect thereto (in each case, without interest thereon). None of Parent,
Merger Sub, the Company, the Surviving Corporation or the Exchange Agent shall
be liable to any person in respect of any Merger Consideration from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
Section 2.6 Dissenting Shares. Each outstanding share of Company Common
Stock as to which a written demand for appraisal is duly made in accordance with
Section 262 of the DGCL at or prior to the Company Stockholder Meeting and not
withdrawn at or prior to the Company Stockholder Meeting and which is not voted
(or consented in writing) in favor of adoption of this Agreement shall not be
converted into or represent a right to receive the Merger Consideration unless
and until the holder thereof shall have failed to perfect, or shall have
effectively withdrawn or lost, such appraisal rights under said Section 262, at
which time each such share shall be converted into the right to receive the
Merger Consideration. All such shares of Company Common Stock as to which such a
written demand for appraisal is so filed and not withdrawn at or prior to the
Company Stockholder Meeting and which are not voted (or consented in writing) in
favor of adoption of this Agreement, except any such shares of Company Common
Stock the holder of which shall have effectively withdrawn or lost such
appraisal rights under said Section 262, are herein referred to as "Dissenting
Shares." The Company shall give Parent prompt notice upon receipt by the Company
of any written demands for appraisal, withdrawal of such demands, and any other
written communications delivered to the Company pursuant to said Section 262,
and the Company shall give Parent the opportunity, to the extent permitted by
law, to participate in all negotiations and proceedings with respect to such
demands. Except with the prior written consent of Parent, the Company shall not
voluntarily make any payment with respect to any demands for appraisal and shall
not settle or offer to settle any such demands.
Section 2.7 Options.
(a) Prior to the Effective Time, the Company shall take such action as
may be necessary for all Options (as hereinafter defined) granted pursuant to
the Option Plan (as hereinafter defined) to be exercisable in full as of
immediately prior to the Effective Time.
(b) The Company shall take all requisite action such that, at the
Effective Time, all Cashout Options (as hereinafter defined) held by each
particular holder shall be canceled and such holder shall be entitled to receive
from the Company, in respect of each Cashout Option, cash (subject to any
applicable withholding tax) in an amount equal to the difference of (i) the
product of (x) the Per Share Cash Consideration, multiplied by (y) two and (ii)
the per share exercise price of such Cashout Option. From and after the
Effective Time, each Cashout Option shall only represent the right to receive
the cash payment provided in this Section 2.7(b).
(c) The Company shall take all requisite action such that, at the
Effective Time, all Rollover Options (as hereinafter defined) held by each
particular holder shall be assumed by Parent and deemed to constitute an option
to acquire, except as provided in Section 2.7(f), on the same terms and
conditions, mutatis mutandis (including, without limitation adjustments for any
stock dividend, subdivision, reclassification, recapitalization, split or other
similar event), as were applicable under such Rollover Option prior to the
Effective Time, a number of shares of Parent Common Stock equal to the product
of (i) the number of shares of Parent Common Stock the holder of such Rollover
Option would have been entitled to receive pursuant to the Merger had such
holder exercised such Rollover Option in full immediately prior to the Effective
Time (not taking into account whether or not such Rollover Option was in fact
then exercisable), multiplied by (ii) two, at a price per share equal to (x) the
per share exercise price for a share of Company Common Stock purchasable
pursuant to such Rollover Option as of immediately prior to the Effective Time,
divided by (y) the quotient realized by dividing (1) the product of (A) the Per
Share Cash Consideration, multiplied by (B) two, by (2) the Average Trading
Price calculated pursuant to Section 2.1(a) and subject to the adjustment
limitations contained therein.
(d) The Company shall take all requisite action such that, at the
Effective Time, there shall not be outstanding any options, warrants or other
rights to acquire capital stock from the Surviving Corporation.
(e) As used herein, the following terms shall have the following
meanings:
(i) "Options" shall mean the options issued and outstanding as
of the Effective Time granted pursuant to the Company's 1997 Stock Option Plan
(the "Option Plan").
(ii) "Cashout Options" shall mean as to a particular holder of
Options, that number of Options that represent one-half of Economic Value (as
hereinafter defined) of all Options (rounded down to the nearest whole share of
Company Common Stock) held by such holder. In determining which Options of a
particular holder are to be treated as Cashout Options (x) to the extent
possible Cashout Options shall be allocated equally to each particular grant of
Options having different exercise prices and different remaining terms (provided
that in the case of Options held by a person who is a party to a Company
Severance Agreement, Cashout Options shall first be allocated to the Economic
Value of all Options, if any, held by such person the exercisability of which is
accelerated by Section 2.7(a) and second, as otherwise contemplated by this
clause (x)) and (y) Options that do not have a positive Economic Value shall not
be treated as a Cashout Option.
(iii) "Rollover Options" shall mean as to a particular holder
of Options, all Options held by such holder that are not Cashout Options.
(iv) "Economic Value" shall mean as to each Option held by a
particular holder the difference between (x) the per share exercise price
thereunder for a share of Company Common Stock, determined as of immediately
prior to the Effective Time, and (y) the product of (1) the Per Share Cash
Consideration, multiplied by (2) two.
(f) From and after the Effective Time, the Parent and the Surviving
Corporation shall be deemed to have waived and hereby agree not to enforce any
rights that they may have in respect of Rollover Options under Section 8 of the
Option Plan; provided that such waiver and agreement not to enforce such
provisions shall in respect of any Rollover Options that are Incentive Options
be conditioned upon the holder thereof executing and delivering to the Parent a
Consent Letter in the form of Exhibit "C" hereto consenting to the treatment
from and after the Effective Time of such Incentive Options as Non-Qualified
Options (as defined in the Option Plan).
(g) In the event that the exercise of any Rollover Option would result
in the issuance of a fractional share of Parent Common Stock such fractional
share shall be aggregated with all other fractional shares attributable to all
other Rollover Options then being exercised by such holder and to the extent
that a fractional share thereafter remains then, such holder shall be entitled
to receive a cash payment for any such remaining fractional share based upon the
last sale price per share of Parent Common Stock on the trading day immediately
preceding the date of exercise. Except as contemplated by Section 2.7(f), from
and after the Effective Time, Parent and the Surviving Corporation shall comply
with the terms of the Option Plan.
(h) Prior to the Effective Time, Parent shall cause to be taken all
corporate action necessary to reserve for issuance a sufficient number of shares
of Parent Common Stock for delivery upon exercise of Rollover Options in
accordance with this Section 2.7. At the Effective Time, Parent shall file with
the SEC a registration statement on Form S-8 (or any successor or appropriate
forms) with respect to the Parent Common Stock subject to the Rollover Options
and shall use its reasonable best efforts to cause the effectiveness of such
registration statement as promptly as possible (and current status of the
prospectus or prospectuses contained therein) and to thereafter maintain such
effectiveness for so long as any Rollover Options remain outstanding.
Section 2.8 Closing of Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of shares of
Company Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to Parent, they shall be cancelled and exchanged as
provided in this Article II.
Section 2.9 Further Assurances. If, at any time after the Effective
Time, Parent shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement, the officers of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of the Company or
otherwise, all such deeds, bills of sale, assignments and assurances and to take
and do all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to or under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out the purposes of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule (each reference
contained herein to such disclosure schedule qualifies the referenced
representation and warranty to the extent specified therein and such other
representations and warranties contained herein (regardless of whether or not
such representation or warranty contains a reference to such disclosure
schedule) to the extent a matter in such disclosure schedule is disclosed in
such a way as to make its relevance to the information called for by such other
representation or warranty readily apparent on its face) of the Company attached
hereto (the "Company Disclosure Schedule"), the Company represents and warrants
to Parent and Merger Sub as follows:
Section 3.1 Organization and Good Standing. The Company and each
Subsidiary (as hereinafter defined) that is a Significant Subsidiary (as
hereinafter defined) and a corporation, is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and each has the corporate power and authority to carry on its
business as it is now being conducted. Each Other Subsidiary (as hereinafter
defined) that is a corporation is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation, and
each has the corporate power and authority to carry on its business as it is now
being conducted, except where the failure (i) to be so organized, validly
existing or in good standing, or (ii) to have such power and authority, would
not reasonably be expected to have a material adverse effect, individually or in
the aggregate, on the business, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole, or the ability
of the Company to consummate the Merger and the other transactions contemplated
by this Agreement (a "Company Material Adverse Effect"). Each other Subsidiary
that is a partnership or a limited liability company is duly organized and
validly existing under the laws of its jurisdiction of organization, and each
has the power and authority to carry on its business as it is now being
conducted, except where the failure (i) to be so organized and validly existing
or (ii) to have such power and authority, would not reasonably be expected to
have a Company Material Adverse Effect. The Company and each Subsidiary that is
a corporation is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing would not reasonably be expected to have a Company Material Adverse
Effect. As used in this Agreement, a "Subsidiary" of any person means any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interests in such partnership) or (ii) at least a majority of the securities or
other interests of which having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation or other organization is directly or indirectly
owned or controlled by such party or by any one or more of its Subsidiaries, or
by such party and one or more of its Subsidiaries. As used in this Agreement, a
"Significant Subsidiary" has the meaning assigned to such term in Regulation S-X
promulgated under the Securities Act. As used in this Agreement, the term "Other
Subsidiary" shall mean any Subsidiary that is not a Significant Subsidiary.
Except as set forth in Section 3.1 of the Company Disclosure Schedule, the
Company does not have any non-corporate subsidiaries.
Section 3.2 Certificate of Incorporation and By-Laws. True, correct and
complete copies of the Certificate of Incorporation and By-laws or equivalent
organizational documents, each as amended to date, of the Company and each of
its Significant Subsidiaries have been delivered to Parent. The Certificate of
Incorporation, By-laws and equivalent organizational documents (collectively the
"Charter Documents") of the Company and each of its Significant Subsidiaries are
in full force and effect. Neither the Company nor any of its Significant
Subsidiaries is in violation of any provision of its Charter Documents. The
Charter Documents of each Subsidiary that is not a Significant Subsidiary are in
full force and effect, and no such Subsidiary is in violation of any provision
of its Charter Documents, except where the failure of such Charter Documents to
be in full force and effect, or where such violation, individually or in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect.
Section 3.3 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
300,000,000 shares of Common Stock, $0.01 par value, and (ii) 100,000,000 shares
of preferred stock, $0.01 par value ("Preferred Stock"). As of May 31, 2000, (i)
78,530,049 shares of Company Common Stock were issued, of which 74,130,049 were
outstanding and 4,400,000 shares were held in the treasury of the Company, and
(ii) 13,444,021 shares of Company Common Stock were reserved for issuance upon
the exercise of outstanding Options. The Company has no shares of Preferred
Stock issued and outstanding. Since May 31, 2000, the Company has not issued any
shares of capital stock, or any security convertible into or exchangeable for
shares of such capital stock, other than the issuance of shares of Company
Common Stock upon the exercise of Options and since May 31, 2000, the Company
has not acquired any additional shares of Company Common Stock in treasury.
There were outstanding, as of May 31, 2000, no options, warrants or other rights
to acquire (including through the conversion or exchange of securities) capital
stock from the Company other than the Options, representing in the aggregate the
right to purchase 11,216,002 shares of Company Common Stock under the Option
Plan. Except as disclosed in Section 3.3 of the Company Disclosure Schedule, no
options or warrants or other rights to acquire capital stock from the Company
have been issued or granted since May 31, 2000. As of May 31, 2000, the weighted
average exercise price of the Options was approximately $12.158. All of the
issued and outstanding Shares are, and any shares of Company Common Stock which
may be issued upon the exercise of Options will be, validly issued, fully paid
and nonassessable, and not subject to preemptive rights.
(b) Except as described in Section 3.3(a) hereof: (i) no shares of
capital stock or other equity securities of the Company are authorized, issued
or outstanding, or reserved for issuance, and there are no options, warrants or
other rights (including registration rights), agreements, arrangements or
commitments of any character to which the Company or any of its Subsidiaries is
a party relating to the issued or unissued capital stock or other equity
interests of the Company or any of its Subsidiaries, requiring the Company or
any of its Subsidiaries to grant, issue or sell any shares of the capital stock
or other equity interests of the Company or any of its Subsidiaries by sale,
lease, license or otherwise; (ii) neither the Company nor its Subsidiaries have
any obligations, contingent or otherwise, to repurchase, redeem or otherwise
acquire any shares of the capital stock or other equity interests of the Company
or its Subsidiaries; (iii) neither the Company nor any of its Subsidiaries
(individually or in the aggregate), directly or indirectly, owns, or has agreed
to purchase or otherwise acquire, the capital stock or other equity interests
of, or any interest convertible into or exchangeable or exercisable for such
capital stock or such equity interests, of any corporation, partnership, joint
venture or other entity which would be material in value to the Company, except
as disclosed in Section 3.3 of the Company Disclosure Schedule, and all of such
investments are owned free and clear of all Liens (as hereinafter defined),
except as disclosed in Section 3.3 of the Company Disclosure Schedule; and (iv)
there are no voting trusts, proxies or other agreements or understandings to or
by which the Company or any of its Subsidiaries is a party or is bound with
respect to the voting of any shares of capital stock or other equity interests
of the Company or any of its Subsidiaries.
(c) No bonds, debentures, notes or other indebtedness of the Company
having the right to vote (whether currently or upon the occurrence of an event)
on any matters on which stockholders of the Company or any of its Subsidiaries
may vote ("Company Voting Debt") are issued or outstanding or subject to
issuance.
Section 3.4 Company Subsidiaries. Section 3.4 of the Company Disclosure
Schedule sets forth a list of each Subsidiary of the Company. All of the
outstanding shares of capital stock or other ownership interests in each of the
Company's Subsidiaries have been validly issued, and are fully paid,
nonassessable and, except as disclosed in Section 3.4 of the Company Disclosure
Schedule, are owned by the Company or another Subsidiary of the Company free and
clear of all pledges, claims, options, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens"), and are not
subject to preemptive rights.
Section 3.5 Corporate Authority.
(a) The Company has the requisite corporate power and authority to
execute and deliver this Agreement and, in the case of the consummation of the
Merger, subject to the adoption of this Agreement by the Company's stockholders,
to consummate the transactions contemplated hereby. The execution and delivery
by the Company of this Agreement, and the consummation by the Company of the
transactions contemplated hereby, have been duly authorized by its Board of
Directors and, in the case of the consummation of the Merger, except for the
adoption of this Agreement by the Company's stockholders, no other corporate or
stockholder action on the part of the Company is necessary to authorize the
execution and delivery by the Company of this Agreement and the consummation by
it of the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company and is enforceable against the Company in accordance
with its terms. The preparation, filing and distribution of the Proxy Statement
(as hereinafter defined) to be filed with the SEC has been duly authorized by
the Board of Directors of the Company.
(b) Prior to execution and delivery of this Agreement and the Stock
Voting Agreements, the Board of Directors of the Company (at a meeting duly
called and held) has (i) approved and declared advisable this Agreement, the
Stock Voting Agreements, the Merger and the other transactions contemplated
hereby and thereby, and such approval is sufficient to render inapplicable to
the Merger and all other transactions contemplated hereby or thereby the
restrictions contained in Section 203 of the DGCL, (ii) determined that the
transactions contemplated hereby are fair to and in the best interests of the
holders of Company Common Stock, and (iii) determined to recommend this
Agreement to the Company's stockholders for adoption at the stockholders meeting
contemplated by Section 6.5(a) hereof. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock, voting together as a
single class, is the only vote of the holders of any class or series of the
Company's capital stock necessary to adopt this Agreement or to approve the
Merger or the transactions contemplated hereby. The Company has taken all steps
necessary to approve and irrevocably exempt the transactions contemplated by
this Agreement and the Stock Voting Agreements from the provisions of Section
203 of the DGCL and from any applicable charter, organizational document or
other agreement, arrangement or understanding to which the Company is a party
containing any change of control, "anti-takeover" or similar provision. To the
Knowledge of the Company, no other state or foreign takeover statute is
applicable to the Merger or the other transactions contemplated herein.
