<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION
14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
CURTICE-BURNS FOODS, INC.
------------------------
(NAME OF SUBJECT COMPANY)
PF ACQUISITION CORP.
PRO-FAC COOPERATIVE, INC.
------------------------
(BIDDER)
CLASS A COMMON STOCK, PAR VALUE $.99 PER SHARE
CLASS B COMMON STOCK, PAR VALUE $.99 PER SHARE
------------------------
(TITLE OF CLASSES OF SECURITIES)
231382102
231382201
------------------------
(CUSIP NUMBER OF CLASSES OF SECURITIES)
ROY A. MYERS
PF ACQUISITION CORP.
PRO-FAC COOPERATIVE, INC.
90 LINDEN PLACE
P.O. BOX 682
ROCHESTER, NEW YORK 14603
(716) 383-1850
------------------------
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
COPIES TO:
SCOTT F. SMITH, ESQ.
HOWARD, DARBY & LEVIN
1330 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
TELEPHONE: (212) 841-1000
------------------------
SEPTEMBER 27, 1994
(DATE OF EVENT WHICH REQUIRES
FILING STATEMENT ON SCHEDULE 13D)
------------------------
<PAGE>
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
$174,119,002 $34,924
- --------------------------------------------------------------------------------
* Estimated for purposes of calculating the amount of filing fee only. The
amount assumes the purchase of 7,107,282 shares of Class A Common Stock and
2,056,876 shares of Class B Common Stock, par value $.99 per share
(collectively, the 'Shares'), at a price per Share of $19.00 in cash. Such
number of Shares represents all of the Shares outstanding as of September 27,
1994, and assumes the exercise of all options outstanding.
** Includes a Schedule 13D filing fee of $100.
[ ] 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 1 of Pages
Exhibit Index begins on Page
<PAGE>
14D-1 AND 13D
CUSIP Nos. 231382102 Page 2 of Pages
231382201
<TABLE>
<CAPTION>
<S> <C>
1) Name of Reporting Persons: PF Acquisition Corp.
S.S. or I.R.S. Identification Nos. of Above Person: pending
------------------------------------------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions).
[ ] (a)
[ ] (b)
------------------------------------------------------------------------------------------------------------------
3) SEC Use Only.
------------------------------------------------------------------------------------------------------------------
4) Sources of Funds (See Instructions). AF, WC, BK, OO
------------------------------------------------------------------------------------------------------------------
5) [ ] Check if Disclosure of Legal Proceedings is Required pursuant to Items 2(e) or 2(f).
------------------------------------------------------------------------------------------------------------------
6) Citizenship or Place of Organization.
New York
------------------------------------------------------------------------------------------------------------------
7) Aggregate Amount Beneficially Owned by Each Reporting Person. As of September 27, 1994, 899,447 Shares of
Class A Common Stock (1)(2) and 2,036,643 Shares of Class B Common Stock (1)(2)
------------------------------------------------------------------------------------------------------------------
8) [ ] Check if the Aggregate Amount in Row 7 Excludes Certain Shares.
------------------------------------------------------------------------------------------------------------------
9) Percent of Class Represented by Amount in Row 7.
As of September 27, 1994, approximately 13.6% of the Class A Common Stock (1)(2) and 99.0% of the Class B
Common Stock (1)(2)
------------------------------------------------------------------------------------------------------------------
10) Type of Reporting Person (See Instructions).
CO
</TABLE>
<PAGE>
14D-1 AND 13D
CUSIP Nos. 231382102 Page 3 of Pages
231382201
<TABLE>
<CAPTION>
<S> <C>
1) Names of Reporting Persons: Pro-Fac Cooperative, Inc.
S.S. or I.R.S. Identification Nos. of Above Person: 16-6036816
------------------------------------------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions).
[ ] (a)
[ ] (b)
------------------------------------------------------------------------------------------------------------------
3) SEC Use Only.
------------------------------------------------------------------------------------------------------------------
4) Sources of Funds (See Instructions). AF, WC, BK, OO
------------------------------------------------------------------------------------------------------------------
5) [ ]Check if Disclosure of Legal Proceedings is Required pursuant to Items 2(e) or 2(f).
------------------------------------------------------------------------------------------------------------------
6) Citizenship or Place of Organization.
New York
------------------------------------------------------------------------------------------------------------------
7) Aggregate Amount Beneficially Owned by Each Reporting Person.
As of September 27, 1994, 899,447 Shares of Class A Common Stock (1)(2) and
2,036,643 Shares of Class B Common Stock (1)(2)
------------------------------------------------------------------------------------------------------------------
8) [ ]Check if the Aggregate Amount in Row 7 Excludes Certain Shares.
------------------------------------------------------------------------------------------------------------------
9) Percent of Class Represented by Amount in Row 7.
As of September 27, 1994, approximately 13.6% of the Class A Common Stock (1)(2) and
99.0% of the Class B Common Stock (1)(2)
------------------------------------------------------------------------------------------------------------------
10) Type of Reporting Person (See Instructions). CO
</TABLE>
- ------------
(1) On September 27, 1994, PF Acquisition Corp., a New York corporation (the
'Purchaser') and a wholly owned subsidiary of Pro-Fac Cooperative, Inc., a
New York cooperative corporation ('Pro-Fac'), entered into an agreement (the
'Stockholder Agreement') with Agway Holdings, Inc., a Delaware corporation
('AHI'), pursuant to which AHI agreed, subject to certain conditions, to
tender pursuant to the tender offer described in this statement (the
'Offer') all of the shares of Class A Common Stock and Class B Common Stock,
par value $.99 per share (collectively, the 'Shares'), of Curtice-Burns
Foods, Inc., a New York corporation (the 'Company'), owned by it within five
business days after the commencement of the Offer and, subject to applicable
law and the terms and conditions of the Stockholder Agreement, to not
withdraw such shares. AHI holds 899,447 Shares and 2,036,643 Shares of Class
A Common Stock and Class B Common Stock, respectively (the 'AHI Shares').
AHI's agreement to tender the AHI Shares in the Offer is reflected in Rows 7
and 9 in each of the tables above. Pursuant to the Stockholder Agreement,
AHI also has agreed to vote, if necessary, the AHI Shares in favor of the
Agreement and Plan of Merger, dated as of September 27, 1994 (the 'Merger
Agreement'), among the Company, Pro-Fac and the Purchaser and the merger of
the Purchaser into the Company (the 'Merger'). In addition to the agreement
to tender, pursuant to the Stockholder Agreement, AHI has granted the
Purchaser an option (the 'Option'), exercisable upon the terms and
conditions set forth in the Stockholder Agreement, to purchase at a price of
$19 per Share any AHI Shares tendered by AHI and subsequently withdrawn
(other than under the circumstances where less than $19 in cash is to be
paid for the Shares or the Merger Agreement has been terminated). The
Purchaser has agreed that it will not accept any Shares of Class A Common
Stock for payment pursuant to the Offer unless it accepts at least 44% of
the Shares of Class A Common Stock then outstanding (not including any
Shares of Class A Common Stock held by AHI). Similarly, the Purchaser shall
not be entitled to purchase AHI Shares under the Option unless it shall have
accepted for payment, or shall be simultaneously accepting for payment, at
least 44% of the Shares of Class A Common Stock then outstanding (not
including any Shares of Class A Common Stock held by AHI). The Stockholder
Agreement and the Merger Agreement are described more fully in Section 11
'Purpose of the Offer; Merger Agreement; Stockholder Agreement; Certain
Statutory Requirements; Financial Advisors' of the Offer to Purchase, dated
October 4, 1994 (the 'Offer to Purchase').
(2) Does not include up to 1,854,546 Shares of Class A Common Stock that,
pursuant to the terms and conditions set forth in the Merger Agreement, may
be issued to the Purchaser in exchange for an equal number of AHI Shares of
Class B Common Stock accepted for payment in the Offer. If such Shares are
included in the calculation of the number of Shares of Class A Common Stock
that the Purchaser and Pro-Fac beneficially own, the Purchaser and Pro-Fac
beneficially own 2,753,993 Shares of Class A Common Stock, which would
represent approximately 32.4% of the Shares of Class A Common Stock
outstanding following such exchange. See Section 11 'Purpose of the Offer;
Merger Agreement; Stockholder Agreement; Certain Statutory Requirements;
Financial Advisors' of the Offer to Purchase.
<PAGE>
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement
on Schedule 13D with respect to the acquisition by the Purchaser and Pro-Fac of
beneficial ownership of the AHI Shares. The item numbers and responses thereto
below are in accordance with the requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Curtice-Burns Foods, Inc., a New
York corporation (the 'Company'), and the address of its principal executive
offices is 90 Linden Place, P.O. Box 682, Rochester, New York 14603.
(b) This Statement on Schedule 14D-1 relates to the offer by the Purchaser
to purchase all outstanding shares of Class A Common Stock and Class B Common
Stock, par value $.99 per share (collectively, the 'Shares'), of the Company at
$19.00 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase (the 'Offer to Purchase') 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 'Offer'). The information set forth in the
introduction to the Offer to Purchase (the 'Introduction') is incorporated
herein by reference.
(c) The information set forth in Section 6 'Price Range of Shares;
Dividends' of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement on Schedule 14D-1 is filed by PF Acquisition
Corp., a New York corporation (the 'Purchaser'), and Pro-Fac Cooperative, Inc.,
a New York cooperative corporation ('Pro-Fac'). The Purchaser is a wholly owned
subsidiary of Pro-Fac. Information concerning the principal business and the
addresses of the principal offices of the Purchaser and Pro-Fac is set forth in
Section 8 'Certain Information Concerning the Purchaser and Pro-Fac' of the
Offer to Purchase, and is incorporated herein by reference. The names, business
addresses, present principal occupations or employments, material occupations,
positions, offices or employment during the last five years and citizenship of
the directors and executive officers of the Purchaser and Pro-Fac are set forth
in Schedule I to the Offer to Purchase and are incorporated herein by reference.
(e) and (f) None of the Purchaser, Pro-Fac or, to the best knowledge of
such corporations, any of the persons listed on Schedule I to the Offer of
Purchase, has during the last five years (i) been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
4
<PAGE>
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in (i) the Introduction and Section
10 'Past Contacts; Background of the Offer; Transactions or Negotiations with
the Company' and Section 11 'Purpose of the Offer; Merger Agreement; Stockholder
Agreement; Certain Statutory Requirements; Financial Advisors' and Schedule I of
the Offer to Purchase, (ii) the Agreement and Plan of Merger, dated as of
September 27, 1994 (the 'Merger Agreement'), among the Company, Pro-Fac and the
Purchaser, a copy of which is attached as Exhibit (c)(1) hereto, and (iii) the
Agreement, dated as of September 27, 1994 (the 'Stockholder Agreement'), among
the Purchaser, Pro-Fac and Agway Holdings, Inc., a Delaware corporation ('AHI'),
a copy of which is attached as Exhibit (c)(2) hereto, respectively, is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 9 'Source and Amount of
Funds' of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e)The information set forth in the Introduction and Section 11
'Purpose of the Offer; Merger Agreement; Stockholder Agreement; Certain
Statutory Requirements; Financial Advisors' of the Offer to Purchase is
incorporated herein by reference.
(f) and (g) The information set forth in Section 12 'Effect of the Offer on
the Market for the Shares; Stock Exchange Listing; Registration Under the
Exchange Act' of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in (i) the Introduction, Section 8
'Certain Information Concerning the Purchaser and Pro-Fac,' Section 10 'Past
Contacts; Background of the Offer; Transactions or Negotiations with the
Company,' Section 11 'Purpose of the Offer; Merger Agreement; Stockholder
Agreement; Certain Statutory Requirements; Financial Advisors' and Schedule I of
the Offer to Purchase, (ii) the Merger Agreement and (iii) the Stockholder
Agreement is incorporated herein by reference.
5
<PAGE>
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in (i) the Introduction, Section 8 'Certain
Information Concerning the Purchaser and Pro-Fac', and Section 10 'Past
Contacts; Background of the Offer; Transactions or Negotiations with the
Company' and Section 11 'Purpose of the Offer; Merger Agreement; Stockholder
Agreement; Certain Statutory Requirements; Financial Advisors' of the Offer to
Purchase, (ii) the Merger Agreement and (iii) the Stockholder Agreement is
incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 17 'Fees and Expenses' of the Offer to
Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 'Certain Information Concerning the
Purchaser and Pro-Fac' of the Offer to Purchase, and the consolidated financial
statements of Pro-Fac in Pro-Fac's s Annual Report on Form 10-K for the fiscal
year ended June 25, 1994 are incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 11 'Purpose of the Offer; Merger
Agreement; Stockholder Option Agreement; Certain Statutory Requirements;
Financial Advisors' of the Offer to Purchase is incorporated herein by
reference.
(b) and (c) The information set forth in Section 16 'Certain Legal Matters;
Regulatory Approvals' of the Offer to Purchase is incorporated herein by
reference.
(d) Not applicable.
(e) None.
(f) The information set forth in (i) the Offer to Purchase, (ii) the Letter
of Transmittal, (iii) the Merger Agreement and (iv) the Stockholder Agreement is
incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase dated October 4, 1994.
(a)(2) Form of Letter of Transmittal (including Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9).
6
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(a)(3) Form of Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(4) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.
(a)(5) Text of press release issued by Pro-Fac dated September 28, 1994.
(a)(6) Form of summary advertisement dated October 4, 1994.
(a)(7) Form of Letter to Participants in the Curtice-Burns Foods Automatic Dividend Reinvestment Plan.
(b)(1) Letter, dated September 2, 1994, from Springfield Bank for Cooperatives to Pro-Fac, as amended by
Letter, dated September 16, 1994.
(b)(2) Letter, dated September 27, 1994, from Dillon, Read & Co. Inc. to Pro-Fac.
(c)(1) Agreement and Plan of Merger, dated as of September 27, 1994, among the Company, Pro-Fac and the
Purchaser.
(c)(2) Agreement, dated as of September 27, 1994, among the Purchaser, Pro-Fac and AHI.
(c)(3) Confidentiality Agreement, dated February 16, 1994, between Pro-Fac and the Company.
(c)(4) Integrated Agreement, dated as of June 27, 1992, between the Company and Pro-Fac.
(c)(5) Demand for Arbitration, dated July 8, 1994, submitted by the Company to Pro-Fac.
(c)(6) Response and Counterdemand for Arbitration, dated August 3, 1994, submitted by Pro-Fac to the Company.
(c)(7) Arbitration Agreement, dated August 16, 1994, between Pro-Fac and the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
7
<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: October 4, 1994
PF ACQUISITION CORP.
By /s/ Roy A. Myers
...................................
Name: Roy A. Myers
Title: President; Vice President and
Treasurer
PRO-FAC COOPERATIVE, INC.
By /s/ Roy A. Myers
...................................
Name: Roy A. Myers
Title: General Manager
8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER EXHIBIT NAME NUMBER
- ------- ------------------------------------------------------------------------------------------ -------
<S> <C> <C>
(a)(1) Offer to Purchase dated October 4, 1994.
(a)(2) Form of Letter of Transmittal (including Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9).
(a)(3) Form of Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(4) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(a)(5) Text of press release issued by Pro-Fac dated September 28, 1994.
(a)(6) Form of summary advertisement dated October 4, 1994.
(a)(7) Form of Letter to Participants in the Curtice-Burns Foods Automatic Dividend Reinvestment Plan.
(b)(1) Letter, dated September 2, 1994, from Springfield Bank for Cooperatives to Pro-Fac, as
amended by Letter, dated September 16, 1994.
(b)(2) Letter, dated September 27, 1994, from Dillon, Read & Co. Inc. to Pro-Fac.
(c)(1) Agreement and Plan of Merger, dated as of September 27, 1994, among the Company, Pro-Fac
and the Purchaser.
(c)(2) Agreement, dated as of September 27, 1994, among the Purchaser, Pro-Fac and AHI.
(c)(3) Confidentiality Agreement, dated February 16, 1994, between Pro-Fac and the Company.
(c)(4) Integrated Agreement, dated as of June 27, 1992, between the Company and Pro-Fac.
(c)(5) Demand for Arbitration, dated July 8, 1994, submitted by the Company to Pro-Fac.
(c)(6) Response and Counterdemand for Arbitration, dated August 3, 1994, submitted by Pro-Fac to
the Company.
(c)(7) Arbitration Agreement, dated August 16, 1994, between Pro-Fac and the Company.
9
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
(d) None.
(e) Not applicable.
(f) None.
10
</TABLE>
<PAGE>
STATEMENT OF DIFFERENCES
The paragraph symbol shall be expressed as 'P'.
<PAGE>
Offer to Purchase for Cash
All Outstanding Class A and Class B Shares of Common Stock
of
CURTICE-BURNS FOODS, INC.
at
$19 NET PER SHARE
by
PF ACQUISITION CORP.
a wholly owned subsidiary of
PRO-FAC COOPERATIVE, INC.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
WEDNESDAY, NOVEMBER 2, 1994, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED BY THE EXPIRATION DATE AND NOT WITHDRAWN THAT NUMBER OF SHARES OF
CURTICE-BURNS FOODS, INC. (THE 'COMPANY') WHICH WOULD REPRESENT AT LEAST 90% OF
EACH OF THE CLASS A COMMON STOCK AND CLASS B COMMON STOCK OF THE COMPANY
OUTSTANDING AT THE EXPIRATION DATE AND (ii) PRO-FAC COOPERATIVE, INC. OR PF
ACQUISITION CORP. (THE 'PURCHASER') HAVING OBTAINED FINANCING SUFFICIENT TO
ALLOW THE PURCHASER TO CONSUMMATE THE OFFER AND THE SUBSEQUENT MERGER. THE OFFER
ALSO IS SUBJECT TO OTHER TERMS AND CONDITIONS CONTAINED IN THIS OFFER TO
PURCHASE. SEE SECTION 15.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE MERGER AGREEMENT, THE
OFFER AND THE MERGER AND THE STOCKHOLDER AGREEMENT, DETERMINED THAT THE TERMS OF
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY
AND THE STOCKHOLDERS OF THE COMPANY, RECOMMENDED THAT THE STOCKHOLDERS OF THE
COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES OF CLASS A COMMON STOCK AND
CLASS B COMMON STOCK (COLLECTIVELY, THE 'SHARES') AND APPROVED THE TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT AND THE STOCKHOLDER AGREEMENT.
--------------------------
Any stockholder desiring to tender Shares 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 deliver it with the certificates
for such Shares and all other required documents to the Depositary or (2)
request his broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for him. A stockholder having Shares 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. Shares may not be
tendered pursuant to any guaranteed delivery procedure.
Questions and requests for assistance or additional copies of this Offer to
Purchase and the Letter of Transmittal may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase.
--------------------------
THE DEALER MANAGER FOR THE OFFER IS:
DILLON, READ & CO. INC.
October 4, 1994
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
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<S> <C> <C>
1. Terms of the Offer................................................................................... 3
2. Acceptance for Payment and Payment................................................................... 5
3. Procedure for Tendering Shares....................................................................... 6
4. Withdrawal Rights.................................................................................... 8
5. Certain Tax Consequences............................................................................. 9
6. Price Range of Shares; Dividends..................................................................... 10
7. Certain Information Concerning the Company........................................................... 11
8. Certain Information Concerning the Purchaser and Pro-Fac............................................. 13
9. Source and Amount of Funds........................................................................... 16
10. Past Contacts; Background of the Offer; Transactions or Negotiations with the Company................ 19
11. Purpose of the Offer; Merger Agreement; Stockholder Agreement; Certain Statutory Requirements; 24
Financial Advisors.................................................................................
12. Effect of the Offer on the Market for the Shares; Stock Exchange Listing; Registration under the 37
Exchange Act.......................................................................................
13. Dividends and Distributions.......................................................................... 39
14. Extension of Tender Period; Termination; Amendment................................................... 39
15. Certain Conditions of the Offer...................................................................... 41
16. Certain Legal Matters; Regulatory Approvals.......................................................... 43
17. Fees and Expenses.................................................................................... 45
18. Miscellaneous........................................................................................ 45
Schedule I Directors and Executive Officers
Schedule II Certain Information Required to be Given to Stockholders Pursuant to New York Law
</TABLE>
<PAGE>
<PAGE>
To the Holders of Class A
and Class B Common Stock of
CURTICE-BURNS FOODS, INC.:
INTRODUCTION
PF Acquisition Corp., a New York corporation (the 'Purchaser') and a wholly
owned subsidiary of Pro-Fac Cooperative, Inc., a New York cooperative
corporation ('Pro-Fac'), hereby offers to purchase all outstanding shares of
Class A Common Stock and Class B Common Stock, $.99 par value per share
(collectively, the 'Shares'), of Curtice-Burns Foods, Inc., a New York
corporation (the 'Company'), at $19 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the 'Offer'). Tendering
stockholders of the Company (the stockholders of the Company are referred to
herein as the 'Stockholders') will not be obligated to pay brokerage fees or
commissions or, except as set forth in the Letter of Transmittal, transfer taxes
on the purchase of Shares pursuant to the Offer. The Purchaser will pay all
charges and expenses of Dillon, Read & Co. Inc. (the 'Dealer Manager'), IBJ
Schroder Bank & Trust Company (the 'Depositary') and Beacon Hill Partners, Inc.
(the 'Information Agent') in connection with the Offer.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE MERGER AGREEMENT (AS
HEREINAFTER DEFINED), THE OFFER AND THE MERGER (AS HEREINAFTER DEFINED) AND THE
STOCKHOLDER AGREEMENT (AS HEREINAFTER DEFINED), DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND
THE STOCKHOLDERS, RECOMMENDED THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES AND APPROVED THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT
AND THE STOCKHOLDER AGREEMENT.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION ('DLJ') HAS DELIVERED
TO THE COMPANY'S BOARD OF DIRECTORS ITS WRITTEN OPINION THAT, BASED UPON AND
SUBJECT TO CERTAIN CONSIDERATIONS AND ASSUMPTIONS, AS OF SEPTEMBER 27, 1994, THE
CONSIDERATION TO BE RECEIVED BY HOLDERS OF SHARES OF CLASS A COMMON STOCK
PURSUANT TO THE OFFER AND THE MERGER IS FAIR TO SUCH HOLDERS FROM A FINANCIAL
POINT OF VIEW. GOLDMAN, SACHS & CO. ('GOLDMAN SACHS') HAS DELIVERED TO THE
COMPANY'S BOARD OF DIRECTORS ITS WRITTEN OPINION THAT, BASED UPON AND SUBJECT TO
CERTAIN CONSIDERATIONS AND ASSUMPTIONS, AS OF SEPTEMBER 27, 1994, THE $19 PER
SHARE OF CLASS B COMMON STOCK IN CASH TO BE RECEIVED BY THE HOLDERS OF SHARES OF
CLASS B COMMON STOCK IN THE OFFER AND THE MERGER IS FAIR TO SUCH HOLDERS. THE
COMPANY HAS ADVISED PRO-FAC AND THE PURCHASER THAT COPIES OF SUCH WRITTEN
OPINIONS HAVE BEEN INCLUDED IN THE COMPANY'S SOLICITATION/RECOMMENDATION
STATEMENT ON SCHEDULE 14D-9 (THE 'SCHEDULE 14D-9') THAT HAS BEEN MAILED TO THE
STOCKHOLDERS IN CONNECTION WITH THE OFFER. STOCKHOLDERS ARE URGED TO READ SUCH
OPINIONS IN THEIR ENTIRETY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED BY THE EXPIRATION DATE (AS HEREINAFTER DEFINED) AND NOT WITHDRAWN THAT
NUMBER OF SHARES WHICH WOULD REPRESENT AT LEAST 90% OF EACH OF THE CLASS A
COMMON STOCK AND CLASS B COMMON STOCK OF THE COMPANY OUTSTANDING AT THE
EXPIRATION DATE (THE 'MINIMUM CONDITION') AND (II) PRO-FAC OR THE PURCHASER
HAVING OBTAINED FINANCING SUFFICIENT TO ALLOW THE PURCHASER TO CONSUMMATE THE
OFFER AND THE MERGER (THE 'FINANCING CONDITION').
The total amount of funds required by the Purchaser to purchase all Shares
(including the In- the-Money Option Shares (as hereinafter defined)) pursuant to
the Offer and the Merger, to refinance or repay existing indebtedness (other
than seasonal debt) and certain other obligations and to pay related fees and
expenses is estimated to be approximately $471 million. Of that amount,
approximately $167 million will be for the purchase of the Shares, approximately
$289 million will be for the repayment of indebtedness and other obligations and
approximately $15 million will be for the payment of fees and expenses. The
Purchaser and Pro-Fac will fund such amounts through a senior bank loan of up to
$200 million, senior subordinated notes of up to $160 million and the balance in
Pro-Fac equity (most of which is already invested in the Company). The Purchaser
and Pro-Fac have received a commitment letter from Springfield Bank for
Cooperatives (the 'Bank') to provide, subject to the terms and conditions set
forth in the letter, loans of up to $200 million in connection with the purchase
of the
<PAGE>
Shares. The Purchaser and Pro-Fac also have received a letter from Dillon, Read
& Co. Inc. ('Dillon Read') stating that, subject to the terms and conditions set
forth in such letter, based upon current market conditions, it is highly
confident of its ability to sell or place up to $160 million of senior
subordinated notes in connection with the Offer and the Merger. See Section 9.
The Company has represented that, as of September 27, 1994, there were
6,633,129 Shares of Class A Common Stock and 2,056,876 Shares of Class B Common
Stock of the Company outstanding. Accordingly, the Purchaser believes that the
Minimum Condition would be satisfied if at least 5,969,817 and 1,851,189 Shares
of Class A Common Stock and Class B Common Stock, respectively, currently
outstanding are validly tendered pursuant to the Offer and not withdrawn.
However, the number of Shares required to satisfy the Minimum Condition will
increase if certain options outstanding to acquire Shares have been or are
exercised after September 27, 1994 and at or prior to the Expiration Date. The
Company has represented that there were outstanding pursuant to various employee
stock plans, options to purchase 474,153 shares of Class A Common Stock of the
Company. Based on information provided by the Company, the Purchaser believes
that options to purchase 285,246 Shares ('In-the-Money Option Shares') of Class
A Common Stock are exercisable at prices less than $19 per Share on or before
the Effective Time (as defined below).
As more fully described below, Agway Holdings, Inc., a Delaware corporation
('AHI') and a wholly owned subsidiary of Agway Inc. ('Agway'), has entered into
an agreement (the 'Stockholder Agreement'), pursuant to which AHI has agreed to
tender all of its Shares pursuant to the Offer. AHI holds 899,447 Shares and
2,036,643 Shares of Class A Common Stock and Class B Common Stock, respectively.
As a result of AHI's agreement to tender its Shares, the Minimum Condition with
respect to the Class B Common Stock will be satisfied whether or not any other
Stockholder tenders any of its Shares. In addition, pursuant to the Merger
Agreement, upon the Purchaser's acceptance for payment of Shares pursuant to the
Offer, the Company will exchange Shares of Class B Common Stock accepted by the
Purchaser for an equivalent number of Shares of Class A Common Stock in order to
enable the Purchaser to own at least 90% of the Shares of Class A Common Stock.
The Purchaser must, after giving effect to such exchange, continue to hold at
least 90% of the Shares of Class B Common Stock. Assuming no other issuance of
Shares of Class A Common Stock after September 27, 1994, and assuming no Shares
of Class B Common Stock are tendered other than those held by AHI, if
Stockholders (other than AHI) holding an aggregate of 4,884,915 Shares of Class
A Common Stock tender and do not withdraw such Shares pursuant to the Offer, the
Minimum Condition will, after giving effect to this exchange right, be
satisfied. See Section 11.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of September 27, 1994 (the 'Merger Agreement'), among the Company, Pro-Fac
and the Purchaser. The Merger Agreement provides, among other things, that,
subject to the satisfaction or waiver of certain conditions, the Company,
Pro-Fac and the Purchaser will take all necessary and appropriate action to
cause the Purchaser to be merged into the Company (the 'Merger'), with the
Company continuing as the surviving corporation (the 'Surviving Corporation'),
simultaneously with or as soon as practicable after the acceptance of Shares
pursuant to the Offer. Pursuant to the Merger Agreement, at the effective time
of the Merger (the 'Effective Time'), each outstanding Share (other than Shares
owned, directly or indirectly, by Pro-Fac or its subsidiaries or held by the
Company or its subsidiaries (which shall be canceled) or by Stockholders
exercising appraisal rights provided in connection with the Merger) will be
converted into the right to receive $19 in cash, without interest. If the
Minimum Condition is satisfied and the Purchaser accepts for payment Shares
pursuant to the Offer, the 'short-form' merger provisions of the New York
Business Corporation Law ('New York Law') would permit the Merger to occur
without a meeting or a vote of the Stockholders. Assuming satisfaction of the
Minimum Condition, the Purchaser intends to complete the Merger immediately
after the acceptance for payment of Shares pursuant to the Offer. See Section
11.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. If the Purchaser acquires control of the Company, the
Purchaser currently intends that no further dividends will be declared on the
Shares.
2
<PAGE>
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions set forth in the Offer, the
Purchaser will accept for payment and pay for, at the time and in the manner set
forth in Section 2, all Shares that are validly tendered by the Expiration Date
and not withdrawn as provided in Section 4. The term 'Expiration Date' shall
mean 12:00 Midnight, New York City time, on Wednesday, November 2, 1994, unless
the Purchaser shall have extended the period of time for which the Offer is
open, in which event the term 'Expiration Date' shall mean the latest time and
date at which the Offer, as so extended by the Purchaser, shall expire.
The Offer is subject to certain conditions set forth in Section 15,
including satisfaction of the Minimum Condition, expiration or termination of
the waiting period applicable to the Purchaser's acquisition of Shares pursuant
to the Offer under Title II of the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 (the 'HSR Act') and satisfaction of the Financing Condition. Pursuant to
the terms of the Merger Agreement, the Purchaser shall, unless the Company
otherwise consents, extend the Offer to allow any unsatisfied condition to the
Purchaser's obligation to consummate the Offer to be satisfied, except that if
the Financing Condition is not satisfied at any scheduled Expiration Date and
the Purchaser has entered into definitive documents for financing sufficient to
consummate the Offer and the Merger, the Purchaser may not extend the Offer
because the Financing Condition has not been satisfied to a date that is more
than five business days after the Purchaser's signing of the last of such
definitive documents. In addition, the Purchaser may, without the consent of the
Company, extend the Offer (i) as required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the
'Commission') and (ii) for any reason for up to 15 business days beyond the
latest Expiration Date that otherwise would be permitted. Unless otherwise
agreed, the Offer may not be extended (unless due to a rule, regulation,
interpretation or position of the Commission) to a date beyond December 15, 1994
or if such extension would be reasonably likely to result in any of the
conditions to the Purchaser's obligation to purchase Shares (except conditions
that have been irrevocably waived) not being satisfied at the proposed new
scheduled Expiration Date. Except as otherwise provided in, and subject to the
terms and conditions of, the Merger Agreement, if any condition is not
satisfied, the Purchaser may (i) terminate the Offer and return all tendered
Shares to tendering Stockholders, (ii) waive such condition and, subject to any
requirement to extend the period of time during which the Offer is open,
purchase all Shares validly tendered by the Expiration Date and not withdrawn or
(iii) delay acceptance for payment or delay payment for Shares, subject to
applicable law, until satisfaction or waiver of the conditions to the Offer. In
the event that the Offer is extended for any reason, the Purchaser may, subject
to withdrawal rights as set forth in Section 4, retain all such Shares until the
expiration of the Offer as so extended. For a description of the Purchaser's
right to extend the period of time during which the Offer is open and to amend,
delay or terminate the Offer, see Section 14.
Pursuant to the terms of the Merger Agreement, the Purchaser expressly
reserves the right to waive any of the conditions to the Offer and to make any
change in the terms or conditions of the Offer; provided that, without the
consent of the Company, no change may be made which (i) changes the form of
consideration to be paid in the Offer, (ii) decreases the price per Share to be
paid or the number of Shares being sought in the Offer, (iii) adds to or amends,
in a manner adverse to the holders of the Shares, the conditions to the Offer,
(iv) amends the Offer in any way such that holders of Class A Common Stock
receive consideration that differs from the consideration to be received by
holders of Class B Common Stock or (v) waives the Minimum Condition, unless at
least 58% of the Shares of Class A Common Stock outstanding, a majority of the
Shares of Class B Common Stock outstanding and two-thirds of all Shares
outstanding, in each case on a fully diluted basis, are accepted for payment
pursuant to the Offer.
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
3
<PAGE>
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
the Purchaser may choose to make any public announcement, subject to applicable
law (including Rules 14d-4(c) and 14d-6(d) under the Securities Exchange Act of
1934 (the 'Exchange Act'), which require that material changes be promptly
disseminated to holders of Shares), the Purchaser shall 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.
Subject to the terms of the Merger Agreement, if the Purchaser makes a
material change in the terms of the Offer, or if it waives a material condition
to the Offer, including waiver of any condition listed in Section 15, the
Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c) and 14d-6(d) under the
Exchange Act. 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 ten business day period from the date
of such change is generally required to allow for adequate dissemination to
stockholders. Accordingly, if prior to the Expiration Date, the Purchaser
increases (other than increases of not more than two percent of the outstanding
Shares) or decreases the number of Shares being sought, or increases or
decreases the consideration offered pursuant to the Offer, and if the Offer is
scheduled to expire at any time earlier than the period ending on the tenth
business day from the date that notice of such increase or decrease is first
published, sent or given to holders of Shares, the Offer will be extended at
least until the expiration of such ten business day period. For purposes of the
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.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings and mailing labels containing the names and
addresses of the record holders of the Shares for the purpose of disseminating
the Offer to holders of Shares. This Offer to Purchase and the related Letter of
Transmittal will be mailed to record holders of Shares 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 Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT.
Upon the terms and subject to the conditions of the Offer (including if the
Offer is extended or amended, the terms and conditions of the Offer as so
amended), the Purchaser will accept for payment and pay for all Shares 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 in Section 15. In addition, the Purchaser reserves the
right, in its sole discretion and subject to applicable law, to delay the
acceptance for payment or payment for Shares in order to comply in whole or in
part with any applicable law or regulatory or government approval as discussed
in Section 15. For a description of the Purchaser's right to terminate the Offer
and not accept for payment or pay for Shares or to delay acceptance for payment
or delay payment for Shares, see Section 14.
For purposes of the Offer, the Purchaser shall be deemed to have accepted
for payment Shares validly tendered and not withdrawn if, as and when the
Purchaser gives oral or written notice to the Depositary of its acceptance of
the tenders of such Shares. In all cases, upon the terms and subject to the
conditions of the Offer, payment for Shares accepted for payment pursuant to the
Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for the tendering Stockholders for the
purpose of receiving payments from the Purchaser and transmitting such payments
to tendering Stockholders.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates for
such Shares or, in the case of Shares of Class A Common Stock, a confirmation (a
'Book-Entry Confirmation') of the book-entry transfer of such
4
<PAGE>
Shares into the Depositary's account at The Depository Trust Company, Midwest
Securities Trust Company or Philadelphia Depository Trust Company (collectively,
the 'Book-Entry Transfer Facilities'), pursuant to the procedures set forth in
Section 3, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, and (iii) any other documents required by the
Letter of Transmittal. For a description of the procedure for tendering Shares
pursuant to the Offer, see Section 3. Under no circumstances will the Purchaser
pay interest on the consideration paid for Shares by reason of any delay in
making such payment.
If the Purchaser increases the consideration to be paid for Shares pursuant
to the Offer, the Purchaser will pay such increased consideration for all Shares
purchased pursuant to the Offer whether or not such Shares were tendered prior
to or after such increase in consideration.
The Purchaser reserves the right to transfer or assign, to any other wholly
owned subsidiary of Pro-Fac, the right to purchase Shares tendered pursuant to
the Offer, but any such transfer or assignment will not prejudice the rights of
tendering Stockholders to receive payment for Shares validly tendered and
accepted for payment pursuant to the Offer.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if share certificates are submitted for more Shares than are
tendered, certificates for such unpurchased or untendered Shares will be
returned (or, in the case of Shares of Class A Common Stock tendered by
book-entry transfer, such Shares will be credited to an account maintained at
one of the Book-Entry Transfer Facilities), without expense to the tendering
Stockholder, as promptly as practicable following the expiration or termination
or withdrawal of the Offer.
3. PROCEDURE FOR TENDERING SHARES.
To tender Shares pursuant to the Offer, certificates for the Shares to be
tendered, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by the Letter of Transmittal
must be received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase on or prior to the Expiration Date. In the case
of the Shares of Class A Common Stock, such Shares may, instead, be delivered
pursuant to the procedures for book-entry transfer described below (in which
case a Book-Entry Confirmation of such delivery must be received by the
Depositary) on or prior to the Expiration Date. Shares of Class B Common Stock
may not be tendered by book-entry transfer procedures.
The Depositary will establish an account at each of the Book-Entry Transfer
Facilities for purposes of the Offer within two business days after the date of
this Offer to Purchase, and any financial institution that is a participant in
the system of any Book-Entry Transfer Facility may make delivery of Shares of
Class A Common Stock by causing such Book-Entry Transfer Facility to transfer
such Shares of Class A Common Stock into the Depositary's account at such
Book-Entry Transfer Facility in accordance with the procedures of such
Book-Entry Transfer Facility. However, although delivery of Shares of Class A
Common Stock may be effected through book-entry transfer, the Letter of
Transmittal (or facsimile thereof) properly completed and duly executed with any
required signature guarantees, and any other required documents, must, in any
case, be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase on or before the Expiration Date. No
guaranteed delivery procedure will apply to the Offer. Delivery of the Letter of
Transmittal and any other required documents to a Book-Entry Transfer Facility
does not constitute delivery to the Depositary.
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 (a)
if the Letter of Transmittal is signed by the registered holder of the Shares
tendered therewith and such holder has not completed the box entitled 'Special
Payment Instructions' or the box entitled 'Special Delivery Instructions' on the
Letter of Transmittal or (b) if such Shares are tendered for the account of an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal.
5
<PAGE>
If the share certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made to, or
share certificates for unpurchased Shares are to be issued or returned to, a
person other than the registered holder, then the tendered certificates must be
endorsed or accompanied by appropriate stock powers, signed exactly as the name
or names of the registered holder or holders appear on the certificates, with
the signatures on the certificates or 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 the share certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING THROUGH A BOOK-ENTRY TRANSFER FACILITY, 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.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of share certificates for, or (in the case of Shares
of Class A Common Stock) of Book-Entry Confirmation with respect to, such
Shares, 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.
Under the federal income tax laws, the Depositary will be required to
withhold 31% of the amount of any payments made to certain Stockholders pursuant
to the Offer. In order to avoid such backup withholding, each tendering
Stockholder must provide the Depositary with such Stockholder's correct taxpayer
identification number and certify that such Stockholder is not subject to such
backup withholding by completing the Substitute Form W-9 included in the Letter
of Transmittal.
By executing a Letter of Transmittal, a tendering Stockholder irrevocably
appoints designees of the Purchaser 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 Shares tendered by such
Stockholder and accepted for payment by the Purchaser (and any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after September 27, 1994). All such powers of attorney and proxies shall be
considered coupled with an interest in the tendered Shares and are irrevocable.
Such appointment is effective only upon the acceptance for payment of such
Shares by the Purchaser. Upon such acceptance for payment, all prior powers of
attorney and proxies and consents granted by such Stockholder with respect to
such Shares and other securities will, without further action, be revoked, and
no subsequent powers of attorney or proxies may be given nor subsequent written
consents executed by such Stockholder (and, if given or executed, will not be
deemed to be effective).
Stockholders whose Shares are enrolled in the Company's dividend
reinvestment plan will receive separate instructions regarding the tender of
those Shares.
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by the Purchaser, in its sole discretion, whose determination
shall be final and binding on all parties. The Purchaser reserves the absolute
right to reject any or all tenders of Shares determined by it not to be in
proper form or the acceptance for payment of or payment for which may, in the
opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the
absolute right to waive any defect or irregularity in any tender of Shares. None
of the Purchaser or any of its affiliates or assigns, if any, the Dealer
Manager, the Depositary, the Information 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 Shares pursuant to any one of the procedures described above
will constitute an agreement between the tendering Stockholder and the Purchaser
upon the terms and subject to the conditions of the Offer.
6
<PAGE>
4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after December 2, 1994 unless theretofore accepted
for payment as provided in this Offer to Purchase. If the Purchaser is delayed
in accepting for payment or in paying for Shares or is unable to accept for
payment or pay for Shares pursuant to the Offer for any reason, then, without
prejudice to the Purchaser's rights under the Offer, the Depositary may, on
behalf of the Purchaser, retain all Shares tendered, and such Shares may not be
withdrawn except as otherwise provided in this Section 4.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and must specify
the name of the person who tendered the Shares to be withdrawn and the number of
Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the
Depositary, a signed notice of withdrawal with (except in the case of Shares
tendered by an Eligible Institution) signatures guaranteed by an Eligible
Institution must be submitted prior to the release of such Shares. In addition,
such notice must specify, in the case of Shares tendered by 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 the Shares to be withdrawn or, in the case of Shares of
Class A Common Stock tendered by book-entry transfer, the name and number of the
account at one of the Book-Entry Transfer Facilities to be credited with the
withdrawn Shares. Withdrawals may not be rescinded, and Shares withdrawn will
thereafter be deemed not validly tendered for purposes of the Offer. However,
properly withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination shall be final and binding. None of the
Purchaser, the Dealer Manager, the Depositary, the Information 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.
5. CERTAIN TAX CONSEQUENCES.
This summary sets forth material anticipated federal income tax
consequences to Stockholders of their disposition of Shares pursuant to the
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. Such laws or interpretations may differ on the date of the
consummation of the Offer or at the Effective Time, and relevant facts may also
differ. The summary does not address any foreign or local tax consequences, does
not completely address state tax consequences and does not address estate or
gift tax considerations. The consummation of the Offer is not conditioned upon
the receipt of any ruling from the Internal Revenue Service 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 Shares, Stockholders
who acquired their Shares through the exercise of an employee stock option or
otherwise as compensation, and persons who receive payments in respect of
options to acquire Shares.
ALL STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISERS AS TO THE
PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL AND FOREIGN TAX LAWS.
Sales of Shares by Stockholders pursuant to the Offer will be taxable
transactions for federal income tax purposes and may also be taxable
transactions under applicable state and local and other tax laws. New York State
imposes a 10% tax upon gains realized by a transferor upon the transfer of an
7
<PAGE>
interest in real property (including leases) located within New York State,
including certain transfers of stock in corporations that own appreciated
interests in such real property (the 'Gains Tax'), and an additional tax on the
gross value of such real property or the portion of the value of the stock in
such corporations attributable to such real property equal to approximately 0.4%
(the 'State Transfer Tax'). The acquisition by the Purchaser of the Shares
pursuant to the Offer and the Merger will constitute a taxable transfer of an
interest in any real property owned or leased by the Company and located in New
York State and may result in a Gains Tax, State Transfer Tax, or any combination
of the foregoing being imposed upon the selling Stockholders. The Purchaser will
file all necessary returns on behalf of the Company's tendering Stockholders in
connection with such Gains Tax and State Transfer Tax and will pay any taxes due
thereon, except as otherwise set forth in the Letter of Transmittal. The amount
of such taxes paid by the Purchaser may result in the deemed receipt of
additional consideration by each Stockholder in proportion to the number of
Shares sold by such Stockholder. However, the Purchaser believes that in such a
case, under Section 164(a) of the Code, a Stockholder would reduce the amount
realized on the sale by the amount of the tax treated as additional
consideration to such Stockholder.
In general, a Stockholder will recognize gain or loss equal to the
difference between the tax basis of his Shares and the amount of cash received
in exchange for those Shares. Such gain or loss will be capital gain or loss if
the Shares are capital assets in the hands of the Stockholder and will be
long-term gain or loss if the holding period for the Shares is more than 12
months as of the date of the sale of such Shares and short-term gain or loss if
held for 12 months or less.
The foregoing discussion may not apply to Stockholders who acquired their
Shares pursuant to the exercise of stock options or other compensation
arrangements with the Company or who are not citizens or residents of the United
States or who are otherwise subject to special tax treatment under the Code.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The shares of Class A Common Stock of the Company are listed and
principally traded on the AMEX and the Chicago Stock Exchange (the 'CSE'). The
following table sets forth for the periods indicated the high and low sales
prices per Share of the Class A Common Stock on the AMEX Composite Tape, as
reported in published financial sources:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C> <C>
Fiscal 1995 First Quarter (to October 3, 1994).................................... $18 3/4 $15 1/2
Fiscal 1994 First Quarter......................................................... 14 3/8 12
Second Quarter........................................................ 13 7/8 13
Third Quarter......................................................... 16 1/4 12 5/8
Fourth Quarter........................................................ 17 7/8 13 3/8
Fiscal 1993 First Quarter......................................................... 15 12 3/8
Second Quarter........................................................ 17 1/4 13
Third Quarter......................................................... 16 3/8 14
Fourth Quarter........................................................ 14 7/8 11 1/4
Fiscal 1992 First Quarter......................................................... 13 3/4 11
Second Quarter........................................................ 13 1/4 10 1/8
Third Quarter......................................................... 15 1/8 13
Fourth Quarter........................................................ 14 3/4 12 1/8
</TABLE>
On September 27, 1994, the last full day of trading prior to the
announcement by Pro-Fac and the Company of the signing of the Merger Agreement,
the reported closing sales price per share of Class A Common Stock on the AMEX
Composite Tape was $17 5/8. On October 3, 1994, the last full day of trading
prior to the commencement of the Offer, the reported closing sales price per
share of Class A Common Stock on the AMEX Composite Tape was $18 5/8.
There is no established trading market for the Class B Common Stock of the
Company. According to the Company, Agway beneficially owns approximately 99% of
the outstanding shares of this class.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE CLASS A
COMMON STOCK.
8
<PAGE>
The Company pays a cash dividend on its Shares of Class A Common Stock and
Class B Common Stock and has paid 85 consecutive quarterly dividends since 1973.
For each of the Company's last three fiscal years, the dividend paid for each
quarter has been $.16 per Share. The Company has agreed not to set as the record
date for a dividend a date earlier than November 15, 1994. Accordingly, if the
Offer and Merger are consummated before November 15, 1994, Stockholders will not
be entitled to receive a dividend with respect to the first quarter of fiscal
1995.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company is a New York corporation with its principal executive offices
located at 90 Linden Place, P.O. Box 681, Rochester, NY 14603.
According to the Company's Annual Report on Form 10-K, for its fiscal year
ended June 25, 1994 (the 'Company 10-K'), the Company's business is principally
conducted in one industry segment, the processing and sale of various food
products. Through its seven operating divisions, the Company produces and
markets a variety of processed food products, including canned fruits and
vegetables, frozen fruits and vegetables, canned desserts, condiments and salad
dressings, potato chips and other snack foods, pickles, canned meat dishes,
soups and peanut butter. The Company also produces containers for some of its
food products.
The following selected consolidated financial data relating to the Company
and its subsidiaries have been taken or derived from the audited financial
statements contained in the Company 10-K. More comprehensive financial
information is included in the Company 10-K and the other documents filed by the
Company 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. Such reports and
other documents may be examined and copies may be obtained from the offices of
the Commission in the manner set forth below.
CURTICE-BURNS FOODS, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
INCOME STATEMENT DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------
JUNE 25, JUNE 26, JUNE 26,
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Net sales.................................................................... $829,116 $878,627 $896,931
Pretax earnings/(loss) before dividing with
Pro-Fac...................................................................... 35,624 (41,742) 20,422
Pro-Fac share of earnings/(loss)............................................. 16,849 (21,800) 9,505
Income/(loss) before taxes................................................... 18,775 (19,942) 10,917
Net income/(loss)............................................................ 10,110 (23,837) 6,148
Net income/(loss) per Share $1.17 $(2.77) $.71
</TABLE>
BALANCE SHEET DATA
<TABLE>
<CAPTION>
AS OF
--------------------
JUNE 25, JUNE 26,
1994 1993
-------- --------
<S> <C> <C>
Working capital........................................................................... $104,049 $100,422
Total assets.............................................................................. 446,938 493,729
Long-term debt............................................................................ 79,061 85,037
Long-term obligations under capital leases................................................ 124,973 154,102
Total liabilities......................................................................... 366,040 418,054
Shareholders' equity...................................................................... 80,898 75,675
</TABLE>
9
<PAGE>
The information concerning the Company contained herein has been taken from
or is based upon reports and other documents on file with the Commission or
otherwise publicly available. Although the Purchaser does not have any knowledge
that would indicate that any statements contained herein based upon such reports
and documents are untrue, the Purchaser does not take any responsibility for the
accuracy or completeness of the information contained in such reports and other
documents or for any failure by the Company to disclose events that may have
occurred and may affect the significance or accuracy of any such information but
that are unknown to the Purchaser.
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. The Company is required to disclose in such proxy
statements certain information, as of particular dates, concerning the Company's
directors and officers, their remuneration, stock options granted to them, the
principal holders of the Company's securities and any material interest of such
persons in transactions with the Company. Such reports, proxy statements and
other information may be inspected 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. Such material should also be available for inspection at the library of
the AMEX, 86 Trinity Place, New York, New York 10006 and at the library of the
CSE, 440 South La Salle Street, Chicago, Illinois 60605.
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PRO-FAC.
The Purchaser, a New York corporation, and a wholly owned subsidiary of
Pro-Fac, was organized to acquire the Company and has not conducted any
unrelated activities since its organization on April 21, 1994.
Pro-Fac is a New York agricultural cooperative. Pro-Fac was formed in 1961
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 700 members are growers (or associations of growers)
located principally in California, Florida, Georgia, Illinois, Iowa, Michigan,
Nebraska, New York, North Dakota, Oregon, Pennsylvania and Washington. The
principal executive offices of Pro-Fac and the Purchaser are at 90 Linden Place,
P.O. Box 682, Rochester, New York 14603.
The name, business address, principal occupation or employment, five-year
employment history and citizenship of each director and executive officer of the
Purchaser and Pro-Fac and certain other information are set forth in Schedule I
hereto.
The following selected consolidated financial data relating to Pro-Fac and
its subsidiaries have 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'). More comprehensive financial information is
included in the Pro-Fac 10-K 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 report and other documents including the financial
statements (and any related notes) contained therein.
