<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-4
RULE 13E-4 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934)
PRO-FAC COOPERATIVE, INC.
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(Name of Issuer)
PRO-FAC COOPERATIVE, INC.
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(Name of Person(s) Filing Statement)
NON-CUMULATIVE PREFERRED STOCK, PAR VALUE $25.00 PER SHARE
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(Title of Classes of Securities)
Not applicable
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(CUSIP Number of Classes of Securities)
STEPHEN R. WRIGHT
PRO-FAC COOPERATIVE, INC.
90 LINDEN PLACE
P.O. BOX 682
ROCHESTER, NEW YORK 14603
(716) 383-1850
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(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of the Person(s) Filing Statement)
COPIES TO:
KELLY VANCE, ESQ.
HOWARD, DARBY & LEVIN
1330 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
TELEPHONE: (212) 841-1000
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AUGUST 23, 1995
(Date Tender Offer First Published
Sent or Given to Security Holders)
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Page 1 of __ Pages
Exhibit Index begins on Page 7
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This statement is filed in connection with (check the appropriate box):
a. [ ] The filing of solicitation materials or an information statement subject
to Regulation 14A, Regulation 14(C) or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. [ ] The Filing of a registration statement under the Securities Act of 1933.
c. [X] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [ ]
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
<S> <C>
$76,083,125 $15,217.00
</TABLE>
* Estimated for purposes of calculating the amount of filing fee only. The
amount assumes the exchange of 3,043,325 shares of Non-Cumulative Preferred
Stock, based on the book value at June 24, 1995 of $25.00 per share. Such number
of shares represents all of the shares of Non-Cumulative Preferred Stock
outstanding as of June 24, 1995.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: None.
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
<PAGE>
Item 1. Security and Issuer.
(a) The name of the issuer is Pro-Fac Cooperative, Inc., a New York
cooperative corporation ("Pro-Fac"), and the address of its principal executive
offices is 90 Linden Place, P.O. Box 682, Rochester, New York 14603.
(b) This Schedule 13E-4 relates to the offer by Pro-Fac to exchange one
share of its Class A Cumulative Preferred Stock, par value $1.00 per share (the
"Cumulative Stock"), for each outstanding share of its Non-Cumulative Preferred
Stock, par value $25.00 per share (collectively, the "Shares"), upon the terms
and subject to the conditions set forth in the Offering Circular dated August
23, 1995 (the "Offering Circular") and in the related Letter of Transmittal,
copies of which are attached hereto as Exhibits (a)(1) and (a)(2) (which,
together with any amendments or supplements thereto, collectively constitute the
"Exchange Offer"). As indicated in the Offering Circular under the headings "The
Exchange Offer -- Interests of Certain Persons; Transactions", Pro-Fac has been
advised by its directors and executive officers who hold Shares that such
directors and executive officers intend to tender their Shares pursuant to the
Exchange Offer. The information set forth under the heading "The Exchange Offer
-- Terms of the Exchange Offer" in the Offering Circular is incorporated herein
by reference.
(c) There is no active trading market for the Shares. The information
set forth in the Offering Circular under the heading "The Exchange Offer --
Background and Purpose of Exchange Offer" is incorporated herein by reference.
(d) Not applicable.
Item 2. Source and Amount of Funds or Other Consideration.
(a) See Item 1(b) above.
(b) Not applicable.
Item 3. Purpose of the Tender Offer and Plans or Proposals
of the Issuer or Affiliate.
(a)-(j) The Shares accepted for exchange and exchanged pursuant to the
Exchange Offer will be cancelled by Pro-Fac. In addition, the information set
forth in the Offering Circular under the headings "Summary -- Purpose of the
Exchange Offer", "The Exchange Offer -- Background and Purpose of Exchange
Offer", "The Exchange Offer -- Certain Effects of the Exchange Offer", "Certain
Tax Consequences", "Description of Preferred Stock", "Pro- Fac Cooperative, Inc.
-- Financing of Acquisition", "Pro-Fac Cooperative, Inc. -- Business of
Curtice-Burns" and "Capitalization" is incorporated herein by reference.
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<PAGE>
Item 4. Interest in Securities of the Issuer.
Not applicable.
Item 5. Contracts, Arrangements, Understandings or Relation-
ships with Respect to the Issuer's Securities.
Not applicable.
Item 6. Persons Retained, Employed or to be Compensated.
The information set forth in the Offering Circular under the heading
"The Exchange Offer -- Solicitations of Tenders; Fees" is incorporated herein by
reference.
Item 7. Financial Information.
(a)-(b) The information set forth in the Offering Circular under
the heading "Pro-Fac Cooperative, Inc. -- Financial Information" and
"Capitalization", the consolidated financial statements of Pro-Fac Cooperative,
Inc. in its Annual Report on Form 10-K for the fiscal year ended June 25, 1994
and its Quarterly Report on Form 10-Q for the fiscal quarter ended March 25,
1995, and the historical consolidated financial statements of Pro-Fac and
Curtice-Burns Foods, Inc. included in Pro-Fac's Registration Statement on Form
S-1, filed with the Securities and Exchange Commission on June 15, 1995, are
incorporated herein by reference.
Item 8. Additional Information.
(a)-(d) Not applicable.
(e) The information set forth in (i) the Offering Circular, including
the exhibits thereto, and (ii) the Letter of Transmittal is incorporated herein
by reference.
Item 9. Material to be Filed as Exhibits.
(a)(1) Offering Circular dated August 23, 1995.
(a)(2) Form of Letter of Transmittal (including Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9).
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter from Pro-Fac to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
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<PAGE>
(a)(6) Form of Letter from Bruce R. Fox, President of Pro-Fac Cooperative,
Inc., to the Holders of the Non-Cumulative Preferred Stock.
(a)(7) Text of press release issued by Pro-Fac dated August 23, 1995.
(a)(8) Form of "Statement of Preferred Stock" distributed to each holder of
Non-Cumulative Preferred Stock with respect to such holder's ownership
of shares of Non-Cumulative Preferred Stock.
(b) Not applicable.
(c) Not applicable.
(d) None.
(e) Not applicable.
(f) Guidelines Regarding Exchange Offer Questions and Answers for use in
making oral solicitation of holders of Non-Cumulative Preferred Stock.
(g) Supplemental Exhibits:
(g)(i) Material incorporated by reference under Item 7:
(A) consolidated financial statements of Pro-Fac Cooperative, Inc.
in its Annual Report on Form 10-K for the fiscal year ended June 25,
1994 and its Quarterly Report on Form 10-Q for the fiscal quarter ended
March 25, 1995, and
(B) historical consolidated financial statements of Pro-Fac
Cooperative, Inc. and Curtice-Burns Foods, Inc. included in Pro-Fac's
Registration Statement on Form S-1, No. 33-60273, filed with the
Securities and Exchange commission on June 15, 1995.
(g)(ii) Form of Letter from Stephen R. Wright, General Manager of Pro-Fac
Cooperative, Inc., to Holders of Liens on Pro-Fac Non-Cumulative
Preferred Stock.
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<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: August 23, 1995
PRO-FAC COOPERATIVE, INC.
By /s/ STEPHEN R. WRIGHT
----------------------------
Name: Stephen R. Wright
Title: General Manager
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Exhibit Name Number
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(a)(1) Offering Circular dated August 23, 1995.
(a)(2) Form of Letter of Transmittal (including Guidelines for
Certification of Taxpayer Identification Number on Substitute Form
W-9).
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter from Pro-Fac to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(a)(6) Form of Letter from Bruce R. Fox, President of Pro-Fac Cooperative,
Inc., to the Holders of the Non-Cumulative Preferred Stock.
(a)(7) Text of press release issued by Pro-Fac dated August 23, 1995.
(a)(8) Form of "Statement of Preferred Stock" distributed to each holder of
Non-Cumulative Preferred Stock with respect to such holder's
ownership of shares of Non-Cumulative Preferred Stock.
(b) Not applicable.
(c) Not applicable.
(d) None.
(e) Not applicable.
(f) Guidelines Regarding Exchange Offer Questions and Answers for use in
making oral solicitation of holders of Non-Cumulative Preferred
Stock.
(g)(i)(A) Financial statements of Pro-Fac Cooperative, Inc. set forth in its
Annual Report on Form 10-K for the fiscal year ended June 25, 1994
and its Quarterly Report on Form 10-Q for the fiscal quarter ended
March 25, 1995 are hereby incorporated herein by reference.
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
(g)(i)(B) Historical consolidated financial statements of Pro-Fac Cooperative,
Inc. and Curtice-Burns Foods, Inc. set forth in the Registration
Statement on Form S-1, No. 33-60273 of Pro-Fac Cooperative, Inc.,
filed with the Securities and Exchange Commission on June 15, 1995
are hereby incorporated herein by reference.
(g)(ii) Form of Letter from Stephen R. Wright, General Manager of Pro-Fac
Cooperative, Inc., to Holders of Liens on Pro-Fac Non-Cumulative
Preferred Stock.
</TABLE>
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<PAGE>
OFFERING CIRCULAR
PRO-FAC COOPERATIVE, INC.
OFFER TO EXCHANGE
ONE SHARE OF ITS
CLASS A CUMULATIVE PREFERRED STOCK
(liquidation preference $25 per share)
FOR EACH SHARE OF ITS
NON-CUMULATIVE PREFERRED STOCK
(liquidation preference $25 per share)
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THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON TUESDAY, OCTOBER 10, 1995, UNLESS THE EXCHANGE OFFER IS EXTENDED.
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Pro-Fac Cooperative, Inc., a New York cooperative corporation ("Pro-Fac"),
hereby offers to exchange one share of its Class A Cumulative Preferred Stock,
liquidation preference $25 per share (the "Cumulative Preferred Stock"), for
each share of its Non-Cumulative Preferred Stock, liquidation preference $25 per
share (the "Non-Cumulative Preferred Stock"), upon the terms and subject to the
conditions set forth in this Offering Circular and in the related Letter of
Transmittal (which, together, constitute the "Exchange Offer").
There is no active trading market for the Non-Cumulative Preferred Stock.
The Cumulative Preferred Stock will be issued upon consummation of the
Exchange Offer. Pro-Fac has applied to include, and received conditional
approval for inclusion of, the Cumulative Preferred Stock on the National Market
System of the National Association of Securities Dealers Automated Quotation
System ("NASDAQ").
--------------------------
THE EXCHANGE OFFER IS CONDITIONED UPON THERE BEING VALIDLY TENDERED BY THE
EXPIRATION DATE AND NOT WITHDRAWN A MINIMUM OF 500,000 SHARES OF NON-CUMULATIVE
PREFERRED STOCK.
HOLDERS OF NON-CUMULATIVE PREFERRED STOCK SHOULD CONSIDER THAT, ALTHOUGH THE
LIQUIDITY OF TRADING IN THE NON-CUMULATIVE PREFERRED STOCK IS ALREADY LIMITED,
SUCH LIQUIDITY AND THE TRADING PRICES OF THE NON-CUMULATIVE PREFERRED STOCK WILL
LIKELY BE FURTHER ADVERSELY AFFECTED BY THE EXCHANGE OFFER.
--------------------------
Any stockholder desiring to tender all or any portion of his Non-Cumulative
Preferred Stock should either (1) complete and sign the Letter of Transmittal
(or a facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver it to IBJ Schroder Bank & Trust Company (the
"Exchange Agent"), together with all other required documents, including, in the
case of shares of Non-Cumulative Preferred Stock represented by certificates,
such certificates or (2) request his broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for him. A stockholder having
shares of Non-Cumulative Preferred Stock registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such person
if he desires to tender such shares. In the case of shares of Non-Cumulative
Preferred Stock that are represented by certificates, and which certificates are
not immediately available, stockholders desiring to tender such Non-Cumulative
Preferred Stock may do so by following the procedures for guaranteed delivery
set forth under the heading "The Exchange Offer -- Procedure for Tendering
Non-Cumulative Preferred Stock" of this Offering Circular. Non-Cumulative
Preferred Stock may not be transferred by book-entry transfer through a
book-entry transfer facility.
Questions and requests for assistance may be directed to the Exchange Agent
at its addresses and telephone numbers set forth on the back cover of this
Offering Circular. Additional copies of this Offering Circular and the Letter of
Transmittal and other related materials may be obtained from the Exchange Agent.
--------------------------
The date of this Offering Circular is August 23, 1995
--------------------------
<PAGE>
This Offering Circular does not constitute an offer for exchange or a
solicitation of an offer for exchange of any securities other than the
securities covered by this Offering Circular, by Pro-Fac or any other person.
The Exchange Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Non-Cumulative Preferred Stock in any jurisdiction in
which the making of the Exchange Offer or acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, Pro-Fac may, in its
discretion, take such action as it may deem necessary to make the Exchange Offer
in any such jurisdiction and extend the Exchange Offer to holders of
Non-Cumulative Preferred Stock in such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THOSE CONTAINED
HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION
AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY PRO-FAC.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION"), NOR HAS THE COMMISSION PASSED UPON THE
FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THIS
INFORMATION CONTAINED IN THIS OFFERING CIRCULAR. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
The Exchange Offer is being made by Pro-Fac in reliance on the exemption
from the registration requirements of the Securities Act of 1933, as amended,
afforded by Section 3(a)(9) thereof. Pro-Fac therefore will not pay any
commission or other remuneration to any broker, dealer, salesman or other person
for soliciting tenders of shares of the Non-Cumulative Preferred Stock. Regular
employees of Pro-Fac may solicit exchanges from the holders of the
Non-Cumulative Preferred Stock, but they will not receive additional
compensation therefor.
AVAILABLE INFORMATION
Pro-Fac is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Act"), and the rules and regulations
promulgated thereunder, and in accordance therewith files reports and other
information with the Commission. Pro-Fac has filed with the Commission its
Annual Report on From 10-K for the year ended June 25, 1994 and its Quarterly
Report on Form 10-Q for each of the quarter ended September 24, 1994, the
quarter ended December 24, 1994, as amended, and the quarter ended March 25,
1995. These reports, and other information filed by Pro-Fac with the Commission,
may be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and will also be available for inspection and copying at the regional
offices of the Commission located at 7 World Trade Center, New York, New York
10048 and at Northwestern Atrium Center, 500 West Madison Street (Suite 1400),
Chicago, Illinois 60661. Copies of such material also may be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates.
Pro-Fac has filed with the Commission a Transaction Statement on Schedule
13E-4, together with exhibits, pursuant to Rule 13e-4 of the General Rules and
Regulations under the Act, furnishing certain additional information with
respect to the Exchange Offer. The Schedule 13E-4 and any amendments thereto,
including exhibits, may be examined and copies may be obtained from the offices
of the Commission in the manner set forth above (except that such information
will not be available at the regional offices of the Commission).
<PAGE>
TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C>
SUMMARY ........................................................... 1
SUMMARY COMPARISON OF NON-CUMULATIVE AND
CUMULATIVE PREFERRED STOCK ...................................... 4
THE EXCHANGE OFFER ................................................ 5
Terms of the Exchange Offer ..................................... 5
Background and Purpose of Exchange Offer ........................ 6
Certain Effects of the Exchange Offer ........................... 7
Procedure for Tendering Non-Cumulative Preferred Stock .......... 8
Withdrawal Rights ............................................... 10
Acceptance for Exchange and Exchange ............................ 11
Extension of Exchange Offer Period;
Termination; Amendments ....................................... 12
Certain Conditions of the Exchange Offer ........................ 13
Solicitations of Tenders; Fees .................................. 14
Interests of Certain Persons; Transactions ...................... 15
CERTAIN TAX CONSEQUENCES .......................................... 15
DESCRIPTION OF PREFERRED STOCK .................................... 16
Non-Cumulative Preferred Stock .................................. 17
Cumulative Preferred Stock ...................................... 20
Class B 10% Cumulative Preferred Stock .......................... 22
PRICE RANGE OF NON-CUMULATIVE PREFERRED STOCK ..................... 23
PRO-FAC COOPERATIVE, INC .......................................... 23
General ......................................................... 23
Acquisition of Curtice-Burns .................................... 23
Financing of Acquisition ........................................ 23
Business of Curtice Burns ....................................... 25
Financial Information ........................................... 27
CAPITALIZATION .................................................... 34
SCHEDULE I Directors and Executive Officers of Pro-Fac ............ I-1
EXHIBIT A-1 Charter Amendment to Certificate of Incorporation
of Pro-Fac Cooperative, Inc. .................................... A-1
EXHIBIT A-2 Cumulative Amendment .................................. A-2
</TABLE>
<PAGE>
SUMMARY
The following is a summary of certain information contained in this Offering
Circular, including a summary of the terms of the Exchange Offer. It is not
intended to be complete and is qualified in its entirety by the more detailed
information contained in this Offering Circular.
Pro-Fac
Pro-Fac is an agricultural cooperative formed under New York State law to
process and market crops grown by its members. On November 3, 1994, Pro-Fac
acquired Curtice-Burns Foods, Inc. ("Curtice Burns"). Pro-Fac and Curtice Burns
were established together in the early 1960s, and since that time Pro-Fac has
supplied its members' crops to Curtice Burns and provided other accommodations
to Curtice Burns and Curtice Burns has provided management services to Pro-Fac
and processed and marketed the crops supplied by Pro-Fac and its members.
Pro-Fac expects these arrangements, as well as certain sharing of income and
losses with Curtice Burns, to continue.
An aggregate of approximately $338 million of senior and subordinated debt was
incurred to finance the acquisition of Curtice Burns and repay certain
indebtedness. These obligations were assumed by Curtice Burns. Accordingly, as a
result of the acquisition, Curtice Burns is more highly leveraged, and has
greater interest expense, than prior to the acquisition. Pro-Fac and certain
subsidiaries of Curtice Burns guaranteed the obligations of Curtice Burns under
the terms of this indebtedness. Although Pro-Fac and Curtice Burns expect that
Curtice Burns will be able to service the interest and principal obligations on
its indebtedness as well as its working capital needs and to fund its capital
expenditures and other operating expenses out of cash flow from operations and
available borrowings, there can be no assurance that such funds will be
available.
Pro-Fac anticipates that any payment of dividends on the Non-Cumulative
Preferred Stock and on the Cumulative Preferred Stock will be made out of
dividend payments from Curtice Burns to Pro-Fac. Under the terms of the Trust
Indenture for the Curtice Burns 12 1/4% Senior Subordinated Notes due 2005,
dividends to Pro-Fac are subject to certain limitations. In addition, to the
extent that payments on the acquisition-related indebtedness are in default,
certain financial tests are not met, or Pro-Fac's or Curtice Burns' obligations
otherwise are in default, Curtice Burns and Pro-Fac may be unable to pay any
dividends or make other payments on their respective capital stock, including
the Non-Cumulative Preferred Stock and the Cumulative Preferred Stock. See
"Pro-Fac Cooperative, Inc. -- Financing of Acquisition".
Purpose of the Exchange Offer
The Exchange Offer is being made to provide the holders of Non-Cumulative
Preferred Stock (such holders being referred to as the "Stockholders") with the
opportunity to exchange on a share-for-share basis their shares of
Non-Cumulative Preferred Stock for shares of Cumulative Preferred Stock. The
Non-Cumulative Preferred Stock has been and is a highly illiquid investment, and
an active trading market has never developed. Because of certain of its
characteristics, the Non-Cumulative Preferred Stock is not suitable for listing
on a national exchange or for inclusion in NASDAQ.
Pro-Fac has applied for, and received conditional approval for, inclusion of the
Cumulative Preferred Stock in the NASDAQ National Market System. Although there
can be no assurance that an active trading market will develop or be sustained,
Pro-Fac believes that, if so included, the Cumulative Preferred Stock may trade
in a more established market and have a more readily ascertainable market price
and therefore may provide a more attractive investment than the Non-Cumulative
Preferred Stock.
<PAGE>
Dividends
Pro-Fac will pay quarterly dividends per share on the Cumulative Preferred Stock
of $0.43, when and if declared by the Board of Directors, which constitutes an
annual dividend of $1.72 per share (or approximately 6.88% of the liquidation
preference of $25.00 per share), except that the dividend payable on the
Cumulative Preferred Stock on October 31, 1995 to holders of record on October
15, 1995 will equal the full quarterly dividend amount of $0.43 per share,
regardless of the date on which shares of Cumulative Preferred Stock are issued
upon completion of the Exchange Offer. Stockholders whose shares of
Non-Cumulative Preferred Stock are exchanged pursuant to the Exchange Offer will
have no further rights, including the right to receive dividends, with respect
to such shares of Non-Cumulative Preferred Stock.
Pro-Fac expects that it will continue to pay annual dividends on the
Non-Cumulative Preferred Stock. Dividends on the Non-Cumulative Preferred Stock
are not in a fixed amount, but instead are at such rate (not less than 6% per
annum) as the Board of Directors may determine (as and when declared by the
Board out of legally available funds). Although the Board of Directors has in
the past declared dividends based on Pro-Fac's cost of funds, the dividend for
fiscal 1995 was at an annual rate of 6%, and Pro-Fac expects that future
dividends on the Non-Cumulative Preferred Stock will not exceed the minimum
annual rate of 6%.
Dividends will be paid only to the extent earnings from Curtice Burns are
available for payment. Pro-Fac also is subject to certain limitations on payment
of dividends under the terms of its financing agreements. See "Pro-Fac
Cooperative, Inc. -- Financing of Acquisition".
The Cumulative Preferred Stock will rank, with respect to dividend rights and
rights on liquidation, dissolution or winding up of Pro-Fac, on a parity with
the Non-Cumulative Preferred Stock and senior to the common stock of Pro-Fac.
The Exchange Offer
Exchange Ratio One share of Cumulative Preferred Stock for each share
of Non-Cumulative Preferred Stock.
Expiration Date 5:00 p.m. (New York City time), on Tuesday, October 10,
1995, unless extended.
Number of Shares Subject to the terms and conditions of the Exchange
Offer, all shares of Non-Cumulative Preferred Stock
validly tendered by the Expiration Date and not
withdrawn will be accepted on the Expiration Date. The
Exchange Offer is conditioned upon there being validly
tendered by the Expiration Date and not withdrawn a
minimum of 500,000 shares (the "Minimum Tender
Condition").
Conditions In addition to the Minimum Tender Condition, Pro-Fac's
obligation to consummate the Exchange Offer is subject
to certain conditions, which are described under "The
Exchange Offer -- Conditions of the Exchange Offer" in
this Offering Circular.
Withdrawal Rights Tenders may be withdrawn at any time before the
Expiration Date and, if not yet accepted for exchange,
at any time after October 18, 1995. See "The Exchange
Offer -- Withdrawal Rights".
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<PAGE>
How to Tender Stockholders desiring to tender all or any portion of
their shares of Non-Cumulative Preferred Stock should
either (i) complete and sign the Letter of Transmittal
and mail or deliver the Letter of Transmittal to the
Exchange Agent, together with all other required
documents, including, in the case of Non-Cumulative
Preferred Stock represented by certificates, the
certificates for such shares of stock or (ii) request
their broker, dealer, commercial bank, trust company or
other nominee to effect the transaction for them. A
Stockholder having shares of Non-Cumulative Preferred
Stock registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must
contact such person if he desires to tender such
shares. Certain provisions have also been made for
Stockholders whose shares of Non-Cumulative Preferred
Stock are represented by certificates and who cannot
comply with the tender procedures on a timely basis.
See "The Exchange Offer -- Procedure for Tendering
Non-Cumulative Preferred Stock".
Acceptance of Tenders Subject to the terms and conditions of the Exchange
Offer, shares of Non-Cumulative Preferred Stock
validly tendered and not withdrawn will be accepted on
the Expiration Date and certificates for shares of
Cumulative Preferred Stock will be issued in exchange
for such properly tendered shares of Non-Cumulative
Preferred Stock and mailed by the Exchange Agent as
soon as practicable after the Expiration Date. See "The
Exchange Offer -- Acceptance for Exchange and
Exchange".
Federal Income Tax Generally, no gain or loss will be recognized for
Consequences federal income tax purposes by the holders of shares of
Non-Cumulative Preferred Stock upon the exchange of
such shares for Cumulative Preferred Stock pursuant to
the Exchange Offer. See "Certain Tax Consequences".
Trading Currently, there is no active trading market for the
Non-Cumulative Preferred Stock. The Non-Cumulative
Preferred Stock is not listed on any exchange or traded
over any national or regional market. Accordingly,
Pro-Fac is unable to determine the current market price
for the Non-Cumulative Preferred Stock. The Cumulative
Preferred Stock will be issued upon consummation of the
Exchange Offer. Pro-Fac anticipates that the Cumulative
Preferred Stock will be quoted on the NASDAQ National
Market System. See "The Exchange Offer -- Certain
Effects of the Exchange Offer".
Exchange Agent IBJ Schroder Bank & Trust Company.
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<PAGE>
SUMMARY COMPARISON OF NON-CUMULATIVE AND CUMULATIVE PREFERRED STOCK
At Pro-Fac's annual meeting held on January 28, 1995, an amendment to
Pro-Fac's Certificate of Incorporation was approved (the "Charter Amendment")
which provided for the authorization of five new classes of preferred stock,
with such terms as may be fixed by the Board of Directors of Pro-Fac (the
"Board"). The relevant provisions of the amendment are set forth in Exhibit A-1
to this Offering Circular. From the five new classes of authorized preferred
stock, the Board has approved the issuance of the Cumulative Preferred Stock,
with such terms and designations as set forth in Exhibit A-2 to this Offering
Circular (the "Cumulative Amendment"). The Board has authorized filing an
amendment to Pro-Fac's Certificate of Incorporation containing substantially the
terms of the Cumulative Amendment immediately before consummation of the
Exchange Offer.