Section 3.6 Compliance with Applicable Law. (i) Each of the Company and
its Subsidiaries holds, and is in compliance with the terms of, all permits,
licenses, exemptions, orders and approvals of all Governmental Entities (as
hereinafter defined) necessary for the conduct of their respective businesses
("Company Permits"), except for failures to hold or to comply with such Company
Permits which would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect; (ii) with respect to the
Company Permits, (x) no action or proceeding is pending or, to the knowledge of
the Company, threatened, and (y) to the knowledge of the Company, no fact exists
or event has occurred that would, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect; (iii) the business of the
Company and its Subsidiaries is being conducted in compliance with all
applicable laws, ordinances, regulations, judgments, decrees or orders
("Applicable Law") of any federal, state, local, foreign or multinational court,
arbitral tribunal, administrative agency or commission or other governmental or
regulatory authority or administrative agency or commission (a "Governmental
Entity"), except for violations or failures to so comply that would not,
individually, or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect; and (iv) no investigation or review by any Governmental
Entity with respect to the Company or its Subsidiaries is pending or, to the
knowledge of the Company, threatened, other than, in each case, those which
would not, individually, or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
Section 3.7 Non-Contravention. Except as disclosed in Section 3.7 of
the Company Disclosure Schedule, the execution and delivery by the Company of
this Agreement do not, and the consummation of the transactions contemplated
hereby and compliance with the provisions hereof will not, (i) result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to the loss of a material benefit under, any loan, guarantee
of indebtedness or credit agreement, note, bond, mortgage, indenture, lease,
agreement, contract, instrument, permit, concession, franchise, right or license
(any of the foregoing, a "Contract") binding upon the Company or any of its
Subsidiaries, or result in the creation of any Lien upon any of the properties
or assets of the Company or any of its Subsidiaries, (ii) conflict with or
result in any violation of any provision of the Certificate of Incorporation or
By-Laws or other equivalent organizational document, in each case as amended, of
the Company or any of its Subsidiaries, or (iii) conflict with or violate any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to the Company or any of its Subsidiaries or any of their respective properties
or assets, other than, in the case of clauses (i) and (iii), any such right of
termination, cancellation or acceleration, violation, conflict, default, right,
loss or Lien that, individually or in the aggregate, would not reasonably be
expected to have a Company Material Adverse Effect.
Section 3.8 Government Approvals; Required Consents. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to the Company or any of its Subsidiaries
in connection with the execution and delivery of this Agreement by the Company
or is necessary for the consummation of the transactions contemplated hereby
(including, without limitation, the Merger) except: (i) in connection, or in
compliance, with the provisions of the Securities Act of 1933, as amended (the
"Securities Act"), the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), any non-United States competition, antitrust and investment
laws and any applicable state securities or "blue sky" law, (ii) the filing of a
notification under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (iii) the filing of notification under the Competition
Act (Canada), (iv) filings under the Mexican Law (as defined in Section 6.7),
(v) the filing of Certificate of Merger with the Secretary of State of the State
of Delaware, (vi) such consents, approvals, authorizations, permits, filings and
notifications listed in Section 3.8 of the Company Disclosure Schedule, (vii)
filing required by the NYSE, (viii) filings required in connection with Company
Permits, (ix) in connection, or in compliance, with the provisions of federal,
state, local and foreign tax law and (x) such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
obtain or make would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
Section 3.9 SEC Documents and Other Reports. The Company has filed all
documents required to be filed prior to the date hereof by it and its
Subsidiaries with the Securities and Exchange Commission (the "SEC") since
November 19, 1997 (the "Company SEC Documents"). Except as set forth in Section
3.9 of the Company Disclosure Schedule, as of their respective dates, or if
amended, as of the date of the last such amendment, the Company SEC Documents
complied, and all documents required to be filed by the Company with the SEC
after the date hereof and prior to the Effective Time (the "Subsequent Company
SEC Documents"; provided, however, that the Subsequent Company SEC Documents
shall not include the Proxy Statement) will comply, in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the applicable rules and regulations promulgated thereunder and none of
the Company SEC Documents contained, and the Subsequent Company SEC Documents
will not contain, any untrue statement of a material fact or omitted, or will
omit, to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, or are to be made, not misleading. The consolidated financial statements
(including related notes) of the Company included in the Company SEC Documents
fairly present in all material respects, and the consolidated financial
statements (including related notes) of the Company included in the Subsequent
Company SEC Documents will fairly present in all material respects, the
consolidated financial position of the Company and its consolidated
Subsidiaries, as at the respective dates thereof and the consolidated results of
their operations and their consolidated cash flows for the respective periods
then ended (subject, in the case of the unaudited statements, to normal and
recurring year-end audit adjustments which were not, and, as to the Subsequent
Company SEC Documents, are not expected to be, material and the fact that
certain information and notes have been condensed or omitted in accordance with
the Exchange Act and the rules and regulations promulgated thereunder) in
conformity with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto). Since December 31, 1999, the Company
has not made any change in the accounting practices or policies applied in the
preparation of its financial statements, except as may be required by GAAP.
Section 3.10 Absence of Certain Changes or Events. Except as set forth
in the Company SEC Documents, since December 31, 1999, the Company and its
Subsidiaries have conducted their respective businesses and operations in all
material respects in the ordinary and usual course consistent with past practice
and, except as set forth in the Company SEC Documents or Section 3.10 of the
Company Disclosure Schedule, there has not occurred (i) through the date hereof,
any change in the business, condition (financial or otherwise) or the results of
operations of the Company and its Subsidiaries that has caused a Company
Material Adverse Effect; (ii) any declaration, setting aside or payment of any
dividend or distribution of any kind by the Company on any class of its capital
stock; (iii) any material increase in the compensation payable or to become
payable by the Company or any Subsidiary to its directors, officers or
management employees or any material increase in any bonus, insurance, pension
or other employee benefit plan, payment or arrangement made to, for or with such
directors, officers or management employees; (iv) any material change by the
Company or its Subsidiaries in accounting methods, principles or practices
except as required by GAAP; (v) any material change in financial or tax
accounting methods, principles or practices by the Company or any Subsidiary,
except insofar as may have been required by the Code; or (vi) any event that, if
taken during the period from the date of this Agreement through the Effective
Time, would constitute a breach of Section 5.1 hereof.
Section 3.11 Actions and Proceedings. Except as set forth in the
Company SEC Documents, there are no outstanding orders, judgments, injunctions,
awards or decrees of any Governmental Entity against the Company or any of its
Subsidiaries, any of their properties, assets or business, or, to the knowledge
of the Company, any of the Company's or its Subsidiaries' current or former
directors or officers or any other person whom the Company or any of its
Subsidiaries has agreed to indemnify, as such other than those that would not
reasonably be expected to have a Company Material Adverse Effect. Except for
such actions contemplated by Section 6.13 that may arise after the date hereof,
or as set forth in Section 3.11 of the Company Disclosure Schedule or in the
Company SEC Documents, there are no actions, suits or legal, administrative,
regulatory or arbitration proceedings pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries, any of their
properties, assets or business, or, to the knowledge of the Company, any of the
Company's or its Subsidiaries' current or former directors or officers or any
other person whom the Company or any of its Subsidiaries has agreed to
indemnify, as such, that (individually or in the aggregate) are reasonably
likely to have a Company Material Adverse Effect, and, except for such actions
contemplated by Section 6.13 that may arise after the date hereof, or as set
forth in Section 3.11 of the Company Disclosure Schedule or in the Company SEC
Documents, to the Knowledge of the Company, no event has occurred, and no state
of facts exists, which are reasonably likely to result in any such action, suit
or proceeding.
Section 3.12 Absence of Undisclosed Liabilities. Except as set forth in
the Company SEC Documents or in Section 3.12 of the Company Disclosure Schedule
and for liabilities or obligations which are accrued or reserved against on the
balance sheet (or reflected in the notes thereto) included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999 (the "Company
10-K"), neither the Company nor any of its Subsidiaries has any liabilities or
obligations (including, without limitation, Tax (as hereinafter defined)
liabilities) (whether absolute, accrued, known or unknown, contingent or
otherwise), other than (i) liabilities or obligations incurred in the ordinary
course of business since December 31, 1999 and (ii) liabilities or obligations
which would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.
Section 3.13 Certain Contracts and Arrangements.
(a) Except as disclosed in Part I of Section 3.13 of the Company
Disclosure Schedule or as disclosed in the Company SEC Documents and except for
this Agreement and the Stock Voting Agreements, as of the date hereof, there are
no contracts to which the Company or any of its Subsidiaries is a party or by
which it is bound which are or would be required to be filed as an exhibit to
the Company SEC Documents or Subsequent Company SEC Documents (any contracts so
filed or required to be so filed collectively, the "Material Contracts"). Part 1
of Section 3.13 of the Company Disclosure Schedule lists all contracts to which
the Company or any of its Subsidiaries is a party or by which they are bound
which (i) contain provisions restricting or limiting the Company's or its
affiliates' ability to compete or otherwise engage in specified lines of
business, or (ii) include any obligation, or contingent obligation, to provide
severance, change of control, golden parachute, stay-pay or similar payments,
excluding, however, severance provisions included in collective bargaining
agreements, and severance policies described on Part II of Section 3.13 of the
Company Disclosure Schedule. The Agreements or arrangements described in Section
3.13(a)(ii) are herein referred to as "Company Severance Agreements".
(b) The aggregate principal amount of indebtedness for borrowed money
of the Company and its Subsidiaries outstanding as of the date hereof is
approximately $1,145,000,000.
(c) Neither the Company nor any of its Subsidiaries is in default under
any Material Contract, and there has not occurred any event that, with the
giving of notice or the lapse of time or both, would constitute such a default
by the Company or any of its Subsidiaries or, to the knowledge of the Company, a
default thereunder by any other party thereto, except as set forth in the
Company SEC Documents or for such defaults as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 3.14 Taxes.
(a) Except to the extent that, in the aggregate, breaches of this
Section 3.14(a) would not result in a Company Material Adverse Effect: (i) the
Company and each of its Subsidiaries has filed all Tax Returns (as hereinafter
defined) required to have been filed on or prior to the date hereof, or
appropriate extensions therefor have been properly obtained, and such Tax
Returns are true, correct and complete; (ii) all Taxes (whether imposed directly
or indirectly) shown to be due on such Tax Returns either (x) have been timely
paid or (y) extensions for payment have been properly obtained or such Taxes are
being timely and properly contested and, in either case, proper accruals
pursuant to GAAP have been established on the Company's consolidated financial
statements with respect thereto; (iii) the Company and each of its Subsidiaries
have complied with all rules and regulations relating to the withholding of
Taxes; (iv) except as set forth in Section 3.14(a) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has waived any statute
of limitations in respect of its Taxes or Tax Returns; (v) Tax Returns of the
Company and its Subsidiaries relating to federal, foreign and material state
income Taxes have not been examined by the Internal Revenue Service ("IRS") or
the appropriate taxing authority, except as disclosed in Section 3.14 of the
Company Disclosure Schedule, which sets forth all closed and pending audits,
examination or claims by any taxing authority of any Tax Returns, and no
extension of the statute of limitations for the assessment of any federal,
foreign and material state income Taxes has been granted by the Company or any
of its Subsidiaries, except as disclosed in Section 3.14 of the Company
Disclosure Schedule; (vi) no issues that have been raised by a taxing authority
in connection with the examination of any federal, foreign or state Tax Returns
of the Company or its Subsidiaries are currently pending; (vii) all deficiencies
asserted or assessments made as a result of any examination of such Tax Returns
by any taxing authority have been paid in full or are being timely and properly
contested and proper accruals pursuant to GAAP have been established on the
Company's consolidated financial statements with respect thereto; (viii) except
as set forth in Section 3.14 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries has any liability for Taxes of any person
other than the Company and its Subsidiaries under (a) Treasury Regulations
Section 1.1502-6 (or any similar provision of state, local or foreign law) or
(b) any express or implied agreement; (ix) except as set forth in Section 3.14
of the Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has been a member of any affiliated group within the meaning of
Section 1504(a) of the Code other than the affiliated group of which the Company
is the common parent corporation; (x) the unpaid Taxes of the Company and its
Subsidiaries for Tax periods from December 31, 1998 through the Closing Date are
normal recurring Taxes attributable solely to the conduct of their businesses in
the ordinary course and in a manner consistent with past practices, and (xi) the
Company and its Subsidiaries (or, in the case of clause (a) below, each of the
Subsidiaries) as of the most recent practicable date (as well as on an estimated
pro forma basis as of the Closing giving effect to the consummation of the
transactions contemplated hereby) do not have any: (a) excess loss accounts as
defined in Treas. Reg. Section 1.1502-19; (b) Code Section 481 adjustments
allocable to the Company or any Subsidiary; or (c) deferred gains or losses
allocable to the Company or its Subsidiaries arising out of any deferred
intercompany transaction as defined in Treas. Reg. Section 1.1502-13 or similar
provisions of U.S. federal, state, local or foreign tax law.
(b) No examination or audit by the IRS or any taxing authority of any
Tax Return of the Company and/or any of its Subsidiaries is currently in
progress or, to the knowledge of the Company, threatened or contemplated, in
each case, which involve claims that, individually or in the aggregate, are
reasonably likely to have a Company Material Adverse Effect. Neither Company nor
any of its Subsidiaries has been informed by any jurisdiction that the
jurisdiction believes that Company or any of its Subsidiaries was required to
file any Tax Return that was not filed which failure or failures, individually
or in the aggregate, are reasonably likely to have a Company Material Adverse
Effect. The election under Section 338(h)(10) of the Code in connection with the
Company's and certain Subsidiaries' acquisition from American Home Products
Corporation on November 1, 1996, was made timely and properly.
(c) Neither Company nor any of its Subsidiaries is a "consent
corporation" within the meaning of Section 341(f) of the Code, and none of the
assets of Company or its Subsidiaries are subject to an election under Section
341(f) of the Code.
(d) Neither the Company nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.
(e) Except as set forth in Section 3.14 of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries has made any payments, is
obligated to make any payments, or is a party to any agreement that could
obligate it to make any payments that will not be deductible under either Code
Section 162(m) or Code Section 280G (or cause the Company or any of its
Subsidiaries to incur an obligation to reimburse a person for a Tax imposed
under Code Section 4999).
(f) Except as set forth in Section 3.14(f) of the Company Disclosure
Schedule, since December 31, 1999, the Company and its Subsidiaries have used
tax accounting methods, practices and elections consistent with past practices,
and have not used any improper, invalid or inconsistent method, practice or
election with respect to any period beginning on or prior to the date hereof,
except to the extent such method, practice or election would not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect.
(g) Except as set forth in Section 3.14(g) of the Company Disclosure
Schedule, to the knowledge of the Company, no state of facts or circumstances
exists which is reasonably likely to constitute grounds for any audit or
examination of, or the assessment of additional Taxes with respect to, Tax
Returns previously filed, or with respect to Tax Returns previously failed to
have been filed, by the Company or any of its Subsidiaries, where such audit or
examination or assessment would, individually or in the aggregate, have a
Company Material Adverse Effect.
(h) For purposes of this Agreement, a "Tax" or, collectively, "Taxes"
means any and all federal, state, local and foreign taxes, assessments and other
governmental charges, duties, impositions, levies, and liabilities, including,
without limitation, taxes based upon or measured by gross receipts, income,
profits, sales, use or occupation, and value added, ad valorem, transfer, gains,
franchise, withholding, payroll, recapture, employment, excise, unemployment
insurance, social security, business license, occupation, business organization,
stamp, environmental and property taxes, together with all interest, penalties
and additions imposed with respect to such amounts and any obligations under any
law or any agreements or arrangements with any other person with respect to such
amounts and including, without limitation, any primary, contingent, transferee
or successor liability for taxes of another person, a predecessor entity or
former affiliate. "Tax Returns" means all reports, returns, declarations,
statements or other information required to be supplied to a taxing authority in
connection with Taxes.
Section 3.15 Intellectual Property. Except as set forth in Section 3.15
of the Company Disclosure Schedule, the Company and its Subsidiaries own, or are
licensed or otherwise have the right to use, all United States and foreign
issued patents, patent rights, patent applications, registered trademarks,
trademark applications, registered service marks, service mark applications,
trade names, copyrights, software and know-how (the "Intellectual Property")
currently used by the Company and its Subsidiaries in their business, except
where the failure to so own, license or otherwise have the right to use such
Intellectual Property would not be reasonably be expected to have a Company
Material Adverse Effect. Except as would not reasonably be expected to have a
Company Material Adverse Effect and except as set forth in Section 3.15 of the
Company Disclosure Schedule, (i) the use of the Intellectual Property by the
Company and its Subsidiaries does not interfere with, infringe upon,
misappropriate or otherwise come into conflict with any patent, trademark,
service mark, trade name, copyright, brand name, logo, symbol or other
intellectual property or proprietary information of any other person, and (ii)
to the knowledge of the Company, no other person is interfering with, infringing
upon, misappropriating or otherwise coming into conflict with any Intellectual
Property of the Company or any of its Subsidiaries.