10
<PAGE>
PRO-FAC COOPERATIVE, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS)
INCOME STATEMENT DATA
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------
JUNE 25, JUNE 26, JUNE 26,
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Proceeds from sale of crops to Curtice-Burns..................................... $ 58,237 $ 59,735 $ 63,434
Proceeds/(loss) under the Integrated Agreement................................... 18,599* (21,800) 9,505
Total revenues................................................................... 94,393 56,882 94,219
Net proceeds/(loss).............................................................. 20,152 (22,046) 9,468
Allocation (to)/from earned surplus.............................................. (2,856) 27,917 (155)
Total net proceeds available to members from current operations.................. 17,296 5,871 9,313
Distribution from current operations, payable to members currently............... 3,109 1,052 2,253
</TABLE>
BALANCE SHEET DATA
<TABLE>
<CAPTION>
AS OF
--------------------
JUNE 25, JUNE 26,
1994 1993
-------- --------
<S> <C> <C>
Working capital........................................................................... $ 2,060 $ 1,713
Total assets.............................................................................. 296,051 324,884
Long-term portion of investment in direct financing leases................................ 123,677 152,329
Long-term loans receivable from Curtice-Burns............................................. 78,040 78,648
Long-term portion of investment in Springfield Bank for Cooperatives...................... 19,632 16,814
Long-term debt............................................................................ 127,134 168,000
Total liabilities......................................................................... 172,286 214,980
Total shareholders' and members' capitalization........................................... 123,765 109,904
</TABLE>
- ------------
* Excludes approximately $1.7 million of legal, accounting, investment banking
and other expenses incurred by the Company in connection with its potential
change of control and allocated to Pro-Fac by the Company, which allocation
Pro-Fac disputes.
Pro-Fac is subject to the periodic filing requirements of the Exchange Act
and in accordance therewith files periodic reports and other information with
the Commission relating to its business, financial condition and other matters.
Pro-Fac is not required to file proxy statements with the Commission. Pro-Fac's
periodic reports and other information filed with the Commission should be
available for inspection and copying at the offices of the Commission in the
same manner as set forth with respect to the Company in Section 7.
Pro-Fac assisted in establishing the Company in 1961. Since that time,
Pro-Fac and the Company have conducted their business under an arrangement
whereby Pro-Fac leases to the Company substantially all the Company's
facilities, Pro-Fac advances funds to the Company from the proceeds of equity of
Pro-Fac's members and of loans from the Bank and Pro-Fac supplies crops to the
Company for processing and distribution. In return, the Company maintains the
facilities leased from Pro-Fac and pays rent to Pro-Fac in an amount equal to
depreciation on the leased facilities and certain other related costs. The
Company also makes interest payments to Pro-Fac with respect to certain other
funds supplied by Pro-Fac, pays Pro-Fac the commercial market value of the crops
supplied by Pro-Fac and shares with Pro-Fac approximately one-half of the
profits, or losses, of the Company's business.
Pro-Fac does not own any capital stock of the Company. Its relationship
with the Company is governed by the Integrated Agreement. The Company does not,
to the best of Pro-Fac's knowledge, own any equity in Pro-Fac.
Pursuant to the Integrated Agreement dated as of June 27, 1992 between
Pro-Fac and the Company (the 'Integrated Agreement'), the Company manages the
day-to-day operations of Pro-Fac,
11
<PAGE>
subject to the direction of Pro-Fac's Board of Directors, and employs and
compensates the personnel provided for Pro-Fac's operations. The Integrated
Agreement calls for the Company to designate, from among the Company's executive
officers, a general manager of Pro-Fac, who serves as the chief executive
officer of Pro-Fac. Mr. Roy A. Myers, an executive vice president and director
of the Company, is Pro-Fac's current general manager. Although the Company
determines which of its other employees are to be assigned to manage the
business of Pro-Fac, the general manager of Pro-Fac may be removed only with the
consent of Pro-Fac's Board of Directors.
Under the Integrated Agreement, Pro-Fac is entitled to one board seat on
the Company's Board of Directors. The president of Pro-Fac historically has held
that seat. In keeping with that practice, Mr. Robert V. Call, Jr., the president
of Pro-Fac, is Pro-Fac's current representative on the Company's Board of
Directors. Under the Integrated Agreement and Pro-Fac's By-Laws, the Company and
Agway are each entitled to one designee on Pro-Fac's Board of Directors. Those
seats currently are vacant.
A copy of the Integrated Agreement is filed as an exhibit to the
Purchaser's combined Tender Offer Statement on Schedule 14D-1 (the 'Purchaser's
Schedule 14D-1') and Statement on Schedule 13D filed with the Commission in
connection with the Offer. Descriptions of the Integrated Agreement in this
Offer to Purchase are qualified in their entirety by reference to the text of
the agreement. For more information regarding the relationship between Pro-Fac
and the Company, see Section 10.
Except as described in this Offer to Purchase (including Schedule I
hereto), neither the Purchaser, Pro-Fac nor, to their knowledge, any of the
persons listed in Schedule I hereto or any associate or majority owned
subsidiary of any of the foregoing, beneficially owns or has the right to
acquire any equity securities of the Company, nor has the Purchaser, Pro-Fac or,
to their knowledge, any of the persons or entities referred to above or any of
the respective executive officers, directors or subsidiaries of any of the
foregoing, effected any transaction in the equity securities of the Company
during the past 60 days. As a result of Pro-Fac's and the Purchaser's entering
into the Stockholder Agreement, the Purchaser has the right to acquire the
899,447 Shares and 2,036,643 Shares of Class A Common Stock and Class B Common
Stock, respectively, held by AHI. The Purchaser and Pro-Fac could be considered
the beneficial owner of those Shares. Such Shares represent approximately 14% of
the Shares of Class A Common Stock outstanding and approximately 99% of the
Shares of Class B Common Stock outstanding at September 27, 1994. In addition,
pursuant to the Merger Agreement, the Company has agreed with the Purchaser that
it will issue to the Purchaser Shares of Class A Common Stock upon the exchange
by the Purchaser of an equivalent number of Shares of Class B Common Stock, up
to the maximum number required to enable the Minimum Condition to be satisfied;
provided, that the Purchaser continue to hold at least 90% of the Shares of
Class B Common Stock outstanding after giving effect to such exchange. Assuming
that the only Shares of Class B Common Stock that are tendered and not withdrawn
pursuant to the Offer are Shares held by AHI, the Purchaser could obtain up to
1,854,546 Shares of Class A Common Stock through such exchange. If such Shares
of Class A Common Stock are included in the calculation of the number of Shares
of Class A Common Stock that the Purchaser and Pro-Fac beneficially own, the
Purchaser and Pro-Fac beneficially own 2,753,993 Shares of Class A Common Stock,
which would represent approximately 32% of the Shares of Class A Common Stock
outstanding following such exchange. See Section 11.
Except as described in this Offer to Purchase (including Schedule I
hereto), neither the Purchaser, Pro-Fac nor, to their knowledge, any of the
persons listed in Schedule I hereto, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any securities of the Company, joint ventures, loan or option arrangements,
puts or calls, guaranties of loans, guaranties against loss or the giving or
withholding of proxies.
Except as described in this Offer to Purchase, there have been no contacts,
negotiations or transactions between the Purchaser, Pro-Fac or any other
subsidiary of Pro-Fac or, to their knowledge, any of the persons listed in
Schedule I hereto, on the one hand, and the Company or its affiliates, on the
other hand, concerning a merger, consolidation or acquisition, a tender offer or
other acquisition of securities, an election of directors, or a sale or other
transfer of a material amount of assets.
12
<PAGE>
Except as described in this Offer to Purchase (including Schedule I
hereto), none of the Purchaser, Pro-Fac, any other subsidiary of Pro-Fac, or, to
their knowledge, any of the persons listed in Schedule I hereto, has had any
business relationship or transaction with the Company or any of its executive
officers, directors or affiliates that would require disclosure pursuant to the
rules and regulations of the Commission.
9. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Purchaser to purchase all Shares
(including the In- the-Money Option Shares) pursuant to the Offer and the
Merger, to refinance or repay existing indebtedness (other than seasonal debt)
and certain other obligations and to pay related fees and expenses is estimated
to be approximately $471 million. Of that amount, approximately $167 million
will be for the purchase of the Shares, approximately $289 million will be for
the repayment of indebtedness and other obligations and approximately $15
million will be for the payment of fees and expenses. The Purchaser and Pro-Fac
will fund such amount through a senior bank loan of up to $200 million, senior
subordinated notes of up to $160 million and the balance in Pro-Fac equity.
Bank Facility. The Purchaser and Pro-Fac have received a commitment letter
from the Bank, pursuant to which the Bank has committed, subject to certain
conditions, to provide loans of up to $200 million to finance the purchase of
Shares pursuant to the Offer and the Merger and other related costs (the
'Acquisition Facility'). The Bank also has agreed, subject to the terms and
conditions set out in the commitment letter, to provide the Surviving
Corporation with seasonal financing of up to $86 million and a $10 million
letter of credit facility for other financing needs. The Acquisition Facility
and the seasonal and letter of credit facilities are collectively referred to
herein as the 'Bank Facility.'
The closing under the Bank Facility will occur substantially simultaneously
with the acceptance for payment of Shares and the consummation of the Merger. On
completion of the Merger, the obligations of the Purchaser under the Bank
Facility will become obligations of the Surviving Corporation.
All obligations under the Bank Facility will be guaranteed by Pro-Fac and
by subsidiaries of Pro-Fac and the Surviving Corporation. Borrowings under the
Bank Facility will be secured by all of the assets of the Surviving Corporation
and each guarantor.
Borrowings of $80 million under the term portion of the Acquisition
Facility will be payable in 20 equal, consecutive semi-annual installments,
beginning in 1995. The Acquisition Facility also provides for additional term
loans of up to $120 million, which will be payable during the first five years
of the facility in annual installments on September 1 of each year, in an amount
equal to the Surviving Corporation's excess cash flow for the preceding fiscal
year, with the balance payable in 10 equal, consecutive, semi-annual
installments thereafter.
It is anticipated that $80 million will be drawn under the term portion of
the Acquisition Facility and approximately $98 million will be drawn from the
remaining portion of the Acquisition Facility to finance the Offer and the
Merger and to pay related fees and expenses. The balance of the Acquisition
Facility will be available for the Surviving Corporation's working capital
needs.
Borrowings under the seasonal loan portion of the Bank Facility are payable
at the expiration of that portion of the facility, which currently is
anticipated to be approximately one year after the closing date of the Bank
Facility. The Bank has undertaken, on a best efforts basis, to extend the
seasonal loan portion of the Bank Facility to a three-year term. On the closing
date, approximately $80 million will be drawn under the seasonal line of credit
to repay existing seasonal debt due from Pro-Fac to the Bank and from the
Company to a syndicate of commercial lenders led by The Chase Manhattan Bank,
N.A.
It is anticipated that the Bank Facility will provide for interest rates on
the Acquisition Facility, at the Purchaser's (or, after the Merger, the
Surviving Corporation's) option, equal to (i) the relevant London interbank
offered rate plus 2.6%, (ii) the relevant prime rate plus .50% or (iii) the
relevant U.S. Treasury Rate plus 3.0%. Pro-Fac and the Purchaser anticipate that
interest rates on amounts outstanding under the seasonal portion of the Bank
Facility will, at the Purchaser's (or, after the Merger, the Surviving
Corporation's) option, equal (x) the relevant London interbank offered rate plus
1.75%, (y) the relevant prime rate minus .25% or (z) the relevant U.S. Treasury
Rate plus 2.0%.
13
<PAGE>
The commitment of the Bank is subject to the negotiation and execution of
mutually acceptable loan documentation. In addition, it is anticipated that the
obligations of the Bank to make the loans under the Acquisition Facility will be
conditioned upon, among other things, (i) the satisfaction of the conditions
precedent for the consummation of the purchase of the Shares and the Merger,
(ii) Pro-Fac demonstrating that, upon completion of the Merger, it will meet
certain debt-to- equity, net worth, working capital and projected cash flow
requirements, (iii) the absence of any injunction or other order preventing the
consummation of the Merger, and the absence of any proceeding reasonably likely
to be successful seeking to enjoin the consummation of the Merger, (iv) the
absence of any default under the definitive documentation for the Bank Facility
and the accuracy in all material respects of the representations contained in
that documentation, (v) the terms of the senior subordinated notes being
substantially as previously presented to the Bank, (vi) the absence of changes
to Pro-Fac's proposal for operating the Surviving Corporation, as previously
presented to the Bank and (vii) the absence of any material adverse change in
the business, assets, operations, properties, financial condition, contingent
liabilities, prospects or material agreements of Pro-Fac or the Company taken as
a whole since June 25, 1994.
It is anticipated that the Acquisition Facility will contain
representations, warranties, covenants and events of default customary to credit
facilities of this nature.
As part of its traditional lending arrangements with the Bank, which is a
cooperative, Pro-Fac makes investments in the Bank. Pro-Fac makes these
investments through (i) a capital purchase obligation equal to a percentage (set
annually based on the Bank's capital needs) of its interest paid to the Bank and
(ii) a patronage rebate on interest paid by Pro-Fac to the Bank based on the
Bank's earnings, which is paid in part in the form of capital certificates. The
investments in the Bank are capital certificates that are redeemed by the Bank,
currently beginning six years after issuance in four quarterly installments. As
of June 25, 1994, the amount of Pro-Fac's investment in the Bank was
approximately $21 million. In connection with the Merger, Pro-Fac will
contribute its investment in the Bank to the capital of the Purchaser.
Notes. Pro-Fac currently anticipates raising approximately $160 million
from the issuance by the Purchaser, substantially simultaneously with the
acceptance of Shares and the consummation of the Merger, of senior subordinated
notes (the 'Notes'). Upon completion of the Merger, the obligations of the
Purchaser under the Notes will become obligations of the Surviving Corporation.
Dillon Read has delivered to the Purchaser a letter (the 'Highly Confident
Letter') dated September 27, 1994 to the effect that, subject to the terms and
conditions set forth in such letter, based on current market conditions it is
highly confident of its ability to sell or place the Notes in connection with
the Offer.
The yield on the Notes will depend on market and other conditions at the
time the Notes are sold. It is expected that the Notes will mature in
approximately 10 years and will be redeemable at the Surviving Corporation's
option after approximately five years from their issuance at a declining premium
and before that time upon the occurrence of certain events and subject to
certain limitations. It is also anticipated that upon a change of control of the
Surviving Corporation, holders of Notes will have the right to require the
Surviving Corporation to repurchase their Notes at a slight premium.
Payments of principal of and interest on the Notes will be unsecured and
subordinated to any payment due under the Bank Facility or any other
indebtedness senior to the Notes. Pro-Fac and subsidiaries of Pro-Fac and the
Surviving Corporation will guarantee (on an unsecured and senior subordinated
basis) payments of principal of and interest on the Notes.
It is currently anticipated that the Notes will be sold in a transaction
exempt from registration under the Securities Act of 1933, as amended.
It is anticipated that the terms of the Notes will include covenants
(including with respect to such matters as the incurrence of additional
indebtedness, the payment of dividends, the incurrence of liens, transactions
with affiliates and sale and leaseback transactions) and events of default
customary to senior subordinated notes issued by companies possessing credit
characteristics similar to those of the Surviving Corporation.
It is anticipated that borrowings under the Bank Facility and obligations
under the Notes will be refinanced or repaid from funds generated internally by
the Surviving Corporation or other sources,
14
<PAGE>
which may include the proceeds of the sale of debt or equity securities or the
sale of assets. No decision has been made concerning this matter, and decisions
will be made based on the Surviving Corporation's and Pro-Fac's review from time
to time of the advisability of selling particular securities or assets as well
as on interest rates and other economic conditions.
Copies of the Bank's commitment letter and the Highly Confident Letter are
filed as exhibits to the Purchaser's Schedule 14D-1. Reference is made to the
Bank's commitment letter for a more complete description of the proposed terms
and conditions of the Bank Facility.
10. PAST CONTACTS; BACKGROUND OF THE OFFER; TRANSACTIONS OR NEGOTIATIONS WITH
THE COMPANY.
The Integrated Agreement. The relationship between Pro-Fac and the Company
currently is governed by the Integrated Agreement, consisting of four sections:
operations financing, marketing, facilities financing and management. The
management of Pro-Fac believes that its relationship with the Company is unique
among agricultural cooperatives and that this relationship has contributed
materially to the successful operations of Pro-Fac and the Company.
General Terms. Under the Integrated Agreement, Pro-Fac sells to the Company
all of the crops produced and delivered to it by its members. The Company pays
Pro-Fac as the purchase price for those crops the commercial market value of the
crops, which is generally defined in the Integrated Agreement as the weighted
average of the prices paid by other commercial processors for similar crops sold
under preseason contracts and in the open market in the same or competing market
area. Pursuant to the terms of the Integrated Agreement, the Company and Pro-Fac
have shared earnings (and losses) on an approximately equal basis.
Under the Integrated Agreement, Pro-Fac lends substantially all of its
funds to the Company, at interest rates that vary in accordance with the direct
cost of those funds to Pro-Fac. Included in these funds are amounts invested in
Pro-Fac by its members, for which the Company pays no interest. Pro-Fac also
obtains short-term borrowings from the Bank under a seasonal line of credit.
Pursuant to the Integrated Agreement, Pro-Fac lends the proceeds of those
short-term borrowings to the Company on the same conditions and at the same
rates as Pro-Fac obtains from the Bank. The Company guarantees all of the
obligations of Pro-Fac under its bank debt. Pro-Fac guarantees the obligations
of the Company under the Company's short-term notes payable to commercial banks
and certain other debt.
Under the Integrated Agreement, Pro-Fac leases to the Company all of the
plants and facilities owned by Pro-Fac, and the Company pays rent for the use
of those facilities. The rental payments are equal to the amortization of the
leased capital assets plus any other costs such as taxes and utilities which may
be incurred by Pro-Fac as a result of the ownership of the facilities.
Revenues received from the Company under the Integrated Agreement for the
fiscal years ended June 25, 1994, June 26, 1993, and June 26, 1992, including
the commercial market value of crops delivered, were approximately $92 million,
$55 million and $93 million, respectively. Of those amounts, approximately $59
million, $60 million and $64 million, respectively, were received for the sale
of crops by Pro-Fac to the Company. Interest income received from the Company
for each of those years was approximately $16 million, $17 million and $20
million, respectively. Pro- Fac received or incurred, from the profit-sharing
provisions of the Integrated Agreement, in the fiscal years ended June 25, 1994,
June 26, 1993 and June 26, 1992 approximately $19 million of proceeds, $22
million of loss, and $10 million of proceeds, respectively. In addition, Pro-Fac
received financing amortization payments of approximately $44 million, $54
million and $26 million for the fiscal years ended June 25, 1994, June 26, 1993,
and June 26, 1992, respectively. The average aggregate short-term borrowings of
Pro-Fac for its fiscal years ended June 25, 1994, June 26, 1993 and June 26,
1992 were approximately $30 million, $39 million and $48 million, respectively.
The Company had no short-term notes payable to commercial banks at June 25,
1994, June 26, 1993, or June 26, 1992. Other Company debt which Pro-Fac
guaranteed amounted to approximately $100,000 at June 25, 1994 and approximately
$6 million at June 26, 1993.
As presently in effect, the Integrated Agreement extends to 1997. The
Company has the right under certain circumstances to terminate the Integrated
Agreement by giving Pro-Fac 60 days' notice and purchasing from Pro-Fac the
assets owned by Pro-Fac which are used in the business of the Company.
15
<PAGE>
A copy of the Integrated Agreement is filed as an exhibit to the
Purchaser's Schedule 14D-1. Descriptions of the Integrated Agreement are
qualified in their entirety by reference to such exhibit. Reference also is made
to the Company 10-K and the Pro-Fac 10-K (including the financial statements and
related notes included therein) for additional information regarding the Company
and Pro-Fac.
Disputes under Integrated Agreement. During the course of the last year and
a half, disputes have developed between Pro-Fac and the Company under the
Integrated Agreement, including Pro- Fac's claim that the Company breached its
fiduciary duty to Pro-Fac. Among other claims, Pro-Fac believes that the Company
cannot, consistent with the profit split required under the Integrated
Agreement, plan a sale of the Company to a third party and organize that sale in
such a manner so as to deprive Pro-Fac of its share of the sale proceeds. The
Company has disputed Pro-Fac's right to receive any proceeds with respect to a
sale of the capital stock of the Company.
In addition, Pro-Fac claims that the Company breached its obligations by
unilaterally taking a writedown for fiscal 1993 (and subsequently in fiscal
1995) of the value of certain assets owned by Pro-Fac and used in the Company's
business. The Company required Pro-Fac to incur approximately $30 million of the
writedown in fiscal 1993 for financial reporting purposes, taking the view that
the reduction would reduce the amount payable to Pro-Fac on a termination of the
Integrated Agreement.
Pro-Fac also has disputed the Company's ability to terminate unilaterally
the supply of crops from Pro-Fac, which the Company attempted to do in March
1994. Although it disputes the Company's right to terminate the crop supply, in
response to the Company's action Pro-Fac gave its affected members notice that
their crops may not be purchased by Pro-Fac after March 1995.
Several other disputes exist under the Integrated Agreement, including
disputes regarding the Company's performance of its managerial responsibilities,
the Company's ability to terminate the Integrated Agreement under circumstances
designed to deny Pro-Fac certain benefits and the period of time during which
the Company is obligated to purchase crops from Pro-Fac in the event the
Integrated Agreement is terminated.
On July 11, 1994, the Company served Pro-Fac with a Demand for Arbitration
of its disputes with Pro-Fac under the Integrated Agreement. On August 3, 1994,
Pro-Fac sent its Response and Counterdemand for Arbitration to the Company. As
part of the events leading up to the Offer, Pro- Fac and the Company entered
into an Agreement dated August 16, 1994 (the 'Arbitration Agreement'), setting
out the principal terms by which the arbitration of the disputes under the
Integrated Agreement would be handled. The Arbitration Agreement was to be of no
effect until Pro-Fac and the Company entered into the Merger Agreement. The
Arbitration Agreement took effect on September 27, 1994. However, pursuant to
the terms of the Merger Agreement, the parties have agreed to suspend the
arbitration process until November 15, 1994, so long as Pro-Fac is not in breach
in any material respect of any of its obligations under the Merger Agreement.
Upon termination of the Merger Agreement (unless due to the Company's breach),
the arbitration process will recommence, with the anticipated arbitration
hearing being conducted approximately three and one-half months from the
termination of the Merger Agreement.
A copy of the Demand for Arbitration, Pro-Fac's Response and Counterdemand
for Arbitration and the Arbitration Agreement are filed as exhibits to the
Purchaser's Schedule 14D-1. Descriptions of those documents are qualified in
their entirety by reference to such exhibits.
Company Change of Control. Prior to 1993, representatives of Agway, the
Company and Pro-Fac held informal discussions regarding the possible sale or
repurchase of Agway's interest in the Company. No formal proposals were made. In
March 1993, the Company announced that Agway, its controlling shareholder,
desired to sell its Class A Common Stock and Class B Common Stock of the
Company. Throughout April and May 1993, Pro-Fac inquired whether it could
purchase Agway's Shares. Agway informed Pro-Fac that, due to Agway's controlling
equity position in the Company, Agway had determined that Pro-Fac's offer to
purchase Agway's Shares should be made to all Stockholders. In response to this
determination by Agway, Pro-Fac entered into discussions in late May and early
June 1993 with Agway and the Company to purchase all of the Shares.
During that period, the parties discussed the possible acquisition by
Pro-Fac of all the outstanding Shares of Class B Common Stock for $17 per Share
in cash, conditioned upon, among other things, the
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distribution to the holders of the Shares of Class A Common Stock of the
hardlines business of the Nalley's Fine Foods division of the Company (the
'Nalley's Business'). In late July 1993, Pro-Fac proposed acquiring all
outstanding Shares of Class B Common Stock for $22 per Share in cash and all
outstanding Shares of Class A Common Stock for $20 per Share in cash, subject to
the sale of the Nalley's Business to a third party for at least $217 million,
the approval of the Board of Directors of Pro-Fac, the approval of the Bank, the
approval of the holders of the Shares of Class A Common Stock and receipt of a
fairness opinion from Dillon Read. In early August 1993, Pro-Fac revised that
proposal to increase the price for the Shares of Class A Common Stock to $22 per
Share in cash. That proposal was withdrawn by Pro-Fac after discussions with its
financial advisor and its Board of Directors. Throughout its discussions with
Pro-Fac, the Company expressed the view that any transaction with Pro-Fac would
have to be conditioned on Pro-Fac's waiver of its claims against the Company.
At its meeting held on August 9 and 10, 1993, the Company's Board of
Directors authorized the Company's management, with the advice of its investment
bankers, to pursue strategic alternatives for the Company, including a sale of
all of the Shares to a third party. On August 27, 1993, Pro-Fac proposed to
acquire all of the Shares at a base price of $19 per share. That proposal was
contingent on the sale of the Nalley's Business for at least $217 million, the
receipt by Pro-Fac of additional necessary financing and other conditions.
During the Fall of 1993, Pro-Fac discussed with several parties the
possibility of making a joint proposal to purchase the Company, which would have
included a sale of the Nalley's Business to a third party. However, none of
these discussions progressed to an advanced stage due to the decision of these
parties not to pursue a transaction on terms acceptable to Pro-Fac.
In November 1993, the Company commenced a process to solicit bids to
purchase all or a portion of the assets or Shares of the Company. Pro-Fac
submitted its indication of interest and was invited to participate in the
Company's second round of bidding. On April 21, 1994, Pro-Fac submitted a
proposal to purchase, subject to certain terms and conditions described in
Pro-Fac's proposal, all of the Shares of the Company's Class A Common Stock and
Class B Common Stock (including shares issuable upon exercise of certain options
outstanding) for a price equal to $16.87 per share, which price was to be
payable in securities issued by Pro-Fac. On May 13, 1994, Pro- Fac revised its
proposal by indicating to the Company it had received such assurances and
commitments so as to enable Pro-Fac to submit an all cash bid. As part of its
revised proposal, Pro- Fac indicated that it had entered into a letter of intent
with Hormel Foods Corporation ('Hormel') for the sale of the Nalley's Business
should Pro-Fac's proposal be accepted.
The Company encouraged Pro-Fac to submit a revised proposal prior to a
special meeting of the Company's Board of Directors on June 8, 1994. In response
to the Company's request, Pro- Fac submitted a revised proposal to purchase for
cash all of the stock of the Company (including shares issuable upon exercise of
certain options outstanding) for a price of $16.87, subject to the terms and
conditions set forth in the revised proposal, including the sale of the Nalley's
Business on the terms set out in Pro-Fac's letter of intent with Hormel. On June
8, 1994, representatives of Pro- Fac and its advisors met with the Board of
Directors of the Company to discuss the terms of Pro- Fac's proposal and other
related matters.
On June 10, 1994, the Company announced that it had decided, at its June 8,
1994 Board meeting, to pursue a proposal from Dean Foods Company ('Dean Foods')
to purchase all of the Shares outstanding for a maximum price in cash of $20 per
share. The Dean Foods proposal was subject to several major contingencies, among
them the resolution of Pro-Fac's rights upon a termination of the Integrated
Agreement and the sale to Hormel of the Nalley's Business.
On June 28, 1994, Pro-Fac met with representatives of the Company, Agway
and Dean Foods to determine whether there was a way to resolve differences
between Pro-Fac and the Company. The parties did not make progress at that
meeting in resolving issues regarding the Integrated Agreement or the proposed
change of control of Curtice Burns. Following the June 28 meeting, Pro-Fac's
legal advisors met with lawyers for the Company and Agway and with the Company's
financial advisors to discuss the nature and scope of Pro-Fac's claims against
the Company.
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To facilitate a timely resolution of its disputes with the Company, on
August 4, 1994, Pro- Fac submitted a proposal to the Board of Directors of the
Company to acquire the Shares for cash in the amount of $19 per Share. In its
proposal, Pro-Fac indicated that its financing sources would need a limited
amount of time to conduct their due diligence investigation of the Company. Pro-
Fac's proposal was subject to certain terms and conditions, including receipt of
approval of the Board of Directors and shareholders of the Company, receipt of
approval by a majority of Pro-Fac's members and receipt of sufficient financing
to consummate the acquisition. Pro-Fac's proposal no longer was contingent on
the sale of the Nalley's Business. Pro-Fac and its advisors discussed this
proposal with the Company's Board of Directors at meetings held on August 8 and
9, 1994.
Following those meetings and the execution of the Arbitration Agreement,
the Company agreed to allow Dillon Read and Pro-Fac's prospective financing
sources to conduct their due diligence investigation in order to permit them to
deliver certain assurances regarding Pro-Fac's proposed financing. In addition,
so that it could remove its contingency regarding the need for member approval,
Pro-Fac held a special meeting of its members in Rochester, New York on August
31, 1994. At that meeting, Pro-Fac's members approved a purchase by Pro-Fac (or
the Purchaser) of the Shares at a price of $19 per Share.
On September 2, 1994, Pro-Fac submitted a proposal to the Company to
purchase the Shares at a price of $19 in cash. With that proposal, Pro-Fac
submitted the Bank's commitment letter and indicated that Dillon Read, Pro-Fac's
financial advisor, was prepared to deliver the Highly Confident Letter. On
September 8, 1994, the Company's financial advisors met with Dillon Read to
review Pro-Fac's proposed financing and, in particular, the proposed terms of
the Notes. At a special meeting of the Company's Board of Directors held on
September 8, 1994, the Board decided to continue discussions of the proposed
terms of the Merger Agreement with Pro-Fac. During the weeks of September 12 and
19, 1994, those discussions took place. The Company advised Pro-Fac that a
special meeting of the Company's Board of Directors would be held on September
27, 1994, to make a final decision with respect to the Pro-Fac and Dean Foods
proposals. Prior to that meeting, Pro-Fac delivered to the Company's Board of
Directors the final form of the Merger Agreement it was prepared to enter into
with the Company.
At its special meeting on September 27, 1994, the Board of Directors of the
Company accepted Pro-Fac's proposal. During the evening of September 27, 1994,
advisors to the Company and Pro-Fac finalized matters relating to the Merger
Agreement. The Merger Agreement was entered into at approximately 9:00 p.m. on
September 27, 1994. The Company notified Dean Foods that it had accepted
Pro-Fac's proposal and was terminating all negotiations with Dean Foods and
other parties for the purchase of all or part of the Company.
During the weeks of September 12, 19 and 26, 1994, Pro-Fac also entered
into negotiations with AHI and Agway, for the agreement by AHI to enter into the
Stockholder Agreement. The Stockholder Agreement was finalized during the
afternoon of September 27, 1994 and entered into by Pro-Fac, the Purchaser and
AHI, a wholly owned subsidiary of Agway and the record holder of the Shares
subject to that agreement, at the time that the Merger Agreement was entered
into by Pro- Fac and the Company.
On September 28, 1994, Pro-Fac issued a press release announcing the
signing of the Merger Agreement and the Stockholder Agreement.
Marketing Agreement. Pro-Fac intends to enter into a marketing agreement
(the 'Marketing Agreement') with the Surviving Corporation, pursuant to which
Pro-Fac and the Surviving Corporation would continue to operate their
businesses, in all material respects, in a manner consistent with the marketing
and management sections of the Integrated Agreement. The Marketing Agreement
would be the successor to similar marketing agreements between the Company and
Pro- Fac that have been continuously in effect since the formation of these
companies. It is anticipated that under the Marketing Agreement, the Surviving
Corporation would continue to pay Pro-Fac the commercial market value of crops
delivered by Pro-Fac and would continue to manage the business and affairs of
Pro-Fac and provide all personnel required for its management. In addition to
commercial market value, it is anticipated that under the Marketing Agreement
the Surviving Corporation would pay Pro-Fac patronage income equal to 90% of the
Surviving Corporation's pre- tax profits on Pro-Fac related
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products (up to a maximum of 50% of the Surviving Corporation's entire pre-tax
income), or reduce commercial market value on a similar basis in the case of
losses by the Surviving Corporation.
Assets. Pro-Fac intends to contribute to the Purchaser, immediately prior
to the acceptance of Shares pursuant to the Offer, all of the facilities
currently leased to the Company pursuant to the Integrated Agreement.
11. PURPOSE OF THE OFFER; MERGER AGREEMENT; STOCKHOLDER AGREEMENT; CERTAIN
STATUTORY REQUIREMENTS; FINANCIAL ADVISORS.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. Pro-Fac and the Purchaser intend to acquire any
remaining equity in the Company not acquired upon the acceptance of Shares duly
tendered and not withdrawn under the Offer by completing the Merger immediately
after the acceptance of Shares pursuant to the Offer. Pursuant to the Merger,
the outstanding Shares not owned by the Purchaser would be converted into the
right to receive cash in an amount equal to the price per Share payable pursuant
to the Offer.
The Merger Agreement. The following description of the Merger Agreement is
qualified in its entirety by reference to the text of such agreement, a copy of
which is attached as an exhibit to the Purchaser's Schedule 14D-1.
The Offer. The Merger Agreement provides for the making of the Offer. The
obligation of the Purchaser to accept for payment or pay for Shares is subject
to the satisfaction of the Minimum Condition, the Financing Condition and
certain other conditions that are described in Section 15 hereof. Pursuant to
the terms of the Merger Agreement, the Purchaser shall, unless the Company
otherwise consents, extend the Offer to allow any unsatisfied condition to the
Purchaser's obligation to consummate the Offer to be satisfied, except that if
the Financing Condition is not satisfied at any scheduled expiration date of the
Offer and the Purchaser has entered into definitive documents for financing
sufficient to consummate the Offer and the Merger, the Purchaser may not extend
the Offer because the Financing Condition has not been satisfied to a date that
is more than five business days after the Purchaser's signing of the last of
such definitive documents to be signed. In addition, the Purchaser may, without
the consent of the Company, extend the Offer as required by any rule,
regulation, interpretation or position of the Commission and for any reason for
up to 15 business days beyond the latest expiration date that otherwise would be
permitted. Unless otherwise agreed, the Offer may not be extended (unless due to
a rule, regulation, interpretation or position of the Commission) beyond
December 15, 1994 or if an extension would be reasonably likely to result in any
of the conditions to the Purchaser's obligations to purchase Shares (other than
conditions irrevocably waived by Pro-Fac and the Purchaser) not being satisfied
at the proposed new scheduled expiration date of the Offer.
Under the Merger Agreement, the Purchaser expressly reserves the right to
waive any of the conditions to the Offer and to make any change in the terms or
conditions of the Offer; provided that, without the consent of the Company, the
Purchaser shall not (i) change the form of consideration to be paid in the
Offer, (ii) decrease the price per Share to be paid or the number of Shares
being sought in the Offer, (iii) add to or amend, in a manner adverse to the
holders of the Shares, the conditions to the Offer, (iv) amend the Offer in any
way such that holders of Class A Common Stock receive consideration that differs
from the consideration to be received by holders of Class B Common Stock or (v)
accept for payment Shares that do not represent at least 58% of the Class A
Common Stock, a majority of the Class B Common Stock and two-thirds of all
Shares, in each case on a fully diluted basis.
Under the Merger Agreement, the Company has waived its rights under its
Certificate of Incorporation to purchase Shares of Class B Common Stock to be
sold to the Purchaser pursuant to the Offer.
Consideration to be Paid in the Merger. The Merger Agreement provides that,
subject to the satisfaction or waiver of certain conditions, simultaneously with
the consummation of the Offer, or as soon thereafter as practicable, the
Purchaser will be merged with and into the Company. In the Merger, each
outstanding Share not held, directly or indirectly, by Pro-Fac, the Purchaser or
any of their respective subsidiaries or by the Company or its subsidiaries
(other than Shares held by Stockholders
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duly exercising appraisal rights provided in connection with the Merger and in
conjunction with Section 623 of New York Law ('Dissenting Shares')) will be
converted into the right to receive $19 in cash, without interest, or, if no
Shares are purchased by the Purchaser pursuant to the Offer, the highest price
per Share offered by the Purchaser pursuant to the Offer. Each share of common
stock of the Purchaser issued and outstanding immediately prior to the time of
the Merger will be converted into and become one share of common stock of the
Surviving Corporation, which will thereupon become a wholly owned subsidiary of
Pro-Fac.
Assuming satisfaction of the Minimum Condition, Pro-Fac and the Purchaser
intend to cause the Merger to be effective immediately after the acceptance of
Shares duly tendered and not withdrawn pursuant to the Offer. However, if the
Minimum Condition is not satisfied and the Purchaser nonetheless accepts for
payment Shares pursuant to the Offer, the Purchaser intends to take control of
the Company's Board of Directors pursuant to the terms of the Merger Agreement
and cause the Company to call a meeting to approve the Merger, the Merger
Agreement and the transactions contemplated thereby.
Board Representation. The Merger Agreement provides that, effective upon
the acceptance for payment by the Purchaser of any Shares pursuant to the Offer,
the number of directors constituting the Board of Directors of the Company shall
be reduced to seven, the Purchaser shall be entitled to designate such number of
directors on the Company's Board of Directors as shall constitute a majority and
the Company shall cause the Purchaser's designees to be elected to the Company's
Board of Directors. The Company has agreed that, subject to applicable law, it
will take all action requested by the Purchaser and necessary to cause the
Purchaser's designees to be elected or appointed to the Company's Board of
Directors. Following the appointment of the Purchaser's designees to the Board,
until the Effective Time, the Company's Board of Directors shall have at least
three members who were directors on September 27, 1994 or who have been
designated by such members (the 'Independent Directors') and who are not at the
time officers of the Company or officers or directors of Pro-Fac. Until the
Effective Time, any amendment or termination of the Merger Agreement or
extension for the performance or exercise or waiver by the Company of any of its
rights under the Merger Agreement shall require the approval of a majority of
the Independent Directors.
The Merger Agreement provides that the officers of the Company immediately
prior to the Effective Time will be the initial officers of the Surviving
Corporation, each to hold office until his or her respective successors are duly
elected and qualified, except that the Chairman of the Board and, at the request
of Pro-Fac or the Purchaser, any officer of the Company who would be entitled,
under the terms of any severance or similar plan, to receive severance benefits
upon such officer's voluntary departure from the Company upon completion of the
Merger, shall tender their resignations immediately following the Effective
Time. As provided in the Merger Agreement, the Certificate of Incorporation of
the Company, as amended at the Effective Time in conjunction with the Merger,
and the By-Laws of the Purchaser, as in effect immediately prior to the
Effective Time (except for a change in the name of the corporation), will be the
Certificate of Incorporation and By-Laws of the Surviving Corporation.
Upon consummation of the Merger, Pro-Fac intends to establish and maintain
a management structure for the Surviving Corporation with independent management
and a Board of Directors with at least 50% non-Pro-Fac representatives. It is
currently anticipated that the initial Board of Directors of the Surviving
Corporation will consist of seven directors, three of whom will be
representatives of Pro-Fac, three of whom will be 'independent' and one of whom
will be an officer of the Surviving Corporation. Pro-Fac currently is in
discussions with several prospective directors.
Stockholder Meeting. The Merger Agreement provides that, if required by
applicable law, the Company will call a meeting of its Stockholders for the
purpose of obtaining any stockholder approvals required in connection with the
transactions contemplated by the Merger Agreement. Under the Merger Agreement,
at any such meeting Pro-Fac and the Purchaser will vote all Shares acquired or
beneficially owned by them in favor of approval of the Merger Agreement and the
Merger. In addition, under the Stockholder Agreement, AHI has agreed to vote its
Shares in favor of approval of the Merger Agreement and the Merger.
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If the Minimum Condition is satisfied pursuant to the Offer, upon its
acceptance for payment of the Shares, the Purchaser will hold at least 90% of
the outstanding Shares of each of the Class A Common Stock and the Class B
Common Stock, enabling it to effect the Merger without any further notice to and
without the authorization of the Stockholders of the Company pursuant to the
'short-form' merger provisions of New York Law. If the Purchaser does not obtain
at least 90% of each of the Class A Common Stock and Class B Common Stock
pursuant to the Offer and the Purchaser's exchange right under the Merger
Agreement, the Purchaser intends to cause a meeting of the Stockholders to be
held to approve the Merger.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the Company, Pro-Fac and the Purchaser. These
include representations and warranties by the Company with respect to corporate
existence and power, capitalization, corporate authorization, non-contravention,
Commission filings, financial statements, material liabilities, absence of
certain changes, litigation, employee benefits, taxes, finders' fees, compliance
with laws, environmental matters, material contracts, intellectual property and
other matters.
Pro-Fac and the Purchaser have also made certain representations and
warranties with respect to corporate existence and power, corporate
authorization, non-contravention, finders' fees, financing and other matters.
Conduct of Business Pending the Merger. The Company has agreed that during
the period from the date of the Merger Agreement to the Effective Time, or, if
earlier, the consummation of the Offer, the Company and its subsidiaries will
conduct their business in the usual, regular and ordinary course in
substantially the same manner as conducted in the past and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with third parties with
whom they have business dealings. The Company has further agreed that, until the
Effective Time, or, if earlier, the consummation of the Offer, except as
otherwise provided in the Merger Agreement, neither it nor any of its
subsidiaries will, among other things: (i) except for regular quarterly
dividends not in excess of $.16 per Share with customary record (so long as such
record date does not occur before November 15, 1994) and payment dates, declare,
set aside or pay any dividends on or make any other distribution with respect to
any shares of its capital stock, (ii) issue, repurchase or redeem any shares of
capital stock, other than issuances of Class A Common Stock pursuant to the
exercise of stock options outstanding as of September 27, 1994, (iii) amend its
charter or by-laws, (iv) acquire or agree to acquire any material assets, except
for purchases of inventory and other assets in the ordinary course of business
consistent with past practice, (v) mortgage or otherwise encumber any of its
properties or assets, except pursuant to existing obligations, (vi) incur any
indebtedness for borrowed money, except for short-term borrowings consistent
with past practice and obligations due Pro-Fac, (vii) make any capital
expenditures except with respect to expenditures approved in the Company's
amended capital budget for 1994 or for certain insured or other items, (viii)
enter into any agreement other than in the ordinary course of business
consistent with past practice and, if material, other than on terms reasonably
acceptable to Pro-Fac, (ix) enter into any agreement that limits the freedom of
the Company or any of its subsidiaries to compete in any line of business or
with any person or in any area or (x) take any action or omit to take any action
the omission of which would result in (A) any of the representations and
warranties of the Company limited by materiality becoming untrue in any respect,
(B) any of the representations and warranties of the Company not limited by
materiality becoming untrue in any material respect (except as they relate to
capitalization of the Company or its subsidiaries or the absence of certain
adverse changes) or (C) except as contemplated in connection with the approval
of a Superior Takeover Proposal (as hereinafter defined), any of the conditions
to the Merger not being satisfied.
The Company has agreed to give Pro-Fac and its representatives access to
the offices, properties, books and records of the Company and its subsidiaries,
and to furnish Pro-Fac with other information concerning its business,
properties and personnel as Pro-Fac may reasonably request.
Subject to the terms and conditions of the Merger Agreement, each of
Pro-Fac, the Purchaser and the Company has agreed to use its reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, and
to assist and cooperate with the other parties in doing all things necessary,
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proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions contemplated by the
Merger Agreement.
Agreements with Respect to Employee Matters. Under the Merger Agreement,
the Company has agreed to take such action as is necessary to adjust the terms
of all outstanding employee stock options to purchase Shares heretofore granted
under any stock option or stock purchase plan to provide that each such option
outstanding immediately prior to the Effective Time shall be vested and
exercisable. Upon the Effective Time, all such stock plans, and the provisions
of any other benefit plan calling for the issuance of stock by the Company,
shall terminate. Notwithstanding the foregoing, the Company and Pro-Fac have
agreed to approach certain directors and employees of the Company who hold
unvested options to purchase, at a price of $14.625 per Share, an aggregate of
144,180 Shares of Class A Common Stock. The Company and Pro-Fac intend to seek
the confirmation by these optionholders that their options will terminate at or
prior to the Effective Time. Pro-Fac has been advised that Messrs. J. William
Petty, David McDonald and Roy A. Myers, directors of the Company, have confirmed
the termination of their options for the purchase of an aggregate of 79,020
Shares of Class A Common Stock.
Under the Merger Agreement, Pro-Fac has agreed to cause the Surviving
Corporation to maintain in effect the deferred compensation agreements with
current and past directors and employees as in effect on September 27, 1994. In
addition, Pro-Fac has agreed to cause the Surviving Corporation to provide, for
up to one year after the Effective Time, or, if earlier, the consummation of the
Offer, benefits to employees of the Company and its subsidiaries that are no
less favorable in the aggregate to such employees than those in effect at
September 27, 1994, except that neither Pro-Fac nor the Surviving Corporation
shall be obligated (i) to provide or maintain such benefits to the extent they
exceed, in the aggregate, benefits generally provided to employees engaged in
similar industries and working in similar markets or in competing markets or to
the extent that the provision or maintenance of such benefits could reasonably
likely be expected to materially adversely affect the Surviving Corporation,
(ii) to offer such benefits to persons hired upon or after the Effective Time or
the consummation of the Offer, as applicable, (iii) to offer such benefits to
the extent such benefits otherwise would have expired by their terms, or (iv) to
provide any stock-based plans or rights or monetary benefits in lieu of such
stock-based plans or rights.
Under the Merger Agreement, Pro-Fac has agreed to cause the Surviving
Corporation to honor all retirement and severance-related benefits provided to
executive officers as in effect on September 27, 1994.
In June of 1994, the Company's Board of Directors approved two amendments
to the Company's standard termination policy whereby salary and benefit
continuation are provided to terminated salaried and clerical employees. The
first amendment states that any salaried exempt or non-exempt employee who is
terminated within one year following a change of control for reasons other than
for 'cause' will be provided with two weeks of salary and benefit continuation
for each full or partial year of service with the Company, with a minimum of one
month and a maximum of forty weeks.
The second amendment to this policy provides enhanced severance benefits to
corporate headquarters employees not covered under the Company's Key Executive
Severance Plan (the 'KESP'). Any such corporate headquarters employee terminated
within one year following a change of control for reasons other than 'cause'
will receive severance, as opposed to salary continuation, and benefit
continuation for periods ranging from 52 weeks for corporate officers to two
weeks for each full or partial year of service (with a minimum of 12 and a
maximum of 40 weeks) for salaried non-exempt clerical employees.
The KESP provides ten executive officers of the Company salary and benefit
continuation in the event of their termination within two years of a change of
control of the Company. During fiscal 1994, the KESP was amended to provide
certain of these executives with two years of salary and benefit continuation
and other executives with up to 12 months of salary and benefit continuation if
they are terminated for reasons other than 'cause' or if they resign for 'good
reason' within two years after a change of control of the Company. In addition,
the KESP was amended to permit Mr. J. William Petty, the Company's Chief
Executive Officer, and Patrick D. Lindenbach, one of the Company's Executive
Vice Presidents, to receive severance benefits if they voluntarily resign from
the Company after a
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change of control involving Pro-Fac or if they are terminated for reasons other
than 'cause' or if they resign for 'good reason' within two years after any
change of control of the Company. It is currently contemplated that, immediately
after the Effective Time, Mr. Petty will resign from the Company.
Under the KESP, Mr. Petty will receive salary continuation for one year of
approximately $424,000, less earned income from other sources of employment, an
annual supplemental retirement benefit for his life of approximately $58,000 and
benefits continuation for one year with a value of approximately $4,500. These
benefits to Mr. Petty are in addition to the projected annual benefits payable
under the Company's Supplemental Executive Retirement Plan.
In the event Mr. Lindenbach exercises his right to resign voluntarily from
the Company after a Pro-Fac change of control, his benefits will include salary
continuation for two years with a present value of approximately $370,000, in
the aggregate, and benefit continuation for two years with a present value of
approximately $11,000 in the aggregate.
Although not technically severance plans, the Company's Deferred Profit
Sharing Plan and Management Incentive Plan provide that, in a change of control
situation, pro-rata portions of annual awards will be granted to terminated
executives for the year of termination.
Other Offers. Pursuant to the Merger Agreement, the Company has agreed that
the Company and its subsidiaries, and the officers, directors, employees and
agents of the Company and its subsidiaries will not, directly or indirectly, (i)
solicit, initiate or, subject to the fiduciary duties of the Board of Directors
(as determined in good faith by a majority of its disinterested members based on
the written advice of the Company's outside counsel), encourage any Takeover
Proposal or (ii) subject to the fiduciary obligations of the Company's Board of
Directors, as determined in good faith by a majority of its disinterested
members based on the written advice of the Company's outside counsel and in
response to an unsolicited request therefor by a person whom a majority of such
disinterested directors believes intends to submit a Takeover Proposal and has
the financial ability (or the ability to obtain financing) to make a Superior
Takeover Proposal, disclose any nonpublic information relating to the Company or
any of its subsidiaries or afford access to the properties, books or records of
the Company or any of its subsidiaries to any person that has made or that the
Company has reason to believe is considering making a Takeover Proposal.
Under the Merger Agreement, a 'Takeover Proposal' means any proposal for a
merger or other business combination involving the Company or any proposal or
offer to acquire in any manner, directly or indirectly, a controlling equity
interest in any voting securities of, or a substantial portion of the assets of,
the Company. The Merger Agreement defines a 'Superior Takeover Proposal' as a
bona fide Takeover Proposal made by a third party which a majority of the
disinterested members of the Company's Board of Directors determines in its good
faith judgment (based on the advice of the Company's independent financial
advisor) to be more favorable to the Stockholders than the Merger, for which
financing, to the extent required, is then committed or the subject of a 'highly
confident' letter from a reputable, nationally recognized investment banking
firm and that is not subject to any condition requiring the sale by the Company
of any material asset, unless a reputable, financially capable person has
agreed, or entered into a letter of intent, subject only to customary conditions
to purchase such asset on terms that would satisfy such condition. In
determining whether a board member is disinterested for purposes of the Merger
Agreement, a director of the Company shall be 'disinterested' unless he or she
is an executive officer of the Company or Pro-Fac or an executive officer or
director of Agway.
The Company has agreed to promptly advise Pro-Fac of any Takeover Proposal
or any inquiry which could lead to any Takeover Proposal and the identity of the
person making any such Takeover Proposal or inquiry and has agreed to keep
Pro-Fac fully informed of the status and details of any such Takeover Proposal
or inquiry and provide Pro-Fac with the documentation relevant to such Takeover
Proposal. The Board of Directors of the Company may approve or recommend a
Superior Takeover Proposal and the Company may enter into an agreement with
respect to such Superior Takeover Proposal, provided it does so within five
business days of giving notice to Pro- Fac of its termination of the Merger
Agreement.
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Agreement with respect to Director and Officer Indemnification and
Insurance. Pursuant to the Merger Agreement, Pro-Fac and the Purchaser have
agreed, subject to any limitation imposed under applicable law, that all rights
to indemnification for acts or omissions occurring prior to the Effective Time
now existing in favor of the current or former directors and officers of the
Company and its subsidiaries as provided in their charters or by-laws in effect
on the date of the Merger Agreement shall survive the Merger and shall continue
in effect for a period of not less than six years from the Effective Time.
Pro-Fac has further agreed that it will cause the Surviving Corporation to
maintain in effect for three years after the Effective Time, officers' and
directors' liability insurance covering those persons currently covered by the
Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount no less favorable than those policies in effect
at September 27, 1994 with respect to acts or omissions occurring before the
Effective Time, except that the Surviving Corporation will not be required to
pay premiums for such insurance in any year in an amount exceeding $100,000.