Set forth below is a comparison of certain other features of the
existing Non-Cumulative Preferred Stock and the Cumulative Preferred Stock. More
detailed information is given under "Description of Preferred Stock". In
addition, the discussion contained herein is qualified in its entirety by, and
should be read in conjunction with, the Cumulative Amendment.
<TABLE>
<S> <C> <C>
Non-Cumulative Preferred Stock Cumulative Preferred Stock
Dividend Rate (subject to As determined by the Board, but $1.72 per annum; constitutes
declaration by Board of Directors not less than 6% per annum of the approximately 6.88% per annum
out of legally available funds) liquidation preference of $25 per of the liquidation preference of
share; dividends of 6% and 6.75% $25 per share; dividend payable on
of the liquidation preference October 31, 1995 will equal $0.43
thereof were paid for fiscal 1995 per share; priority of dividend on
and 1994, respectively; Board does a parity with Non-Cumulative
not anticipate paying future Preferred Stock
dividends on Non-Cumulative
Preferred Stock in excess of 6%
per annum of the liquidation
preference of $25 per share;
priority of dividend on a parity
with Cumulative Preferred Stock
Frequency Dividends Paid Each Annually Quarterly
Year (if declared)
Consequence if Dividends Not No accumulation if annual Accumulation of prior quarterly
Declared or Paid dividend not declared dividends not declared or paid
Liquidation Preference $25.00 per share plus accrued and $25.00 per share plus accrued and
unpaid dividends; rights on unpaid dividends; rights on
liquidation and winding up rank on liquidation and winding up rank on
a parity with Cumulative Preferred a parity with Non-Cumulative
Stock Preferred Stock
Par Value $25.00 $1.00
Term; Redemption Perpetual (no requirement to Perpetual (no requirement to
redeem); redeemable at Pro-Fac's redeem); redeemable at Pro-Fac's
option option
Voting Rights None None
Trading Market No active market NASDAQ National Market System
applied for
</TABLE>
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<PAGE>
THIS OFFERING CIRCULAR AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE EXCHANGE OFFER.
THE EXCHANGE OFFER
Terms of the Exchange Offer
Pro-Fac hereby offers, upon the terms and subject to the conditions set
forth in this Offering Circular and in the related Letter of Transmittal, to
exchange one share of Cumulative Preferred Stock for each share outstanding of
its Non-Cumulative Preferred Stock that is validly tendered by the Expiration
Date and not withdrawn as provided in this Offering Circular. The term
"Expiration Date" means 5:00 p.m., New York City time, on Tuesday, October 10,
1995, unless Pro-Fac shall have extended the period of time for which the
Exchange Offer is open, in which event the term "Expiration Date" shall mean the
latest time and date at which the Exchange Offer, as so extended by Pro-Fac,
shall expire.
As of June 24, 1995, there were 3,043,325 shares of Non-Cumulative
Preferred Stock outstanding held of record by 2,129 Stockholders. The Exchange
Offer is conditioned upon there having been validly tendered by the Expiration
Date and not withdrawn at least 500,000 shares of Non-Cumulative Preferred
Stock.
The Exchange Offer is subject to certain conditions, including satisfaction
of the Minimum Tender Condition. See "The Exchange Offer -- Certain Conditions
of the Exchange Offer". Pro-Fac expressly reserves the right to waive any of the
conditions to the Exchange Offer and to make any change in the terms or
conditions of the Exchange Offer. If any condition is not satisfied, Pro-Fac may
(i) terminate the Exchange Offer and return all tendered Non-Cumulative
Preferred Stock to tendering Stockholders, (ii) waive such condition and,
subject to any requirement to extend the period of time during which the
Exchange Offer is open, purchase all Non-Cumulative Preferred Stock validly
tendered by the Expiration Date and not withdrawn or (iii) delay acceptance for
exchange or delay exchange of shares of Non-Cumulative Preferred Stock, subject
to applicable law, until satisfaction or waiver of the conditions to the
Exchange Offer. In the event that the Exchange Offer is extended for any reason,
Pro-Fac may, subject to withdrawal rights as set forth under "The Exchange Offer
-- Withdrawal Rights", retain all such Non-Cumulative Preferred Stock until the
expiration of the Exchange Offer as so extended. For a description of Pro-Fac's
right to extend the period of time during which the Exchange Offer is open and
to amend, delay or terminate the Exchange Offer, see "The Exchange Offer - -
Extension of Exchange Offer Period; Termination; Amendments".
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof, and such announcement in
the case of an extension will be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Without limiting the manner in which Pro-Fac may choose to make any public
announcement, subject to applicable law (which requires that material changes be
promptly disseminated to holders of Non-Cumulative Preferred Stock), Pro-Fac
shall
-5-
<PAGE>
have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to the Dow Jones News
Service.
If Pro-Fac makes a material change in the terms of the Exchange Offer, or
if it waives a material condition to the Exchange Offer, Pro-Fac will extend the
Exchange Offer and disseminate additional exchange offer materials to the extent
required by applicable law. The minimum period during which an offer must remain
open following material changes in the terms of the offer, other than a change
in price or a change in percentage of securities sought or a change in any
dealer's soliciting fee, will depend upon the facts and circumstances, including
the materiality, of the changes. With respect to a change in price or, subject
to certain limitations, a change in the percentage of securities sought or a
change in any dealer's soliciting fee, a minimum period of 10 business days from
the date of such change is generally required to allow for adequate
dissemination to stockholders. For purposes of the Exchange Offer, a "business
day" means any day other than a Saturday, Sunday or a federal holiday and
consists of the time period from 12:01 a.m. through 12:00 midnight, New York
City time.
This Offering Circular and the related Letter of Transmittal will be mailed
to record holders of Non-Cumulative Preferred Stock and will be furnished to
brokers, dealers, commercial banks, trust companies and similar persons whose
names, or the names of whose nominees, appear on the stockholder list or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of
Non-Cumulative Preferred Stock.
Background and Purpose of Exchange Offer
The Exchange Offer is being made to provide Stockholders with the
opportunity to exchange on a share-for-share basis their shares of
Non-Cumulative Preferred Stock for shares of Cumulative Preferred Stock. The
Non-Cumulative Preferred Stock has been and is a highly illiquid investment, and
an active trading market has never developed. Because of certain of its
characteristics, the Non-Cumulative Preferred Stock is not suitable for listing
on a national exchange or for inclusion in NASDAQ. Although there can be no
assurance that an active trading market will develop or be sustained, Pro-Fac
believes that the Cumulative Preferred Stock may, upon inclusion in the NASDAQ
National Market System, trade in a more active market and possess a readily
ascertainable market price and therefore provide a more attractive investment
than the Non-Cumulative Preferred Stock.
The Non-Cumulative Preferred Stock has been issued from time to time upon
the conversion of "retains", which are participations in Pro-Fac's earnings
issued annually to Pro-Fac members. See "Description of Preferred Stock".
Several regional brokers have made a market from time to time in the
Non-Cumulative Preferred Stock. Despite these efforts, the Non-Cumulative
Preferred Stock is an illiquid security and has never enjoyed an active trading
market. During a limited period from its fiscal years ended 1984 to 1993,
Pro-Fac redeemed small portions of the Non-Cumulative Preferred Stock at its par
value. However, those redemptions were at the sole discretion of Pro-Fac.
Pro-Fac has not offered to redeem any Non-Cumulative Preferred Stock since its
fiscal year ended 1993 and has no intention to do so in the near future. Pro-Fac
also is restricted in its ability to redeem shares of its capital stock under
the various financing
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<PAGE>
obligations entered into to finance its acquisition of Curtice Burns. See
"Pro-Fac Cooperative, Inc. -- Financing the Acquisition".
Pro-Fac's management and Board have considered how to provide the
Stockholders with a more active or identifiable market for their preferred stock
investment. Pro-Fac's management and Board have met with several brokerage firms
and investment advisors to discuss the Non-Cumulative Preferred Stock and means
of providing a more liquid market to the Stockholders. The Board has determined
that the Exchange Offer may provide the means for Stockholders to receive a
security that will be more liquid and have a market price that is readily
ascertainable. Pro-Fac has applied to include the Cumulative Preferred Stock in
the NASDAQ National Market System and has received approval to include the
Cumulative Preferred Stock in that system, subject to registering the Cumulative
Preferred Stock under Section 12(g)(1) of the Act. Inclusion of the Cumulative
Preferred Stock in the NASDAQ National Market System will provide Stockholders
with an established market in which to obtain quotations for their shares of
Cumulative Preferred Stock and enable Stockholders to determine the market value
for their shares of Cumulative Preferred Stock. The NASDAQ National Market
System has certain criteria for the continued inclusion of securities. See "The
Exchange Offer -- Certain Effects of the Exchange Offer".
Certain Effects of the Exchange Offer
Holders of Non-Cumulative Preferred Stock should consider that, although
the liquidity of trading in the Non-Cumulative Preferred Stock is already
limited, such liquidity and the trading prices of the Non-Cumulative Preferred
Stock likely will be further adversely affected by the Exchange Offer. Upon
consummation of the Exchange Offer, there may not be a liquid market for the
Non-Cumulative Preferred Stock or, if there is a market for the Non-Cumulative
Preferred Stock, such stock may trade at a price lower than the price per share
of Cumulative Preferred Stock. In addition, the Board does not currently
anticipate paying a dividend in excess of 6% per annum on shares of the
Non-Cumulative Preferred Stock remaining outstanding after completion of the
Exchange Offer. The Board also anticipates providing holders of retains issued
before the end of fiscal 1995 the opportunity to receive Cumulative Preferred
Stock in lieu of Non-Cumulative Preferred Stock upon the maturity of those
retains and providing for the issuance of Cumulative Preferred Stock upon the
maturity of all retains issued after the end of fiscal 1995. These changes may
further adversely affect the Non-Cumulative Preferred Stock. See "Description of
Preferred Stock -- Non-Cumulative Preferred Stock".
Pro-Fac has applied for, and received conditional approval for, inclusion
of the Cumulative Preferred Stock in the NASDAQ National Market System. Pro-Fac
anticipates that the Cumulative Preferred Stock will be included for quotation
in the NASDAQ National Market System. Accordingly, the Cumulative Preferred
Stock likely will have a more liquid market, and trading prices will be readily
ascertainable, after consummation of the Exchange Offer.
According to NASDAQ's published guidelines, the Cumulative Preferred Stock
would not meet the criteria for continued inclusion in the NASDAQ National
Market System if, among other things, the number of publicly held shares of
Cumulative Preferred Stock (excluding Cumulative Preferred Stock held by
officers or directors or their immediate family and excluding concentrated
holdings of 10% or more) was less than 200,000, the aggregate market value of
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<PAGE>
the publicly held Cumulative Preferred Stock was less than $2 million or there
were fewer than two market makers for the Cumulative Preferred Stock. If these
standards were not met, quotations might continue to be published in the
over-the-counter "additional list" or one of the "local lists" unless, as set
forth in NASDAQ's published guidelines, the number of publicly-held shares of
Cumulative Preferred Stock (excluding shares held by officers, directors or
their immediate family and concentrated holdings of 10% or more of the Shares)
were less than 100,000, there were fewer than 300 holders in total, or there
were not at least one market maker for the Cumulative Preferred Stock. If the
shares of Cumulative Preferred Stock are no longer eligible for NASDAQ
quotation, quotations might still be available from other sources.
Once included in the NASDAQ National Market System, the Cumulative
Preferred Stock will constitute "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which would have the effect, among other things, of allowing brokers to extend
credit on the collateral of the Cumulative Preferred Stock. If no longer
included or reported in market quotations, the Cumulative Preferred Stock would
no longer constitute "margin securities" for the purposes of the Federal Reserve
Board's margin regulations and, therefore, could no longer be used as collateral
for loans made by brokers.
Procedure for Tendering Non-Cumulative Preferred Stock
To tender Non-Cumulative Preferred Stock pursuant to the Exchange Offer a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by the Letter of Transmittal,
including, in the case of shares of Non-Cumulative Preferred Stock represented
by certificates, the certificates for such shares, must be received by the
Exchange Agent at one of its addresses set forth on the back cover of this
Offering Circular on or prior to the Expiration Date. The Non-Cumulative
Preferred Stock may not be delivered pursuant to any procedure for book-entry
transfer through a book-entry transfer facility.
Except as otherwise provided below, all signatures on a Letter of
Transmittal must be guaranteed by a bank, broker, dealer, credit union, savings
association or other entity which is a member of a recognized Medallion Program
approved by the Securities Transfer Association, Inc. (an "Eligible
Institution"). Signatures on a Letter of Transmittal need not be guaranteed (i)
if the Letter of Transmittal is signed by the registered holder of the
Non-Cumulative Preferred Stock tendered therewith and such holder has not
completed the box entitled "Special Issuance Instructions" or the box entitled
"Special Delivery Instructions" on the Letter of Transmittal or (ii) if such
Non-Cumulative Preferred Stock is tendered for the account of an Eligible
Institution. See Instructions 1 and 5 of the Letter of Transmittal.
In the case of shares of Non-Cumulative Preferred Stock represented by
certificates, stockholders who desire to tender such shares of Non-Cumulative
Preferred Stock pursuant to the Exchange Offer and who cannot deliver
certificates for such shares of Non-Cumulative Preferred Stock and all other
required documents to the Exchange Agent by the Expiration Date, may
nevertheless tender such shares if (i) such tender is made by or through an
Eligible Institution, (ii) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by Pro-Fac is received by
the Exchange Agent by the
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<PAGE>
Expiration Date in accordance with the delivery procedures described below and
(iii) the certificates for such Non-Cumulative Preferred Stock, together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by the Letter of Transmittal, are
received by the Exchange Agent within three NASDAQ trading days after the date
of the execution of the Notice of Guaranteed Delivery. The Notice of Guaranteed
Delivery may be delivered by hand or transmitted by telegram, telex, facsimile
transmission or mail to the Exchange Agent and must include a guarantee by an
Eligible Institution in the form set forth in such Notice.
If the shares of Non-Cumulative Preferred Stock are registered in the name
of a person other than the signer of the Letter of Transmittal, or if
certificates for shares of Cumulative Preferred Stock are to be issued to, or
Non-Cumulative Preferred Stock not exchanged is to be returned to, a person
other than the registered holder, then the Letter of Transmittal must be
accompanied by appropriate stock powers, signed exactly as the name or names of
the registered holder or holders appear on the stock record books, with the
signatures on stock powers guaranteed by an Eligible Institution as provided in
the Letter of Transmittal. See Instructions 1 and 5 of the Letter of
Transmittal.
If any share certificates are forwarded separately to the Exchange Agent, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF THE LETTER
OF TRANSMITTAL, SHARE CERTIFICATES (IF ANY) OR ANY OTHER DOCUMENTS ARE SENT BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Notwithstanding any other provision hereof, exchange of Non-Cumulative
Preferred Stock accepted for exchange pursuant to the Exchange Offer will in all
cases be made only after timely receipt by the Exchange Agent of a properly
completed and duly executed Letter of Transmittal (or facsimile thereof),
together with any required signature guarantees, and any other documents
required by the Letter of Transmittal.
By executing a Letter of Transmittal, a tendering Stockholder irrevocably
appoints designees of Pro-Fac as such Stockholder's attorneys-in-fact and
proxies in the manner set forth in the Letter of Transmittal to the full extent
of such Stockholder's rights with respect to the Non-Cumulative Preferred Stock
tendered by such Stockholder and accepted for exchange by Pro-Fac (and any and
all other Non-Cumulative Preferred Stock or other securities issued or issuable
in respect of such Non-Cumulative Preferred Stock on or after August 23, 1995).
All such powers of attorney and proxies shall be considered coupled with an
interest in the tendered Non-Cumulative Preferred Stock and are irrevocable.
Such appointment is effective only upon the acceptance for exchange of such
Non-Cumulative Preferred Stock by Pro-Fac. Upon such acceptance for exchange,
all prior powers of attorney and proxies and consents granted by such
Stockholder with respect to such Non-Cumulative Preferred Stock and other
securities will, without further action, be revoked, and no subsequent powers of
attorney or proxies may be
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<PAGE>
given nor subsequent written consents executed by such Stockholder (and, if
given or executed, will not be deemed to be effective).
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for exchange of any tender of
Non-Cumulative Preferred Stock will be determined by Pro-Fac, in its sole
discretion, whose determination shall be final and binding on all parties.
Pro-Fac reserves the absolute right to reject any or all tenders of
Non-Cumulative Preferred Stock determined by it not to be in proper form or the
acceptance for exchange of or exchange for which may, in the opinion of
Pro-Fac's counsel, be unlawful. Pro-Fac also reserves the absolute right to
waive any defect or irregularity in any tender of Non-Cumulative Preferred
Stock. None of Pro-Fac or any of its affiliates or assigns, if any, the Exchange
Agent or any other person will be under any duty to give any notification of any
defects or irregularities in tenders or incur any liability for failure to give
any such notification.
The tender of Non-Cumulative Preferred Stock pursuant to any one of the
procedures described above will constitute an agreement between the tendering
Stockholder and Pro-Fac upon the terms and subject to the conditions of the
Offer.
Withdrawal Rights
Tenders of Non-Cumulative Preferred Stock made pursuant to the Exchange
Offer may be withdrawn at any time prior to the Expiration Date. Thereafter,
such tenders are irrevocable, except that they may be withdrawn after October
18, 1995 unless theretofore accepted for exchange as provided in this Offering
Circular. If Pro-Fac is delayed in accepting for exchange or in exchanging
Non-Cumulative Preferred Stock or is unable to accept for exchange or exchange
Non-Cumulative Preferred Stock pursuant to the Exchange Offer for any reason,
then, without prejudice to Pro-Fac's rights under the Exchange Offer, the
Exchange Agent may, on behalf of Pro-Fac, retain all Non-Cumulative Preferred
Stock tendered, and such Non-Cumulative Preferred Stock may not be withdrawn
except as otherwise provided.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Exchange Agent at one of its
addresses set forth on the back cover of this Offering Circular and must specify
the name of the person who tendered the Non-Cumulative Preferred Stock to be
withdrawn and the number of shares of Non-Cumulative Preferred Stock to be
withdrawn. If the shares of Non-Cumulative Preferred Stock to be withdrawn have
been delivered to the Exchange Agent, a signed notice of withdrawal with (except
in the case of Non-Cumulative Preferred Stock tendered by an Eligible
Institution) signatures guaranteed by an Eligible Institution must be submitted
prior to the release of such Non-Cumulative Preferred Stock. In addition, such
notice must specify, in the case of any shares of Non-Cumulative Preferred Stock
tendered by the delivery of certificates, the name of the registered holder (if
different from that of the tendering Stockholder) and the serial numbers shown
on the particular certificates evidencing such shares to be withdrawn.
Withdrawals may not be rescinded, and Non-Cumulative Preferred Stock withdrawn
will thereafter be deemed not validly tendered for purposes of the Exchange
Offer. However, properly withdrawn Non-Cumulative Preferred Stock may be
retendered by again following one of the procedures described under "The
Exchange Offer -- Procedure for Tendering Non-Cumulative Preferred Stock" at any
time prior to the Expiration Date.
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<PAGE>
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Pro-Fac, in its sole discretion,
which determination shall be final and binding. None of Pro-Fac, the Exchange
Agent or any other person will be under any duty to give notification of any
defect or irregularity in any notice of withdrawal or incur any liability for
failure to give any such notification.
Acceptance for Exchange and Exchange
Upon the terms and subject to the conditions of the Exchange Offer
(including if the Exchange Offer is extended or amended, the terms and
conditions of the Exchange Offer as so extended or amended), Pro-Fac will accept
for exchange and exchange all shares of Non-Cumulative Preferred Stock validly
tendered by the Expiration Date and not withdrawn as soon as practicable after
the later of (i) the Expiration Date and (ii) the satisfaction or waiver of the
conditions set forth under "The Exchange Offer -- Conditions to Exchange Offer".
In addition, Pro-Fac reserves the right, in its sole discretion and subject to
applicable law, to delay the acceptance for exchange or exchange of
Non-Cumulative Preferred Stock in order to comply in whole or in part with any
applicable law or regulatory or government approval as discussed under "The
Exchange Offer -- Conditions to Exchange Offer". For a description of Pro-Fac's
right to terminate the Exchange Offer and not accept for exchange or exchange
Non-Cumulative Preferred Stock or to delay acceptance for exchange or delay
exchange of Non-Cumulative Preferred Stock, see "The Exchange Offer -- Extension
of the Exchange Offer Period; Termination; Amendments".
For purposes of the Exchange Offer, Pro-Fac shall be deemed to have
accepted for exchange Non-Cumulative Preferred Stock validly tendered and not
withdrawn if, as and when Pro-Fac gives oral or written notice to the Exchange
Agent of its acceptance of the tenders of such Non-Cumulative Preferred Stock.
In all cases, upon the terms and subject to the conditions of the Exchange
Offer, the exchange of Non-Cumulative Preferred Stock accepted for exchange
pursuant to the Exchange Offer will be made by Pro-Fac's submission of
certificates for Cumulative Preferred Stock with the Exchange Agent, which will
act as agent for the tendering Stockholders for the purpose of receiving
certificates for shares of Cumulative Preferred Stock from Pro-Fac and
transmitting such consideration to tendering Stockholders.
In all cases, delivery of certificates of shares of Cumulative Preferred
Stock to be issued in exchange for properly tendered shares of Non-Cumulative
Preferred Stock pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of (i) the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, (ii) in the case of shares of
Non-Cumulative Preferred Stock represented by certificates, the certificates for
such shares and (iii) any other documents required by the Letter of Transmittal.
For a description of the procedure for tendering Non-Cumulative Preferred Stock
pursuant to the Exchange Offer, see "The Exchange Offer -- Procedure for
Tendering Non-Cumulative Preferred Stock". Under no circumstances will Pro-Fac
pay interest on the consideration given for Non-Cumulative Preferred Stock by
reason of any delay in making such payment.
If Pro-Fac increases the consideration to be given for Non-Cumulative
Preferred Stock pursuant to the Exchange Offer, Pro-Fac will provide such
increased consideration for all Non-
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<PAGE>
Cumulative Preferred Stock acquired pursuant to the Exchange Offer whether or
not such Non-Cumulative Preferred Stock was tendered prior to or after such
increase in consideration.
If any tendered Non-Cumulative Preferred Stock is not exchanged pursuant to
the Exchange Offer for any reason, certificates (if any) for such unexchanged or
untendered shares will be returned without expense to the tendering Stockholder,
as promptly as practicable following the expiration or termination or withdrawal
of the Exchange Offer.
Extension of Exchange Offer Period; Termination; Amendments
Pro-Fac expressly reserves the right, in its sole discretion, at any time
or from time to time, to extend the period of time during which the Exchange
Offer is open by giving oral or written notice of such extension to the Exchange
Agent and by making a public announcement of such extension. There can be no
assurance that Pro-Fac will exercise its right to extend the Exchange Offer.
Pro-Fac also expressly reserves the right, at any time or from time to time, in
its sole discretion and regardless of whether or not any of the conditions
specified in "The Exchange Offer -- Conditions of Exchange Offer" shall have
been satisfied, to amend the Exchange Offer in any respect by making a public
announcement of such amendment.
If Pro-Fac shall decide to decrease or increase (other than increases of
not more than two percent of the outstanding shares of Non-Cumulative Preferred
Stock) the number of shares of Non-Cumulative Preferred Stock being sought, or
increases or decreases the consideration offered pursuant to the Exchange Offer,
and the Exchange Offer is scheduled to expire at any time before the expiration
of a period of 10 business days from and including the date that notice of such
increase or decrease is first published, sent or given to Stockholders, the
Exchange Offer will be extended at least until the expiration of such period of
10 business days.
In addition, if Pro-Fac makes a material change in the terms of the
Exchange Offer (other than a change in percentage or price of securities sought)
or in the information concerning the Exchange Offer, or waives a material
condition of the Exchange Offer, Pro-Fac will extend the Exchange Offer if and
to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(2) promulgated under
the Act or other applicable law. These rules provide that a period sufficient to
allow Stockholders to consider the amended terms of the Exchange Offer must be
provided following material changes in the terms of the offer or information
concerning the offer. In a published release, the Commission has stated that in
its view an offer must remain open for a minimum period of time following a
material change in the terms of such offer and that the waiver of a condition is
a material change in the terms of an offer. The release states that an offer
should remain open for a minimum of five business days from the date the
material change is first published, sent or given to security holders, and that
if material changes are made with respect to information that approaches the
significance of price and share levels, a minimum of 10 business days may be
required to allow adequate dissemination and investor response.
Pro-Fac also expressly reserves the right, in the event any of the
conditions specified under "The Exchange Offer -- Conditions of Exchange Offer"
shall not have been satisfied and so long as Non-Cumulative Preferred Stock has
not theretofore been exchanged, to delay (except as otherwise required by
applicable law) acceptance for exchange or delay exchange of Non-
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Cumulative Preferred Stock, or to terminate the Exchange Offer and not accept
for exchange or not exchange Non-Cumulative Preferred Stock.