Section 3.16 Information in Disclosure Documents and Registration
Statement. None of the information supplied or to be supplied by the Company for
inclusion in (i) the Registration Statement on Form S-4 to be filed with the SEC
under the Securities Act for the purpose of registering the shares of Parent
Common Stock to be issued in connection with the Merger (the "Registration
Statement") or (ii) the proxy statement/prospectus to be distributed in
connection with the Company's meeting of stockholders to vote upon this
Agreement (the "Proxy Statement") will, in the case of the Registration
Statement, at the time it becomes effective or, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the time of the
initial mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of the Company Stockholder Meeting (as defined herein)
to be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Registration
Statement, as of its effective date, will comply (with respect to information
relating to the Company) as to form in all material respects with the
requirements of the Securities Act, and the rules and regulations promulgated
thereunder, and as of the date of its initial mailing and as of the date of the
Company Stockholder Meeting, the Proxy Statement will comply (with respect to
information relating to the Company) as to form in all material respects with
the applicable requirements of the Exchange Act, and the rules and regulations
promulgated thereunder. Notwithstanding the foregoing, the Company makes no
representation with respect to any statement in the foregoing documents based
upon information supplied by Parent or Merger Sub for inclusion therein.
Section 3.17 Employee Benefit Plans; ERISA.
(a) Section 3.17(a) of the Company Disclosure Schedule sets forth the
name of each Company Plan (as hereinafter defined) and of each bonus, deferred
compensation (together with a list of participants therein), incentive
compensation, profit sharing, salary continuation (together with a list of
participants therein), employee benefit plan, stock purchase, stock option,
employment, severance, termination, golden parachute, consulting or supplemental
retirement plan or agreement (collectively, the "Benefit Plans"). With respect
to each Benefit Plan, to the extent applicable, the Company has delivered to
Parent correct and complete copies of (i) the plan documents and summary plan
descriptions, (ii) the most recent determination letter received from the IRS,
(iii) the most recent Form 5500 annual report, and (iv) all related agreements,
insurance contracts and other agreements which implement each Benefit Plan.
(b) Except to the extent that, in the aggregate, breaches of this
Section 3.17(b) and Sections 3.17(c), (d) and (e) would not result in a Company
Material Adverse Effect and except as described in Section 3.17(b) of the
Company Disclosure Schedule: (i) each Company Plan and Benefit Plan complies in
all respects with the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), the Code and all other applicable laws and administrative or
governmental rules and regulations, (ii) no "reportable event" (within the
meaning of Section 4043 of ERISA) has occurred with respect to any Company Plan
for which the 30-day notice requirement has not been waived (other than with
respect to the transactions contemplated by this Agreement); (iii) neither the
Company nor any of its ERISA Affiliates (as hereinafter defined) has withdrawn
from any Company Plan under Section 4063 of ERISA or has taken, or is currently
considering taking, any action to do so; and no action has been taken, or is
currently being considered, to terminate any Company Plan subject to Title IV of
ERISA, (iv) no Company Plan, nor any trust created thereunder, has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA), whether
or not waived, (v) there are no actions, suits or claims pending or, to the
knowledge of the Company, threatened (other than routine claims for benefits)
with respect to any Company Plan or Benefit Plan, (vi) neither the Company nor
any of its ERISA Affiliates has incurred or would reasonably be expected to
incur any liability under or pursuant to Title IV of ERISA that has not been
satisfied in full, (vii) no non-exempt prohibited transactions described in
Section 406 of ERISA or Section 4975 of the Code have occurred, and (viii) all
Company Plans and Benefit Plans that are intended to be qualified under Section
401(a) of the Code have received a favorable determination letter as to such
qualification from the Internal Revenue Service, and no event has occurred,
either by reason of any action or failure to act, which could be expected to
cause the loss of any such qualification, and the Company is not aware of any
reason why any Company Plan and Benefit Plan is not so qualified in operation.
As used herein: (i) "Company Plan" means a "pension plan" (as defined in Section
3(2) of ERISA, other than a Company Multiemployer Plan) or a "welfare plan" (as
defined in Section 3(l) of ERISA) established or maintained by the Company or
any of its ERISA Affiliates or to which the Company or any of its ERISA
Affiliates has contributed in the last three years or otherwise may have any
liability; (ii) "Company Multiemployer Plan" means a "multiemployer plan" (as
defined in Section 4001(a)(3) of ERISA) to which the Company or any of its ERISA
Affiliates is or has been obligated to contribute or otherwise may have any
liability; and (iii) "ERISA Affiliate" means any member of a "controlled group"
of which the Company is a member or under "common control" with the Company
(within the meaning of Section 414(b) or (c) of the Code.
(c) Section 3.17(c) of the Company Disclosure Schedule sets forth the
name of each Company Multiemployer Plan. With respect to each Company
Multiemployer Plan, except as set forth on Schedule 3.17(c) of the Company
Disclosure Schedule, and except for such matters that, together with breaches of
Section 3.17(b), (d) and (e) that, in the aggregate, would not result in a
Company Material Adverse Effect, (i) neither the Company nor any Company
Subsidiary or ERISA Affiliate has withdrawn, partially withdrawn, or received
any notice of any claim or demand for withdrawal liability or partial withdrawal
liability, (ii) neither the Company nor any Company Subsidiary or ERISA
Affiliate knows or has been notified by any Company Multiemployer Plan that such
Company Multiemployer Plan is currently in reorganization or insolvency under or
within the meaning of Sections 4241 or 4245 of ERISA, that such Multiemployer
Plan intends to terminate or has been terminated under Section 4041A of ERISA,
that increased contributions may be required to avoid a reduction in plan
benefits or the imposition of any excise tax, or that any such plan is or may
become insolvent, (iii) neither the Company nor any Company Subsidiary or ERISA
Affiliate has failed to make any required contributions to any such plan, (iv)
no such plan is a party to any pending merger or asset or liability transfer,
(v) to the knowledge of the Company, there are no PBGC proceedings against or
affecting any such plan, and (vi) neither the Company nor any Company Subsidiary
or ERISA Affiliate has (or may have as a result of the transaction contemplated
hereby) any withdrawal liability by reason of the sale of assets pursuant to
Section 4204 of ERISA. Except as otherwise set forth on Section 3.17(c) of the
Company Disclosure Schedule, Section 3.17(c) of the Company Disclosure Schedule
includes for each Company Multiemployer Plan, as of its last valuation date, the
amount of potential withdrawal liability for the Company, Company Subsidiary or
ERISA Affiliate, calculated according to the information made available pursuant
to ERISA Section 4221(a) and identified as the specific obligor. To the
knowledge of the Company, except as set forth on Section 3.17(c) of the Company
Disclosure Schedule, nothing has occurred or is expected to occur that would
increase the amount of the total potential withdrawal liability of a specified
obligor for any such plan over the amount shown in Section 3.17(c) of the
Company Disclosure Schedule, except where such increase would not have a Company
Material Adverse Effect.
(d) Except as disclosed in Section 3.17(d) of the Company Disclosure
Schedule, as of the last day of the most recent prior plan year, the market
value of assets under each Benefit Plan subject to Title IV of ERISA, other than
any Multiemployer Plan, equaled or exceeded the present value of benefit
liabilities thereunder (determined in accordance with the actuarial valuation
assumptions described on Section 3.17(d) of the Company Disclosure Schedule or
the actuarial valuation report provided to Parent).
(e) (i) Except as disclosed in Section 3.17(e) of the Company
Disclosure Schedule, no amount payable under any Company Plan will fail to be
deductible for federal income tax purposes by virtue of Section 280G of the
Code; and (ii) except as would not be reasonably likely to result in material
(individually or in the aggregate) liability, the consummation of the
transactions contemplated by this Agreement will not (either alone or in
combination with any other event, including a termination of employment) (A)
entitle any current or former director, officer or employee of the Company or
any of its ERISA Affiliates to severance pay, change of control payments, golden
parachute payments, unemployment compensation or any other payment, except as
expressly provided in this Agreement, (B) accelerate the time of payment or
vesting, or increase the amount of, compensation or other economic benefit
provided or made available to any such director, officer or employee, or (C)
accelerate or increase the funding obligation of the Company or its Subsidiaries
with respect to any Company Plan.
Section 3.18 Environmental Matters. Except as disclosed in Section 3.18
of the Company Disclosure Schedule or in the Company SEC Documents, and except
for such matters that would not, in the aggregate, have a Company Material
Adverse Effect:
(a) The Company and its Subsidiaries have obtained, or have timely
applied for, all environmental, health and safety permits, licenses and
governmental authorizations (collectively, "Environmental Permits") necessary
under applicable Environmental Laws (as hereinafter defined) to conduct their
business and operations as currently conducted.
(b) The Company and its Subsidiaries are in compliance with all
applicable Environmental Laws and Environmental Permits, and neither the Company
nor any of its Subsidiaries has received any written communication from any
person or Governmental Entity that alleges that the Company or any of its
Subsidiaries is not in such compliance.
(c) There are no Environmental Claims (as hereinafter defined) pending
or, to the knowledge of the Company, threatened, against the Company or any of
its Subsidiaries, in either case arising out of (i) any real property currently
or formerly owned, leased or operated by the Company or any of its Subsidiaries,
or (ii) any current or former operations of the Company or any of its
Subsidiaries.
(d) Neither the Company nor any of its Subsidiaries has retained, or
assumed, either contractually or by operation of law, any liabilities of which
the Company has knowledge arising under applicable Environmental Laws.
(e) The Company and its Subsidiaries are in compliance with all
applicable Environmental Laws governing the investigation, remediation and
monitoring of a facility at the time of its transfer, including the New Jersey
Industrial Site Recovery Act and the Connecticut Transfer Act, to the extent
required to consummate the transactions contemplated by this Agreement.
(f) To the Knowledge of the Company, no event has occurred, and no
state of facts exists, that is reasonably likely to result in any Environmental
Claim described in Section 3.18(c) above.
(g) (i) "Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation (in each case in writing) by any Person or entity (including any
Governmental Entity), alleging noncompliance, violation or potential liability
(including potential responsibility or liability for costs of enforcement,
investigation, cleanup, governmental response, removal or remediation, for
natural resources damages, property damage, personal injuries or penalties or
for contribution, indemnification, cost recovery, compensation or injunctive
relief) arising out of, or related to (x) the presence, Release (as hereinafter
defined) or threatened Release of any Hazardous Materials at any location,
whether or not owned or operated by the Company or any of its Subsidiaries, or
(y) circumstances forming the basis of any violation or alleged violation of, or
liability under, any Environmental Law or Environmental Permit.
(ii) "Environmental Laws" mean all foreign, federal, state and
local laws, rules, regulations, orders, decrees, common law, judgments or
binding agreements issued, promulgated or entered into by or with any
Governmental Entity, relating to pollution, the environment (including ambient
air, surface water, groundwater, land surface or subsurface strata) or
protection of human health as it relates to the environment, including laws and
regulations relating to Releases or threatened Releases of Hazardous Materials,
or otherwise relating to the generation, manufacture, processing, distribution,
use, treatment, storage, transport, handling of or exposure to Hazardous
Materials.
(iii) "Hazardous Materials" means (x) any petroleum or
petroleum products, fractions or wastes, radioactive materials or wastes,
friable asbestos and polychlorinated biphenyls; and (y) any other chemical,
material, substance or waste the generation, manufacture, processing,
distribution, possession, use, treatment, storage or Release of which is
prohibited, limited or regulated under any applicable Environmental Law.
(iv) "Release" means any release, spill, emission, leaking,
dumping, injection, pouring, deposit, disposal, discharge, dispersal, leaching
or migration into the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or within any building,
structure, facility or fixture.
Section 3.19 Affiliate Transactions. Except as set forth in Section
3.19 of the Company Disclosure Schedule, or except as set forth in the Company
SEC Documents, there are no material Contracts or other material transactions
between the Company or any of its Subsidiaries, on the one hand, and any (i)
officer or director of the Company or of any of its Subsidiaries, (ii) record or
beneficial owner of five percent or more of any class of the voting securities
of the Company or (iii) affiliate (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) of any such officer, director or beneficial
owner, on the other hand.
Section 3.20 Opinion of Financial Advisor. The Company has received the
written opinion of Chase Securities Inc. ("Chase") in the form and substance of
the written opinion provided to Parent prior to the execution and delivery of
this Agreement to the effect (as provided therein) that the Merger Consideration
is fair to the holders of Company Common Stock from a financial point of view
which opinion will be confirmed in writing.
Section 3.21 Brokers. Other than Chase and Hicks, Muse & Co. Partners,
L.P. ("HMCo"), no broker, finder, investment banker or financial advisor has
been retained by the Company or is entitled to any brokerage, finder's or other
fee or commission from the Company in connection with the transactions
contemplated by this Agreement.
Section 3.22 Fees.
(a) On the assumption that all employees subject or party to the
Company Severance Agreements are terminated immediately following the Closing
Date, the Company's and its Subsidiaries' obligations under the Company
Severance Agreements will not exceed, in the aggregate, $15,352,000 (as such
amount may be increased after September 15, 2000 for the amount of any bonus
accruing after such date in accordance with the terms of the applicable Company
Severance Agreements), provided that such amount does not include (i) amounts
payable pursuant to the Worker Adjustment and Retraining Notification Act (or
any similar state statute), (ii) amounts payable under the Company's severance
policies described in Section 3.22 of the Company Disclosure Schedule, or (iii)
the impact of the transactions contemplated herein with respect to the Options.
(b) Other than the Financial Advisory Agreement dated as of November 1,
1996 between the Company and HMCo (the "Advisory Agreement") and the Monitoring
and Oversight Agreement dated as of November 1, 1996 between the Company and
HMCo (the "Oversight Agreement"), and except as set forth in Section 3.22 of the
Company Disclosure Schedule, there is no agreement or other arrangement between
the Company or any Subsidiary and HMCo or any affiliate of HMCo (including,
without limitation, Hicks, Muse, Tate & Furst Incorporated and its affiliates).
The compensation, fees and other amounts, excluding the reimbursement of
expenses, payable by the Company or its Subsidiaries pursuant to the Advisory
Agreement as a result of the transactions contemplated herein shall not exceed,
in the aggregate, $10,000,000. No additional amounts will be paid or payable
under the Oversight Agreement other than regularly scheduled payments. In
addition to the foregoing, HMCO shall be entitled to reimbursement of expenses
through the Closing Date pursuant to the terms of the Advisory Agreement and the
Oversight Agreement provided that such expenses shall not exceed $50,000 in the
aggregate.
(c) The fees payable by the Company or its Subsidiaries to Chase for
the fairness opinion referred to in Section 3.20 above shall not exceed
$2,000,000, plus any required expense reimbursement.
Section 3.23 Lack of Ownership of Parent Common Stock. Neither the
Company nor any of its Subsidiaries owns any shares of Parent Common Stock
(exclusive of any shares owned by Company Plans).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUB
Parent and Merger Sub, jointly and severally, represent and warrant to
the Company as follows:
Section 4.1 Organization and Good Standing. Each of Parent, Merger Sub
and each Subsidiary of Parent that is a Significant Subsidiary and a corporation
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and each has the corporate power and authority to
carry on its business as it is now being conducted. Each Other Subsidiary that
is a corporation is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and each has the
corporate power and authority to carry on its business as it is now being
conducted, except where the failure (i) to be so organized, validly existing or
in good standing, or (ii) to have such power and authority, would not reasonably
by expected to have a material adverse effect, individually or in the aggregate,
on the business, condition (financial or otherwise) or results of operations of
Parent and its Subsidiaries taken as a whole, or the ability of Parent or Merger
Sub to consummate the Merger and the other transactions contemplated by this
Agreement (a "Parent Material Adverse Effect"). Parent, Merger Sub and each
Significant Subsidiary that is a corporation is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified or in good standing would not reasonably be expected to have a Parent
Material Adverse Effect.
Section 4.2 Certificate of Incorporation and By-Laws. True, correct and
complete copies of the Certificates of Incorporation and By-laws or equivalent
organizational documents, each as amended to date, of Parent and Merger Sub have
been made available to the Company. The Certificates of Incorporation and
By-laws, or equivalent organizational documents, of Parent and each of its
Subsidiaries are in full force and effect. Neither Parent nor any of its
Subsidiaries is in violation of any provision of its Certificate of
Incorporation, By-laws or equivalent organizational documents.
Section 4.3 Capitalization.
(a) The authorized capital stock of Parent consists of (i)
1,200,000,000 shares of Common Stock, par value $5.00 per share, constituting
Parent Common Stock, (ii) 150,000 shares of parent Class B Preferred Stock,
$50.00 par value ("Class B Stock"), (iii) 250,000 shares of Parent Class C
Preferred Stock, $100.00 par value ("Class C Stock"), (iv) 1,100,000 shares of
Parent Class D Preferred Stock, without par value ("Class D Stock"), and (v)
16,550,000 shares of parent Class E Preferred Stock, without par value ("Class E
Stock"). The Class B Stock, Class C Stock, Class D Stock and Class E Stock,
together with Parent Common Stock, is referred to as the "Parent Capital Stock".