Other Agreements. Under the Merger Agreement, Pro-Fac, the Company and the
Surviving Corporation will, at the Effective Time or, if earlier, upon the
consummation of the Offer, release and discharge each director, officer,
employee, agent and advisor of the Company from any and all claims, demands,
causes of action and other liabilities that may exist at such time in favor of
Pro- Fac, the Company or the Surviving Corporation, to the extent arising out of
or based upon (i) the Integrated Agreement, except insofar as any claim arises
after September 27, 1994 and is based on behavior not generally consistent with
prior behavior or on action taken, or the failure to take action, with
intentional disregard for what is in good faith believed to be the rights of
Pro-Fac under the Integrated Agreement and (ii) the transactions leading up to
the Merger Agreement.
Pursuant to the Merger Agreement, upon the Purchaser's acceptance for
payment of Shares pursuant to the Offer, the Company will exchange Shares of
Class B Common Stock so accepted by the Purchaser for an equivalent number of
Shares of Class A Common Stock. The Purchaser must, after giving effect to such
exchange, continue to hold at least 90% of the Shares of Class B Common Stock.
Assuming compliance by AHI with its obligation to tender its Shares, the
exchange right will enable the Purchaser to own 90% of the Shares of Class A
Common Stock and thereby effect the Merger pursuant to the 'short-form'
provisions of New York Law, if Stockholders (other than AHI) holding an
aggregate of 4,884,915 Shares of Class A Common Stock (assuming no other
issuance of Class A Common Stock after September 27, 1994) validly tender and do
not withdraw such Shares pursuant to the Offer.
Conditions to the Merger. Pursuant to the Merger Agreement, the respective
obligations of each party to consummate the Merger are subject to the
satisfaction or waiver, where permissible, at or before the Effective Time of
the following conditions: (i) the approval of the Merger Agreement by the
affirmative vote of the Stockholders by requisite vote in accordance with
applicable law, if such vote is required by applicable law, (ii) no judgment,
injunction, order or decree shall prohibit the consummation of the Merger and no
proceeding challenging the Merger Agreement or seeking to prohibit, prevent or
materially delay, or alter any of the terms of, the transactions contemplated by
the Merger Agreement shall have been instituted by any government or
governmental authority or agency, domestic or foreign, and be pending or shall
have been instituted by any other person before any court or governmental
authority or agency, domestic or foreign, and be pending if, in the written
opinion of counsel for the party seeking to invoke this condition, such
proceeding by such other person is reasonably likely to have a material adverse
affect on the Company and (iii) the applicable waiting period (and any extension
thereof) under the HSR Act shall have expired or been terminated. In addition,
unless the Purchaser shall have accepted Shares for payment pursuant to the
Offer, the obligations of Pro-Fac and the Purchaser to consummate the Merger are
subject to the satisfaction of the further conditions that (A) the
representations and warranties of the Company set forth in the Merger Agreement
that are qualified as to materiality shall be true and correct and the
representations and warranties of the Company set forth in the Merger Agreement
that are not so qualified shall be true and correct in all material respects
(except representations and warranties as to capitalization of the Company and
its subsidiaries and the absence of certain adverse changes, which shall be true
in all respects), (B) the Company shall have performed in all material respects
all obligations required to be performed by it under the Merger Agreement, (C)
except as otherwise provided in the Merger
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Agreement, each employee stock option shall have been exercised or terminated,
(D) Pro-Fac shall have received, or be satisfied that it will receive, all
material consents, filings, approvals or waivers from third parties required to
consummate the Merger, (E) Pro-Fac and the Purchaser shall have received
financing sufficient to enable the consummation of the Merger, (F) Pro-Fac shall
have received satisfactory evidence of the termination of the Company's
obligations under agreements with financial advisors to the Company, except for
certain obligations with respect to expenses and other payments due in
connection with the Merger and indemnification and contribution obligations and
(G) Pro-Fac shall have received all other documents it may reasonably request
relating to the existence of the Company and its corporate authority for the
Merger Agreement.
Termination. The Merger Agreement may be terminated by (i) the mutual
written consent of Pro-Fac and the Company, (ii) either Pro-Fac or the Company
if (A) unless the Purchaser shall have accepted Shares for payment pursuant to
the Offer, upon a vote of the Company's shareholders, the required approval is
not obtained, (B) unless the Purchaser shall have accepted Shares for payment
pursuant to the Offer, the Merger shall not have been consummated on or before
February 28, 1995, unless due to the wilful and material breach of the Merger
Agreement by the party seeking to terminate the agreement or (C) any court,
arbitrator or governmental body, agency or official shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable, (iii) the Company if its Board of
Directors shall have withdrawn or modified its approval or recommendation of the
Merger Agreement in connection with a Superior Takeover Proposal or determined
to enter into an agreement with respect to a Superior Takeover Proposal,
provided, in either case, that the Company enters into a binding agreement with
respect to such Superior Takeover Proposal within five business days of notice
to Pro-Fac of such termination, (iv) Pro-Fac if (A) the Company's Board of
Directors shall have withdrawn or modified in a manner adverse to Pro-Fac or the
Purchaser its approval or recommendation of the Offer, the Merger or the Merger
Agreement or approved or recommended a Superior Takeover Proposal, (B) the
Company shall have entered into an agreement with respect to a Superior Takeover
Proposal or (C) the Company's Board of Directors or any committee thereof shall
have resolved to do any of the foregoing, (v) unless the Purchaser shall have
accepted Shares for payment pursuant to the Offer, by Pro-Fac if any court,
arbitrator or governmental body, agency or official shall have issued an order,
decree or ruling that shall have become final and nonappealable and would, in
the reasonable judgment of Pro-Fac, have a material adverse effect on the
operation after the Effective Time of the Surviving Corporation's business
substantially in the manner now conducted, (vi) Pro-Fac or the Company if the
Purchaser shall not have accepted Shares for payment pursuant to the Offer
within 10 business days after expiration of the Offer, provided notice of such
termination is given within 15 business days after expiration of the Offer and
(vii) Pro-Fac or the Company if the Purchaser shall not have accepted Shares for
payment pursuant to the Offer by 10:00 a.m. (New York time) on December 16,
1994; provided, that the Company shall have no right to terminate the Merger
Agreement under the circumstances described in clause (vi) or (vii) if at the
time of expiration of the Offer, the Minimum Condition is not satisfied and, at
least five business days before such time, the Purchaser has publicly
disclosed that it has executed definitive documents or otherwise has commitments
reasonably satisfactory to the Company (subject only to customary closing
conditions) for financing sufficient to consummate the Offer and the Merger.
Fees and Expenses. All fees and expenses incurred in connection with the
Merger, the Merger Agreement and the transactions contemplated by the Merger
Agreement will be paid by the party incurring such fees or expenses, whether or
not the Merger is consummated, except (i) in the case of a wilful and material
breach of the Merger Agreement and (ii) that, if the Merger Agreement is
terminated in connection with a Superior Takeover Proposal or due to the
Company's Board of Directors' withdrawal or modification of its approval of the
Merger Agreement, the Offer or the Merger in a manner adverse to Pro-Fac, the
Company shall pay all fees and expenses incurred by Pro-Fac or the Purchaser in
connection with the Merger Agreement and the transactions contemplated thereby,
up to $3 million. In addition, the Company shall pay Pro-Fac a termination fee
of $2.5 million if the Merger Agreement is terminated (x) in connection with a
Superior Takeover Proposal, (y) due to a withdrawal or modification adverse to
Pro-Fac of the Company's Board of Directors' approval of the Merger
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Agreement, the Offer or the Merger, unless such withdrawal or modification is
based primarily on facts not known to the Board on September 27, 1994 or
developments occurring after that date and at the time of such withdrawal or
modification there shall not be pending any Takeover Proposal made after
September 27, 1994, or (z) due to any other withdrawal or modification adverse
to Pro-Fac of the Company's Board of Directors' approval or recommendation if,
within one year after a termination of the Merger Agreement on that basis, any
other party acquires a controlling equity interest in the voting securities or
substantially all the assets of the Company or engages in a merger or other
business combination with the Company.
If the Merger Agreement is terminated due to the failure to obtain the
approval of the Stockholders (if any is required) or to consummate the Merger on
or before February 28, 1995 (if attributable to the Company's breach) and,
within two years from such termination, any person who, between April 1, 1993
and such termination date, had made, indicated to the Company's Board of
Directors or any committee thereof, the Company's chief executive officer or
chief financial officer or the Company's financial advisor its interest in
making or was approached by the Company to make a Takeover Proposal acquires a
controlling equity interest in any voting securities, or substantially all of
the assets, of the Company or engages in any merger or other business
combination with the Company, then the Company shall reimburse Pro-Fac for all
fees and expenses incurred by Pro-Fac in connection with the Merger Agreement
and the transactions contemplated thereby prior to the termination of the Merger
Agreement, up to $3 million.
Timing. The exact timing and details of the Merger will depend upon legal
requirements and a variety of other factors, including the number of Shares
acquired by the Purchaser pursuant to the Offer. Although Pro-Fac has agreed to
cause the Merger to be consummated on the terms set forth above, there can be no
assurance as to the timing of the Merger.
Pro-Fac and the Purchaser reserve the right to acquire additional Shares
following the expiration or termination of the Offer through open market
transactions, private purchases, other tender offers or otherwise, on terms and
at prices that may be the same as, or more or less favorable than, those of the
Offer.
Appraisal Rights. Stockholders do not have dissenters' rights as a result
of the Offer. HOWEVER, STOCKHOLDERS WHO DO NOT TENDER SHARES PURSUANT TO THE
OFFER WILL BE ENTITLED TO EXERCISE CERTAIN RIGHTS TO DISSENT AND DEMAND
APPRAISAL OF THEIR SHARES IN CONNECTION WITH THE MERGER AND IN CONJUNCTION WITH
NEW YORK LAW. DISSENTING STOCKHOLDERS WHO COMPLY WITH THE REQUISITE PROCEDURES
OF SECTION 623 OF NEW YORK LAW TO DISSENT TO THE MERGER, THE MATERIAL FEATURES
OF WHICH MERGER ARE OUTLINED IN THIS OFFER TO PURCHASE, WOULD BE ENTITLED TO A
JUDICIAL DETERMINATION AND PAYMENT OF THE 'FAIR VALUE' OF THEIR SHARES, TOGETHER
WITH INTEREST THEREON, AT SUCH RATE AS THE COURT FINDS EQUITABLE, FROM THE DATE
THE MERGER IS CONSUMMATED UNTIL THE DATE OF PAYMENT. Under New York Law, in
fixing the fair value of the Shares, a court would consider the nature of the
transaction giving rise to the Stockholders' right to receive payment for Shares
and its effect on the Company and its Stockholders, the concepts and methods
then customary in the relevant securities and financial markets for determining
fair value of shares of a corporation engaging in a similar transaction under
comparable circumstances and all other relevant factors. The value so determined
could be more or less than the purchase price offered pursuant to the Offer or
the Merger.
The Stockholder Agreement. The Purchaser has entered into the Stockholder
Agreement with AHI. Pursuant to the Stockholder Agreement, AHI has agreed to
tender all of its Shares of Class A Common Stock and Class B Common Stock of the
Company pursuant to the Offer within five business days after the commencement
of the Offer and, subject to applicable law and the terms and conditions of the
Stockholder Agreement, not to withdraw such Shares. AHI may withdraw Shares
tendered in the Offer if the amount or form of consideration to be paid for the
Shares is less than cash in the amount of $19 per Share, net to AHI, or the
Merger Agreement is terminated. The Purchaser has agreed with AHI that it will
not accept for payment less than 44% of the Shares of Class A Common Stock
(excluding Shares owned by AHI) that are outstanding at the time of acceptance.
AHI holds of record an aggregate of 899,447 and 2,036,643 of the Shares of
Class A Common Stock and Class B Common Stock, respectively, of the Company.
Accordingly, assuming AHI's compliance with its obligations, the Minimum
Condition with respect to the Shares of Class B Common Stock will
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be satisfied whether or not any other Stockholder tenders any Shares. In
addition, Pro-Fac estimates that if other Stockholders holding an aggregate of
5,070,370 Shares of the Class A Common Stock validly tender and do not withdraw
their Shares pursuant to the Offer (without giving effect to the exchange of
Class B Common Stock into Class A Common Stock by the Company described below,
and assuming no other issuance of Class A Common Stock after September 27,
1994), the Minimum Condition will be satisfied. Assuming AHI's compliance with
its obligations and that no other Stockholder tenders any Shares of Class B
Common Stock, the Purchaser could exchange 1,854,546 Shares of Class B Common
Stock tendered by AHI into an equivalent number of Shares of Class A Common
Stock. Such an exchange would permit the Purchaser to obtain 90% of the Shares
of Class A Common Stock outstanding (after giving effect to such exchange but
assuming no other issuance of capital stock after September 27, 1994) if
Stockholders (other than AHI) holding an aggregate of 4,884,915 Shares of Class
A Common Stock validly tendered and did not withdraw their Shares.
Pursuant to the Stockholder Agreement, AHI has granted the Purchaser an
option (the 'Option'), exercisable upon the terms and conditions set forth in
the Stockholder Agreement, to purchase any Shares tendered by AHI and
subsequently withdrawn (other than under the circumstances where less than $19
in cash is to be paid for the Shares or the Merger Agreement has been
terminated) at a price of $19 per Share. The Purchaser shall not be entitled to
purchase AHI's Shares under the Option unless it shall have accepted for
payment, or shall be simultaneously accepting for payment, at least 44% of the
Shares of Class A Common Stock then outstanding (not including any Shares of
Class A Common Stock held by AHI). Under the Stockholder Agreement, AHI also has
agreed to vote, if necessary, its Shares in favor of the Merger Agreement and
the Merger.
Under the Stockholder Agreement, Pro-Fac, the Company and the Surviving
Corporation will, at the Effective Time or, if earlier, the consummation of the
Offer, release and discharge Agway, AHI and each subsidiary, affiliate,
director, officer, employee, agent and advisor of either of them from any and
all claims, demands, causes of action and other liabilities that may exist at
such time in favor of Pro-Fac, the Company or the Surviving Corporation, to the
extent arising out of or based upon (i) the Integrated Agreement, except insofar
as any claim arises after September 27, 1994 and is based on behavior not
generally consistent with prior behavior or on action taken, or the failure to
take action, with intentional disregard for what is in good faith believed to be
the rights of Pro-Fac under the Integrated Agreement or (ii) the transactions
leading up to the Merger Agreement.
Certain Statutory Requirements. New York Law. Section 912 of the New York
Law purports to regulate certain 'business combinations' of a 'resident domestic
corporation' with an 'interested shareholder' after the 'stock acquisition
date,' each as defined in Section 912. Section 912 provides that a resident
domestic corporation shall not engage at any time in any business combination
with any interested shareholder other than: (i) a business combination approved
by the board of directors of such resident domestic corporation prior to such
interested shareholder's stock acquisition date or where the purchase of stock
by such interested shareholder on the stock acquisition date had been approved
by the board of directors prior to the stock acquisition date; (ii) a business
combination approved by the affirmative vote of the holders of a majority of the
outstanding voting stock not beneficially owned by such interested shareholder
or any affiliate thereof no earlier than five years after such interested
shareholder's stock acquisition date; or (iii) a business combination after such
five year period which meets certain 'fair price' criteria and other conditions
specified in Section 912 (which would require, among other things, that the
consideration be in cash or in the same form as paid in the Offer).
Section 912 defines 'resident domestic corporation' as a corporation (i)
organized in the State of New York, (ii) having either (A) its principal
executive offices and significant business operations located in the State of
New York or (B) alone or in combination with one or more of its subsidiaries of
which it owns at least 80% of the voting stock, a specified number or percentage
of employees employed primarily in the State of New York and (iii) having at
least ten percent of its voting stock owned beneficially by residents of the
State of New York. A 'business combination' includes (i) any merger or
consolidation of a resident domestic corporation with (a) an interested
shareholder or (b) any other corporation which is, or after such merger or
consolidation would be, an affiliate or associate of such interested
shareholder, (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition to or with an interested shareholder or any affiliate or associate
thereof of assets having an
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aggregate market value equal to at least 10% of the aggregate market value of
all assets on a consolidated basis or of all outstanding stock, or representing
at least 10% of the earning power or net income on a consolidated basis, of such
resident domestic corporation, and (iii) other specified self-dealing
transactions between such resident domestic corporation and an interested
shareholder, or any affiliate or associate thereof. An 'interested shareholder'
is defined to include any person (other than the corporation or a subsidiary
thereof) that is the beneficial owner, directly or indirectly, of 20% or more of
the outstanding voting stock of such resident domestic corporation. 'Stock
acquisition date' is defined as the date that a person first becomes an
interested shareholder.
Because the Company's Board of Directors has approved the Offer and the
Merger, Section 912 is inapplicable to the Purchaser in connection with the
Merger.
Article 16 of the New York Law also requires a bidder for shares of a New
York corporation to file a registration statement with the attorney general and
satisfy certain disclosure requirements. The Purchaser is filing, on the date of
this Offer to Purchase, such a registration statement and has attached as
Schedule II to this Offer to Purchase the additional statements required by such
Article 16.
Other Matters. Any Merger or other similar business combination proposed by
Pro-Fac or the Purchaser also would have to comply with any applicable Federal
law. In particular, the Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain 'going private' transactions. Pro-Fac believes
that Rule 13e-3 will not be applicable to the Offer or the Merger unless the
Merger is consummated more than one year after termination of the Offer or if an
alternative merger transaction were to provide for Stockholders to receive
consideration for their Shares in an amount less than the price per Share paid
pursuant to the Offer. If applicable, Rule 13e-3 would require, among other
things, that certain financial information concerning the Company and certain
information relating to the fairness of the proposed transaction and the
consideration offered to minority Stockholders in such a transaction be filed
with the Commission and distributed to such Stockholders prior to consummation
of the transaction.
If the Purchaser acquires Shares pursuant to the Offer and depending upon
the number of Shares so acquired and other factors relevant to the Purchaser's
equity ownership in the Company, the Purchaser may, subsequent to the
consummation of the Offer, seek to acquire additional Shares through open market
purchases, privately negotiated transactions, a tender or exchange offer or
other transactions or a combination of the foregoing on such terms and at such
prices as it shall determine, which may be different from the price paid for
Shares in the Offer. The Purchaser also reserves the right to dispose of Shares
which it has acquired or may acquire. The Purchaser may also consider engaging
in a proxy solicitation in order to elect its nominees to the Company's Board of
Directors.
Assuming the Minimum Condition is satisfied, the Purchaser intends to
consummate the Merger immediately after its acceptance of Shares pursuant to the
Offer. As a result of the Merger, Pro-Fac, as the sole shareholder of the
Surviving Corporation, will be entitled to elect all directors of the Surviving
Corporation. If the Merger cannot be consummated as planned, the Purchaser
currently intends, as soon as practicable after the acceptance of Shares
pursuant to the Offer, to cause the Company to appoint at least four individuals
designated by Pro-Fac to the Company's Board of Directors (the total number of
which would be reduced to seven) pursuant to the terms of the Merger Agreement.
In connection with its consideration of the Offer, the Purchaser has made a
preliminary review, and will continue to review, on the basis of available
information, various possible business strategies that it might consider in the
event that it acquires control of the Company. Such strategies could include,
among other things, the possible disposition of certain assets or lines of
business. Pro-Fac and the Purchaser intend to continue in effect the management
arrangements of the Integrated Agreement and Pro-Fac's practice of supplying
crops to the Company (or the Surviving Corporation, as the case may be) for
marketing and the payment by the Company to Pro-Fac of the commercial market
value of those crops. In addition, it is anticipated that under the Marketing
Agreement, the Surviving Corporation would pay Pro-Fac patronage income equal to
90% of the Surviving Corporation's pre-tax profits on Pro-Fac related products
(up to a maximum of 50% of the Surviving Corporation's entire pre-tax income),
or reduce commercial market value on a similar basis in the case of losses by
the Surviving Corporation. It is anticipated that the facilities currently
leased to the Company will be owned directly by the Surviving Corporation.
Pro-Fac and the Purchaser may conduct a review of the Company and its
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assets, businesses, operations, properties, policies (including dividend
policies), corporate structure, capitalization and the responsibilities and
qualifications of the Company's management and personnel and consider what, if
any, changes Pro-Fac or the Purchaser deems desirable in light of the
circumstances which then exist.
Except as described above or elsewhere in this Offer to Purchase, the
Purchaser has no present plans or proposals that would relate to or result in an
extraordinary corporate transaction involving the Company or any of its
subsidiaries (such as a merger, reorganization, liquidation, relocation of any
operations or sale or other transfer of a material amount of assets), any change
in the Company's Board of Directors or management, any material change in the
Company's capitalization or dividend policy or any other material change in the
Company's corporate structure or business.
Financial Advisors. DLJ has delivered to the Company's Board of Directors
its written opinion that, based upon and subject to certain considerations and
assumptions, as of September 27, 1994, the consideration to be received by
holders of Shares of Class A Common Stock pursuant to the Offer and the Merger
is fair to such holders from a financial point of view. Goldman Sachs has
delivered to the Company's Board of Directors its written opinion that, based
upon and subject to certain considerations and assumptions, as of September 27,
1994, the $19 per Share of Class B Common Stock in cash to be received by the
holders of Shares of Class B Common Stock in the Offer and the Merger is fair to
such holders. The Company has advised Pro-Fac and the Purchaser that copies of
such written opinions have been included in the Schedule 14D-9 that has been
mailed to the Stockholders. Stockholders are urged to read such opinions in
their entirety.
Based on information available to Pro-Fac, the Purchaser and Pro-Fac
estimate that DLJ and Goldman Sachs are entitled to receive fees aggregating
approximately $5 million, based on the most recent fiscal year-end balance
sheet, if the Offer and the Merger are consummated, for their respective
financial advisory services relative to the transactions contemplated by the
Merger Agreement. A portion of these fees already has been paid by the Company.
In addition, DLJ and Goldman Sachs are entitled to reimbursement for their
respective out-of-pocket expenses and to indemnification against certain
liabilities and expenses, including certain liabilities under the federal
securities laws.
12. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE LISTING;
REGISTRATION UNDER THE EXCHANGE ACT.
There is no established trading market for the Shares of the Company's
Class B Common Stock. However, the purchase of any Shares pursuant to the Offer
may reduce the number of holders of Shares, will reduce the number of Shares
that might otherwise trade and could adversely affect the liquidity and market
value of the remaining Shares held by Stockholders other than the Purchaser. The
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares or whether it would cause future
market prices to be greater or less than the Offer price.
Depending upon the number of Shares of Class A Common Stock purchased
pursuant to the Offer, the Shares of Class A Common Stock may no longer meet the
requirements of the AMEX or the CSE for continued listing and may, therefore, be
delisted from such exchanges. According to the AMEX's published guidelines, the
AMEX would consider delisting those Shares if, among other things, the number of
publicly held Shares (excluding Shares held by officers, directors, controlling
Stockholders or other family or concentrated holdings) was less than 200,000,
there were less than 400 holders of at least 100 Shares or less than 600 record
holders in total, or the aggregate market value of the publicly held Shares was
less than $1 million. According to the CSE's published guidelines, the CSE would
consider delisting the Shares of Class A Common Stock if, among other things,
the number of those publicly held Shares (excluding Shares held by officers,
directors or other concentrated holdings) was less than 100,000, or there were
less than 500 holders in total. According to the Company 10-K, there were
approximately 3,300 holders of record of Shares of Class A Common Stock and 64
holders of record of Shares of Class B Common Stock as of June 25, 1994. If, as
a result of the purchase of Shares of Class A Common Stock pursuant to the Offer
or otherwise, those Shares no longer meet the requirements of the AMEX or the
CSE for continued listing or trading and such trading of Shares is discontinued,
the market for such Shares could be adversely affected.
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If the AMEX and CSE were to delist the Shares of Class A Common Stock
(which the Purchaser currently intends to cause the Company to seek to occur if
the Purchaser acquires control of the Company), it is possible that the Shares
would trade on another securities exchange or in the over-the-counter market and
that price quotations for the Shares would be reported by such exchange or
through the National Association of Securities Dealers Automated Quotation
System ('NASDAQ') or other sources. The extent of the public market for the
Shares and availability of such quotations would, however, depend upon such
factors as the number of holders and the aggregate market value of the
publicly-held Shares at such time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of registration
of the Shares under the Exchange Act as described below and other factors.
The Shares of Class A Common Stock are currently 'margin securities' under
the regulations of the Board of Governors of the Federal Reserve System (the
'Federal Reserve Board'), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares. Depending upon
factors similar to those described above regarding listing and market
quotations, the Shares might 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.
The Shares of Class A Common Stock are currently registered under the
Exchange Act. The purchase of the Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act. Such
registration may be terminated upon application of the Company to the Commission
if the Shares are not listed on a 'national securities exchange' and there are
less than 300 holders of record. Termination of the registration of the Shares
of Class A Common Stock under the Exchange Act would substantially reduce the
information required to be furnished by the Company to holders of Shares and to
the Commission and would make certain of the provisions of the Exchange Act,
such as the short-swing profit recovery provisions of Section 16(b), the
requirement of furnishing a proxy or information statement in connection with
Stockholder meetings pursuant to Section 14(a), and the related requirement of
an annual report to Stockholders and the requirements of Rule 13e-3 under the
Exchange Act with respect to 'going private' transactions, no longer applicable
to the Company. Furthermore, 'affiliates' of the Company and persons holding
'restricted securities' of the Company may be deprived of the ability to dispose
of such securities pursuant to Rule 144 promulgated under the Securities Act of
1933, as amended, (the 'Securities Act'). If registration of the Shares under
the Exchange Act were terminated, the Shares would no longer be 'margin
securities' or eligible for listing or NASDAQ reporting. If, as a result of the
purchase of the Shares pursuant to the Offer or the Merger, the Company is no
longer required to maintain registration of the Shares under the Exchange Act,
the Purchaser intends to seek to cause the Company to terminate registration of
the Shares under the Exchange Act as soon after consummation of the Offer as the
requirements for termination of registration of the Shares are met.
13. DIVIDENDS AND DISTRIBUTIONS.
Pursuant to the Merger Agreement, the Company has agreed that it will not
(i) split, combine or otherwise change the Shares or its capitalization, (ii)
acquire or otherwise cause a reduction in the number of outstanding Shares or
(iii) issue or sell any additional Shares (other than Shares issued pursuant to
and in accordance with the terms in effect on September 27, 1994 of employee
stock options and Shares of Class A Common Stock issued on exchange of an equal
number of Shares of Class B Common Stock), shares of any other class or series
of capital stock, other voting securities or any convertible securities. In
addition, under the Merger Agreement the Company has covenanted that it will not
declare or pay any dividend on the Shares (other than regular quarterly cash
dividends not in excess of $.16 per Share having customary and usual record and
payment dates (so long as the earliest such record date is not before November
15, 1994)) or any distribution with respect to the Shares. If the Company takes
any such action in breach in any material respect of these covenants, the
Purchaser will not be required to purchase Shares pursuant to the Offer.
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<PAGE>
14. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT.
Pursuant to the terms of the Merger Agreement, the Purchaser shall (unless
the Company otherwise consents) extend the Offer if any of the conditions shall
not have been satisfied (or waived) at any scheduled Expiration Date (except
that if the Financing Condition is not satisfied at any scheduled Expiration
Date and the Purchaser has entered into definitive documents for financing
sufficient to consummate the Offer and the Merger, the Purchaser may not extend
the Offer because the Financing Condition has not been satisfied to a date that
is more than five business days after the Purchaser's signing of the last of
such definitive documents). In addition, the Purchaser may, without the consent
of the Company, extend the Offer as required by any rule, regulation,
interpretation or position of the Commission and for any reason for up to 15
business days beyond the latest expiration date that otherwise would be
permitted. Unless otherwise agreed, the Offer may not be extended (unless due to
a rule, regulation, interpretation or position of the Commission) beyond
December 15, 1994 or if an extension would be reasonably likely to result in any
of the conditions to the Purchaser's obligations to purchase Shares (other than
conditions irrevocably waived by Pro-Fac and the Purchaser) not being satisfied
at the proposed new scheduled expiration date of the Offer. Subject to these and
the other terms of the Merger Agreement, the Purchaser 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 Section 15 shall have been satisfied,
to extend the period of time during which the Offer is open by giving oral or
written notice of such extension to the Depositary and by making a public
announcement of such extension. Except as otherwise required by the Merger
Agreement, there can be no assurance that the Purchaser will exercise its right
to extend the Offer.
Subject to the terms of the Merger Agreement, the Purchaser 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 Section 15 shall have been
satisfied, to amend the Offer in any respect by making a public announcement of
such amendment. The Merger Agreement requires that, without the consent of the
Company, the Purchaser shall not (i) change the form of consideration to be paid
in the Offer, (ii) decrease the price per Share to be paid or the number of
Shares being sought in the Offer, (iii) add to or amend, in a manner adverse to
the holders of the Shares, the conditions to the Offer, (iv) amend the Offer in
any way such that holders of Class A Common Stock receive consideration that
differs from the consideration to be received by holders of Class B Common Stock
or (v) accept for payment Shares that do not represent at least 58% of the Class
A Common Stock, a majority of the Class B Common Stock and two-thirds of all
Shares, in each case on a fully diluted basis. There can be no assurance as to
whether or not the Purchaser will exercise its right to amend the Offer.
If the Purchaser shall decide, subject to the terms of the Merger
Agreement, to decrease the percentage of Shares being sought, or increase or
decrease the consideration to be paid for Shares pursuant to the Offer, and the
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 in the manner specified below, the
Offer will be extended until the expiration of such period of 10 business days.
If the Purchaser makes a material change in the terms of the Offer (other than a
change in price or percentage of securities sought) or in the information
concerning the Offer, or waives a material condition of the Offer, the Purchaser
will extend the Offer, if required by applicable law, for a period sufficient to
allow Stockholders to consider the amended terms of 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 such as the Minimum 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.
The Purchaser also reserves the right, subject to the terms of the Merger
Agreement, in the event any of the conditions specified in Section 15 shall not
have been satisfied and so long as Shares have not theretofore been paid for, to
delay (except as otherwise required by applicable law) acceptance for
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<PAGE>
payment of or delay payment for Shares, or to terminate the Offer and not accept
for payment or not pay for Shares.
If the Purchaser extends the period of time during which the Offer is open,
is delayed in accepting for payment or paying for Shares or is unable to accept
for payment or pay for Shares pursuant to the Offer for any reason, then,
without prejudice to the Purchaser's rights under the Offer, the Depositary may,
on behalf of the Purchaser, retain all Shares tendered, and such Shares may not
be withdrawn except as otherwise provided in Section 4. The reservation by the
Purchaser of the right to delay acceptance for payment of or payment for Shares
is subject to applicable law, which requires that the Purchaser pay the
consideration offered or return the Shares deposited by or on behalf of
Stockholders promptly after the termination or withdrawal of the Offer. The
reservation by the Purchaser of the right to delay acceptance for payment of
Shares also is subject to the Merger Agreement, pursuant to which the Company
may, subject to certain limitations, terminate the Merger Agreement if the
Purchaser has not accepted for payment Shares prior to the earlier of 10
business days after the expiration of the Offer and December 16, 1994.
Any extension, termination or amendment of the 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 the Purchaser may choose
to make any public announcement, the Purchaser 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.
15. CERTAIN CONDITIONS OF THE OFFER.
The Offer is subject to the Minimum Condition. Based on the information
provided to Pro- Fac by the Company, at September 27, 1994 there were 6,633,129
and 2,056,876 Shares of Class A Common Stock and Class B Common Stock,
respectively, outstanding. Accordingly, the Purchaser believes that the Minimum
Condition would be satisfied if 5,969,817 and 1,851,189 shares of Class A Common
Stock and Class B Common Stock, respectively, are validly tendered pursuant to
the Offer and not withdrawn. However, the number of Shares required to satisfy
the Minimum Condition will increase if certain outstanding options to acquire
Shares have been or are exercised after September 27, 1994 and at or prior to
the Expiration Date. Pursuant to the Merger Agreement, upon the Purchaser's
acceptance for payment of Shares pursuant to the Offer, the Company will
exchange Shares of Class B Common Stock so accepted by the Purchaser for an
equivalent number of Shares of Class A Common Stock. The Purchaser must, after
giving effect to such exchange, continue to hold at least 90% of the Shares of
Class B Common Stock. Assuming compliance by AHI with its obligation to tender
its Shares and that no other Stockholder tenders any Shares of Class B Common
Stock, the exchange right will enable the Purchaser to own 90% of the Shares of
Class A Common Stock, and thereby effect the Merger pursuant to the 'short-form'
provisions of New York Law, if Stockholders (other than AHI) holding an
aggregate of 4,884,915 Shares of Class A Common Stock (assuming no other
issuance of Class A Common Stock after September 27, 1994) validly tender and do
not withdraw such Shares pursuant to the Offer. Pursuant to the Stockholder
Agreement, AHI has agreed to tender all of its Shares of Class A Common Stock
and Class B Common Stock of the Company. AHI holds of record an aggregate of
899,447 and 2,036,643 of the Shares of Class A Common Stock and Class B Common
Stock, respectively, of the Company. Assuming AHI's compliance with its
obligations, the Minimum Condition with respect to the Shares of Class B Common
Stock will be satisfied whether or not any other Stockholder tenders any Shares.
Notwithstanding any other provision of the Offer, the Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) (relating to the
Purchaser's obligation to pay for or return tendered Shares after termination of
the Offer), to purchase or pay for any Shares tendered if (i) the Minimum
Condition or the Financing Condition shall not have been satisfied or (ii) the
waiting period applicable for the purchase of Shares pursuant to the Offer under
the HSR Act shall not have expired or been terminated prior to the expiration of
the Offer (and any extensions thereof). In addition, the Purchaser may terminate
the Offer or, subject to the terms of the Merger Agreement, amend the Offer if
any of the conditions described in
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clause (a), (b) or (d) below shall exist or if the Company is in material breach
of its obligations under the Merger Agreement, and the Purchaser shall not be
obligated to accept for payment or pay for any Shares and the Purchaser may
terminate or amend the Offer if, at any scheduled expiration date of the Offer,
or following the expiration of the Offer but before the acceptance of such
Shares for payment or the payment of the Shares, any of the following conditions
shall exist:
(a) any temporary restraining order, preliminary or permanent
injunction or other order shall have been issued by any court of competent
jurisdiction, or any other legal restraint or prohibition shall be in
effect, that, directly or indirectly, prohibits or delays materially the
Purchaser from purchasing or paying for Shares of Class A Common Stock or
Class B Common Stock pursuant to the Offer or consummating the Merger, or
any proceeding challenging the Merger Agreement or the Stockholder
Agreement or seeking to prohibit, prevent or materially delay, or alter any
of the terms of, the transactions contemplated by the Merger Agreement or
the Stockholder Agreement, shall have been instituted by any government or
governmental authority or agency, domestic or foreign, and be pending or
shall have been instituted by any other person before any court or
governmental authority or agency, domestic or foreign, and be pending if,
in the written opinion of counsel for the party seeking to invoke this
condition, such proceeding by such other person is reasonably likely to
have a material adverse affect on the Company; provided, however, that Pro-
Fac and the Purchaser shall have used their reasonable best efforts to
prevent the entry of such injunction or other order and to appeal as
promptly as possible any injunction or other order that may be entered;
(b) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified as to materiality, or relating
to the capitalization of the Company or its subsidiaries or the absence of
certain adverse changes or events, or any of the representations and
warranties of AHI set forth in the Stockholder Agreement, shall not be true
and correct or any of the other representations and warranties set forth in
the Merger Agreement shall not be true and correct in all material
respects; in each case as if each such representation and warranty were
made as of such time;
(c) the Company or AHI shall have breached or failed to perform when
required in any material respect any obligation required to be performed by
it under the Merger Agreement or the Stockholder Agreement;
(d) the Merger Agreement shall have been terminated in accordance with
its terms, or the Offer shall have been amended or terminated with the
consent of the Company;
(e) Pro-Fac shall not have received, or not be satisfied that it shall
receive, all consents, filings, approvals or waivers from third parties
required to consummate the Offer or the Merger, other than such consents,
filings, approvals or waivers the absence of which would not, individually
or in the aggregate, have a material adverse effect on the operation of the
business of the Company in the manner now conducted; or (f) Pro-Fac shall
not have received evidence, reasonably satisfactory to it, of the
termination of the contracts, agreements and other arrangements between the
Company and each Advisor terminating as of the Effective Time all of the
Company's (or any successor's) obligations thereunder, except as otherwise
described in the Merger Agreement.
The foregoing conditions are for the sole benefit of Pro-Fac and the
Purchaser and may be asserted by Pro-Fac or the Purchaser in its sole discretion
regardless of the circumstances (including any action or omission by the
Purchaser) giving rise to any such conditions or may be waived, subject to the
terms of the Merger Agreement, by Pro-Fac or the Purchaser in its sole
discretion in whole at any time or in part from time to time. The failure by the
Purchaser or 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.
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16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
General. Based on its examination of publicly available information filed
by the Company with the Commission and other publicly available information
concerning the Company, the Purchaser is not aware of any license or regulatory
permit that appears to be material to the Company's business that might be
adversely affected by the Purchaser's acquisition of Shares as contemplated
herein or, except as set forth below, of any approval or other action by any
government or governmental authority or agency, domestic or foreign, that would
be required for the acquisition or ownership of Shares by the Purchaser as
contemplated herein. Should any such approval or other action be required, the
Purchaser currently contemplates that, except as described below under 'State
Takeover Statutes,' such approval or other action will be sought. Except as
described under 'Antitrust,' there is no current intent to delay the purchase of
Shares tendered pursuant to the Offer. The Purchaser is unable to predict
whether it may determine that it is required to delay the acceptance for payment
of or payment for Shares tendered pursuant to the Offer pending the outcome of
any such matter. There can be no assurance that any such approval or other
action, if needed, would be obtained or would be obtained without substantial
conditions or that if such approvals were not obtained or such other actions
were not taken adverse consequences might not result to the Company's business
or certain parts of the Company's business might not have to be disposed of, any
of which could cause the Purchaser to elect to terminate the Offer without the
purchase of Shares thereunder. The Purchaser's obligation under the Offer to
accept for payment and pay for Shares is subject to certain conditions. See
Section 15.
State Takeover Statutes. A number of states in addition to New York, where
the Company is incorporated, have adopted laws which purport, to varying
degrees, to apply to attempts to acquire corporations that are incorporated in,
or which have substantial assets, stockholders, principal executive offices or
principal places of business or whose business operations otherwise have
substantial economic effects in, such states. The Company, directly or through
subsidiaries, conducts business in a number of states throughout the United
States, some of which have enacted such laws. Except as described herein, the
Purchaser does not know whether any of these laws will, by their terms, apply to
the Offer or the Merger or other business combination between the Purchaser or
any of its affiliates and the Company. The Board of Directors of the Company has
approved the Offer and the Merger, thereby making inapplicable the restrictions
set forth in Section 912 of the New York Law. The Company has not complied with
any state laws other than with respect to obtaining such approval and complying
with the registration requirements of Article 16 of the New York Law. To the
extent that certain provisions of state laws purport to apply to the Offer or
any such merger or other business combination, the Purchaser believes that there
are reasonable bases for contesting such laws.
In 1982, in Edgar v. MITE Corp., the Supreme Court of the United States
invalidated on constitutional grounds the Illinois Business Takeover Statute
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in 1987 in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana
could, as a matter of corporate law, constitutionally disqualify a potential
acquiror from voting shares of a target corporation without the prior approval
of the remaining stockholders where, among other things, the corporation is
incorporated in, and has a substantial number of stockholders in, the state.
Subsequently, in TLX Acquisition Corp. v. Telex Corp., a Federal District
Court in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar
as they apply to corporations incorporated outside Oklahoma in that they would
subject such corporations to inconsistent regulations. Similarly, in Tyson
Foods, Inc. v. McReynolds, a Federal District Court in Tennessee ruled that four
Tennessee takeover statutes were unconstitutional as applied to corporations
incorporated outside Tennessee. This decision was affirmed by the United States
Court of Appeals for the Sixth Circuit. In December 1988, a Federal District
Court in Florida held in Grand Metropolitan PLC v. Butterworth, that the
provisions of the Florida Affiliated Transactions Act and the Florida Control
Share Acquisition Act were unconstitutional as applied to corporations
incorporated outside of Florida.
If any person, government official or third party should seek to apply any
state takeover law to the Offer or the Merger or other business combination
between the Purchaser or any of its affiliates and the Company, the Purchaser
will take such action as then appears desirable, which action may include
challenging the applicability or validity of such statute in appropriate court
proceedings. In the event it
34
<PAGE>
is asserted that one or more state takeover statutes is applicable to the Offer
or the Merger or other business combination and an appropriate court does not
determine that it is inapplicable or invalid as applied to the Offer or the
Merger or other business combination, the Purchaser might be required to file
certain information with, or to receive approvals from, the relevant state
authorities or holders of Shares, and the Purchaser might be unable to accept
for payment or pay for Shares tendered pursuant to the Offer, or be delayed in
continuing or consummating the Offer or the Merger or other business
combination. In such case, the Purchaser may not be obligated to accept for
payment or pay for any tendered Shares. See Section 15.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the 'FTC'), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the 'Antitrust
Division') and the FTC and certain waiting period requirements have been
satisfied. The purchase of Shares pursuant to the Offer is subject to such
requirements.
The Purchaser is filing on October 4, 1994 a Notification and Report Form
with respect to the Offer with the Antitrust Division and the FTC. Assuming a
filing on October 4, 1994, the waiting period applicable to the purchase of
Shares pursuant to the Offer will be scheduled to expire at 11:59 P.M., New York
City time, on Wednesday, October 19, 1994. However, prior to such time, the
Antitrust Division or the FTC may extend the waiting period by requesting
additional information or documentary material relevant to the Offer from the
Purchaser. If such a request is made, the waiting period will be extended until
11:59 P.M., New York City time, on the tenth day after substantial compliance by
the Purchaser with such request. Thereafter, such waiting period can be extended
only by court order.
A request has been made for early termination of the waiting period
applicable to the offer. There can be no assurance, however, that the 15-day HSR
Act waiting period will be terminated early. Shares will not be accepted for
payment or paid for pursuant to the Offer until the expiration or earlier
termination of the applicable waiting period under the HSR Act. See Section 15.
Any extension of the waiting period will not give rise to any withdrawal rights
not otherwise provided for by applicable law. See Section 4.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the acquisition of Shares by the
Purchaser pursuant to the Offer. At any time before or after the consummation of
any such transactions, the Antitrust Division or the FTC could take such action
under the antitrust laws as they deem necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or seeking divestiture of the Shares so acquired or divestiture of
substantial assets of the Purchaser or the Company. Private parties (including
individual States) may also bring legal actions under the antitrust laws. Based
on an examination of publicly available information relating to and its
knowledge of the business in which the Company is engaged, the Purchaser does
not believe that the consummation of the Offer or the Merger will result in a
violation of any applicable antitrust laws. However, there can be no assurance
that a challenge to the Offer on antitrust grounds will not be made, or if such
a challenge is made, what the result will be. See Section 15 for certain
conditions to the Offer, including conditions with respect to litigation and
certain governmental actions.
17. FEES AND EXPENSES.
Dillon Read is acting as financial advisor to the Purchaser and is acting
as Dealer Manager in connection with the Offer. The Purchaser has agreed to pay
Dillon Read as compensation for its services as financial advisor and as Dealer
Manager in connection with the Offer an aggregate fee of $3,050,000,
approximately $1,800,000 of which has been paid or accrued at September 30, 1994
and the balance of which is payable upon completion of the Offer. If the
transaction is not consummated, Dillon Read will be entitled to fees aggregating
$1,800,000, plus 10% of any break-up fee paid to Pro-Fac or
35
<PAGE>
the Purchaser. For its services in connection with the proposed issuance of the
Notes, Dillon Read will receive a fee equal to 3% of the gross proceeds raised.
The Purchaser also has agreed to reimburse Dillon Read for certain reasonable
out-of-pocket expenses incurred in connection with the Offer and the Notes
(including the fees and disbursements of counsel) and to indemnify Dillon Read
against certain liabilities, including certain liabilities under the federal
securities laws.
The Purchaser has retained Beacon Hill Partners, Inc. to act as the
Information Agent and IBJ Schroder Bank & Trust Company to act as the Depositary
in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interviews and may
request brokers, dealers and other nominee Stockholders to forward materials
relating to the Offer to beneficial owners. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
respective services, will be reimbursed for certain reasonable out-of pocket
expenses and will be indemnified against certain liabilities in connection
therewith, including certain liabilities under the federal securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person (other than the Dealer Manager, the Information Agent and
the Depositary) for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, commercial banks and trust companies will, upon request, be reimbursed
by the Purchaser for reasonable and necessary costs and expenses incurred by
them in forwarding materials to their customers.
18. MISCELLANEOUS.
The 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
Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, Pro-Fac or the Purchaser may, in their discretion, take
such action as they may deem necessary to make the Offer in any such
jurisdiction and extend the Offer to holders of Shares in such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser has filed with the Commission a Tender Offer Statement on
Schedule 14D-1, together with exhibits, pursuant to Rule 14d-3 of the General
Rules and Regulations under the Exchange Act, furnishing certain additional
information with respect to the Offer. The Schedule 14D-1 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 in Section 7 of this Offer to
Purchase (except that such information will not be available at the regional
offices of the Commission).
PF ACQUISITION CORP.
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF PRO-FAC AND THE PURCHASER
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 or executive officer of Pro-Fac
beneficially owns any Shares of Class B Common Stock. No director of Pro-Fac
beneficially owns Shares representing more than .1% of the Shares of Class A
Common Stock outstanding as of September 27, 1994.
DIRECTORS (INCLUDING EXECUTIVE
OFFICERS WHO ARE DIRECTORS)
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND MATERIAL POSITIONS HELD
BUSINESS ADDRESS AGE DURING PAST FIVE YEARS
- ------------------------------- --- --------------------------------------------------------------------
<S> <C> <C>
Dale W. Burmeister (1) 54 Director of Pro-Fac since 1992. He has been a member of Pro-Fac
1605 S. 32nd Avenue since 1974. Mr. Burmeister is a fruit and vegetable grower
Shelby, MI 49455 (Lakeshore Farms, Inc., and Dale Burmeister, sole proprietorship,
Shelby, MI).
Robert V. Call, Jr. (1)(2) 68 Director of Pro-Fac since 1962. He has been President of Pro-Fac
8113 Lewiston Road since 1986 and a member of Pro-Fac since 1961. He has been a
Batavia, NY 14020 Director of the Company since 1986. Mr. Call is a vegetable, fruit
and grain farmer (My-T Acres, Inc., Batavia, NY).
Glen Lee Chase (1) 57 Director of Pro-Fac since 1989. He has been a member of Pro-Fac
Box 314 since 1984. Mr. Chase is a peanut, poultry, grain and vegetable
Oglethorpe, GA 31068 farmer (Chase Farms Inc., Oglethorpe, GA).
Tommy R. Croner (1)(3) 52 Director of Pro-Fac since 1985. He has been a member of Pro-Fac
RD #1, Box 208 since 1973. Mr. Croner is a dairy and potato farmer (T. Rich Inc.,
Berlin, PA 15530 Berlin, PA).
Albert P. Fazio (1)(4) 58 Director of Pro-Fac since 1976. He has been Vice President of
12112 NW Lower River Road Pro-Fac since March 1993 and a member of Pro-Fac since 1975. He
Vancouver, WA 98660 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 (1)(5) 47 Director of Pro-Fac since 1974. He has been Treasurer of Pro-Fac
N.J. Fox & Sons, Inc. since 1984 and a member of Pro-Fac since 1974. Mr. Fox is a fruit
40 Second Street and vegetable grower (N.J. Fox & Sons, Inc., Shelby, MI).
Shelby, MI 49455
Steven D. Koinzan (1)(6) 45 Director of Pro-Fac since 1983. He has been Secretary of Pro-Fac
P.O. Box 7 since March 1993 and a member of Pro-Fac since 1979. Mr. Koinzan
Whispering Pines is a popcorn, fieldcorn and soybean farmer (Koinzan Farms, Norden,
Valentine, NE 69201 NE).
Kenneth A. Mattingly (1) 46 Director of Pro-Fac since 1993. He has been a member of Pro-Fac
8283 Harris Road since 1978. Mr. Mattingly is a vegetable and grain farmer (M-B
LeRoy, NY 14482 Farms Inc., LeRoy, NY).
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND MATERIAL POSITIONS HELD
BUSINESS ADDRESS AGE DURING PAST FIVE YEARS
- ------------------------------- --- --------------------------------------------------------------------
<S> <C> <C>
Allan D. Mitchell (1)(7) 67 Director of Pro-Fac since 1975. He has been a member of Pro-Fac
2577 Rittmer Lane since 1961. He was Secretary of Pro-Fac from 1985 to 1990. Mr.
Seneca Falls, NY 13148 Mitchell is a fruit grower in North Rose, NY.
Allan W. Overhiser (1) 34 Director of Pro-Fac since March 1994. He has been a member of
6317-107th Avenue Pro-Fac since 1984. Mr. Overhiser is a fruit farmer (A.W.
South Haven, MI 49090 Overhiser Orchards, South Haven, MI).
Paul E. Roe (1)(8) 55 Director of Pro-Fac since 1986. He has been a member of Pro-Fac
1720 Toomey Road since 1961. Mr. Roe is a vegetable, grain and dry bean farmer (Roe
Bellona, NY 14415 Acres, Inc., Bellona, NY).
Edward L. Whitaker (1) 68 Director of Pro-Fac since 1992. He has been a member of Pro-Fac
RR1, Box 34 since 1988. Mr. Whitaker is a farm land owner and a popcorn grower
Forest City, IL 61532 in Forest City, IL.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Thomas R. Kalchik (9) 47 Mr. Kalchik is employed by the Company to provide management
services to Pro-Fac pursuant to the Integrated Agreement. In such
capacity, he has served as Vice President of Member Relations of
Pro-Fac since June 1990 and Assistant Secretary of Pro-Fac since
1983. Mr. Kalchik was Director of Member Relations of Pro-Fac from
August 1983 to June 1990.
Roy A. Myers (10) 63 General Manager of Pro-Fac since 1987. He has been a Director and
Executive Vice President of the Company since 1987.
William D. Rice (11) 60 Assistant Treasurer of Pro-Fac since 1970. He has been Senior Vice
President-Finance and Administration of the Company since 1991,
Secretary of the Company since 1989 and Treasurer of the Company
since 1975. He was Vice President -- Finance of the Company from
1969 to 1991.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. 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 the Purchaser (except to the extent
that such information with respect to each such person is set forth in paragraph
1 above). 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.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
NAME AND MATERIAL POSITIONS HELD
BUSINESS ADDRESS AGE DURING PAST FIVE YEARS
- -------------------------- --- -----------------------------------------------------------------------
<S> <C> <C>
Roy A. Myers Director of the Purchaser since September 16, 1994. President, Vice
President and Treasurer of the Purchaser since September 19, 1994.
Thomas R. Kalchik Secretary and Assistant Treasurer of the Purchaser since September 19,
1994.
Stephen R. Wright (12) 47 Assistant Secretary of the Purchaser since September 19, 1994. He has
been Vice President-Procurement of the Company since July 1990. Mr.
Wright was Director of Commodities and Administration Services for
the Company from April 1988 to June 1990.