If Pro-Fac extends the period of time during which the Exchange Offer is
open, is delayed in accepting for exchange or exchanging Non-Cumulative
Preferred Stock or is unable to accept for exchange or exchange Non-Cumulative
Preferred Stock pursuant to the Exchange Offer for any reason, then, without
prejudice to Pro-Fac's rights under the Exchange Offer, the Exchange Agent may,
on behalf of Pro-Fac, retain all Non-Cumulative Preferred Stock tendered, and
such Non-Cumulative Preferred Stock may not be withdrawn except as otherwise
provided in "The Exchange Offer -- Withdrawal Rights". The reservation by
Pro-Fac of the right to delay acceptance for exchange or exchange Non-Cumulative
Preferred Stock is limited by Rule 13e- 4(f)(5) promulgated under the Act, which
requires that Pro-Fac pay the consideration offered or return the Non-Cumulative
Preferred Stock deposited by or on behalf of Stockholders promptly after the
termination or withdrawal of the Exchange Offer.
Any extension, termination or amendment of the Exchange Offer will be
followed as promptly as practicable by a public announcement of such extension
no later than 9:00 a.m. New York time, on the next business day after the
previously scheduled Expiration Date. Without limiting the manner in which
Pro-Fac may choose to make any public announcement, Pro-Fac will have no
obligation (except as otherwise required by applicable law) to publish,
advertise or otherwise communicate any such public announcement other than by
making a release to the Dow Jones News Service.
Certain Conditions of the Exchange Offer
The Exchange Offer is subject to the Minimum Tender Condition that at least
500,000 shares of Non-Cumulative Preferred Stock shall have been validly
tendered by the Expiration Date and not withdrawn. The Minimum Tender Condition
represents approximately 16.43% of the number of shares of Non-Cumulative
Preferred Stock issued and outstanding as of June 24, 1995. As of that date,
there were 3,043,325 shares of Non-Cumulative Preferred Stock outstanding held
of record by 2,129 Stockholders.
Notwithstanding any other provisions of the Exchange Offer, Pro-Fac shall
not be required to accept for exchange or to exchange any Non-Cumulative
Preferred Stock tendered and may terminate or amend the Exchange Offer or may
postpone (subject to the requirements of the Act for prompt exchange or return
of Non-Cumulative Preferred Stock) the acceptance for exchange of, and exchange
of, Non-Cumulative Preferred Stock tendered if (i) the Minimum Tender Condition
shall not have been satisfied, (ii) the Cumulative Preferred Stock will not,
upon issuance, be included in the NASDAQ National Market System or (iii) any
material change occurs which is likely to affect the Exchange Offer or the value
or market price of the Non- Cumulative Preferred Stock or the Cumulative
Preferred Stock, including, but not limited to, the following:
(a) there shall have been threatened, instituted or pending any action
or proceeding before any court, authority, agency or tribunal which
challenges the making of the Exchange Offer, the acquisition of some or
all of the Non-Cumulative Preferred Stock pursuant to
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<PAGE>
the Exchange Offer, the amendment of Pro-Fac's Certificate of
Incorporation with the Cumulative Amendment or otherwise relates in any
manner to the Exchange Offer;
(b) there shall have been any action threatened, pending or taken, or
any approval withheld, or any statute, rule, regulation, judgment,
order or injunction threatened, proposed, sought, promulgated, enacted,
entered, enforced or deemed to be applicable to the Exchange Offer or
Pro-Fac, Curtice Burns or any of their respective subsidiaries which,
in Pro-Fac's sole judgment, would or might directly or indirectly (1)
make the acceptance for exchange or exchange of some or all of the
Non-Cumulative Preferred Stock illegal or otherwise restrict, prohibit
or delay materially the consummation of the Exchange Offer, (2) delay
or restrict the ability of Pro-Fac, or render Pro-Fac unable, to amend
its Certificate of Incorporation as set forth in the Cumulative
Amendment or to accept for exchange or exchange some or all of the
Non-Cumulative Preferred Stock, (3) materially impair the contemplated
benefits of the Exchange Offer to Pro-Fac, or (4) materially affect the
business, condition (financial or other), income, operations or
prospects of Pro-Fac, Curtice Burns or any of their respective
subsidiaries, or otherwise materially impair in any way the
contemplated future conduct of the business of Pro-Fac, Curtice Burns
or any of their respective subsidiaries; or
(c) there shall have occurred any general suspension of, or limitation
on prices for, trading in securities on any national securities
exchange or in the over-the-counter market or any other change in the
general political, market, economic or financial conditions in the
United States or abroad that could, in the sole judgment of Pro-Fac,
have a material adverse effect on the business, condition (financial or
other), income, operations or prospects of Pro-Fac, Curtice Burns or
any of their respective subsidiaries or the trading in the Cumulative
Preferred Stock or the Non-Cumulative Preferred Stock.
The Minimum Tender Condition and the additional conditions referred to
above are for the sole benefit of Pro-Fac and may be asserted by Pro-Fac in its
sole discretion regardless of the circumstances (including any action or
omission by Pro-Fac) giving rise to any such conditions or may be waived by
Pro-Fac in its sole discretion in whole at any time or in part from time to
time. The failure by Pro-Fac or any other affiliate of Pro-Fac at any time to
exercise its rights under any of the foregoing conditions shall not be deemed a
waiver of any such right. The waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances, and each such right shall be deemed an
ongoing right which may be asserted at any time or from time to time.
Solicitations of Tenders; Fees
Pro-Fac has not retained any dealer-manager or similar agent in connection
with the Exchange Offer and will not make any payments to brokers, dealers or
others for soliciting acceptances of the Exchange Offer.
Pro-Fac has retained IBJ Schroder Bank & Trust Company as Exchange Agent in
connection with the Exchange Offer. The Exchange Agent will receive reasonable
and customary compensation for its services in connection with the Exchange
Offer, will be reimbursed for its
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reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws.
Pro-Fac may contact holders of Non-Cumulative Preferred Stock by mail,
telephone, telecopy, telegraph and personal interview and may request brokers,
dealers and other nominee shareholders to forward materials relating to the
Exchange Offer to beneficial owners. Pro-Fac also will reimburse brokers,
dealers, commercial banks and trust companies for customary handling and mailing
expenses incurred in forwarding the Exchange Offer to their customers.
Interests of Certain Persons; Transactions
The interests of Pro-Fac's directors in the Non-Cumulative Preferred Stock
are reflected in Schedule 1 to this Offering Circular. Except as reflected on
Schedule 1, as of June 24, 1995, none of Pro-Fac's executive officers
beneficially owns any Non-Cumulative Preferred Stock. Pro-Fac has been advised
by its directors and executive officers who hold Non-Cumulative Preferred Stock
that such directors and executive officers intend to tender their shares
pursuant to the Exchange Offer.
During the 40 days preceding the date of this Offering Circular, neither
Pro-Fac nor, to its knowledge, any of its subsidiaries, executive officers or
directors or any associate of any such officer or director has engaged in any
transactions involving the Non-Cumulative Preferred Stock.
CERTAIN TAX CONSEQUENCES
This summary sets forth the principal anticipated federal income tax
consequences to Stockholders of their exchange of Non-Cumulative Preferred Stock
for Cumulative Preferred Stock pursuant to the Exchange Offer. The summary is
based on the provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the Treasury regulations promulgated thereunder, and administrative and
judicial interpretations thereof, all as in effect as of the date hereof, and,
in particular, is based on the assumption that the shares of Non-Cumulative
Preferred Stock have been held as "capital assets" within the meaning of Section
1221 of the Code. Such laws or interpretations may differ on the date of the
consummation of the Exchange Offer, and relevant facts may also differ. This
summary does not address any foreign or local tax consequences, does not address
state tax consequences and does not address estate or gift tax considerations.
The consummation of the Exchange Offer is not conditioned upon the receipt of
any ruling from the Internal Revenue Service (the "IRS") or any opinion of
counsel as to tax matters.
This summary is for general information only. The tax treatment of each
Stockholder will depend in part upon his particular situation. Special tax
consequences not described below may be applicable to particular classes of
taxpayers, including financial institutions, pension funds, mutual funds,
broker-dealers, persons who are not citizens or residents of the United States
or who are foreign corporations, foreign partnerships or foreign estates or
trusts, Stockholders who own actually or constructively (under certain
attribution rules contained in the Code) 5% or more of the Non-Cumulative
Preferred Stock, Stockholders who acquired their Non-Cumulative
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Preferred Stock as compensation and persons who receive payments in respect of
options to acquire Non-Cumulative Preferred Stock.
ALL STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISERS AS TO THE
PARTICULAR TAX CONSEQUENCES OF THE EXCHANGE OFFER TO THEM, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
No gain or loss will be recognized by a holder (an "Exchanging Holder") of
shares of Non-Cumulative Preferred Stock as a result of the exchange of shares
of Non-Cumulative Preferred Stock for shares of Cumulative Preferred Stock. The
tax basis of an Exchanging Holder in its shares of Cumulative Preferred Stock
will be determined by allocating the holder's tax basis in the shares of
Non-Cumulative Preferred Stock exchanged therefor pro rata among the shares of
Cumulative Preferred Stock. The holding period of an Exchanging Holder in shares
of Cumulative Preferred Stock received pursuant to the Exchange Offer will
include the period during which such holder held the shares of Non-Cumulative
Preferred Stock exchanged therefor.
Stockholders may be subject to backup withholding at the rate of 31% with
respect to distributions and redemptions paid with respect to the Non-Cumulative
Preferred Stock and the Cumulative Preferred Stock, unless the holder (i) is an
entity (including corporations, tax-exempt organizations and certain qualified
nominees) which is exempt from withholding and, when required, demonstrates this
fact, or (ii) provides Pro-Fac with its Taxpayer Identification Number ("TIN")
(which for an individual Stockholder would be the holder's social security
number), certifies that the TIN provided to Pro-Fac is correct and that the
holder has not been notified by the IRS that it is subject to backup withholding
due to underreporting of dividends, and otherwise complies with applicable
requirements of the backup withholding rules. In addition, such payments to
Stockholders that are not corporations, tax-exempt organizations or qualified
nominees will generally be subject to information reporting requirements. A
Stockholder who does not provide Pro-Fac with his correct TIN may be subject to
penalties imposed by the IRS.
Pro-Fac will report to Stockholders and to the IRS the amount of any
"reportable payments" (including any dividends paid) and any amount withheld
with respect to the Non-Cumulative Preferred Stock or the Cumulative Preferred
Stock during the calendar year.
The amount of any backup withholding from a payment to a Stockholder will
be allowed as a credit against such holder's federal income tax liability and
may entitle such holder to a refund, provided that the required information is
furnished to the IRS.
DESCRIPTION OF PREFERRED STOCK
On January 28, 1995, the members of Pro-Fac approved the Charter Amendment
to Pro-Fac's Certificate of Incorporation to authorize the issuance of an
additional 50 million shares of preferred stock, divided into five classes
(Classes A through E) of 10 million shares each. As a result of the Charter
Amendment, the Board continues to be authorized to issue up to 5 million shares
of Non-Cumulative Preferred Stock and is authorized to issue up to 50 million
shares of
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new preferred stock at such times, for such purposes, on such terms and for such
consideration as the Board may determine, without further action of the members.
The Board is authorized to provide for the issuance, from time to time, of
any such new preferred stock in one or more designated series, and to fix the
terms of each such designated series of shares. In establishing the terms of the
series of new preferred stock, the Board is authorized to set, among other
things, the number of shares, the dividend rate and preferences, the form or
method of payment of dividends, the cumulative or non-cumulative nature of
dividends, redemption provisions (if any), including any mandatory scheduled
redemptions, the right (if any) to convert or exchange such preferred shares for
other securities, voting rights (if any), in addition to any required by
applicable law, and the amounts payable, and preferences, in the event of the
voluntary or involuntary liquidation of Pro-Fac. Each series of new preferred
stock will, in respect of dividends and liquidation, rank senior to Pro-Fac's
common stock, par value $5.00 per share (the "Common Stock"), and on a parity
with or junior to the Non- Cumulative Preferred Stock, as determined by the
Board at the time of issuance of such series. Within any class of the new
preferred stock, each series will rank on a parity with each other series in
that class as to dividends and liquidation.
Pursuant to its authority created by the Charter Amendment, the Board has
approved the Cumulative Amendment which designates the series of the Cumulative
Preferred Stock and sets the rights and terms of such stock. It is anticipated
that the Cumulative Amendment will be filed as an amendment to Pro-Fac's
Certificate of Incorporation immediately before consummation of the Exchange
Offer. The summaries of the Non-Cumulative Preferred Stock and the Cumulative
Preferred Stock set forth below are qualified in their entirety by the terms of
Pro-Fac's Certificate of Incorporation, as amended by the Charter Amendment,
and of the Cumulative Amendment. The Charter Amendment and the Cumulative
Amendment are set forth in Exhibits A-1 and A-2, respectively, to this Offering
Circular.
As a cooperative, Pro-Fac is restricted by law in its ability to pay
dividends in any year. Currently, a dividend rate of 12% per annum on any share
of capital stock is the maximum rate permitted by law.
Under Pro-Fac's Bylaws, upon dissolution or other termination of Pro-Fac or
its business, after the payment of all debts, all outstanding retains are to be
retired in full, or on a pro-rata basis without priority, before any liquidating
dividends are declared on or with respect to capital stock.
Non-Cumulative Preferred Stock
General. It has been Pro-Fac's practice to issue one share of
Non-Cumulative Preferred Stock upon the maturity of each $25 in qualified
retains. Historically, qualified retains have matured into shares of
Non-Cumulative Preferred Stock on or about December 31 following the completion
of the fifth year after allocation of such retain to the member's account. In
addition, it has been the Board's recent practice to redeem non-qualified
retains allocated to its members' accounts partially in cash and partially in
shares of Non-Cumulative Preferred Stock approximately five years after the
allocation of such non-qualified retains. The Non-Cumulative
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Preferred Stock is classified into annual series which coincide with the annual
series of the retains to which they relate.
The holders of the Non-Cumulative Preferred Stock do not have any
preemptive rights. The Non-Cumulative Preferred Stock is not subject to any
sinking fund or other obligation of Pro-Fac to redeem or retire the
Non-Cumulative Preferred Stock. Unless redeemed by Pro-Fac, the Non-Cumulative
Preferred Stock has perpetual maturity.
The Board currently does not anticipate paying a dividend in excess of 6%
per annum on shares of the Non-Cumulative Preferred Stock remaining outstanding
after completion of the Exchange Offer (whether or not any shares of
Non-Cumulative Preferred Stock are accepted for exchange or exchanged for shares
of Cumulative Preferred Stock). In addition, the Board anticipates issuing
shares of Cumulative Preferred Stock upon the maturity of all retains issued for
the fiscal year ending June 24, 1995 and each fiscal year thereafter. The Board
has decided to offer to holders of existing retains the opportunity to receive
Cumulative Preferred Stock in lieu of Non-Cumulative Preferred Stock upon the
maturity of those retains. These actions are likely to further reduce the
liquidity and market price of the Non-Cumulative Preferred Stock.
Dividends. The holders of Non-Cumulative Preferred Stock are entitled to
receive, in preference to dividends on Pro-Fac's shares of Common Stock,
dividends at a rate of not less than 6% per annum, when, as and if declared by
the Board of Directors out of legally available funds.
Dividends, if any, on the Non-Cumulative Preferred Stock are noncumulative,
which means that holders of Non-Cumulative Preferred Stock do not have any
dividend preference with respect to undeclared dividends for prior periods.
Dividends paid on the Non-Cumulative Preferred Stock have been paid by Pro-Fac
once a year, subsequent to the fiscal year to which they relate. For fiscal
1995, 1994 and 1993, Pro-Fac paid a dividend on the Non-Cumulative Preferred
Stock at a rate of 6.0%, 6.75% and 6.25% per annum, respectively, on the stated
amount of such stock.
The Cumulative Amendment provides that no full dividend and no distribution
shall be declared by the Board or paid or set apart for payment by Pro-Fac on
the Cumulative Preferred Stock for any period unless a pro rata portion of the
annual dividend anticipated to be paid on the Non-Cumulative Preferred Stock for
the applicable period (in any event, not less than 6% per annum) has been or is
contemporaneously declared. In addition, the Cumulative Amendment provides that
no full dividend and no distribution shall be declared by the Board or paid or
set apart for payment by Pro-Fac on the Non-Cumulative Preferred Stock or other
Parity Dividend Securities (as defined below) unless full cumulative dividends
have been or contemporaneously are declared and a sum set apart sufficient for
such payment on the Cumulative Preferred Stock for all dividend periods
terminating on or prior to the date of payment of such full dividends on the
Non-Cumulative Preferred Stock or other Parity Dividend Securities. If any
dividends are not paid in full upon the shares of the Cumulative Preferred Stock
and the Non-Cumulative Preferred Stock and other Parity Dividend Securities, all
dividends declared for any period upon shares of the Cumulative Preferred Stock
and the Non-Cumulative Preferred Stock and other Parity Dividend Securities
shall be declared ratably in proportion to accrued dividends on the
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Cumulative Preferred Stock and other Parity Dividend Securities and the current
period dividend accrual on the Non-Cumulative Preferred Stock.
By operation of the Cumulative Amendment, Pro-Fac may not declare, pay or
set apart for payment any dividend (other than certain stock dividends) on any
of the Junior Dividend Securities (as defined below) or make any distribution in
respect thereof unless full cumulative dividends on the Cumulative Preferred
Stock have been or are contemporaneously declared and the corresponding portion
of the current annual dividend on the Non-Cumulative Preferred Stock is declared
as described in the preceding paragraph.
Redemption. Pro-Fac is entitled from time to time to redeem or retire all
or any portion of its outstanding Non-Cumulative Preferred Stock upon payment to
the holders thereof of the par value of $25 per share plus all accrued dividends
unpaid at the date of retirement. No such payments for the retirement of
Non-Cumulative Preferred Stock may be made under circumstances which would
produce any impairment of the capital or capital stock of the cooperative. Any
such retirement of Non-Cumulative Preferred Stock may be made on such other
terms and conditions as are established by the Board, provided that no
retirement of any Non-Cumulative Preferred Stock may be effected except upon 90
days written notice to the holders thereof.
Restriction on Certain Stock Acquisitions. By operation of the Cumulative
Amendment, Pro- Fac may not purchase, redeem or otherwise acquire for
consideration (other than in a repurchase of Common Stock of a departing member
pursuant to Pro-Fac's Bylaws or in certain recapitalizations, exchanges or
refinancings) any Cumulative Preferred Stock, Parity Dividend Securities
(including the Non-Cumulative Preferred Stock), Parity Liquidation Securities,
Junior Dividend Securities or Junior Liquidation Securities (as such terms are
defined below) unless full cumulative dividends on the Cumulative Preferred
Stock have been or are contemporaneously declared and the corresponding portion
of the current annual dividend on the Non-Cumulative Preferred Stock is declared
as described under the heading "Description of Preferred Stock -- Non-Cumulative
Preferred Stock -- Dividends" above.
Liquidation. After payment to holders of all outstanding retains, the
holders of Non-Cumulative Preferred Stock are entitled to receive, out of the
funds then remaining, the full par value of their stock, together with the
amount of such dividends as may have been declared but remain unpaid. In
accordance with the Cumulative Amendment, if amounts available after the payment
to holders of all outstanding retains are insufficient to pay, in full, the
liquidation value of the Non-Cumulative Preferred Stock, the liquidation value
of $25 per share (plus accumulated dividends) of the Cumulative Preferred Stock
and the liquidation value (including accumulated dividends) of any other shares
of Parity Liquidation Securities issued and outstanding, payments to holders of
the Non-Cumulative Preferred Stock, the Cumulative Preferred Stock and such
Parity Liquidation Securities will be made pro-rata.
Voting. Except as required by law, holders of Non-Cumulative Preferred
Stock do not have any voting rights with respect to their shares of
Non-Cumulative Preferred Stock.
Uncertificated Securities. With certain limited exceptions, the shares of
Non-Cumulative Preferred Stock are uncertificated securities.
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Cumulative Preferred Stock
General. When issued, the Cumulative Preferred Stock issued in exchange of
the Non-Cumulative Preferred Stock will be validly issued, fully paid and
nonassessable. The holders of the Cumulative Preferred Stock will not have any
preemptive rights. The Cumulative Preferred Stock will not be subject to any
sinking fund or other obligation of Pro-Fac to redeem or retire the Cumulative
Preferred Stock. Unless redeemed by Pro-Fac, the Cumulative Preferred Stock will
have perpetual maturity.
Ranking. The Cumulative Preferred Stock will rank as to dividends and upon
liquidation, dissolution and winding up on a parity with the Non-Cumulative
Preferred Stock, and will rank as to dividends or upon liquidation, dissolution
or winding up, or both, on a parity with any other class or series of capital
stock that expressly provides that it ranks on a parity with the Cumulative
Preferred Stock with respect to dividends or upon liquidation, dissolution and
winding up, as the case may be (collectively, "Parity Dividend Securities" or
"Parity Liquidation Securities"). The Cumulative Preferred Stock will rank
senior with respect to dividends and upon liquidation, dissolution and winding
up to the Common Stock and any other capital stock (other than the
Non-Cumulative Preferred Stock) that does not, by its terms, expressly provide
that it is senior to or on a parity with the Cumulative Preferred Stock with
respect to dividends or upon liquidation, dissolution and winding up, as the
case may be (collectively, "Junior Dividend Securities" or "Junior Liquidation
Securities").
Dividends. Holders of shares of Cumulative Preferred Stock will be entitled
to receive, when, as and if declared by the Board, out of assets of Pro-Fac
legally available therefor, cumulative cash dividends at a quarterly rate equal
to $0.43 per share, except that the dividend payable on the shares of Cumulative
Preferred Stock on October 31, 1995 will equal the full quarterly dividend
amount of $0.43 per share, regardless of the date on which such shares are
issued upon completion of the Exchange Offer. Dividends on the Cumulative
Preferred Stock will be payable quarterly in arrears on each April 30, July 31,
October 31 and January 31 of each year, commencing October 31, 1995. Each such
dividend will be payable to holders of record as they appear on the stock
records of Pro-Fac at the close of business on each April 15, July 15, October
15 and January 15 preceding such dividend payment date, or such other record
dates as selected by the Board, which will not be more than 50 days prior to
such payment date. Dividends will be cumulative from each dividend payment date,
whether or not in any dividend period or periods there are assets of Pro-Fac
legally available for the payment of such dividends.
Accumulations of dividends on shares of Cumulative Preferred Stock will not
bear interest. Except for the dividend payable on October 31, 1995, dividends
payable on the Cumulative Preferred Stock for any period greater or less than a
full dividend period will be computed on the basis of a 360-day year consisting
of twelve 30-day months.
For a summary of the provisions regarding the payment of dividends on the
Cumulative Preferred Stock, the Non-Cumulative Preferred Stock, other Parity
Dividend Securities and Junior Dividend Securities, see "Description of
Preferred Stock -- Non-Cumulative Preferred Stock -- Dividends".
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Redemption. Pro-Fac has the right, at any time and from time to time, to
redeem the Cumulative Preferred Stock, in whole or in part, at the redemption
price of $25 per share, plus, in each case, all dividends accrued and unpaid on
the Cumulative Preferred Stock up to the date fixed for redemption, upon giving
notice at least 30 but not more than 60 days before the date fixed for
redemption. If fewer than all of the outstanding shares of Cumulative Preferred
Stock are to be redeemed, the shares to be so redeemed will be selected pro rata
or by lot, except that Pro-Fac reserves the right to first redeem all of the
shares held by any holder of a number not to exceed 100.
From and after the redemption date (except to the extent Pro-Fac defaults
in the payment of the redemption price), all dividends on the shares of
Cumulative Preferred Stock designated for redemption will cease to accrue, and
all rights of the holders thereof as stockholders of Pro-Fac, except the right
to receive the redemption price thereof, will cease and terminate.
Restriction on Certain Stock Acquisitions. For a summary of the provision
of the Cumulative Amendment regarding restrictions on certain acquisitions by
Pro-Fac of its capital stock, see "Description of Preferred Stock --
Non-Cumulative Preferred Stock -- Restrictions on Certain Stock Acquisitions."
Liquidation. After payment to holders of all outstanding retains, the
holders of the Cumulative Preferred Stock will be entitled to receive, in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
Pro-Fac, $25 per share plus an amount equal to all dividends (whether or not
earned or declared) accrued and unpaid thereon to the date of final distribution
to such holders. Until the holders of the Cumulative Preferred Stock have been
paid such liquidation preference in full, no payment or other distribution will
be made on any Junior Liquidation Securities upon the liquidation, dissolution
or winding up of Pro-Fac. If amounts available after the payment to holders of
all outstanding retains are insufficient to pay, in full, the liquidation value
of the Cumulative Preferred Stock and the liquidation value of the
Non-Cumulative Preferred Stock and the liquidation value (including accumulated
dividends) of any other shares of Parity Liquidation Securities issued and
outstanding, payments to holders of the Cumulative Preferred Stock, the
Non-Cumulative Preferred Stock and such Parity Liquidation Securities will be
made pro-rata. Neither a consolidation or merger of Pro-Fac nor a sale, lease
or transfer of all or substantially all of Pro-Fac's assets will be considered a
liquidation, dissolution or winding up, voluntary or involuntary, of Pro-Fac.