As of May 28, 2000, (x) 492,347,367 shares of Parent Common Stock were issued
and outstanding, (y) 25,627,130 shares of Parent Common Stock were reserved for
issuance upon the exercise of outstanding options to purchase Parent Common
Stock, and (z) 31,789,509 shares of Parent Common Stock were held in the
treasury of Parent. Parent has no shares of Class B Stock, Class C Stock, Class
D Stock or Class E Stock issued and outstanding. Since May 28, 2000 through the
date hereof, Parent has not issued any shares of its capital stock, or any
security convertible into or exchangeable for shares of such capital stock,
other than upon the exercise of stock options and, since May 27, 2000 through
the date hereof, Parent has not acquired any additional shares of Parent Common
Stock in treasury. Except as set forth in the Parent SEC Documents, there were
outstanding as of May 28, 2000, no options, warrants or other rights to acquire
(including through the conversion or exchange of securities) capital stock from
Parent other than stock options representing in the aggregate the right to
purchase 25,627,130 shares of Parent Common Stock under the Parent 1982 Stock
Plan, 1985 Stock Plan, 1990 Stock Plan, 1995 Stock Plan, Golden Valley Stock
Plan and Goodmark Stock Plan (the "Parent Option Plans"). Except pursuant to the
Parent Option Plans, no options or warrants or other rights to acquire capital
stock from the Company have been issued or granted since May 28, 2000 through
the date hereof. As of May 28, 2000, the weighted average exercise price of such
options issued by Parent was approximately $23.2941. The authorized capital
stock of Merger Sub consists of 10,000 shares of Common Stock, par value $.01
per share, constituting the Merger Sub Common Stock. As of the date hereof,
1,000 shares of Merger Sub Common Stock are issued and outstanding, all of which
are owned by Parent, and no shares of Merger Sub Common Stock are held in the
treasury of Merger Sub. All of the issued and outstanding shares of Parent
Common Stock and Merger Sub Common Stock have been validly issued, and are fully
paid and nonassessable, and are not subject to preemptive rights. Each share of
Parent Common Stock to be issued in connection with the Merger or upon exercise
of the Rollover Options has been duly authorized and, when so issued, will be
fully paid and nonassessable, and will not be subject to preemptive rights.
(b) Except as set forth in the Parent SEC Documents, and except as
described in Section 4.3(a), as of the date hereof, (i) no shares of capital
stock or other equity securities of Parent or Merger Sub are authorized, issued
or outstanding, or reserved for issuance and there are no options, warrants or
other rights (including registration rights), agreements, arrangements or
commitments of any character to which Parent or Merger Sub or any of their
respective Subsidiaries is a party relating to the issued or unissued capital
stock or other equity interests of Parent or Merger Sub, requiring Parent or
Merger Sub to grant, issue or sell any shares of the capital stock or other
equity interests of Parent or Merger Sub or any of their respective Subsidiaries
by sale, lease, license or otherwise; (ii) neither Parent nor any of its
Subsidiaries have any obligation, contingent or otherwise, to repurchase, redeem
or otherwise acquire any shares of the capital stock or other equity interests
of Parent or Merger Sub or any of their respective Subsidiaries; (iii) none of
Parent or Merger Sub or any of their respective Subsidiaries (individually or in
the aggregate), directly or indirectly, owns, or has agreed to purchase or
otherwise acquire, the capital stock or other equity interests of, or any
interest convertible into or exchangeable or exercisable for such capital stock
or such equity interests, of any corporation, partnership, joint venture or
other entity which would be material in value to Parent; and (iv) there are no
voting trusts, proxies or other agreements or understandings to or by which
Parent or Merger Sub or any of their respective Subsidiaries is a party or is
bound with respect to the voting of any shares of capital stock or other equity
interests of Parent or Merger Sub or any of their respective Subsidiaries.
(c) No bonds, debentures, notes or other indebtedness of Parent or
Merger Sub having the right to vote (whether currently or upon the occurrence of
an event) on any matters on which the stockholders of Parent, Merger Sub or any
of its other Subsidiaries may vote are issued or outstanding or subject to
issuance.
Section 4.4 Corporate Authority.
(a) Each of Parent and Merger Sub has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated hereby have been duly authorized by its respective
Board of Directors and no other corporate action on the part of Parent or Merger
Sub is necessary to authorize the execution and delivery by Parent and Merger
Sub of this Agreement and the consummation by it of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and Merger Sub and constitutes a valid and binding agreement of Parent
and Merger Sub and is enforceable against Parent and Merger Sub in accordance
with its terms. The preparation and filing of the Registration Statement to be
filed with the SEC has been duly authorized by the Board of Directors of Parent.
(b) Prior to the execution and delivery of this Agreement and the Stock
Voting Agreements, the Board of Directors of each of Parent and Merger Sub (at a
meeting duly called and held) has (i) approved and declared advisable this
Agreement, the Stock Voting Agreements, the Merger and the other transactions
contemplated hereby and thereby, and (ii) determined that the transactions
contemplated hereby are fair to and in the best interests of the holders of
Parent Common Stock and Merger Sub Common Stock.
Section 4.5 Compliance with Applicable Law. (i) Each of Parent and its
Subsidiaries holds, and is in compliance with the terms of, all permits,
licenses, exemptions, orders and approvals of all Governmental Entities
necessary for the conduct of their respective business ("Parent Permits"),
except for failures to hold or to comply with such Parent Permits which would
not, individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect; (ii) with respect to the Parent Permits, no action or
proceeding is pending or, to the knowledge of Parent, threatened, and, to the
knowledge of Parent, no fact exists or event has occurred that would,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect; (iii) the business of Parent and its Subsidiaries is
being conducted in compliance with all Applicable Laws of any Governmental
Entity, except for violations or failures to so comply that would not,
individually, or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect; and (iv) no investigation or review by any Governmental
Entity with respect to Parent or its Subsidiaries is pending or, to the
knowledge of Parent, threatened, other than, in each case, those which would
not, individually, or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
Section 4.6 Non-contravention. The execution and delivery by Parent and
Merger Sub of this Agreement do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, (i)
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit under, any
Contract binding upon Parent or any of its Subsidiaries, or result in the
creation of any Lien upon any of the properties or assets of Parent or any of
its Subsidiaries, (ii) conflict with or result in any violation of any provision
of the Certificate of Incorporation or By-Laws or other equivalent
organizational document, in each case as amended, of Parent or any of its
Subsidiaries, or (iii) conflict with or violate any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent or any of its
Subsidiaries or any of their respective properties or assets, other than, in the
case of clauses (i) and (iii), any such violation, conflict, default, right,
loss or Lien that, individually or in the aggregate, would not reasonably be
expected to have a Parent Material Adverse Effect.
Section 4.7 Government Approvals; Required Consents. No filing or
registration with, or authorization, consent or approval of, any Governmental
Entity is required by or with respect to Parent or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by Parent and
Merger Sub or is necessary for the consummation of the transactions contemplated
hereby (including, without limitation, the Merger) except: (i) in connection, or
in compliance, with the provisions of the Securities Act, the Exchange Act, any
non-United States competition, antitrust and investment laws and any applicable
state securities or "blue sky" law, (ii) the filing of a notification under the
HSR Act, (iii) the filing of a notification under the Competition Act (Canada),
(iv) filings required under the Mexican Law (as defined in Section 6.7), (v) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware, (vi) in connection, or in compliance with the provisions of federal,
state, local and foreign tax law, (vii) filing required by the NYSE, and (viii)
such other consents, orders, authorizations, registrations, declarations and
filings the failure of which to obtain or make would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect.
Section 4.8 SEC Documents and Other Reports. Parent has filed all
documents required to be filed prior to the date hereof by it and its
Subsidiaries with the SEC since May 25, 1997 (the "Parent SEC Documents"). As of
their respective dates, or if amended as of the date of the last such amendment,
the Parent SEC Documents complied, and all documents required to be filed by
Parent with the SEC after the date hereof and prior to the Effective Time
("Subsequent Parent SEC Documents; provided, however, that the Subsequent Parent
SEC Documents shall not include the Registration Statement") will comply, in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the applicable rules and regulations promulgated
thereunder and none of the Parent SEC Documents contained, and the Subsequent
Parent SEC Documents will not contain, any untrue statement of a material fact
or omitted, or will omit, to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, or are to be made, not misleading. The
consolidated financial statements (including related notes) of Parent included
in the Parent SEC Documents fairly present in all material respects, and the
consolidated financial statements (including related notes) of Parent included
in the Subsequent Parent SEC Documents will fairly present in all material
respects, the consolidated financial position of Parent and its consolidated
Subsidiaries, as at the respective dates thereof and the consolidated results of
their operations and their consolidated cash flows for the respective periods
then ended (subject, in the case of the unaudited statements, to normal year-end
audit adjustments and to any other adjustments described therein and the fact
that certain information and notes have been condensed or omitted in accordance
with the Exchange Act and the rules and regulations promulgated thereunder) in
conformity with GAAP (except in the case of the unaudited statements) applied on
a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto). Since May 30, 1999, Parent has not made any
change in the accounting practices or policies applied in the preparation of its
financial statements, except as may be required by GAAP.
Section 4.9 Absence of Certain Changes or Events. Except as set forth
in the Parent SEC Documents, since May 30, 1999, Parent and its Subsidiaries
have conducted their respective businesses and operations in all material
respects in the ordinary and usual course consistent with past practice and,
except as set forth in the Parent SEC Documents, there has not occurred (i)
through the date hereof, any change in the business, condition (financial or
otherwise) or the results of operations of Parent and its Subsidiaries that
would reasonably be expected to have a Parent Material Adverse Effect; (ii) any
declaration, setting aside or payment of any dividend or distribution of any
kind by Parent on any class of its capital stock (other than regular quarterly
dividends); (iii) any material increase in the compensation payable or to become
payable by Parent or any Subsidiary to its directors, officers or management
employees or any material increase in any bonus, insurance, pension or other
employee benefit plan, payment or arrangement made to, for or with such
directors, officers or management employees; (iv) any material change by Parent
or its Subsidiaries in accounting methods, principles or practices except as
required by GAAP; or (v) any material change in financial or tax accounting
methods, principles or practices by Parent or any Subsidiary, except insofar as
may have been required by the Code.
Section 4.10 Information in Disclosure Documents and Registration
Statement. None of the information supplied or to be supplied by Parent or
Merger Sub for inclusion in (i) the Registration Statement or (ii) the Proxy
Statement will, in the case of the Registration Statement, at the time it
becomes effective or, in the case of the Proxy Statement or any amendments
thereof or supplements thereto, at the time of the initial mailing of the Proxy
Statement and any amendments or supplements thereto, and at the time of the
meeting of stockholders of the Company to be held in connection with the Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement, as of its effective date, will comply
(with respect to information relating to Parent and Merger Sub) as to form in
all material respects with the requirements of the Securities Act, and the rules
and regulations promulgated thereunder, and as of the date of its initial
mailing and as of the date of the Company Stockholders Meeting, the Proxy
Statement will comply (with respect to information relating to Parent and Merger
Sub) as to form in all material respects with the applicable requirements of the
Exchange Act, and the rules and regulated thereunder. Notwithstanding the
foregoing, neither Parent nor Merger Sub makes any representation with respect
to any statement in the foregoing documents based upon information supplied by
the Company for inclusion therein.
Section 4.11 Employee Benefit Plans; ERISA. Except as described in any
of the Parent SEC Documents, as of the date hereof all "employee benefit plans"
as defined in Section 3(3) of ERISA, maintained or contributed to by Parent or
its Subsidiaries are in material compliance with their terms and all applicable
provisions of ERISA, the Code and any other applicable legislation, and Parent
and its Subsidiaries do not have any liabilities or obligations with respect to
any such employee benefit plans, whether or not accrued, contingent or
otherwise, except (a) as described in any of the Parent SEC Documents and (b)
for instances of noncompliance or liabilities or obligations that would not in
the aggregate have a Parent Material Adverse Effect.
Section 4.12 Lack of Ownership of Company Common Stock. Neither Parent
nor any of its Subsidiaries owns any shares of Company Common Stock or other
securities convertible into shares of Company Common Stock (exclusive of any
shares owned by Parent's employee benefit plans).
Section 4.13 Required Vote of Parent Stockholders. No vote of the
stockholders of Parent or Merger Sub (other than written consent of Parent Sub
as sole shareholder of Merger Sub to the adoption of this Agreement, which
written consent is being delivered contemporaneously with the execution of this
Agreement) is required by law or by the charter or by-laws of Parent or Merger
Sub in order for Parent and Merger Sub to consummate the Merger and the
transactions contemplated hereby.
Section 4.14 Absence of Undisclosed Liabilities. As of the date hereof,
neither Parent nor any of its Subsidiaries has any material liabilities or
obligations or obligations (whether absolute, accrued, known or unknown,
contingent or otherwise) of a type required by GAAP to be reflected on a
consolidated balance sheet, other than (i) liabilities or obligations incurred
in the ordinary course of business since December 31, 1999, (ii) liabilities or
obligations reflected in any of the Parent SEC Documents and (iii) liabilities
or obligations which would not in the aggregate reasonably be expected to have a
Parent Material Adverse Effect.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
Section 5.1 Conduct of Business by the Company Pending the Merger.