</TABLE>
I-2
<PAGE>
- ------------
(1) Each member of Pro-Fac sells crops to Pro-Fac which are then purchased by
the Company pursuant to the Integrated Agreement. See Sections 8 and 10.
(2) Beneficially owns 5,550 Shares of Class A Common Stock. Through My-T Acres,
Inc., Mr. Call received $2,038,000 from Pro-Fac for products delivered by
My-T Acres to Pro-Fac during fiscal 1994.
(3) Beneficially owns 969 Shares of Class A Common Stock.
(4) Beneficially owns 3,601 Shares of Class A Common Stock.
(5) Beneficially owns 111 Shares of Class A Common Stock.
(6) Beneficially owns 100 Shares of Class A Common Stock.
(7) Beneficially owns 1,600 Shares of Class A Common Stock.
(8) Beneficially owns 49 Shares of Class A Common Stock.
(9) Beneficially owns 2,547 Shares of Class A Common Stock (including 1,680
Shares issuable upon the exercise of options granted under certain of the
Company's employee stock option plans at an average exercise price per
share of $11.50), representing less than .1% of the Shares of Class A
Common Stock outstanding as of September 27, 1994. In addition, Mr. Kalchik
holds options to purchase 1,520 Shares of Class A Common Stock granted
under certain of the Company's employee stock option plans at an average
exercise price per share of $12.22, of which options to purchase 800 such
Shares will accelerate and vest in connection with the Merger and the
balance of which are not exercisable within 60 days of October 4, 1994. For
a description of the treatment of the Company's outstanding employee stock
options under the Merger Agreement, see Section 11.
(10) Beneficially owns 38,435 Shares of Class A Common Stock (including 26,836
Shares issuable upon the exercise of options granted under certain of the
Company's employee stock option plans at an average exercise price per
share of $15.93), representing less than .6% of the Shares of Class A
Common Stock outstanding as of September 27, 1994. In addition, Mr. Myers
holds options to purchase 15,904 Shares of Class A Common Stock granted
under certain of the Company's employee stock option plans at an average
exercise price per share of $13.25, of which options to purchase 4,984 such
Shares will accelerate and vest in connection with the Merger and the
balance of which are not exercisable within 60 days of October 4, 1994.
(11) Beneficially owns 33,416 Shares of Class A Common Stock (including 27,632
Shares issuable upon the exercise of options granted under certain of the
Company's employee stock option plans at an average exercise price per
share of $15.85), representing less than .6% of the Shares of Class A
Common Stock outstanding as of September 27, 1994. In addition, Mr. Rice
holds options to purchase 16,821 Shares of Class A Common Stock granted
under certain of the Company's employee stock option plans at an average
exercise price per share of $13.29, of which options to purchase 5,121 such
Shares will accelerate and vest in connection with the Merger and the
balance of which are not exercisable within 60 days of October 4, 1994.
(12) Beneficially owns 6,317 Shares of Class A Common Stock (including 5,886
Shares issuable upon the exercise of options granted under certain of the
Company's employee stock option plans at an average exercise price per
share of $15.68), representing less than .1% of the Shares of Class A
Common Stock outstanding as of September 27, 1994. In addition, Mr. Wright
holds options to purchase 3,271 Shares of Class A Common Stock granted
under certain of the Company's employee stock option plans at an average
exercise price per share of $14.43, of which options to purchase 1,711 such
Shares will accelerate and vest in connection with the Merger and the
balance of which are not exercisable within 60 days of October 4, 1994.
I-3
<PAGE>
SCHEDULE II
PRO-FAC COOPERATIVE, INC.
CERTAIN INFORMATION REQUIRED
TO BE GIVEN TO STOCKHOLDERS
PURSUANT TO NEW YORK LAW
Pension Plans; Employee Benefits.
Pursuant to the Integrated Agreement, the Company manages Pro-Fac and
supplies all personnel to Pro-Fac. Accordingly, Pro-Fac has no pension plan or
employee benefit or similar plan, and individuals providing services to Pro-Fac
are eligible to participate in benefit and pension plans maintained by the
Company in accordance with the terms of those plans.
Charitable Contributions.
Pro-Fac and the Company have established a joint Foundation Trust for
purposes of sharing in corporate philanthropy, as a viable part of the business
and agricultural community.
The principal focus of contributions is in those communities in which the
Company's employees, Pro-Fac's members, and facilities for the business are
located, and where the Company's employees and Pro-Fac's members are users of
such services and facilities. Special consideration is given to those programs
in which employees and members are active volunteers.
The primary areas for giving are health care, community services,
education, youth, research and cultural programs. Historically, the Board of
Directors of the Company has determined on an annual basis what amount of the
Company's earnings would be allocated to the Foundation Trust for charitable
giving. Approximately one-third of the allocation each year has been made to the
Rochester area.
II
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter
of Transmittal and certificates for Shares and any other required documents
should be sent to the Depositary at one of the addresses set forth below:
The Depositary 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 New York, New York 10004
New York, New York 10274-0084 institutions only): Attn: Securities Processing
Attn: Reorganization Operations (212) 858-2611 Window, Subcellar One
Department
To Confirm Facsimile
Transmissions Call:
(212) 858-2103
(call collect)
</TABLE>
Questions or requests for assistance or additional copies of this Offer to
Purchase and the Letter of Transmittal may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth below. Stockholders may also contact their broker, dealer, commercial bank
or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
New York, New York 10004
(800) 755-5001
The Dealer Manager for the Offer is:
DILLON, READ & CO. INC.
535 Madison Avenue
New York, New York 10022
(212) 906-7527
(call collect)
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF CLASS A AND CLASS B COMMON STOCK
OF
CURTICE-BURNS FOODS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED OCTOBER 4, 1994
BY
PF ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
PRO-FAC COOPERATIVE, INC.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
WEDNESDAY, NOVEMBER 2, 1994, UNLESS THE OFFER IS EXTENDED.
The Depositary 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 New York, New York 10004
New York, New York 10274-0084 institutions only): Attn: Securities Processing
Attn: Reorganization Operations Department (212) 858-2611 Window, Subcellar One
</TABLE>
To Confirm Facsimile
Transmissions Call:
(212) 858-2103
(call collect)
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 if certificates are to be
forwarded herewith or, in the case of Shares (as defined below) of Class A
Common Stock, if delivery of such Shares is to be made by book-entry transfer to
the Depositary's account at The Depository Trust Company, Midwest Securities
Trust Company or Philadelphia Depository Trust Company (hereinafter collectively
referred to as the 'Book-Entry Transfer Facilities') pursuant to the procedures
set forth in Section 3 of the Offer to Purchase (as defined below).
To tender Shares, stockholders must deliver certificates for such Shares
and all other documents required hereby to the Depositary on or prior to the
Expiration Date (as defined in the Offer to Purchase). In the case of Shares of
Class A Common Stock, such Shares may, instead, be delivered on or prior to the
Expiration Date pursuant to the procedures for book-entry transfer set forth in
Section 3 of the Offer to Purchase. Shares of Class B Common Stock may not be
tendered by book-entry transfer procedures. Shares may not be tendered by any
guaranteed delivery procedure.
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES OF CLASS A COMMON STOCK TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES OF CLASS A COMMON STOCK TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
<S> <C> <C> <C>
TOTAL NUMBER OF
CLASS A SHARES NUMBER OF CLASS
CERTIFICATE REPRESENTED BY A SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
TOTAL SHARES
</TABLE>
(1) Need not be completed by stockholders tendering by book-entry transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares evidenced by
any certificates delivered to the Depositary are
being tendered. See Instruction 4.
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES OF CLASS B COMMON STOCK TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES OF CLASS B COMMON STOCK TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
<S> <C> <C> <C>
TOTAL NUMBER OF
CLASS B SHARES NUMBER OF CLASS
CERTIFICATE REPRESENTED BY B SHARES
NUMBER(S) CERTIFICATE(S) TENDERED(1)
TOTAL SHARES
</TABLE>
(1) Unless otherwise indicated, it will be assumed that all Shares evidenced by
any certificates delivered to the Depositary are
being tendered. See Instruction 4.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
[ ] CHECK HERE IF TENDERED SHARES OF CLASS A COMMON STOCK ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY
TRANSFER FACILITIES AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A
BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES OF CLASS A COMMON STOCK BY
BOOK-ENTRY TRANSFER):
Name of Tendering Institution .............................................
Account No. ............................................................. at
[ ] The Depository Trust Company
[ ] Midwest Securities Trust Company
[ ] Philadelphia Depository Trust Company
Transaction Code Number ...................................................
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to PF Acquisition Corp., a New York
corporation (the 'Purchaser') and a wholly owned subsidiary of Pro-Fac
Cooperative, Inc., a New York cooperative corporation ('Pro-Fac'), the above
described shares of Class A Common Stock and Class B Common Stock, $.99 par
value (collectively, except where the context otherwise requires, the 'Shares'),
of Curtice-Burns Foods, Inc., a New York corporation (the 'Company'), pursuant
to the Purchaser's offer to purchase all outstanding Shares at a price of $19
per Share, net to the seller in cash, without interest, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated October 4,
1994 (the 'Offer to Purchase'), 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 'Offer'). The Purchaser reserves
the right to transfer or assign, in whole or from time to time in part, to one
or more of its affiliates the right to purchase Shares tendered pursuant to the
Offer.
Subject to and effective upon acceptance for payment of the Shares tendered
herewith in accordance with the terms and subject to the conditions of the
Offer, the undersigned hereby sells, assigns and transfers to or upon the order
of the Purchaser 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 September 27, 1994) and irrevocably
constitutes and appoints the Depositary 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) in the case of Shares of Class A Common Stock, deliver certificates for such
Shares (and all such other Shares or securities), or transfer ownership of such
Shares (and all such other Shares or securities) on the account books maintained
by any of the Book-Entry Transfer Facilities, together, in any such case, with
all accompanying evidences of transfer and authenticity, to or upon the order of
the Purchaser, (b) present such Shares (and all such other Shares or securities)
for transfer on the books of the Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and all
such other Shares or securities), all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Mr. Thomas R. Kalchik, Mr. Roy
A. Myers and Mr. Stephen R. Wright, and each of them, and any other designees of
the Purchaser 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 payment by the Purchaser 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 September 27, 1994), at any meeting of stockholders
of the Company (whether annual or special and whether or not an adjourned
meeting), by written consent or otherwise. This proxy is irrevocable and is
granted in consideration of, and is effective upon, the acceptance for payment
of such Shares by the Purchaser in accordance with the terms of the Offer. Such
acceptance for payment shall revoke any other 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 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, 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 September 27, 1994) and that when the
same are accepted for payment by the Purchaser, the Purchaser 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 any additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby (and all such other Shares
or securities).
<PAGE>
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 Offer, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated under 'Special Payment Instructions,' please
issue the check for the purchase price of any Shares purchased, and return any
Shares not tendered or not purchased, in the name(s) of the registered holder(s)
appearing under 'Description of Shares of Class A Common Stock Tendered' or
'Description of Shares of Class B Common Stock Tendered,' as the case may be
(and, in the case of Shares of Class A Common Stock tendered by book-entry
transfer, by credit to the account at the Book-Entry Transfer Facility
designated above). Similarly, unless otherwise indicated under 'Special Delivery
Instructions,' please mail the check for the purchase price of any Shares
purchased and any certificates for Shares not tendered or not purchased (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under 'Description of Shares of Class A Common Stock
Tendered' or 'Description of Shares of Class B Common Stock Tendered,' as the
case may be, shown below the undersigned's signature(s). In the event that both
'Special Delivery Instructions' are completed, please issue the check for the
purchase price of any Shares purchased and return any Shares not tendered or not
purchased (and accompanying documents, as appropriate) in the name(s) of, and
mail said check and any certificates (and accompanying documents, as
appropriate) to, the person(s) so indicated. The undersigned recognizes that the
Purchaser has no obligation, pursuant to the 'Special Payment Instructions,' to
transfer any Shares from the name of the registered holder(s) thereof if the
Purchaser does not accept for payment any of the Shares so tendered.
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or certificates for Shares not tendered or not purchased are to
be issued in the name of someone other than the undersigned, or if Shares
of Class A Common Stock tendered by book-entry transfer that are not
purchased are to be returned by credit to an account at one of the Book-
Entry Transfer Facilities other than that designated above.
Issue check and/or certificates to:
Name: ...................................................................
(PLEASE PRINT)
Address: ................................................................
.........................................................................
(INCLUDE ZIP CODE)
.........................................................................
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
[ ] Credit unpurchased Shares of Class A Common Stock tendered by
book-entry transfer to the account set forth below:
Name of Account Party ...............................................
Account No. ....................................................... at
[ ] The Depository Trust Company
[ ] Midwest Securities Trust Company
[ ] Philadelphia Depository Trust Company
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or certificates for Shares not tendered or not purchased 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 check and/or certificates to:
Name: ...................................................................
(PLEASE PRINT)
Address: ................................................................
.........................................................................
(INCLUDE ZIP CODE)
<PAGE>
IMPORTANT
<TABLE>
<S> <C>
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW)
.................................................................................................................
.................................................................................................................
SIGNATURE(S) OF OWNER(S)
Date: .................................................................................................... , 1994
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or on a security
position listing 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 No.: ....................................................................................
Taxpayer Identification or Social Security No.: .................................................................
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature: ...........................................................................................
Name: ...........................................................................................................
(PLEASE PRINT)
Name of Firm: ...................................................................................................
Address: ........................................................................................................
.................................................................................................................
(INCLUDE ZIP CODE)
Area Code and Telephone No.: ....................................................................................
Date: .................................................................................................... , 1994
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
PAYER'S NAME: IBJ SCHRODER BANK & TRUST COMPANY
PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX Social Security Number or
AT RIGHT AND CERTIFY BY SIGNING AND DATING Employer Identification Number
BELOW ........................................
SUBSTITUTE PART 2 -- Certification -- Under penalties of perjury, I certify that:
FORM W-9 (1) The number shown on this form is my correct Taxpayer Identification Number (or I
DEPARTMENT OF THE TREASURY am waiting for a number to be issued to me) and
INTERNAL REVENUE SERVICE (2) I am not subject to backup withholding because: (a) I am exempt from backup
PAYER'S REQUEST FOR withholding, or (b) I have not been notified by the Internal Revenue Service (the
TAXPAYER IDENTIFICATION 'IRS') that I am subject to backup withholding as a result of a failure to report
NUMBER ('TIN') 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 been
notified by the IRS that you are currently subject to backup withholding because of
under-reporting interest or dividends on your tax return. 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 ......... , 1994 PART 3
AWAITING TIN [ ]
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
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.
<TABLE>
<CAPTION>
<S> <C>
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 ..................... , 1994
</TABLE>
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE 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 (which term, for purposes of this document, shall
include any participant in one of the Book-Entry Transfer Facilities whose name
appears on a security position listing as the owner of Shares of Class A Common
Stock) tendered herewith and such holder(s) have not completed the instruction
entitled 'Special Payment 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 either if certificates for Shares are to be forwarded herewith or
if delivery of Shares of Class A Common Stock is to be made by book-entry
transfer pursuant to the procedures set forth in Section 3 of the Offer to
Purchase. Certificates for all physically delivered Shares, or a confirmation of
a book-entry transfer into the Depositary's account at one of the Book-Entry
Transfer Facilities of all Shares of Class A Common Stock delivered
electronically, 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 Depositary at one of its
addresses set forth on the front page of this Letter of Transmittal by the
Expiration Date. Shares of Class B Common Stock may not be tendered by
book-entry transfer procedures. Shares may not be tendered by any guaranteed
delivery procedures.
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 DEPOSITARY BY THE EXPIRATION
DATE.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. By executing this Letter of Transmittal (or
facsimile thereof), the tendering stockholder waives any right to receive any
notice of the acceptance for payment of the Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. Partial Tenders (not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares represented by any certificate delivered
to the Depositary are to be tendered, fill in the number of Shares which are to
be tendered in the box entitled 'Number of Shares of Class A Common Stock
Tendered' or 'Number of Shares of Class B Common Stock Tendered,' as the case
may be. In such case, a new certificate for the remainder of the Shares
represented by the old certificate 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 Offer. All Shares represented by certificates delivered to
the Depositary 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 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.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the purchase price is to be made, or Shares not
tendered or not purchased 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, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
for such Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution.
<PAGE>
If this Letter of Transmittal or any certificate or stock power 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
the Purchaser of the authority of such person so to act must be submitted.
6. Stock Transfer Taxes. The Purchaser will pay any stock transfer taxes
with respect to the sale and transfer of any Shares to it or its order pursuant
to the Offer. If, however, payment of the purchase price is to be made to, or
Shares not tendered or not purchased 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 will be deducted
from the purchase price unless satisfactory evidence of the payment of such
taxes, or exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
Transfer Tax Stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. Special Payment and Delivery Instructions. If the check for the purchase
price of any Shares purchased is to be issued, or any Shares not tendered or not
purchased are to be returned, in the name of a person other than the person(s)
signing this Letter of Transmittal or if the check or any certificates for
Shares not tendered or not purchased 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. Stockholders tendering
Shares of Class A Common Stock by book-entry transfer may request that any such
Shares not purchased be credited to such account at any of the Book-Entry
Transfer Facilities as such Stockholder may designate under 'Special Payment
Instructions.' If no such instructions are given, any such Shares of Class A
Common Stock not purchased will be returned by crediting the account at the
Book-Entry Transfer Facilities designated above.
8. Waiver of Conditions. Subject to the terms of the Offer, the Purchaser
reserves the absolute right in its sole discretion to waive any of the specified
conditions of the 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 payment is
required to provide the Depositary with such stockholder's correct taxpayer
identification number ('TIN') on Substitute Form W-9 above. If the Depositary is
not provided with the correct TIN, the Internal Revenue Service may subject the
stockholder or other payee to a $50 penalty. In addition, payments that are made
to such stockholder or other payee with respect to Shares purchased pursuant to
the Offer 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 Depositary. See the attached 'Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9' for more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the stockholder or other payee. 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.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
The stockholder is required to give the Depositary 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, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the attached '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 Offer to Purchase and this Letter of Transmittal may
be obtained from the Information Agent or the Dealer Manager at their respective
<PAGE>
addresses or telephone numbers set forth below. Questions may be directed to the
Information Agent or the Dealer Manager.
11. Lost, Destroyed or Stolen Certificates. If any certificate representing
Shares has been lost, destroyed or stolen, the stockholder should promptly
notify the Depositary. 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 Offer, the Purchaser will have accepted for payment (and
thereby purchased) Shares validly tendered and not withdrawn as, if and when the
Purchaser gives oral or written notice to the Depositary of its acceptance of
the tenders of such Shares pursuant to the Offer.
13. Withdrawal Rights. Tendered Shares may be withdrawn only pursuant to
the procedures set forth in Section 4 of the Offer to Purchase.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE COPY THEREOF (TOGETHER
WITH CERTIFICATES FOR, OR IN THE CASE OF SHARES OF CLASS A COMMON STOCK, A
BOOK-ENTRY CONFIRMATION WITH RESPECT TO, TENDERED SHARES WITH ANY REQUIRED
SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED BY THE
DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.
<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.
<PAGE>
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).
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.
<PAGE>
(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 Depositary 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 New York, New York 10004
New York, New York 10274-0084 institutions only): Attn: Securities Processing
Attn: Reorganization Operations (212) 858-2611 Window, Subcellar One
Department
</TABLE>
To Confirm Facsimile
Transmissions Call:
(212) 858-2103
(call collect)
Questions or requests for assistance or additional copies of the Offer to
Purchase and this Letter of Transmittal may be directed to the Information Agent
or the Dealer Manager at their respective addresses and telephone numbers set
forth below. Stockholders may also contact their broker, dealer, commercial bank
or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
[BEACON HILL PARTNERS, INC. Logo]
90 BROAD STREET
NEW YORK, NY 10004
TOLL FREE: (800) 755-5001
BANKS AND BROKERAGE FIRMS
PLEASE CALL: (212) 843-8500
The Dealer Manager for the Offer is:
DILLON, READ & CO. INC.
535 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 906-7527
(CALL COLLECT)
<PAGE>
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, New York 10022
Offer to Purchase for Cash
All Outstanding Shares of Class A and Class B Common Stock
of
CURTICE-BURNS FOODS, INC.
at
$19 Net Per Share
by
PF Acquisition Corp.
a wholly owned subsidiary of
PRO-FAC COOPERATIVE, INC.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
WEDNESDAY, NOVEMBER 2, 1994, UNLESS THE OFFER IS EXTENDED.
October 4, 1994
To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
We have been appointed by PF Acquisition Corp., a New York corporation (the
'Purchaser') and a wholly owned subsidiary of Pro-Fac Cooperative, Inc., a New
York cooperative corporation ('Pro-Fac'), to act as Dealer Manager in connection
with the Purchaser's offer to purchase all outstanding shares of Class A Common
Stock and Class B Common Stock, $.99 par value (collectively, the 'Shares'), of
Curtice-Burns Foods, Inc., a New York corporation (the 'Company'), at $19 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Purchaser's Offer to Purchase, dated October 4, 1994 (the
'Offer to Purchase'), and the related Letter of Transmittal (which, together
with any supplements or amendments thereto, collectively constitute the
'Offer').
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase;
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;
<PAGE>
3. 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 Offer; and
4. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE
NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON WEDNESDAY, NOVEMBER 2, 1994, UNLESS THE OFFER IS
EXTENDED.
The Purchaser will not pay any fees or commissions to any broker or
dealer or other person (other than the Dealer Manager, the Information
Agent and the Depositary as described in the Offer to Purchase) for
soliciting tenders of Shares pursuant to the Offer. The Purchaser will,
however, 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. The Purchaser will pay all
stock transfer taxes applicable to its purchase of Shares pursuant to the
Offer, subject to Instruction 6 of the Letter of Transmittal. Shares may
not be tendered by any guaranteed delivery procedure.
The 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 Offer or acceptance thereof would not be in compliance with the laws of
such jurisdiction.
Any inquiries you may have with respect to the Offer should be
addressed to, and additional copies of the enclosed materials may be
obtained from, the Information Agent or the undersigned at the addresses
and telephone numbers set forth on the back cover of the Offer to Purchase.
Very truly yours,
DILLON, READ & CO. INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PRO-FAC, THE INFORMATION AGENT, THE
DEPOSITARY OR THE DEALER MANAGER OR ANY AFFILIATE OF ANY 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 OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A AND CLASS B COMMON STOCK
OF
CURTICE-BURNS FOODS, INC.
AT
$19 NET PER SHARE
BY
PF ACQUISITION CORP.
a wholly owned subsidiary of
PRO-FAC COOPERATIVE, INC.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, NOVEMBER 2, 1994, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated October 4,
1994 (the 'Offer to Purchase'), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
'Offer') relating to an offer by PF Acquisition Corp., a New York corporation
(the 'Purchaser') and a wholly owned subsidiary of Pro-Fac Cooperative, Inc., a
New York cooperative corporation ('Pro-Fac'), to purchase all outstanding shares
of Class A Common Stock and Class B Common Stock, $.99 par value (collectively,
the 'Shares'), of Curtice-Burns Foods, Inc., a New York corporation (the
'Company'), at a purchase price of $19 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer. To tender
Shares, stockholders must deliver certificates for such Shares and all other
required documents to IBJ Schroder Bank & Trust Company (the 'Depositary') on or
prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase).
In the case of Shares of Class A Common Stock, such Shares may, instead, be
delivered on or prior to the Expiration Date pursuant to the procedures for
book-entry transfer set forth in Section 3 of the Offer to Purchase. Shares of
Class B Common Stock may not be tendered by book-entry transfer procedures.
Shares may not be tendered by any guaranteed delivery procedure.
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.
<PAGE>
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 Offer.
Your attention is directed to the following:
1. The tender price is $19 per Share, net to you in cash, without
interest thereon, upon the terms and subject to the conditions set forth in
the Offer.
2. The Board of Directors of the Company has approved the Merger
Agreement (as defined in the Offer to Purchase), the Offer and the Merger
(as defined in the Offer to Purchase) and the Stockholder Agreement (as
defined in the Offer to Purchase), determined that the terms of the Offer
and the Merger are fair to, and in the best interests of, the Company and
the stockholders of the Company, recommended that stockholders of the
Company accept the Offer and tender their Shares and approved the
transactions contemplated by the Merger Agreement and the Stockholder
Agreement.
3. The Offer and withdrawal rights expire at 12:00 Midnight, New York
City time, on Wednesday, November 2, 1994, unless the Offer is extended by
the Purchaser. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Depositary of certificates for such Shares (or, in the case of Shares of
Class A Common Stock, a confirmation of a book-entry transfer of such
Shares as described in Section 2 of the Offer to Purchase), a properly
completed and duly executed Letter of Transmittal (or facsimile thereof)
and any other documents required by the Letter of Transmittal.
4. The Offer is conditioned upon, among other things, (i) there being
validly tendered by the Expiration Date and not withdrawn that number of
Shares which would represent at least 90% of each of the Class A Common
Stock and the Class B Common Stock of the Company outstanding at the
Expiration Date and (ii) Pro-Fac or the Purchaser having obtained financing
sufficient to allow the Purchaser to consummate the Offer and the
subsequent Merger.
5. The Purchaser will pay any stock transfer taxes applicable to the
sale of Shares to the Purchaser pursuant to the 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 Offer. If you do not instruct us
to tender your Shares, they will not be tendered.
The 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
Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF CLASS A AND CLASS B COMMON STOCK
OF
CURTICE-BURNS FOODS, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated October 4, 1994, and the related Letter of Transmittal,
relating to the offer by PF Acquisition Corp., a New York corporation and a
wholly owned subsidiary of Pro-Fac Cooperative, Inc., a New York cooperative
corporation, to purchase all outstanding shares of Class A Common Stock and
Class B Common Stock, $.99 par value (collectively, the 'Shares'), of
Curtice-Burns Foods, Inc., a New York corporation.
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 Offer to Purchase and the related Letter of
Transmittal.
<TABLE>
<S> <C>
Dated: ......................... , 1994 ........................................
Number of Shares to be Tendered* ........................................
........ Shares of Class A Common Stock ........................................
(Signature(s))
........ Shares of Class B Common Stock
........................................
Please Print Names(s)
........................................
Address
........................................
Include Zip Code
Area Code and
Telephone No. .........................
Taxpayer Identification
or Social Security No. ................
........................................
</TABLE>
- ------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
3
<PAGE>
Exhibit (a)(5)
[Letterhead of Oglivy Adams & Rinehart]
FOR IMMEDIATE RELEASE
For: Pro-Fac Cooperative, Inc. Contact: Roy A. Myers
716-264-3155
PRO-FAC'S ACQUISITION OFFER ACCEPTED BY CURTICE BURNS
_______________________________
ROCHESTER, N.Y., September 28, 1994 -- Pro-Fac Cooperative, Inc.
announced today that Curtice Burns Foods, Inc. (AMEX:CBI) has
entered into a definitive merger agreement with Pro-Fac and that
the Board of Directors of Curtice Burns has recommended that its
shareholders accept the Pro-Fac offer of $19.00 per share in
cash.
Pro-Fac will commence a cash tender offer no later than
October 4 for all outstanding shares of Curtice Burns Class A and
Class B common stock for $19 per share. Following the successful
completion of this tender offer, Curtice Burns will be merged
with a subsidiary of Pro-Fac.
Pro-Fac has advised Curtice Burns that it expects to
complete its tender on or about November 1. Curtice Burns has
agreed in the merger agreement not to declare a dividend for the
current quarter with a record date earlier than November 15.
Pro-Fac's tender offer is subject to certain
conditions, including the valid tender of shares representing 90%
of each class of common stock of Curtice Burns, receipt
-more-
<PAGE>
2
by Pro-Fac of financing sufficient to permit it to consummate the
offer and other customary conditions. Agway Inc., the holder of
approximately 99% of the Class B common stock and 14% of the
Class A common stock has agreed with Pro-Fac to tender all its
shares if a majority of the Class A shares not held by Agway are
tendered. Curtice Burns has, in the merger agreement, required
Pro-Fac to exchange shares of Class B common stock for shares of
Class A common stock if necessary to meet the minimum 90%
condition to the offer.
The Springfield Bank for Cooperatives has committed to
provide approximately $200 million to finance the purchase of
shares and to refinance certain existing bank debt. Dillon, Read
& Co. Inc. has delivered a letter stating that it is 'highly
confident' that it will be able to arrange up to $160 million of
senior subordinated debt financing. Upon consummation of the
transaction, Pro-Fac will have approximately $130 million in
equity invested in Curtice Burns, including its existing
investment.
Roy A. Myers, General Manager of Pro-Fac, said, 'We are
deeply satisfied by Curtice Burns' decision. Both our management
and membership have been in full support of the acquisition. We
believe both sides will benefit. Curtice Burns shareholders will
receive a fair value and our members will benefit from the
continuation of a historically successful relationship. Best of
all, we can now get back to business.'
Curtice Burns' Chairman, Donald Pease, said, 'Our Board
is pleased to have concluded the merger agreement with Pro-Fac.
Notwithstanding our recent disputes, Curtice Burns and our
controlling shareholder, Agway, are glad to be in agreement with
Pro-Fac and at the same time see that a fair price is paid to our
Class A and Class B shareholders.'
<PAGE>
3
As required by the merger agreement with Pro-Fac,
Curtice Burns is terminating all ongoing discussions between
Curtice Burns and Dean Foods Company, which had previously
proposed to acquire Curtice Burns for a maximum of $20 per share
in cash, subject to certain significant contingencies.
Mr. Myers added, 'Pro-Fac greatly appreciates the
substantial time and effort put in by the Curtice Burns' Board
and the many Curtice Burns' employees involved in the process.
Pro-Fac looks forward to continuing to work with the employees of
Curtice Burns as the two companies' thirty year relationship
moves forward.'
Curtice Burns Foods processes and markets 21 product
lines of regional branded, private label, and food service
products through seven autonomously managed divisions located
throughout the United States and Canada.
Pro-Fac is an agricultural marketing cooperative with
more than 700 members throughout New York, Pennsylvania, Georgia,
the Midwest and Northwest. Pro-Fac and Curtice Burns have
cooperated for more than 30 years in the growing, supplying,
processing and distribution of a wide variety of fruits and
vegetables.
<PAGE>
Exhibit (a)(6)
This announcement is not an offer to purchase or a solicitation of an offer to
sell Shares. The Offer is made solely by the Offer to Purchase, dated October 4,
1994 and the related Letter of Transmittal and 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 Offer or acceptance thereof would not be in
compliance with the laws of such jurisdiction. In those jurisdictions where the
applicable laws require that the Offer be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A AND CLASS B COMMON STOCK
OF
CURTICE-BURNS FOODS, INC.
AT
$19 NET PER SHARE
BY
PF ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
PRO-FAC COOPERATIVE, INC.
PF Acquisition Corp., a New York corporation (the 'Purchaser') and a wholly
owned subsidiary of Pro-Fac Cooperative, Inc., a New York cooperative
corporation ('Pro-Fac'), is offering to purchase all outstanding shares of Class
A Common Stock and Class B Common Stock, $.99 par value (collectively, the
'Shares'), of Curtice-Burns Foods, Inc., a New York corporation (the 'Company'),
at $19 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated October 4, 1994 (the 'Offer
to Purchase'), and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the Offer).
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY,
NOVEMBER 2, 1994, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED BY THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE) AND NOT
WITHDRAWN THAT NUMBER OF SHARES WHICH WOULD REPRESENT AT LEAST 90% OF EACH OF
THE CLASS A COMMON STOCK
<PAGE>
AND THE CLASS B COMMON STOCK OF THE COMPANY OUTSTANDING AT THE EXPIRATION DATE
(THE 'MINIMUM CONDITION') AND (II) THE PURCHASER BEING SATISFIED THAT SUFFICIENT
FINANCING HAS BEEN OBTAINED TO ALLOW THE PURCHASER TO CONSUMMATE THE OFFER AND
THE SUBSEQUENT MERGER (AS DEFINED BELOW) (THE 'FINANCING CONDITION').
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE MERGER AGREEMENT (AS
DEFINED BELOW), THE OFFER AND THE MERGER AND THE STOCKHOLDER AGREEMENT (AS
DEFINED BELOW), DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND THE STOCKHOLDERS OF THE
COMPANY, RECOMMENDED THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND
TENDER THEIR SHARES AND APPROVED THE TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT AND THE STOCKHOLDER AGREEMENT.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of September 27, 1994 (the 'Merger Agreement'), among the Company, Pro-Fac
and the Purchaser. The Merger Agreement provides, among other things, that,
subject to the satisfaction or waiver of certain conditions, the Company,
Pro-Fac and the Purchaser will take all necessary and appropriate action to
cause the Purchaser to be merged into the Company (the 'Merger'), with the
Company continuing as the surviving corporation (the 'Surviving Corporation'),
simultaneously with or as soon as practicable after the consummation of the
Offer. Pursuant to the Merger Agreement, at the effective time of the Merger,
each outstanding Share (other than Shares owned, directly or indirectly, by
Pro-Fac or its subsidiaries or held by the Company or its subsidiaries (which
shall be canceled) or by stockholders of the Company exercising appraisal rights
provided in connection with the Merger) will be converted into a right to
receive $19 in cash, without interest. If the Minimum Condition is satisfied and
the Purchaser accepts for payment Shares pursuant to the Offer, the 'short-form'
merger provisions of the New York Business Corporation Law would permit the
Merger to occur without a meeting or a vote of the stockholders of the Company.
Assuming satisfaction of the Minimum Condition, the Purchaser intends to
complete the Merger immediately after the acceptance for payment of Shares
pursuant to the Offer.
The Offer is subject to certain conditions set forth in the Offer to
Purchase. Pursuant to the terms of the Merger Agreement, the Purchaser shall,
unless the Company otherwise consents, extend the Offer to allow any unsatisfied
condition to the Purchaser's obligation to consummate the Offer to be satisfied,
except that if the Financing Condition is not satisfied at any scheduled
Expiration Date and the Purchaser has entered into definitive documents for
financing that would be sufficient to consummate the Offer and the Merger, the
Purchaser may not extend the Offer because the Financing Condition has not been
satisfied to a date that is more than five business days after the Purchaser's
signing of the last of such definitive documents. In addition, the Purchaser
may, without the consent of the Company, extend the Offer (i) as required by any
rule, regulation, interpretation or position of the Securities and Exchange
Commission (the 'Commission') and (ii) for any reason for up to 15 business days
beyond the latest Expiration Date that otherwise would be permitted. Unless
otherwise agreed, the Offer may not be extended (unless due to a rule,
regulation, interpretation or position of the Commission) to a date beyond
December 15, 1994 or if such extension would be reasonably likely to result in
any of the conditions to the Purchaser's obligation to purchase Shares (except
conditions that have been irrevocably waived) not being satisfied at the
proposed new scheduled Expiration Date. Except as otherwise provided in, and
subject to the terms and conditions of, the Merger Agreement, if any condition
is not satisfied, the Purchaser may (i)
2
<PAGE>
terminate the Offer and return all tendered Shares to tendering Stockholders,
(ii) waive such condition and, subject to any requirement to extend the period
of time during which the Offer is open, purchase all Shares validly tendered by
the Expiration Date and not withdrawn or (iii) delay acceptance for payment or
delay payment for Shares, subject to applicable law, until satisfaction or
waiver of the conditions to the Offer. In the event that the Offer is extended
for any reason, the Purchaser may, subject to withdrawal rights as set forth
below, retain all such Shares until the expiration of the Offer as so extended.
The Purchaser, Pro-Fac and Agway Holdings, Inc., a Delaware corporation ('AHI')
and a wholly owned subsidiary of Agway, Inc., have entered into an agreement
(the 'Stockholder Agreement'), pursuant to which AHI has agreed, among other
things, to tender all of its Shares pursuant to the Offer. AHI holds 899,447
Shares and 2,036,643 Shares of Class A Common Stock and Class B Common Stock,
respectively. As a result of AHI's agreement to tender its Shares, the Minimum
Condition with respect to the Class B Common Stock will be satisfied whether or
not any other Shares are tendered. In addition, pursuant to the Merger
Agreement, upon the Purchaser's acceptance for payment of Shares pursuant to the
Offer, the Company will exchange Shares of Class B Common Stock accepted by the
Purchaser for an equivalent number of Shares of Class A Common Stock in order to
enable the Purchaser to own at least 90% of the Shares of Class A Common Stock.
The Purchaser must, after giving effect to such exchange, continue to hold at
least 90% of the Shares of Class B Common Stock.
The Purchaser reserves the right, at any time or from time to time, and
regardless of whether or not any of the conditions to the Offer have been
satisfied (except to the extent otherwise provided in the Merger Agreement), to
extend the period of time during which the Offer is open by giving oral or
written notice of such extension to the Depositary (as defined below). Any such
extension will be followed as promptly as practicable by public announcement
thereof.
For purposes of the Offer, the Purchaser shall be deemed to have accepted for
payment Shares validly tendered and not withdrawn if, as and when the Purchaser
gives oral or written notice to IBJ Schroder Bank & Trust Company (the
'Depositary') of its acceptance of the tenders of such Shares. Shares may not be
tendered by any guaranteed delivery procedure. In all cases, payment for Shares
accepted for payment pursuant to the Offer will be made only after timely
receipt by the Depositary of certificates for such Shares (or, in the case of
Shares of Class A Common Stock, a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase)), a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other required
documents.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior
to the Expiration Date. Thereafter, such tenders are irrevocable, except that
they may be withdrawn after December 2, 1994 unless theretofore accepted for
payment as provided in the Offer to Purchase. For a withdrawal to be effective,
a written or facsimile transmission notice of withdrawal must be timely received
by the Depositary at one of its addresses set forth in the Offer to Purchase and
must specify the name of the person who tendered the Shares to be withdrawn and
the number of Shares to be withdrawn. If the Shares to be withdrawn have been
delivered to the Depositary, a signed notice of withdrawal with (except in the
case of Shares tendered by an Eligible Institution (as defined in the Offer to
Purchase)) signatures guaranteed by an Eligible Institution must be submitted
prior to
3
<PAGE>
the release of such Shares. In addition, such notice must specify, in the case
of Shares tendered by 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 the Shares to be
withdrawn or, in the case of Shares of Class A Common Stock tendered by
book-entry transfer, the name and number of the account at one of the Book-Entry
Transfer Facilities to be credited with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-6
of the General Rules and Regulations under the Securities Exchange Act of 1934
is contained in the Offer to Purchase and is incorporated herein by reference.
The Company has provided the Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares 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 Shares.
The Offer to Purchase and Letter of Transmittal contain important information
which should be read before any decision is made with respect to the Offer.
Requests for copies of the Offer to Purchase and the related Letter of
Transmittal and other tender offer materials may be directed to the Information
Agent or the Dealer Manager as set forth below, and copies will be furnished
promptly at the Purchaser's expense.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 742-1318
The Dealer Manager for the Offer is:
DILLON, READ & CO. INC.
535 MADISON AVENUE
NEW YORK, NEW YORK 10022
(212) 906-7527
(call collect)
October 4, 1994
4
<PAGE>
EXHIBIT (a)(7)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF CLASS A AND CLASS B COMMON STOCK
OF
CURTICE-BURNS FOODS, INC.
AT
$19 NET PER SHARE
BY
PF ACQUISITION CORP.
a wholly owned subsidiary of
PRO-FAC COOPERATIVE, INC.
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, NOVEMBER 2, 1994, UNLESS THE OFFER IS EXTENDED.
October 4, 1994
To Participants in the Curtice-Burns Foods Automatic Dividend Reinvestment Plan:
Enclosed for your consideration are the Offer to Purchase, dated October 4,
1994 (the 'Offer to Purchase'), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
'Offer') relating to an offer by PF Acquisition Corp., a New York corporation
(the 'Purchaser') and a wholly owned subsidiary of Pro-Fac Cooperative, Inc., a
New York cooperative corporation ('Pro-Fac'), to purchase all outstanding shares
of Class A Common Stock and Class B Common Stock, $.99 par value (collectively,
the 'Shares'), of Curtice-Burns Foods, Inc., a New York corporation (the
'Company'), at a purchase price of $19 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer.
OUR NOMINEE IS THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT AS A
PARTICIPANT IN THE CURTICE-BURNS FOODS AUTOMATIC DIVIDEND REINVESTMENT PLAN (THE
'PLAN). IF YOU WISH TO HAVE US TENDER ANY OR ALL OF YOUR SHARES HELD IN THE
PLAN, PLEASE SO INSTRUCT US BY COMPLETING, EXECUTING, DETACHING AND RETURNING TO
US THE INSTRUCTION FORM CONTAINED IN THIS LETTER.
YOU MUST USE THE ENCLOSED BLUE LETTER OF TRANSMITTAL IF YOU WISH TO TENDER
ANY SHARES NOT HELD IN THE PLAN.
<PAGE>
<PAGE>
We request instructions as to whether you wish to have us instruct our
nominee to tender on your behalf any or all of the Shares held in your Plan
account, upon the terms and subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $19 per Share, net to you in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer.
2. The Board of Directors of the Company has approved the Merger Agreement
(as defined in the Offer to Purchase), the Offer and the Merger (as defined in
the Offer to Purchase) and the Stockholder Agreement (as defined in the Offer to
Purchase), determined that the terms of the Offer and the Merger are fair to,
and in the best interests of, the Company and the stockholders of the Company,
recommended that stockholders of the Company accept the Offer and tender their
Shares and approved the transactions contemplated by the Merger Agreement and
the Stockholder Agreement.
3. The Offer and withdrawal rights expire at 12:00 Midnight, New York City
time, on Wednesday, November 2, 1994, unless the Offer is extended by the
Purchaser.
4. The Offer is conditioned upon, among other things, (i) there being
validly tendered by the Expiration Date and not withdrawn that number of Shares
which would represent at least 90% of each of the Class A Common Stock and the
Class B Common Stock of the Company outstanding at the Expiration Date and (ii)
Pro-Fac or the Purchaser having obtained financing sufficient to allow the
Purchaser to consummate the Offer and the subsequent Merger.
5. The Purchaser will pay any stock transfer taxes applicable to the sale
of Shares to the Purchaser pursuant to the Offer, except as otherwise provided
in Instruction 6 of the Letter of Transmittal.
An envelope in which to return your instructions to us is enclosed. If you
authorize tender of your Shares, all such Shares will be tendered unless
otherwise specified in your instructions. YOUR INSTRUCTIONS SHOULD BE FORWARDED
TO US IN AMPLE TIME, AND IN ANY EVENT AT LEAST ONE BUSINESS DAY BEFORE THE
EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE) TO PERMIT US TO INSTRUCT
OUR NOMINEE TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
2
<PAGE>
The 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
Offer or acceptance thereof would not be in compliance with the laws of such
jurisdiction.
Very truly yours,
FIRST UNION NATIONAL BANK,
as Dividend Reinvestment Agent
3
<PAGE>
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF CLASS A AND CLASS B COMMON STOCK
OF
CURTICE-BURNS FOODS, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated October 4, 1994, and the related Letter of Transmittal,
relating to the offer by PF Acquisition Corp., a New York corporation and a
wholly owned subsidiary of Pro-Fac Cooperative, Inc., a New York cooperative
corporation, to purchase all outstanding shares of Class A Common Stock and
Class B Common Stock, $.99 par value (collectively, the 'Shares'), of
Curtice-Burns Foods, Inc., a New York corporation. The undersigned understand(s)
that the Offer applies to Shares allocated to the account of the undersigned in
the Curtice-Burns Foods Automatic Dividend Reinvestment Plan (the 'Plan').
This will instruct you, as Dividend Reinvestment Agent, to instruct your
nominee to tender the number of Shares indicated below held for the Plan account
of the undersigned, upon the terms and subject to the conditions set forth in
such Offer to Purchase and the related Letter of Transmittal.
Dated: -----------------, 1994
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.
4
<PAGE>
PAYER'S NAME: IBJ Schroder Bank & Trust Company
SUBSTITUTE
FORM W-9
Department of the Treasury
Internal Revenue Service
Payer's Request for
Taxpayer Identification
Number ('TIN')
PART 1--PLEASE PROVIDE YOUR TIN IN
THE BOX AT RIGHT AND CERTIFY BY
SIGNING AND DATING BELOW.
Social Security Number or
Employer Identification Number
- ------------------------
PART 2--Certification--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding because: (a) I am exempt from 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 been
notified by the IRS that you are currently subject to backup withholding because
of under-reporting interest or dividends on your tax return. 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-------------, 1994
Part 3
Awaiting TIN # [ ]
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE GUIDELINES ENCLOSED WITH THE LETTER OF TRANSMITTAL 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----------------, 1994
5
<PAGE>
Exhibit (b)(1)
[Letterhead of Springfield Bank for Cooperatives]
September 2, 1994
Pro-Fac Cooperative, Inc.
P.O. Box 682
Rochester, New York 14603
Attention: Mr. Roy A. Myers
General Manager
Gentlemen:
In response to the request of Pro-Fac Cooperative, Inc.
('Pro-Fac'), Springfield Bank for Cooperatives (the 'Bank') is
prepared to provide a wholly-owned subsidiary of Pro-Fac ('PF
Acquisition') with (1) a term loan in an aggregate principal
amount of $80 million, (2) a term loan facility in an aggregate
principal amount of $120 million and (3) a seasonal loan facility
in an aggregate principal amount equal to the lesser of (a) the
Borrowing Base (as hereinafter defined) and (b) $86 million (said
term loan, term loan facility and seasonal loan facility being
hereinafter collectively referred to as the 'Acquisition
Facility') to assist in financing the acquisition (the
'Acquisition') by PF Acquisition of the Class A and Class B
Common Stock of Curtice-Burns Foods, Inc. ('Curtice-Burns'), to
repay the existing indebtedness of Pro-Fac to the Bank, to repay
existing indebtedness of Curtice-Burns to its lenders, and to
provide permanent financing to Curtice-Burns following the merger
of PF Acquisition into Curtice-Burns. PF Acquisition and
Curtice-Burns, as the entity surviving the merger of PF
Acquisition into Curtice-Burns, are sometimes hereinafter
referred to as the 'Borrower'. A summary of the principal terms
and conditions of the Acquisition Facility is set forth in the
term sheet attached hereto as Exhibit A (the 'Term Sheet').
In addition, the Bank will provide the Borrower with a
letter of credit facility as set forth in the Term Sheet (the
'L/C Facility'; together with the Acquisition Facility, the
'Facility').
The Bank's commitment to provide the Facility is
subject to the conditions set forth or referred to in this
commitment letter (the 'Commitment Letter') and the Term Sheet.
This commitment is conditional upon: (1) the execution
and delivery of definitive documentation with respect to the
Facility in form and substance reasonably satisfactory to the
<PAGE>
Pro-Fac Cooperative, Inc.
September 2, 1994
Page 2
Bank and its counsel incorporating terms and conditions customary
to transactions of this type and as shall be reasonably
satisfactory to the Bank, together with opinions of counsel in
form and substance satisfactory to the Bank and its counsel;
(2) there being no changes, prior to closing of the Facility, to
the Pro-Fac Cooperative, Inc. Restructuring Proposal, dated
August 25, 1994 ('Restructuring Proposal') and the supplement
thereto, dated September 1, 1994, describing the Borrower's
proposed management structure (the 'Management Supplement')
previously delivered to the Bank other than changes reasonably
acceptable to the Bank; (3) the absence, prior to the closing of
the Facility, of any material adverse change in the business,
assets, operations, properties, financial condition, contingent
liabilities, prospects or material agreements of Pro-Fac and
Curtice-Burns taken as a whole as reflected in the June 25, 1994
financial statements of Pro-Fac and of Curtice-Burns; (4) receipt
by the Bank prior to closing of the Facility of pro forma
consolidated financial statements for the Borrower, reasonably
acceptable to the Bank, demonstrating to the Bank's satisfaction
that as of the closing of the Facility, the Borrower will be in
compliance with the financial tests set forth as conditions
precedent in the Term Sheet; (5) receipt by the Bank of a copy of
an opinion from Dillon Read, addressed to Pro-Fac, when and if
delivered to Pro-Fac, as to the reasonableness, from the
standpoint of Pro-Fac, of the consideration to be paid by PF
Acquisition to the holders of the Class A and Class B Common
Stock of Curtice-Burns in connection with the proposed
acquisition of Curtice-Burns by PF Acquisition, which opinion
must be reasonably acceptable to Pro-Fac, and which opinion shall
in no way be relied upon by the Bank; and (6) compliance with all
other conditions set forth herein and in the Term Sheet.
By executing this Commitment Letter, Pro-Fac agrees (a)
to indemnify and hold harmless the Bank and its officers,
directors, employees, affiliates, agents and controlling persons
from and against any and all losses, claims, damages, liabilities
and reasonable expenses, joint or several, to which any such
person may become subject arising out of or in connection with
this Commitment Letter, the Term Sheet, the Facility or any
related transaction, including, but not limited to the Bank's
furnishing of funds to the Borrower under the Facility and
assisting in financing the Acquisition or any claim, litigation,
investigation or proceeding relating to any of the foregoing,
regardless of whether any of such indemnified parties is a party
<PAGE>
Pro-Fac Cooperative, Inc.
September 2, 1994
Page 3
thereto, and to reimburse each of such indemnified parties upon
demand for any reasonable legal or other expenses incurred in
connection with investigating or defending any of the foregoing,
provided, that such indemnified parties will not be indemnified
for any such losses, claims, damages, liabilities or expenses
resulting from the gross negligence or willful misconduct of the
Bank, and (b) to reimburse the Bank from time to time, for all
reasonable expenses (including reasonable fees, disbursements and
other charges of counsel) incurred in connection with the
Facility and the preparation of this Commitment Letter, the Term
Sheet, the definitive documentation for the Facility and the
security arrangements in connection therewith, whether or not the
closing of the Facility occurs. The provisions contained in the
immediately preceding sentence shall remain in full force and
effect notwithstanding the termination of the Commitment Letter
or the Bank's commitment hereunder.
The Bank is issuing this commitment in reliance upon
the accuracy of the information and projections furnished to it
by Pro-Fac without independent verification thereof, including
without limitation, the information contained in the
Restructuring Proposal, and the Management Supplement. Pro-Fac
agrees to supplement the information and the projections
previously furnished by it from time to time until the closing of
the Facility in order that all such information and projections,
when taken as a whole, will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements contained therein, when made, not
materially misleading in light of the circumstances under which
such statements were made. However, the Bank recognizes that,
although Pro-Fac has prepared the projections using assumptions
it believes are reasonable, actual results or events may vary.
Pro-Fac agrees that this Commitment Letter and the Term
Sheet and the contents hereof and thereof are for Pro-Fac's
confidential use only in connection with Pro-Fac's submission of
bid(s) relative to the Acquisition and will not without the prior
written consent of the Bank (except as otherwise required by law)
be disclosed by Pro-Fac to any person other than Curtice-Burns or
Pro-Fac's and Curtice-Burns' officers, directors, accountants,
attorneys and other advisors, in each case only in connection
with the transactions contemplated hereby and on a confidential
basis.
<PAGE>
Pro-Fac Cooperative, Inc.