Voting. Except as required by law, holders of Cumulative Preferred Stock
will not have any voting rights with respect to their shares of Cumulative
Preferred Stock.
Stock Certificates. The shares of Cumulative Preferred Stock will be
represented by certificates for such shares.
Transfer Agent. The transfer agent, registrar, dividend agent and
redemption agent for the shares of Cumulative Preferred Stock will be Harris
Trust Company.
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Class B 10% Cumulative Preferred Stock
In June 1995, the Board approved, pursuant to its authority under the
Charter Amendment, the creation of a new series of preferred stock, to be
designated the "Class B, Series 1, 10% Cumulative Preferred Stock" (the "Class B
Stock"). Pro-Fac expects to issue up to 500,000 shares of the Class B Stock to
employees of Curtice Burns pursuant to an employee stock purchase plan adopted
by the Curtice Burns and Pro-Fac Boards of Directors in June 1995 and
anticipated to be implemented in the Fall of 1995.
As approved by the Board, the Class B Stock will rank as to dividends and
upon liquidation, dissolution and winding up on a parity with the Cumulative
Preferred Stock and the Non- Cumulative Preferred Stock and any other class or
series of capital stock that expressly provides that it ranks on a parity with
the Class B Stock with respect to dividends or upon liquidation, dissolution and
winding up. The Class B Stock will rank senior with respect to dividends and
upon liquidation, dissolution and winding up to the Common Stock and any other
capital stock (other than the Non-Cumulative Preferred Stock and the Cumulative
Preferred Stock) that does not, by its terms, expressly provide that it is
senior to or on a parity with the Class B Stock with respect to dividends or
upon liquidation, dissolution and winding up. For purposes of the preceding
discussion of the rights and preferences of the Non-Cumulative Preferred Stock
and the Cumulative Preferred Stock, shares of the Class B Stock are Parity
Dividend Securities and Parity Liquidation Securities.
Holders of Class B Stock will be entitled to receive, when, as and if
declared by the Board, out of assets of Pro-Fac legally available therefor,
cumulative cash dividends at an annual rate of $1.00 per share. It is
anticipated that dividends will be payable once each year on the Class B Stock.
Pro-Fac will have the right to redeem all or part of the Class B Stock at any
time or from time to time at a redemption price of $10 per share plus accrued
and unpaid dividends. It is anticipated that the Class B Stock will have a
liquidation value of $10 per share plus accrued and unpaid dividends. In
general, the other terms of the Class B Stock will be identical to the terms of
the Cumulative Preferred Stock.
It is anticipated that, under the terms of the Curtice Burns employee stock
purchase plan, exempt employees, non-exempt employees and certain designated
hourly employee groups will have the ability to purchase the Class B Stock. The
Class B Stock will not be freely transferrable. Subject to restrictions under
its financing arrangements and as the Board may determine, Pro-Fac currently
intends to offer once annually to repurchase at least five percent of the number
of shares of Class B Stock outstanding, with priority being given to redeeming
the Class B Stock of employees who have terminated their employment with Curtice
Burns. All such redemptions will be subject to limitations imposed on Pro-Fac in
its financing arrangements. See "Pro-Fac Cooperative, Inc. -- Financing of
Acquisition".
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PRICE RANGE OF NON-CUMULATIVE PREFERRED STOCK
There is no active trading market for the Non-Cumulative Preferred Stock.
Accordingly, Pro-Fac does not have current or relevant information as to the
sales prices or high and low bid quotations of the Non-Cumulative Preferred
Stock.
For a description of Pro-Fac's dividend policy on the Non-Cumulative
Preferred Stock, see "Description of Preferred Stock -- Non-Cumulative Preferred
Stock".
PRO-FAC COOPERATIVE, INC.
General
Pro-Fac is a New York agricultural cooperative. Pro-Fac was formed in 1960
to process and market crops grown by its members. Only growers of crops marketed
through Pro-Fac (or associations of growers) can become members of Pro-Fac; a
grower becomes a member through the purchase of Common Stock of Pro-Fac.
Pro-Fac's approximately 650 members are growers (or associations of growers)
located principally in California, Florida, Georgia, Illinois, Iowa, Michigan,
Nebraska, New York, Oregon, Pennsylvania and Washington. The principal executive
offices of Pro-Fac are at 90 Linden Place, P.O. Box 682, Rochester, New York
14603.
Acquisition of Curtice Burns
On November 3, 1994, Pro-Fac acquired Curtice Burns. The acquisition was
accomplished through a tender offer for all outstanding shares of Curtice Burns
and a subsequent merger of PF Acquisition Corp. ("PFAC"), a wholly owned
subsidiary of Pro-Fac, into Curtice Burns. As a result of the acquisition, the
holders of the Class A and Class B Common Stock of Curtice Burns became entitled
to $19 per share in cash, Curtice Burns became a wholly owned subsidiary of
Pro-Fac and Curtice Burns assumed all of the liabilities of PFAC, including
liabilities for acquisition indebtedness.
Financing of Acquisition
In connection with the acquisition, PFAC entered into a Term Loan, Term
Loan Facility and Seasonal Loan Agreement (as since amended, the "Credit
Agreement") with CoBank, ACB, formerly The Springfield Bank for Cooperatives
(the "Bank"), which provided $80 million as a term loan (the "Term Loan") and
approximately $97.5 million as part of a $120 million term loan facility (the
"Term Loan Facility") to finance the acquisition of Curtice Burns, to refinance
certain existing indebtedness of Pro-Fac and Curtice Burns and to pay fees and
expenses related to the acquisition. In addition, PFAC sold $160 million of 12
1/4% Senior Subordinated Notes due 2005 (the "Notes") to certain institutional
investors. As a result of the merger of PFAC into Curtice Burns, Curtice Burns
assumed all of the obligations under the Credit Agreement and the Notes. As a
result of the acquisition, Curtice Burns is more highly leveraged, and has
greater interest expense, than prior to the acquisition. Pro-Fac and certain
subsidiaries of Curtice Burns guaranteed the obligations of Curtice Burns under
the Credit Agreement and under the Notes. In addition, substantially all of the
assets of Pro-Fac, Curtice Burns and certain of Curtice
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Burns' subsidiaries were pledged as security to the Bank for obligations under
the Credit Agreement and the related guarantees. To the extent that payments on
any of this indebtedness are in default or certain financial tests are not met,
Pro-Fac will be unable to pay dividends on any of its capital stock, including
the Non-Cumulative Preferred Stock and the Cumulative Preferred Stock.
The Credit Agreement. Under the Credit Agreement, in addition to the Term
Loan and the Term Loan Facility, the Bank provides up to $83.3 million to meet
Curtice Burns' seasonal financing needs (the "Seasonal Loan Facility") and a
letter of credit facility of $13.7 million (the "Letter of Credit Facility"). As
of August 1, 1995, the amount available under the Term Loan Facility had been
reduced to $116.3 million, of which $115.3 million is outstanding, and the
amount available under the Seasonal Loan Facility had been reduced to $83.3
million. The amount borrowed under the Seasonal Loan Facility fluctuates
significantly based on Pro-Fac's production and other seasonal financing needs.
The Term Loan and Term Loan Facility accrue interest, at Curtice Burns'
option, equal to (i) the relevant London interbank offered rate plus 2.6%, (ii)
the relevant prime rate plus 0.5% or (iii) the relevant U.S. Treasury Rate plus
3.0%. The Seasonal Facility provides for interest on amounts outstanding, at
Curtice Burns' option, of (x) the relevant London interbank offered rate plus
1.75%, (y) the relevant prime rate minus 0.25% or (z) the relevant U.S. Treasury
Rate plus 2.0%. The weighted average rate of interest applicable to the Term
Loan and the Term Loan Facility was approximately 8.6% per annum for the period
from November 3, 1994 through June 24, 1995.
The Term Loan is repayable in 20 equal semi-annual payments, the first of
which was made in May 1995. Borrowings under the Term Loan Facility are payable
during the first five years of the facility in annual installments equal to the
"annual cash sweep" for the preceding fiscal year as defined in the Credit
Agreement. Beginning in 2000, the balance of the Term Loan Facility is repayable
in 10 equal semi-annual installments. Borrowings under the Seasonal Facility are
payable in May 1996. The Letter of Credit Facility provides for the issuance of
letters of credit through May 1996, which facility may, in the Bank's sole
discretion, renew for successive one-year periods.
Under its guarantee provided to the Bank, Pro-Fac is required to achieve,
on a consolidated basis, a minimum adjusted cash flow coverage ratio at the end
of fiscal 1995 of at least 1.0 to 1.0 and at the end of each fiscal year
thereafter of at least 1.1 to 1.0, to maintain a minimum working capital of at
least $100 million as of the end of each month and to maintain a long-term debt
to equity ratio (measured at month-end) of not more than 2.8 to 1.0 from June
1995 through May 1996, and declining over time to 1.8 to 1.0 at June 2001 and
thereafter. Pro-Fac also is required to maintain a consolidated total net worth
during the year of at least 15% of total assets at each month-end (except the
month ending each fiscal year) until July 2000 and 20% thereafter and at least
19% of total assets at the fiscal year ending June 1996, increasing over time to
at least 25% of total assets at the fiscal year ending June 2001 and each fiscal
year thereafter. The Credit Agreement and related Pro-Fac guarantee contain
additional restrictions and obligations on Curtice Burns and Pro-Fac, including
limitations on the incurrence of debt or the creation of liens and limitations
on investments, acquisitions, capital expenditures and asset sales. In addition,
under its guarantee to the Bank, except for payments with respect to
-24-
<PAGE>
patronage and commercial market value for crops, Pro-Fac may not pay dividends
or make other distributions, or purchase or redeem any shares of its capital
stock in an amount exceeding $7.5 million for the fiscal years ending June 1996
and 1997, and increasing each year to $9 million for the fiscal year ending June
2000 and each year thereafter.
The Notes. The Notes are unsecured obligations of Curtice Burns,
subordinated in right of payment to certain other obligations of Curtice Burns,
including obligations under the Credit Agreement. The Notes are unconditionally
guaranteed by Pro-Fac and certain subsidiaries of Curtice Burns, with each such
guarantee subordinated to the guarantors' respective guarantee obligations to
the Bank.
The Notes will mature on February 1, 2005. Interest on the Notes accrues at
the rate of 12 1/4% per annum and is payable semi-annually in arrears on
February 1 and August 1, which payments commenced on February 1, 1995. Curtice
Burns may, at any time before February 1, 1998, redeem up to $56 million
aggregate principal amount of Notes (provided at least $104 million in aggregate
principal amount of Notes remains outstanding after giving effect to such
redemption), at a redemption price equal to 110% of the principal amount of such
Notes, plus accrued interest. Any such redemption must be made with the proceeds
of a capital stock offering or asset sale generating net proceeds exceeding $20
million, in each case to the extent such proceeds are not otherwise applied as
required by the Notes. In addition, at any time on or after February 1, 2000,
Curtice Burns may, at its option, redeem all or part of the Notes at a
redemption price equal (for the 12-month period beginning February 1, 2000) to
104.594% of the principal amount of the Notes being redeemed, plus accrued
interest, which redemption price shall decline over time to 100% for the
12-month period beginning February 1, 2003 and thereafter.
Each holder of the Notes may require Curtice Burns to repurchase such Notes
upon a "change of control" of Pro-Fac or Curtice Burns (as defined in the Notes)
at a price of 101% of the principal amount of such Notes plus accrued interest.
Curtice Burns is required to offer to repurchase the Notes to the extent that
the proceeds of asset dispositions exceed $10 million and are not applied to
reduce indebtedness under the Credit Agreement or reinvested in Curtice Burns.
Any such repurchase of Notes will be at 100% of the principal amount of the
Notes being repurchased.
Under the terms of the Trust Indenture for the Notes, the ability of
Curtice Burns or its subsidiaries to pay dividends or make other distributions
with respect to its capital stock also is limited, based in part on the
achievement of certain fixed charge coverage ratios and consolidated net income
standards. Pro-Fac's ability to pay dividends on the Non-Cumulative Preferred
Stock and the Cumulative Preferred Stock depends on Curtice Burns' ability to
pay dividends to Pro-Fac. The Notes contain additional restrictions and
obligations on Curtice Burns and its subsidiaries, including limitations on the
incurrence of debt or the creation of liens and limitations on asset sales and
transactions with affiliates.
Business of Curtice Burns
Curtice Burns is a producer and marketer of processed food products. In
addition, Curtice Burns manufactures cans which are utilized by Curtice Burns
and sold to third parties. Curtice
-25-
<PAGE>
Burns sells products in three principal categories: (i) "branded" products,
which are sold under Curtice Burns' trademarks, (ii) "private label" products,
which are sold to grocers that in turn use their own brand names on the products
and (iii) "food service" products, which are sold to food service institutions.
In fiscal 1994, approximately one-half of Curtice Burns' net sales were branded
and the remainder were split between private label and food service. Curtice
Burns operates throughout the United States through six operating divisions.
Prior to the acquisition, Pro-Fac and Curtice Burns had operated under an
Integrated Agreement, pursuant to which Pro-Fac leased to Curtice Burns
substantially all of Curtice Burns' facilities, provided Curtice Burns with
crops grown by Pro-Fac's members and provided certain accommodations to Curtice
Burns. Curtice Burns, in turn, processed and marketed such crops, made certain
financing and crop payments to Pro-Fac, shared the losses and income of the
business with Pro-Fac and provided management services to Pro-Fac. In
conjunction with the acquisition, Pro-Fac transferred all of its properties to
Curtice Burns and the two companies entered into a Marketing and Facilitation
Agreement (the "Marketing Agreement"), which superseded the Integrated
Agreement. Under the Marketing Agreement, Pro-Fac and Curtice Burns have
continued, and expect to continue, the marketing and management arrangements of
the Integrated Agreement.
Under the Marketing Agreement, Curtice Burns purchases crops from Pro-Fac
at the "Commercial Market Value" of those crops, which is defined generally as
the weighted average of the prices paid by other commercial processors for
similar crops used for similar or related purposes sold under pre-season
contracts and in the open market in the same or similar market areas. Under the
predecessor agreements to the Marketing Agreement, Curtice Burns paid Pro-Fac
$64.2 million, $59.8 million and $59.2 million as Commercial Market Value for
crops purchased from Pro-Fac in fiscal years 1992, 1993 and 1994, respectively.
The crops purchased by Curtice Burns from Pro-Fac represented approximately 65%,
60% and 65% of all raw agricultural crops purchased by Curtice Burns in fiscal
1992, 1993 and 1994, respectively.
In addition to Commercial Market Value, under the Marketing Agreement,
Curtice Burns will pay to Pro-Fac as additional patronage income (the
"Additional Patronage Income") up to 90% of Curtice Burns' pre-tax income on
Pro-Fac related products (the "Pro-Fac Products"), or reduce Commercial Market
Value by up to 90% of Curtice Burns' losses on Pro-Fac Products. The Marketing
Agreement provides that Additional Patronage Income may not exceed 50% of
Curtice Burns' entire pre-tax income and that no more than 50% of Curtice Burns'
entire pre-tax loss will be charged to Pro-Fac, through a reduction of
Commercial Market Value, during the term of the Notes. Additional Patronage
Income is paid to Pro-Fac for services provided to Curtice Burns, including the
provision of a long term, stable crop supply, favorable payment terms for crops
and access to cooperative bank financing and the sharing of risks in losses of
operations of the business.
Curtice Burns historically has paid Pro-Fac Additional Patronage Income
based on a portion of Curtice Burns' pre-tax income. Under the predecessor
agreements to the Marketing Agreement, Additional Patronage Income generally
equalled 50% of the pre-tax income of Curtice Burns, or in loss years amounts
due to Pro-Fac for interest on its loans to Curtice Burns were reduced by 50% of
Curtice Burns' pre-tax losses. Curtice Burns paid Additional Patronage Income to
Pro-Fac of $9.5 million and $16.9 million in fiscal 1992 and 1994 on account of
-26-
<PAGE>
Curtice Burns' earnings for those years. In fiscal 1993, Curtice Burns reduced
the amount of interest due to Pro-Fac by $21.8 million based on a 50% allocation
of a loss at Curtice Burns.
Additional Patronage Income received by Pro-Fac is deductible to Pro-Fac
for federal income tax purposes only to the extent distributed to its members.
Pro-Fac may make this distribution to its members through a combination of cash
and securities as long as a minimum of 20% of the amount is paid in cash as
required by federal tax law. Pro-Fac historically has paid its members between
20% and 30% of Additional Patronage Income in cash and the remaining portion in
qualified retains. Funds made available by the distribution of investment
certificates to members (i.e., in retains) in lieu of cash historically have
been reinvested by Pro-Fac in Curtice Burns. Pursuant to the Notes, Pro-Fac
will be required to reinvest at least 70% of the Additional Patronage Income in
Curtice Burns.
Financial Information
The following table sets forth selected historical financial data relating
to Pro-Fac for the periods indicated. This information has been taken or derived
from the audited financial statements contained in Pro-Fac's Annual Report on
Form 10-K for the year ended June 25, 1994 (the "Pro-Fac 10-K") and the
unaudited financial statements contained in Pro-Fac's Quarterly Report on Form
10-Q for the quarter ended March 25, 1995 (the "Pro-Fac 10-Q"). The nine-month
data reflects Pro-Fac's acquisition of Curtice Burns on November 3, 1994. The
information presented for the nine-month period ended and as of March 25, 1995
is therefore consolidated and reflects Pro-Fac and its wholly owned subsidiary
Curtice Burns.
More comprehensive financial information is included in the Pro-Fac 10-K,
the Pro-Fac 10- Q and the other documents filed by Pro-Fac with the Commission,
and the financial data set forth below is qualified in its entirety by reference
to such reports and other documents including the financial statements (and any
related notes) contained therein.
-27-
<PAGE>
PRO-FAC COOPERATIVE, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Millions)
<TABLE>
<CAPTION>
Income Statement Data Fiscal Year Ended Nine Months Ended
---------------------------------------------- ------------------------------
June 26, 1992 June 26, 1993 June 25, 1994 March 24, 1994 March 25, 1995
------------- ------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net Sales and Revenues ............................. $94.2 $56.9 $94.4 $58.4 $347.1
Net income/(loss)
(proceeds before dividends) ...................... $13.9 ($17.5) $24.6 $18.5 $ 17.9
Dividends on common
and preferred stock .............................. (4.4) (4.5) (4.4) (4.4) (4.9)
------ ------ ------ ------ ------
Net proceeds/(loss) ................................ 9.5 (22.0) 20.2 14.1 13.0
Allocation (to)/from
earned surplus ................................... (.2) 27.9 2.9 (2.1) (9.8)
------ ------ ------ ------ ------
Total net proceeds
available to members from current
operations ....................................... $9.3 $5.9 $17.3 $2.0 $3.2
Distribution from current
operations, payable to members currently ......... $2.3 $1.1 $3.1 $2.3 $0.6
Ratio of earnings to fixed charges(1) .............. 1.68x --(2) 2.91x 2.77x 1.78x
</TABLE>
(1) For purposes of calculating earnings to fixed charges, earnings are
determined by adding fixed charges to net income/(loss) less
undistributed earnings of the Bank. Fixed charges consist of interest
expense and rentals deemed representative of the interest factor
included in rent expense.
(2) Earnings were inadequate to cover fixed charges by $19.0 million in
fiscal 1993.
<TABLE>
<CAPTION>
Balance Sheet Data As of
-----------------------------------------------------------------------
June 26, 1993 June 25, 1994 March 24, 1994 March 25, 1995
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Working capital ............................................ $ 1,713 $ 2,060 $ 65 $114,255
Total assets ............................................... 324,884 296,051 305,846 702,686
Long-term portion of investment
in direct financing leases .............................. 152,329 123,677 118,677 --
Long-term loans receivable from
Curtice Burns ........................................... 78,648 78,040 86,262 --
Long-term portion of investment in
CoBank, ACB ............................................. 16,814 19,632 19,356 22,907
Long-term debt ............................................. 168,000 127,134 133,014 325,438
Total liabilities .......................................... 214,980 172,286 187,235 567,379
Common Stock ............................................... 13,455 10,284 10,335 10,217
Total shareholders' and members'
capitalization ............................................. 96,449 113,481 108,276 125,090
</TABLE>
-28-
<PAGE>
The following unaudited pro forma condensed combined financial data (the
"Pro-Forma Combined Financial Data") of Pro-Fac and Curtice Burns is based on
the historical financial statements of Pro-Fac and the historical consolidated
financial statements of Curtice Burns, adjusted to give effect to Pro-Fac's
acquisition of Curtice Burns. This information has been taken or derived from
the audited financial statements contained in the Registration Statement of
Pro-Fac on Form S-1, filed with the Commission June 15, 1995 (the "Registration
Statement"), which is on file with the Commission and may be examined in the
manner described under "Available Information" (except that such information
will not be available at the regional offices of the Commission). More
comprehensive financial information is included in the Registration Statement,
and the financial data set forth below is qualified in its entirety by reference
to such reports and other documents including the financial statements (and any
related notes) contained therein.
The Unaudited Pro Forma Combined Statements of Operations of Pro-Fac and
Curtice-Burns for the year ended June 25, 1994 and for the nine months ended
March 25, 1995 give effect to Pro-Fac's acquisition of Curtice Burns as if it
had occurred as of June 27, 1993 and June 26, 1994, respectively. The pro forma
combined financial data do not purport to represent what the combined results of
operations or financial position of Pro-Fac and Curtice Burns would actually
have been had the acquisition in fact occurred on such date or to project the
combined results of operations or financial position of Pro-Fac and Curtice
Burns for any future period or date. The pro forma combined data do not give
effect to any transaction other than Pro-Fac's acquisition of Curtice Burns as
discussed in the notes to the Pro Forma Combined Financial Data set forth below.
The acquisition was accounted for using the purchase method of accounting.
In recording the acquisition, approximately $121.6 million was added to fixed
asset values to reflect appraised fair market value, and the asset lives were
adjusted to lives deemed appropriate for assets acquired. The resulting annual
depreciation will approximate $23.3 million on all existing assets at the
appraised values. In addition, approximately $94.8 million of goodwill and other
intangible assets were recorded as the excess of purchase cost over net assets
acquired. Included in this amount was approximately $45.1 million for deferred
tax adjustments to properly reflect the effects of the acquisition in accordance
with the Statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes." The resulting annual amortization of goodwill and
other intangible assets will approximate $2.7 million for goodwill and other
intangible assets using a 35-year amortization period. For purposes of preparing
these financial statements a preliminary allocation of the purchase price has
been made. Future adjustments will be made to this allocation based upon the
final asset appraisals and analyses.
The pro forma adjustments are based on available information and upon
certain assumptions that managements of Pro-Fac and Curtice Burns believe are
reasonable under the circumstances. The Pro Forma Combined Financial Data and
accompanying notes should be read in conjunction with the historical financial
statements of Pro-Fac and the historical consolidated financial statements of
Curtice Burns, including the notes thereto, and other financial information
pertaining to Pro-Fac and Curtice Burns included or referred to elsewhere
herein.
-29-
<PAGE>
PRO-FAC COOPERATIVE, INC. AND CURTICE-BURNS FOODS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 25, 1994
(Dollars in Millions)
<TABLE>
<CAPTION>
Pro-Fac Curtice- Acquisition
Cooperative Burns Foods, and Note
Inc. Inc. Offering Pro Forma
(Historical) (Historical) Adjustments Combined
------------ ------------ ----------- --------
<S> <C> <C> <C> <C>
Net sales and revenues $94.3 $829.1 $(94.3)(a)(c) $829.1
Cost of sales 58.2 592.6 (54.1)(a)(b) 596.7
------ ------- -------- -------
Gross profit 36.1 236.5 (40.2) 232.4
Selling, administrative
and general 0.8 186.9 (2.6)(a)(c) 185.1
Restructuring including
net (gain)/loss from
division disposals -- (7.8) 7.8(g) --
Change in control expenses -- 3.5 (3.5)(d) --
Pro-Fac share of earnings -- 16.9 (16.9)(a) --
------- ------ -------- -----
Operating income 35.3 37.0 (25.0) 47.3
Total interest expense 11.6 18.2 7.4(e) 37.2
------- ------ ------- ------
Pre-tax earnings/(loss) 23.7 18.8 (32.4) 10.1
(Benefit)/provision for taxes (0.8) 8.7 (3.9)(f) 4.0
------- ------ -------- ------
Net income/(loss) $ 24.5 $ 10.1 $(28.5) $ 6.1
====== ====== ======= ======
</TABLE>
See accompanying notes to the pro forma combined financial data.