Prior to the Effective Time, unless Parent shall otherwise agree in writing or
as set forth in Section 5.1 of the Company Disclosure Schedule or in Section
2.7, 6.17 or 6.19 hereof, or as necessary or appropriate to satisfy its
obligations hereunder, the Company shall conduct, and cause each of its
Subsidiaries to conduct, its business only in the ordinary and usual course
consistent with past practice, and the Company shall use, and cause each of its
Subsidiaries to use, its reasonable best efforts to preserve intact the present
business organization, keep available the services of its present officers and
key employees, and preserve their existing business relationships. Without
limiting the generality of the foregoing, unless Parent shall otherwise agree in
writing (which agreement will not be unreasonably withheld), or as otherwise
contemplated in Sections 2.7, 6.17 or 6.19 hereof or as necessary or appropriate
to satisfy its obligations hereunder, or as set forth in Section 5.1 of the
Company Disclosure Schedule, prior to the Effective Time, the Company shall not,
nor shall it permit any of its Subsidiaries to:
(a) (i) amend its Certificate of Incorporation, as amended, By-Laws or
other organizational documents, (ii) split, combine or reclassify any shares of
its outstanding capital stock, (iii) other than dividends from one Subsidiary to
another Subsidiary or to the Company, declare, set aside or pay any dividend or
other distribution payable in cash, stock or property, or (iv) directly or
indirectly redeem or otherwise acquire any shares of its capital stock or shares
of the capital stock of any of its Subsidiaries;
(b) authorize for issuance, issue, deliver, sell, pledge, dispose of,
encumber or grant any Lien on, or authorize or propose the issuance, delivery,
sale, pledge, disposition of, encumbrance or grant of any Lien on, any shares of
its capital stock or any shares of the capital stock of any of its Subsidiaries,
or other voting securities or any securities convertible into or exercisable
for, or any rights, warrants or options to acquire, any such securities or
voting securities or any other ownership interest (or interest the value of
which is derived by reference to any of the foregoing), or enter into any
agreement with respect to any of the foregoing, other than the issuance of
Company Common Stock upon the exercise of Options outstanding on the date hereof
in accordance with their present terms;
(c) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets (other than the acquisition of assets
which, taken together, do not constitute a business and which are of the type
currently used in the operations of the business of the Company and its
Subsidiaries in the ordinary course of business consistent with past practice);
provided, however, that the foregoing shall not prohibit the creation of new
Subsidiaries of the Company organized to conduct or continue activities
otherwise permitted by this Agreement;
(d) other than (i) dispositions required to be made pursuant to an
agreement or contract to which the Company or any of its Subsidiaries is a party
or by which it is bound as of the date of this Agreement and (ii) dispositions
of inventory and excess or obsolete assets in the ordinary course of business
consistent with past practice, the Company shall not, and shall not permit any
Subsidiary of the Company to, sell, lease, encumber, license or otherwise
dispose of, or agree to sell, lease, encumber, license or otherwise dispose of,
any of its assets;
(e) (i) make any loans, advances or capital contributions to, or
investments in (other than acquisitions permitted by Section 5.1(c)), any other
person, other than (x) by the Company or a Subsidiary of the Company to or in
the Company or any direct or indirect wholly owned Subsidiary of the Company,
(y) pursuant to and in accordance with the terms of any contract or other legal
obligation of the Company or any of its Subsidiaries existing at the date of
this Agreement, or (z) in the ordinary course of business consistent with past
practice in an aggregate amount not in excess of $5,000,000, or (ii) create,
incur, assume or suffer to exist any indebtedness, issuances of debt securities,
guarantees, loans, advances or other non-equity securities not in existence as
of the date of this Agreement except (x) pursuant to the credit facilities,
indentures and other arrangements in existence on the date of this Agreement,
(y) for short-term borrowings (1) in the ordinary course of business consistent
with past practice or (2) the proceeds of which are used to refund existing or
maturing indebtedness or fund any acquisition transaction permitted by Section
5.1(c) or (z) intercompany indebtedness between the Company and any of its
wholly owned Subsidiaries or between such wholly owned Subsidiaries;
(f) pay, satisfy, discharge or settle any material claim, liabilities
or obligations (absolute, accrued, contingent or otherwise), other than in the
ordinary course of business and consistent with past practice or pursuant to
mandatory terms of any Company Contract in effect on the date hereof;
(g) modify or amend, or waive any benefit of, any non-competition
agreement to which the Company or any of its Subsidiaries is a party;
(h) enter into any new material line of business, or incur or commit to
any capital expenditures other than capital expenditures incurred or committed
to in the ordinary course of business consistent with past practice and which,
together with all such expenditures incurred or committed to during any fiscal
year, are not in excess of the respective amounts by category or in the
aggregate set forth in the Company's 2000 capital expenditure budget, a true and
complete copy of which is set forth in Section 5.1 of the Company Disclosure
Schedule;
(i) voluntarily permit any insurance policy naming the Company or any
Subsidiary of the Company as a beneficiary or a loss payee to be cancelled or
terminated other than in the ordinary course of business;
(j) (i) adopt, commit to adopt, enter into, terminate or amend (except
as may be required by Applicable Law or existing Contracts) any employee plan,
agreement, contract, arrangement or other Company Plan for the current or future
benefit or welfare of any past, present or future director, officer or employee,
(ii) except as required by existing Contracts or in the ordinary course of
business consistent with past practice, increase or commit or agree to increase
in any manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee; provided, however, that, except as required by
existing Contracts, (x) no such increase or payment shall be made to or for the
benefit of any person listed in Section 5.1 of the Company Disclosure Schedule,
and (y) with respect to officers, any such increase shall not exceed 5% of the
current compensation or any such officer and such increase shall not be made
without consultation with Parent, (iii) other than pursuant to Section 2.7
hereof, take any action to fund or in any other way secure, or to accelerate or
otherwise remove restrictions with respect to, the payment of compensation or
benefits under any employee plan, agreement, contract, arrangement or other
Company Plan, (iv) issue any additional Options, or (v) make or agree to make
any contribution, other than regularly scheduled contributions, to any Company
Plan, except as required by law;
(k) (i) make any change in its accounting or tax policies or
procedures, except as required by Applicable Law or to comply with GAAP, (ii)
change its fiscal year, or (iii) make any material Tax election, other than in
the ordinary course of business consistent with past practice;
(l) take any action with knowledge that such action could reasonably be
expected to result in any of the conditions to the Merger set forth in Article
VII not being satisfied;
(m) enter into, implement, or otherwise become subject to or bound by
any new agreement, arrangement, commitment or program which provides for
severance, golden parachute, unemployment, stay-pay, change of control or
similar payments, or amend any existing agreement, arrangement, commitment or
program which provides for such payments;
(n) enter into any Material Contract, except as expressly permitted
pursuant to this Agreement; or
(o) authorize any of, or commit, resolve or agree to take any of, the
actions prohibited by paragraphs (a) though (n) of this Section 5.1.
Section 5.2 Conduct of Business by Parent Pending the Closing. Except
as set forth in Section 5.2 of the Parent Disclosure Schedule or as specifically
permitted by any other provision of this Agreement, Parent shall not (unless
required by Applicable Law or stock exchange regulations), between the date of
this Agreement and the Effective Time, directly or indirectly, do, or agree to
do, any of the following, without the prior written consent of the Company,
which consent will not be unreasonably withheld:
(a) amend or otherwise change Parent's Certificate of Incorporation or
By-laws or equivalent organizational documents in a manner that adversely
affects the rights of holders of Parent Common Stock or amend or otherwise
change Merger Sub's Certificate of Incorporation or By-Laws;
(b) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of Parent's
capital stock (other than regular quarterly cash dividends having record dates
and payment dates in accordance with Parent's historical practices);
(c) make any change in accounting policies or procedures, other than in
the ordinary course of business consistent with past practice or except as
required by GAAP or a Governmental Entity; or
(d) take any action with knowledge that such action could reasonably be
expected to result in any of the conditions to the Merger set forth in Article
VII not being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Access and Information; Confidentiality.
(a) The Company shall (and shall cause its Subsidiaries and its and
their respective officers, directors, employees, auditors and agents to) afford
to Parent and to Parent's officers, employees, financial advisors, legal
counsel, accountants, consultants and other representatives (except to the
extent not permitted under Applicable Law as advised by counsel) reasonable
access during normal business hours throughout the period prior to the Effective
Time to all of its books and records and its properties, plants and personnel
and, during such period, shall furnish promptly to Parent a copy of each report,
schedule and other document filed or received by it pursuant to the requirements
of federal securities laws. Parent shall (and shall cause its Subsidiaries and
its and their respective officers, directors, employees, auditors and agents to)
afford to the Company and to the Company's officers, employees, financial
advisors, legal counsel, accountants, consultants and other representatives
(except to the extent not permitted under Applicable Law as advised by counsel)
reasonable access (i) by the Company throughout the period prior to the
Effective Time to members of senior management of Parent to the extent
reasonably necessary for the Company's Board of Directors to fulfill its
fiduciary duties under applicable laws, and (ii) by Chase throughout the period
prior to the Effective Time to members of senior management of Parent and to
such of Parent's or its Subsidiaries' books and records as reasonably determined
by Chase to be necessary in connection with any bringdowns or amendments of its
fairness opinion.
(b) Parent and the Company acknowledge and agree that the
Confidentiality Agreement dated December 2, 1998, between the Company and
Parent, as amended by that certain letter agreement dated June 9, 2000, between
the Company and Parent (together, the "Confidentiality Agreement") is in full
force and effect as of the date hereof.
Section 6.2 No Solicitation.
(a) The Company shall immediately cease any existing discussions or
negotiations, if any, with any parties conducted heretofore with respect to any
Takeover Proposal (as hereinafter defined). The Company shall not directly or
indirectly, and it shall cause its officers, directors, employees,
representatives, agents or affiliates, including any investment bankers,
attorneys or accountants (collectively, "Representatives") retained by the
Company or any of its Subsidiaries or affiliates not to, (i) solicit, initiate,
encourage or otherwise facilitate (including by way of furnishing information)
any inquiries or proposals that constitute, or could reasonably be expected to
lead to, a proposal or offer for a merger, tender offer, recapitalization,
consolidation, business combination, sale or other disposition of all or a
substantial portion of the assets of the Company and its Subsidiaries, taken as
a whole, sale of 15% or more of the shares of capital stock (including by way of
a tender offer, share exchange or exchange offer) or similar or comparable
transactions involving the Company or any of its Subsidiaries, other than the
transactions contemplated by this Agreement (any one or combination of the
foregoing inquiries or proposals being referred to in this Agreement as a
"Takeover Proposal"), (ii) engage in negotiations or discussions concerning, or
provide any non-public information to any person or entity relating to, any
Takeover Proposal, or which may reasonably be expected to lead to a Takeover
Proposal, or (iii) enter into any agreement, arrangement or understanding with
respect to any such Takeover Proposal or which would require it to abandon,
terminate or fail to consummate the Merger or any other transaction contemplated
by this Agreement. Notwithstanding anything in this Agreement to the contrary,
the Board of Directors of the Company may, at any time prior to adoption of this
Agreement by the stockholders of the Company, furnish information (pursuant to a
customary confidentiality agreement no more favorable, in the aggregate, to the
party receiving information than the Confidentiality Agreement, except that such
confidentiality agreement need not require approval or request of the Company's
Board of Directors prior to making an inquiry or Takeover Proposal to the
Company or its Board of Directors to, or engage in discussions or negotiations
with, any person in response to an unsolicited bona fide written Takeover
Proposal of such person, if, and only to the extent that, (A) the Board of
Directors of the Company, after consultation with its financial advisors and
outside legal counsel to the Company, determines in good faith that such
Takeover Proposal is or could reasonably be expected to lead to a Superior
Proposal (as defined herein) and (B) prior to furnishing such information to, or
entering into discussions or negotiations with, such person, the Company
provides written notice to Parent to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
and the Company complies with Section 6.2(c).
(b) Notwithstanding anything in this Agreement to the contrary, the
Company's Board of Directors shall be permitted, at any time prior to adoption
of this Agreement by the stockholders of the Company, (i) to withdraw, modify or
change, or propose to withdraw, modify or change, the recommendation by the
Board of Directors of this Agreement, the Merger or the other transactions
contemplated by this Agreement if, after consultation with outside legal
counsel, the Company's Board of Directors concludes in good faith that failure
to take such action would result in a breach by the Company's Board of Directors
of its fiduciary obligations under Applicable Law; or (ii) in response to an
unsolicited Takeover Proposal, to approve or recommend, or propose to approve or
recommend, any Takeover Proposal and, in connection therewith, to withdraw,
modify or change the approval or recommendation by the Board of Directors of
this Agreement, the Merger or the other transactions contemplated by this
Agreement, but only if, in the case referred to in clause (ii), the Board of
Directors of the Company concludes in good faith that such Takeover Proposal, if
consummated, would constitute a Superior Proposal. "Superior Proposal" means any
written Takeover Proposal which the Board of Directors of the Company determines
in good faith (after consultation with its financial advisors and legal counsel)
taking into account all legal, financial, regulatory and other aspects of the
proposal and the person making the proposal, (i) would, if consummated, result
in a transaction that is more favorable to the Company's stockholders (in their
capacity as stockholders), from a financial point of view, than the transactions
contemplated by this Agreement and (ii) is reasonably capable of being completed
(provided that for purposes of this definition the term "Takeover Proposal"
shall have the meaning assigned to such term in Section 6.2(a), except that (x)
the reference to "15%" in the definition of Takeover Proposal shall be deemed to
be a reference to "50%", (y) "Takeover Proposal" must be a transaction involving
the Company, and (z) no such sale or other disposition of assets shall be deemed
to be a "sale or other disposition of all" or "substantial" unless such sale or
other disposition is for at least 75% of the assets of the Company and its
Subsidiaries, taken as a whole. Any withdrawal, modification or change in the
recommendation or the determination to do so of the Company's Board of Directors
of this Agreement, the Merger or the other transactions contemplated hereby made
in accordance with this Section 6.2(b) shall not constitute a breach of the
Company's representations, warranties, covenants or agreements contained in this
Agreement. Following termination of this Agreement, a public offering by the
Company of its voting securities (excluding, however, a secondary offering of
securities currently held by affiliates of the Company) in a manner intended to
result in a broad distribution of such securities will not constitute a
"Takeover Proposal."
(c) The Company shall notify Parent as promptly as reasonably
practicable (and no later than 24 hours) after receipt by the Company of any
Takeover Proposal or any request for non-public information in connection with a
Takeover Proposal or for access to the properties, books or records of the
Company by any person or entity that informs the Company that it is considering
making, or has made, a Takeover Proposal. Such notice shall be made orally and
in writing and shall indicate in reasonable detail the identity of the offeror
and the terms and conditions of such proposal, inquiry or contact to the extent
available to the Company. The Company agrees to keep Parent informed, on a
reasonably current basis, of the status and terms of any such Takeover Proposal
(including any material changes to the details or terms thereof) and the status
of any such discussions or negotiations.
(d) Nothing contained in this Section 6.2 shall prohibit the Company or
its Board of Directors (i) from taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or
from making any legally required disclosure to the stockholders of the Company
or (ii) prior to the adoption of this Agreement by the stockholders of the
Company, from taking any action as contemplated by Section 8.1(e).
Section 6.3 Third-Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, the Company shall not
terminate, amend, modify or waive any provision of any confidentiality or
standstill agreement to which it or any of its Subsidiaries is a party, except
that the Company shall not be required hereunder to enforce, and may waive the
terms of, any such confidentiality or standstill agreement that restricts any
third party from making an inquiry or Takeover Proposal to the Company or its
Board of Directors, if, after consultation with outside legal counsel, the
Company's Board of Directors concludes in good faith that enforcement of such
terms or failure to waive such terms would result in a breach by the Company's
Board of Directors of its fiduciary obligations under Applicable Law.
Simultaneously with any such waiver or such action, the Company shall be deemed
to have made such waiver, or taken such action, with respect to the
Confidentiality Agreement, to the same extent as such waiver or action was taken
with respect to such other confidentiality or standstill agreement.
Section 6.4 Registration Statement. As promptly as practicable, Parent
and the Company shall in consultation with each other prepare and file with the
SEC the Proxy Statement and Registration Statement in preliminary form. Each of
the Company and Parent shall use its reasonable best efforts to have the Proxy
Statement cleared by the SEC and the Registration Statement declared effective
under the Securities Act and applicable state securities laws as soon as
practicable and keep the Registration Statement effective as long as is
necessary to consummate the Merger. The Company shall furnish Parent with all
information concerning the Company and the holders of its capital stock and
shall take such other action Parent may reasonably request in connection with
the Registration Statement and the issuance of shares of Parent Common Stock in
connection with the Merger. If, at any time prior to the Effective Time, any
event or circumstance relating to the Company, any Subsidiary of the Company,
Parent or any Subsidiary of Parent, or their respective officers or directors,
should be discovered by such party which should be set forth in an amendment or
a supplement to the Registration Statement or Proxy Statement, such party shall
promptly inform the other thereof and take appropriate action in respect
thereof.
Section 6.5 Proxy Statements; Stockholder Approval.
(a) The Company, acting through its Board of Directors, shall, subject
to and in accordance with Applicable Law, its Certificate of Incorporation and
its By-Laws, promptly and duly call, give notice of, convene and hold as soon as
practicable following the date upon which the Registration Statement becomes
effective and the Proxy Statement has been cleared by the SEC a meeting of the
holders of Company Common Stock for the purpose of voting to adopt this
Agreement (the "Company Stockholder Meeting"), and, (i) except as set forth in
Sections 6.2(b) or 6.2(d), recommend adoption of this Agreement to the
stockholders of the Company and include in the Proxy Statement such
recommendation and (ii) except to the extent that the Company's Board of
Directors, after consultation with outside legal counsel, concludes in good
faith that such action is not consistent with the Company's Board of Director's
fiduciary obligations under Applicable Law take all reasonable action to solicit
and obtain such approval.
(b) The Company, as promptly as practicable, shall cause the definitive
Proxy Statement to be mailed to its stockholders as soon as practicable
following the date on which it is cleared by the SEC and the Registration
Statement is declared effective.
Section 6.6 Compliance with the Securities Act. Prior to the Effective
Time, the Company shall cause to be prepared and delivered to Parent a list
(reasonably satisfactory to counsel for Parent) identifying each person who, at
the time of the Company Stockholder Meeting, may be deemed to be an "affiliate"
of the Company, as such term is used in paragraphs (c) and (d) of Rule 145 under
the Securities Act (the "Company Rule 145 Affiliates"). The Company shall use
its reasonable best efforts to cause each person who is identified as a Company
Rule 145 Affiliate in such list to deliver to Parent on or prior to the
Effective Time a written agreement, substantially in the form of Exhibit "D"
hereto.
Section 6.7 Other Actions.
(a) Subject to the terms and conditions herein provided and applicable
legal requirements, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, and to assist and cooperate with the other parties hereto in doing, as
promptly as practicable, all things necessary, proper or advisable under
applicable laws and regulations to ensure that the conditions set forth in
Article VII are satisfied and to consummate and make effective the transactions
contemplated by this Agreement.
(b) Each of the parties shall use its reasonable best efforts to obtain
as promptly as practicable all consents, waivers, approvals, authorizations or
permits of, or registration or filing with or notification to (any of the
foregoing being a "Consent"), of any Governmental Entity or any other person
required in connection with, and waivers of any violations, defaults or breaches
that may be caused by, the consummation of the transactions contemplated by this
Agreement.