September 2, 1994
Page 4
This Commitment Letter and the Bank's commitment
hereunder shall not be assignable by Pro-Fac and may not be
amended or any provision hereof waived or modified except by an
instrument in writing signed by Pro-Fac and the Bank. This
Commitment Letter may be executed in any number of counterparts,
each of which shall be an original and all of which, when taken
together, shall constitute one agreement. Delivery of an
executed counterpart of a signature page of this Commitment
Letter by facsimile transmission shall be effective as delivery
of a manually executed counterpart of this Commitment Letter.
This Commitment Letter is intended to be solely for the benefit
of the parties hereto and is not intended to confer any benefits
upon, or create any rights in favor of, any person other than the
parties hereto. This Commitment Letter shall be governed by, and
construed in accordance with, the laws of the State of New York.
Please evidence your acceptance of the foregoing by
signing in the appropriate space below and returning to us the
enclosed duplicate original of this Commitment Letter not later
than 5:00 p.m., Eastern time, on the earlier of (a) the fifth
business day following the date on which Curtice-Burns publicly
announces its acceptance of Pro-Fac's bid the for the purchase of
the Curtice-Burns Class A and Class B Common Stock, and
(b) September 15, 1994, at which time the Bank's commitment
hereunder will expire if not previously accepted in accordance
with this sentence.
We understand that you contemplate that the Acquisition
will close during October, 1994. In the event that the execution
of the definitive documentation satisfactory to the Bank in
respect of the Facility does not occur on or before January 15,
1995, then this Commitment Letter and the Bank's commitment
hereunder shall terminate unless the Bank shall, in its
discretion, agree to an extension. Notwithstanding the
foregoing, the compensation, reimbursement and indemnification
provisions hereof and of the Term Sheet shall survive any
termination of this Commitment Letter and the Bank's commitment
hereunder, but such reimbursement and indemnification provisions
shall be superseded in all respects by the provisions of the
definitive documentation upon its execution by the parties
thereto.
This Commitment Letter supersedes and replaces in their
entirety any and all prior letters or correspondence heretofore
<PAGE>
Pro-Fac Cooperative, Inc.
September 2, 1994
Page 5
delivered by the Bank to Pro-Fac relating to the Facility or any
other financial accommodation relating to the Acquisition.
We look forward to working with you on this
transaction.
Sincerely,
SPRINGFIELD BANK FOR COOPERATIVES
/s/ C. Scott Herring
C. Scott Herring
Vice President
Accepted: September 7, 1994.
PRO-FAC COOPERATIVE, INC.
By: /s/ Roy A. Myers
........................
Title: General Manager
......................
Duly Authorized
<PAGE>
EXHIBIT A
TERM SHEET
SPRINGFIELD BANK FOR COOPERATIVES
WITH
PRO-FAC COOPERATIVE, INC.
$286,000,000 ACQUISITION FACILITY
SUMMARY OF PRINCIPAL TERMS AND CONDITIONS
Terms used but not defined in this Term Sheet shall have the
respective meanings assigned thereto in the Commitment Letter to
which this Term Sheet is attached (the 'Commitment Letter').
<TABLE>
<S> <C>
Borrower: PF Acquisition Corp., a New York cooperative
corporation and, upon completion of the
merger of PF Acquisition into Curtice-Burns
Foods, Inc., means Curtice-Burns as the
entity surviving such merger.
Lender: Springfield Bank for Cooperatives.
Acquisition
Facility: (1) A term loan in the amount of $80,000,000
(the '$80 Million Term Loan').
(2) A term loan facility in the amount of
$120,000,000 (the '$120 Million Term
Loan Facility'; together with the
$80 Million Term Loan, collectively, the
'Term Loan'). The Borrower may borrow
under the $120 Million Term Loan
Facility upon closing of the Facility
and from time to time thereafter.
(3) A seasonal loan facility in an aggregate
principal amount equal to the lesser of
(a) the Borrowing Base (as hereinafter
defined) and (b) $86 million.
'Borrowing Base' shall mean (i) 66% of
eligible accounts receivable plus
(ii) 50% of eligible inventory, as
provided for in the definitive
documentation.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Letter of Credit
Facility: A letter of credit facility in an aggregate
amount not to exceed $10 million of letters
of credit at any time outstanding. The
Borrower shall pay to the Bank the Bank's
customary fees and charges for issuance,
amendment and payment of letters of credit,
as in effect from time to time.
Use of Proceeds
of Acquisition
Facility: Assist in financing the acquisition by PF
Acquisition of the Class A and Class B Common
Stock of Curtice-Burns, repay the existing
indebtedness of Pro-Fac to the Bank, repay
the existing indebtedness of Curtice-Burns to
its existing lenders, and provide permanent
financing to the Borrower.
Guarantors: All obligations of the Borrower under the
definitive credit documentation for the
Facility will be unconditionally guaranteed
by Pro-Fac and by each subsidiary of the
Borrower (collectively, the 'Guarantors').
Security: As security for the Facility and the
obligations of the Guarantors to the Bank,
first and only security interests in and
liens upon all of the assets of the Borrower
and Guarantors, including, without
limitation, (a) all present and future:
accounts, contract rights, chattel paper,
instruments, documents, inventory, general
intangibles (including, without limitation,
all patents, trade names, trademarks,
copyrights, and tax refunds) and equipment;
(b) all real property of the Borrower and
Guarantors, and (c) all products and proceeds
of all of the foregoing (collectively, the
'Collateral'), except for liens reasonably
acceptable to the Bank.
Amortization
of the $80
Million Term Loan: The $80 Million Term Loan shall be repaid in
twenty (20) equal, consecutive semi-annual
installments.
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
Amortization of
$120 Million
Term Loan Facility: The $120 Million Term Loan Facility shall be
repaid as follows: (1) from closing of the
Facility through September 1, 1999, on
September 1 of each year, to the extent of
Annual Cash Sweep (as hereinafter defined)
for the Borrower's immediately preceding
fiscal year and (2) from September 2, 1999
through the tenth anniversary of closing, any
outstanding balance in ten equal installments
payable on the same dates that the
installments of the $80 Million Term Loan are
due. All payments at any time applied to the
outstanding balance of the $120 Million Term
Loan Facility shall reduce the amount
available to be borrowed thereunder by an
equal amount. 'Annual Cash Sweep' means 80%
of the Borrower's available cash at the end
of each fiscal year, calculated as follows
for each fiscal year: net income after taxes
and interest, plus depreciation, plus
amortization, plus deferred finance charges,
for such fiscal year, less the principal
installments payable during such fiscal year
with respect to the $120 Million Term Loan,
less capital expenditures, less dividends
paid to preferred stockholders, and less cash
patronage payments.
In addition, all net proceeds received by the
Borrower at any time after closing from the
sale and issuance by the Borrower to its
members of so-called PIK Preferred Stock
and/or subordinated debentures (said net
proceeds are collectively hereinafter
referred to as 'Member Equity') shall be
applied to the outstanding balance of the
$120 Million Term Loan Facility and shall
reduce the amount available to be borrowed
thereunder by an equal amount, except that,
the Borrower shall be permitted to re-borrow
at any time, and from time to time, under the
$120 Million Term Loan Facility an amount
which, together with all amounts previously
re-borrowed under the $120 Million Term Loan
Facility, shall be equal to, in the
aggregate, the lesser of (a) Member Equity
applied to the outstanding balance of the
$120 Million Term Facility and (b) (i)
$25 million from closing through and
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
including June 30, 1996 and (ii) $20 million
from and after July 1, 1996.
Repayment of
Seasonal Loan
Facility: The Seasonal Loan Facility shall have terms
similar to those that presently exist under
the Bank's seasonal loan facility with Pro-
Fac. The Seasonal Loan Facility shall be in
a fully paid status for a period of at least
fifteen (15) consecutive days.
Interest: Payable monthly in arrears, calculated on the
basis of a 360-day year and actual days
elapsed, at a rate per annum equal to, at the
option of the Borrower, (a) The Wall Street
Journal Prime Rate (i) with respect to the
Term Loan, plus .50%, and (ii) with respect
to the Seasonal Loan Facility, minus .25%
(collectively, the 'Variable Rate Option'),
(b) LIBOR plus, for interest periods less
than 180 days, (i) with respect to the Term
Loan, 2.60% and (ii) with respect to the
Seasonal Loan Facility, 1.75% (collectively,
the 'LIBOR Rate') or (c) the U.S. Treasury
Rate plus, for interest periods in excess of
180 days, (i) with respect to the Term Loan,
3.00% and (ii) with respect to the Seasonal
Loan Facility, 2.00% (collectively the
'Treasury - Based Rate'; together with the
LIBOR Rate, collectively, the 'Fixed Rate
Option'). Notwithstanding the foregoing, if
the Borrower achieves a long-term debt to
equity ratio of (x) 2.5:1 or (y) 2.15:1,
then, solely with respect to the Term Loan,
the Variable Rate Option and the Fixed Rate
Option shall be reduced by .25% or .50%,
respectively.
The Variable Rate Option and the Fixed Rate
Option may be selected by the Borrower with
respect to all or a designated portion of the
Term Loan and the Seasonal Loan Facility, as
provided in the definitive documentation.
Solely with respect to the Treasury - Based
Rate, if, as and when the spread between the
Bank's cost of funds and the U.S. Treasury
Rate increases or decreases, then the
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
Treasury - Based Rate shall be automatically
changed by an amount equal to such increase
or decrease.
Fees: 1. Commitment Fee. A non-refundable
commitment fee as agreed upon between
Pro-Fac and the Bank.
2. Acquisition Facility Fee. Non-
refundable acquisition facility fee in
an amount equal to the sum of 3/4 of 1%
of the Acquisition Facility, payable at
the closing of the Acquisition Facility.
3. Break-up Fee. A non-refundable Break-up
Fee in the amount of One Hundred
Thousand Dollars ($100,000) if the
Acquisition Facility does not close due
to no fault of the Bank.
Prepayment: The Term Loan may be prepaid in whole or in
part at any time without premium or penalty,
except for prepayments with respect to any
portion of the Term Loan with respect to
which the Borrower has elected the Fixed Rate
Option, which prepayments shall be subject to
the breakage costs provided for in the
definitive documentation. All Term Loan
prepayments shall be applied pro rata to the
unpaid installments, at the Borrower's
option, of the $80 Million Term Loan or the
$120 Million Term Loan Facility.
Conditions
Precedent to the
Facility: The Term Loan will be subject to conditions
precedent customarily found in credit
agreements for similar financings, including:
1. The Agreement and Plan of Merger by and
among Pro-Fac, PF Acquisition and
Curtice-Burns shall have been executed
and delivered in substantially the form
of the draft dated August 24, 1994,
previously delivered to the Bank, with
such material changes thereto in a form
reasonably acceptable to the Bank, and
all conditions precedent for the
consummation of the merger of PF
Acquisition into Curtice-Burns (the
'Merger') shall have been satisfied or
waived;
</TABLE>
v
<PAGE>
<TABLE>
<S> <C>
2. The Borrower shall have received gross
proceeds of Subordinated Debt (as
hereinafter defined) of not less than
$160 Million.
3. After giving effect to the Merger, PF
Acquisition and Curtice-Burns shall
have, as at the date of the closing of
the Facility, on a consolidated basis
and determined in accordance with
generally accepted accounting principles
consistently applied ('GAAP'):
a. a long term debt-to-equity ratio of
no greater than 3.1:1.0;
b. total net worth (including capital
stock, earnings allocated to Pro-
Fac members and earned surplus) of
not less than 18% of total assets;
c. working capital of not less than
$100 million; and
d. on the basis of cash flow
projections reasonably acceptable
to the Bank, a cash flow coverage
ratio at the end of each fiscal
year of (1) net income after taxes,
plus depreciation, plus
amortization, plus deferred finance
charges for such fiscal year to (2)
the current portion of long term
debt, plus capital expenditures,
plus dividends to preferred
stockholders, plus cash patronage
payments to members for such fiscal
year, of not less than 1.1 to 1.0.
4. No injunction or other order issued by
any court of competent jurisdiction or
by any governmental or regulatory body
which prevents the consummation of the
Merger as contemplated by the Merger
Agreement shall be in effect; and no
proceeding before any such court or
governmental or regulatory body with any
reasonable likelihood of success shall
have been commenced seeking to enjoin
the consummation of the merger
contemplated by the Merger Agreement.
</TABLE>
vi
<PAGE>
<TABLE>
<S> <C>
5. Definitive documentation with respect to
the Facility, including, without
limitation, a loan agreement, security
agreements, guaranties, UCC financing
statements and related documentation
incorporating customary terms and
provisions and such other provisions as
the Bank may reasonably require in the
context of the transactions contemplated
hereby, including, but not limited to,
those described herein, and such other
closing documentation as the Bank may
reasonably require.
6. There shall not be any material
liabilities under ERISA of Pro-Fac or
Curtice-Burns in respect of any pension
plan, except and to the extent disclosed
in the most recent audited financial
statements of Pro-Fac and of Curtice-
Burns or otherwise disclosed and
acceptable to the Bank.
7. There shall exist no default or event
which with notice or passage of time, or
both, would constitute a default under
the definitive documentation for the
Facility, and the representations and
warranties in such definitive
documentation shall be true and correct
in all material respects.
8. The terms and conditions of the
Subordinated Debt shall be substantially
as set forth in Schedule A annexed
hereto (the 'Subordinated Debt') and the
terms of any other financing assumed or
incurred by the Borrower, whether direct
or indirect, and of any indebtedness
which is to remain outstanding after the
closing of the Facility shall be
satisfactory in all material respects to
the Bank and its counsel.
9. Delivery to the Bank of evidence of
insurance coverage, including
mortgagee's and lender's loss payee
endorsements in the Bank's favor as to
casualty and business interruption
insurance and mortgagee's title
insurance by a company and agent
acceptable to the Bank (a) insuring the
</TABLE>
vii
<PAGE>
<PAGE>
<TABLE>
<S> <C>
priority, amount and sufficiency of any
mortgage, deed of trust or deed to
secure debt in favor of the Bank on each
fee and leasehold interest included in
the Collateral, (b) insuring against
matters that would be disclosed by
surveys, and (c) containing all
endorsements, assurances or affirmative
coverage reasonably requested by the
Bank for protection of the Bank's
interests.
Representations
and Warranties: To include, but not be limited to:
authorization and enforceability;
absence of default or event of default;
absence of material adverse change;
accuracy of financial statements
(including pro forma financial
statements); absence of undisclosed
liabilities; compliance with laws
(including environmental laws and
regulations), charter documents and
agreements; good standing;
inapplicability of the Investment
Company Act of 1940; payment of taxes;
ownership of properties; validity of
security interests; absence of liens;
and absence of material litigation.
Affirmative Covenants: To include, but not be limited to:
maintenance of corporate existence and
rights; compliance with laws, including
environmental laws; performance of
obligations; maintenance of properties
in good repair; maintenance of
appropriate and adequate insurance;
inspection of books and properties;
payment of taxes and other liabilities;
delivery of notice of defaults,
litigation and other adverse action,
including environmental action; delivery
of financial statements, financial
projections and other information; from
and after the occurrence of an event of
default, at such times as the Bank may
request, delivery of appraisals of the
Collateral from appraisers acceptable to
the Bank; and further assurances.
Negative Covenants: To include, but not be limited to:
limitations on dividends and on
</TABLE>
viii
<PAGE>
<TABLE>
<S> <C>
redemptions and repurchases of capital
stock; limitations on debt (except for
the Subordinated Debt) and guarantees;
limitations on repurchases or prepayment
of debt; limitations on liens;
limitations on sale-leaseback
transactions; limitations on loans,
investments, acquisitions and asset
sales; limitations on amendment of
certain material agreements; limitations
on transactions or changes in business
conducted; limitations on capital
expenditures including expenditures in
respect of capitalized leases (all such
capital expenditures in any year not to
exceed the amount of depreciation in
such fiscal year); and limitations on
mergers and consolidations.
Financial Covenants: Shall include, but not be limited to,
the following:
1. The Borrower shall achieve and maintain
as of each fiscal year end and at all
times thereafter, on a consolidated
basis and in accordance with GAAP:
(a) Achieve and maintain a long-term
debt to equity ratio of not less
than the following minimum levels
for the periods set forth below;
6/30/95 through 6/29/97: 2.7 to 1.0
6/30/97 through 6/29/98: 2.5 to 1.0
6/30/98 through 6/29/01: 2.15 to
1.0
6/30/01 and thereafter: 1.8 to 1.0
(b) Achieve and maintain a total net
worth (including capital stock,
earnings allocated to members and
earned surplus) of not less than
the following minimum levels for
the period set forth below;
6/30/95 through 6/29/97: 19%
6/30/97 through 6/29/01: 20%
6/30/01 and thereafter: 25%
(c) Achieve and maintain a tangible net
worth of not less than the amount
determined upon completion of the
</TABLE>
ix
<PAGE>
<TABLE>
<S> <C>
Merger, subject to adjustments made
in accordance with GAAP;
(d) Achieve and maintain a cash flow
coverage ratio at the end of each
fiscal year of (1) net income after
taxes, plus depreciation, plus
amortization, plus deferred finance
charges for such fiscal year to (2)
the current portion of long term
debt, plus capital expenditures,
plus dividends to preferred
stockholders, plus cash patronage
payments for such fiscal year, of
not less than 1.1 to 1.0;
(e) Achieve and maintain minimum
working capital of not less than
$100 million for the Borrower's
fiscal year ending 6/30/95 and for
each fiscal year thereafter.
2. If the Borrower fails to comply with any
of the financial covenants set forth in
paragraphs 1(a) through (d), inclusive,
immediately above, then, without in any
way limiting or waiving any of the
Bank's rights or remedies that will be
set forth in the definitive
documentation for the Facility, the
Borrower shall make no cash payments to
growers for raw products in excess of
90% of established commercial market
values therefor in any fiscal year in
which such covenant default occurs.
3. No later than two months prior to the
commencement of each fiscal year, the
Borrower shall provide the Bank with a
financial plan for such fiscal year,
satisfactory to the Bank, which plan
shall include, without limitation,
provision for maintenance of appropriate
grower contracts and pool accounting and
pool proceeds distribution procedures to
support the Bank's credit terms and
conditions.
Events of Default: Shall include, but not be limited to,
payment defaults, cross defaults to
agreements evidencing indebtedness to
other parties, covenant defaults, breach
</TABLE>
x
<PAGE>
<PAGE>
<TABLE>
<S> <C>
of warranty, voluntary and involuntary
bankruptcy, judgments and attachments,
dissolution, ERISA violations, OSHA
violations, environmental law
violations, change in control and breach
of collateral documents.
Participations: The Bank shall have the right to sell
participations in the Facility or any
part thereof. Participants shall have
the same benefits as the Bank with
respect to provision of information
regarding the Borrower. The Bank shall
have the right to furnish to
participants (including prospective
participants) any information concerning
the Borrower in the possession of the
Bank.
Indemnity: Borrower shall indemnify the Bank and
its directors, officers, agents, and
employees and hold them harmless from
and against all costs, expenses
(including the reasonable fees and
disbursements of counsel) and
liabilities, including those resulting
from any litigation or other proceedings
(regardless of whether the Bank is a
party thereto), related to or arising
out of the transactions contemplated
hereby, provided that the Bank will not
be indemnified for any costs, expenses
or liabilities resulting from its gross
negligence or willful misconduct.
Governing Law: New York.
This Term Sheet is not meant to be, nor
shall it be construed as, an attempt to
describe all of the terms and conditions
that pertain to this Facility, nor do
its terms suggest the specific phrasing
of documentation clauses. Rather, it is
intended only to outline the principal
terms and conditions of the Facility.
</TABLE>
xi
<PAGE>
Summary Terms and Conditions of Subordinated Debt
<TABLE>
<S> <C>
Issuer: Curtice-Burns Foods, Inc. (the 'Company').
Issue: Senior Subordinated Unsecured Notes (the
'Notes').
Amount: $150,000,000.
Interest Rate: __% per annum, payable semiannually in arrears.
Maturity: Approximately 10 years (maturing after the Term
Loans).
Sinking Fund: None.
Optional Redemption: The Notes will be redeemable at the option of the
Company, in whole or in part, at the end of five
years from the date of issuance at prices
declining ratably to par, in each case together
with accrued interest.
Ranking: The Notes will rank junior in right of payment to
all existing and future senior debt (including
the Term Loans, the Seasonal Working Capital
Facility, Letter of Credit Facilities, IRBs and
certain severance payments to former officers of
Curtice-Burns), pari passu in right of payment to
all existing and future senior subordinated debt,
and senior to all existing and future
subordinated debt. The provisions regarding the
terms of the subordination of the Notes to Senior
Indebtedness debt are set forth in Annex 1.
Negative Pledge: To the extent any senior subordinated debt is
granted a security interest, the Notes will be
equally and ratably secured. To the extent any
subordinated debt is granted a security interest,
the Notes will be secured on a senior basis
similar to the seniority of the Term Loans to the
Notes.
</TABLE>
Dillon, Read & Co., Inc. 1
<PAGE>
Summary Terms and Conditions of Subordinated Debt
<TABLE>
<S> <C>
Guarantees: The Notes will be guaranteed on a senior
subordinated unsecured bases by Pro-Fac
Cooperative, Inc. ('Pro-Fac') if Pro-Fac
guarantees the Term Loans and the Seasonal
Working Capital Facility, and by those
subsidiaries of the Company, if any, guaranteeing
the Term Loans and the Seasonal Working Capital
Facility. Pro-Fac will agree to make specified
capital contributions to the Company out of
payments in respect of patronage received from
the Company.
Senior Subordinated Debt Covenants
Limitation on Restricted Payments:
Dividends and other distributions on, and redemptions
of, equity are payable, and investments in entities
that are not Subsidiaries may be made, as long as there
is no default or Event of Default and only out of: (i)
cumulative proceeds from the issuance of equity of the
Company, plus (ii) an amount equal to (a) __% of
cumulative Consolidated Pretax Income, minus (b) 100%
of cumulative Consolidated Taxes, if positive, or 100%
or cumulative Consolidated Net Income, if negative, of
the Company and its Subsidiaries, plus (iii) $___
million. In addition, a minimum pro forma EBITDA to
interest coverage covenant permitting the Company to
incur at least $1 of additional debt under the
'Limitation on Additional Indebtedness' will have to be
met before Restricted Payments, other than payments in
respect of patronage, can be made.
Limitation on Additional Indebtedness: Additional debt of the Company and its
Subsidiaries will be permitted only if pro forma
EBITDA interest coverage exceeds 2.0x, except
that, regardless of this limitation, the Company
will always be permitted to borrow (i) up to
[$10] million of unused available amounts as of
Closing under its $100 Million Term Loan
Facility, (ii) amounts not exceeding __% of
inventories and __% of accounts receivable under
its Seasonal
</TABLE>
Dillon, Read & Co., Inc. 2
<PAGE>
Summary Terms and Conditions of Subordinated Debt
<TABLE>
<S> <C>
Working Capital Facility, and (iii)
amounts drawn under letters of credit issued to
support workers compensation or similar
obligations.
Limitation on Subsidiary Indebtedness: No additional debt will be permitted at the
Company's Subsidiaries, except industrial revenue
bonds the net proceeds of which are used for new
facilities or equipment and the aggregate
principal amount of which does not exceed __% of
the fair market value of the facilities or
equipment financed thereby.
[NOTE: ALL TERMS RELATING TO THE SUBORDINATED DEBT WHICH HAVE NOT YET BEEN FINALIZED
AND FOR WHICH BLANK LINES HAVE BEEN PROVIDED IN THIS SUMMARY ARE SUBJECT TO
REVIEW AND APPROVAL BY THE BANK IN THEIR PROPOSED FINAL FORM.]
Limitation on Transactions
with Affiliates: Transactions with affiliates have to be at least
as favorable to the Company and its Subsidiaries
as arm's lengths transactions would have been;
provided that the marketing agreement between
Pro-Fac and the Company as in effect on the date
of the Indenture shall be deemed to be in
compliance with this covenant.
Limitation on Payment Restrictions
Affecting Subsidiaries: No restrictions on upstream payments affecting
Subsidiaries of the Company will be permitted.
Limitation on Asset Sales: All proceeds from Asset Sales (including stock of
Subsidiaries) exceeding $500,000 each will have
to be used, at the Company's option: (i) for
investments in capital assets in the food
business within 180 days of the asset sale, (ii)
to repay senior debt with corresponding permanent
commitment reduction, if applicable, or (iii) to
offer to repurchase Notes at par.
</TABLE>
Dillon, Read & Co., Inc. 3
<PAGE>
Summary Terms and Conditions of Subordinated Debt
<TABLE>
<S> <C>
Anti-Layering: The Company may not incur any debt which is
subordinated to the senior debt of the Company
and Senior to the Notes.
Change of Control: In the event of a Change of Control the Company
will have to offer to repurchase all outstanding
Notes at 101%.
Limitation on Mergers: Mergers of the Company will be permitted only if:
(i) there is no Default or Event of Default, (ii)
the surviving entity, if the Company is not the
survivor, assumes the obligations under the
Notes, (iii) Consolidated Net Worth of the
surviving entity is not less than that of the
Company prior to the merger, and (iv) the EBITDA
interest coverage test in the Limitation on
Indebtedness covenant would, on a pro forma
basis, permit the surviving entity to incur $1 of
additional debt.
SENIOR SUBORDINATED DEBT EVENTS OF DEFAULT
Events of Default: Events of Default will include:
Failure to pay principal with due.
Failure to pay interest for 30 days after it is
due.
Failure to comply with any covenant for 60 days
following notice by the Trustee or holders of 25%
of the Notes.
Cross-acceleration to other debt of the Company,
Pro-Fac or a Subsidiary of $__ million or more in
the aggregate.
</TABLE>
Dillon, Read & Co., Inc. 4
<PAGE>
Summary Terms and Conditions of Subordinated Debt
<TABLE>
<S> <C>
Failure to pay or have discharged for 60 days
judgments against the Company, Pro-Fac or a
Subsidiary for $__ million or more in the
aggregate.
Certain events of bankruptcy or insolvency.
The trustee or holders of 25% of the Notes will be able
to accelerate the Notes upon the occurrence of an Event
of Default, except that acceleration will be automatic
in the case of a bankruptcy or insolvency.
All defaults, except defaults in the payment of
principal or interest, may be waived by the holders of
a majority in principal amount of the Notes.
</TABLE>
Dillon, Read & Co., Inc. 5
<PAGE>
Subordination
The Indebtedness evidenced by the Notes will be
subordinated to the prior payment in cash when due of the
principal of, and premium, if any, and accrued and unpaid
interest on and all other amounts owing in respect of, all
existing and future Senior Indebtedness of the Company. The
Notes will rank pari passu with all existing and future senior
subordinated Indebtedness of the Company, and will rank senior to
all existing and future subordinated Indebtedness of the Company.
The Indenture will provide that, upon any distribution
to creditors of the Company of the assets of the Company in a
liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding
relating to the Company, the holders of all Senior Indebtedness
of the Company then outstanding will be entitled to be paid in
full in cash (including interest accruing subsequent to a
bankruptcy or insolvency, whether or not such interest is an
allowed claim enforceable against the Company in bankruptcy)
before the Holders are entitled to receive any payment on or with
respect to the Notes; and until all Senior Indebtedness of the
Company is paid in full in cash, any distribution to which the
Holders would be entitled but for the subordination provisions
will be made to holders of Senior Indebtedness of the Company as
their interests may appear.
Upon the occurrence of any default beyond the
applicable grace period in the payment of any principal of or
interest on or other amounts due on any Senior Indebtedness of
the Company (a 'Payment Default'), no payment shall be made by
the Company with respect to the Notes unless and until such
Payment Default shall have been cured or waived or shall have
ceased to exist, such Senior Indebtedness has been discharged or
paid in full or the benefits of this sentence have been waived by
or on behalf of the holders of such Senior Indebtedness of the
Company, immediately after which the Company must resume making
any and all required payments, including missed payments, in
respect of its obligations under the Notes.
Upon (1) the occurrence of a continuing event of
default (other than a Payment Default) relating to Senior
Indebtedness of the Company, as such event of default is defined
therein or in the instrument or agreement under which it is
outstanding, which event of default, pursuant to the instruments
governing such Senior Indebtedness, entitles the holders (or a
specified portion of the holders) of such Senior Indebtedness to
immediately accelerate without further notice (except such notice
as may be required to effect such acceleration) the maturity of
such Senior Indebtedness (a 'Non-payment Default') and (2) the
receipt by the Trustee and the Company from a Senior
Representative of written notice (a 'Payment Blockage Notice') of
such occurrence, no payment is permitted to be made by the
Company in respect of the Notes for a period (a 'Payment Blockage
<PAGE>
Period') commencing on the date of receipt by the Trustee of such
notice and ending on the earliest to occur of the following
events (subject to any blockage of payments that may then be in
effect due to a Payment Default on Senior Indebtedness of the
Company): (w) such Non-payment Default has been cured or waived
or has ceased to exist; (x) a 179-consecutive-day period
commencing on the date such written notice is received by the
Trustee has elapsed; (y) such Payment Blockage Period has been
terminated by written notice to the Trustee from the Senior
Representative, whether or not such Non-payment Default has been
cured or waived or has ceased to exist; or (z) such Senior
Indebtedness of the Company has been discharged or paid in full,
immediately after which, in the case of clause (w) (x), (y) or
(z), the Company must resume making any and all required
payments, including missed payments, in respect of its
obligations under the Notes. Notwithstanding the foregoing, (a)
not more than one Payment Blockage Period may be commenced in any
period of 365 consecutive days, (b) no default or event of
default with respect to the Senior Indebtedness of the Company
that was the subject of a Payment Blockage Notice which existed
or was continuing on the date of the giving of any Payment
Blockage Notice shall be or serve as the basis for the giving of
a subsequent Payment Blockage Notice whether or not within a
period of 365 consecutive days unless such default or event of
default shall have been cured or waived for a period of at least
120 consecutive days after such date, and (c) if a Senior
Representative gives any Payment Blockage Notice, a similar
notice relating to or arising out of the same default or facts
giving rise to such default (whether or not such default is on
the same issue of Senior Indebtedness of the Company) shall not
be effective for purposes of this paragraph.
In the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Company or Pro-Fac
whether in cash, property or securities (other than securities
that are subordinated at least to the same extent as the Notes
and the Guarantee are to Senior Indebtedness of the Company or
Pro-Fac, respectively) shall be received by the Trustee or the
Holders or Notes at a time when such payment or distribution is
prohibited by the foregoing provisions, such payment or
distribution shall be held in trust for the benefit of the
holders of Senior Indebtedness of the Company or Pro-Fac, as the
case may be, and shall be paid or delivered by the Trustee or
such Holders, as the case may be, to the holders of the Senior
Indebtedness of the Company or Pro-Fac, as the case may be,
remaining unpaid or unprovided for or their representative or
representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of
such Senior Indebtedness of the Company or Pro-Fac, as the case
may be, may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of the Senior Indebtedness of
the Company or Pro-Fac, as the case may be, held or represented
by each, for application to the payment of all Senior
Indebtedness of the Company or Pro-Fac, as the case may be,
<PAGE>
remaining unpaid to the extent necessary to pay or to provide for
the payment of all such Senior Indebtedness in full in cash after
giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness.
If the Company fails to make any payment on the Notes
when due or within any applicable grace period, whether or not
such failure is on account of the subordination provisions
referred to above, such failure would constitute an Event of
Default under the Indenture and would enable the Holders to
accelerate the maturity of the Notes. See '-- Events of
Default.'
<PAGE>
September 16, 1994
Pro-Fac Cooperative, Inc.
P.O. Box 682
Rochester, New York 14603
Attention: Mr. Roy A. Myers
General Manager
Re: Amendment to Commitment Letter
Gentlemen:
We refer to our Commitment Letter, dated September 2,
1994 (the 'Commitment Letter'), previously delivered to you by
the Bank. Capitalized terms used herein, unless otherwise
defined herein, shall have the meaning ascribed thereto in the
Commitment Letter.
As per your request, the Bank agrees with Pro-Fac that
the Commitment Letter is hereby amended as follows:
10. Commitment Acceptance: Clause (b) of the second
paragraph on page 4 of the Commitment Letter is hereby amended by
deleting therefrom 'September 15, 1994' and substituting
'September 26, 1994' therefor.
11. Correction: The first paragraph of the Section of
the Term Sheet entitled, 'Amortization of $120 Million Term Loan
Facility', on page iii of the Term Sheet, is hereby amended by
deleting from the 24th line thereof (i.e., the 4th line from the
bottom of said paragraph) the term, '$120 Million Term Loan' and
correcting the same to read '$80 Million Term Loan'.
12. Conditions Precedent: Paragraph 1 of the Section
of the Term Sheet entitled, 'Conditions Precedent to the
Facility', on page (v) of the Term Sheet, is hereby amended by
deleting from the 5th line thereof the reference to the draft of
the Agreement and Plan of Merger 'dated August 24, 1994' and
substituting therefor a reference to the draft dated 'September
15, 1994'.
13. Subordinated Debt: Notwithstanding the fact that
the Summary Terms and Conditions of Subordinated Debt attached to
the Commitment Letter as Schedule A provides that the amount of
the Subordinated Debt shall be $150 million, the Bank
<PAGE>
acknowledges and confirms that, as set forth in paragraph 2 of
the section in the Term Sheet entitled, 'Conditions Precedent to
the Facility', the gross proceeds of Subordinated Debt received
by the Borrower on or before closing of the Term Loan shall be in
an aggregate amount of not less than $160 million.
14. Financial Covenants: Notwithstanding anything to
the contrary contained in the Commitment Letter, the Bank agrees
that, in calculating any ratio contained in any financial
covenant set forth in the Term Sheet, the Borrower shall be
permitted to round to the nearest tenth both the numerator and
denominator thereof.
Except as expressly set forth herein, no other
amendments of modifications to the Commitment Letter are intended
or implied, and the Commitment Letter remains in full force and
effect in accordance with its existing terms and provisions.
Please signify your agreement with the foregoing by
executing a duplicate original of this letter and returning the
same to the Bank. Thank you.
Sincerely,
SPRINGFIELD BANK FOR COOPERATIVES
By: /s/ C. Scott Herring
.............................
Title: Vice President
AGREED TO:
PRO-FAC COOPERATIVE, INC.
By: /s/ Roy A. Myers
.......................
Title: General Manager
.................
Exhibit (b)(2)
[Letterhead of Dillon, Read & Co. Inc.]
September 27, 1994
Board of Directors
Pro-Fac Cooperative, Inc.
90 Linden Place
Rochester, New York 14603
Gentlemen:
You have advised us of your intention to form a
subsidiary to enter into an agreement to acquire Curtice
Burns Foods, Inc. (the 'Acquired Business'). You have
retained us to assist you in raising a portion of the funds
required to consummate the acquisition of the Acquired
Business (after giving effect to the proposed contribution
of your assets, the 'Transaction') through the sale or
placement of up to $160 million aggregate principal amount
of senior subordinated debt securities (the 'Subordinated
Debt') to be issued by the Acquired Business and to be
guaranteed on a senior subordinated basis by you. We
understand that the sources of financing for the Transaction
and related costs and expenses will be bank financing from
the Springfield Bank for Cooperatives ('Springfield Bank')
of approximately $200 million and the Subordinated Debt. We
also understand that Springfield Bank will provide a
seasonal working capital facility of up to $86 million. You
have advised us that you or your members will contribute not
less than $10 million in equity to the Acquired Business
during the current fiscal year of the Acquired Business.
You have also advised us that following the Transaction the
Acquired Business will have no indebtedness for money
borrowed other than as set forth in the preceding sentences.
We are pleased to inform you that, based upon
current market conditions, we are highly confident of our
ability to sell or place the Subordinated Debt in connection
with the Transaction. The structure, covenants, and terms
of the Subordinated Debt, including the coupon, will be
determined by Dillon, Read & Co. Inc. in consultation with
you (to be mutually acceptable to both parties) based on
market conditions at the time of the sale or placement and
on the structure and documentation of the Transaction. Our
ability to consummate the sale or placement of the
Subordinated Debt is subject to: (i) there not having
<PAGE>
Pro-Fac Cooperative, Inc. 2
occurred any material adverse change in your financial
condition, results of operations, businesses or prospects or
that of the Acquired Business since June 25, 1994, (ii) the
terms and structure of the Springfield Bank or any other
financing for the Transaction being acceptable to us and the
execution of documentation relating thereto satisfactory in
form and substance to us (and we confirm that the terms and
structure substantially as set forth in the commitment
letter dated September 2, 1994 and amended on September 16,
1994 from Springfield Bank, previously reviewed by us, are
acceptable to us on a preliminary basis), (iii) the receipt
of all necessary governmental, regulatory or third party
approvals or consents in connection with the Transaction and
the absence of any pending or threatened litigation which
could jeopardize the offering of the Subordinated Debt, (iv)
the execution and delivery of documentation for the
Transaction and related transactions in form and substance
satisfactory to us and such documentation being in full
force and effect, (v) agreement on the terms of the
Subordinated Debt, including coupon, and the negotiation and
execution of satisfactory documentation with respect to the
Subordinated Debt and the offering and sale thereof, (vi)
our continuing due diligence investigation not having
disclosed any facts that would altar our current view with
respect to all aspects of your business and the Acquired
Business, including without limitation, the financial
condition, results of operations, prospects and
environmental liabilities of your business and the Acquired
Business (including solvency), (vii) the availability of
audited (the reports with respect to which shall be
unqualified) and unaudited historical financial statements
of your business and the Acquired Business (including pro
forma financial statements) as required by any state and
federal securities laws applicable to registration
statements, reports and other documents filed thereunder and
a private placement memorandum and/or prospectus and
auditor's comfort letter in respect thereof, in each case,
acceptable to us, (viii) no change or proposed change in
United States law having occurred that could reasonably be
expected to adversely affect the economic consequences,
including the tax treatment, that you or any of your
subsidiaries contemplate deriving from the Transaction, (ix)
our having reasonable time to market the Subordinated Debt,
based on our experience in comparable transactions being
<PAGE>
Pro-Fac Cooperative Inc. 3
satisfactory market conditions at the time of offering and
(xi) the cooperation of the management of the Acquired
Business in marketing the Subordinated Debt.
Very truly yours,
Dillon, Read & Co. Inc.
By: /s/ Robert H. Hotz
--------------------------
Name: Robert H. Hotz
Title: Managing Director
Agreed and Accepted
Pro-Fac Cooperative, Inc.
By: /s/ Roy A. Myers
- --------------------------
Name: Roy A. Myers
Title: General Manager
<PAGE>
EXHIBIT (c)(1)
============================================================
AGREEMENT AND PLAN OF MERGER
Among
PRO-FAC COOPERATIVE, INC.,
PF ACQUISITION CORP.
and
CURTICE-BURNS FOODS, INC.
Dated as of September 27, 1994
============================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
The Offer
SECTION 1.01 The Offer . . . . . . . . . . . . . . . . 2
SECTION 1.02 Company Actions . . . . . . . . . . . . . 4
ARTICLE II
The Merger
SECTION 2.01. The Merger . . . . . . . . . . . . . . . 6
SECTION 2.02. Closing . . . . . . . . . . . . . . . . . 6
SECTION 2.03. Effective Time . . . . . . . . . . . . . 6
SECTION 2.04. Effects of the Merger . . . . . . . . . . 7
SECTION 2.05. Certificate of Incorporation and
By-laws . . . . . . . . . . . . . . . . 7
SECTION 2.06. Directors . . . . . . . . . . . . . . . . 7
SECTION 2.07. Officers . . . . . . . . . . . . . . . . 7
ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock . . . . . . . . . 8
SECTION 3.02. Exchange of Certificates . . . . . . . . 9
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of the
Company . . . . . . . . . . . . . . . . 11
SECTION 4.02. Representations and Warranties of
Parent and Sub . . . . . . . . . . . . 28
<PAGE>
Contents, 2
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business . . . . . . . . . . . 35
ARTICLE VI
Additional Agreements
SECTION 6.01. Shareholder Approval; Preparation of
Proxy Statement . . . . . . . . . . . . 39
SECTION 6.02. Access to Information; Confidentiality . 40
SECTION 6.03. Reasonable Efforts; Notification . . . . 40
SECTION 6.04. Stock Options . . . . . . . . . . . . . . 42
SECTION 6.05. Benefit Plans . . . . . . . . . . . . . . 43
SECTION 6.06. Indemnification . . . . . . . . . . . . . 44
SECTION 6.07. Fees and Expenses . . . . . . . . . . . . 45
SECTION 6.08. Public Announcements . . . . . . . . . . 46
SECTION 6.09. Real Estate Taxes . . . . . . . . . . . . 47
SECTION 6.10. Appraisals . . . . . . . . . . . . . . . 47
SECTION 6.11. Integrated Agreement . . . . . . . . . . 47
SECTION 6.12. Other Offers . . . . . . . . . . . . . . 47
SECTION 6.13. No Waiver . . . . . . . . . . . . . . . . 48
SECTION 6.14. Release . . . . . . . . . . . . . . . . . 48
SECTION 6.15. Directors . . . . . . . . . . . . . . . . 49
SECTION 6.16. Exchange of Class B Common Stock for
Class A Common Stock . . . . . . . . . 50
SECTION 6.17. Stockholder Agreement . . . . . . . . . . 50
ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obligation To
Effect the Merger . . . . . . . . . . . 51
SECTION 7.02. Conditions to Obligations of Parent
and Sub . . . . . . . . . . . . . . . . 52
SECTION 7.03. Conditions to Obligation of the Company . 53
<PAGE>
<PAGE>
Contents, 3
ARTICLE VIII
Board Actions
SECTION 8.01. Board Actions . . . . . . . . . . . . . . 54
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01. Termination . . . . . . . . . . . . . . . 55
SECTION 9.02. Effect of Termination . . . . . . . . . . 58
SECTION 9.03. Amendment . . . . . . . . . . . . . . . . 58
SECTION 9.04. Extension; Waiver . . . . . . . . . . . . 58
SECTION 9.05. Procedure for Termination, Amendment,
Extension or Waiver . . . . . . . . . . 59
ARTICLE X
General Provisions
SECTION 10.01. Nonsurvival of Representations and
Warranties . . . . . . . . . . . . . . 59
SECTION 10.02. Notices . . . . . . . . . . . . . . . . 59
SECTION 10.03. Definitions . . . . . . . . . . . . . . 61
SECTION 10.04. Interpretation . . . . . . . . . . . . . 62
SECTION 10.05. Counterparts . . . . . . . . . . . . . . 62
SECTION 10.06. Entire Agreement; No Third-Party
Beneficiaries; Effect on
Arbitration Agreement . . . . . . . . 62
SECTION 10.07. Governing Law . . . . . . . . . . . . . 63
SECTION 10.08. Assignment . . . . . . . . . . . . . . . 63
SECTION 10.09. Enforcement . . . . . . . . . . . . . . 63
Exhibit A Conditions of the Offer
Exhibit B Certificate of Incorporation of
Surviving Corporation
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of
September 27, 1994, among PRO-FAC COOPERATIVE
INC., a New York cooperative corporation
('Parent'), PF ACQUISITION CORP., a New York
corporation and a wholly owned subsidiary of
Parent ('Sub'), and CURTICE-BURNS FOODS,
INC., a New York corporation (the 'Company').
WHEREAS the respective Boards of Directors of
Parent, Sub and the Company have approved the acquisition of
the Company by Parent on the terms and subject to the
conditions of this Agreement;
WHEREAS in furtherance of such acquisition, Parent
proposes to causes Sub to make a tender offer (as it may be
amended from time to time as permitted hereunder, the
'Offer') to purchase all the issued and outstanding shares
of Class A Common Stock, par value $.99 per share, of the
Company (the 'Class A Common Stock') and Class B Common
Stock, par value $.99 per share, of the Company (the 'Class
B Common Stock' and, together with the Class A Common Stock,
the 'Common Stock'), at a price per share of Common Stock of
$19.00 net to the seller in cash, upon the terms and subject
to the conditions of this Agreement; and the Board of
Directors of the Company has adopted resolutions approving
the Offer and the Merger (as hereinafter defined) and
recommending that the Company's shareholders accept the
Offer and, if necessary, vote in favor of the Merger;
WHEREAS the respective Boards of Directors of
Parent, Sub and the Company have approved the merger of Sub
into the Company as set forth below (the 'Merger'), upon the
terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of
Common Stock not owned directly or indirectly by Parent or
the Company, except shares of Common Stock held by persons
who object to the Merger and comply with all the provisions
of New York law concerning the right of holders of Common
Stock to dissent from the Merger and require appraisal of
their shares of Common Stock ('Dissenting Shareholders'),
shall be converted into the right to receive the per share
consideration paid pursuant to the Offer, or, if no shares
of Common Stock are purchased pursuant to the Offer, the
highest price per share offered by Sub in the Offer; and
2
<PAGE>
WHEREAS Parent, Sub and the Company desire to make
certain representations, warranties, covenants and
agreements in connection with the Offer and the Merger and
also to prescribe various conditions to the Offer and the
Merger.
NOW, THEREFORE, in consideration of the
representations, warranties, covenants and agreements
contained in this Agreement, the parties agree as follows:
ARTICLE I
The Offer
SECTION 1.01. The Offer. (a) Subject to the
provisions of this Agreement, as promptly as practicable but
in no event later than five business days from the date of
public announcement of the terms of this Agreement, Sub
shall, and Parent shall cause Sub to, commence the Offer.
The obligation of Sub to, and of Parent to cause Sub to,
accept for payment, and pay for, any shares of Common Stock
tendered pursuant to the Offer shall be subject to the
conditions set forth in Exhibit A (any of which may, subject
to the next sentence, be waived by Sub in its sole
discretion) and to the terms and conditions set forth in
this Agreement. Sub expressly reserves the right to modify
the terms of the Offer, except that, without the consent of
the Company, Sub shall not (i) reduce the number of shares
of Common Stock subject to the Offer, (ii) reduce the price
per share of Common Stock to be paid pursuant to the Offer,
(iii) add to or amend in a manner adverse to the holders of
shares the conditions set forth in Exhibit A, (iv) except as
provided in the next sentence, extend the Offer, (v) change
the form of consideration payable in the Offer, (vi) amend
the Offer in any way such that holders of Class A Common
Stock receive consideration that differs from the
consideration received by holders of Class B Common Stock or
(vii) accept for payment shares of Common Stock that do not
represent, in the aggregate, at least 58% of all the
outstanding shares of Class A Common Stock, at least a
majority of all the outstanding shares of Class B Common
Stock and at least two-thirds of all the outstanding shares
of Common Stock, in each case on a fully diluted basis.
Notwithstanding the foregoing, Sub may, without the consent
of the Company (and, in the cases of clauses (i) and (ii)
below, shall, unless the Company otherwise consents),
3
<PAGE>
(i) extend the Offer if at any scheduled expiration date of
the Offer any condition to Sub's obligation to purchase
shares of Common Stock (other than the condition described
in clause (iii) of the first sentence of Exhibit A) shall
not be satisfied, to allow additional time for such
condition to be satisfied or waived, (ii) extend the Offer
if at any scheduled expiration date of the Offer the
condition described in clause (f) of the second sentence of
Exhibit A shall exist, to allow additional time to cause
such condition no longer to exist (provided that, if Parent
or Sub has signed definitive agreements for financing that
would be sufficient to consummate the Offer and the Merger
on the terms contemplated by this Agreement, Sub may not
extend the Offer pursuant to this clause (ii) to a date that
is more than five business days after the date of signing of
the last such definitive agreement to be signed),
(iii) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and
Exchange Commission (the 'SEC') or the staff thereof
applicable to the Offer and (iv) extend the Offer for any
reason for a period of not more than 15 business days beyond
the latest expiration date that would otherwise be permitted
under clause (i), (ii) or (iii) of this sentence; provided,
however, that Sub may not extend the Offer pursuant to
clause (i), (ii) or (iv) of this sentence (A) to a date
later than December 15, 1994, or (B) if such extension would
be reasonably likely to result in any of the conditions
(other than any condition irrevocably waived in writing by
Parent and Sub prior to such extension) to Sub's obligations
to purchase shares of Common Stock not being satisfied at
the proposed new scheduled expiration date of the Offer.
Subject to the terms and conditions of the Offer and this
Agreement, Sub shall, and Parent shall cause Sub to, pay for
all shares of Common Stock validly tendered and not
withdrawn pursuant to the Offer that Sub becomes obligated
to purchase pursuant to the Offer as soon as practicable
after the expiration of the Offer.
(b) As soon as practicable on the date of
commencement of the Offer, Parent and Sub shall file with
the SEC a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer, which shall contain an offer to
purchase and a related letter of transmittal and summary
advertisement (such Schedule 14D-1 and the documents therein
pursuant to which the Offer will be made, together with any
supplements or amendments thereto, the 'Offer Documents'),
shall hand deliver a copy of the Offer Documents to the
Company at its principal executive office, shall give the
4
<PAGE>
telephonic notice required by SEC Rule 14d-3(a)(3) to the
American Stock Exchange (if practicable prior to the opening
of such Exchange) and shall mail a copy of the Offer
Documents to the American Stock Exchange by means of first-
class mail. Each of Parent, Sub and the Company shall
promptly correct any information provided by it for use in
the Offer Documents if and to the extent that such
information shall have become false or misleading in any
material respect, and each of Parent and Sub further agrees
to take all steps necessary to cause the Offer Documents as
so corrected to be filed with the SEC and to be disseminated
to the Company's shareholders, in each case as and to the
extent required by applicable Federal securities laws.
Parent and Sub shall provide the Company and its counsel in
writing with any comments Parent, Sub or their counsel may
receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
SECTION 1.02. Company Actions. (a) The Company
hereby approves of and consents to the Offer and represents
that the Board of Directors of the Company, at a meeting
duly called and held, has duly approved this Agreement, the
Offer and the Merger (including for the purposes of Section
912 of the New York Business Corporation Law (the 'BCL'))
and the Agreement, dated as of the date hereof (the
'Stockholder Agreement'), among Parent, Sub and Agway
Holdings, Inc. ('AHI'), determined that the terms of the
Offer and the Merger are fair to, and in the best interests
of, the Company and the Company's shareholders, recommended
that the Company's shareholders accept the Offer and tender
their shares pursuant to the Offer, approved the
transactions contemplated by this Agreement and the
Stockholder Agreement and waived the Company's rights under
Article 4(d) of the Company's certificate of incorporation
with respect to shares of Class B Common Stock to be sold to
and purchased by Sub pursuant to the Offer. The Company
further represents that Donaldson, Lufkin & Jenrette
Securities Corporation ('DLJ') and Goldman, Sachs & Co.
('Goldman Sachs' and, together with DLJ, the 'Advisors')
have each delivered to the Board of Directors of the Company
its written opinion that, in the case of DLJ, the
consideration to be received by holders of shares of Class A
Common Stock of the Company pursuant to the Offer and the
Merger is fair to such holders from a financial point of
view, and in the case of Goldman Sachs, the $19 per share of
Class B Common Stock in cash to be received by the holders
of shares of Class B Common Stock in the Offer and the
5
<PAGE>
Merger is fair to such holders. The Company has been
advised that all its directors and executive officers
currently intend to tender their Shares pursuant to the
Offer.