-30-
<PAGE>
PRO-FAC COOPERATIVE, INC. AND CURTICE-BURNS FOODS, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 25, 1995
(Dollars in Millions)
<TABLE>
<CAPTION>
Pro-Fac Curtice- Acquisition
Cooperative Burns and Note
Inc. Foods, Inc. Offering Pro Forma
(Historical) (Predecessor) Adjustments Combined
------------ ------------- ----------- --------
<S> <C> <C> <C> <C>
Net sales and revenues $347.1 $276.6 $(50.5)(a) $573.2
Cost of sales 257.5 195.8 (50.8)(a)(b) 402.5
------- ------- -------- -------
Gross profit 89.6 80.8 0.3 170.7
Selling, administrative
and general 66.6 60.6 (0.6)(a)(c) 126.6
Interest income from
Curtice-Burns prior
to Acquisition (6.1) -- 6.1(a) --
Restructuring including
net loss from
division disposals -- 8.4 (8.4)(g) --
Change in control expenses -- 2.2 (2.2)(d) --
Gain on assets resulting
from fire claim -- (6.5) -- (6.5)
Pro-Fac share of earnings (5.2) 4.1 1.1(a) --
------- ----- ----- ---
Operating income 34.3 12.0 4.3 50.6
Total interest expenses 20.6 7.6 2.9(e) 31.1
------ ----- ----- ------
Pretax earnings (loss) 13.7 4.4 1.4 19.5
(Benefit)/provision for taxes (4.2) 2.7 (1.3)(f) (.2)(h)
------- ----- -------- --------
Net income/(loss) $ 17.9 $ 1.7 $ 0.1 $ 19.7
======= ===== ======== ========
</TABLE>
See accompanying notes to the pro forma combined financial data.
-31-
<PAGE>
NOTES TO THE PRO FORMA COMBINED FINANCIAL DATA
Note 1. Basis of Presentation
The unaudited Pro Forma Combined Statements of Operations for the year
ended June 25, 1994 and the nine months ended March 25, 1995 have been presented
assuming Pro-Fac's acquisition of Curtice Burns was consummated as of June 27,
1993 and June 26, 1994, respectively. The unaudited pro forma financial
information should be read in conjunction with the financial historical
statements and notes thereto of Curtice-Burns and Pro-Fac included or referred
to elsewhere in this document.
Note 2. Unaudited Pro Forma Combined Statement of Operations for the Year Ended
June 25, 1994 Adjustments
(a) To reflect the elimination of the earnings split and other
transactions between Curtice Burns and Pro-Fac.
(b) Primarily to reflect the adjustment to depreciation expense in
connection with recording fixed asset values at appraised fair
market value and to adjust the asset lives deemed appropriate
for the assets acquired.
(c) To reflect $2.7 million of amortization of goodwill and other
intangible assets assuming life of 35 years and to reduce
previously recorded amortization of goodwill and other
intangibles by $3.4 million. Additionally, to reflect the
reclassification of the patronage dividend received from the
Bank ($1.9 million).
(d) To reflect the elimination of change in control expenses
incurred during fiscal 1994.
(e) To reflect the net adjustment to interest expense calculated
as follows:
<TABLE>
<CAPTION>
(Dollars
in Millions)
------------
<S> <C>
Notes at rate of 12.25% $ 19.6
Borrowings under Credit Agreement:
$80.0 million Term Loan at assumed
rate of 8.3% 6.7
$97.5 million Term Loan Facility
at assumed rate of 7.8% 7.6
Amortization of debt insurance costs
(10-year period) 0.8
Less historical interest expense net adjustment (27.0)
Less amortization of debt issue costs related
to debt repaid (0.3)
-------
Net adjustment to interest expense $ 7.4
======
</TABLE>
(f) To reflect the income tax effect of the pro forma adjustments
(exclusive of non-deductible expenses) based on an assumed
marginal income tax rate of 40 percent.
-32-
<PAGE>
Note 2. (g) To reflect the elimination of restructuring activities
(continued) relating to divisions disposed of by Curtice Burns.
Note 3. Unaudited Pro Forma Combined Statement of Operations for the
Nine Months Ended March 25, 1995 Adjustments for Predecessor
Entity
(a) To reflect the elimination of the earnings split and other
transactions between Curtice Burns and Pro-Fac.
(b) Primarily to reflect the adjustment to depreciation expense in
connection with recording fixed asset values at appraised fair
market value and to adjust the asset lives to lives deemed
appropriate for the assets acquired.
(c) To adjust amortization of goodwill and other intangibles
assuming life of 35 years and to eliminate previously recorded
amortization of Curtice Burns.
(d) To reflect the elimination of change in control expenses
incurred by Curtice Burns during the period.
(e) To reflect the net adjustment to interest expense for the
predecessor entity calculated as follows:
<TABLE>
<CAPTION>
(Dollars
in Millions)
------------
<S> <C>
Notes at rate of 12.25% $ 7.1
Borrowings under Credit Agreement:
$80.0 million Term Loan at assumed
rate of 8.3% 2.4
$97.5 million Term Loan Facility at
assumed rate of 7.8% 2.8
Amortization of debt insurance costs
(10-year period) 0.3
Less historical interest expense net adjustment (9.7)
------
Net adjustment to interest expense $ 2.9
======
</TABLE>
(f) To reflect the income tax effect of the pro forma adjustments
(exclusive of non-deductible expenses) based on an assumed
marginal income tax rate of 40 percent.
(g) To reflect the elimination of restructuring activities
relating to divisions disposed of by Curtice Burns.
(h) The benefit for taxes includes the recognition of an operating
loss carryforward recorded by Pro-Fac in the second quarter of
fiscal 1995.
-33-
<PAGE>
Each of Pro-Fac and Curtice Burns is subject to the periodic filing
requirements of the Act and in accordance therewith files periodic reports and
other information with the Commission relating to its business, financial
condition and other matters. Neither Pro-Fac nor Curtice Burns is required to
file proxy statements with the Commission. Pro-Fac's and Curtice Burns' periodic
reports and other information filed with the Commission should be available for
inspection at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, Room 1024, N.W., Washington, D.C. 20549-1004
and should also be available for inspection and copying at the regional offices
of the Commission in New York (7 World Trade Center, Suite 1300, New York, New
York 10048) and Chicago (Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511). Copies of such material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549-1004.
The name, business address, principal occupation or employment,
five-year employment history and citizenship of each director and executive
officer of Pro-Fac and certain other information are set forth in Schedule 1
hereto.
CAPITALIZATION
The following table sets forth the summary consolidated capitalization
of Pro-Fac and its subsidiaries as of March 25, 1995 and as adjusted to reflect
the issuance pursuant to the Exchange Offer of one share of Cumulative Preferred
Stock for each share of Non-Cumulative Preferred Stock tendered, assuming that
100% of the outstanding shares of Non-Cumulative Preferred Stock are tendered.
The adjustments do not reflect any other transactions after March 25, 1995.
<TABLE>
<CAPTION>
Actual As Adjusted
------ -----------
(In Thousands)
<S> <C> <C>
Retained earnings allocated $30,749 $30,749
to members
Non-qualified allocation to 3,765 3,765
members
Non-Cumulative Preferred 76,083 --
Stock
Cumulative Preferred Stock -- 76,083
Earned surplus 14,493 14,493
Total shareholders' and ________ ________
members' capitalization $125,090 $125,090
======== ========
</TABLE>
-34-
<PAGE>
SCHEDULE 1
DIRECTORS AND EXECUTIVE OFFICERS
OF PRO-FAC
The following table sets forth the name, age and present principal
occupation or employment, and material occupations, positions, offices or
employments for the past five years of each director and executive officer of
Pro-Fac. Unless otherwise indicated below, the business address of each such
person is c/o Pro-Fac Cooperative, Inc., 90 Linden Place, P.O. Box 682,
Rochester, New York 14603. Each such person is a citizen of the United States of
America. No director of Pro-Fac beneficially owns Non-Cumulative Preferred Stock
representing more than approximately 1.43% of the Non-Cumulative Preferred Stock
outstanding as of June 24, 1995.
DIRECTORS (INCLUDING EXECUTIVE
OFFICERS WHO ARE DIRECTORS)
<TABLE>
<CAPTION>
Present Principal Occupation or
Name and Employment; Material Positions Held
Business Address Age During Past Five Years
---------------- --- -----------------------------------
<S> <C> <C>
Dale W. Burmeister (1) 55 Director of Pro-Fac since 1992. He
1605 S. 32nd Avenue has been a member of Pro-Fac since
Shelby, MI 49455 1974. Mr. Burmeister is a fruit and
vegetable grower (Lakeshore Farms,
Inc., and Dale Burmeister, sole
proprietorship, Shelby, MI).
Robert V. Call, Jr. (2) 68 Director of Pro-Fac since 1962. He
8113 Lewiston Road served as President of Pro-Fac from
Batavia, NY 14020 1986 until January 28, 1995 and has
been a member of Pro-Fac since
1961. He has been a Director of
Curtice Burns since 1986 and has
been Chairman of the Board of
Curtice Burns since November 1994.
Mr. Call is a vegetable, fruit and
grain farmer (My-T Acres, Inc.,
Batavia, NY).
Glen Lee Chase (3) 58 Director of Pro-Fac since 1989. He
Box 314 has been a member of Pro-Fac since
Oglethorpe, GA 31068 1984. Mr. Chase is a peanut,
poultry, grain and vegetable farmer
(Chase Farms Inc., Oglethorpe, GA).
</TABLE>
-------------------------
(1) Beneficially owns 9,193 shares of Non-Cumulative Preferred Stock.
(2) Beneficially owns 43,567 shares of Non-Cumulative Preferred Stock.
(3) Beneficially owns 4,962 shares of Non-Cumulative Preferred Stock.
I-1
<PAGE>
<TABLE>
<S> <C> <C>
Tommy R. Croner (4) 52 Director of Pro-Fac since 1985. He
RD #1, Box 208 has been Secretary of Pro-Fac since
Berlin, PA 15530 March 27, 1995. He has been a
member of Pro-Fac since 1973. Mr.
Croner is a dairy and potato farmer
(T. Rich Inc., Berlin, PA).
Albert P. Fazio (5) 59 Director of Pro-Fac since 1976. He
12112 NW Lower River has served as Vice President of
Road Pro-Fac since March 1993 and served
Vancouver, WA 98660 as acting President of Pro-Fac from
January 28, 1995 to March 27, 1995.
Mr. Fazio has been a member of
Pro-Fac since 1975. He was
Secretary of Pro-Fac from March
1991 to March 1993. Mr. Fazio is a
vegetable, grain and livestock
farmer (New Columbia Garden Co.,
Inc., Vancouver, WA). Mr. Fazio
also operates a sand and gravel
business (Fazio Bros. Sand Co.,
Vancouver, WA).
Bruce R. Fox (6) 48 Director of Pro-Fac since 1974. He
N.J. Fox & Sons, Inc. has been President of Pro-Fac since
40 Second Street March 27, 1995. He has been a
Shelby, MI 49455 member of Pro-Fac since 1974. He
has been a Director of Curtice
Burns since November 1994. He
served as Treasurer of Pro-Fac from
1984 to March 27, 1995. Mr. Fox is
a fruit and vegetable grower (N.J.
Fox & Sons, Inc., Shelby, MI).
Steven D. Koinzan (7) 46 Director of Pro-Fac since 1983. He
P.O. Box 7 has been Treasurer of Pro-Fac since
Whispering Pines March 27, 1995. He has been a
Valentine, NE 69201 member of Pro-Fac since 1979. He
has been a Director of Curtice
Burns since November 1994. He
served as Secretary of Pro-Fac from
March 1993 to March 27, 1995. Mr.
Koinzan is a popcorn, fieldcorn and
soybean farmer (Koinzan Farms,
Norden, NE).
</TABLE>
-------------------------
(4) Beneficially owns 10,076 shares of Non-Cumulative Preferred Stock.
(5) Beneficially owns 8,430 shares of Non-Cumulative Preferred Stock.
(6) Beneficially owns 13,559 shares of Non-Cumulative Preferred Stock.
(7) Beneficially owns 1,924 shares of Non-Cumulative Preferred Stock.
I-2
<PAGE>
<TABLE>
<S> <C> <C>
Kenneth A. Mattingly (8) 47 Director of Pro-Fac since 1993. He
8283 Harris Road has been a member of Pro-Fac since
LeRoy, NY 14482 1978. Mr. Mattingly is a vegetable
and grain farmer (M-B Farms Inc.,
LeRoy, NY).
Allan D. Mitchell (9) 68 Director of Pro-Fac since 1975. He
2577 Rittmer Lane has been a member of Pro-Fac since
Seneca Falls, NY 13148 1961. He was Secretary of Pro-Fac
from 1985 to 1990. Mr. Mitchell is
a fruit grower in North Rose, NY.
Allan W. Overhiser (10) 35 Director of Pro-Fac since March
6317-107th Avenue 1994. He has been a member of
South Haven, MI 49090 Pro-Fac since 1984. Mr. Overhiser
is a fruit farmer (A.W. Overhiser
Orchards, South Haven, MI).
Paul E. Roe (11) 56 Director of Pro-Fac since 1986. He
1720 Toomey Road has been a member of Pro-Fac since
Bellona, NY 14415 1961. Mr. Roe is a vegetable, grain
and dry bean farmer (Roe Acres,
Inc., Bellona, NY).
Edward L. Whitaker (12) 69 Director of Pro-Fac since 1991. He
RR1, Box 34 has been a member of Pro-Fac since
19174 N. County Road 1988. Mr. Whitaker is a farm land
2800E owner and a popcorn grower in
Forest City, IL 61532 Forest City, IL.
</TABLE>
-------------------------
(8) Beneficially owns 3,147 shares of Non-Cumulative Preferred Stock.
(9) Beneficially owns 6,680 shares of Non-Cumulative Preferred Stock.
(10) Beneficially owns 1,512 shares of Non-Cumulative Preferred Stock.
(11) Beneficially owns 3,160 shares of Non-Cumulative Preferred Stock.
(12) Beneficially owns 117 shares of Non-Cumulative Preferred Stock.
I-3
<PAGE>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
<TABLE>
<CAPTION>
Present Principal Occupation or
Name and Employment; Material Positions Held
Business Address Age During Past Five Years
---------------- --- -----------------------------------
<S> <C> <C>
Thomas R. Kalchik (13) 48 Mr. Kalchik is employed by Curtice
Burns. He has served as Vice
President of Administration and
Planning of Pro-Fac since June 1995
and as Assistant Secretary of
Pro-Fac since 1983. From June 1990
to June 1995, Mr. Kalchik was Vice
President of Member Relations of
Pro-Fac. Mr. Kalchik was Director
of Member Relations of Pro-Fac from
August 1983 to June 1990.
Kevin M. Murphy (14) 42 Mr. Murphy is employed by Curtice
Burns. He has been Vice President
of Member Relations of Pro-Fac
since June 1995. He was Director of
Pro-Fac Communications and Member
Relations from August 1990 to June
1995.
William D. Rice 61 Mr. Rice is employed by Curtice
Burns. He has been the Assistant
Treasurer of Pro-Fac since 1970. He
has been Senior Vice
President-Finance and
Administration of Curtice Burns
since 1991, Secretary of Curtice
Burns since 1989 and Treasurer of
Curtice Burns since 1975. He was
Vice President--Finance of Curtice
Burns from 1969 to 1991.
</TABLE>
(13) Beneficially owns 328 shares of Non-Cumulative Preferred Stock.
(14) Beneficially owns 300 shares of Non-Cumulative Preferred Stock.
I-4
<PAGE>
<TABLE>
<S> <C> <C>
Stephen R. Wright (15) 47 Mr. Wright is employed by Curtice
Burns. He has been the General
Manager of Pro- Fac since March 27,
1995 and served as Assistant
General Manager of Pro-Fac from
November 14, 1994 to March 27,
1995. He also has served as
Assistant Secretary and Assistant
Treasurer of Pro-Fac since
September 19, 1994. He has been
Senior Vice President --
Procurement of Curtice Burns since
November 14, 1994. Mr. Wright was
Vice President -- Procurement for
Curtice Burns from July 1990 to
November 1994.
</TABLE>
(15) Beneficially owns 840 shares of Non-Cumulative Preferred Stock.
II
<PAGE>
EXHIBIT A-1
CHARTER AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
PRO-FAC COOPERATIVE, INC.
Paragraph 6 of Pro-Fac's certificate of incorporation is
amended to read in its entirety as follows:
6. The aggregate number of shares of stock which the
Corporation shall have the authority to issue is 60,000,000, of which
5,000,000 shares of the par value of $5 per share shall be designated as
Common Voting Stock, 5,000,000 shares of the par value of $25 per share
shall be designated as Non-Cumulative Preferred Stock, 10,000,000 shares
of the par value of $1 per share shall be designated as Class A Preferred
Stock, 10,000,000 shares of the par value of $1 per share shall be
designated as Class B Preferred Stock, 10,000,000 shares of the par value
of $1 per share shall be designated as Class C Preferred Stock,
10,000,000 shares of the par value of $1 per share shall be designated as
Class D Preferred Stock and 10,000,000 shares of the par value of $1 per
share shall be designated as Class E Preferred Stock.
The designations, rights, preferences, privileges, voting
powers and limitations of said classes of stock are as follows:
(a) The shares of the Non-Cumulative Preferred Stock may be
issued in one or more annual series, which the Board of Directors shall
have the authority to establish, the shares of each such series to be
designated by the year of issuance so as to distinguish them from shares
of all other series.
The holders of the Non-Cumulative Preferred Shares shall be
entitled to receive as and when declared by the Board of Directors out of
funds legally available therefor dividends at such rate as may, from time
to time, be determined by the Board of Directors, but not less than 6
percent per annum of the par value of such shares. Such dividends, if
any, shall be non-cumulative and shall be payable at such times as shall
be determined by the Board of Directors. After full non-cumulative
dividends at the rate determined by the Board of Directors for the then
current year shall have been declared and paid or set apart for payment
to the holders of Preferred shares, dividends may be declared and paid or
set apart for payment to the holders of Common shares.
Subject to the foregoing provisions, the Non-Cumulative
Preferred Stock shall not be entitled to participate in any other or
additional surplus or net profits of the corporation. The corporation
shall be entitled from time to time to retire the whole or any portion or
A-1-1
<PAGE>
series of its Non-Cumulative Preferred Stock upon payment of the par
value of such stock plus all accrued dividends unpaid at the date of such
retirement. Such retirement shall be effected by payment out of funds
legally available for such purpose, but no such stock shall be redeemed
for cash under circumstances which would produce any impairment of the
capital or capital stock of the corporation. Such retirement shall be on
such other terms and conditions as may be determined by the Board of
Directors, provided that no shares of the Non-Cumulative Preferred Stock
shall be retired except upon 90 days' written notice of such retirement
given to the holders thereof.
Upon dissolution or other termination of the Corporation or
its business, or the distribution of its assets, prior to any payment to
the holders of the Common Voting Stock, the holders of the Non-Cumulative
Preferred Stock shall first receive the full par value of such stock,
together with the amount of such dividends as have been declared but are
unpaid as of such distribution and payment.
(b) Each of the Class A Preferred Stock, the Class B Preferred
Stock, the Class C Preferred Stock, the Class D Preferred Stock and the
Class E Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more series of Class A Preferred Stock,
Class B Preferred Stock, Class C Preferred Stock, Class D Preferred Stock
or Class E Preferred Stock, as the case may be, and the Board of
Directors is expressly authorized, prior to issuance, in the resolution
or resolutions providing for the issue of shares of each particular
series of any such class of preferred stock, to fix the following:
(i) The distinctive serial designation of such
series which shall distinguish it from other series;
(ii) The number of shares included in such series,
which number may be increased or decreased from time to time
unless otherwise provided by the Board of Directors in
creating the series;
(iii) The annual dividend rate (or method of
determining such rate) for shares of such series, the date or
dates upon which, and the form or method of payment in which,
such dividends shall be payable and, subject to paragraph (c)
below, the relative priority of the right to such dividends;
(iv) Whether dividends on the shares of such series
will be cumulative or non-cumulative, and, in the case of
shares of any series having cumulative dividend rights, the
date or dates or method of determining the date or dates from
which dividends on the shares of such series shall be
cumulative;
(v) The amount or amounts which shall be paid out of
the assets of the Corporation to the holders of the shares of
such series upon voluntary or involuntary liquidation,
dissolution or winding up of the Corporation and, subject to
paragraph (c) below, the relative priority of the right to
such distribution;
A-1-2
<PAGE>
(vi) The price or prices at which, the period or
periods within which and the terms and conditions upon which
the shares of such series may be redeemed, in whole or in
part, at the option of the Corporation;
(vii) The obligation, if any, of the Corporation to
purchase or redeem shares of such series pursuant to a sinking
fund or otherwise and the price or prices at which, the period
or periods within which and the terms and conditions upon
which the shares of such series shall be redeemed, in whole or
in part, pursuant to such obligation;
(viii) The period or periods within which and the
terms and conditions, if any, including the price or prices or
the rate or rates of conversion and the terms and conditions
of any adjustments thereof, upon which the shares of such
series shall be convertible at the option of the holder into
shares of any class of stock or into shares of any other
series of such class of preferred stock, except into shares of
a class having rights or preferences as to dividends or
distribution of assets upon liquidation which are prior or
superior in rank to those of the shares being converted;
(ix) The voting rights, if any, of the shares of such
series in addition to those required by law; and
(x) Any other relative designations, rights,
preferences, privileges, voting powers or limitations of the
shares of the series not inconsistent herewith or with
applicable law.
(c) All shares of Class A Preferred Stock, Class B Preferred
Stock, Class C Preferred Stock, Class D Preferred Stock and Class E
Preferred Stock (i) shall rank senior in priority to the Common Voting
Stock and, as determined by the Board of Directors, on a parity with or
junior in priority to the Non-Cumulative Preferred Stock in respect of
the right to receive dividends and the right to receive payments out of
the assets of the Corporation upon voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, (ii) shall, with respect to
other shares of its class, be of equal rank with respect to all other
shares of such class, regardless of series, and (iii) shall be identical
in all respects except as provided in paragraph (b) above. The shares of
any one series of the Class A Preferred Stock, the Class B Preferred
Stock, the Class C Preferred Stock, the Class D Preferred Stock or the
Class E Preferred Stock shall be identical with each other in all
respects except as to the dates from and after which dividends thereon
shall be cumulative. In case the stated dividends or the amounts payable
on liquidation are not paid in full, the shares of any series of the
Class A Preferred Stock, the Class B Preferred Stock, the Class C
Preferred Stock, Class D Preferred Stock or Class E Preferred Stock shall
share ratably with the shares of all other series of Class A Preferred
Stock, Class B Preferred Stock, Class C Preferred Stock, Class D
Preferred Stock.or Class E Preferred Stock, as the case may be, in the
payment of dividends, including accumulations, if any, in accordance with
the sums which would be payable on said shares if all dividends were
declared and paid in full, and in any distribution of assets other than
by way of dividends in accordance with the sums which would be payable on
such distribution if all sums
A-1-3
<PAGE>
payable were discharged in full. Shares of Class A Preferred Stock, Class
B Preferred Stock, Class C Preferred Stock, Class D Preferred Stock and
Class E Preferred Stock redeemed, purchased or otherwise acquired by the
Corporation (including shares surrendered for conversion) shall, as
determined by the Board of Directors and subject to applicable law, be
canceled and thereupon restored to the status of authorized but unissued
Class A Preferred Stock, Class B Preferred Stock, Class C Preferred
Stock, Class D Preferred Stock or Class E Preferred Stock, as the case
may be, undesignated as to series, or retained as treasury shares.
(d) Except as otherwise provided by the Board of Directors in
accordance with paragraph (b) above in respect of any series of the Class
A Preferred Stock, the Class B Preferred Stock, the Class C Preferred
Stock, the Class D Preferred Stock or the Class E Preferred Stock or as
otherwise expressly required by law, all voting rights of the Corporation
shall be vested exclusively in the holders of the Common Voting Stock.
Each holder of Common Voting Stock shall have one vote regardless of the
number of such shares held by such shareholder. When two or more holders
of Common Voting Stock join in an agricultural venture which markets
crops through the Corporation, the Board of Directors shall in its
discretion determine whether such venture is a single agricultural
enterprise for which the holders of the Common Voting Stock who
participate in the enterprise shall have one vote among them or whether
the venture is a multiple enterprise entitling the holders of Common
Voting Stock who participate in the enterprise to more than one vote.
Any holder of Common Voting Stock who ceases to be a producer
of agricultural products which he sells to the Corporation shall be
obligated to dispose of his Common Voting Stock as provided in the Bylaws
of the Corporation.
Upon dissolution or other termination of the Corporation or
its business, or the distribution of its assets, after payment to the
holders of Non-Cumulative Preferred Stock, Class A Preferred Stock, Class
B Preferred Stock, Class C Preferred Stock, Class D Preferred Stock and
Class E Preferred Stock as herein provided, out of the funds so remaining
there shall first be paid to the holders of the Common Voting Stock the
par value thereof, together with the amount of such dividends as may have
been declared but are unpaid as of such distribution and payment. Should
there be insufficient funds to make such payment, then the holders of
such Common Voting Stock shall share such funds as are available in such
proportion as the par value of and accrued dividends on their stock shall
bear to the total par value of and accrued dividends on all outstanding
Common Voting Stock. After payment to the holders of all classes of stock
as herein provided, the funds remaining shall be distributed as provided
by law and in the Bylaws of the Corporation.
A-1-4
<PAGE>
EXHIBIT A-2
CUMULATIVE AMENDMENT
DESIGNATION, PREFERENCES AND RIGHTS OF CLASS A CUMULATIVE PREFERRED
STOCK
1. CERTAIN DEFINITIONS
As used herein, the following terms shall have the following
meanings (with terms defined in the singular having comparable meanings when
used in the plural and vice versa), unless the context otherwise requires:
"Board of Directors" means the Board of Directors of the
Corporation.