(c) Each party hereto shall promptly inform the other of any material
communication from the SEC, the United States Federal Trade Commission, the
United States Department of Justice or any other Governmental Entity regarding
any of the transactions contemplated by this Agreement. If any party hereto or
any affiliate thereof receives a request for additional information or
documentary material from any such Governmental Entity with respect to the
transactions contemplated by this Agreement, then such party shall use
commercially reasonable efforts to cause to be made, as soon as reasonably
practicable and after consultation with the other party, an appropriate response
in compliance with such request.
(d) Without limiting the generality of the foregoing, Parent will, and
the Company will use its reasonable best efforts to, obtain all authorizations
or waivers required under the HSR Act, the Competition Act (Canada) and the
Mexican Federal Economic Competition Law (the "Mexican Law") to consummate the
transactions contemplated hereby, including, without limitation, making all
filings with the Antitrust Division of the Department of Justice ("DOJ") and the
Federal Trade Commission ("FTC"), the Competition Bureau (Canada) and the
Mexican Federal Economic Competition Commission ("Mexican Commission") required
in connection therewith (the initial filing with DOJ and FTC to occur no later
than five (5) business days, and the initial filing with Competition Bureau
(Canada) and the Mexican Commission to occur no later than ten (10) business
days, following the execution and delivery of this Agreement unless mutually
agreed otherwise) and responding as promptly as practicable to all inquiries
received from the DOJ, FTC, the Competition Bureau (Canada) or the Mexican
Commission for additional information or documentation. Each of Parent and the
Company shall furnish to the other such necessary information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission which is necessary under the HSR Act, the Competition Act
(Canada) and Mexican Law. Parent and the Company shall keep each other apprised
of the status of any communications with, and any communications with, and any
inquiries or requests for additional information from, the FTC, the DOJ, the
Competition Bureau (Canada) and the Mexican Commission. In the event a suit is
threatened or instituted challenging the Merger as violatile of the HSR Act, the
Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade
Commission Act, as amended, the Competition Act (Canada), as amended, the
Mexican Law, as amended, or any other federal, state or foreign law or
regulation or decree designed to prohibit, restrict or regulate actions for the
purpose or effect of monopolization or restraint or trade (collectively,
"Antitrust Laws"), each party hereto shall use its reasonable best efforts to
avoid the filing of, or resist or resolve such suit. The Company shall use its
reasonable best efforts to take such action as may be required, and Parent shall
take all actions as may be required, in order to obtain clearance under the HSR
Act, the Competition Act (Canada) and the Mexican Law in order to consummate the
Merger prior to the Termination Date (as hereinafter defined). Parent shall be
entitled to direct any proceedings or negotiations with any Governmental Entity
relating to any of the foregoing, provided that it shall afford Company a
reasonable opportunity to participate therein. In addition, Parent shall, and
the Company shall use its reasonable best efforts to, take such action as may be
required by any federal or state court of the United States, in any suit brought
by any Governmental Entity or any other person challenging the Merger as
violative of the Antitrust Laws, or in proceedings threatened by the
Commissioner of Competition to bring an application under the Competition Act
(Canada) or proceedings threatened by the Mexican Commission under the Mexican
Law in order to avoid the entry of any permanent injunction or other permanent
order which has the effect of preventing the consummation of the Merger prior to
the Termination Date, and in the event that any permanent or preliminary
injunction or other order is entered or becomes reasonably foreseeable to be
entered in any proceeding that would make consummation of the transactions
contemplated hereby in accordance with the terms of this Agreement unlawful or
that would prevent or delay consummation of the transactions contemplated
hereby, Parent shall take promptly any and all steps (including the appeal
thereof, the posting of a bond) necessary to vacate, modify or suspend such
injunction or order so as to permit such consummation prior to the Termination
Date.
(e) Failure of Parent to obtain clearance or expiration of the required
waiting period under the HSR Act, the Competition Act (Canada) or the Mexican
Law, as applicable, or to cause to be vacated, modified or suspended any
injunction or order resulting from a claim that the Merger is violative of the
Antitrust Laws, in either case resulting in the failure of the Merger to be
consummated on or prior to the Termination Date, shall be deemed a material
breach by Parent of this Section 6.7, unless such failure results from the
Company's failure, in any material respects, to perform its obligations set
forth in Section 6.7(d).
(f) If Parent is required to take any action in order to comply with
this Section 6.7, Parent may take such action concurrently with the closing of
the Merger on the Closing Date, and nothing in this Agreement shall require
Parent to take such action prior to the Closing Date.
Section 6.8 Public Announcements. Parent and the Company shall each use
their reasonable best efforts to consult with each other before issuing any
press releases or making any public statement with respect to the transactions
by this Agreement and shall not issue any such press release or such public
statement prior to such consultation, except as may be required by applicable
law or obligations pursuant to any listing agreement with any national
securities exchange.
Section 6.9 Directors' and Officers' Indemnification and Insurance.
(a) Parent, Merger Sub and the Company agree that all rights to
indemnification and all limitations on liability existing in favor of any
Indemnitee (as hereinafter defined) as provided in the Company's Certificate of
Incorporation, Company's By-laws, charter or By-laws of any Subsidiary of the
Company or any Indemnity Agreement (as hereinafter defined) shall survive the
Merger and continue in full force and effect to the fullest extent permitted by
law. To the extent permitted by (i) the DGCL, or (ii) any agreement disclosed in
Section 6.9 of the Company Disclosure Schedule which provides for
indemnification by the Company or any Subsidiary of the Company of any
Indemnitee in effect on the date of this Agreement (including any indemnity
provisions contained in any agreement disclosed in Section 6.9 of the Company
Disclosure Schedule which provides for the registration of securities) (each, an
"Indemnity Agreement"), advancement of Indemnitee Expenses (as hereinafter
defined) pursuant to this Section 6.9 shall be mandatory rather than permissive
and the Surviving Corporation shall advance Costs (as hereinafter defined) in
connection with such indemnification, in all such cases subject to receipt of
any undertaking to repay required by the DGCL. Parent shall cause the Surviving
Corporation to expressly assume at Closing and thereafter honor in accordance
with their terms, to the fullest extent permitted under the DGCL, all Indemnity
Agreements. With respect to any determination of whether an Indemnitee is
entitled to indemnification by the Surviving Corporation under this Section
6.9(a), the Indemnitee shall have the right, as contemplated by the DGCL, to
require that such determination be made by special, independent legal counsel
selected by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed material services
for the Company or for Indemnitee within the last three (3) years. For the
purposes of this Section 6.9, (i) "Indemnitee Expenses" shall include reasonable
attorneys' fees and all other costs, charges and expenses paid or incurred in
connection with investigation, defending, being a witness in or participating in
(including on appeal), or preparing to defend, be a witness in or participate in
any Indemnifiable Claim (as hereinafter defined), (ii) an "Indemnitee" shall
mean any individual who on or prior to the Effective Time was an employee,
officer or director of the Company or any of its Subsidiaries, and the heirs,
executors, trustees, fiduciaries and administrators of any such employee,
officer or director, (iii) "Costs" shall mean all losses, Indemnitee Expenses,
claims, damages, liabilities, judgments, or amounts paid in settlement in
respect to any Indemnifiable Claim, and (iv) "Indemnifiable Claim" shall mean
any actual or alleged act, omission, statement, misstatement, event, or
occurrence related to the fact that Indemnitee is or was a director, officer,
agent, employee, or fiduciary of the Company, or is or was serving at the
request of the Company as a director, officer, trustee, agent, employee, or
fiduciary of another corporation, partnership, joint venture, employee benefit
plan, trust, or other enterprise, or by reason of any actual or alleged thing
done or not done by Indemnitee in any such capacity. For purposes of this
provision, the Company agrees that Indemnitee's service on behalf of or with
respect to any Subsidiary or employee benefits plan of the Company or any
Subsidiary of the Company shall be deemed to be at the request of the Company.
(b) For a period of six years after the Effective Time, Parent shall,
or shall cause the Surviving Corporation to, maintain officers' and directors'
liability insurance and fiduciary liability insurance covering the Indemnitees
who are currently covered by the Company's existing officers' and directors' or
fiduciary liability insurance policies on terms no less advantageous to such
indemnified parties than such existing insurance; provided, however, that
neither Parent nor the Surviving Corporation will be required in order to
maintain such policies to pay an annual premium in excess of 150% of the greater
of (i) the last annual premium paid by the Company prior to the date of this
Agreement and (ii) the annual premium for the year in which the Closing occurs
(the "Cap"); and provided, further, that, if equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of the
Cap, then Parent shall, or shall cause the Surviving Corporation to, maintain
policies that, in Parent's good faith judgment, provide the maximum coverage
available at an annual premium equal to the Cap.
(c) From and after the Effective Time, Parent shall cause the Surviving
Corporation not to alter, amend or otherwise modify the Certificate of
Incorporation or By-Laws of the Surviving Corporation in any manner that
adversely affects or otherwise prejudices the rights of any of the Indemnified
Parties under this Section 6.9.
(d) Notwithstanding any other provisions hereof, the obligations of the
Company, the Surviving Corporation and Parent contained in this Section 6.9
shall be binding upon the successors and assigns of Parent and the Surviving
Corporation. In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other Person or (ii) transfers all or substantially all of its properties or
assets to any Person, then, and in each case, proper provision shall be made so
that successors and assigns of the Company or the Surviving Corporation, as the
case may be, honor the indemnification obligations set forth in this Section
6.9.
(e) The obligations of the Company, the Surviving Corporation, and
Parent under this Section 6.9 shall survive the consummation of the Merger and
shall not be terminated or modified in such a manner as to adversely affect any
Indemnitee to whom this Section 6.9 applies without the consent of such affected
Indemnitee (it being expressly agreed that the Indemnitees to whom this Section
6.9 applies shall be third party beneficiaries of this Section 6.9, each of whom
may enforce the provisions of this Section 6.9).
Section 6.10 Expenses. Except as otherwise set forth in Sections 8.2(b)
and (c), each party hereto shall bear its own costs and expenses in connection
with this Agreement and the transactions contemplated hereby.
Section 6.11 Listing Application. Parent shall cause the shares of
Parent Common Stock to be issued pursuant to this Agreement in the Merger or
upon exercise of the Rollover Options to be listed for trading on the New York
Stock Exchange or on any securities exchange on which shares of Parent Common
Stock shall be listed at the Effective Time.
Section 6.12 Supplemental Disclosure. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence, or non-occurrence, of any event the occurrence, or nonoccurrence, of
which would be likely to cause (x) any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect or (y) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied and (ii) any failure of the Company or Parent, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 6.12 shall not have any effect for the
purpose of determining the satisfaction of the conditions set forth in Article
VII of this Agreement or otherwise limit or affect the remedies available
hereunder to any party.
Section 6.13 Stockholder Litigation. The Company shall give Parent the
reasonable opportunity to participate in the defense or settlement of any
stockholder litigation against the Company and/or its directors relating to the
transactions contemplated by this Agreement, and no such settlement shall be
agreed to without Parent's written consent, which shall not be unreasonably
withheld or delayed. The assertion or filing of any such litigation shall not be
a breach of Section 3.11 or Section 3.12.
Section 6.14 Tax Matters. The parties acknowledge their respective
desire to structure the Merger to constitute a reorganization within the meaning
of Section 368(a) of the Code, provided, however, such tax treatment shall not
be a condition to either parties' obligation to close the transactions
contemplated herein. Parent and the Company will use their reasonable good faith
efforts to achieve such tax treatment. If based upon the Reorganization
Assumptions (as defined below), the fair market value (determined as of the
Effective Time) of the stock consideration provided in the Merger would be at
least 40% of the fair market value (determined as of the Effective Time) of the
total consideration received by the stockholders of the Company pursuant to the
Merger, the Company shall deliver to Parent an opinion of Vinson & Elkins
L.L.P., special counsel to the Company, in the form attached hereto as Exhibit
"E" to the effect that the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code, and that accordingly the Company will not
recognize gain or loss for federal income tax purposes as a result of the
Merger, and stockholders of the Company that do not elect dissenters' rights
will not recognize gain or loss for federal income tax purposes, except to the
extent of the cash payment made pursuant to Section 2.1(a) hereof and any cash
received in lieu of fractional shares of Parent Common Stock, (the "Tax
Opinion"). The issuance of the Tax Opinion shall be conditioned on the receipt
by such tax counsel of representation letters from each of the Company, Parent,
Merger Sub, and certain stockholders of the Company, in each case, in form and
substance reasonably satisfactory to Vinson & Elkins L.L.P. The specific
provisions of each such representation letter shall be in form and substance
reasonably satisfactory to such tax counsel, and each such representation letter
shall be dated on or before the date of such opinion and shall not have been
withdrawn or modified in any material respect. For purposes of this Agreement
the term "Reorganization Assumptions" shall mean the following assumptions: (A)
the average consideration paid to all dissenting stockholders of the Company in
satisfaction of their appraisal rights is $22 per share of Company Common Stock,
and (B) the fair market value of Parent Common Stock as of the Effective Time is
equal to the closing price of Parent Common Stock on the New York Stock Exchange
at the end of the trading day immediately preceding the Effective Time of the
Merger.
Section 6.15 Investigation and Agreement by the Parties; No Other
Representations or Warranties.
(a) Parent and Merger Sub, on the one hand, and the Company, on the
other, each acknowledges and agrees that it has made its own inquiry and
investigation into, and, based thereon, has formed an independent judgment
concerning, the other party and its Subsidiaries and their businesses and
operations, and such party has requested such documents and information from the
other party as such party considers material in determining whether to enter
into this Agreement and to consummate the transactions contemplated in this
Agreement. Each of Parent and Merger Sub, on the one hand, and the Company, on
the other hand, acknowledge and agree that it has had an opportunity to ask all
questions of and receive answers from the other party with respect to any matter
such party considers material in determining whether to enter into this
Agreement and to consummate the transactions contemplated in this Agreement. In
connection with each party's investigation of the other party and its
Subsidiaries and their businesses and operations, each party and its
representatives have received from the other party or its representatives
certain projections and other forecasts for the other party and its Subsidiaries
and certain estimates, plans and budget information. Each party acknowledges and
agrees that there are uncertainties inherent in attempting to make such
projections, forecasts, estimates, plans and budgets; that such party is
familiar with such uncertainties; that such party is taking full responsibility
for making its own evaluation of the adequacy and accuracy of all estimates,
projections, forecasts, plans and budgets so furnished to it or its
representatives; and that such party will not (and will cause all of its
respective Subsidiaries or other Affiliates or any other person acting on its
behalf to not) assert any claim or cause of action against any of the other
party's direct or indirect partners, directors, officers, employees, agents,
stockholders, Affiliates, consultants, counsel, accountants, investment bankers
or representatives with respect thereto, or hold any such other person liable
with respect thereto.
(b) Each of Parent and Merger Sub, on the one hand, and the Company, on
the other, agrees that, except for the representations and warranties made by
the other party that are expressly set forth in Article III and Article IV of
this Agreement, as applicable, neither the other party nor any of its
representatives or Affiliates has made and shall not be deemed to have made to
such party or to any of its representatives or Affiliates any representation or
warranty of any kind. Without limiting the generality of the foregoing, each
party agrees that neither the other party nor any of its Affiliates makes or has
made any representation or warranty to such party or to any of its
representatives or Affiliates with respect to:
(i) any projections, forecasts, estimates, plans or budgets of
future revenues, expenses or expenditures, future results of operations (or any
component thereof), future cash flows (or any component thereof) or future
financial condition (or any component thereof) of the other party or any of its
Subsidiaries or the future business, operations or affairs of the other party or
any of its Subsidiaries heretofore or hereafter delivered to or made available
to such party or its counsel, accountants, advisors, lenders, representatives or
Affiliates; and
(ii) any other information, statement or documents heretofore
or hereafter delivered to or made available to such party or its counsel,
accountants, advisors, lenders, representatives or Affiliates with respect to
the other party or any of its Subsidiaries or the business, operations or
affairs of the other party or any of its Subsidiaries, except to the extent and
as expressly covered by a representation and warranty made by the other party
and contained in Article III or Article IV of this Agreement, as applicable.
Section 6.16 Resignations. At Closing, the Company shall deliver to
Parent written resignations of the directors of the Company, together with those
officers designated by Parent at least ten (10) days prior to the Effective
Time.
Section 6.17 Amendment of Advisory and Oversight Agreements.
Simultaneously with the execution of this Agreement, the Company shall execute,
and deliver to Parent a true and correct copy of, (a) an amendment to the
Advisory Agreement in substantially the form attached as Exhibit "F" (the
"Advisory Agreement Amendment") and (b) an amendment to the Oversight Agreement
in substantially the form attached as Exhibit "G" (the "Oversight Agreement
Amendment").
Section 6.18 Section 16(b) Board Approval.