(b) As soon as practicable on the date the
recommendation of the Company with respect to the Offer is
first published or sent or given to the shareholders of the
Company, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 with
respect to the Offer (such Schedule 14D-9, as amended from
time to time, the 'Schedule 14D-9') containing the
determinations and recommendations regarding the Offer
described in Section 1.02(a), shall hand deliver a copy of
the Schedule 14D-9 to Sub at its principal office, shall
give the telephonic notice required by SEC Rule 14d-9(a)(2)
to the American Stock Exchange (if possible prior to the
opening of the market), shall mail a copy of the Schedule
14D-9 to the American Stock Exchange by means of first-class
mail and shall mail the Schedule 14D-9 to the shareholders
of the Company. Each of the Company, Parent and Sub shall
promptly correct any information provided by it for use in
the Schedule 14D-9 if and to the extent that such
information shall have become false or misleading in any
material respect, and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and disseminated to the Company's
shareholders, in each case as and to the extent required by
applicable Federal securities laws. The Company shall
provide Parent and its counsel in writing with any comments
the Company or its counsel may receive from the SEC or its
staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments.
(c) In connection with the Offer, the Company
shall cause its transfer agent to furnish Sub promptly with
mailing labels containing the names and addresses of the
record holders of Common Stock as of a recent date and of
those persons becoming record holders subsequent to such
date, together with copies of all lists of shareholders,
security position listings and computer files and all other
information in the Company's possession or control regarding
the record and beneficial owners of Common Stock, and shall
furnish to Sub such information and assistance (including
updated lists of shareholders, security position listings
and computer files) as Parent may reasonably request in
communicating the Offer to the Company's shareholders.
Subject to the requirements of applicable law, and except
6
<PAGE>
for such steps as are necessary to disseminate the Offer
Documents and any other documents necessary to consummate
the Merger, until the consummation of the Merger Parent and
Sub shall hold in confidence the information contained in
any such labels, listings and files, shall use such
information only in connection with the Offer and the Merger
and, if this Agreement shall be terminated, shall, upon
request, deliver to the Company all copies of such
information then in their possession.
ARTICLE II
The Merger
SECTION 2.01. The Merger. Upon the terms and
subject to the conditions set forth in this Agreement, and
in accordance with the BCL, Sub shall be merged with and
into the Company at the Effective Time of the Merger (as
defined in Section 2.03). Following the Merger, the
separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the
'Surviving Corporation') and shall succeed to and assume all
the rights and obligations of Sub in accordance with the
BCL.
SECTION 2.02. Closing. The closing of the Merger
(the 'Closing') shall take place at 10:00 a.m. on a date to
be specified by the parties, which (subject to satisfaction
or waiver of the conditions set forth in Sections 7.02 and
7.03) shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in
Section 7.01 (the 'Closing Date'), at the offices of
Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue,
New York, N.Y. 10019, unless another date or place is agreed
to in writing by the parties hereto.
SECTION 2.03. Effective Time. As soon as practi-
cable following the satisfaction or waiver of the conditions
set forth in Article VII, the parties shall file a certifi-
cate of merger or other appropriate documents (in any such
case, the 'Certificate of Merger') executed in accordance
with the relevant provisions of the BCL and shall make all
other filings or recordings required under the BCL, it being
understood that if Sub then owns at least 90% of the
outstanding shares of each class of Common Stock the Merger
shall be effected under the procedures permitted by
Section 905 of the BCL. The Merger shall become effective
at such time as the Certificate of Merger is duly filed with
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the New York Secretary of State, or at such other time as
Sub and the Company shall agree should be specified in the
Certificate of Merger (the time the Merger becomes effective
being the 'Effective Time of the Merger').
SECTION 2.04. Effects of the Merger. The Merger
shall have the effects set forth in the BCL, including
Section 906 thereof.
SECTION 2.05. Certificate of Incorporation and
By-laws. (a) The Certificate of Incorporation of the
Surviving Corporation shall be amended, to the extent
necessary, to read as provided in Exhibit B, until there-
after changed or amended as provided therein or by applica-
ble law.
(b) The By-laws of Sub as in effect at the
Effective Time of the Merger shall be the By-laws of the
Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
SECTION 2.06. Directors. The directors of Sub at
the Effective Time of the Merger shall be the directors of
the Surviving Corporation, until the earlier of their
resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 2.07. Officers. With the exception of
the Company's Chairman of the Board, the officers of the
Company at the Effective Time of the Merger shall be the
officers of the Surviving Corporation, until the earlier of
their resignation or removal or until their respective
successors are duly elected and qualified, as the case may
be; provided, however, that the Chairman of the Board and,
at the request of Parent or Sub, any officer who would be
entitled, under the terms of any severance or similar plan,
to receive severance benefits upon such officer's voluntary
departure from the Company upon completion of the Merger,
shall tender their resignations immediately following the
Effective Time of the Merger.
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ARTICLE III
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 3.01. Effect on Capital Stock. As of the
Effective Time of the Merger, by virtue of the Merger and
without any action on the part of the holder of any shares
of Common Stock or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and
outstanding share of the capital stock of Sub shall be
converted into and become one fully paid and nonassess-
able share of Common Stock, par value $0.01 per share,
of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent
Owned Stock. Each share of Common Stock that is owned
by the Company or by any subsidiary of the Company and
each share of Common Stock that is owned by Parent, Sub
or any other subsidiary of Parent shall automatically
be canceled and retired and shall cease to exist, and
no consideration shall be delivered in exchange
therefor.
(c) Conversion of Common Stock. Subject to
Sections 3.01(b) and 3.01(d), each issued and
outstanding share of Common Stock shall be converted
into the right to receive from Parent the cash price
per share of Common Stock paid pursuant to the Offer
or, if no shares of Common Stock are purchased pursuant
to the Offer, the highest price per share offered by
Sub in the Offer (the 'Merger Consideration'). As of
the Effective Time of the Merger, all such shares of
Common Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease
to exist, and each holder of a certificate representing
any such shares of Common Stock shall cease to have any
rights with respect thereto, except the right to
receive the Merger Consideration without interest.
(d) Shares of Dissenting Shareholders. Notwith-
standing anything in this Agreement to the contrary,
any issued and outstanding shares of Common Stock held
by a Dissenting Shareholder shall not be converted as
described in Section 3.01(c) but shall become the right
to receive such consideration as may be determined to
be due to such Dissenting Shareholder pursuant to the
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<PAGE>
laws of the State of New York; provided, however, that
the shares of Common Stock outstanding immediately
prior to the Effective Time of the Merger and held by a
Dissenting Shareholder who shall, after the Effective
Time of the Merger, withdraw his demand for appraisal
or lose his right of appraisal, in either case pursuant
to the BCL, shall be deemed to be converted as of the
Effective Time of the Merger, into the right to receive
the Merger Consideration. The Company shall give
Parent (i) prompt notice of any written demands for
appraisal of shares of Common Stock received by the
Company and (ii) the opportunity to direct all negotia-
tions and proceedings with respect to any such demands.
The Company shall not, without the prior written
consent of Parent, voluntarily make any payment with
respect to, or settle, offer to settle or otherwise
negotiate, any such demands.
SECTION 3.02. Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time of the
Merger, Parent shall select a bank or trust company to act
as exchange agent (the 'Exchange Agent') for the exchange of
the Merger Consideration upon surrender of certificates
representing Common Stock.
(b) Parent To Provide Merger Consideration.
Parent shall take all steps to provide to the Exchange Agent
promptly after the Effective Time of the Merger all the
funds payable in exchange for the outstanding shares of
Common Stock pursuant to Section 3.01.
(c) Exchange Procedure. As soon as reasonably
practicable after the Effective Time of the Merger, the
Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the
Effective Time of the Merger represented outstanding shares
of Common Stock (the 'Certificates') whose shares were
converted into the right to receive the Merger Consideration
pursuant to Section 3.01, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall
be in a form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effect-
ing the surrender of the Certificates in exchange for the
Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by the Parent, together with such
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<PAGE>
letter of transmittal, duly executed, and such other docu-
ments as may reasonably be required by the Exchange Agent,
the holder of such Certificate shall be entitled to receive
in exchange therefor the Merger Consideration into which the
shares of Common Stock theretofore represented by such
Certificate shall have been converted pursuant to
Section 3.01 and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of
ownership of Common Stock which is not registered in the
transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate
so surrendered is registered, if such Certificate shall be
properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay
any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such
Certificate or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this
Section 3.02, each Certificate shall be deemed at any time
after the Effective Time of the Merger to represent only the
right to receive upon such surrender the Merger
Consideration, without interest, into which the shares of
Common Stock theretofore represented by such Certificate
shall have been converted pursuant to Section 3.01. No
interest will be paid or will accrue on the Merger
Consideration upon the surrender of any Certificate.
(d) No Further Ownership Rights in Common Stock.
All Merger Consideration paid upon the surrender of
Certificates in accordance with the terms of this
Article III shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of
Common Stock theretofore represented by such Certificates,
subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a
record date prior to the Effective Time of the Merger which
may have been declared or made by the Company on such shares
of Company Common Stock in accordance with the terms of this
Agreement or prior to the date of this Agreement and which
remain unpaid at the Effective Time of the Merger and have
not been paid prior to surrender, and there shall be no
further registration of transfers on the stock transfer
books of the Surviving Corporation of the shares of Common
Stock which were outstanding immediately prior to the
Effective Time of the Merger. If, after the Effective Time
of the Merger, Certificates are presented to the Surviving
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<PAGE>
Corporation for any reason, they shall be canceled and
exchanged as provided in this Article III.
(e) No Liability. None of Parent, Sub, the
Company or the Exchange Agent shall be liable to any person
in respect of any Merger Consideration delivered to a public
official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificates shall not have
been surrendered prior to three years after the Effective
Time of the Merger (or immediately prior to such earlier
date on which any payment pursuant to this Article III would
otherwise escheat to or become the property of any
Governmental Entity (as defined in Section 4.01(d))), the
payment in respect of such Certificate shall, to the extent
permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto.
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of
the Company. The Company represents and warrants to Parent
and Sub as follows:
(a) Organization, Standing and Corporate Power.
Each of the Company and each of its subsidiaries is a
corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in
which it is incorporated and has the requisite corpo-
rate power and authority to carry on its business as
now being conducted, except where the failure to be so
organized, existing or in good standing or to have such
power would not, individually or in the aggregate, have
a material adverse effect on the Company. Each of the
Company and each of its subsidiaries is duly qualified
or licensed to do business and is in good standing in
each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than
in such jurisdictions where the failure to be so
qualified or licensed (individually or in the
aggregate) would not have a material adverse effect on
the Company. The Company has delivered to Parent
complete and correct copies of its Certificate of
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Incorporation and By-laws and the certificates of
incorporation and by-laws of its subsidiaries, in each
case as amended to the date of this Agreement.
(b) Subsidiaries. The disclosure schedule
previously delivered by the Company to Parent (the
'Disclosure Schedule') lists each subsidiary of the
Company. All the outstanding shares of capital stock
of each such subsidiary have been validly issued and
are fully paid and nonassessable and, except as set
forth in the Disclosure Schedule, are owned by the
Company, by another subsidiary of the Company or by the
Company and another such subsidiary, free and clear of
all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever
(collectively, 'Liens'), except as set forth in the
Disclosure Schedule. Except for the capital stock of
its subsidiaries and except for the ownership interests
set forth in the Disclosure Schedule, the Company does
not own, directly or indirectly, any capital stock or
other ownership interest in any corporation, part-
nership, joint venture or other entity.
(c) Capital Structure. The authorized capital
stock of the Company consists of 10,125,000 shares of
Class A Common Stock and 4,050,000 shares of Class B
Common Stock. At the close of business on
September 27, 1994, (i) 6,633,129 shares of Class A
Common Stock and 2,056,876 shares of Class B Common
Stock were issued and outstanding, (ii) no shares of
Common Stock were held by the Company in its treasury
and (iii) 474,153 shares of Class A Common Stock were
reserved for issuance pursuant to options outstanding
under the Stock Plans (as defined in Section 6.04).
Except as set forth above, at the close of business on
September 27, 1994, no shares of capital stock or other
voting securities of the Company were issued, reserved
for issuance or outstanding. There are no outstanding
stock appreciation rights which were not granted in
tandem with a related Employee Stock Option (as defined
in Section 6.04). All outstanding shares of capital
stock of the Company are, and all shares which may be
issued pursuant to the Stock Plans (as defined in
Section 6.04) will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are not any bonds,
debentures, notes or other indebtedness of the Company
having the right to vote (or convertible into, or
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<PAGE>
exchangeable for, securities having the right to vote)
on any matters on which shareholders of the Company may
vote. Except as set forth above, as of the date of
this Agreement, there are not any securities, options,
warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the
Company or any of its subsidiaries is a party or by
which any of them is bound obligating the Company or
any of its subsidiaries, directly or indirectly, to
offer, issue, deliver or sell, or cause to be offered,
issued, delivered or sold, additional shares of capital
stock or other voting securities of the Company or of
any of its subsidiaries or obligating the Company or
any of its subsidiaries, directly or indirectly, to
offer, issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking (other than this
Agreement). As of the date of this Agreement, there
are not any outstanding contractual obligations of the
Company or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock
of the Company or any of its subsidiaries (other than
this Agreement).
(d) Authority; Noncontravention. The Company has
the requisite corporate power and authority to enter
into this Agreement and, subject, in the case of the
Merger, to approval of this Agreement by the Required
Company Shareholder Vote (as defined in
Section 4.01(m)) (except as otherwise permitted by
Section 905 of the BCL), to consummate the transactions
contemplated by this Agreement. The execution and
delivery of this Agreement by the Company and the
consummation by the Company of the transactions contem-
plated by this Agreement have been duly authorized by
all necessary corporate action on the part of the
Company, subject, in the case of the Merger, to
approval of this Agreement by the Required Company
Shareholder Vote (except as otherwise permitted by
Section 905 of the BCL). This Agreement has been duly
executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforce-
able against the Company in accordance with its terms.
The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated
by this Agreement and compliance with the provisions of
this Agreement will not, conflict with, or result in
any violation of, or default (with or without notice or
14
<PAGE>
lapse of time, or both) under, or give rise to a right
of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the
properties or assets of the Company or any of its
subsidiaries under, (i) subject, in the case of the
Merger, to approval of this Agreement by the Required
Company Shareholder Vote, the Certificate of
Incorporation or By-laws of the Company or the
comparable charter or organizational documents of any
of its subsidiaries, (ii) subject to the receipt of the
consents specifically listed in Items 3 and 5 of the
Disclosure Schedule, any loan or credit agreement,
note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or
license applicable to the Company or any of its
subsidiaries or their respective properties or assets
or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Company or any of its
subsidiaries or their respective properties or assets,
other than, in the case of clause (ii) or (iii), any
such conflicts, violations, defaults, rights or Liens
that individually or in the aggregate would not
(x) have a material adverse effect on the Company,
(y) impair the ability of the Company to perform its
obligations under this Agreement or (z) prevent, enjoin
or materially delay the consummation of or alter the
terms of any of the transactions contemplated by this
Agreement. No consent, approval, order or authoriza-
tion of, or registration, declaration or filing with,
any Federal, state or local government or any court,
administrative or regulatory agency or commission or
other governmental authority or agency, domestic or
foreign (a 'Governmental Entity'), is required by or
with respect to the Company or any of its subsidiaries
in connection with the execution and delivery of this
Agreement by the Company or the consummation by the
Company of the transactions contemplated by this
Agreement, except for (i) the filing of a premerger
notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the 'HSR Act'), (ii) the filing with the SEC of (w)
the Schedule 14D-9, (x) the Information Statement (as
defined in Section 4.01(f)), (y) a proxy statement or
information statement relating to the approval by the
Company's shareholders of this Agreement, if such
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<PAGE>
approval is required by law (as amended or supplemented
from time to time, the 'Proxy Statement'), and (z) such
reports under Section 13(a) of the Securities Exchange
Act of 1934, as amended (the 'Exchange Act'), as may be
required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the
filing of the Certificate of Merger with the New York
Secretary of State and appropriate documents with the
relevant authorities of other states in which the
Company is qualified to do business, (iv) such notices,
filings and consents as may be required under the
Illinois Responsible Property Transfer Act of 1988 and
the Indiana Responsible Property Transfer Law, (v) such
filings as may be required in connection with the taxes
described in Section 6.09, (vi) the filings required by
Article 16 of the BCL and (vii) such other consents,
approvals, orders, authorizations, registrations,
declarations and filings as are specifically set forth
in the Disclosure Schedule.
(e) SEC Documents; Financial Statements;
Undisclosed Liabilities. The Company has filed, as and
when required, all required reports, schedules, forms,
statements and other documents with the SEC since
June 25, 1994 (the 'SEC Documents'). As of their
respective dates, the SEC Documents complied in all
material respects with the requirements of the
Securities Act of 1933 (the 'Securities Act') or the
Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC
Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. Except to the
extent that information contained in any SEC Document
has been revised or superseded by a later Company Filed
SEC Document (as defined in Section 4.01(g)), none of
the SEC Documents contains any untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the circum-
stances under which they were made, not misleading.
The financial statements of the Company included in the
SEC Documents comply as to form in all material
respects with applicable accounting requirements and
the published rules and regulations of the SEC with
16
<PAGE>
respect thereto, have been prepared in accordance with
generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated
in the notes thereto) and fairly present the
consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and
the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit
adjustments). The consolidated balance sheet for the
Company and its subsidiaries as of June 25, 1994,
contained in the Disclosure Schedule fairly presents
the consolidated financial position of the Company and
its consolidated subsidiaries as of that date (subject
to annual year-end audit adjustments). Except as set
forth in the Company Filed SEC Documents or in the
Disclosure Schedule, neither the Company nor any of its
subsidiaries has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting
principles to be set forth on a consolidated balance
sheet of the Company and its consolidated subsidiaries
or in the notes thereto and which, individually or in
the aggregate, could reasonably be expected to have a
material adverse effect on the Company.
(f) Information Supplied. None of the informa-
tion supplied or to be supplied by the Company for
inclusion or incorporation by reference in the Offer
Documents or the information statement to be filed by
the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the
'Information Statement') and none of the information in
the Schedule 14D-9 or, if approval of this Agreement by
the shareholders of the Company is required by law, the
Proxy Statement, will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information
Statement, at the respective times the Offer Documents,
the Schedule 14D-9 and the Information Statement are
filed with the SEC or published, sent or given to the
Company's shareholders, or, in the case of any Proxy
Statement, at the date the Proxy Statement is filed
with the SEC or at the time the Proxy Statement is
first mailed to the Company's shareholders or at the
time of the meeting of the Company's shareholders held
to vote on approval of this Agreement, contain any
17
<PAGE>
untrue statement of a material fact or omit to state
any material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances under which they are made,
not misleading (except that no representation or
warranty is made by the Company with respect to
information supplied by Parent or Sub for inclusion in
the Schedule 14D-9, the Information Statement or the
Proxy Statement). The Schedule 14D-9, the Information
Statement and any Proxy Statement will comply as to
form in all material respects with the requirements of
the Exchange Act and the rules and regulations there-
under.
(g) Absence of Certain Changes or Events. Except
as disclosed in the SEC Documents filed and publicly
available prior to the date of this Agreement (the
'Company Filed SEC Documents') or the Disclosure
Schedule, since the date of the most recent financial
statements included in the Company Filed SEC Documents,
the Company and its subsidiaries have conducted their
business only in the ordinary course in all material
respects, and there has not been (i) any material
adverse change, or any event or condition which could
reasonably be expected to result in a material adverse
change, in the Company, other than changes, events or
conditions after the date hereof relating to any
violation of or default under the Company Finance
Documents (as defined in Section 10.03) unless such
violation or default (A) is a default in the payment
when due of any interest on or principal of the
indebtedness thereunder or (B) results in an
acceleration of the maturity of the indebtedness
thereunder or the taking of any action by the lenders
under the Company Finance Documents to realize on the
collateral securing such indebtedness, (ii) subject to
Section 5.01(a)(i), except for the regular quarterly
dividends not in excess of $.16 per share of Common
Stock with customary record and payment dates, any
declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital
stock, (iii) any split, combination or reclassification
of any of its capital stock or any issuance or the
authorization of any issuance of any other securities
in respect of, in lieu of or in substitution for shares
of its capital stock (other than pursuant to this
Agreement), (iv) (A) any granting by the Company or any
18
<PAGE>
of its subsidiaries to any director, officer or
employee of the Company or any of its subsidiaries of
any increase in compensation or benefits, except in the
ordinary course of business consistent with prior
practice or as was required under employment agreements
in effect as of the date of this Agreement and listed
in the Disclosure Schedule, (B) any granting by the
Company or any of its subsidiaries to any such
director, officer or employee of any increase in
severance or termination pay or similar benefit, except
as was required under employment, severance or
termination agreements or plans in effect as of the
date of this Agreement and listed in the Disclosure
Schedule or (C) any entry by the Company or any of its
subsidiaries into any employment, deferred
compensation, severance or termination agreement or
other similar agreement (or any amendment to any such
existing agreement) with any such director, officer or
employee, (v) any damage, destruction or loss, whether
or not covered by insurance, that has or could have a
material adverse effect on the Company, (vi) any change
in accounting methods, principles or practices by the
Company or its subsidiaries, except insofar as may have
been required to ensure compliance with generally
accepted accounting principles, (vii) prior to the date
of this Agreement, any (A) incurrence, assumption or
guarantee by the Company or any of its subsidiaries of
any indebtedness, other than in the ordinary course of
business in amounts and on terms consistent with past
practices, (B) issuance or sale of any securities
convertible into or exchangeable for debt securities of
the Company or any of its subsidiaries or (C) issuance
or sale of options or other rights to acquire from the
Company or any of its subsidiaries, directly or
indirectly, debt securities of the Company or any of
its subsidiaries or any securities convertible into or
exchangeable for any such debt securities, (viii) prior
to the date of this Agreement, any creation or
assumption by the Company or any of its subsidiaries of
any Lien on any material asset, other than in the
ordinary course of business consistent with past
practices or as required by the Company Finance
Documents, (ix) prior to the date of this Agreement,
any making of any loan, advance or capital contribution
to or investment in any person other than loans,
advances or capital contributions to or investments in
(A) wholly owned subsidiaries of the Company made in
the ordinary course of business consistent with past
19
<PAGE>
practice, (B) Parent and (C) directors, officers and
employees of the Company and its subsidiaries made in
the ordinary course of business consistent with past
practice, (x) prior to the date of this Agreement, any
transaction or commitment made, or any contract or
agreement entered into, by the Company or any of its
subsidiaries that is material to the Company, other
than those contemplated by this Agreement, or (xi) any
agreement or arrangement made by the Company or any of
its subsidiaries to take any action which, if taken
prior to the date hereof, would have made any
representation or warranty in this Section 4.01(g)
untrue or incorrect in any material respect.
(h) Litigation. Except as disclosed in the
Company Filed SEC Documents or in the Disclosure
Schedule, there is no investigation by any Governmental
Entity, suit, action or proceeding pending or, to the
knowledge of the Company, threatened against or affect-
ing the Company or any of its subsidiaries or any of
their respective properties or assets (and the Company
is not aware of any basis for any such investigation,
suit, action or proceeding) that, individually or in
the aggregate, could reasonably be expected to (i) have
a material adverse effect on the Company, (ii) impair
the ability of the Company to perform its obligations
under this Agreement or (iii) prevent, enjoin or
materially delay the consummation of or alter the terms
of any of the transactions contemplated by this
Agreement, nor is there any judgment, decree, injunc-
tion, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any of
its subsidiaries having, or which, insofar as reason-
ably can be foreseen, in the future would have, any
such effect.
(i) Absence of Changes in Benefit Plans. Except
(i) as disclosed in the Company Filed SEC Documents,
(ii) as contemplated by Section 6.04(a) and (iii) for
the change to the KES Plan (as defined in
Section 6.05(b)) expressly contemplated by the
Disclosure Schedule, since the date of this Agreement,
there has not been any adoption or amendment in any
material respect by the Company or any of its
subsidiaries of any collective bargaining agreement or
any bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock,
20
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retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan,
arrangement or understanding (whether or not legally
binding) providing benefits to any current or former
employee, officer or director of the Company or any of
its subsidiaries (collectively, 'Benefit Plans').
Except as disclosed in the Company Filed SEC Documents
or in the Disclosure Schedule, there exist no
employment, consulting, severance, termination or
indemnification agreements, arrangements or
understandings, written or oral, between the Company or
any of its subsidiaries and any current or former
officer, director, employee or consultant of the
Company or any of its subsidiaries which require
aggregate annual payments or total payments over the
life of such agreement, arrangement or understanding to
such officer, director, employee or consultant in
excess of $25,000 or $40,000, respectively, other than
any such agreement, arrangement or understanding
terminable without penalty by the Company or the
applicable subsidiary upon not more than one month's
notice. The Company has delivered to Parent a true and
complete copy of each such agreement and an accurate
summary of each such other arrangement or
understanding.
(j) ERISA Compliance. (i) The Disclosure
Schedule contains a list and brief description of all
'employee pension benefit plans' (as defined in
Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ('ERISA')), 'employee welfare
benefit plans' (as defined in Section 3(1) of ERISA)
and all other Benefit Plans maintained, or contributed
to, by the Company or any of its subsidiaries for the
benefit of any current or former employees, officers or
directors of the Company or any of its subsidiaries.
The Company has delivered to Parent true, complete and
correct copies of (w) each Benefit Plan (or, in the
case of any unwritten Benefit Plans, descriptions
thereof), (x) the most recent annual report on Form
5500 filed with the Internal Revenue Service with
respect to each Benefit Plan (if any such report was
required), (y) the most recent summary plan description
for each Benefit Plan for which such summary plan
description is required and (z) each trust agreement
and group annuity contract relating to any Benefit
Plan.
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(ii) Except as disclosed
in the Disclosure Schedule, all Benefit Plans that are
employee benefit pension plans (each, a 'Pension Plan')
have been the subject of determination letters from the
Internal Revenue Service to the effect that such Pension
Plans are qualified and exempt from Federal income taxes
under Sections 401(a) and 501(a), respectively, of the
Internal Revenue Code of 1986, as amended (the 'Code'),
and no such determination letter has been revoked nor,
to the knowledge of the Company, has revocation been
threatened, nor has any such Pension Plan been amended
since the date of its most recent determination letter
or application therefor in any respect that would
adversely affect its qualification or materially
increase its costs.
(iii) The Company has
furnished to Parent the most recent actuarial report or
valuation with respect to each Pension Plan subject to
Title IV of ERISA, other than any Pension Plan that is a
'multiemployer plan' (as such term is defined in Section
4001(a)(3) of ERISA; collectively, the 'Multiemployer
Pension Plans'). The information supplied to the actuary
by the Company for use in preparing those reports or
valuations was true and correct in all material
respects. None of the Pension Plans has an
'accumulated funding deficiency' (as such term is
defined in Section 302 of ERISA or Section 412 of the
Code), whether or not waived. Parent has received a
true and complete copy of the most recent actuarial
report prepared by the Company's actuaries. The
assumptions used in such actuarial report and applied
in making such determination were, and continue to be,
reasonable. None of the Company, any of its
subsidiaries, any officer of the Company or any of its
subsidiaries or any of the Benefit Plans which are
subject to ERISA, including the Pension Plans, any
trusts created thereunder or any trustee or administra-
tor thereof, has engaged in a 'prohibited transaction'
(as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) or any other breach of
fiduciary responsibility that could subject the Com-
pany, any of its subsidiaries or any officer of the
Company or any of its subsidiaries to the tax or
penalty on prohibited transactions imposed by such
Section 4975 or to any liability under Section 502(i)
or (1) of ERISA. Neither any of such Benefit Plans nor
any of such trusts has been terminated, nor has there
22
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been any 'reportable event' (as that term is defined in
Section 4043 of ERISA) with respect thereto, during the
last five years. Neither the Company nor any of its
subsidiaries has suffered or otherwise caused a 'com-
plete withdrawal' or a 'partial withdrawal' (as such
terms are defined in Sections 4203 and Section 4205,
respectively, of ERISA) since the effective date of
such Sections 4203 and 4205 with respect to any of the
Multiemployer Pension Plans.
(iv) With respect to any
Benefit Plan that is an employee welfare benefit plan,
except as disclosed in the Disclosure Schedule, (x) no
such Benefit Plan is unfunded or funded through a 'welfare
benefits fund', as such term is defined in Section 419(e)
of the Code and (y) each such Benefit Plan that is a
'group health plan', as such term is defined in Section
5000(b)(1) of the Code, complies with the applicable
requirements of Section 4980B(f) of the Code.
(k) Taxes. Except as set forth in the Disclosure
Schedule, each of the Company and each of its
subsidiaries has timely filed all tax returns and
reports required to be filed by it and has paid (or the
Company has paid on its behalf) all taxes required to
be paid by it, and the most recent financial statements
contained in the Company Filed SEC Documents reflect an
adequate reserve for all taxes payable by the Company
and its subsidiaries for all taxable periods and
portions thereof through the date of such financial
statements. No deficiencies for any taxes have been
proposed, asserted or assessed against the Company or
any of its subsidiaries, and no requests for waivers of
the time to assess any such taxes are pending. The
Federal income tax returns of the Company and each of
its subsidiaries consolidated in such returns have been
examined by and settled with the United States Internal
Revenue Service for all years through 1988. As used in
this Agreement, 'taxes' shall include all Federal,
state, local and foreign income, property, sales,
excise and other taxes, tariffs or governmental charges
of any nature whatsoever and all penalties and interest
with respect thereto. The Disclosure Schedule sets
forth the Company's most recent estimate of the basis,
as defined in Section 1012 of the Code, as of
December 24, 1993, of the Company's assets (by asset
categories). Such estimate was made in good faith,
applying reasonable assumptions.
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<PAGE>
(l) No Excess Parachute Payments. Except as set
forth in the Disclosure Schedule, any amount that could
be received (whether in cash or property or the vesting
of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer
or director of the Company or any of its affiliates who
is a 'disqualified individual' (as such term is defined
in proposed Treasury Regulation Section 1.280G-1) under
any employment, severance or termination agreement,
other compensation arrangement or Benefit Plan cur-
rently in effect would not be characterized as an
'excess parachute payment' (as such term is defined in
Section 280G(b)(1) of the Code). Except as set forth
in the Disclosure Schedule, no 'covered employee' (as
such term is defined in Section 162(m) of the Code) of
the Company or any of its subsidiaries is entitled to,
or as a result of the transactions contemplated hereby
or of a change in control of the Company would be
entitled to, 'applicable employee remuneration' (as
such term is defined in Section 162(m) of the Code) not
deductible by reason of Section 162(m) of the Code.
(m) Voting Requirements. In the event
Section 905 of the BCL does not eliminate the need for
the approval and adoption by the shareholders of the
Company of this Agreement and the plan of merger
included herein, the affirmative votes of (i) the
holders of two-thirds of the outstanding shares of
Class A Common Stock and Class B Common Stock, voting
as one class, (ii) the holders of a majority of the
outstanding shares of the Class A Common Stock and
(iii) the holders of a majority of the outstanding
shares of the Class B Common Stock approving this
Agreement (the 'Required Company Shareholder Vote') are
the only votes of the holders of any class or series of
the Company's capital stock necessary to consummate the
Merger.
(n) State Takeover Statutes. The Board of
Directors of the Company has approved the Offer, the
Merger and this Agreement, and such approval is suffi-
cient to render inapplicable to the Offer, the Merger,
this Agreement and the transactions contemplated by
this Agreement the provisions of Section 912 of the
BCL. To the best of the Company's knowledge, other
than Article 16 and Section 912 of the BCL, no state
takeover statute or similar statute or regulation
applies or purports to apply to the Offer, the Merger,
24
<PAGE>
this Agreement or any of the transactions contemplated
by this Agreement.
(o) Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other
person, other than the Advisors, is entitled to any
broker's, finder's, financial advisor's or other
similar fee or commission in connection with the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The
Company has provided to Parent true and complete copies
of its agreements with the Advisors.
(p) Compliance with Laws. (i) Each of the
Company and its subsidiaries has in effect all Federal,
state, local and foreign governmental approvals,
authorizations, certificates, filings, franchises,
licenses, notices, permits and rights ('Permits')
necessary for it to own, lease or operate its
properties and assets and to carry on its business as
now conducted, and there has occurred no default under
any such Permit, except for the absence of Permits and
for defaults under Permits which absence or defaults,
individually or in the aggregate, could not reasonably
be expected to have a material adverse effect on the
Company. Except as disclosed in the Company Filed SEC
Documents, the Company and its subsidiaries are in
compliance with all applicable statutes, laws,
ordinances, regulations, rules, judgments, decrees or
orders of any Governmental Entity, except for possible
noncompliance which, individually or in the aggregate,
could not reasonably be expected to have a material
adverse effect on the Company.
(ii) The Company has provided
Parent with certain environmental materials relating to the
facilities and operations of the Company and its
subsidiaries, which materials are identified in the
Disclosure Schedule (the 'Environmental Materials').
Except as set forth in the Disclosure Schedule, (A) neither
the Company nor any of its subsidiaries have received any
written communication from a Governmental Entity that
alleges that the Company or any subsidiary is not in
compliance in any material respect with any
Environmental Laws, (B) each of the Company and its
subsidiaries hold, and are in compliance with, all
Permits required for the Company and its subsidiaries
to conduct their respective businesses under
25
<PAGE>
Environmental Laws, and are in compliance with all
Environmental Laws, except for the absence of such
Permits and incidents of noncompliance which absence or
noncompliance, individually or in the aggregate, could
not reasonably be expected to have a material adverse
effect on the Company, and (C) the Company has no
knowledge of any environmental materials, events or
facts or information other than as set forth in the
Disclosure Schedule which disclose or could reasonably
be expected to give rise to an environmental liability
which would have a material adverse effect on the
Company. As used in this Agreement, the term
'Environmental Laws' means, as of the Closing Date, any
applicable treaties, laws, regulations, enforceable
requirements, orders, decrees or judgments issued,
promulgated or entered into by any Governmental Entity,
which relate to (A) pollution or protection of the
environment or (B) Hazardous Materials (as hereinafter
defined) generation, storage, use, handling, disposal
or transportation including the Comprehensive
Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. 9601 et seq.
('CERCLA'), the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. 6901 et seq., the Federal
Water Pollution Control Act, as amended, 33 U.S.C.
1251 et seq., the Clean Air Act of 1970, as amended,
42 U.S.C. 7401 et seq., the Toxic Substances Control
Act of 1976, 15 U.S.C. 2601 et seq., the Hazardous
Materials Transportation Act, 49 U.S.C. 1801 et
seq., and any similar or implementing state or local
law, and all amendments or regulations promulgated
thereunder. As used in this Agreement, the term
'Hazardous Materials' means all explosive or regulated
radioactive materials or substances, hazardous or toxic
substances, wastes or chemicals, petroleum or petroleum
distillates, asbestos or asbestos containing materials,
and all other materials or chemicals regulated pursuant
to any Environmental Law, including materials listed in
49 C.F.R. 172.101 and materials defined as hazardous
pursuant to Section 101(14) of CERCLA.
(q) Contracts; Debt Instruments. (i) Neither
the Company nor any of its subsidiaries is in violation
of or in default under (nor does there exist any
condition which upon the passage of time or the giving
of notice would cause such a violation of or default
under) any loan or credit agreement, note, bond,
mortgage, indenture, lease, permit, concession,
26
<PAGE>
franchise, license or any other contract, agreement,
arrangement or understanding, to which it is a party or
by which it or any of its properties or assets is
bound, except as set forth in the Disclosure Schedule
and except for violations or defaults that would not,
individually or in the aggregate, result in a material
adverse effect on the Company.
(ii) Set forth in the
Disclosure Schedule is (x) a list of all loan or credit
agreements, notes, bonds, mortgages, indentures and other
agreements and instruments pursuant to which any
indebtedness of the Company or any of its subsidiaries in
an aggregate principal amount in excess of $1,000,000 is
outstanding or may be incurred and (y) the respective
principal amounts outstanding thereunder, in each case as
of February 26, 1994. The Company has provided to Parent
a true and complete copy of all such documents and
instruments. For purposes of this Agreement,
'indebtedness' shall mean, with respect to any person,
without duplication, (A) all obligations of such person
for borrowed money, or with respect to deposits or
advances of any kind to such person, (B) all
obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (C) all
obligations of such person upon which interest charges
are customarily paid, (D) all obligations of such
person under conditional sale or other title retention
agreements relating to property purchased by such
person, (E) all obligations of such person issued or
assumed as the deferred purchase price of property or
services (excluding obligations of such person to
creditors for raw materials, inventory, services and
supplies incurred in the ordinary course of such
person's business), (F) all capitalized lease
obligations of such person, (G) all obligations of
others secured by any lien on property or assets owned
or acquired by such person, whether or not the
obligations secured thereby have been assumed, (H) all
obligations of such person under interest rate or
currency hedging transactions (valued at the
termination value thereof), (I) all letters of credit
issued for the account of such person (excluding
letters of credit issued for the benefit of suppliers
to support accounts payable to suppliers incurred in
the ordinary course of business) and (J) all guarantees
and arrangements having the economic effect of a
27
<PAGE>
guarantee of such person of any indebtedness of any
other person.
(iii) Set forth in the
Disclosure Schedule is a list of (A) any letter of intent,
agreement in principle, other understanding or agreement in
effect on the date hereof for the future sale, lease or
other disposition by the Company or any of its subsidiaries
of any assets, except for sales of inventory or assets
no longer used or useful in the conduct of its
business, in each case in the ordinary course and
consistent with past practice, (B) any letter of
intent, agreement in principle, other understanding or
agreement in effect on the date hereof to which the
Company or any of its subsidiaries is a party and that
substantially limits the freedom of the Company or any
of its subsidiaries to (1) compete in any line of
business or with any person or in any area or which
would so limit the freedom of the Company or any
subsidiaries after the Effective Time of the Merger
(other than any such agreement that has been in effect
for longer than seven years if the Company and all its
subsidiaries are currently in material compliance with
such agreement) or (2) sell, lease or otherwise dispose
of any significant portion of the assets of the Company
(determined on a consolidated basis) or (C) any other
agreement in effect on the date hereof not made in the
ordinary course of business and material to the Company
under which the Company or any of its subsidiaries has
material unperformed obligations, if entered into less
than seven years prior to the date hereof, or, with
respect to such agreements entered into before such
date, would, if entered into as of the date hereof, be
considered made not in the ordinary course. The
Company has provided the Parent with a true and
complete copy of all such contracts and agreements.
(r) Title to Properties. (i) Except as set
forth in the Disclosure Schedule, each of the Company
and each of its subsidiaries has good and marketable
title to, or valid leasehold interests in, all its
properties and assets, except for such as are no longer
used or useful in the conduct of its businesses or as
have been disposed of in the ordinary course of
business and except for defects in title, easements,
restrictive covenants and similar encumbrances or
impediments that, in the aggregate, do not and will not
materially interfere with its ability to conduct its
28
<PAGE>
business as currently conducted. All such assets and
properties, other than assets and properties in which
the Company or any of its subsidiaries has leasehold
interests, are free and clear of all Liens other than
those set forth in the Disclosure Schedule and except
for Liens that, in the aggregate, do not and will not
materially interfere with the ability of the Company
and its subsidiaries to conduct their respective
businesses, as currently conducted.
(ii) Except as set forth in
the Disclosure Schedule, each of the Company and each of
its subsidiaries has complied in all material respects with
the terms of all material leases to which it is a party
and under which it is in occupancy, and all such leases
are in full force and effect. Each of the Company and
each of its subsidiaries enjoys peaceful and
undisturbed possession under all such material leases.
(s) Intellectual Property. The Company and its
subsidiaries own, or are validly licensed or otherwise
have the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade name
rights, service marks, service mark rights, copyrights
and other proprietary intellectual property rights and
computer programs (collectively, 'Intellectual Property
Rights') which are material to the conduct of the
business of the Company and its subsidiaries as
currently conducted. The Disclosure Schedule sets
forth a description of all Intellectual Property Rights
which are material to the conduct of the business of
the Company and its subsidiaries as currently
conducted. Except as set forth in the Disclosure
Schedule, no claims are pending or, to the knowledge of
the Company, threatened that the Company or any of its
subsidiaries is infringing or otherwise adversely
affecting the rights of any person with regard to any
Intellectual Property Right. To the knowledge of the
Company, except as set forth in the Disclosure
Schedule, no person is infringing the rights of the
Company or any of its subsidiaries with respect to any
Intellectual Property Right.
29
<PAGE>
SECTION 4.02. Representations and Warranties of
Parent and Sub. Parent and Sub represent and warrant to the
Company as follows:
(a) Organization, Standing and Corporate Power.
Each of Parent and Sub is a corporation duly organized,
validly existing and in good standing under the laws of
the jurisdiction in which it is incorporated and has
the requisite corporate power and authority to carry on
its business as now being conducted, except where the
failure to be so organized, existing or in good
standing or to have such power would not, individually
or in the aggregate, have a material adverse effect on
Parent. Parent has provided the Company with complete
and correct copies of its and Sub's Certificate of
Incorporation and By-laws.
(b) Capital Structure. The authorized capital
stock of Parent consists of 5,000,000 shares of
Preferred Stock, par value $25 per share, and
5,000,000 shares of common stock, par value $5 per
share. At the close of business on September 19, 1994,
(i) 2,043,493 shares of Parent Common Stock and
2,623,604 shares of Parent Preferred Stock were issued
and outstanding. As of the date of this Agreement, the
authorized capital stock of Sub consists of
10,000 shares of common stock, par value $0.01 per
share, all of which have been validly issued, are fully
paid and nonassessable and are owned by Parent free and
clear of any Liens.
(c) Authority; Noncontravention. Parent and Sub
have all requisite corporate power and authority to
enter into this Agreement and to consummate the trans-
actions contemplated by this Agreement. The execution
and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action
on the part of Parent and Sub. This Agreement has been
duly executed and delivered by Parent and Sub and
constitutes a valid and binding obligation of such
party, enforceable against such party in accordance
with its terms. The execution and delivery of this
Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compli-
ance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or
30
<PAGE>
both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to
loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or
assets of Parent or any of its subsidiaries under,
(i) the certificate of incorporation or by-laws of
Parent or Sub or the comparable charter or
organizational documents of any other subsidiary of
Parent, (ii) subject to the receipt of the consents
specifically listed in Items 3 and 5 of the Disclosure
Schedule, any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license
applicable to Parent or Sub or their respective
properties or assets or (iii) subject to the
governmental filings and other matters referred to in
the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable
to Parent, Sub or any other subsidiary of Parent or
their respective properties or assets, other than, in
the case of clause (ii) or (iii), any such conflicts,
violations, defaults, rights or Liens that individually
or in the aggregate would not (x) have a material
adverse effect on Parent, (y) impair the ability of
Parent and Sub to perform their respective obligations
under this Agreement or (z) prevent, enjoin or
materially delay the consummation of or alter the terms
of any of the transactions contemplated by this
Agreement. No consent, approval, order or
authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or
with respect to Parent, Sub or any other subsidiary of
Parent in connection with the execution and delivery of
this Agreement or the consummation by Parent or Sub, as
the case may be, of any of the transactions
contemplated by this Agreement, except for (i) the
filing of a premerger notification and report form
under the HSR Act, (ii) the filing with the SEC of
(x) the Offer Documents and (y) such reports under
Sections 13 and 16 of the Exchange Act as may be
required in connection with this Agreement and the
transactions contemplated by this Agreement, (iii) the
filing of the Certificate of Merger with the New York
Secretary of State and appropriate documents with the
relevant authorities of other states in which the
Company is qualified to do business, (iv) such filings
as may be required in connection with the taxes
described in Section 6.09, (v) such notices, filings
31
<PAGE>
and consents as may be required under the Illinois
Responsible Property Transfer Act of 1988 and the
Indiana Responsible Property Transfer Law, (vi) the
filings required by Article 16 of the BCL and
(vii) such other consents, approvals, orders,
authorizations, registrations, declarations and filings
as may be required under the 'takeover' or 'blue sky'
laws of various states. Neither Parent nor any of its
Affiliates or Associates (as each such term is defined
in Section 912 of the BCL) is, at the date of execution
and delivery of this Agreement, an Interested
shareholder (as such term is defined in 912 of the BCL)
of the Company.
(d) SEC Documents; Financial Statements;
Undisclosed Liabilities. Parent has filed, as and when
required, all required reports, forms and other
documents with the SEC since June 26, 1993 (the 'Parent
SEC Documents'). As of their respective dates, the
Parent SEC Documents complied in all material respects
with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder
applicable to such Parent SEC Documents, and none of
the Parent SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to
make the statements therein, in light of the
circumstances under which they were made, not mis-
leading. Except to the extent that information
contained in any Parent SEC Document has been revised
or superseded by a later Parent Filed SEC Document (as
defined in Section 4.02(f)), none of the Parent SEC
Documents contains any untrue statement of a material
fact or omits to state any material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they were made, not misleading. The financial
statements of Parent included in the Parent SEC
Documents comply as to form in all material respects
with applicable accounting requirements and the
published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with
generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by
Form 10-Q of the SEC) applied on a consistent basis
during the periods involved and fairly present the
consolidated financial position of Parent and its
32
<PAGE>
consolidated subsidiaries as of the dates thereof and
the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the Parent Filed
SEC Documents, neither Parent nor any of its
subsidiaries has any material liabilities or
obligations required by generally accepted accounting
principles to be recognized or disclosed on a
consolidated balance sheet of Parent and its consoli-
dated subsidiaries or in the notes thereto and which,
individually or in the aggregate, would have a material
adverse effect on Parent.
(e) Information Supplied. None of the informa-
tion supplied or to be supplied by Parent or Sub for
inclusion or incorporation by reference in the
Schedule 14D-9 or, if approval of this Agreement by the
shareholders of the Company is required by law, the
Proxy Statement, and none of the information in the
Offer Documents or the Information Statement will, in
the case of the Offer Documents, the Schedule 14D-9 and
the Information Statement, at the respective times the
Offer Documents, the Schedule 14D-9, and the
Information Statement are filed with the SEC or
published, sent or given to the Company's shareholders,
or, in the case of the Proxy Statement, at the date any
Proxy Statement is first mailed to the Company's
shareholders or at the time of the meeting of the
Company's shareholders held to vote on approval of this
Agreement, contain any untrue statement of a material
fact or omit to state any material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances under
which they are made, not misleading (except that no
representation or warranty is made by Parent or Sub
with respect to information supplied by the Company for
inclusion in the Offer Documents or the Information
Statement). The Offer Documents will comply as to form
in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder.
(f) Absence of Certain Changes or Events. Except
as disclosed in the Parent SEC Documents filed and
publicly available prior to the date of this Agreement
(the 'Parent Filed SEC Documents') or the Disclosure
Schedule, since the date of the most recent financial
statements contained in the Parent Filed SEC Documents,
33
<PAGE>
Parent has conducted its business only in the ordinary
course and there has not been (i) any material adverse
change, or any event or condition which could
reasonably be expected to result in a material adverse
change, in Parent, (ii) except for regular annual
dividends (in an amount determined in a manner
consistent with Parent's past practice) with customary
record and payment dates, any declaration, setting
aside or payment of any dividend or distribution
(whether in cash, stock or property) with respect to
any of Parent's capital stock, (iii) any split,
combination or reclassification of any of its capital
stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock
or (iv) any change in accounting methods, principles or
practices by Parent, except insofar as may have been
disclosed in the Parent SEC Documents or required to
ensure compliance with generally accepted accounting
principles.
(g) Litigation. Except as disclosed in the
Parent Filed SEC Documents or in the Disclosure
Schedule, there is no investigation by any Governmental
Entity, suit, action or proceeding pending or, to the
knowledge of Parent, threatened against or affecting
Parent or any of its subsidiaries or any of their
respective properties or assets that, individually or
in the aggregate, could reasonably be expected to
(i) have a material adverse effect on Parent,
(ii) impair in any material respect the ability of
Parent to perform its obligations under this Agreement
or (iii) prevent, enjoin or materially delay the
consummation of or alter the terms of any of the
transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order
of any Governmental Entity or arbitrator outstanding
against Parent or any of its subsidiaries having, or
which is reasonably likely to have, any such effect.
(h) Brokers. No broker, investment banker,
financial advisor or other person, other than Dillon,
Read & Co. Inc., the fees and expenses of which will be
paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission
in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on
behalf of Parent or Sub.
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<PAGE>
(i) Contracts; Debt Instruments. Neither Parent
nor any of its subsidiaries is in violation of or in
default under (nor does there exist any condition which
upon the passage of time or the giving of notice would
cause such a violation of or default under) any loan or
credit agreement, note, bond, mortgage, indenture,
lease or other contract, agreement, arrangement or
understanding, to which it is a party or by which it or
any of its properties or assets is bound, except for
violations or defaults that could not, individually or
in the aggregate, reasonably be expected to result in a
material adverse effect on Parent.
(j) Title to Properties. Parent and its
subsidiaries have good and marketable title to, or
valid leasehold interests in, all their material
properties and assets, except as otherwise indicated in
the Disclosure Schedule or for such as are no longer
used or useful in the conduct of its businesses or as
have been disposed of in the ordinary course of
business and except for defects in title, easements,
restrictive covenants and similar encumbrances or
impediments that, in the aggregate, do not and will not
materially interfere with its ability to conduct its
business as currently conducted. All such material
properties and assets, other than properties and assets
in which Parent or any of its subsidiaries has
leasehold interests, and other than as reflected in the
Disclosure Schedule are free and clear of all Liens,
except for Liens that, in the aggregate, do not and
will not materially interfere with the ability of
Parent and its subsidiaries to conduct business as
currently conducted.
(k) Financing. Parent and Sub have funds avail-
able on hand or available pursuant to binding
commitments or 'highly confident' letters from
financing sources sufficient to consummate the Offer
and the Merger on the terms contemplated by this
Agreement, and, at the Effective Time of the Merger,
Parent and Sub will have available all of the funds
necessary (x) to repay the indebtedness outstanding
under the Commercial Bank Credit Agreement (as defined
in Section 10.03(b)), (y) to perform their respective
obligations under this Agreement and (z) to pay all the
related fees and expenses in connection with the
foregoing. Parent has provided to the Company true and
correct copies of all commitment letters, 'highly
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confident' letters and other evidence satisfactory to
the Company that Parent has such sufficient funds.
Parent and Sub shall use all commercially reasonable
efforts to complete and satisfy all conditions to
lending under such finance commitments.