"Business Day" means any day other than a Saturday, Sunday,
national holiday or other day on which commercial banks in New York City are
authorized or required to close under the laws of the State of New York.
"Capital Stock" means any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate
stock.
"Common Stock" means the Common Voting Stock, par value $5.00
per share, of the Corporation and any other class of common stock hereafter
authorized by the Corporation from time to time.
"Corporation" means Pro-Fac Cooperative, Inc.
"Cumulative Preferred Stock" means the Class A Cumulative
Preferred Stock, par value $1.00 per share, of the Corporation.
"Dividend Payment Date" means the April 30, July 31, October
31 and January 31 of each year.
"Dividend Period" means the Initial Dividend Period and,
thereafter, each Quarterly Dividend Period.
"Dividend Record Date" means, with respect to the dividend
payable on each Dividend Payment Date, the immediately preceding April 15, July
15, October 15 or January 15 or such other record date as may be designated by
the Board of Directors with respect to the dividend payable on such Dividend
Payment Date; provided, however, that such record date may not be more than
fifty (50) days prior to such Dividend Payment Date.
A-2-1
<PAGE>
"Holder" means a registered holder of shares of Cumulative
Preferred Stock.
"Initial Dividend Period" means, with respect to each share of
Cumulative Preferred Stock, the dividend period commencing on the Issue Date of
such share of Cumulative Preferred Stock and ending on and including the
immediately succeeding Dividend Payment Date.
"Issue Date" means, with respect to each share of Cumulative
Preferred Stock, the date upon which such share was originally issued by the
Corporation.
"Junior Dividend Securities" has the meaning specified in
Section 3(a) hereof and includes the Common Stock.
"Junior Liquidation Securities" has the meaning specified in
Section 3(a) hereof and includes the Common Stock.
"Liquidation Preference" means, with respect to each share of
Cumulative Preferred Stock, the Original Liquidation Preference, plus an amount
in cash equal to all accrued and unpaid dividends (including an amount equal to
a prorated dividend from the last Dividend Payment Date to the date such
Liquidation Preference is being determined). The Liquidation Preference of a
share of Cumulative Preferred Stock will increase on a daily basis as dividends
accrue on such share and will decrease only to the extent such dividends are
actually paid.
"Non-Cumulative Amount" has the meaning specified in Section
4(a) hereof.
"Non-Cumulative Preferred Stock" means the Non-Cumulative
Preferred Stock, par value $25.00 per share, of the Corporation.
"Original Liquidation Preference" means $25.00 per share of
Cumulative Preferred Stock.
"Other Class A Series" means any series of Class A Preferred
Stock, par value $1.00 per share, of the Corporation other than the Cumulative
Preferred Stock.
"Parity Dividend Securities" has the meaning specified in
Section 3(b) hereof and includes the Non-Cumulative Preferred Stock and any
Other Class A Series.
"Parity Liquidation Securities" has the meaning specified in
Section 3(b) hereof and includes the Non-Cumulative Preferred Stock and any
Other Class A Series.
"Quarterly Dividend Period" means the quarterly period
commencing on and including the day after each Dividend Payment Date and ending
on and including the immediately subsequent Dividend Payment Date.
"Redemption" has the meaning specified in Section 6(a) hereof.
A-2-2
<PAGE>
"Redemption Date" has the meaning specified in Section 6(b)
hereof.
"Redemption Notice" has the meaning specified in Section 6(b)
hereof.
"Redemption Price" means a price per share equal to the
Liquidation Preference as of the applicable Redemption Date.
"Replaced Securities" has the meaning specified in Section 7
hereof.
"Replacing Securities" has the meaning specified in Section 7
hereof.
"Senior Dividend Securities" has the meaning specified in
Section 3(c) hereof.
"Senior Liquidation Securities" has the meaning specified in
Section 3(c) hereof.
2. DESIGNATION
The series of preferred stock authorized hereunder shall be
designated as the "Class A Cumulative Preferred Stock." The number of shares
constituting such series shall initially be 10,000,000, which number may from
time to time be changed (but not above 10,000,000 or below the number then
outstanding) by the Board of Directors. The par value of the Cumulative
Preferred Stock shall be $1.00 per share. All shares of Cumulative Preferred
Stock shall be identical with each other in all respects except as to the dates
from and after which dividends thereon shall be cumulative.
3. RANK
The Cumulative Preferred Stock shall rank, with respect to
priority of dividend rights or rights on liquidation, dissolution and winding-up
of the affairs of the Corporation or both:
(a) senior to all classes or series of Common Stock of the
Corporation and to any other class or series of Capital Stock
(except the Non-Cumulative Preferred Stock and any Other Class
A Series) that does not expressly provide that it ranks senior
to or on a parity with the Cumulative Preferred Stock as to
dividends or upon liquidation, dissolution and winding-up, as
the case may be (with respect to such junior dividend rights
or junior rights upon liquidation, dissolution and winding up,
collectively referred to, as the context may require, as
"Junior Dividend Securities" or "Junior Liquidation
Securities");
(b) on a parity with the Non-Cumulative Preferred Stock and any
Other Class A Series and each class or series of Capital Stock
that expressly provides that it ranks on a parity with the
Cumulative Preferred Stock as to dividends or upon
liquidation, dissolution and winding-up, as the case may be
(with respect to such parity dividend rights or parity rights
upon liquidation, dissolution and winding-up, collectively
referred to, as the context may require, as "Parity Dividend
Securities" or "Parity Liquidation Securities"); and
A-2-3
<PAGE>
(c) junior to each class or series of Capital Stock (except any
Other Class A Series) which expressly provides that it ranks
senior to the Cumulative Preferred Stock as to dividends or
upon liquidation, dissolution and winding-up, as the case may
be (with respect to such senior dividend rights or senior
rights upon liquidation, dissolution and winding-up,
collectively referred to, as the context may require, as
"Senior Dividend Securities" or "Senior Liquidation
Securities").
4. DIVIDENDS, ETC.
(a) Beginning on the applicable Issue Date, the Holders of
outstanding shares of Cumulative Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of
Directors, but only out of funds legally available for the
payment of dividends, dividends payable in cash at the rate
per share of $0.43 per quarter and no more; provided that the
dividend payable on October 31, 1995 on any shares of
Cumulative Preferred Stock to holders of record thereof on
October 15, 1995 shall equal $0.43 per share. All dividends
shall be fully cumulative and shall accrue (whether or not
earned or declared, whether or not permitted under any
agreement of the Corporation and whether or not there are
funds legally available therefor), without interest, from the
first day of the Quarterly Dividend Period with respect to
which such dividend may be payable as herein provided, except
that with respect to the first dividend payable with respect
to any share of Cumulative Preferred Stock, such dividend
shall accrue from the applicable Issue Date; provided that
with respect to the dividend payable on October 31, 1995 with
respect to any share of Cumulative Preferred Stock, such
dividend shall equal $0.43. All dividends shall be cumulative
and shall be payable in arrears on each Dividend Payment Date
commencing on the Dividend Payment Date immediately succeeding
the applicable Issue Date, in preference to and with priority
over dividends on Junior Dividend Securities. No full dividend
and no distribution shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation
on the Cumulative Preferred Stock for any period unless
dividends aggregating at least the Non-Cumulative Amount have
been or contemporaneously are declared on the Non-Cumulative
Preferred Stock (including any dividends previously declared
for the same stated dividend payment date pursuant to this
sentence), payable not later than the stated dividend payment
date for the Non-Cumulative Preferred Stock on or next
following the date of payment of such dividend or distribution
on the Cumulative Preferred Stock, and a sum has been or
contemporaneously is set apart sufficient for such payment.
The "Non-Cumulative Amount" means the pro rata portion of the
anticipated annual dividends (in any case, not less than six
percent per annum) on the Non-Cumulative Preferred Stock
calculated for the period from, but not including, its
immediately preceding stated dividend payment date (whether or
not any dividend was paid on such date) through, and
including, the date of payment of such dividend or
distribution on the Cumulative Preferred Stock.
(b) All dividends and distributions paid with respect to shares of
the Cumulative Preferred Stock pursuant to Section 4(a) hereof
shall be paid pro rata to the Holders entitled thereto. No
full dividend and no distribution shall be declared
A-2-4
<PAGE>
by the Board of Directors or paid or set apart for payment by
the Corporation on Parity Dividend Securities for any period
unless full cumulative dividends have been or
contemporaneously are declared and a sum set apart sufficient
for such payment on the Cumulative Preferred Stock for all
Dividend Periods terminating on or prior to the date of
payment of such full dividends on the Parity Dividend
Securities. If any dividends are not paid in full upon the
shares of the Cumulative Preferred Stock and the Parity
Dividend Securities, (i) all dividends declared for any period
upon shares of the Cumulative Preferred Stock and the Parity
Dividend Securities shall be declared pro rata so that the
amount of dividends declared on the Cumulative Preferred Stock
and on each class or series of the Parity Dividend Securities
shall in all cases bear to each other the same ratio that
accrued dividends (or, in the case of the Non-Cumulative
Preferred Stock, that portion of the Non-Cumulative Amount
which has not previously been declared and set apart) on the
Cumulative Preferred Stock and on each class or series of
Parity Dividend Securities bear to each other, and (ii) a sum
shall be set apart sufficient to pay any such declared
dividends which are not being paid immediately. Any dividend
not paid on the Cumulative Preferred Stock pursuant to this
Section 4 shall be fully cumulative and shall accrue, without
interest, as set forth in Section 4(a) hereof and shall be in
arrears until paid.
(c) The Corporation shall not declare, pay or set apart for
payment any dividend on any of the Junior Dividend Securities
or make any distribution in respect thereof either directly or
indirectly and whether in cash, obligations or shares of the
Corporation or other property (other than dividends or
distributions in Junior Dividend Securities which are no
higher in priority with respect to the Cumulative Preferred
Stock, as to rights on liquidation, dissolution and
winding-up, than the Junior Dividend Securities upon which
such dividend or distribution is issued), unless on or prior
to the date of declaration of such dividend or distribution on
the Junior Dividend Securities full cumulative dividends have
been or contemporaneously are declared in compliance with
Section 4(a) hereof, and a sum set apart sufficient for such
payment, on the Cumulative Preferred Stock for all Dividend
Periods terminating on or prior to the date of payment of such
dividend or distribution on the Junior Dividend Securities.
(d) Except as otherwise provided in Section 4(a) hereof with
respect to the dividend payable on October 31, 1995, the
amount of dividends payable on the Cumulative Preferred Stock
for any period less than a full Quarterly Dividend Period
(including the Initial Dividend Period) and the Non-Cumulative
Amount shall be computed on the basis of twelve 30-day months
and a 360-day year. Dividends shall accrue on a daily basis
during each Dividend Period as provided above, and the
Liquidation Preference of each outstanding share of Cumulative
Preferred Stock shall be correspondingly increased on a daily
basis. Each such dividend shall be payable to Holders of
record as their names shall appear on the stock books of the
Corporation on the Dividend Record Date for such dividends,
except that dividends in arrears for any past Dividend Payment
Date may be declared and paid at any time without reference to
such regular Dividend Payment Date
A-2-5
<PAGE>
to Holders of record on such date not more than fifty (50)
days prior to the date of payment as shall be determined by
the Board of Directors.
(e) Dividends shall cease to accrue in respect of any particular
share of Cumulative Preferred Stock on the Redemption Date
with respect thereto unless the Corporation defaults in
payment of the Redemption Price with respect to such share of
Cumulative Preferred Stock.
5. PAYMENT ON LIQUIDATION
Upon any liquidation, dissolution or winding-up of the affairs
of the Corporation, whether voluntary or involuntary, the Holders of Cumulative
Preferred Stock will be entitled to receive out of the assets of the Corporation
available for distribution to the holders of its Capital Stock an amount in cash
per share equal to the Liquidation Preference determined as of the date of such
liquidation, dissolution or winding-up, before any payment or other distribution
is made on any Junior Liquidation Securities. Holders of Cumulative Preferred
Stock shall not be entitled to any other distribution in the event of
liquidation, dissolution or winding-up of the affairs of the Corporation. If
upon any liquidation, dissolution or winding-up of the affairs of the
Corporation, the assets of the Corporation are not sufficient to pay in full the
liquidation payments payable to the holders of outstanding shares of the
Cumulative Preferred Stock and all Parity Liquidation Securities, then the
holders of all such shares shall share equally and ratably in any distribution
of assets in proportion to the full liquidation payments determined as of the
date of such liquidation, dissolution or winding-up, to which each of them is
entitled. For the purposes of this Section 5, neither a consolidation or merger
of the Corporation with or into one or more corporations nor a sale, lease,
exchange or transfer of all or substantially all of the Corporation's assets
shall be deemed to be a liquidation, dissolution or winding-up of the
Corporation.
6. REDEMPTION
(a) Redemption. The Corporation may redeem at the option of the
Corporation in its sole discretion, at any time or from time
to time, in whole or in part, shares of Cumulative Preferred
Stock (a "Redemption"), at the Redemption Price. With respect
to any Redemption of fewer than all the outstanding shares of
Cumulative Preferred Stock, the number of shares to be
redeemed shall be determined by the Board of Directors and the
shares to be redeemed shall be selected pro rata or by lot,
except that the Corporation may first redeem all shares held
by any Holder of a number of shares not to exceed 100, as may
be specified by the Corporation. The Board of Directors shall
have full power and authority, subject to the provisions
herein contained, to prescribe the terms and conditions upon
which shares of the Cumulative Preferred Stock shall be
redeemed from time to time.
(b) Notice of Redemption. Notice of any Redemption of shares of
Cumulative Preferred Stock shall be given by publication at
least once in a newspaper printed in the English language and
customarily published on each Business Day and of
A-2-6
<PAGE>
general circulation in the County of Monroe, State of New York
and in such other local, regional or national publications, if
any, as the Board of Directors may determine. Such publication
shall be not more than sixty (60) days nor less than thirty
(30) days prior to the date fixed for Redemption (the
"Redemption Date"). Notice of any Redemption of shares of
Cumulative Preferred Stock, specifying the time and place of
Redemption and the Redemption Price (a "Redemption Notice"),
shall also be mailed, not more than sixty (60) nor less than
thirty (30) days prior to the Redemption Date, in a postage
prepaid envelope to each Holder of Cumulative Preferred Stock
to be redeemed, at the address for such Holder shown on the
Corporation's records. No failure to give such Redemption
Notice nor any defect therein shall affect the validity of the
procedure for the Redemption of any shares of Cumulative
Preferred Stock to be redeemed. Each such Redemption Notice
shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the number of shares of Cumulative Preferred Stock to
be redeemed and, if fewer than all the shares of
Cumulative Preferred Stock held by a Holder are to be
redeemed, the number of shares thereof to be redeemed
from such Holder;
(iv) the manner and place or places at which payment for
the shares of Cumulative Preferred Stock offered for
Redemption will be made, upon presentation and
surrender to the Corporation of the certificates
evidencing the shares being redeemed;
(v) that dividends on the shares of Cumulative Preferred
Stock being redeemed shall cease to accrue on the
Redemption Date unless the Corporation defaults in
the payment of the Redemption Price with respect to
such shares; and
(vi) that the rights of Holders of Cumulative Preferred
Stock as stockholders of the Corporation with respect
to shares being redeemed shall terminate as of the
Redemption Date unless the Corporation defaults in
the payment of the Redemption Price with respect to
such shares.
Upon mailing any such Redemption Notice, the Corporation shall
become obligated to redeem at the Redemption Price on the
applicable Redemption Date all shares of Cumulative Preferred
Stock therein specified.
(c) On any Redemption Date, the full Redemption Price shall become
payable in cash for the shares of Cumulative Preferred Stock
being redeemed on such Redemption Date. As a condition of
payment of the Redemption Price, each Holder of Cumulative
Preferred Stock must surrender the certificate or certificates
representing the shares of Cumulative Preferred Stock being
redeemed to the
A-2-7
<PAGE>
Corporation in the manner and at the place designated in the
Redemption Notice. Each surrendered certificate shall be
canceled and retired. All Redemption payments will be made to
the Holders of the shares being redeemed.
(d) On any Redemption Date, unless and to the extent that the
Corporation defaults in the payment of the Redemption Price
for any shares called for Redemption, dividends on the
Cumulative Preferred Stock called for Redemption shall cease
to accumulate, and all rights of Holders of such shares shall
terminate, except for the right to receive the Redemption
Price, without interest.
7. RESTRICTION ON REDEMPTIONS AND
OTHER ACQUISITIONS OF CERTAIN STOCK
Except in the case of repurchases of Common Stock by the
Corporation pursuant to Article II, Section 7 of the Bylaws of the Corporation,
the Corporation shall not purchase, redeem or otherwise acquire for
consideration, directly or indirectly, any shares of Cumulative Preferred Stock,
Parity Dividend Securities, Parity Liquidation Securities, Junior Dividend
Securities or Junior Liquidation Securities unless on or prior to the date of
such purchase, redemption or acquisition full cumulative dividends have been or
contemporaneously are declared in compliance with Section 4(a) hereof, and a sum
set apart sufficient for such payment, on the Cumulative Preferred Stock for all
Dividend Periods terminating on or prior to such date. Notwithstanding the
foregoing, the Corporation may acquire Cumulative Preferred Stock, Parity
Dividend Securities, Parity Liquidation Securities, Junior Dividend Securities
or Junior Liquidation Securities (the "Replaced Securities") as a result of a
reclassification, exchange or conversion of the Replaced Securities solely into
or for other Capital Stock of the Corporation (the "Replacing Securities"), or
through the use solely of the proceeds of a substantially simultaneous sale of
Replacing Securities, provided in any such case that the Replacing Securities
are no higher in priority with respect to the Cumulative Preferred Stock and the
Non-Cumulative Preferred Stock, as to either dividend rights or rights on
liquidation, dissolution and winding-up, than the Replaced Securities.
8. VOTING RIGHTS
The Cumulative Preferred Stock, except as otherwise required
by law, shall be non-voting.
9. MUTILATED OR MISSING CUMULATIVE PREFERRED STOCK CERTIFICATES
If any of the Cumulative Preferred Stock certificates shall be
mutilated, lost, stolen or destroyed, the Corporation shall issue, in exchange
and substitution for and upon cancellation of the mutilated Cumulative Preferred
Stock certificate, or in lieu of and substitution for the Cumulative Preferred
Stock certificate lost, stolen or destroyed, a new Cumulative Preferred Stock
certificate of like tenor and representing an equivalent number of shares of
Cumulative Preferred Stock, but only upon receipt of evidence satisfactory to
the Corporation of such loss, theft or destruction of such Cumulative Preferred
Stock certificate and indemnity and bond, if requested.
A-2-8
<PAGE>
10. REISSUANCE OF CUMULATIVE PREFERRED STOCK
Shares of Cumulative Preferred Stock that have been issued and
reacquired in any manner, including shares purchased or redeemed or exchanged,
shall (upon compliance with any applicable provisions of the laws of the State
of New York) have the status of authorized and unissued shares of Class A
Preferred Stock of the Corporation undesignated as to series and may be
redesignated and reissued as part of any series of Class A Preferred Stock of
the Corporation.
11. BUSINESS DAY
If any payment, redemption or exchange shall be required by
the terms hereof to be made on a day that is not a Business Day, such payment,
redemption or exchange shall be made on the immediately succeeding Business Day.
12. HEADINGS OF SUBDIVISIONS
The headings of various subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of
the provisions hereof.
13. SEVERABILITY OF PROVISIONS
If any right, preference or limitation of the Cumulative
Preferred Stock set forth herein is invalid, unlawful or incapable of being
enforced by reason of any rule or law or public policy, all other rights,
preferences and limitations set forth herein which can be given effect without
the invalid, unlawful or unenforceable right, preference or limitation shall,
nevertheless, remain in full force and effect, and no right, preference or
limitation herein set forth shall be deemed dependent upon any other such right,
preference or limitation unless so expressed herein.
14. LIMITATIONS
Except as may otherwise be required by law, the shares of
Cumulative Preferred Stock shall not have any powers, preferences or relative,
participating, optional or other special rights other than those specifically
set forth herein or otherwise in the Certificate of Incorporation of the
Corporation.
A-2-9
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The
Letter of Transmittal and any other required documents should be sent to the
Exchange Agent at one of the addresses set forth below:
The Exchange Agent for the Exchange Offer is:
IBJ Schroder Bank & Trust Company
<TABLE>
<S> <C> <C>
By Mail: By Facsimile By Hand or Overnight Delivery:
P.O. Box 84 Transmission (for One State Street
Bowling Green Station eligible financial Attn: Securities Processing
Attn: Reorganization Operations institutions only): Window, Subcellar One
Department (212) 858-2611 New York, New York 10004
New York, New York 10274-0084
</TABLE>
To Confirm Facsimile
Transmissions Call:
(212) 858-2103
(call collect)
Questions or requests for assistance or additional copies of this
Offering Circular and the Letter of Transmittal may be directed to the Exchange
Agent at one of its addresses and telephone numbers set forth above. Questions
also may be directed to Pro-Fac at the special toll-free numbers established for
this Exchange Offer set forth below. Stockholders may also contact their broker,
dealer, commercial bank or trust company for assistance concerning the Exchange
Offer.
Pro-Fac Cooperative, Inc.
1-800-280-5096
<PAGE>
THE EXCHANGE OFFER IS BEING MADE PURSUANT TO THE EXEMPTION FROM REGISTRATION
AFFORDED BY SECTION 3(A)(9) OF THE SECURITIES ACT OF 1933. ACCORDINGLY, NO
COMMISSION OR OTHER REMUNERATION WILL BE PAID OR GIVEN DIRECTLY OR INDIRECTLY
FOR SOLICITING THE EXCHANGE OF NON-CUMULATIVE PREFERRED STOCK PURSUANT TO THE
EXCHANGE OFFER.
LETTER OF TRANSMITTAL
TO EXCHANGE SHARES OF NON-CUMULATIVE PREFERRED STOCK
(LIQUIDATION PREFERENCE $25 PER SHARE)
OF
PRO-FAC COOPERATIVE, INC.
FOR
SHARES OF ITS
CLASS A CUMULATIVE PREFERRED STOCK
(LIQUIDATION PREFERENCE $25 PER SHARE)
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON TUESDAY, OCTOBER 10, 1995, UNLESS THE EXCHANGE OFFER IS EXTENDED.
The Exchange Agent for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile By Hand or Overnight Delivery:
P.O. Box 84 Transmission (for One State Street
Bowling Green Station eligible financial Attn: Securities Processing
Attn: Reorganization Operations institutions only): Window, Subcellar One
Department (212) 858-2611 New York, New York 10004
New York, New York 10274-0084
To Confirm Facsimile
Transmissions Call:
(212) 858-2103
(Call Collect)
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION NUMBER OTHER THAN THE
ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS IN THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY
BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used in connection with the delivery of
shares of any and all Non-Cumulative Preferred Stock, whether or not delivery of
such shares is to be made by the instruction of the stockholder set forth herein
or by the delivery of certificates (if any) for such shares. In the case of
shares of Non-Cumulative Preferred Stock represented by certificates,
stockholders who cannot deliver certificates for such shares and all other
documents required hereby to the Exchange Agent by the Expiration Date (as
defined in the Offering Circular referred to below) must tender such shares
pursuant to the guaranteed delivery procedure set forth under the heading 'The
Exchange Offer -- Procedure for Tendering Non-Cumulative Preferred Stock' in the
Offering Circular.
Questions or requests for assistance or additional copies of the Offering
Circular and this Letter of Transmittal may be directed to the Exchange Agent at
its addresses and telephone numbers set forth above. Stockholders may also
contact their broker, dealer, commercial bank or trust company for assistance
concerning the Exchange Offer.
<TABLE>
DESCRIPTION OF SHARES OF NON-CUMULATIVE PREFERRED STOCK TENDERED
<CAPTION>
<S> <C> <C> <C>
SHARES OF NON-CUMULATIVE PREFERRED STOCK
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) TENDERED(1)(2)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S), IF (ATTACH ADDITIONAL SIGNED LIST IF
ANY) NECESSARY)
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S) CERTIFICATE(S) TENDERED(2)
TOTAL SHARES
</TABLE>
(1) If you desire, for your convenience, in lieu of completing the
information called for below, you may attach to this Letter of Transmittal the
Statement of Preferred Stock that was sent to you. See Instruction 3.
(2) Unless otherwise indicated, it will be assumed that all shares
delivered to the Exchange Agent are being tendered. See Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
[ ] CHECK HERE IF TENDERED SHARES OF NON-CUMULATIVE PREFERRED STOCK ARE BEING
DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Tendering Stockholder(s) .......................................
Date of Execution of Notice of Guaranteed Delivery ................. , 1995
Name of Institution which Guaranteed Delivery .............................
Ladies and Gentlemen:
The undersigned hereby tenders to Pro-Fac Cooperative, Inc., a New York
cooperative corporation ('Pro-Fac'), the above described shares of
Non-Cumulative Preferred Stock, liquidation preference $25 per share
(collectively, except where the context otherwise requires, the 'Shares'), of
Pro-Fac pursuant to Pro-Fac's offer to exchange one share of its Class A
Cumulative Preferred Stock, liquidation preference $25 per share (the
'Cumulative Preferred Stock'), for each share of its Non-Cumulative Preferred
Stock, liquidation preference $25 per share, upon the terms and subject to the
conditions set forth in the Offering Circular, dated August 23, 1995 (the
'Offering Circular'), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, together with any amendments or supplements
thereto or hereto, collectively constitute the 'Exchange Offer').