(a) Prior to Closing, the Board of Directors of Parent shall, by
resolution duly adopted by such Board of Directors or a duly authorized
committee of "non-employee directors" thereof, approve and adopt, for purposes
of exemption from "short-swing" liability under Section 16(b) of the Exchange
Act, the acquisition of Parent Common Stock at the Effective Time by officers
and directors of Parent (including officers or directors of the Company who
become, prior to, at, or following the Effective Time of the Merger, officers or
directors of Parent) as a result of the conversion of shares of Company Common
Stock in the Merger and the assumption of the Options by Parent at the Effective
Time. Such resolution shall set forth the name of the applicable "insiders" for
purposes of Section 16 of the Exchange Act, the number of securities to be
acquired by each individual, that the approval is being granted to exempt the
transaction under Rule 16b-3 under the Exchange Act, and, for the Options to be
assumed by Parent at the Effective Time, the material terms of the options and
warrants to purchase Parent Common Stock acquired by such insiders as a result
of the assumption by Parent of such Options.
(b) Prior to Closing, the Board of Directors of the Company shall, by
resolution duly adopted by such Board of Directors or a duly authorized
committee of "non-employee directors" thereof, approve and adopt, for purposes
of exemption from "short-swing" liability under Section 16(b) of the Exchange
Act, the conversion at the Effective Time of the shares of the Company Common
Stock held by officers and directors of the Company into shares of Parent Common
Stock as a result of the conversion of shares in the Merger, and the assumption
and cashout by Parent at the Effective Time of the Options of the officers and
directors of the Company. Such resolution shall set forth the name of the
applicable "insiders" for purposes of Section 16 of the Exchange Act and, for
each "insider," the number of shares of Company Common Stock to be converted
into shares of Parent Common Stock at the Effective Time, the number and
material terms of the Options to be assumed and cashed out by Parent at the
Effective Time, and that the approval is being granted to exempt the transaction
under Rule 16b-3 under the Exchange Act.
Section 6.19 Transfer of Assets. Prior to the Closing, the Company
shall transfer the assets set forth on Section 6.19 of the Company Disclosure
Schedule, on an as is, where is basis, with no warranties, to an entity in which
the Company has no equity interest. As consideration for such assets, such
entity shall assume the lease described on Section 6.19 of the Company
Disclosure Schedule (and obtain a release of the Company with respect thereto),
and shall assume all other obligations with respect to such leased premises,
including, without limitation, utilities, phone system, and equipment lease
obligations. Such transfer, assignment and release shall be in form and
substance reasonably satisfactory to Parent.
Section 6.20 Other Registration Statements. Parent shall perform, in
all material respects, its obligations under the Registration Rights Agreement
required to be performed prior to the Effective Time.
Section 6.21 Opinion of Financial Advisor. A true, correct and complete
copy of the written opinion delivered by Chase as set forth in Section 3.20,
which opinion shall be included in the Proxy Statement, has been delivered to
Parent by the Company.
Section 6.22 401(k) Plan Distributions. The Surviving Corporation and
its Subsidiaries shall, or Parent shall cause the Surviving Corporation and its
Subsidiaries to, cause a distribution of vested account balances from the
Company's 401(k) plan, to each employee participating in the plan who terminates
employment with the Company and all ERISA Affiliates after the Closing Date, as
soon as administratively feasible following such employee's termination of
employment, to the extent permissible under applicable law and not inconsistent
with any other contractual obligation of the Surviving Corporation, its
Subsidiaries or Parent; provided, however, the preceding shall not prohibit the
transfer of the assets and liabilities of any Company 401(k) plan to a 401(k)
plan of the Parent.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction or waiver at or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been adopted by
the requisite vote (as described in Section 3.5(b)) of the stockholders of the
Company in accordance with Applicable Law.
(b) Governmental Approvals. All authorizations, consents, orders,
declarations or approvals of, or filings with, or terminations or expirations of
waiting periods imposed by, any Governmental Entity, which the failure to
obtain, make or occur would have the effect of making the Merger or any of the
transactions contemplated hereby illegal or would have a Material Adverse Effect
on Parent or the Company (as the Surviving Corporation) or would materially
impair the operations of the Surviving Corporation, assuming the Merger had
taken place, shall have been obtained, shall have been made or shall have
occurred.
(c) Waiting Periods. The waiting period (and any extension thereof)
under the HSR Act, the Competition Act (Canada) and the Mexican Law, as
applicable shall have expired or been terminated and, as applicable, clearance
thereunder shall have been obtained.
(d) Registration Statement. The Registration Statement shall have
become effective in accordance with the provisions of the Securities Act. No
stop order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have been
initiated by the SEC.
(e) No Injunction. No Governmental Entity having jurisdiction over the
Company or Parent, or any of their respective Subsidiaries, shall have enacted,
issued, promulgated, enforced or entered any law, rule, regulation, executive
order, decree, injunction or other order (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making the Merger or
the Stock Voting Agreements illegal or otherwise prohibiting consummation of the
Merger.
Notwithstanding the foregoing provisions of this Section 7.1, if the
conditions set forth herein shall not be satisfied due to Parent's failure to
comply with Section 6.7(d) or (e), such failure shall not be excused by the
foregoing provisions of this Section 7.1 and such failure shall constitute a
material breach of this Agreement.
Section 7.2 Conditions to Obligation of Parent and Merger Sub to Effect
the Merger. The obligation of Parent and Merger Sub to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following additional conditions, unless waived in writing by Parent:
(a) Representations and Warranties. Each of the representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak expressly as of an earlier
date) as of the Effective Time as though made on and as of the Effective Time;
provided, however, that this condition shall be deemed to have been satisfied
unless the individual or aggregate impact of all inaccuracies of such
representations and warranties (without regard to any materiality or Material
Adverse Effect qualifier(s) contained in any and each such representation or
warranty) would have a Company Material Adverse Effect. Parent shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer and the Chief Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and Parent shall have
received a certificate signed on behalf of the Company by the Chief Executive
Officer or the Chief Financial Officer of the Company to such effect.
Section 7.3 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following additional
conditions, unless waived in writing by the Company:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak expressly as of
an earlier date) as of the Effective Time as though made on and as of the
Effective Time; provided, however, that this condition shall be deemed to have
been satisfied unless the individual or aggregate impact of all inaccuracies of
such representations and warranties (without regard to any materiality or
Material Adverse Effect qualifier(s) contained in any and each such
representation or warranty) would have a Parent Material Adverse Effect. The
Company shall have received a certificate signed on behalf of Parent by the
Chief Executive Officer and the Chief Financial Officer of Parent to such
effect.
(b) Performance of Obligations of Parent and Merger Sub. Each of Parent
and Merger Sub shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Effective
Time, and the Company shall have received a certificate signed on behalf of
Parent by the Chief Financial Officer of Parent to such effect.
(c) Stock Exchange Listing. The shares of Parent Common Stock to be
issued in the Merger or upon exercise of the Rollover Options shall have been
authorized for listing on the NYSE, subject to official notice of listing.
(d) Registration Rights Agreement. The Parent shall have complied in
all material respects with its obligations under the Registration Rights
Agreement required to be performed prior to the Effective Time.
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated, and the
Merger and the other transactions contemplated hereby may be abandoned, at any
time prior to the Effective Time, whether before or after adoption of this
Agreement by the stockholders of the Company under the following circumstances:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company, if (i) the Merger shall not have
been consummated on or before November 30, 2000, as such date may be extended by
the 15-day cure period provided for in Sections 8.1(d) and (f) (the "Termination
Date"), or (ii) the stockholders of the Company do not adopt this Agreement by
the requisite vote at a meeting duly convened therefor or any adjournment
thereof; provided that the party seeking to terminate this Agreement pursuant to
clause (i) of this Section 8.1(b) shall not have breached in any material
respect its obligations under this Agreement in any manner that shall have
proximately contributed to the failure to consummate the Merger on or before the
Termination Date; and provided, further, that Parent shall have no right to
terminate this Agreement under this clause (i) of this Section 8.1(b) if the
Merger shall not have become effective prior to the Termination Date due to
Parent's failure to comply with Section 6.7(d) or (e), which failure shall
constitute a material breach of this Agreement by Parent;
(c) by either Parent or the Company, if any permanent injunction,
order, decree or ruling by any Governmental Entity of competent jurisdiction
preventing the consummation of the Merger shall have become final and
nonappealable; provided, however, that the party seeking to terminate this
Agreement pursuant to this Section 8.1(c) shall have used reasonable best
efforts to remove such injunction or overturn such action; provided, further,
that Parent shall have no right to terminate this Agreement under this Section
8.1(c) if the Merger shall not become effective prior to the Termination Date
due to Parent's failure to comply with Section 6.7(d) or (e), which failure
shall constitute a material breach of this Agreement by Parent;
(d) by Parent, if (i) there has been a material breach of the
representations or warranties, covenants or agreements of the Company set forth
in this Agreement, which breach is not curable or, if curable, is not cured
within fifteen (15) days after written notice of such breach is given by Parent
to the Company; provided, however, that this termination right under this clause
(i) of this Section 8.1(d) shall not be available unless the individual or
aggregate impact of all inaccuracies of such representations and warranties
(without regard to any materiality or Material Adverse Effect qualifier(s)
contained in any and each such representation or warranty) would have a Company
Material Adverse Effect, or (ii) the Board of Directors of the Company (x) fails
to convene a meeting of the Company's stockholders to adopt this Agreement on or
before the later of (A) November 28, 2000, or (B) within 45 days (but not sooner
than 20 business days after the date the Proxy Statement is first mailed to
stockholders) following the date that the Registration Statement shall have
become effective and the Proxy Statement has been cleared by the SEC, or, in
either case, postpones the date scheduled for the meeting of the stockholders of
the Company to adopt this Agreement beyond such date, except, in either case (1)
with the written consent of Parent, or (2) if such failure or postponement is
due to a breach by Parent of this Agreement, (y) fails to recommend the adoption
of this Agreement to the Company's stockholders in accordance with Section
6.5(a) hereof, or (z) withdraws or amends or modifies in a manner adverse to
Parent its recommendation or approval in respect of this Agreement or the Merger
or fails to reconfirm such recommendation within two business days of a written
request for such confirmation by Parent;
(e) by the Company, prior to adoption of this Agreement by the
stockholders of the Company concurrently with the Company, entering into a
definitive acquisition, merger or similar agreement to effect a Superior
Proposal; provided, however, that the Company may not terminate this Agreement
pursuant to this subsection (e) unless (i) five days shall have elapsed after
delivery to Parent of a written notice of the Company's intention to so
terminate this Agreement and informing Parent of the terms and conditions of
such Superior Proposal and the identity of the person or group making such
Superior Proposal, and (ii) at the end of such five (5) day period, the Board of
Directors of the Company believes that such proposal for Superior Proposal is
still superior to the transaction contemplated under this Agreement as such may
be modified as proposed by Parent. During such five (5) day period, the Company
shall fully cooperate with Parent in a manner consistent with the fiduciary
duties of the Board of Directors with the intent of enabling Parent to agree to
propose for the consideration of the Company's Board of Directors a modification
of the terms and conditions of this Agreement so that the transactions
contemplated hereby may be effected; and
(f) by the Company, if there has been a material breach of any of the
representations or warranties, covenants or agreements of Parent or Merger Sub
set forth in this Agreement, which breach is not curable or, if curable, is not
cured within fifteen (15) days after written notice of such breach is given by
the Company to Parent; provided, however, that this termination right under this
Section 8.1(f) shall not be available unless the individual or aggregate impact
of all inaccuracies of such representations and warranties (without regard to
any materiality or Material Adverse Effect qualifier(s) contained in any and
each such representation or warranty) would have a Parent Material Adverse
Effect.
Section 8.2 Effect of Termination.
(a) In the event of termination of this Agreement pursuant to this
Article VIII, the Merger shall be deemed abandoned and this Agreement shall
forthwith become void, except that the provisions of Section 6.10, this Section
8.2, Article IX and the terms of the Confidentiality Agreement shall survive any
termination of this Agreement; provided, however, that nothing in this Agreement
shall relieve any party from liability for any breach of this Agreement;
provided that, subject to Section 8.2(d), nothing herein shall relieve any party
from liability for any breaches hereof which at a minimum shall be the
reasonable expenses incurred by of the non-breaching party in connection with
the transactions contemplated herein.
(b) If (A) Parent shall have terminated this Agreement pursuant to
Section 8.1(d)(ii) (x), (y) or (z), or (B) the Company shall have terminated
this Agreement pursuant to Section 8.1(e), then, in any such case, the Company
shall pay Parent within one (1) business day following such termination, a
termination fee of $50,000,000, payable by wire transfer of immediately
available funds to an account designated by Parent.
(c) If Parent or Company shall have terminated this Agreement pursuant
to Section 8.1(b)(ii), and within twelve (12) months after the date of such
termination the Company (i) consummates a Takeover Proposal, or (ii) enters into
a Definitive Agreement to do so (or a tender offer with respect thereto is
commenced), then, in any such case, the Company shall pay Parent, within one (1)
business day following consummation of any Takeover Proposal, a termination fee
of $50,000,000, payable by wire transfer of immediately available funds to an
account designated by Parent.
(d) Notwithstanding anything to the contrary contained herein, receipt
by Parent of the amounts payable pursuant to Section 8.2(b) or Section 8.2(c)
shall constitute full settlement of any and all liabilities of the Company for
damages under this Agreement in respect of a termination of this Agreement
pursuant to Sections 8.1(d)(ii)(x), (y) or (z), 8.1(e), or 8.1(b)(ii).
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Amendment and Modification. At any time prior to the
Effective Time, whether before or after adoption of this Agreement by the
stockholders of the Company, this Agreement may be amended, modified or
supplemented by written agreement (referring specifically to this Agreement) of
Parent and the Company with respect to any of the terms contained herein;
provided, however, that after adoption of this Agreement by the stockholders of
the Company, no such amendment, modification or supplementation shall be made
which under Applicable Law requires the approval of such stockholders, without
the further approval of such stockholders.
Section 9.2 Waiver. At any time prior to the Effective Time, Parent, on
the one hand, and the Company, on the other hand, may (i) extend the time for
the performance of any of the obligations or other acts of the other, (ii) waive
any inaccuracies in the representations and warranties of the other contained
herein or in any documents delivered pursuant hereto and (iii) waive compliance
by the other with any of the agreements or conditions contained herein which may
legally be waived. Any such extension or waiver shall be valid only if set forth
in an instrument in writing specifically referring to this Agreement and signed
on behalf of such party.
Section 9.3 Survivability; Investigations. The respective
representations and warranties of Parent and Merger Sub, on the one hand, and
the Company, on the other hand, contained herein or in any certificates or other
documents delivered prior to or as of the Effective Time (i) shall not be deemed
waived or otherwise affected by any investigation made by any party hereto and
(ii) shall not survive beyond the Effective Time. The covenants and agreements
of the parties hereto (including the Surviving Corporation after the Merger)
shall survive the Effective Time, without limitation (except for those which, by
their terms, contemplate a shorter survival period).
Section 9.4 Notices. All notices and other communications hereunder
shall be in writing and shall be delivered personally or by next-day courier or
telecopied with confirmation of receipt, to the parties at the addresses
specified below (or at such other address for a party as shall be specified by
like notice; provided that notices of a change of address shall be effective
only upon receipt thereof). Any such notice shall be effective upon receipt, if
personally delivered or telecopied, or one day after delivery to a courier for
next-day delivery.
If to Parent or Merger Sub, to:
ConAgra, Inc.
One ConAgra Drive
Omaha, Nebraska, 68102
Attention: Dwight J. Goslee
Telephone: (402) 595-4091
Telecopier: (402) 595-4709
with copies to:
McGrath, North, Mullin & Kratz, P.C.
1400 One Central Park Plaza
222 South Fifteenth Street
Omaha, Nebraska, 68102
Attention: Roger W. Wells
Telephone: (402) 341-3070
Telecopier: (402) 341-0216
If to the Company, to:
International Home Foods, Inc.
1633 Littleton Road
Parsippany, New Jersey, 07054
Attention: General Counsel
Telephone: (973) 359-9920
Telecopier: (973) 254-5897
with a copy to:
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: A. Winston Oxley
Telephone: (214) 220-7700
Telecopier: (214) 220-7716
Section 9.5 Descriptive Headings; Interpretation. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. References in this
Agreement to Sections, Exhibits or Articles mean a Section, Exhibit or Article
of this Agreement unless otherwise indicated. References to this Agreement shall
be deemed to include the Exhibits hereto, the Company Disclosure Schedule,
unless the context otherwise requires. The term "person" shall mean and include
an individual, a partnership, a joint venture, a corporation, a limited
liability company, a trust, a Governmental Entity or an unincorporated
organization. The disclosure of any matter in any section of the Company
Disclosure Schedule shall not be deemed to constitute an admission by any party
or to otherwise imply that any such matter is material or may have a Company
Material Adverse Effect for purposes of this Agreement.