ARTICLE V
Covenants Relating to Conduct of Business
SECTION 5.01. Conduct of Business. (a) Conduct
of Business by the Company. During the period from the date
of this Agreement to the Effective Time of the Merger, or,
if earlier, the consummation of the Offer, the Company
shall, and shall cause its subsidiaries to, carry on their
respective businesses in the usual, regular and ordinary
course in substantially the same manner as heretofore
conducted and, to the extent consistent therewith, use all
reasonable efforts to preserve intact their current business
organizations, keep available the services of their current
officers and employees and preserve their relationships with
customers, suppliers, licensors, licensees, distributors and
others having business dealings with them to the end that
their goodwill and ongoing businesses shall be unimpaired at
the Effective Time of the Merger. Without limiting the
generality of the foregoing, during the period from the date
of this Agreement to the Effective Time of the Merger, or,
if earlier, the consummation of the Offer, except as set
forth in the Disclosure Schedule, the Company shall not, and
shall not permit any of its subsidiaries to:
(i) (x) except for regular quarterly dividends not
in excess of $.16 per share of Common Stock with
customary record and payment dates, declare, set aside
or pay any dividends on, or make any other
distributions in respect of, any of its capital stock,
other than dividends and distributions by any direct or
indirect wholly owned subsidiary of the Company to its
parent (provided that the Company shall not set as the
record date for a dividend a date earlier than
November 15, 1994), (y) split, combine or reclassify
any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock
or (z) purchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any
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rights, warrants or options to acquire any such shares
or other securities;
(ii) offer, issue, deliver,
sell, pledge or otherwise encumber any shares of its
capital stock, any other voting securities or any
securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or
convertible securities (other than (x) the issuance of
Common Stock upon the exercise of Employee Stock Options
outstanding on the date of this Agreement in accordance
with their present terms and (y) the issuance of shares of
Class A Common Stock on a one for one basis in connection
with any requested conversion of outstanding shares of
Class B Common Stock to shares of Class A Common Stock
by the holders of Class B Common Stock);
(iii) amend its certificate of
incorporation, by-laws or other comparable charter or
organizational documents;
(iv) acquire or agree to
acquire (x) by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by
any other manner, any business or any corporation,
partnership, joint venture, association or other business
organization or division thereof or (y) any assets that
are material, individually or in the aggregate, to the
Company and its subsidiaries, taken as a whole, except
purchases of inventory and other assets in the ordinary
course of business consistent with past practice;
(v) except as required by the Company's Finance
Documents (as in effect on the date hereof, true and
complete copies of which have been delivered to Parent)
in the case of any property of the Company (including
after-acquired property) in which the Company is
obligated to deliver to the secured party thereunder a
security interest or mortgage or except as permitted by
the Company's Finance Documents (as in effect on the
date hereof) with respect to capitalized lease
obligations or purchase money debt, mortgage or other-
wise encumber or subject to any Lien (other than any
Lien arising by operation of law) or, except for sales
in the ordinary course of business consistent with past
practice of inventory or assets no longer used or
usable by the Company or such subsidiary, sell, lease
or otherwise dispose (or enter into any letter of
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intent, agreement in principle, other understanding or
commitment to sell, lease or otherwise dispose) of any
of its properties or assets;
(vi) (y) incur any indebtedness
for borrowed money or guarantee any such indebtedness of
another person, issue or sell any debt securities or
warrants or other rights to acquire, directly or indirectly,
any debt securities of the Company or any of its
subsidiaries or any securities convertible into or
exchangeable for debt securities of the Company or any of
its subsidiaries, guarantee any debt securities of another
person, enter into any 'keep well' or other agreement
to maintain any financial statement condition of
another person or enter into any arrangement having the
economic effect of any of the foregoing, except for
(A) short-term borrowings incurred in the ordinary
course of business consistent with past practice if
pursuant to or permitted by the Company Finance
Documents (as in effect on the date hereof) and
(B) indebtedness to Parent, or (z) make any loans,
advances or capital contributions to, or investments
in, any other person, other than to or in (A) the Com-
pany or any direct or indirect wholly owned subsidiary
of the Company made in the ordinary course of business
consistent with past practice, (B) Parent and
(C) directors, officers and employees of the Company
and its subsidiaries made in the ordinary course of
business consistent with past practice so long as such
loans and advances do not, as to any one director,
officer or employee, exceed $10,000 and such loans and
advances do not, as to all such loans and advances,
exceed $50,000 in aggregate;
(vii) make or agree to make any
capital expenditures except as have been set forth in the
Company's approved capital budget for 1994, as amended
prior to the date hereof by the Boards of Directors of
Parent and the Company; provided, however, that (A) the
Company may make any necessary or appropriate capital
expenditures resulting from the fire at the Southern
Frozen Foods plant in Montezuma, GA, to the extent such
expenditures are (I) permitted or required by paragraphs
18 and 19 of the Integrated Agreement (as defined in
Section 6.07(d)) or (II) are made out of the proceeds
of insurance payments or are reasonably expected by the
Company to be reimbursed by insurance, and (B) the
Company or its subsidiaries may make emergency capital
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expenditures, not exceeding $25,000 as to any single
emergency, in accordance with the Company's Corporate
Policy Manual concerning capital expenditures and
consistent with past practice;
(viii) make any material tax
election (unless required by law) or settle or compromise
any material income tax liability;
(ix) pay, discharge or satisfy
any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities reflected
or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes
thereto) of the Company included in the Company Filed
SEC Documents, disclosed in the Disclosure Schedule or
incurred in the ordinary course of business consistent
with past practice, or waive the benefits of, or agree
to modify in any manner, any confidentiality, stand-
still or similar agreement to which the Company or any
of its subsidiaries is a party;
(x) enter into any agreement, contract,
transaction or commitment other than in the ordinary
course of business consistent with past practice and,
if material to the Company, other than on terms
reasonably acceptable to Parent;
(xi) enter into any agreement,
contract, transaction or commitment that limits the freedom
of the Company or any of its subsidiaries to compete in
any line of business or with any person or in any area
or which would so limit the freedom of the Company or
any subsidiaries after the Effective Time of the
Merger; or
(xii) authorize any of, or
commit or agree to take any of, the foregoing actions.
(b) Other Actions. The Company and Parent shall
not, and shall not permit any of their respective subsidi-
aries to, take any action that would result in, or omit to
take any action the omission of which would result in
(i) any of the representations and warranties of such party
set forth in this Agreement that are qualified as to
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materiality becoming untrue, (ii) any of such representa-
tions and warranties that are not so qualified becoming
untrue in any material respect (except for the
representations and warranties in Sections 4.01(c) and (g)
that are not so qualified, which shall not be permitted to
become untrue in any respect) or (iii) except as
contemplated by Section 8.01(a), any of the conditions to
the Merger set forth in Article VII not being satisfied.
(c) Notwithstanding any provision of this
Section 5.01 or any other Section of this Agreement or of
the Integrated Agreement to the contrary, the Company's
Board of Directors may declare, and the Company may pay, a
cash dividend not in excess of $.16 per share of Common
Stock with a record date therefor on or after November 15,
1994, and prior to December 31, 1994.
ARTICLE VI
Additional Agreements
SECTION 6.01. Shareholder Approval; Preparation
of Proxy Statement. (a) If approval of this Agreement by
the shareholders of the Company is required by law, the
Company shall, following the expiration or consummation of
the Offer, duly call, give notice of, convene and hold a
meeting of its shareholders (the 'Company Shareholders
Meeting') for the purpose of approving this Agreement and
the transactions contemplated by this Agreement. The
Company shall, through its Board of Directors, recommend to
its shareholders approval of this Agreement and the
transactions contemplated by this Agreement, except to the
extent that the Board of Directors of the Company shall have
withdrawn or modified its approval or recommendation of this
Agreement or the Merger as contemplated by Section 8.01(a).
Notwithstanding the foregoing, if Sub shall own at least 90%
of the outstanding shares of each class of Common Stock, and
provided the conditions set forth in Section 7.01 shall have
been satisfied or waived, the parties shall take all
necessary and appropriate action to cause the Merger to
become effective simultaneously with or as soon as
practicable after acceptance of shares of Common Stock for
payment pursuant to the Offer without the approval of the
shareholders of the Company in accordance with Section 905
of the BCL.
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(b) If approval of this Agreement by the
shareholders of the Company is required by law, as promptly
as practicable following expiration or consummation of the
Offer, the Company shall prepare and file with the SEC the
Proxy Statement. The Company shall use its best efforts to
cause the Proxy Statement to be mailed to the Company's
shareholders as promptly as practicable after such filing.
(c) If approval of this Agreement by the
shareholders of the Company is required by law, Parent shall
cause all shares of Common Stock owned by it, Sub or any
other subsidiary of Parent to be voted in favor of the
approval of this Agreement.
SECTION 6.02. Access to Information; Confiden-
tiality. The Company shall, and shall cause each of its
subsidiaries to, afford to Parent, and to Parent's officers,
employees, accountants, counsel, financial advisers and
other representatives, reasonable access during normal busi-
ness hours during the period prior to the Effective Time of
the Merger to all their respective properties, books, con-
tracts, commitments, personnel and records and, during such
period, the Company shall, and shall cause each of its sub-
sidiaries to, furnish promptly to Parent (i) a copy of each
report, schedule, registration statement and other document
filed by it during such period pursuant to the requirements
of Federal or state securities laws and (ii) all other
information concerning its business, properties and
personnel as Parent may reasonably request. Parent shall
hold, and shall cause its Representatives (as defined in the
Confidentiality Agreement dated February 16, 1994 (the
'Confidentiality Agreement'), between the Company and
Parent) to hold, any Evaluation Material (as defined in the
Confidentiality Agreement) in confidence in accordance with
the terms of the Confidentiality Agreement and, in the event
of termination of this Agreement for any reason, Parent
shall promptly return or destroy, and cause to be returned
or destroyed, all Evaluation Material in accordance with the
terms of the Confidentiality Agreement.
SECTION 6.03. Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth
in this Agreement, unless, as contemplated by
Section 8.01(a), the Board of Directors of the Company
approves or recommends a superior takeover proposal, each of
the parties shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in
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doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious
manner practicable, the Offer, the Merger and the other
transactions contemplated by this Agreement, including
(i) the obtaining of all necessary actions or nonactions,
waivers, consents and approvals from Governmental Entities
and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and
the taking of all reasonable steps as may be necessary to
obtain an approval or waiver from, or to avoid an action or
proceeding by, any Governmental Entity, (ii) the obtaining
of all necessary consents, approvals or waivers from third
parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging
this Agreement or the consummation of any of the
transactions contemplated by this Agreement, including
seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or
reversed, and (iv) the execution and delivery of any addi-
tional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of,
this Agreement. In connection with and without limiting the
foregoing, the Company and its Board of Directors shall
(A) cooperate and cause its officers to cooperate with and
assist Parent and Sub in obtaining financing, of the nature
described in the commitment letters and 'highly confident'
letters referred to in Section 4.02(k), sufficient to
consummate the Offer and the Merger, and to complete the
Offer and the Merger, on the terms contemplated by this
Agreement, (B) take all action necessary to ensure that no
state takeover statute or similar statute or regulation
(other than Article 16 of the BCL) is or becomes applicable
to the Offer, the Merger, this Agreement or any of the other
transactions contemplated by this Agreement and (C) if any
state takeover statute or similar statute or regulation
(other than Article 16 of the BCL) becomes applicable to the
Offer, the Merger, this Agreement or any other transaction
contemplated by this Agreement, take all action necessary to
ensure that the Offer, the Merger and the other transactions
contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such
statute or regulation on the Offer, the Merger and the other
transactions contemplated by this Agreement. Without
limiting the foregoing, Parent and Sub shall take all
reasonable actions necessary, proper or advisable to obtain
as promptly as practicable financing, consistent with the
terms of the commitment letters and 'highly confident'
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letters referred to in Section 4.02(k) or otherwise
satisfactory to Parent and Sub, sufficient to consummate the
Offer and the Merger on the terms contemplated by this
Agreement. Notwithstanding the foregoing, the Board of
Directors of the Company shall not be prohibited from taking
any action permitted by Section 8.01(a) or Section 9.01(c).
(b) The Company shall give prompt notice to
Parent, and Parent or Sub shall give prompt notice to the
Company, of (i) any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate in
any material respect, (ii) the failure by it to comply with
or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it under
this Agreement, (iii) any written notice or other
communication from any person alleging that the consent of
such person is or may be required in connection with the
transactions contemplated by this Agreement or (iv) any
notice or other communication from any Governmental Entity
in connection with the transactions contemplated by this
Agreement; provided, however, that no such notification
shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the
obligations of the parties under this Agreement.
SECTION 6.04. Stock Options. (a) As soon as
practicable following the date of this Agreement, the Board
of Directors of the Company (or, if appropriate, any commit-
tee administering the Stock Plans) shall adopt such resolu-
tions or take such other actions as are required to adjust
the terms of all outstanding employee stock options to
purchase shares of Common Stock ('Employee Stock Options')
heretofore granted under any stock option or stock purchase
plan, program or arrangement of the Company (collectively,
the 'Stock Plans') to provide that each Employee Stock
Option outstanding immediately prior to the Effective Time
of the Merger shall be vested and exercisable. The Company
may discharge its obligations under this Section 6.04(a)
with respect to the 144,180 Employee Stock Options that were
issued in March and June 1993 and not by their terms
currently vested by causing such Employee Stock Options to
terminate without the requirement of any payment by the
Company immediately prior to the Effective Time of the
Merger and the Company shall do so with respect to any such
options held by any director of the Company (other than
Messrs. Call and Myers); and Parent and the Company shall
jointly approach each other holder of any such option to
consent to such termination.
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(b) The Stock Plans shall terminate as of the
Effective Time of the Merger, and the provisions in any
other Benefit Plan providing for the issuance, transfer or
grant of any capital stock of the Company or any interest in
respect of any capital stock of the Company shall be deleted
as of the Effective Time of the Merger, and the Company
shall ensure that following the Effective Time of the Merger
no holder of an Employee Stock Option or any participant in
any Stock Plan or other Benefit Plan shall have any right
thereunder to acquire any capital stock of the Company or
the Surviving Corporation.
SECTION 6.05. Benefit Plans. (a) Parent shall
cause the Surviving Corporation to maintain in effect the
deferred compensation agreements with current and past
directors and employees as in effect on the date of this
Agreement. Parent shall cause the Surviving Corporation to
provide, for at least one year after the Effective Time of
the Merger, or, if earlier, the consummation of the Offer,
benefits to employees of the Company and its subsidiaries
that are no less favorable in the aggregate to such
employees than those in effect on the date of this
Agreement; provided, however, that neither Parent nor the
Surviving Corporation shall be obligated (i) to provide or
maintain such benefits to the extent they exceed, in the
aggregate, benefits generally provided to employees engaged
in similar industries and working in similar markets or in
competing markets or to the extent the provision or
maintenance thereof could reasonably likely be expected to
materially adversely affect the Surviving Corporation,
(ii) to offer such benefits to persons hired upon or after
the Effective Time of the Merger or the consummation of the
Offer, as applicable, (iii) to offer such benefits to the
extent such benefits would have expired, by their terms,
absent an agreement otherwise or (iv) to provide any
employees of the Company or its subsidiaries with any stock
options or other rights to acquire stock or with monetary or
other benefits in lieu of the right to receive stock options
or such other rights.
(b) Without limiting the generality of
Section 6.05(a), after the consummation of the Offer the
Company and, after the Effective Time of the Merger, the
Surviving Corporation shall, and Parent shall cause the
Company and the Surviving Corporation to, honor and perform
or discharge when due all the obligations of the Company
under the Company's Key Executive Severance Plan (the 'KES
Plan'), the Company's Non-Qualified Profit-Sharing Plan, the
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Company's Deferred Profit Sharing Plan, the Company's
Supplemental Executive Retirement Plan, the Company's
Management Incentive Plan and the agreements listed under
the heading 'Executive Agreements' in Item 5 of the
Disclosure Schedule, in each case as in effect on the date
of execution of this Agreement. The Company and Parent
acknowledge that the Effective Time of the Merger (or, if
earlier, the consummation of the Offer) shall constitute a
'Change of Control' and a 'Special Change of Control' within
the meaning of the KES Plan (and therefore also of any of
the other benefit plans and agreements listed above that
incorporates such definitions from the KES Plan), as in
effect on the date hereof, and that such 'Change of Control'
and 'Special Change of Control' shall take place at such
time. This Section 6.05(b) is intended to be for the
benefit of, and may be enforced by, each person entitled to
participate in any of the benefit plans and agreements
listed above.
SECTION 6.06. Indemnification. Parent and Sub
agree that all rights to indemnification for acts or
omissions occurring prior to the Effective Time of the
Merger now existing in favor of the current or former
directors or officers of the Company and its subsidiaries as
provided in their respective certificates of incorporation
or by-laws shall survive the Merger and shall continue in
full force and effect in accordance with their terms for a
period of not less than six years from the Effective Time of
the Merger. Parent shall cause to be maintained for a
period of not less than three years from the Effective Time
of the Merger the Company's current directors' and officers'
insurance and indemnification policy to the extent that it
provides coverage for events occurring prior to the
Effective Time of the Merger (the 'D&O Insurance') for all
persons who are directors and officers of the Company on the
date of this Agreement, so long as the annual premium
therefor would not be in excess of $100,000 per year (the
'Maximum Premium'). If the existing D&O Insurance cannot be
maintained (because such policy is obtained through Agway
Inc.), expires, is terminated or canceled during such three-
year period, Parent shall use all reasonable efforts to
cause to be obtained as much D&O Insurance as can be
obtained for the remainder of such period for an annualized
premium not in excess of the Maximum Premium, on terms and
conditions no less advantageous than the existing D&O
Insurance.
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SECTION 6.07. Fees and Expenses. (a) Except in
the case of a wilful and material breach of this Agreement
by the other party or as otherwise set forth in this
Section 6.07, all fees and expenses incurred in connection
with the Offer, the Merger, this Agreement and the
transactions contemplated by this Agreement shall be paid by
the party incurring such fees or expenses, whether or not
the Merger is consummated. Prior to the Effective Time of
the Merger or, if earlier, the consummation of the Offer,
the Company shall not incur or pay any such fees and
expenses other than (i) fees and expenses required to be
paid under the terms of its agreements with the Advisors
(and only at or after the times required by such
agreements), (ii) fees and expenses of other agents and
advisors and (iii) reasonable fees and expenses not payable
to agents and advisors, in each case unless otherwise
approved by Parent.
(b) The Company shall pay Parent a termination
fee of $2,500,000 if this Agreement is terminated (i) in
connection with a superior takeover proposal, (ii) by Parent
pursuant to Section 9.01(d) if the Board of Directors of the
Company or any committee thereof shall have withdrawn or
modified, or resolved to withdraw or modify, in a manner
adverse to Parent or Sub its approval or recommendation of
the Offer, the Merger or this Agreement unless (A) such
withdrawal or modification shall have resulted primarily
from facts not known to the Board of Directors on the date
of this Agreement or developments occurring after the date
of this Agreement and (B) at the time of such withdrawal or
modification there shall not be pending any takeover
proposal (as defined in Section 8.01(a)) (other than by
Parent) made after the date of this Agreement or (iii) by
Parent pursuant to Section 9.01(d) and, in the case of this
clause (iii), within one year from such termination any
person (other than Parent or one of its subsidiaries)
acquires a controlling equity interest in the voting
securities, or substantially all the assets, of the Company
or engages in any merger or other business combination with
the Company (an 'Alternative Acquisition') (unless any
termination fee shall have previously been paid pursuant to
clause (i) or (ii) above). Such payment shall be paid in
immediately available funds, promptly, but in no event later
than five business days, after the termination of this
Agreement or, in the case of a payment pursuant to
clause (iii) above, after such Alternative Acquisition.
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(c) Notwithstanding anything to the contrary
contained herein, if this Agreement is terminated (i) in
circumstances in which a termination fee is due pursuant to
Section 6.07(b), (ii) by Parent pursuant to Section 9.01(d)
or (iii) pursuant to Section 9.01(b)(i) or 9.01(b)(ii) (if
due to the Company's breach) and, in the case of this
clause (iii), within two years from such termination, any
person (or an affiliate thereof) (other than Parent or one
of its subsidiaries) who, between April 1, 1993, and the
date of such termination, had made, indicated to the Board
of Directors of the Company or any committee thereof, to the
chief executive officer or chief financial officer of the
Company or to either Advisor its interest in making or was
approached by the Company to make, a takeover proposal
consummates an Alternative Acquisition, then the Company
shall reimburse Parent for all fees and expenses incurred by
Parent prior to the termination date (including the
reasonable fees and expenses of Parent's counsel and
financial advisors and any institutions that have prior to
the date hereof made a commitment to provide financing to
Parent, Sub or the Surviving Corporation for the
transactions contemplated hereby) in connection with this
Agreement and the transactions contemplated hereby, up to a
maximum reimbursement of $3,000,000.
(d) Notwithstanding anything to the contrary in
the Integrated Agreement (the 'Integrated Agreement') dated
as of June 27, 1992, between Parent and the Company, any
amounts payable by the Company pursuant to Section 6.07(b)
or 6.07(c) shall not be taken into account for the purposes
of determining any amounts due from the Company to Parent,
or from Parent to the Company, pursuant to paragraphs 48
through 52 of the Integrated Agreement.
SECTION 6.08. Public Announcements. Parent and
Sub, on the one hand, and the Company, on the other hand,
shall consult with each other before issuing, and provide
each other the opportunity to review and comment upon, any
press release or other public statements with respect to the
transactions contemplated by this Agreement, including the
Merger, and shall not issue any such press release or make
any such public statement prior to such consultation, except
as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any
national securities exchange. The parties agree that the
initial press release to be issued with respect to the
transactions contemplated by this Agreement shall be in the
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form agreed to by the parties hereto prior to the execution
of this Agreement.
SECTION 6.09. Real Estate Taxes. Parent and Sub
agree that the Surviving Corporation shall pay the New York
State Real Property Transfer Tax, the New York State Real
Property Transfer Gains Tax, the Pennsylvania Realty
Transfer Tax, and the Washington State Excise Tax on Real
Estate Sales (collectively, the 'Gains Taxes'), if any, and
any penalties or interest with respect to the Gains Taxes,
payable in connection with the consummation of the Merger
without any offset, deduction, counterclaim or deferment of
price to be paid for Common Stock in the Merger. The
Company shall cooperate with Parent and Sub in the filing of
any returns with respect to the Gains Taxes, including
supplying in a timely manner a complete list of all real
property interests held by the Company that are located in
the applicable state and any information with respect to
such property that is reasonably necessary to complete such
returns. The portion of the consideration to be received by
holders of Common Stock in connection with the Merger that
is allocable to the real property of the Company and its
subsidiaries in the applicable state shall be determined by
Parent and the Company or, if they are unable to agree, an
independent appraiser selected by Parent and the Company.
The shareholders of the Company shall be deemed to have
agreed to be bound by the allocation established pursuant to
this Section 6.09 in the preparation of any return with
respect to the Gains Taxes.
SECTION 6.10. Appraisals. Prior to the Effective
Time of the Merger, Parent shall have the right to conduct
or have conducted on its behalf appraisals of all or part of
such assets and businesses of the Company and its
subsidiaries as Parent may reasonably request.
SECTION 6.11. Integrated Agreement. Prior to the
Effective Time of the Merger, the Company shall not
terminate or take any action to terminate the Integrated
Agreement between the Company and the Parent.
SECTION 6.12. Other Offers. From the date
hereof, neither the Company, any of its subsidiaries nor any
officer, director, employee or any agent of the Company or
any of its subsidiaries shall, directly or indirectly,
(i) solicit, initiate or (subject to Section 8.01(a))
encourage any takeover proposal or (ii) subject to
Section 8.01(a), engage in negotiation with or disclose any
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nonpublic information relating to the Company or any of its
subsidiaries or afford access to the properties, books or
records of the Company or any of its subsidiaries to any
person (other than Parent) that has made or that the Company
has reason to believe is considering making a takeover
proposal. The Company shall, and shall cause its
subsidiaries to, terminate any and all existing discussions
or negotiations with any person (other than Parent) relating
to any takeover proposal. The Company shall not be
responsible for any breach of this Section 6.12 by Roy
Myers, Robert Call, Jr., or any employee of the Company
involved primarily in managing the business of Parent or any
other employee of the Company acting at the request of any
of the foregoing.
SECTION 6.13. No Waiver. By entering into and
delivering this Agreement, neither the Company nor Parent
has, and neither of them shall be deemed to have, waived any
of its rights or claims against the other with respect to
the Integrated Agreement or otherwise or to have agreed with
the characterization of any arrangement, obligation, dispute
or claim involving the Company and Parent disclosed in the
Disclosure Schedule.
SECTION 6.14. Release. From and after the
Effective Time of the Merger, or, if earlier, the
consummation of the Offer, (i) Parent, the Company and the
Surviving Corporation (each a 'Releasor') shall release and
discharge each director, officer, employee, agent and
advisor of the Company (each, a 'Releasee') from any and all
claims, demands, causes of action, actions, suits,
proceedings and liabilities of any nature whatsoever
(collectively, 'Claims') that may exist at such time in
favor of any such Releasor against any such Releasee to the
extent arising out of or based upon (A) the Integrated
Agreement, including the write-down by the Company of
certain assets at the end of fiscal 1993 and in the first
half of fiscal 1995, the actions by the Company in
connection with the termination by Parent in March 1994 of
certain crops, the management by the Company of the business
of Parent prior to the date hereof or the inclusion of
certain 'change-of-control' expenses in the profits of the
Company for fiscal 1994 to be shared with Parent pursuant to
the Integrated Agreement, or (B) the transactions leading up
to this Agreement; provided, however, that the foregoing
release shall not apply to any Claim to the extent such
Claim (I) arises after the date of this Agreement,
(II) either (x) is based upon behavior of the applicable
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Releasee that is not generally consistent with the behavior
of such Releasee prior to the date hereof or (y) is based
upon any action taken by such Releasee, or failure by such
Releasee to take any action, with intentional disregard for
what such Releasee in good faith believes to be the rights
of Parent under the Integrated Agreement (it being agreed
that any action or failure to take action consistent with
such Releasee's understanding of the advice (written or
oral) of counsel shall be deemed to have been without
intentional disregard for what such Releasee in good faith
believes to be the rights of Parent), and (III) is made in
writing by Parent to such Releasee promptly upon Parent or
Sub becoming aware of facts giving rise to such Claim if
they so became aware prior to the Effective Time of the
Merger or, if earlier, the consummation of the Offer (it
being acknowledged by Parent and Sub that neither the
Company nor any Releasee concedes that a Claim made that is
consistent with this proviso is necessarily a valid claim
against any Releasee, none of whom is a party to the
Integrated Agreement); and (ii) Parent shall release and
discharge the Company from any and all claims, demands,
causes of action, actions, suits, proceedings and
liabilities of any nature whatsoever that may exist in favor
of Parent against the Company to the extent arising out of
or based upon the Integrated Agreement or the transactions
leading up to this Agreement.
SECTION 6.15. Directors. Promptly upon the
acceptance of any shares of Common Stock for payment
pursuant to the Offer, the number of directors constituting
the Board of Directors of the Company shall be reduced to
not less than seven, and Sub shall be entitled to designate
such number of directors on the Board of Directors of the
Company as shall give Sub, subject to compliance with
Section 14(f) of the Exchange Act, majority representation
on such Board of Directors, and the Company shall, at such
time, cause Sub's designees to be elected to the Board of
Directors of the Company. Notwithstanding the foregoing, if
Sub's designees are appointed or elected to the Board of
Directors of the Company, (a) immediately following such
appointment or election the Board of Directors of the
Company shall also include at least three directors who are
directors on the date hereof and who are approved by the
Board of Directors of the Company immediately prior to such
appointment or election (the 'Independent Directors') and
(b) if the number of Independent Directors shall be reduced
below three for any reason whatsoever, (i) any remaining
Independent Directors (or Independent Director, if there
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shall be only one remaining) shall be entitled to designate
persons to fill such vacancies who shall be deemed to be
Independent Directors for purposes of this Agreement or (ii)
if no Independent Directors then remain, the other directors
shall designate three persons to fill such vacancies who
shall not be officers, shareholders or affiliates of the
Company, Parent or Sub, and such persons shall be deemed to
be Independent Directors for purposes of this Agreement.
Subject to applicable law, the Company shall take all action
requested by Parent necessary to effect any such election,
including mailing to its shareholders an Information
Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. This Section 6.15 shall terminate upon the
Effective Time of the Merger.
SECTION 6.16. Exchange of Class B Common Stock
for Class A Common Stock. If, at any time on or after the
acceptance for payment of shares pursuant to the Offer, Sub
shall own more than 90% of the outstanding shares of Class B
Common Stock, and (i) Sub shall own less than 90% of the
outstanding shares of Class A Common Stock, the Company
shall forthwith issue to Sub such number of shares of
Class A Common Stock as shall be sufficient to cause Sub to
own at least 90% of the outstanding shares of Class A Common
Stock or (ii) Sub shall own 90% or more of the outstanding
shares of Class A Common Stock, the Company shall at Sub's
request issue to Sub additional shares of Class A Common
Stock, in each case in exchange for an equivalent number of
shares of Class B Common Stock surrendered by Sub to the
Company; provided, however, that the foregoing exchange
shall only be effected to the extent that the surrender of
such shares of Class B Common Stock shall not result in Sub
owning less than 90% of the outstanding shares of Class B
Common Stock after giving effect to such surrender.
SECTION 6.17. Stockholder Agreement. Parent and
Sub shall not exercise the option granted by AHI pursuant to
the Stockholder Agreement unless Sub is simultaneously
accepting, or has previously accepted, for payment pursuant
to the Offer at least 44% of the outstanding shares of Class
A Common Stock.
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ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's Obliga-
tion To Effect the Merger. The respective obligation of
each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of
the following conditions:
(a) Shareholder Approval. If required by
applicable law, this Agreement shall have been approved
and adopted by the Required Company Shareholder Vote.
(b) HSR Act. The waiting period (and any
extension thereof) applicable to the Merger under the
HSR Act shall have been terminated or shall have
expired.
(c) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction
or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in
effect, no proceeding challenging this Agreement or
seeking to prohibit, prevent or materially delay, or
alter any of the terms of, the transactions
contemplated hereby shall have been instituted by any
Governmental Entity and be pending and no other
proceeding challenging this Agreement or seeking to
prohibit, prevent or materially delay, or alter any of
the terms of, the transactions contemplated hereby
shall have been instituted by any other person and be
pending if, in the written opinion of counsel for the
party seeking to invoke this condition, such other
proceeding is reasonably likely to have a material
adverse affect on the Company; provided, however, that
each of the parties shall have used its reasonable best
efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any
injunction or other order that may be entered.
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SECTION 7.02. Conditions to Obligations of Parent
and Sub. Unless Sub shall have accepted shares of Common
Stock for payment pursuant to the Offer, the obligations of
Parent and Sub to effect the Merger are further subject to
the following conditions:
(a) Representations and Warranties. The repre-
sentations and warranties of the Company set forth in
this Agreement that are qualified as to materiality
shall be true and correct, and the representations and
warranties of the Company set forth in this Agreement
that are not so qualified shall be true and correct in
all material respects (except that the representations
and warranties in Sections 4.01(c) and 4.01(g) shall be
true and correct in all respects), in each case as of
the date of this Agreement and as of the Closing Date,
as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement, and Parent
shall have received a certificate signed on behalf of
the Company by the chief executive officer and the
chief financial officer of the Company to such effect.
(b) Performance of Obligations of the Company.
The Company shall have performed in all material
respects all obligations required to be performed by it
under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed on
behalf of the Company by the chief executive officer
and the chief financial officer of the Company to such
effect.
(c) Employee Stock Options. Other than the
144,180 Employee Stock Options granted in March and
June 1993 that are not by their terms currently vested,
each Employee Stock Option shall have been exercised or
terminated.
(d) Consents. Parent shall have received, or be
satisfied that it will receive, any consents, filings,
approvals or waivers from third parties required to
consummate the Merger, other than such consents,
filings, approvals or waivers the absence of which
would not, individually or in the aggregate, have a
material adverse effect on the operation of the
business of the Company after the Effective Time of the
Merger substantially in the manner now conducted.
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(e) Financing. Parent shall have received
financing sufficient to consummate the Merger on the
terms contemplated by this Agreement.
(f) Advisors' Termination. Parent shall have
received evidence, reasonably satisfactory to it, of
the termination of the contracts, agreements and other
arrangements between the Company and each Advisor,
terminating as of the Effective Time of the Merger all
of the Company's (or any successor's) obligations
thereunder, except the obligations to make the expense
reimbursements and other payments in connection with
the Offer and the Merger required by the agreements
previously delivered to Parent and referred to in
Section 4.01(o), and the indemnification and
contribution obligations for services performed before
the Effective Time of the Merger, as set out in such
agreements previously delivered to Parent.
(g) Other Documents. The Parent shall have
received all other documents it may reasonably request
relating to the existence of the Company and its
corporate authority for this Agreement, all in form and
substance reasonably satisfactory to the Parent.
SECTION 7.03. Conditions to Obligation of the
Company. Unless Sub shall have accepted shares of Common
Stock for payment pursuant to the Offer, the obligation of
the Company to effect the Merger is further subject to the
following conditions:
(a) Representations and Warranties. The
representations and warranties of Parent and Sub set
forth in this Agreement that are qualified as to
materiality shall be true and correct, and the
representations and warranties of Parent and Sub set
forth in this Agreement that are not so qualified shall
be true and correct in all material respects, in each
case as of the date of this Agreement and as of the
Closing Date, as though made on and as of the Closing
Date, except as otherwise contemplated by this
Agreement, and the Company shall have received a
certificate signed on behalf of each of Parent and Sub
by the chief executive officer and the chief financial
officer of such entity to such effect.
(b) Performance of Obligations of the Parent and
Sub. Each of Parent and Sub shall have performed in
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all material respects all obligations required to be
performed by it under this Agreement at or prior to the
Closing Date, and the Company shall have received a
certificate signed on behalf of each of Parent and Sub
by the chief executive officer and the chief financial
officer of such entity to such effect.
ARTICLE VIII
Board Actions
SECTION 8.01. Board Actions. (a) Notwith-
standing any other provision of this Agreement to the
contrary, to the extent required by the fiduciary obliga-
tions of the Board of Directors of the Company, as deter-
mined in good faith by a majority of the disinterested
members thereof based on the written advice of the Company's
outside counsel:
(i) the Company may, in response to an unsolicited
request therefor, participate in discussions or
negotiations with, or furnish information with respect
to the Company pursuant to a customary confidentiality
agreement (as determined by the Company's outside
counsel) to, any person who a majority of such
disinterested directors believes (A) intends to submit
a takeover proposal and (B) has the financial ability
to make (or the ability to obtain financing for) a
superior takeover proposal (for purposes of this
Agreement, 'takeover proposal' means any proposal for a
merger or other business combination involving the
Company or any proposal or offer to acquire in any
manner, directly or indirectly, a controlling equity
interest in any voting securities of, or a substantial
portion of the assets of, the Company, other than the
transactions contemplated by this Agreement); and
(ii) the Board of Directors of the Company may
approve or recommend (and, in connection therewith,
withdraw or modify its approval or recommendation of
this Agreement, the Offer or the Merger) a superior
takeover proposal and the Company may enter into an
agreement with respect to such superior takeover
proposal (for purposes of this Agreement, 'superior
takeover proposal' means a bona fide takeover proposal
made by a third party (A) that a majority of the
disinterested members of the Board of Directors of the
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Company determines in its good faith judgment (based on
the advice of the Company's independent financial
advisor) to be more favorable to the Company's
shareholders than the Offer and the Merger, (B) for
which financing, to the extent required, is then
committed or the subject of 'highly confident' letters
issued by reputable, nationally recognized investment
banking firms and (C) that is not subject to any
condition requiring the sale by the Company of any
material asset unless a reputable, financially capable
person has agreed, or entered into a letter of intent,
subject only to customary conditions to purchase such
asset on terms that would satisfy such condition).
(b) The Company promptly shall advise Parent
orally and in writing of any takeover proposal or any
inquiry with respect to or which could lead to any takeover
proposal and the identity of the person making any such
takeover proposal or inquiry. The Company shall keep Parent
fully informed of the status and details of any such take-
over proposal or inquiry and shall provide copies of all
such proposals, together with any financing commitments,
'highly confident' letters, letters of intent and other
relevant documents.
(c) For purposes of this Section 8.01, a member
of the Board of Directors of the Company shall be
'disinterested' unless he or she is an executive officer of
the Company or Parent or an executive officer or director of
Agway Inc.
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01. Termination. This Agreement may be
terminated at any time prior to the Effective Time of the
Merger, whether before or after approval of the transactions
contemplated by this Agreement, by the shareholders of the
Company:
(a) by mutual written consent of Parent and the
Company;
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(b) by notice from either Parent or the Company to
the other:
(i) unless Sub shall have accepted shares of
Common Stock for payment pursuant to the Offer,
if, upon a vote at a duly held Company
Shareholders Meeting or any adjournment thereof,
the required approval of the shareholders of the
Company shall not have been obtained as
contemplated by Section 6.01(a);
(ii) unless Sub shall
have accepted shares of Common Stock for payment
pursuant to the Offer, if the Merger shall not have
been consummated on or before February 28, 1995,
unless the failure to consummate the Merger is the
result of a wilful and material breach of this
Agreement by the party seeking to terminate this
Agreement; provided, however, that the passage of such
period shall be tolled for any part thereof during
which any party shall be subject to a nonfinal order,
decree, ruling or action restraining, enjoining or
otherwise prohibiting the consummation of the Merger
or the calling or holding of the Company Shareholders
Meeting; or
(iii) if any
Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently
enjoining, restraining or otherwise prohibiting the
Merger and such order, decree, ruling or other action
shall have become final and nonappealable;
(c) by notice to Parent from the Company if the
Board of Directors of the Company shall have
(i) withdrawn or modified its approval or
recommendation of this Agreement, the Offer or the
Merger, as contemplated by Section 8.01(a)(ii), or
(ii) determined to enter into an agreement with respect
to a superior takeover proposal as contemplated by
Section 8.01(a); provided, however, that, in either
case, the Company shall have entered into a binding
agreement with respect to such superior takeover
proposal within five business days of its notice to
Parent of such termination (and, if the Company shall
not have done so, such notice of termination shall be
null and void and any amounts paid to Parent or Sub
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pursuant to Section 6.07 shall be promptly returned by
Parent to the Company);
(d) by notice to the Company from Parent
if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a
manner adverse to Parent or Sub its approval or
recommendation of the Offer, the Merger or this
Agreement, or approved or recommended any superior
takeover proposal, (ii) the Company shall have entered
into any agreement with respect to any superior
takeover proposal (other than a confidentiality
agreement as contemplated by Section 8.01(a)(i)) or
(iii) the Board of Directors of the Company or any
committee thereof shall have resolved to do any of the
foregoing;
(e) unless Sub shall have accepted shares of
Common Stock for payment pursuant to the Offer, by
notice to the Company from Parent if any Governmental
Entity shall have issued an order, decree or ruling
that (i) shall have become final and unappealable and
(ii) would, in the reasonable judgment of Parent, have
a material adverse effect on the operation after the
Effective Time of the Merger of the business of the
Company and its subsidiaries substantially in the
manner now conducted;
(f) by notice from either Parent or the Company to
the other if Sub shall not have accepted shares of
Common Stock for payment pursuant to the Offer within
ten business days after expiration of the Offer;
provided, however, that such notice shall have been
given within 15 business days after expiration of the
Offer; and
(g) by notice from either Parent or the Company to
the other if Sub shall not have accepted shares of
Common Stock for payment pursuant to the Offer by
10:00 a.m., New York time, on December 16, 1994;
provided, however, that the Company shall not have the right
to terminate this Agreement pursuant to clause (f) or (g)
above if (i) at the time of expiration of the Offer the
Minimum Tender Condition (as defined in Exhibit A) shall not
have been satisfied and (ii) at least five business days
prior to the time of expiration of the Offer, Sub shall have
publicly disclosed that it has executed definitive
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agreements or otherwise has commitments reasonably
satisfactory to the Company, subject only to customary
closing conditions, for financing that would be sufficient
to consummate the Offer and the Merger on the terms
contemplated by the Agreement.
SECTION 9.02. Effect of Termination. In the
event of termination of this Agreement by either the Company
or Parent as provided in Section 9.01, this Agreement shall
forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the
Company, other than the provisions of Section 4.01(o),
Section 4.02(h), the last sentence of Section 6.02,
Section 6.05, Section 6.07, Section 6.14, Section 6.15, this
Section 9.02 and Article X and except to the extent that
such termination results from the wilful and material breach
by a party of any of its representations, warranties,
covenants or agreements set forth in this Agreement;
provided, however, that if the Offer is not consummated
prior to termination of this Agreement, Sections 6.05, 6.14
and 6.15 shall not survive such termination.
SECTION 9.03. Amendment. This Agreement may be
amended by the parties at any time before or after any
required approval of the transactions contemplated by this
Agreement by the shareholders of the Company; provided,
however, that, after any such approval, there shall not be
made any amendment that by law requires further approval by
such shareholders without the further approval of such
shareholders. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the
parties.
SECTION 9.04. Extension; Waiver. At any time
prior to the Effective Time of the Merger, the parties may
(a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive
any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered
pursuant to this Agreement or (c) subject to the proviso of
Section 9.03, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on
the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed
on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement
or otherwise shall not constitute a waiver of those rights.
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SECTION 9.05. Procedure for Termination, Amend-
ment, Extension or Waiver. A termination of this Agreement
pursuant to Section 9.01, an amendment of this Agreement
pursuant to Section 9.03 or an extension or waiver pursuant
to Section 9.04 shall, in order to be effective, require
(a) in the case of Parent, Sub or the Company, action by its
Board of Directors or the duly authorized designee of its
Board of Directors and (b) in the case of the Company,
action by a majority of the members of the Board of
Directors of the Company who were members thereof on the
date of this Agreement and remain as such hereafter or the
duly authorized designee of such members; provided, however,
that in the event that Sub's designees are appointed or
elected to the Board of Directors of the Company as provided
in Section 6.15, after the acceptance for payment of shares
of Common Stock pursuant to the Offer and prior to the
Effective Time of the Merger, the affirmative vote of a
majority of the Independent Directors, in lieu of the vote
required pursuant to clause (b) above, shall be required to
(i) amend or terminate this Agreement by the Company,
(ii) exercise or waive any of the Company's rights or
remedies under this Agreement or (iii) extend the time for
performance of Parent's and Sub's respective obligations
under this Agreement.
ARTICLE X
General Provisions
SECTION 10.01. Nonsurvival of Representations and
Warranties. None of the representations and warranties in
this Agreement or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time of the
Merger, or, if earlier, the consummation of the Offer. This
Section 10.01 shall not limit any covenant or agreement of
the parties which by its terms contemplates performance
after the Effective Time of the Merger.
SECTION 10.02. Notices. All notices, requests,
claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing
proof of delivery) to the parties at the following addresses
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(or at such other address for a party as shall be specified
by like notice):
(a) if to Parent or Sub, to
Pro-Fac Cooperative, Inc.
90 Linden Place
P.O. Box 682
Rochester, New York 14603
Attention: Roy A. Myers
Fax: (716) 383-1606
Harris Beach & Wilcox
The Granite Building
130 East Main Street
Rochester, New York 14604-1687
Attention: Thomas M. Hampson
Fax: (716) 232-6925
and
Howard, Darby & Levin
1330 Avenue of the Americas
New York, New York 10019
Attention: Scott F. Smith
Fax: (212) 841-1010
(b) if to the Company, to
Curtice-Burns Foods, Inc.
90 Linden Place
Rochester, New York 14603
Attention: Mr. J. William Petty
Fax: (716) 383-0719
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with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Alan C. Stephenson, Esq.
Fax: (212) 474-3700
SECTION 10.03. Definitions. For purposes of this
Agreement:
An 'affiliate' of any person means another person
that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under
common control with, such first person.
'Company Finance Documents' means, collectively,
(1) the Credit Agreement dated as of September 4, 1992,
as amended (the 'Commercial Bank Credit Agreement'),
among the Company, The Chase Manhattan Bank, N.A.
('Chase'), as agent, and the banks party thereto (the
'Commercial Banks'), (2) the Guaranty dated July 2,
1990, as amended, between the Company and Springfield
Bank for Cooperatives ('Springfield') pursuant to which
the Company has agreed to guarantee the obligations of
Parent, under (A) the Master Agreement dated October 8,
1981, as amended, (B) the Seasonal Loan Agreement dated
December 10, 1992, as amended, (C) the Seasonal Loan
Agreement (Letters of Credit) dated February 9, 1993,
as amended, and (D) various Term Loan Agreements dated
various dates, each as amended and including future
Term Loan Agreements, (3) the related agreements
securing such obligations of the Company, including (I)
each of the Security Agreement and the Trademark
Collateral Assignment and Agreement, each dated as of
September 1, 1993, among the Company, Chase and the
Commercial Banks and (II) the Security Agreement dated
as of September 1, 1993, between the Company and
Springfield and (4) the other agreements related to any
of the agreements referred to in the foregoing clauses
(1), (2) and (3), which agreements are listed in the
Disclosure Schedule.
'Material adverse change' or 'material adverse
effect' means, when used in connection with the Company
or Parent, any change or effect (or any development
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that, insofar as can reasonably be foreseen, is likely
to result in any change or effect) that is materially
adverse to the business, properties, assets, condition
(financial or otherwise), results of operations or
prospects of the Company and its subsidiaries, taken as
a whole, or Parent and its subsidiaries, taken as a
whole, as the case may be.
A 'person' means an individual, corporation,
partnership, joint venture, association, trust, unin-
corporated organization or other entity.
A 'subsidiary' of any person means another person,
an amount of the voting securities, other voting
ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity
interests of which) is owned directly or indirectly by
such first person.
SECTION 10.04. Interpretation. When a reference
is made in this Agreement to a Section, such reference shall
be to a Section of this Agreement unless otherwise
indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the words 'include', 'includes' or
'including' are used in this Agreement, they shall be deemed
to be followed by the words 'without limitation'.
SECTION 10.05. Counterparts. This Agreement may
be executed in one or more counterparts, all of which shall
be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
SECTION 10.06. Entire Agreement; No Third-Party
Beneficiaries; Effect on Arbitration Agreement. (a) This
Agreement (i) constitutes the entire agreement and
supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the
subject matter of this Agreement, other than the agreement
with respect to arbitration dated August 16, 1994, between
the Company and Parent (the 'Arbitration Agreement') and the
Confidentiality Agreement, and (ii) except for the
provisions of Article III and Sections 6.05(b), 6.06 and
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6.14, is not intended to confer upon any person other than
the parties any rights or remedies hereunder.
(b) Notwithstanding anything to the contrary in
the Arbitration Agreement, (i) the references in the
Schedule to the Arbitration Agreement to 'signing Merger
Agreement' and to 'signing' shall be construed as references
to November 15, 1994, or the first date prior thereto on
which Parent or Sub shall be in breach in any material
respect of its obligations hereunder, including the
penultimate sentence of Section 6.03, and (ii) the
Arbitration Agreement shall be null and void if this
Agreement shall have been terminated pursuant to Section
9.01(b)(ii) (if the Merger shall not have been consummated
due to the Company's breach of this Agreement).
SECTION 10.07. Governing Law. This Agreement
shall be governed by, and construed in accordance with, the
laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of
conflict of laws thereof.
SECTION 10.08. Assignment. Neither this
Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part,
by operation of law or otherwise by any of the parties
without the prior written consent of the other parties,
except that Sub may assign its rights and obligations
hereunder to any other wholly owned subsidiary of Parent.
Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of, and be enforceable
by, the parties and their respective successors and assigns.
SECTION 10.09. Enforcement. The parties agree
that irreparable damage would occur in the event that any of
the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement in any court of the
United States located in the State of New York or in New
York state court, this being in addition to any other remedy
to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any Federal court
located in the State of New York or any New York state court
in the event any dispute arises out of this Agreement or any
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of the transactions contemplated by this Agreement,
(b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave
from any such court and (c) agrees that it will not bring
any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any court
other than a Federal or state court sitting in the State of
New York or a New York state court.
IN WITNESS WHEREOF, Parent, Sub and the Company
have caused this Agreement to be signed by their respective
officers thereunto duly authorized, all as of the date first
written above.
PRO-FAC COOPERATIVE, INC.,
by
/s/ Roy Myers
Name: Roy A. Myers
Title: General Manager
PF ACQUISITION CORP.,
by
/s/ Roy Myers
Name: Roy A. Myers
Title: President
CURTICE-BURNS FOODS, INC.,
by
/s/ William Petty
Name: J. William Petty
Title: President and Chief
Executive Officer
<PAGE>
EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer or
this Agreement, Sub shall not be required to accept for
payment or, subject to any applicable rules and regulations
of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered
shares of Common Stock after the termination or withdrawal
of the Offer), to purchase or pay for any shares of Common
Stock tendered pursuant to the Offer unless (i) there shall
have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of shares of Common
Stock which would represent at least 90% of the shares of
Class A Common Stock and 90% of the shares of Class B Common
Stock outstanding at the time of expiration of the Offer
(the 'Minimum Tender Condition'), (ii) any waiting period
under the HSR Act applicable to the purchase of shares of
Common Stock pursuant to the Offer shall have expired or
been terminated and (iii) Parent or Sub shall have received
financing sufficient to consummate the Offer and the Merger
on the terms contemplated by this Agreement. Furthermore,
notwithstanding any other term of the Offer or this
Agreement, Sub shall not be required to commence the Offer
(and, if the Offer shall have commenced, Sub may terminate
or (subject to Section 1.01(a) of this Agreement) amend the
Offer) if any of the conditions set forth in clauses (a),
(b) or (d) below shall exist or if the Company is in
material breach of its obligations hereunder, nor shall Sub
be required to accept for payment or, subject as aforesaid,
to pay for any shares of Common Stock and Sub may terminate
or (subject to Section 1.01(a)) amend the Offer, if, at any
scheduled expiration date of the Offer or following the
expiration of the Offer but before the acceptance of such
shares for payment or the payment therefor, any of the
following conditions shall exist:
(a) any temporary restraining order, preliminary
or permanent injunction or other order shall have been
issued by any court of competent jurisdiction, or any
other legal restraint or prohibition shall be in
effect, that, directly or indirectly, prohibits or
delays materially Sub from purchasing or paying for
shares of Common Stock pursuant to the Offer, or
consummation of the Merger, any proceeding challenging
this Agreement or the Stockholder Agreement or seeking
to prohibit, prevent or materially delay, or alter any
of the terms of, the transactions contemplated hereby
or thereby shall have been instituted by any
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Governmental Entity and be pending or any other
proceeding challenging this Agreement or the
Stockholder Agreement or seeking to prohibit, prevent
or materially delay, or alter any of the terms of, the
transactions contemplated hereby, shall have been
instituted by any other person and be pending if, in
the written opinion of counsel for the party seeking to
invoke this condition, such other proceeding is
reasonably likely to have a material adverse effect on
the Company; provided, however, that Parent and Sub
shall have used their reasonable best efforts to
prevent the entry of such injunction or other order and
to appeal as promptly as possible any injunction or
other order that may be entered;
(b) any of the representations and warranties of
the Company set forth in this Agreement that are
qualified as to materiality, or set forth in
Section 4.01(c) or 4.01(g), or any of the
representations and warranties of AHI set forth in the
Stockholder Agreement, shall not be true and correct or
any of the other representations and warranties set
forth in this Agreement shall not be true and correct
in all material respects; in each case as if each such
representation and warranty were made as of such time;
(c) the Company or AHI shall have breached or
failed to perform when required in any material respect
any obligation required to be performed by it under
this Agreement or the Stockholder Agreement;
(d) this Agreement shall have been terminated in
accordance with its terms, or the Offer shall have been
amended or terminated with the consent of the Company;
(e) Parent shall not have received, or not be
satisfied that it shall receive, all consents, filings,
approvals or waivers from third parties required to
consummate the Offer or the Merger, other than such
consents, filings, approvals or waivers the absence of
which would not, individually or in the aggregate, have
a material adverse effect on the operation of the
business of the Company in the manner now conducted; or
(f) Parent shall not have received evidence,
reasonably satisfactory to it, of the termination of
the contracts, agreements and other arrangements
between the Company and each Advisor terminating as of
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the Effective Time of the Merger all of the Company's
(or any successor's) obligations thereunder, except the
obligations to make the expense reimbursements and
other payments in connection with the Offer and the
Merger required by the agreements previously delivered
to Parent and referred to in Section 4.01(o), and the
indemnification and contribution obligations for
services performed before the Effective Time of the
Merger, as set out in such agreements previously
delivered to Parent.