Upon the terms and subject to the conditions of the Exchange Offer and
effective upon acceptance for exchange of the Shares tendered herewith, the
undersigned hereby tenders, exchanges, sells, assigns and transfers to or upon
the order of Pro-Fac, and (in the case of Shares not represented by
certificates) instructs Pro-Fac to register such tender, exchange, sale,
assignment and transfer of, all right, title and interest in and to all the
Shares that are being tendered hereby (and any and all other Shares or other
securities issued or issuable in respect thereof on or after August 23, 1995)
and irrevocably constitutes and appoints the Exchange Agent the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares (and
all such other Shares or securities), with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) present the Shares (and all such other Shares or securities)
for transfer on the books of Pro-Fac, including, in the case of Shares
represented by certificates, by delivery of certificates for such Shares (and
all such other Shares or securities), together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Pro-Fac and (b) receive all benefits and otherwise exercise all rights of
beneficial ownership of the Shares (and all such other Shares or securities),
all in accordance with the terms of the Exchange Offer.
The undersigned hereby irrevocably appoints Mr. Thomas R. Kalchik, Mr.
William D. Rice and Mr. Stephen R. Wright, and each of them, and any other
designees of Pro-Fac as the attorneys and proxies of the undersigned, each with
full power of substitution, to exercise all voting and other rights of the
undersigned in such manner as each such attorney and proxy or its substitute
shall in its sole discretion deem proper with respect to, to execute any written
consent concerning any matter as each such attorney and proxy or its substitute
shall in its sole discretion deem proper with respect to, and to otherwise act
as such attorney and proxy or its substitute shall in its sole discretion deem
proper with respect to, all of the Shares tendered hereby which have been
accepted for exchange by Pro-Fac prior to the time of any vote or other action
(and any and all other Shares or other securities issued or issuable in respect
thereof on or after August 23, 1995), at any meeting of stockholders of Pro-Fac
(whether annual or special and whether or not an adjourned meeting), by written
consent or otherwise. These powers of attorney and proxies are irrevocable and
are granted in consideration of, and are effective upon, the acceptance for
exchange of such Shares by Pro-Fac in accordance with the terms of the Exchange
Offer. Such acceptance for exchange shall revoke any other power of attorney or
proxy or written consent granted by the undersigned at any time with respect to
such Shares (and all such other Shares or securities), and no subsequent power
of attorney or proxies will be given or written consents will be executed by the
undersigned (and, if given or executed, will not be deemed to be effective).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, sell, assign and transfer the
Shares tendered hereby (and any and all other Shares or other securities issued
or issuable in respect thereof on or after August 23, 1995) and to give the
instruction set forth herein and that when such Shares are accepted for exchange
by Pro-Fac, Pro-Fac will acquire good and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claims. The undersigned will, upon request, execute and deliver, or
cause to be executed and delivered, any additional documents deemed by the
Exchange Agent or Pro-Fac to be necessary or desirable to complete the tender,
exchange, sale, assignment and transfer of the Shares tendered hereby (and all
such other Shares or securities).
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Exchange Offer, this
tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in the Offering Circular and in the instructions hereto
will constitute a binding agreement between the undersigned and Pro-Fac upon the
terms and subject to the conditions of the Exchange Offer.
<PAGE>
Unless otherwise indicated under 'Special Issuance Instructions,' please
issue the certificate for the shares of Cumulative Preferred Stock issuable
upon exchange of the Shares being exchanged in the name(s) of the registered
holder(s) appearing under 'Description of Shares of Non-Cumulative Preferred
Stock Tendered' and return any Shares not tendered or not exchanged to such
registered holder(s). Similarly, unless otherwise indicated under 'Special
Delivery Instructions,' please mail the certificate for the shares of
Cumulative Preferred Stock issuable upon exchange of the Shares being
exchanged, and return any Shares not tendered or not exchanged (and
accompanying documents, as appropriate), to the address(es) of the registered
holder(s) appearing under 'Description of Shares of Non-Cumulative Preferred
Stock Tendered' shown below the undersigned's signature(s). In the event that
both 'Special Issuance Instructions' and 'Special Delivery Instructions' are
completed, please issue the certificate and return any Shares not tendered or
not exchanged (and accompanying documents, as appropriate) in the name(s) of,
and mail said certificate (and accompanying documents, as appropriate) to, the
person(s) so indicated. The undersigned recognizes that Pro-Fac has no
obligation, pursuant to the 'Special Issuance Instructions,' to transfer any
Shares from the name of the registered holder(s) thereof if Pro-Fac does not
accept for exchange any of the Shares so tendered.
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if the certificates for the Cumulative Preferred
Stock are to be issued in the name of someone other than the undersigned
and/or if the shares of Non-Cumulative Preferred Stock not exchanged are
to be registered (or certificates (if any) representing such shares are to
be issued) in the name of someone other than the undersigned.
Issue certificates to:
Name ....................................................................
(Please Print)
Address .................................................................
.........................................................................
(Include Zip Code)
.........................................................................
(Taxpayer Identification or Social Security No.)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if the certificates for the Cumulative Preferred
Stock and/or if the certificates (if any) representing any shares of
Non-Cumulative Preferred Stock not exchanged are to be mailed to someone
other than the undersigned or to the undersigned at an address other than
that shown below the undersigned's signature(s).
Mail certificates to:
Name ....................................................................
(Please Print)
Address .................................................................
.........................................................................
(Include Zip Code)
<PAGE>
SIGN HERE
(Please complete Substitute Form W-9 below)
...........................................................................
...........................................................................
Signature(s) of Owner(s)
Dated: ............................................................. , 1995
(Must be signed by registered holder(s) exactly as name(s) appear(s) on a
security position listing or, in the case of certificated shares, on the
stock certificate(s) or by person(s) authorized to become registered
holder(s) by certificates and documents transmitted herewith. If signature
is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 5.)
Name(s): ........................................................
(Please Print)
.................................................................
Capacity (full title) (See Instruction 5): ......................
Address: ........................................................
.................................................................
(Include Zip Code)
Area Code and
Telephone Number: ...............................................
Tax Identification or
Social Security No.: ............................................
GUARANTEE OF SIGNATURE(S)
(If Required -- See Instructions 1 and 5)
Authorized Signature: ...........................................
Name(s): ........................................................
(Please Print)
Name of Firm: ...................................................
Address: ........................................................
.................................................................
(Include Zip Code)
Area Code and
Telephone Number: ...............................................
Dated: .................................................. , 1995
<PAGE>
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C>
Social Security Number or
Employer Identification Number
Part 1 -- PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND CERTIFY BY
SIGNING AND DATING BELOW.
......................................
Part 2 -- Certification -- Under penalties of perjury, I certify that:
SUBSTITUTE (1) The number shown on this form is my correct Taxpayer Identification Number
Form W-9 (or I am waiting for a number to be issued to me) and
Department of the Treasury (2) I am not subject to backup withholding because: (a) I am exempt from
Internal Revenue Service backup withholding, or (b) I have not been notified by the Internal Revenue
Service (the 'IRS') that I am subject to backup withholding as a result of
a failure to report all interest or dividends, or (c) the IRS has notified
me that I am no longer subject to backup withholding.
Certification Instructions -- You must cross out Item (2) above if you have
Payer's Request For been notified by the IRS that you are currently subject to backup withholding
Taxpayer Identification because of under-reporting interest or dividends on your tax return.
Number ('TIN') However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no
longer subject to backup withholding, do not cross out such Item (2).
SIGNATURE .................... DATE .................... , 1995 Part 3 --
Awaiting
TIN # [ ]
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable payments made to me will be withheld,
but that such amounts will be refunded to me if I then provide a taxpayer
identification number within sixty (60) days.
Signature ......................... Date ........................ , 1995
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a bank, broker,
dealer, credit union, savings association or other entity that is a member of a
recognized Medallion Program approved by The Securities Transfer Association,
Inc. (an 'Eligible Institution'). Signatures on this Letter of Transmittal need
not be guaranteed (a) if this Letter of Transmittal is signed by the registered
holder(s) of the Shares tendered herewith and such holder(s) have not completed
the instruction entitled 'Special Issuance Instructions' on this Letter of
Transmittal or (b) if such Shares are tendered for the account of an Eligible
Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Shares. This Letter of Transmittal
is to be used for the tender of all shares of Non-Cumulative Preferred Stock,
whether or not represented by a certificate. A properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by this Letter of Transmittal must be received by the Exchange Agent at
one of its addresses set forth on the front page of this Letter of Transmittal
by the Expiration Date. In addition, in the case of Shares represented by
certificates which are to be delivered by physical delivery of such
certificates, such certificates, together with any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent by the
Expiration Date.
In the case of Shares represented by certificates, stockholders who cannot
deliver certificates for such Shares and all other required documents to the
Exchange Agent by the Expiration Date must tender such Shares pursuant to the
guaranteed delivery procedure set forth in the Offering Circular under the
caption 'The Exchange Offer -- Procedure for Tendering Non-Cumulative Preferred
Stock.' Pursuant to such procedure: (a) such tender must be made by or through
an Eligible Institution, (b) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by Pro-Fac must be
received by the Exchange Agent by the Expiration Date and (c) the certificates
for such Shares (if any), as well as a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent within three
NASDAQ trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in the Offering Circular under the caption 'The
Exchange Offer -- Procedure for Tendering Non-Cumulative Preferred Stock.'
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF
CERTIFICATES FOR SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY TO THE EXCHANGE AGENT BY THE
EXPIRATION DATE.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be exchanged. By executing this Letter of Transmittal (or
facsimile thereof), the tendering stockholder waives any right to receive any
notice of the acceptance for exchange of the Shares.
3. Use of Statement of Preferred Stock; Inadequate Space. In lieu of
completing the boxes entitled 'Certificate Number(s),' 'Total Number of Shares
Represented by Certificate(s)' and 'Number of Shares Tendered,' you may attach
to this Letter of Transmittal the Statement of Preferred Stock that was sent to
you with this Letter of Transmittal. You should indicate clearly on that
Statement the Shares that are to be tendered. If the space provided herein is
inadequate and you do not use your Statement of Preferred Stock, the certificate
numbers and/or the number of Shares should be listed on a separate schedule
attached hereto.
4. Partial Tenders. If fewer than all the Shares delivered to the Exchange
Agent are to be tendered, fill in the number of Shares which are to be tendered
in the box entitled 'Number of Shares Tendered' or, if you are submitting your
Statement of Preferred Stock with this Letter of Transmittal, indicate on the
Statement the Shares that are to be tendered. In such case, a written statement,
or (in the case of Shares represented by certificates) a new certificate, for
the remainder of the Shares not tendered will be sent to the person(s) signing
this Letter of Transmittal, unless otherwise provided in the appropriate box on
this Letter of Transmittal, as promptly as practicable following the expiration
or termination of the Exchange Offer. All Shares delivered to the Exchange Agent
will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the stock records or, in the case of certificated Shares, on the face of the
certificates, without alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are held of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
<PAGE>
If any of the Shares tendered hereby are registered in different names, it
will be necessary to complete, sign and submit as many separate Letters of
Transmittal as there are different registrations.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates (if any) or separate
stock powers are required unless issuance of the certificates representing the
Cumulative Preferred Stock is to be made, or Shares not tendered or not
exchanged are to be returned, in the name of any person other than the
registered holder(s). Signatures on any such certificates or stock powers must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, this Letter of Transmittal
must be accompanied by appropriate stock powers, or, in the case of Shares
represented by certificates, such certificates must be endorsed, in either case
signed exactly as the name(s) of the registered holder(s) appear(s) in Pro-Fac's
stock records or, in the case of certificated Shares, on the certificates for
such Shares. Signature(s) on any such stock powers or certificates must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any stock power or certificate is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
Pro-Fac of the authority of such person so to act must be submitted.
6. Stock Transfer Taxes. Pro-Fac will pay any stock transfer taxes with
respect to the exchange of any Shares tendered and accepted pursuant to the
Exchange Offer. If, however, certificates for the Cumulative Preferred Stock
issuable upon exchange of the Shares tendered hereby, or Shares not tendered or
not exchanged, are to be registered in the name of any person other than the
registered holder(s), the amount of any stock transfer taxes (whether imposed on
the registered holder(s), such other person or otherwise) payable on account of
the transfer to such person must be paid to Pro-Fac or the Exchange Agent (or
the transferee must establish to the satisfaction of Pro-Fac that such taxes
have been paid or need not be paid) before the Cumulative Preferred Stock will
be issued or such Shares will be registered.
Except as provided in this Instruction 6, it will not be necessary for
Transfer Tax Stamps to be affixed to the certificates (if any) listed in this
Letter of Transmittal.
7. Special Issuance and Delivery Instructions. If the certificates for the
Cumulative Preferred Stock issuable upon exchange of the Shares tendered hereby
are to be issued, or any Shares not tendered or not exchanged are to be
returned, in the name of a person other than the person(s) signing this Letter
of Transmittal or if the certificates for the Cumulative Preferred Stock or
certificates (if any) for Shares not tendered or not exchanged are to be mailed
to someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
8. Waiver of Conditions. Subject to the terms of the Exchange Offer,
Pro-Fac reserves the absolute right in its sole discretion to waive any of the
specified conditions of the Exchange Offer, in whole or in part, in the case of
any Shares tendered.
9. 31% Backup Withholding; Substitute Form W-9. Under U.S. Federal income
tax law, a stockholder whose tendered Shares are accepted for exchange is
required to provide the Exchange Agent with such stockholder's correct taxpayer
identification number ('TIN') on Substitute Form W-9 above. If the Exchange
Agent is not provided with the correct TIN, the Internal Revenue Service may
subject the stockholder to a $50 penalty. In addition, payments made to such
stockholder with respect to the Shares or the Cumulative Preferred Stock may be
subject to 31% backup withholding.
Certain stockholders (including among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Exchange Agent. See the enclosed 'Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9' for more instructions.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service, provided that the required
information is given to the Internal Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number above in order to avoid backup withholding.
The stockholder is required to give the Exchange Agent the TIN (e.g.,
social security number or employer identification number) of the record owner of
the Shares or of the last transferee appearing on the transfers attached to, or
endorsed on,
<PAGE>
the Shares. If the Shares are in more than one name or are not in the name of
the actual owner, consult the enclosed 'Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9' for additional guidance on which
number to report.
10. Requests for Assistance or Additional Copies. Requests for assistance
or additional copies of the Offering Circular and this Letter of Transmittal may
be obtained from the Exchange Agent at its address or telephone number set forth
above. Questions or requests for assistance may be directed to the Exchange
Agent.
11. Lost, Destroyed or Stolen Certificates. In the case of Shares
represented by certificates, if any such certificate has been lost, destroyed or
stolen, the stockholder should promptly notify the Exchange Agent. The
stockholder will then be instructed as to the steps that must be taken in order
to replace the certificate(s). This Letter of Transmittal and related documents
cannot be processed until the procedures for replacing lost or destroyed
certificates have been followed.
12. Acceptance of Tendered Shares. Upon the terms and subject to the
conditions of the Exchange Offer, Pro-Fac will have accepted for exchange (and
thereby exchanged) Shares validly tendered and not withdrawn as, if and when
Pro-Fac gives oral or written notice to the Exchange Agent of its acceptance of
the tenders of such Shares pursuant to the Exchange Offer.
13. Withdrawal Rights. Tendered Shares may be withdrawn only pursuant to
the procedures set forth under the heading 'The Exchange Offer -- Withdrawal
Rights' in the Offering Circular.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER -- Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF --
<S> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the
account) account or, if combined
funds, any one of the
individuals(1)
3. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
4. (A)The usual revocable savings The grantor-trustee(1)
trust account (grantor is
also trustee)
(B)So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
5. Sole proprietorship account The owner(3)
</TABLE>
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF --
<S> <C>
6. A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title.)(4)
7. Corporate account The corporation
8. Religious, charitable, or The organization
educational organization account
9. Partnership The partnership
10. Association, club, or other The organization
tax-exempt organization
11. A broker or registered nominee The broker or nominee
12. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school
district, or prison) that
receives agricultural program
payments
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Show the name of the owner. You may also enter your business name. You may
use your Social Security Number or Employer Identification Number.
(4) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments
include the following:
A corporation.
A financial institution.
An organization exempt from tax under section 501(a), or an
individual retirement plan.
The United States or any agency or instrumentality thereof.
A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof.
A foreign government, a political subdivision of a foreign
government, or any agency or instrumentality thereof.
An international organization or any agency, or instrumentality
thereof.
A registered dealer in securities or commodities registered in the
U.S. or a possession of the U.S.
A real estate investment trust.
A common trust fund operated by a bank under section 584(a).
<PAGE>
An exempt charitable remainder trust, or a non-exempt trust described
in section 4947(a)(1).
An entity registered at all times under the Investment Company Act of
1940.
A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
Payments to nonresident aliens subject to withholding under section
1441.
Payments to partnerships not engaged in a trade or business in the
U.S. and which have at least one nonresident partner.
Payments of patronage dividends where the amount received is not paid
in money.
Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include
the following:
Payments of interest on obligations issued by individuals. NOTE: You
may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you
have not provided your correct taxpayer identification number to the
payer.
Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
Payments described in section 6049(b)(5) to non-resident aliens.
Payments on tax-free covenant bonds under section 1451.
Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE 'EXEMPT' ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
Privacy Act Notice -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If
you make a false statement with no reasonable basis which results in no
imposition of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT
OR THE INTERNAL REVENUE SERVICE.
The Exchange Agent for the Offer is:
IBJ SCHRODER BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile By Hand or Overnight Delivery:
P.O. Box 84 Transmission (for One State Street
Bowling Green Station eligible financial Attn: Securities Processing
Attn: Reorganization Operations institutions only): Window, Subcellar One
Department (212) 858-2611 New York, New York 10004
New York, New York 10274-0084
To Confirm Facsimile
Transmissions Call:
(212) 858-2103
(Call Collect)
</TABLE>
NOTICE OF GUARANTEED DELIVERY
Of NON-CUMULATIVE PREFERRED STOCK
(liquidation preference $25 per share)
of
PRO-FAC COOPERATIVE, INC.
As set forth under the heading "The Exchange Offer -- Procedure for
Tendering Non-Cumulative Preferred Stock" in the Offering Circular (as defined
below), this Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Exchange Offer (as defined below) if, in the
case of Shares (as defined below) represented by certificates, such certificates
are not immediately available or time will not permit all required documents to
reach IBJ Schroder Bank & Trust Company (the "Exchange Agent") prior to the
Expiration Date (as defined under the heading "The Exchange Offer -- Terms of
the Exchange Offer" in the Offering Circular). Such form may be delivered by
hand, facsimile transmission or mailed to the Exchange Agent and must include a
guarantee by an Eligible Institution (as defined under the heading "The Exchange
Offer -- Procedure for Tendering Non-Cumulative Preferred Stock" in the
Offering Circular).
The Exchange Agent for the Offer is:
IBJ Schroder Bank & Trust Company
<TABLE>
<S> <C> <C>
By Mail: By Facsimile By Hand or Overnight Delivery:
P.O. Box 84 Transmission (for One State Street
Bowling Green Station eligible financial Attn: Securities Processing
Attn: Reorganization Operations institutions only): Window, Subcellar One
Department (212) 858-2611 New York, New York 10004
New York, New York 10274-0084
</TABLE>
To Confirm Facsimile
Transmissions Call:
(212) 858-2103
(call collect)
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON
A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE APPROPRIATE LETTER OF
TRANSMITTAL.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to Pro-Fac Cooperative, Inc., a New York
cooperative corporation ("Pro-Fac"), upon the terms and subject to the
conditions set forth in Pro-Fac's Offering Circular, dated August 23, 1995 (the
"Offering Circular"), and the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Exchange Offer"), receipt of which is hereby acknowledged, _____________ shares
of Non-Cumulative Preferred Stock, liquidation preference $25 per share
(collectively, the "Shares"), of Pro-Fac, pursuant to the guaranteed delivery
procedure set forth in the Offering Circular under the heading "The Exchange
Offer -- Procedure for Tendering Non-Cumulative Preferred Stock".
Name(s) of Record Holder(s):----------------------------------------------------
Certificate No(s).
(if applicable and if available):-----------------------------------------------
(Please Print)
Address(es):-------------------------------------
-------------------------------------------------
(Zip Code)
Area Code and Tel. No.:--------------------------
(Daytime telephone number)
Signature(s):-------------------------
--------------------------------------
Dated:-------------------------, 1995
-2-
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, an Eligible Institution (as such term is
defined in the Offering Circular), hereby guarantees to deliver to the Exchange
Agent, at one of its addresses set forth above, the certificates representing
the Shares tendered hereby, in proper form for transfer, together with a
properly completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) and any other documents required by the Letter of
Transmittal, all within three NASDAQ trading days after the date hereof.
Name of Firm:------------------------ --------------------------------------
(Authorized Signature)
Address:----------------------------- Name:---------------------------------
(Please type or print)
------------------------------------- Title:-------------------------------
(Zip Code)
Area Code and Tel. No.:-------------- Date:---------------------------, 1995
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES FOR SHARES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
-3-
<PAGE>
PRO-FAC COOPERATIVE, INC.
OFFER TO EXCHANGE
ONE SHARE OF ITS
CLASS A CUMULATIVE PREFERRED STOCK
(liquidation preference $25 per share)
FOR EACH SHARE OF ITS
NON-CUMULATIVE PREFERRED STOCK
(liquidation preference $25 per share)
--------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON TUESDAY, OCTOBER 10, 1995, UNLESS THE EXCHANGE OFFER IS EXTENDED.
--------------------------------------------------------------------------------
August 23, 1995
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
Pro-Fac Cooperative, Inc., a New York cooperative corporation
("Pro-Fac"), is offering to exchange one share of its Class A Cumulative
Preferred Stock, liquidation preference $25.00 per share (the "Cumulative
Stock"), for each share of its Non-Cumulative Preferred Stock, liquidation
preference $25.00 per share (collectively, the "Shares"), upon the terms and
subject to the conditions set forth in Pro-Fac's Offering Circular, dated August
23, 1995 (the "Offering Circular"), and the related Letter of Transmittal
(which, together with any supplements or amendments thereto, collectively
constitute the "Exchange Offer").
For your information and for forwarding to your clients for whom you
hold Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offering Circular dated August 23, 1995;
2. Letter of Transmittal for your use and for the information of
your clients, together with Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9
providing information relating to backup federal income tax
withholding;
3. Notice of Guaranteed Delivery to be used to accept the
Exchange Offer if, in the case of Shares represented by
certificates, such certificates and all other required
documents cannot be delivered on a timely basis by the
Expiration Date (as defined in the Offering Circular);
4. A form of letter which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the
name of your nominee, with space provided for obtaining such
clients' instructions with regard to the Exchange Offer; and
<PAGE>
5. A return envelope addressed to IBJ Schroder Bank & Trust
Company, the Exchange Agent.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE
NOTE THAT THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON TUESDAY, OCTOBER 10, 1995, UNLESS THE EXCHANGE OFFER IS EXTENDED.
Pro-Fac will not pay any fees or commissions to any broker or dealer or
other person for soliciting tenders of Shares pursuant to the Exchange Offer.
Regular employees of Pro-Fac may solicit exchanges from the holders of the
Shares, but they will not receive additional compensation therefor. Pro-Fac
will, upon request, reimburse brokers, dealers, commercial banks and trust
companies for reasonable and necessary costs and expenses incurred by them in
forwarding materials to their customers. Pro-Fac will pay all stock transfer
taxes applicable to its acceptance for exchange of Shares pursuant to the
Exchange Offer, subject to Instruction 6 of the Letter of Transmittal.
The Exchange Offer is not being made to, nor will tenders be accepted
from or on behalf of, holders of Shares in any jurisdiction in which the making
of the Exchange Offer or acceptance thereof would not be in compliance with the
laws of such jurisdiction.
Any inquiries you may have with respect to the Exchange Offer should be
addressed to, and additional copies of the enclosed materials may be obtained
from, the Exchange Agent at the addresses and telephone numbers set forth on the
back cover of the Offering Circular.
Very truly yours,
PRO-FAC COOPERATIVE, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR ANY
OTHER PERSON THE AGENT OF PRO-FAC, THE EXCHANGE AGENT OR ANY AFFILIATE OF EITHER
OF THEM OR AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY
DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM WITH RESPECT TO THE
EXCHANGE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
-2-
<PAGE>
PRO-FAC COOPERATIVE, INC.
OFFER TO EXCHANGE
ONE SHARE OF ITS
CLASS A CUMULATIVE PREFERRED STOCK
(liquidation preference $25 per share)
FOR EACH SHARE OF ITS
NON-CUMULATIVE PREFERRED STOCK
(liquidation preference $25 per share)
--------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON TUESDAY, OCTOBER 10, 1995, UNLESS THE EXCHANGE OFFER IS EXTENDED.