Section 9.6 Entire Agreement. This Agreement (including the Exhibits,
the Company Disclosure Schedule, the Stock Voting Agreement and the Registration
Rights Agreement), together with the Confidentiality Agreement, constitutes the
entire agreement between the parties and supersedes all other prior agreements
and understandings, both written and oral, among the parties or any of them,
with respect to the subject matter hereof.
Section 9.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to the provisions thereof relating to conflicts of law.
Section 9.8 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated by this Agreement, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court and (c) agrees that it will not bring any
action relating to this Agreement or any of the transactions contemplated by
this Agreement in any court other than a federal or state court sitting in the
State of Delaware.
Section 9.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
Section 9.10 Assignment; Third-Party Beneficiaries. This Agreement and
the rights, interests and obligations hereunder shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns;
provided, however, that no party hereto may assign or otherwise transfer its
rights, interests or obligations hereunder without the prior written consent of
the other parties hereto. Except for the provisions of Article II and Section
6.9, nothing in this Agreement is intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
Section 9.11 No Recourse Against Others. Each of the following is
herein referred to as a "Company Affiliate:" (a) any direct or indirect holder
of any equity interests or securities in the Company (whether limited or general
partners, members, stockholders, or otherwise), (b) any Affiliate of the
Company, or (c) any director, officer, employee, representative or agent of (i)
the Company, (ii) any Affiliate of the Company, or (iii) any such holder of
equity interests or securities referred to in clause (a) above. Except to the
extent that a Company Affiliate is an express signatory party thereto, no
Company Affiliate shall have any liability or obligation of any nature
whatsoever in connection with or under this Agreement, the Stock Voting
Agreements or the Registration Rights Agreement or the transactions contemplated
hereby or thereby, and Parent and Merger Sub hereby waive and release all claims
of any such liability and obligation, except as set forth below. Notwithstanding
the provisions of the preceding sentence, Parent and Merger Sub neither waive
nor release, any claims that they may otherwise have against any Company
Affiliate for such Company Affiliate's actual, intentional misrepresentation (a)
of any fact to the Company's independent auditors, or any item reflected in the
Company's SEC Documents or Subsequent SEC Documents, and (b) to the extent that
such misrepresentation has caused the Company SEC Documents or Subsequent SEC
Documents to materially misstate the financial position of the Company and its
consolidated Subsidiaries, at such date, or the consolidated results of their
operations and their consolidated cash flow for the period then ended.
Section 9.12 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 9.13 Attorneys' Fees. If any action or law or equity, including
an action for declaratory relief, is brought to enforce or interpret any
provision of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and expenses from the other party, which fees and
expenses shall be in addition to any other relief which may be awarded.
<PAGE>
IN WITNESS WHEREFORE, Parent, Merger Sub and the Company have caused
this Agreement and Plan of Merger to be executed on its behalf by their
respective officers thereunto duly authorized, all as of the date first above
written.
CONAGRA, INC.
By: /s/ Bruce C. Rohde
Its: Chairman and Chief Executive Officer
CAG ACQUISITION SUB, INC.
By: /s/ Bruce C. Rohde
Its: President
INTERNATIONAL HOME FOODS, INC.
By: /s/ C. Dean Metropoulos
Its: Chief Executive Officer
<PAGE>
ANNEX B
OPINION OF CHASE SECURITIES INC.
Chase Securities Inc.
270 Park Avenue
New York, NY 10017-2070
June 22, 2000
Board of Directors
International Home Foods, Inc.
100 Northfield Street
Greenwich, CT 06830
Members of the Board:
You have informed us that International Home Foods, Inc. (the "Company"),
ConAgra, Inc. ("Parent") and CAG Acquisition Sub, Inc. ("Merger Sub"), a direct
wholly-owned subsidiary of Parent, propose to enter into an Agreement and Plan
of Merger dated as of June 22, 2000 (the "Agreement") which provides, among
other things, that a merger will occur between the Company and the Merger Sub
(the "Merger"). Pursuant to the Agreement, the shareholders of the Company will
receive for each share of common stock of the Company, par value $.01 per share
("Company Common Stock"), (i) $11.00 in cash (the "Per Share Cash
Consideration") and (ii) a certain number of shares of common stock of Parent,
par value $5.00 per share ("Parent Common Stock") equal to an exchange ratio
calculated pursuant to the Agreement (the "Per Share Stock Consideration"). The
Per Share Cash Consideration and the Per Share Stock Consideration are together
(and not separately) referred to herein as the "Merger Consideration." As set
forth more fully in the Agreement, the Per Share Stock Consideration shall be
determined by dividing $11.00 by the average closing price of the Parent Common
Stock on the NYSE Composite Transactions List for the ten full trading days
ending on the fifth full trading day immediately preceding the Closing Date of
the Merger (the "Actual Average Trading Price"), provided however in no event
shall the Average Trading Price (as defined in the Agreement) utilized for
purposes of calculating the Per Share Stock Consideration be greater than $22.00
(which will result in the minimum exchange ratio (the "Exchange Ratio Floor"))
nor less than $18.00 (which will result in the maximum exchange ratio (the
"Exchange Ratio Cap")).
You have requested that we render our opinion as to the fairness, from a
financial point of view, to the holders of Company Common Stock of the Merger
Consideration in the Merger.
In arriving at the opinion set forth below, we have, among other things:
(a) reviewed a draft of the Agreement in the form provided to us
and have assumed that the final form of such agreement will
not vary in any regard that is material to our analysis;
(b) reviewed certain publicly available business and financial
information we deemed relevant relating to the Company and
Parent and the respective industries in which they operate;
(c) reviewed certain internal non-public financial and operating
data provided to us by the management of the Company relating
to the Company's business, including certain forecast and
projection information as to the future financial results of
such business;
(d) discussed with members of the senior management of the Company
and Parent, the Company's and Parent's operations, historical
financial statements and future prospects, before and after
giving effect to the Merger, as well as their views of the
business, operational and strategic benefits and other
implications of the Merger and such other matters as we deemed
necessary or appropriate;
(e) compared the financial and operating performance of the
Company and Parent with publicly available information
concerning certain other companies we deemed comparable and
reviewed the relevant historical stock prices of Company
Common Stock, Parent Common Stock and certain publicly traded
securities of such other companies;
(f) reviewed the financial terms of certain recent business
combinations and acquisition transactions we deemed reasonably
comparable to the Merger and otherwise relevant to our
inquiry; and
(g) made such other analyses and examinations as have deemed
necessary or appropriate.
We have assumed and relied upon, without assuming any responsibility for
verification, the accuracy and completeness of all of the financial and other
information provided to, discussed with, or reviewed by or for us, or publicly
available, for purposes of this opinion and have further relied upon the
assurances of managements of the Company and Parent that they are not aware of
any facts that would make such information inaccurate or misleading. We have
neither made nor obtained any independent evaluations or appraisals of the
assets or liabilities of the Company or Parent, nor have we conducted a physical
inspection of the properties and facilities of the Company or Parent. We have
assumed that the financial forecast and projection information provided to or
discussed with us by or on behalf of the Company and Parent have been reasonably
determined on bases reflecting the best currently available estimates and
judgments of the managements of the Company and Parent as to the future
financial performance of such companies, including after giving effect to the
Merger. We have further assumed that, in all material respects, such forecasts
and projections will be realized in the amounts and times indicated thereby. We
express no view as to such forecast or projection information or the assumptions
upon which they were based.
For purposes of rendering our opinion we have assumed, in all respects
material to our analysis, that the representations and warranties of each party
contained in the Agreement are true and correct, that each party will perform
all of the covenants and agreements required to be performed by it under the
Agreement and that all conditions to the consummation of the Merger will be
satisfied without waiver thereof. We have also assumed that all material
governmental, regulatory or other consents and approvals will be obtained and
that in the course of obtaining any necessary governmental, regulatory or other
consents and approvals, or any amendments, modifications or waivers to any
documents to which either of the Company or Parent is party, as contemplated by
the Agreement, no restrictions will be imposed or amendments, modifications or
waivers made that would have any material adverse effect on the contemplated
benefits to the Company or Parent of the Merger. We have also assumed that the
Merger is consummated under circumstances where the Actual Average Trading Price
is not less than the Average Trading Price used under the Agreement to determine
the Per Share Stock Consideration as a result of the Exchange Ratio Cap.
In connection with the preparation of this opinion, we have not been
authorized by the Company or the Board of Directors to solicit, nor have we
solicited, third party indications of interest for the acquisition of all or any
part of the Company.
Our opinion herein is necessarily based on market, economic and other
conditions as they exist and can be evaluated on the date of this letter. Our
opinion is limited to the fairness, from a financial point of view, to the
holders of Company Common Stock of the Merger Consideration to be received in
the Merger and we express no opinion as to the merits of the underlying decision
by the Company to engage in the Merger. We express no opinion on matters of a
tax, accounting or legal nature related to the Merger. This opinion does not
constitute a recommendation to any shareholder of the Company as to how such
shareholder should vote (or agree to vote) with respect to the Merger, or any
other matters related thereto. In addition, we express no opinion as to the
prices at which the Company Common Stock or Parent Common Stock will trade
following the announcement or the consummation of the Merger.
Chase Securities Inc., as part of its financial advisory business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions and valuations for estate, corporate
and other purposes. We have acted as financial advisor to the Company in
connection with the Merger and will receive a fee for our services, including
for rendering this opinion, payment of a portion of which is contingent upon the
consummation of the Merger. In addition, the Company has agreed to indemnify us
for certain liabilities arising out of our engagement. As we have previously
advised you, The Chase Manhattan Corporation and its affiliates, including Chase
Securities Inc., in the ordinary course of business, have from time to time,
provided, and in the future may continue to provide, for customary compensation,
commercial and investment banking services to the Company, Hicks, Muse, Tate &
Furst Incorporated and Parent and their respective affiliates. In the ordinary
course of business, we or our affiliates may own, manage or trade in the debt
and equity securities of the Company and Parent and their respective affiliates,
for our own accounts and for the accounts of our customers and, accordingly, may
at any time hold a long or short position in such securities.
Based upon and subject to the foregoing, we are of the opinion, as of the
date hereof, that the Merger Consideration in the Merger is fair, from a
financial point of view, to the holders of Company Common Stock.
This opinion is for the use and benefit of the Board of Directors of the
Company in its evaluation of the Merger and shall not be used for any other
purpose without the prior written consent of Chase Securities Inc.
Very truly yours,
/s/ Chase Securitis Inc.
CHASE SECURITIES INC.
<PAGE>
ANNEX C
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
SECTION 262 Appraisal Rights -- (a) Any stockholder of a corporation of
this State who holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with respect to such shares, who
continuously holds such shares through the effective date of the merger or
consolidation, who has otherwise complied with subsection (d) of this section
and who has neither voted in favor of the merger or consolidation nor consented
thereto in writing pursuant to Sec. 228 of this title shall be entitled to an
appraisal by the Court of Chancery of the fair value of the stockholder's shares
of stock under the circumstances described in subsections (b) and (c) of this
section. As used in this section, the word "stockholder" means a holder of
record of stock in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what is ordinarily
meant by those words and also membership or membership interest of a member of a
nonstock corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Sec. 251 (other than a merger effected pursuant to Sec.
251(g) of this title), Sec. 252, Sec. 254, Sec. 257, Sec. 258, Sec. 263 or Sec.
264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or
series of stock, which stock, or depository receipts in
respect thereof, at the record date fixed to determine the
stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities
exchange or designated as a national market system security on
an interdealer quotation system by the National Association of
Securities Dealers, Inc. or (ii) held of record by more than
2,000 holders; and further provided that no appraisal rights
shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of Sec. 251 of this
title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the
shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the terms
of an agreement of merger or consolidation pursuant to Sec.
251, 252, 254, 257, 258, 263 and 264 of this title to accept
for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation, or
depository receipts in respect thereof;
b. Shares of stock of any other corporation, or
depository receipts in respect thereof, which
shares of stock (or depository receipts in
respect thereof) or depository receipts at the
effective date of the merger or consolidation will
be either listed on a national securities exchange
or designated as a national market system security
on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional
depository receipts described in the foregoing
subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or
fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under Sec. 253 of this
title is not owned by the parent corporation immediately prior
to the merger, appraisal rights shall be available for the
shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal
rights are provided under this section is to be submitted for
approval at a meeting of stockholders, the corporation, not
less than 20 days prior to the meeting, shall notify each of
its stockholders who was such on the record date for such
meeting with respect to shares for which appraisal rights are
available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of
the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand
the appraisal of such stockholder's shares shall deliver to
the corporation, before the taking of the vote on the merger
or consolidation, a written demand for appraisal of such
stockholder's shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand
the appraisal of such stockholder's shares. A proxy or vote
against the merger or consolidation shall not constitute such
a demand. A stockholder electing to take such action must do
so by a separate written demand as herein provided. Within 10
days after the effective date of such merger or consolidation,
the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or
consented to the merger or consolidation of the date that the
merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to
Sec. 228 or Sec. 253 of this title, each constituent
corporation, either before the effective date of the merger or
consolidation or within ten days thereafter, shall notify each
of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that
appraisal rights are available for any or all shares of such
class or series of stock of such constituent corporation, and
shall include in such notice a copy of this section; provided
that, if the notice is given on or after the effective date of
the merger or consolidation, such notice shall be given by the
surviving or resulting corporation to all such holders of any
class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given
on or after the effective date of the merger or consolidation,
shall, also notify such stockholders of the effective date of
the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or
resulting corporation the appraisal of such holder's shares.
Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of such
holder's shares. If such notice did not notify stockholders of
the effective date of the merger or consolidation, either (i)
each such constituent corporation shall send a second notice
before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal
rights of the effective date of the merger or consolidation or
(ii) the surviving or resulting corporation shall send such a
second notice to all such holders on or within 10 days after
such effective date; provided, however, that if such second
notice is sent more than 20 days following the sending of the
first notice, such second notice need only be sent to each
stockholder who is entitled to appraisal rights and who has
demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant
secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given
shall, in the absence of fraud, be prima facie evidence of the
facts stated therein. For purposes of determining the
stockholders entitled to receiver either notice, each
constituent corporation may fix, in advance, a record date
that shall be not more than 10 days prior to the date the
notice is given, provided, that if the notice is given on or
after the effective date of the merger or consolidation, the
record date shall be such effective date. If no record date is
fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw such stockholder's demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10 days
after such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted
such stockholder's certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any stockholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(1) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
<PAGE>
INTERNATIONAL HOME FOODS, INC.
1633 Littleton Road
Parsippany, New Jersey 07054
Proxy for Special Meeting of Stockholders to be held ___________, ____.
This proxy is solicited by the board of directors of International Home
Foods, Inc.
The undersigned hereby appoints ____________ and ____________, and each of
them, proxies or proxy with full power of substitution and revocation as to each
of them, to represent the undersigned and to act and vote all of the shares of
common stock of International Home Foods, Inc. the undersigned is entitled to
vote at the Special Meeting of Stockholders of International Home Foods, Inc. to
be held on the ____ day of __________, ____, at __________m., local time, at
____________________________, on the following matters and in their discretion
on any other matters which may come before the meeting or any adjournments or
postponements thereof. Receipt of the proxy statement dated _________________,
2000 is acknowledged.
PLEASE MARK, SIGN AND DATE THE REVERSE SIDE OF THIS PROXY
AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(continued on other side)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED Please mark
IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. your vote as
IN THE ABSENCE OF SUCH DIRECTION, THIS PROXY WILL BE VOTED indicated in [X]
"FOR" ITEM 1. this example.
This proxy is solicited by the board of directors of International Home Foods,
Inc.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
1. To approve and adopt the Agreement and Plan of Merger dated as of June 22,
2000, among ConAgra, Inc., CAG Acquisition Sub, Inc. and International Home
Foods, Inc.
[ ] FOR AGAINST ABSTAIN
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the special meeting and at any and all
adjournments or postponements thereof.
--------------------------------------
Signature
--------------------------------------
Signature if held jointly
Dated: ________________________, _____
Please sign exactly as name appears
herein, date and return promptly. When
shares are held by joint tenants, both
must sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such. If a corporation, please sign in
full corporate name by duly authorized
officer and give title of officer. If
a partnership, please sign in
partnership name by authorized person
and give title or capacity of person
signing.