--------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration are the Offering Circular dated August
23, 1995 (the "Offering Circular"), and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Exchange Offer") relating to an offer by Pro-Fac Cooperative,
Inc., a New York cooperative corporation ("Pro-Fac"), to exchange one share of
its Class A Cumulative Preferred Stock, liquidation preference $25.00 per share
(the "Cumulative Stock"), for each share of its Non-Cumulative Preferred Stock,
liquidation preference $25.00 per share (collectively, the "Shares"), upon the
terms and subject to the conditions set forth in the Exchange Offer. To tender
Shares, stockholders must deliver the Letter of Transmittal, and all other
required documents, including, in the case of Shares represented by
certificates, the certificates for such Shares, to IBJ Schroder Bank & Trust
Company (the "Exchange Agent") on or prior to the Expiration Date (as defined in
the Offering Circular under the heading "The Exchange Offer" --Terms of the
Exchange Offer"). In the case of such Shares represented by certificates,
stockholders may tender such Shares pursuant to the guaranteed delivery
procedures set forth in the Offering Circular under the heading "The Exchange
Offer -- Procedure for Tendering Non-Cumulative Preferred Stock".
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish us to tender any or all
of the Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Exchange Offer.
<PAGE>
Your attention is directed to the following:
1. The exchange rate is one share of Cumulative Stock for each share of
Pro-Fac's Non-Cumulative Preferred Stock, upon the terms and subject to the
conditions set forth in the Exchange Offer.
2. The Exchange Offer and withdrawal rights expire at 5:00 P.M., New
York City time, on Tuesday, October 10, 1995 unless the Exchange Offer is
extended by Pro-Fac. In all cases, the exchange of Shares accepted for exchange
pursuant to the Exchange Offer will be made only after timely receipt by the
Exchange Agent of a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other documents required by the Letter of
Transmittal, including, in the case of Shares represented by certificates, the
certificates for such Shares.
3. The Exchange Offer is conditioned upon, among other things, there
being validly tendered by the Expiration Date and not withdrawn at least 500,000
Shares.
4. Pro-Fac will pay any stock transfer taxes applicable to the exchange
of Shares pursuant to the Exchange Offer, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any or all of your Shares, please so
instruct us by completing, executing, detaching and returning to us the
instruction form on the detachable part hereof. An envelope to return your
instructions to us is enclosed. If you authorize tender of your Shares, all such
Shares will be tendered unless otherwise specified on the detachable part
hereof. Your instructions to us should be forwarded promptly to permit us to
submit a tender on your behalf prior to the expiration of the Exchange Offer. If
you do not instruct us to tender your Shares, they will not be tendered.
The Exchange Offer is not being made to, nor will tenders be accepted
from or on behalf of, holders of Shares in any jurisdiction in which the making
of the Exchange Offer or acceptance thereof would not be in compliance with the
laws of such jurisdiction.
-2-
<PAGE>
Instructions with Respect to
PRO-FAC COOPERATIVE, INC.
Offer to Exchange
One Share of Its
Class A Cumulative Preferred Stock
(liquidation preference $25 per share)
For Each Share of Its
Non-Cumulative Preferred Stock
(liquidation preference $25 per share)
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offering Circular, dated August 23, 1995, and the related Letter of Transmittal,
relating to the offer by Pro-Fac Cooperative, Inc., a New York cooperative
corporation, to exchange one share of its Class A Cumulative Preferred Stock,
liquidation preference $25.00, for each share of its Non-Cumulative Preferred
Stock, liquidation preference $25.00 per share (collectively, the "Shares").
This will instruct you to tender the number of Shares indicated below
held by you for the account of the undersigned, upon the terms and subject to
the conditions set forth in such Offering Circular and the related Letter of
Transmittal. Dated: _________________, 1995
---------------------------------
Number of Shares to be Tendered*
---------------------------------
--------------------------------- (Signature(s))
---------------------------------
Please Print Names(s)
---------------------------------
Address
--------------------------
---------------------------------
Include Zip Code
Area Code and
Telephone No.
--------------------
Taxpayer Identification
or Social Security No.
-----------
---------------------------------
------------
* Unless otherwise indicated, it will be assumed that all Shares held
by us for your account are to be tendered.
-3-
<PAGE>
[Letterhead of Pro-Fac]
August 23, 1995
To the Holders of Preferred Stock
of Pro-Fac Cooperative, Inc.
As many of you may recall, last January the members of Pro-Fac
authorized five new classes of preferred stock. Pro-Fac's Board of Directors has
decided to use one of those classes to create a new series of preferred stock,
which will be offered in exchange for shares of Pro-Fac's existing preferred
stock.
The new preferred stock will accrue an annual dividend of $1.72, which
will be payable quarterly, on a cumulative basis. In addition, Pro-Fac has
applied to list the new preferred stock on the NASDAQ National Market System.
Although the only sure thing when talking about investments is that there is no
sure thing, we believe that the new preferred stock should have a larger and
more active market than Pro-Fac's existing preferred stock.
If you have not already, you will be receiving in a few days materials
relating to Pro-Fac's offer to exchange the new preferred stock for your shares
of existing preferred stock. The exchange will be on a share-for-share basis. As
stated in the exchange offer materials, Pro-Fac has conditioned its offer on at
least 500,000 shares of existing preferred stock being tendered. This is because
a minimum number of shares of new preferred stock must be issued to meet the
requirements for NASDAQ listing as well as help ensure a sufficient market for
the new stock.
The exchange offer materials are fairly lengthy and have been written
to satisfy a number of legal requirements. We suspect that many of you may have
questions about the materials or the exchange offer. If you have questions, we
ask that you call Tom Kalchik, Shari Bonsignore or Kevin Murphy (1-800-280-5096)
at Pro-Fac or your local field representative (if you are a member). Questions
of a technical nature, such as regarding how to tender your shares, should be
directed to representatives of IBJ Schroder Bank & Trust Company, which is
acting as the exchange agent. Telephone numbers for IBJ are included in the
exchange offer materials.
To help you in completing certain forms required by the exchange offer
when tendering your shares of existing preferred stock, we have included with
the Letter of Transmittal (that you have already received or should be receiving
shortly), a listing of your preferred stock. You may, if you wish, attach this
list to the Letter of Transmittal as a description of the preferred stock that
you own.
We know that this is coming at a busy time of year for many of you, but
we hope that you will take the time to review the exchange offer materials.
Sincerely yours,
Bruce R. Fox
President
<PAGE>
ANOTHER FIRST FOR PRO-FAC COOPERATIVE:
PREFERRED STOCK APPROVED FOR NASDAQ1
ROCHESTER, NY, August 23, 1995. . . Pro-Fac Cooperative, Inc., a farmer
cooperative based in Rochester, N.Y., announced today that it has commenced an
offer to exchange an existing class of preferred stock for a new class of
preferred stock. Upon completion of the exchange offer, the new preferred stock
will be included on the Nasdaq National Market System, a national, computerized
network of nearly 500 securities market makers.2
"We believe that this is the first time a cooperative will have securities
included on Nasdaq or listed on any stock exchange," said Michigan Pro-Fac
member and board president Bruce Fox. This follows another major `first' for the
company, Fox added. "When Pro-Fac
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1The following is the text of the national press release of Pro-Fac related
to the exchange offer. Pro-Fac is also issuing seven regional press releases
that are identical to the national press release except as indicated herein.
2The following text is included in each of the respective regional press
releases:
a. In Pennsylvania, 20 members market about 20,000 tons of potatoes
through the Snyder of Berlin Division of Curtice Burns Foods, a wholly
owned subsidiary of Pro-Fac.
b. In Michigan, 200 members market about 35,000 tons of tart cherries,
apples, asparagus, blueberries, carrots, plums and peaches through the
Comstock Michigan Fruit division of Curtice Burns Foods, a wholly owned
subsidiary of Pro-Fac.
c. In Illinois, 70 members market about normally 20,000 tons of popcorn
through the Comstock Michigan Fruit division of Curtice Burns Foods, a
wholly owned subsidiary of Pro-Fac.
d. In Nebraska, 30 members market about normally 9,000 tons of popcorn
through the Comstock Michigan Fruit division of Curtice Burns Foods, a
wholly owned subsidiary of Pro-Fac.
e. In New York, 265 members market about 330,000 tons of various fruits
and vegetables, including tart cherries, apples, snap beans, sweet
corn, peas, beets, cabbage and other crops through the Comstock
Michigan Fruit division of Curtice Burns Foods, a wholly owned
subsidiary of Pro-Fac.
f. In the Pacific Northwest, 50 members market about 26,000 tons of
cucumbers and potatoes through the Nalley's and Tim's Cascade Chips
divisions of Curtice Burns Foods, a wholly owned subsidiary of Pro-Fac.
g. In the Southeast, 11 members market about 12,000 tons of leafy
greens, southern peas, turnip roots and chipping potatoes through the
Southern Frozen Foods and Snyder of Berlin (located in Pennsylvania)
divisions of Curtice Burns Foods, a wholly owned subsidiary of
Pro-Fac.
<PAGE>
PRO-FAC EXCHANGE OFFER (p.2)
Cooperative acquired Curtice Burns Foods in November 1994, it was, to the best
of our knowledge, the first time a cooperative purchased a publicly-held
company. "We're very excited that the National Association of Security Dealers
(NASD) agreed to include our preferred stock," he continued. "Pro-Fac has been
an innovator since its founding, 35 years ago, and we continue to break new
ground with this preferred stock."
Details of the exchange offer have been sent to the Cooperative's preferred
stock shareholders. The offer is expected to expire on October 10, 1995.
Shareholders are being offered the opportunity to exchange, on a share-for-share
basis, their shares of Pro-Fac's non-cumulative preferred stock for new
cumulative preferred stock of Pro-Fac. Both the old and the new shares have a
liquidation value of $25 per share. Terms of the new cumulative preferred stock
include a fixed, cumulative dividend of $1.72 annually, payable quarterly at
$.43 per share. A cumulative dividend means that dividends not paid for prior
quarters will accumulate, whereas the non-cumulative preferred stock had no such
requirement.
The offer is conditioned upon at least 500,000 shares being validly
tendered and not withdrawn by the expiration of the exchange offer. There are
currently over 3,000,000 shares of the old non-cumulative stock outstanding,
held by about 2,100 shareholders.
Pro-Fac is an agricultural marketing cooperative with about 650 members
nationwide. Pro-Fac members received non-cumulative preferred stock as part of
their sharing in the earnings of Pro-Fac, and they were free to sell the stock
to other members or non-members of the Cooperative. However, the non-cumulative
preferred stock has been an illiquid investment, and an active trading market
never developed.
"Pro-Fac's board and management have been considering how to increase the
liquidity of our preferred stock," Fox explained. "We believe that the new
cumulative preferred stock may provide that liquidity and help establish a
market price." Pro-Fac's entry into the Nasdaq National Market provides brokers
and others with immediate access to the best bid and ask prices and other
information about its shares throughout the trading day. Those prices are
available on more than 200,000 electronic terminals in brokers' offices
throughout the United States and the world. Trading data is also distributed
widely through wire services for selective dissemination by newspapers and radio
and television stations.
<PAGE>
PRO-FAC EXCHANGE OFFER (p.3)
Pro-Fac Cooperative members grow fruits, grains and vegetables for Curtice
Burns Foods. Curtice Burns[, a wholly-owned subsidiary of Pro-Fac,]3 processes
and markets a variety of product lines of regional branded, private label and
foodservice products through eight autonomously managed divisions located
throughout the United States.
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3The bracketed language is included only in the national press release.
<PAGE>
STATEMENT OF
PREFERRED STOCK
ACCOUNT NAME:
ADDRESS: MEMBER I.D.#
# OF CERT
SERIES CERT. # SHARES HELD-BY LIENHOLDER NAME
TOTAL:
HELD-BY:
OUR RECORDS INDICATE THAT CERTIFICATES WERE ISSUED TO YOU FOR ONE OR MORE OF
YOUR SHARES OF PREFERRED STOCK. THIS IS SHOWN BY THE WORD "OWNER" IN THE
"HELD-BY" COLUMN. THOSE CERTIFICATES MUST BE SUBMITTED WITH THE TRANSMITTAL
LETTER TO THE EXCHANGE AGENT (IBJ SCHRODER BANK AND TRUST) BEFORE THE EXCHANGE
CAN BE COMPLETED. IF THE CERTIFICATES HAVE BEEN LOST OR DESTROYED, PLEASE
CONTACT IBJ SCHRODER BANK AND TRUST AT 1-212-858-2103 (CALL COLLECT) FOR
INSTRUCTIONS CONCERNING THE REPLACEMENT OF LOST OR DESTROYED CERTIFICATES.
LIENHOLDER:
OUR RECORDS INDICATE THAT ONE OR MORE OF YOUR PREFERRED STOCK CERTIFICATES HAVE
BEEN PLEDGED AS COLLATERAL FOR A LOAN AND ARE SUBJECT TO A LIEN IN FAVOR OF THE
LENDER WHO IS NAMED ABOVE. YOU SHOULD CONTACT THE LENDER IMMEDIATELY TO OBTAIN
THE PROPER RELEASE TO SUBMIT ALONG WITH THE TRANSMITTAL LETTER TO THE EXCHANGE
AGENT (IBJ SCHRODER BANK AND TRUST). THIS RELEASE REQUIRES A SIGNATURE GUARANTEE
OR NOTARY. IF YOU NEED FURTHER INFORMATION, PLEASE CONTACT IBJ SCHRODER AT
1-212-858-2103 (CALL COLLECT).
ATTACH THIS STATEMENT TO THE LETTER OF TRANSMITTAL AS A DESCRIPTION OF THE
NON-CUMULATIVE PREFERRED STOCK THAT IS REGISTERED IN YOUR NAME.
<PAGE>
EXCHANGE OFFER QUESTIONS AND ANSWERS
1. Should I exchange my old preferred shares for new shares?
ANS.: Pro-Fac cannot give you investment advice, the decision is yours.
However, in making that decision, you should be aware of the following:
a. The dividend on the new shares is set at 6.88%, while any dividend
paid hereafter on the old shares is likely to be at the minimum rate
of 6%.
b. Dividends on the new preferred shares are cumulative, i.e. if
Pro-Fac skips a dividend on those shares, it has to make it up in
the future. This is not the case with the old preferred shares.
c. Dividends on the new preferred shares will be payable quarterly,
while dividends on the old preferred shares are paid to shareholders
only once a year.
d. New preferred shares should have greater liquidity, for it is
anticipated that a market will established for those shares through
NASDAQ.
(See page 4 of the Offering Circular, "Summary Comparison of Non-Cumulative and
Cumulative Preferred Stock," pages 6-7 of the Offering Circular, "The Exchange
Offer -- Background and Purpose of Exchange Offer, and "-- Certain Effects of
the Exchange Offer," and Page 16 of the Offering Circular, "Description of
Preferred Stock," for more information.)
2. Will there be a market for the old shares?
ANS.: The market probably will be extremely limited. If you do not
exchange your old preferred shares for the new preferred shares, you will
probably only be able to sell the old shares by working out a private deal with
someone interested in buying them. It is not likely that a market will develop
for the old preferred shares.
<PAGE>
2
(See page 7 of the Offering Circular, "The Exchange Offer -- Certain Effects of
the Exchange Offer," for more information.)
3. Will I continue to get a dividend on the old shares if I do not
exchange them?
ANS.: Future dividends are in the discretion of the Pro-Fac board. It
is likely that Pro-Fac will continue to pay a dividend of 6% on the old
preferred shares, payable annually as in the past. (See page 18 of the Offering
Circular, "Description of Preferred Stock -- Non-Cumulative Preferred Stock,"
for more information.)
4. What happens if I don't exchange my old shares now? Will I have another
chance to exchange them later on?
ANS.: You'll continue to own your old shares. As of now Pro-Fac does
not anticipate that it will make another exchange offer available. (See page 6
of the Offering Circular, "The Exchange Offer -- Background and Purpose of
Exchange Offer," and page 12 of the Offering Circular, "The Exchange Offer --
Extension of Exchange Offer Period; Termination; Amendments, for more
information.)
5. What is the new preferred stock worth?
ANS.: The market should determine what it will be worth on a day to day
basis, just like any other publicly traded stock. Presumably the 6.88% annual
return paid on a quarterly will be compared with interest rates and the yield of
other available investments. Should Pro-Fac go out of business and be
liquidated, each share should be worth $25, if there are funds available
sufficient to pay that amount. Pro-Fac also has the right to redeem the new
shares at $25 per share; however, such redemption is unlikely -- see the next
item.
(See page 6 of Offering Circular, "The Exchange Offer -- Background and Purpose
of the Exchange Offer," and page 34 of the Offering Circular, "Capitalization,"
for more information.)
<PAGE>
3
6. My old shares used to be worth more than the price at which the new
shares may trade. Will that still be true?
ANS.: Some of the old shares used to trade at prices higher than the
price at which new shares may trade. However, the price of the old shares then
was probably significantly affected by a redemption program by which Pro-Fac
redeemed some of the oldest series of its preferred shares at the $25 par value
at which it was issued. Redemption was in the discretion of the board of
directors and depended primarily on whether earnings were sufficient to justify
a return of capital. With the downturn in earnings in recent years, there has
been no redemption program since late in 1992. Nor is any redemption of old or
new preferred shares likely in the foreseeable future, since repurchase of its
shares by Pro-Fac is limited under the terms of the debt incurred to buy Curtice
Burns. So the past trading value of the old preferred shares is not a reliable
indication of the value of those shares now or of the new preferred shares. (See
page 6 of Offering Circular, "The Exchange Offer -- Background and Purpose of
the Exchange Offer," for more information.)
7. Why is Pro-Fac making this exchange offer?
ANS.: The market for Pro-Fac preferred stock has always been limited.
For some years there were as many as three brokerage houses involved in trying
to make a market for the preferred shares. During the uncertainty of the last
couple of years when the future of Pro-Fac and Curtice Burns was in doubt, the
brokers were reluctant to place a value on the preferred shares and withdrew
from the market. Consequently our preferred shareholders do not now have a way
to sell their stock other than through a private sale. This exchange offer and
the anticipated listing of the new preferred shares with NASDAQ should provide
liquidity for the holders of the preferred shares. (See page 6 of Offering
Circular, "The Exchange Offer -- Background and Purpose of the Exchange Offer,"
for more information.)
<PAGE>
4
8. Will I have to pay any income tax if I exchange my shares?
ANS.: Most shareholders will not have a gain or loss as a result of the
exchange of the old shares for the new preferred stock. The tax basis for the
old shares should become the tax basis for the new shares. (See page 15 of the
Offering Circular, "Certain Tax Consequences," for more information.)
9. The old preferred shares were issued in annual series. If I exchange my
old shares for new, will I get a separate certificate for each series
of old preferred which I exchange?
ANS.: No. All shares of the new preferred stock will be of the same
series. (See page 20 of the Offering Circular, "Description of Preferred Stock
-- Cumulative Preferred Stock," for more information.)
10. I don't have any certificates to exchange. What should I do?
ANS.: Very few holders of old preferred stock have certificates for
their shares. Pro-Fac did not issue certificates unless the shareholder
specifically requested them. Instead, investment summaries were sent to
shareholders which reflect their ownership of preferred shares. To tender your
shares in the exchange offer, you can use a recent investment summary from
Pro-Fac and write the certificate numbers and number of shares in the space
provided on the letter of transmittal. Or simply attach the preferred stock
listing that you received with the exchange offer documents to the letter of
transmittal. However, if that listing has the word "Owner" under the "Held By"
column, our records indicate that a certificate was issued to you and you must
find it to tender it in the exchange.
(See page 8 of the Offering Circular, "The Exchange Offer -- Procedure for
Tendering Non-Cumulative Preferred Stock," for more information.)
<PAGE>
5
11. The listing indicates that I was apparently once issued certificates
for my stock, but I cannot now find my certificates. What should I do?
ANS.: If you have lost the certificates, contact I. B. J. Schroder for
instructions at 212-858-2103 (call collect). (See page 8 of the Offering
Circular, "The Exchange Offer -- Procedure for Tendering Non-Cumulative
Preferred Stock," for more information.)
12. Will I continue to get investment summaries showing the Pro-Fac
Securities I own?
ANS.: Pro-Fac will continue to send investment summaries showing the
common stock with the corresponding crop commitments, the retains and old
preferred stock. However, the new preferred will be represented by certificates.
After the exchange is completed you will receive a certificate for the new
preferred shares you own. (See page 11 of the Offering Circular, "The Exchange
Offer -- Acceptance for Exchange and Exchange," for more information.)
13. My lender has a lien on my preferred stock. What should I do?
ANS.: We have notified all lienholders of whom we have knowledge that
Pro-Fac is conducting this exchange offer. If you intend to exchange your old
preferred stock, you should contact your lender to get a release to exchange the
shares and instructions about what you should do with the new certificate when
you receive it. I.B.J. Schroder will require that your lender's signature on the
release be guaranteed. (See page 8 of the Offering Circular, "The Exchange Offer
-- Procedure for Tendering Non-Cumulative Preferred Stock," for more
information.)
14. Why are there so many documents?
ANS.: This exchange offer is subject to certain requirements under
federal securities laws. The information in the documents is designed to satisfy
these rules and provide you with objective information to make a decision. If
you have any specific
<PAGE>
6
questions, we are here to answer them. Or we may refer you to I.B.J. Schroder
Bank and Trust Company, the exchange agent who can help with questions about how
to tender your shares.
15. What is going to happen to my retains?
ANS.: The retains you now hold will convert after five years to shares
of new preferred stock unless you instruct us to convert them to the old stock.
Retains that will be issued in the 1995 calendar year and in the future will
convert to the new preferred stock.
(See pages 17-18 of the Offering Circular, "Description of Preferred Stock --
Non-Cumulative Preferred Stock, for more information.)
16. What are my retains worth and will I be able to sell them?
ANS.: The value of retains is dependent upon the value of preferred
stock, since retains ultimately convert to preferred stock. When investors know
the market value of preferred, they can determine a value for the retains based
on the number of years they must wait for the retains to convert to preferred
and start earning a dividend. Having a public market for new preferred stock
should assist this process for retains that convert into new shares of
preferred. We will work with the brokers who have been helping make the market
for retains in the past to continue to do this in the future. However, we cannot
give assurance at this time that we will be successful in accomplishing this.
<PAGE>
[Letterhead of Pro-Fac]
To: Holders of Liens on Pro-Fac Non-Cumulative Preferred Stock
Re: Exchange Offer for Pro-Fac Non-Cumulative Preferred Stock
Our records indicate that you hold a security interest in certain
shares of Non-Cumulative Preferred Stock, liquidation preference $25 per share
(the "Non-Cumulative Preferred Stock"), of Pro-Fac Cooperative, Inc.
("Pro-Fac"). We would like to make you aware of the following:
1. On August 23, 1995, Pro-Fac commenced an exchange offer for
all of the shares of Non-Cumulative Preferred Stock issued and
outstanding. The exchange offer is conditioned upon there being validly
tendered by October 10, 1995 (or a later date, if Pro-Fac extends its
offer) and not withdrawn a minimum of 500,000 shares of Non-Cumulative
Preferred Stock. Following Pro-Fac's acceptance of shares under the
exchange offer, all shares of Non-Cumulative Preferred Stock validly
tendered and not withdrawn will be exchanged, on a share-for-share
basis, for shares of Pro-Fac's newly authorized Class A Cumulative
Preferred Stock, liquidation preference $25 per share (the "Cumulative
Preferred Stock").
2. Pro-Fac has applied for inclusion of the Cumulative
Preferred Stock in the NASDAQ National Market System. Although there
can be no assurance that an active trading market will develop or be
sustained, Pro-Fac believes that, if so included, the Cumulative
Preferred Stock may trade in a more established market and have a more
readily ascertainable market price. Therefore, the Cumulative Preferred
Stock may provide a more attractive investment than the Non-Cumulative
Preferred Stock, which has been and is a highly illiquid investment.
3. Stockholders who have pledged their shares of
Non-Cumulative Preferred Stock must obtain a release of that pledge
from the secured party prior to tendering their shares to Pro-Fac in
the exchange offer. As of the date of this letter, we do not know
whether the preferred stockholder who pledged the shares of
Non-Cumulative Preferred Stock to you desires to tender those shares to
Pro-Fac in exchange for shares of Cumulative Preferred Stock. However,
if that is the case, you may be receiving a request from that
stockholder to release your security interest in the shares of
Non-Cumulative Preferred Stock.
WE WOULD APPRECIATE YOUR FORWARDING THIS LETTER TO THE APPROPRIATE LOAN
REPRESENTATIVE(S) WITHIN YOUR ORGANIZATION SO THEY ARE AWARE THAT THESE REQUESTS
MAY BE FORTHCOMING.
To help facilitate the valid tender of shares of Non-Cumulative
Preferred Stock, and to assist you in better understanding the exchange offer,
we are providing you with this information and have enclosed with this letter a
copy of the Offering Circular. The Offering Circular describes in more detail
the purpose and certain effects of the exchange offer. If you wish to discuss
the exchange offer with a Pro-Fac representative, you may do so by calling
1-800-280-5096. If you have questions regarding the documentation that will need
to be delivered to evidence your release of your security interest in the
Non-Cumulative Preferred Stock, we suggest that you contact IBJ Schroder Bank &
<PAGE>
Trust Company, which is the exchange agent in connection with Pro-Fac's exchange
offer, at (212) 858-2103.
Sincerely,
Stephen R. Wright
General Manager