The foregoing conditions are for the sole benefit
of Sub and Parent and may be asserted by Sub or Parent
regardless of the circumstances giving rise to such
condition or (subject to Section 1.01(a)) may be waived by
Sub and Parent in whole or in part at any time and from time
to time in their sole discretion. The failure by Parent,
Sub or any other affiliate of Parent at any time to exercise
any of the foregoing rights 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 that may be
asserted at any time and from time to time.
<PAGE>
EXHIBIT B
Certificate of Incorporation of
Surviving Corporation
FIRST. The name of the corporation is Curtice-
Burns Foods, Inc.
SECOND. The purpose of the corporation is to
engage in any lawful act or activity for which corporations
may be organized under the Business Corporation Law of the
State of New York but not to engage in any act or activity
requiring the consent or approval of any state official,
department, board, agency or other body without such consent
or approval first being obtained.
THIRD. The office of the corporation in the State
of New York is to be located in the County of Monroe.
FOURTH. The aggregate number of shares which the
corporation shall have authority to issue is 10,000 common
shares of the par value of $.01 per share.
FIFTH. The Secretary of State of the State of New
York is designated as agent of the corporation upon whom
process in any action or proceeding against it may be
served. The address to which the Secretary of State shall
mail a copy of any process against the corporation served
upon him is in care of Curtice-Burns Foods, Inc., 90 Linden
Place, P.O. Box 681, Rochester, New York 14603, Attention:
Corporate Secretary.
SIXTH. By-laws of the corporation may be adopted,
amended or repealed by the Board of Directors of the
corporation by the vote of a majority of the directors
present at a meeting of the Board of Directors at which a
quorum is present, subject to the power of the holders of
stock having voting power thereon to alter, amend or repeal
the By-laws adopted by the Board of Directors.
SEVENTH. No holder of shares of any class of the
corporation, now or hereafter authorized, shall as such
holder have any preferential or preemptive right to
subscribe for, purchase or receive any shares of the
corporation of any class, now or hereafter authorized, or
any options or warrants for such shares, or any rights to
subscribe for or purchase such shares, or any bonds,
debentures, notes or other securities convertible into or
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exchangeable for such shares, which may at any time be
issued, sold or offered for sale by the corporation.
EIGHTH. To the fullest extent permitted by the
Business Corporation Law of the State of New York as the
same exists or may hereafter be amended, no director shall
be personally liable to the corporation or any of its
shareholders for damages for any breach of duty as a
director; provided, however, that the foregoing provision
shall not eliminate or limit the liability of a director if
a judgment or other final adjudication adverse to him
establishes that his acts or omissions were in bad faith or
involved intentional misconduct or a knowing violation of
law or that he personally gained in fact a financial profit
or other advantage to which he was not legally entitled or
that his acts violated Section 719 of the Business
Corporation Law of the State of New York.
NINTH. The corporation reserved the right to
amend, alter, change or repeal any provision contained in
this Certificate of Incorporation in the manner now or
hereafter prescribed by law, and all rights and powers
conferred herein on stockholders, directors and officers are
subject to this reserved power.
EXHIBIT (c)(2)
AGREEMENT
AGREEMENT, dated as of September 27, 1994 (the 'Agreement'), among Pro-Fac
Cooperative, Inc., a New York cooperative corporation ('Pro-Fac'), PF
Acquisition Corp., a New York corporation and a wholly owned subsidiary of
Pro-Fac ('Buyer'), and Agway Holdings, Inc., a Delaware corporation ('Agway'),
and a wholly owned subsidiary of Agway Inc., a Delaware corporation.
WHEREAS, Pro-Fac, Buyer, and Curtice Burns Foods, Inc., a New York
corporation (the 'Company'), propose to enter into an Agreement and Plan of
Merger dated the date hereof (the 'Acquisition Agreement') which provides, among
other things, that Buyer shall commence an offer (the 'Offer', which term shall
include any amendment thereof not in violation of the Acquisition Agreement) to
purchase any and all of the issued and outstanding shares of the Company's Class
A Common Stock, par value $.99 per share ('Class A Common Stock'), and Class B
Common Stock ('Class B Common Stock'), par value $.99 per share, and shall merge
with and into the Company (the 'Merger'), in each case upon the terms and
subject to the conditions set forth in the Acquisition Agreement (any term used
herein without definition shall have the definition ascribed thereto in the
Acquisition Agreement);
WHEREAS, Agway owns 899,447 shares of Class A Common Stock and 2,036,643
shares of Class B Common Stock (the 'Agway Shares');
WHEREAS, as a condition to the willingness of Pro-Fac and Buyer to enter
into the Acquisition Agreement, and as an inducement to them to do so, Agway has
agreed for the benefit of Pro-Fac and Buyer to tender the Agway Shares, and any
other shares of Class A Common Stock or Class B Common Stock at any time during
the term of this Agreement held by Agway, in response to the Offer on the terms
and conditions contained in this Agreement; and
WHEREAS, the Board of Directors of the Company has approved this Agreement,
the Acquisition Agreement, the Offer and the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement the parties hereby agree as
follows:
ARTICLE I
TENDER OFFER AND OPTION
SECTION 1.1. Tender of Shares. (a) Within five business days of the
commencement by the Buyer of the Offer, Agway shall tender to the depositary
(the 'Depositary') designated in the Offer to Purchase (the 'Offer to Purchase')
distributed by the Buyer in connection with the Offer (i) a letter of
transmittal with respect to the Agway Shares and any other shares of Class A
Common Stock or Class B Common Stock held by Agway (whether or not currently
held by Agway, the Agway Shares and such other shares being referred to herein
as the 'Shares'), complying with the terms of the Offer to Purchase, together
with instructions directing the Depositary to make payment for such Shares
directly to Agway (but if such Shares are not accepted
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<PAGE>
for payment and are to be returned pursuant to the Offer to Purchase, to return
such Shares to Agway), (ii) the certificates representing the Shares and (iii)
all other documents or instruments required to be delivered pursuant to the
terms of the Offer to Purchase (such documents in clauses (i) through (iii)
collectively being hereinafter referred to as the 'Tender Documents').
(b) Agway will not, subject to applicable law, withdraw the tender
effected in accordance with Section 1.1(a); provided, however, that (i)
Agway may decline to tender, or may withdraw, any and all Shares if (A) the
amount or form of consideration to be paid for such Shares is less than
cash in the amount of $19.00 per Share, net to Agway or (B) the Acquisition
Agreement is terminated and (ii) Agway shall give Buyer at least one
business day's prior notice of any withdrawal of Shares.
SECTION 1.2. Option. (a) Agway hereby irrevocably grants Buyer an option
(the 'Option'), exercisable only upon the events and subject to the conditions
set forth herein, to purchase all the Shares at a purchase price of $19 per
Share, net to Agway.
(b) Subject to the conditions set forth in Section 1.3, Buyer may
exercise the Option in whole at any time or from time to time on or after
the date (if any) on which Agway withdraws any or all of the Shares from
the tender made pursuant to Section 1.1 hereof. Buyer shall exercise the
Option by delivering notice thereof to Agway, specifying the date, time and
place for the closing of such purchase. The closing of the purchase of
Shares pursuant to this Section 1.2 (the 'Closing') shall take place on the
date, at the time and at the place specified in such notice; provided, that
if at such date any of the conditions specified in Section 1.3 shall not
have been satisfied (or waived), Buyer may postpone the Closing until a
date within five business days after such conditions are satisfied.
(c) At the Closing, Agway will deliver to Buyer (in accordance with
Buyer's instructions) the certificates representing the Shares being
purchased pursuant to Section 1.2(b), duly endorsed or accompanied by stock
powers duly executed in blank. At such Closing, Buyer shall deliver to
Agway a certified or bank cashier's check payable to or upon the order of
Agway in an amount equal to the number of Shares being purchased at such
Closing multiplied by $19.
(d) The Option will terminate upon termination of the Acquisition
Agreement.
SECTION 1.3. Conditions. The obligation of Agway to sell Shares at the
Closing is subject to the following conditions:
(a) Buyer shall, on or prior to the date of such Closing, have
accepted or simultaneously be accepting for payment at least 44% of the
shares of Class A Common Stock outstanding at the time of such acceptance
(not including any shares of Class A Common Stock held by Agway) pursuant
to the Offer;
(b) such Shares shall have been withdrawn from the tender made
pursuant to Section 1.1; provided that Buyer shall have no Option with
respect to Shares withdrawn pursuant to Section 1.1(b)(i);
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<PAGE>
(c) all waiting periods under the HSR Act applicable to such exercise
shall have expired or been terminated; and
(d) there shall be no preliminary or permanent injunction or other
order, decree or ruling issued by any Governmental Entity, nor any statute,
rule, regulation or order promulgated or enacted by any Governmental Entity
prohibiting, or otherwise restraining, such exercise of the Option.
SECTION 1.4. No Purchase. Buyer may allow the Offer to expire without
accepting for payment or paying for any Shares, as set forth in the Offer to
Purchase, and may allow the Option to terminate without purchasing all or any
Shares pursuant to the exercise thereof. If any Shares are not accepted for
payment in accordance with the terms of the Offer to Purchase or purchased
pursuant to the Option, they shall be returned to Agway, whereupon they shall
continue to be held by Agway subject to the terms and conditions of this
Agreement.
ARTICLE II
CONSENT AND VOTING
Agway hereby revokes any and all previous proxies granted with respect to
the Shares. By entering into this Agreement, Agway hereby consents to the
Acquisition Agreement and the transactions contemplated thereby, including the
Merger (as defined in the Acquisition Agreement). So long as the Acquisition
Agreement is in effect, Agway hereby agrees to vote all Shares now or hereafter
owned by Agway in favor of the Acquisition Agreement, the Merger and the
transactions contemplated thereby.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF AGWAY
Agway represents, warrants and covenants to Pro-Fac and the Buyer that:
SECTION 3.1. Ownership. Agway is the sole, true, lawful and beneficial
owner of the Shares with no restrictions on voting rights or rights of
disposition pertaining to the Shares. Agway will convey good and valid title to
the Shares being purchased pursuant to the Offer, the Merger or the Option, as
the case may be, free and clear of any and all claims, liens, charges,
encumbrances and security interests. None of the Shares is subject to any voting
trust or other agreement or arrangement with respect to the voting of such
Shares. Until this Agreement is terminated, Agway shall not, directly or
indirectly, sell, exchange, encumber, assign or otherwise transfer or dispose
of, or agree to or solicit any of the foregoing, or grant any right or power to
any person which limits Agway's sole power to vote, sell, assign, transfer,
encumber or otherwise dispose of the Shares or otherwise directs Agway with
respect to the Shares. Agway agrees to notify
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<PAGE>
Pro-Fac and Buyer promptly and to provide all details requested by Pro-Fac or
Buyer if Agway or any of its affiliates shall be approached or solicited,
directly or indirectly, by any person with respect to any of the foregoing.
SECTION 3.2. Non-Contravention. The execution, delivery and performance by Agway
of this Agreement and the consummation of the transactions contemplated hereby
(i) are within Agway's powers, have been duly authorized by all necessary action
(including any consultation, approval or other action by or with any other
person), (ii) require no action by or in respect of, or filing with, any
governmental body, agency, official or authority (except as may be required
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or the Securities
Exchange Act of 1934), and (iii) do not and will not contravene or constitute a
default under, or give rise to a right of termination, cancellation or
acceleration of any right or obligation of Agway or to a loss of any benefit of
Agway under, any provision of applicable law or regulation or of any agreement,
judgment, injunction, order, decree, or other instrument binding on Agway or
result in the imposition of any lien on any asset of Agway.
SECTION 3.3. Binding Effect. This Agreement has been duly executed and delivered
by Agway and is the valid and binding agreement of Agway, enforceable against it
in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, moratorium or other similar laws relating to creditor's
rights generally.
SECTION 3.4. Total Shares. The Agway Shares are the only Shares beneficially
owned as of the date hereof by Agway and Agway owns no option to purchase or
right to subscribe for or otherwise acquire any securities of the Company and
has no other interest in or voting rights with respect to any securities of the
Company.
SECTION 3.5. Finder's Fees. No investment banker, broker or finder is entitled
to a commission or fee from Buyer or the Company in respect of this Agreement
based upon any arrangement or agreement made by or on behalf of Agway, except as
otherwise provided in the Acquisition Agreement.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PRO-FAC AND BUYER
Pro-Fac and Buyer represent, warrant and covenant to Agway:
SECTION 4.1. Corporate Power and Authority. Pro-Fac and Buyer have all
requisite corporate power and authority to enter into this Agreement and to
perform their obligations hereunder. The execution, delivery and performance by
Pro-Fac and Buyer of this Agreement and the consummation by Pro-Fac and Buyer of
the transactions contemplated hereby have been duly authorized by the board of
directors of Pro-Fac and Buyer and no other corporate action on the part of
Pro-Fac or Buyer is necessary to authorize the execution, delivery or
performance by Pro-Fac or
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Buyer of this Agreement and the consummation by Pro-Fac and Buyer of the
transactions contemplated hereby.
SECTION 4.2. Binding Effect. This Agreement has been duly executed and delivered
by Pro-Fac and Buyer and is a valid and binding agreement of Pro-Fac and Buyer,
enforceable against each of them in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
SECTION 4.3. Acquisition for Buyer's Account. Any Shares to be acquired upon
consummation of the Offer or upon exercise of the Option will be acquired by
Buyer for its own account and not with a view to the public distribution thereof
and will not be transferred except in compliance with the Securities Act of
1933.
SECTION 4.4. Release of Claims. From and after the Effective Time of the Merger
(as defined in the Acquisition Agreement) or, if earlier, the purchase of Shares
pursuant to the Offer or the Option, Pro-Fac and Buyer shall and, after the
Merger, shall cause the Surviving Corporation and the Company (each a
'Releasor') to, release and discharge Agway, Agway Inc. and each director,
officer, employee, agent and advisor of Agway or Agway Inc. (each a 'Releasee')
from any and all claims, demands, causes of action, actions, suits, proceedings
and liabilities of any nature whatsoever (collectively, 'Claims') that may exist
at such time in favor of any such Releasor against any such Releasee to the
extent arising out of or based upon (a) the Integrated Agreement, including the
write-own by the Company of certain assets at the end of fiscal 1993 and in the
first half of fiscal 1995, the actions by the Company in connection with the
termination by Pro-Fac in March 1994 of certain crops, the management by the
Company of the business of Pro-Fac prior to the date hereof or the inclusion of
certain 'change-of-control' expenses in the profits of the Company for fiscal
1994 to be shared with Pro-Fac pursuant to the Integrated Agreement, or (b) the
transactions leading up to the Acquisition Agreement (including, but not limited
to, the auction process); provided, however, that the foregoing release shall
not apply to any Claim to the extent such Claim (i) arises after the date of
this Agreement, (ii) either (A) is based upon behavior of the applicable
Releasee that is not generally consistent with the behavior of such Releasee
prior to the date hereof or (ii) is based upon any action taken by such
Releasee, or failure by such Releasee to take any action, with intentional
disregard for what such Releasee in good faith believes to be the rights of
Pro-Fac under the Integrated Agreement (it being agreed that any action or
failure to take action consistent with such Releasee's understanding of the
advice (written or oral) of counsel shall be deemed to have been without
intentional disregard for what such Releasee in good faith believes to be the
rights of Pro-Fac), and (iii) is made in writing by Pro-Fac to such Releasee
promptly upon Pro-Fac or Buyer becoming aware of facts giving rise to such Claim
if they so became aware prior to the purchase of the Shares (whether or not
pursuant to the Merger, the Offer or the Option), it being acknowledged by
Pro-Fac and Buyer that neither Agway nor any Releasee concedes that a Claim made
that is consistent with this proviso is necessarily a valid claim against any
Releasee, none of whom is a party to the Integrated Agreement. In addition, each
Releasor promises and agrees that, to the extent within its control and except
as may be required by law, such Releasor will not initiate or participate in any
claim, complaint, or litigation arising out of or in connection with any Claim
released hereby.
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Agreements of Agway. Agway hereby covenants and agrees that,
so long as the Acquisition Agreement is in effect:
(a) No Shopping. Agway shall not directly or indirectly (i) solicit,
initiate or encourage (or authorize any person to solicit, initiate or
encourage) any inquiry, proposal or offer from any person to acquire the
business, property or capital stock of the Company or any direct or
indirect subsidiary thereof, or any acquisition of a substantial equity
interest in, or a substantial amount of the assets of, the Company or any
direct or indirect subsidiary thereof, whether by merger, purchase of
assets, tender offer or other transaction or (ii) participate in any
discussion or negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or
participate in, facilitate or encourage any effort or attempt by any other
person to do or seek any of the foregoing, except as such participation or
cooperation shall be required as a result of the exercise by the Board of
Directors of the Company of its fiduciary duty consistent with and the
terms of the Acquisition Agreement. Agway shall promptly advise the Company
of the terms of any communications it or any of its affiliates may receive
relating to any of the foregoing.
(b) Adjustment Upon Changes in Capitalization or Merger. In the event
of any change in the Company's capital stock by reason of stock dividends,
stock splits, mergers, consolidations, recapitalizations, combinations,
conversions, exchanges of shares, extraordinary or liquidating dividends,
or other changes in the corporate or capital structure of the Company which
would have the effect of diluting or changing the Buyer's rights hereunder,
the number and kind of shares or securities subject to this Agreement and
the purchase price per Share (but not the total purchase price) shall be
appropriately and equitably adjusted so that the Buyer shall receive
pursuant to the Offer or the Option the number and class of shares or other
securities or property that the Buyer would have received in respect of the
Shares purchasable pursuant to the Offer or the Option if such purchase had
occurred immediately prior to such event. Agway shall request the Company
to take, and shall use reasonable efforts to take, such steps in connection
with such consolidation, merger, liquidation or other such action as may be
necessary to assure that the provisions hereof shall thereafter apply as
nearly as possible to any securities or property thereafter deliverable
pursuant to the Offer or the Option.
SECTION 5.2. Agreement of Buyer. Buyer covenants and agrees that if it
accepts any Shares pursuant to the Offer, it shall accept for payment under
the Offer at least 44% of the shares of Class A Common Stock (not including
Shares owned by Agway) outstanding at the time of such acceptance.
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ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Expenses. All costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense.
SECTION 6.2. Further Assurances. Pro-Fac, Buyer and Agway will each execute
and deliver or cause to be executed and delivered all further documents and
instruments and use its best efforts to secure such consents and take all such
further action as may be reasonably necessary in order to consummate the
transactions contemplated hereby and by the Acquisition Agreement.
SECTION 6.3. Additional Agreements. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations and
which may be required under any agreements, contracts, commitments, instruments,
understandings, arrangements or restrictions of any kind to which such party is
a party or by which such party is governed or bound, to consummate and make
effective the transactions contemplated by this Agreement.
SECTION 6.4. Specific Performance. Each party hereto agrees that the other
parties hereto may be irreparably damaged if for any reason such party failed to
perform any of its obligations under this Agreement, and that the non-breaching
party would not have an adequate remedy at law for money damages in such event.
Accordingly, each party shall be entitled to specific performance and injunctive
and other equitable relief to enforce the performance of this Agreement by each
other party. This provision is without prejudice to any other rights that a
party may have against any other party for any failure to perform its
obligations under this Agreement.
SECTION 6.5. Notices. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
SECTION 6.6. Survival of Representations and Warranties. All
representations and warranties contained in this Agreement shall survive
delivery of and payment for the Shares.
SECTION 6.7. Amendments; Termination. This Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement executed by the parties hereto. This Agreement will terminate
upon the termination of the Acquisition Agreement in accordance with its terms.
SECTION 6.8. Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided, however, that Buyer may assign its
rights and obligations to another wholly owned subsidiary of Pro-Fac who is the
assignee of Buyer's rights under the Acquisition Agreement and provided,
further, that except as set forth in the prior clause, a party may not assign,
delegate or
7
<PAGE>
otherwise transfer any of its rights or obligations under this Agreement without
the consent of the other parties hereto.
SECTION 6.9. Governing Law. This Agreement shall be construed in accordance with
and governed by the law of New York without giving effect to the principles of
conflicts of laws thereof.
SECTION 6.10. Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
PRO-FAC COOPERATIVE, INC.
By /s/ Roy Myers
------------------------------------
Title: General Manager
90 Linden Place
Rochester, New York 14603
PF ACQUISITION CORP.
By /s/ Roy Myers
------------------------------------
Title: President
90 Linden, Place
Rochester, New York 14603
AGWAY HOLDINGS INC.
By /s/ Peter O'Neill
------------------------------------
Title: Senior Vice President,
Finance and Control
c/o Agway Inc.
333 Butternut Drive
De Witt, New York 13214
Attention: Peter J. O'Neill
Senior Vice President
8
Exhibit (c)(3)
Goldman, Sachs & Co. Donaldson, Lufkin & Jenrette
85 Broad Street Securities Corporation
New York, New York 10004 140 Broadway
New York, New York 10005
February 16, 1994
Mr. Roy A. Myers
Pro-Fac Cooperative, Inc.
90 Linden Oaks Park
Rochester, New York 14603
Gentlemen:
You have requested information from Curtice-Burns
Foods, Inc. (the 'Company' or 'Curtice Burns') in connection with
your consideration of a possible transaction involving you and
the Company (the 'Transaction'). As a condition to our
furnishing such information or causing such information to be
furnished to you, you are entering into this Agreement.
1. (a) Pro-Fac shall treat confidentially any
information about the Company that the Company or any of its
respective directors, officers, employees, agents or
representatives (including attorneys and advisors) furnishes to
Pro-Fac or Pro-Fac's directors, officers, employees,
representatives, attorneys, agents, advisors, prospective bank or
institutional lenders or affiliates or to any representative of
Pro-Fac's agents, advisors or prospective lenders (all of the
foregoing collectively referred to as 'Pro-Fac Representatives'),
whether such information is oral or in writing, and all notes,
analyses, compilations, studies or other documents, whether
prepared by Pro-Fac or others, which contain or otherwise reflect
such information (collectively, the 'Evaluation Material');
provided that Pro-Fac and Pro-Fac Representatives may disclose
such information as required by any court, governmental agency or
other tribunal exercising jurisdiction over it, or, in the
written opinion of counsel to Pro-Fac, required by law.
(b) The Evaluation Material will be kept
confidential by Pro-Fac and Pro-Fac Representatives, except that
Pro-Fac and Pro-Fac Representatives may disclose the Evaluation
Material or portions thereof to The Dial Corp and Pro-Fac
Representatives who need to know such information, in each case,
for the purpose of evaluating a possible transaction involving
the Company or Nalley's (it being understood that, before
disclosing the Evaluation Material or any portion thereof to such
Representatives, Pro-Fac will inform them of the
<PAGE>
confidential nature of the Evaluation Material and obtain their
agreement to be bound by this Agreement and not to disclose
such Evaluation Material to any other person); provided that
Pro-Fac and Pro-Fac Representatives may disclose such information
as required by any court, governmental agency or other tribunal
exercising jurisdiction over it, or, in the written opinion of
counsel to Pro-Fac, required by law.
(c) In the event Pro-Fac or any of its officers,
directors, employees, agents or representatives become legally
compelled (by deposition, interrogatory, request for documents,
subpoena, civil investigative demand or similar process or
otherwise) to disclose any of the Evaluation Material, or if Pro-
Fac receives a written opinion of counsel that it is required by
law to disclose any Evaluation Material, Pro-Fac shall provide
the Company with prompt prior written notice of such requirement
so that the Company may seek a protective order or other
appropriate remedy or waive compliance with the terms of this
agreement. In the event that such protective order or other
remedy is not obtained, or that the Company waives compliance
with the provisions hereof, Pro-Fac agrees to furnish only that
portion of the Evaluation Material which Pro-Fac is advised by
written opinion of counsel is legally required and to exercise
all commercially reasonable efforts to obtain assurance that
confidential treatment will be accorded such Evaluation Material.
(d) The term 'Evaluation Material' does not
include any information that (i) at the time of disclosure is
generally available to and known by the public (other than as a
result of a disclosure directly or indirectly by Pro-Fac or Pro-
Fac Representatives), (ii) as to Pro-Fac, is held or obtained by
Pro-Fac in the ordinary course of business as the owner of
facilities leased to the Company or as financing provider to the
Company, or any information held or obtained under the Integrated
Agreement or any notes, analyses, compilations, studies or other
documents which contain only such information and other non-
confidential information, or (iii) was or becomes available to
Pro-Fac on a non-confidential basis from a source other than the
Company or any of its directors, officers, employees, affiliates,
agents or representatives (including attorneys and advisors),
provided that such source is not bound by a confidentiality
obligation to the Company or any of its representatives or agents
or is otherwise prohibited from transmitting the information to
Pro-Fac or Pro-Fac Representatives by a contractual, legal or
fiduciary obligation.
(e) Nothing in clause (d) shall be deemed to
confer any right to Pro-Fac to use any confidential information
(whether or not defined herein as Evaluation Material) in
contravention of any other confidentiality obligation relating to
such information.
2. Without the prior written consent of the Company,
neither Pro-Fac nor any Pro-Fac Representative will (i) solicit
or contact any person other than The Dial Corp or (ii) disclose
to any person other than The Dial Corp, the Company, Agway Inc.
or any of their respective advisors or directors the fact that
any investigations, discussions or negotiations are taking place
concerning a possible transaction involving the Company or
Nalley's or any terms, conditions or other facts (including any
offer or proposal that may be made by Pro-Fac) with respect to
any such possible transaction involving the Company or Nalley's,
including the status
2
<PAGE>
thereof. The term 'person' as used in this Agreement
will be interpreted broadly to include, without limitation,
any corporation, company, partnership or individual.
Notwithstanding the foregoing, in the event that Curtice Burns is
advised that The Dial Corp and Pro-Fac are no longer pursuing a
joint proposal to purchase Curtice Burns, Curtice Burns will
consult with Pro-Fac about qualifying other bidders for the
Nalley's hardlines business ('Nalley's') to work with Pro-Fac to
develop a joint bid for Curtice Burns (it being understood that
Curtice Burns shall have no obligation to qualify any other
bidder for Nalley's to work with Pro-Fac).
3. Pro-Fac and Curtice Burns each understands and
agrees that no contract or agreement providing for a transaction
to acquire Curtice Burns or any of its assets involving Pro-Fac
and Curtice Burns shall be deemed to exist between Pro-Fac and
Curtice Burns unless and until a definitive agreement providing
for such transaction (a 'Definitive Agreement') has been
approved, executed and delivered. Pro-Fac and Curtice Burns each
also agrees that unless and until a Definitive Agreement has been
executed and delivered, neither party will have any legal
obligation of any kind whatsoever with respect to any possible
transaction by virtue of this Agreement or any other written or
oral expression with respect to such possible transaction,
except, in the case of this Agreement, for the matters
specifically agreed to herein. For purposes of this paragraph,
the term 'Definitive Agreement' does not include an executed
letter of intent or any other preliminary written agreement, nor
does it include any written or oral acceptance of an offer or
bid. Pro-Fac further understands that (a) Curtice Burns shall be
free to conduct the process for any possible transaction
involving Curtice Burns as it in its sole discretion shall
determine (including, without limitation, by negotiating with any
other party and, subject to Pro-Fac's rights other than as
granted under this Agreement, if any, entering into an agreement
with such third party without prior notice to Pro-Fac or any
other person) and (b) any procedures relating to such transaction
may be changed at any time without notice to Pro-Fac or any other
person.
4. No provision of this Agreement may be waived or
amended except by written agreement of Curtice Burns and Pro-Fac,
which agreement shall explicitly make such waiver or amendment.
5. This Agreement will be governed by and construed
in accordance with the laws of the State of New York. The
invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or unenforceability of any other
provisions of this Agreement, which shall remain in full force
and effect.
3
<PAGE>
If you agree with the foregoing, please sign and return
one copy of this agreement to the undersigned, which will
constitute our agreement with respect to the subject matter
hereof.
Very truly yours,
Goldman, Sachs & Co.
As Agent for
CURTICE-BURNS FOODS, INC.
Accepted and agreed as of
the date written above:
PRO-FAC COOPERATIVE, INC.
By: /s/ Roy A. Myers
-----------------------
Name: Roy A. Myers
-----------------------
Title: General Manager
-----------------------
EXHIBIT (c)(4)
INTEGRATED AGREEMENT
Since 1961 the working relationship between
Curtice Burns Foods, Inc. ('Curtice Burns') and Pro-Fac
Cooperative, Inc. ('Pro-Fac') has been expressed in a series
of four inter-related agreements between them. Based upon
the experience of 30 years of operations it now is
appropriate to set forth in this Integrated Agreement the
assumptions and considerations on which those agreements are
based and to integrate and renew the agreements.
The members and patrons of Pro-Fac are active
growers who have joined together in their cooperative to
market their crops at a fair price and to try to achieve as
much stability and continuity as is possible in agriculture.
While Pro-Fac and its members and patrons have considerable
expertise in the growing of crops, they do not have such
expertise in the processing and sale of those crops in the
form of commercially viable processed food products.
Curtice Burns has long been engaged in the
processing, distribution and sale of processed foods, now on
a diversified geographical basis, but it lacks expertise in
the farming and growing of the crops on which it depends for
a reliable source of supply for its products.
2
<PAGE>
Pro-Fac and Curtice Burns have come together
because of the need of Pro-Fac to find a stable market for
crops grown by its members and patrons and because of the
need of Curtice Burns for a reliable supply of such crops.
While Curtice Burns believes that it has available to it
adequate funds to finance its own operations, in order to
process and market Pro-Fac products Curtice Burns requires
significant additional sources of financing in the form of
working capital and facilities necessary to give it the
capacity to provide a reliable and stable market for Pro-Fac
products. Consequently, the willingness of Curtice Burns to
enter into its relationship with Pro-Fac depends upon the
commitment of Pro-Fac to provide financing for Curtice Burns
from a variety of sources not directly available to Curtice
Burns. Pro-Fac provides such financing in order to achieve
its primary objective of a guaranteed and stable market for
crops grown by its members and patrons.
Since Pro-Fac and Curtice Burns have different
areas of expertise in the production and sale of food
products, as well as access to different sources of funds
necessary to conduct their operations, each retains its
independence for their mutual benefit.
This Integrated Agreement shall be for the fiscal
year of the parties beginning June 27, 1992 and for the
ensuing four additional fiscal years ending in June of 1997,
as well as for such further period as to which the parties
3
<PAGE>
may agree or for which the agreement may be extended in
accordance with paragraph 72.
OPERATIONS FINANCING
1. Loan of Funds. To the extent that funds
available to Pro-Fac are not invested in its ownership of
facilities or otherwise needed in the conduct of its own
business, Pro-Fac agrees to lend such funds to Curtice Burns
on terms and conditions herein provided. Curtice Burns
shall pay interest to Pro-Fac for the use of such funds as
provided in paragraphs 3, 4, 5 and 6, as well as the payment
described in paragraph 50.
2. Source of Funds to Be Lent to Curtice Burns.
Pro-Fac shall determine the source of funds which it lends
to Curtice Burns pursuant to this agreement. The following
is the present priority of funds derived from the sources
indicated for the use of funds by Pro-Fac to finance
ownership of its facilities and other aspects of its
business:
a. Common stock
b. Retains
C. Allocated tax paid reserve
d. Earned surplus
e. Preferred stock
f. Long-term debt
g. Seasonal debt
4
<PAGE>
It is anticipated that the sources of funds to be lent to
Curtice Burns will be in inverse order from that listed
above.
3. Loan of Equity Funds. The equity of Pro-Fac
shall be lent upon the following conditions:
a. Curtice Burns shall pay no interest on loans
of funds derived from the proceeds from the sale and
issuance of Pro-Fac common stock.
b. To the extent that Pro-Fac lends Curtice Burns
funds derived from the issuance of Pro-Fac preferred
stock and to the extent that such funds are not lent to
Curtice Burns but are used by Pro-Fac to pay for its
facilities, Curtice Burns shall annually pay interest
on such an aggregate amount at a rate equal to the
average interest rate paid by Pro-Fac and Curtice Burns
for term borrowing. All interest payable under this
paragraph shall be based upon the average amount of the
loans outstanding pursuant to this paragraph during the
year. To the extent that funds derived from retains
lent without interest pursuant to paragraph 5 mature
into preferred stock of Pro-Fac, Curtice Burns agrees
to pay interest on such funds as provided in this
paragraph for the full fiscal year in which such
preferred stock derived from retains is issued.
4. Loan of Proceeds from Pro-Fac Loans. To the
extent that Pro-Fac lends Curtice Burns funds derived from
5
<PAGE>
both seasonal and term loans to Pro-Fac from the Springfield
Bank for cooperatives or such other source from which Pro-
Fac may borrow and to the extent such funds are used by Pro-
Fac to pay for its facilities, Curtice Burns shall pay
interest on such funds at a rate equal to that payable by
Pro-Fac to the source from which Pro-Fac has obtained such
funds. To the extent necessary to enable Pro-Fac to obtain
funds, Curtice Burns agrees to guarantee repayment of all
loans obtained by Pro-Fac and further agrees to repay funds
borrowed from Pro-Fac at the termination of this agreement.
However, the amount Curtice Burns is so obligated to repay
to Pro-Fac shall be reduced by any amount Curtice Burns has
paid to any third party under its guaranty of Pro-Fac debt.
If by the terms of any agreement by which Pro-Fac has
obtained funds subsequently lent to Curtice Burns Pro-Fac
must repay such funds before the termination of this
agreement, then Curtice Burns shall repay such funds to Pro-
Fac in time to enable Pro-Fac to make such repayment.
5. Loan of Retained Funds. To the extent that
Pro-Fac lends Curtice Burns funds allocated to members of
Pro-Fac pursuant to retains but retained by Pro-Fac, Curtice
Burns shall not pay interest to Pro-Fac for the use of such
funds, except as provided in paragraph 3(b).
6. Loan of Allocated Tax Paid Reserves and Earned
Surplus. To the extent that Pro-Fac lends Curtice Burns
funds derived from the allocated tax paid reserves and from
6
<PAGE>
the earned surplus of Pro-Fac, Curtice Burns shall pay no
interest for the use of such funds for the first five fiscal
years following the fiscal year in which such funds
originated in Pro-Fac. Thereafter Curtice Burns shall pay
interest for the use of such funds on the same basis and at
the same rate as is payable for the use of funds derived
from the issuance of preferred stock as described in
paragraph 3(b).
7. Record of Loans. The amount and nature of the
indebtedness of Curtice Burns to Pro-Fac shall be as is set
forth and reflected from time to time on the books and
records of Curtice Burns and Pro-Fac; no promissory note or
notes shall be necessary to evidence such indebtedness.
8. Right to Recall Funds. Pro-Fac shall
determine and advise Curtice Burns at the end of each fiscal
year the amount of loans payable from Curtice Burns which
may reasonably be due currently so as to provide Pro-Fac
with current assets at least equivalent to its current
liabilities. Should Pro-Fac not receive through interest
payments as herein provided, or from other sources, funds
sufficient to meet its requirements for the conduct of its
business, then Curtice Burns shall, upon reasonable notice
from Pro-Fac, repay all or any portion of funds lent by Pro-
Fac to Curtice Burns as so requested, so as to provide Pro-
Fac with funds necessary to meet its legitimate business
purposes. In giving such notice, Pro-Fac shall provide
7
<PAGE>
Curtice Burns with as much advance notification as possible
so as to enable Curtice Burns to arrange for any refinancing
necessary for it to make such repayment.
9. Prepayment. Curtice Burns may, at its
election, pre-pay any funds borrowed from Pro-Fac upon
written notice Of not less than five days to Pro-Fac,
without penalty or premium, and any such prepayment in part
may be applied to such particular payments provided for
hereunder as Curtice Burns may designate.
10. Bond. Curtice Burns will obtain a blanket
bond insuring the interest of both Pro-Fac and Curtice Burns
as such interest may appear and providing coverage in an
amount satisfactory to the boards of directors of both
Curtice Burns and Pro-Fac for such employees of Curtice
Burns as shall handle moneys of Pro-Fac in behalf of Curtice
Burns. The expense of such bond shall be charged by Curtice
Burns as a direct sales, general and administrative expense.
FACILITIES FINANCING
11. Premises. In consideration of the financing
payments to be made to Pro-Fac by Curtice Burns as
hereinafter specified, Pro-Fac hereby makes available for
the use of Curtice Burns (which is hereinafter deemed to
include any subsidiary of Curtice Burns which shall be
designated by Curtice Burns to operate the facilities) all
real property owned by Pro-Fac, together with all buildings,
8
<PAGE>
plants, structures, improvements, water and sewer rights,
easements, and all rights of any sort or kind belonging or
appertaining thereto (such real property hereinafter
referred to as the 'Premises'). Unless specifically
excluded by resolution of the boards of directors of Pro-Fac
and Curtice Burns, the Premises shall also include any real
property subsequently acquired by Pro-Fac during the term of
this agreement.
12. Equipment. Pro-Fac hereby further makes
available for the use of Curtice Burns all fixtures, food
processing equipment, machinery, office equipment, motor
vehicles and all other equipment of every kind and
description owned by Pro-Fac now or hereafter attached to,
or now or hereafter used on or procured for use upon the
Premises or elsewhere (such personal property hereafter
referred to as the 'Equipment'). Unless specifically
excluded by resolution of the boards of directors of Pro-Fac
and Curtice Burns, the Equipment shall also include any
equipment subsequently acquired by Pro-Fac during the term
of this agreement. The Premises and the Equipment are
sometimes referred to in the aggregate as the 'Facilities'.
13. Facilities Financing Payments. The
Facilities are accounted for as capitalized lease assets
which will be depreciated by Curtice Burns. The parties
agree that the central purpose of this agreement is to
provide a security interest to Pro-Fac through its retention
9
<PAGE>
of title to the Facilities to assure the recovery by Pro-Fac
of all costs of acquisition, financing and associated
carrying costs involved with the Facilities. Curtice Burns
shall pay Facilities financing payments to Pro-Fac in an
amount equal to the total annual depreciation each year on
the Facilities determined on a straight line basis in
accordance with generally accepted accounting principles or
in some other fashion which is acceptable to Pro-Fac.
Curtice Burns further agrees to pay all taxes, charges for
water, utilities and assessments against the Facilities of
any sort, ordinary and extraordinary, which may be levied,
assessed or imposed upon the Facilities, accruing or
becoming due and payable during the term of this agreement
and the cost of insurance as provided in paragraph 15. It
is the intention of the parties that Pro-Fac shall receive
the Facilities financing payments free from all taxes,
charges, expenses or deductions of every description, and
that Curtice Burns shall pay all such items and expenses
which, except for the execution and delivery of this
agreement, would have been chargeable against the Facilities
and payable by Pro-Fac.
14. Interest on Default. Any payment accruing
under the provisions of this agreement which shall not be
paid when due shall bear interest at the judgment rate then
prevailing in the State of New York from the date it is
10
<PAGE>
payable under the terms of this agreement until it shall
have been paid by Curtice Burns to Pro-Fac.
15. Insurance. Curtice Burns shall procure and
maintain policies of insurance at its own cost and expense
insuring:
a. The interest in the Facilities of Pro-Fac,
Curtice Burns and any mortgagee thereof, against loss
or damage by fire, lightning, wind, hail, aircraft,
vehicles, smoke, explosion, riot or civil commotion.
The insurance coverage shall be for not less than the
full replacement cost of the Facilities (unless a
lesser coverage is approved by Pro-Fac upon
recommendation of Curtice Burns), with all proceeds of
insurance payable jointly to Pro-Fac and any such
mortgagee. The full replacement cost shall be -
determined annually or at such other intervals as may
be reasonable, either through periodic appraisals paid
for by Curtice Burns or through some other method of
valuation acceptable to both parties.
b. Pro-Fac and Curtice Burns from all claims,
demands or actions for injury to or death of any person
in an amount not less than $1,000,000.00 per occurrence
for bodily injury, including death, and property
damage, and not less than $1,000,000.00 annual
aggregate made by, or in behalf of, any person or
persons, firm or corporation arising from, related to
11
<PAGE>
or connected with the Facilities. In addition to the
foregoing minimum coverage, Curtice Burns shall also
obtain umbrella coverage against liability for personal
injury and property damage totalling not less than
$50 million which shall include full contractual
liability coverage.
c. Pro-Fac and Curtice Burns, in an amount which
shall be reasonably satisfactory to Pro-Fac, against
risks customarily covered by boiler and machinery
insurance and business interruption.
16. Form of Insurance. The insurance to be
obtained as herein provided shall be with companies and in
form, substance, and amount (where not stated above)
satisfactory to Pro-Fac and any mortgagee of Pro-Fac. The
aforesaid insurance shall not be subject to cancellation
except after at least 10 days prior written notice to Pro-
Fac and any mortgagee of Pro-Fac. The original insurance
policies (or certificates thereof satisfactory to Pro-Fac)
together with satisfactory evidence of payment of the
premiums thereon, shall be deposited with Pro-Fac at the
beginning of the term hereof, and renewals thereof shall be
similarly deposited not less than 30 days prior to the end
of the term of such coverage.
17. Waiver of Subrogation Rights. Whenever
(a) any loss, cost, damage or expense resulting from a fire,
explosion or any other casualty or occurrence is incurred by
12
<PAGE>
either of the parties to this agreement in connection with
the Facilities, and (b) such party is then covered in whole
or in part by insurance with respect to such loss, cost,
damage or expense, then the party so insured hereby releases
the other party from any liability it may have on account of
such loss, cost, damage or expense to the extent of any
amount recovered by reason of such insurance and waives any
right of subrogation which might otherwise exist in or
accrue to any person on account thereof.
18. Damage and Reconstruction. If the Equipment
or the buildings on the Premises shall be damaged or
partially destroyed by fire or any other cause at any time
during the term hereof, Curtice Burns shall forthwith
replace such equipment and cause the damage to the buildings
to be repaired with all reasonable dispatch, provided that
such replacement and repair are economically justifiable in
the judgment of the boards of directors of both Pro-Fac and
Curtice Burns. Should a building at any time on the
Premises be so damaged by fire or otherwise that repair or
restoration will be impracticable, then Curtice Burns shall
forthwith demolish and remove such damaged buildings and
proceed with the erection and construction of suitable
replacement buildings on the Premises. Any such necessary
repairs shall be made and such buildings replaced in
accordance with plans and specifications submitted by
Curtice Burns and approved by Pro-Fac. In order to pay for
13
<PAGE>
the cost of such repair or reconstruction, Curtice Burns
shall be entitled to obtain from Pro-Fac any sum received as
insurance for such damage (to the extent permitted by any
mortgagee of Pro-Fac which may have a right to such
insurance proceeds), which shall be paid to Curtice Burns as
hereinafter provided, to be held by Curtice Burns as a trust
fund for such repairs. Curtice Burns shall not be obligated
under this paragraph to make any repairs or undertake any
reconstruction beyond that which may be paid for through the
use of funds to be provided Curtice Burns by Pro-Fac for
such purpose pursuant to this paragraph. If the holder of
any mortgage on the Premises and Equipment shall require
that the proceeds of insurance policies be paid in reduction
or payment of such mortgage, then Pro-Fac covenants with
Curtice Burns to provide for the use of Curtice Burns as
aforesaid a sum equal to the amount of such insurance
proceeds so paid to any mortgagee. Pro-Fac shall, from time
to time, as certified by Curtice Burns and to an extent not
exceeding 80% of the value of the work, labor and material
entered into in the erection of such new buildings or the
repair of old buildings, pay over to Curtice Burns the
proceeds of insurance actually collected by Pro-Fac, or such
other funds in substitution thereof as Pro-Fac may be
required to provide Curtice Burns as hereinbefore provided.
The balance of such insurance proceeds or other funds shall
be paid by Pro-Fac to Curtice Burns after the buildings are
14
<PAGE>
fully repaired, completed and paid for. Curtice Burns shall
promptly pay construction cost or costs of repair when
incurred. Curtice Burns shall obtain adequate general
liability insurance protecting and indemnifying Pro-Fac from
claims or damages arising out of the repair or demolition of
any buildings on the premises and the erection and
construction of any new buildings.
19. Maintenance and Repair. The Facilities shall
during the term hereof be kept by Curtice Burns in good
order and repair at the sole cost and expense of Curtice
Burns. Curtice Burns will comply with all orders,
regulations, rules and requirements of every kind and nature
relating to the Facilities now or hereafter in effect, of
the federal, state, municipal, or other governmental
authorities, whether they be usual or unusual, ordinary or
extraordinary, and whether they or any of them relate to
structural changes or requirements of whatever nature, or to
changes or requirements incident to or as the result of, any
use or occupation thereof or otherwise. Should Curtice
Burns determine that compliance with any such order,
regulation, rule or requirement would be uneconomical and
that instead the parties should terminate active operation
of any portion of the Premises which would be affected
thereby, then Curtice Burns shall so recommend to Pro-Fac;
if the parties agree that such operation should be so
terminated rather than to contest or comply with such order,
15
<PAGE>
rule, regulation or requirement, then the parties agree to
terminate such operation forthwith upon such determination.
If following such recommendation by Curtice Burns Pro-Fac
does not agree thereto, then the matter shall be resolved by
arbitration under the procedure for arbitration as described
herein. Should the parties not agree that such operations
should be suspended, or should arbitration so determine,
then Curtice Burns will pay all cost and expenses incidental
to such compliance and will indemnify and save harmless Pro-
Fac from all expense by reason of any notices, orders,
violations or penalties filed against or imposed upon the
Premises or Equipment, or against Pro-Fac as owner thereof,
because of the failure of Curtice Burns to comply with this
covenant. However, Curtice Burns shall have the right to
contest or review any order issued against the Premises or
Equipment by legal proceeding or in such other manner as it
may deem advisable, and may have such order modified,
cancelled, removed or revoked without compliance therewith.
Any such action or proceeding instituted shall be conducted
promptly at the expense of Curtice Burns. The term 'legal
proceeding' as used herein shall be construed as including
appeals from judgments, decrees or orders. If and whenever
any such order shall become final and binding, Curtice Burns
shall then comply therewith with due diligence; in default
thereof by Curtice Burns, Pro-Fac may comply therewith, and
the cost expense of so doing may be paid by Pro-Fac and
16
<PAGE>
shall be charged against Curtice Burns, becoming due on the
next June 22 following such payment by Pro-Fac. In such
event, Pro-Fac shall have recourse to all the remedies
herein and conferred upon Pro-Fac in respect to the
collection of payments due hereunder or to the recovery of
the possession of the Premises and Equipment because of
default in any payment required of Curtice Burns.
20. Indemnity. Curtice Burns will protect,
indemnify and save harmless Pro-Fac from and against all
liabilities, obligations, claims, damages, penalties, causes
of action, costs and expenses (including without limitation
reasonable attorneys' fees and expenses) imposed upon or
incurred by or asserted against Pro-Fac by reason of any
accident, injury to or death of persons or loss of or damage
to property of others occurring on or about the Premises or
any part thereof or the adjoining properties, sidewalks,
curbs, streets, or way. In case of any action, suit, or
proceeding brought against Pro-Fac by reason of any such
occurrence, Curtice Burns will, at its expense, resist and
defend such action, suit or proceeding, or cause it to be
resisted and defended by counsel approved by Pro-Fac.
21. Utilities. The cost of all utilities and
services, including but not limited to gas, water, sewer and
electricity, shall be paid by Curtice Burns.
22. Quiet Enjoyment. So long as Curtice Burns is
not in default under the covenants and agreements of this
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agreement, the quiet and peaceful enjoyment by Curtice Burns
of the Premises and Equipment shall not be disturbed or
interfered with by Pro-Fac or by any person claiming by,
through or under Pro-Fac. However, nothing herein shall
affect the rights of the holder of any mortgage or other
security interest given by Pro-Fac applicable to the
Premises or Equipment.
23. Subordination. This agreement and all rights
of Curtice Burns herein shall be subject and subordinate to
any mortgage or mortgages or any renewals or replacements
thereof which are now or may hereafter be placed on the
Premises and Equipment, and Curtice Burns agrees that at the
time of the placing of any such mortgage or renewal thereof
on the Premises or Equipment and at the request of Pro-Fac,
Curtice Burns will execute and deliver any further
instruments necessary to subordinate its rights under this
agreement to any such mortgage or renewal thereof. Pro-Fac
agrees that it will notify Curtice Burns of the execution
and delivery of any such mortgage and that it will, upon the
request of Curtice Burns, exhibit to Curtice Burns at least
5 days before the expiration of any default period provided
in such mortgage satisfactory evidence showing that interest
due thereunder and any installment of principal has been
paid. If at such time any installment of interest or
principal has not been paid in accordance with the terms of
said mortgage, Curtice Burns may pay the same, together with
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any interest accrued thereon, and the amount so paid by
Curtice Burns and the interest thereon at the judgment rate
then prevailing in the State of New York from the time of
payment shall be paid by Pro-Fac to Curtice Burns on demand,
or may be offset by Curtice Burns against any amount payable
hereunder until the whole amount thereof shall have been
repaid to Curtice Burns by Pro-Fac.
24. Default. The occurrence of any one of the
following events shall be considered an event of default by
Curtice Burns under this agreement:
a. Curtice Burns shall be adjudged a bankrupt, or
a decree or order approving, as properly filed, a
petition or answer asking reorganization of Curtice
Burns under the federal bankruptcy laws, or under the
laws of any state, shall be entered, and any such
decree or judgment or order shall not have been vacated
or stayed or set aside within 30 days from the date of
the entry or granting thereof; or
b. Curtice Burns shall file or admit the
jurisdiction of the court and the material allegations
contained in, any petition in bankruptcy, or any
petition pursuant or purporting to be pursuant to the
federal bankruptcy laws, or Curtice Burns shall
institute any proceedings for any relief of Curtice
Burns under any bankruptcy or insolvency laws or any
laws relating to the relief of debtors, readjustment of
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indebtedness, organization, arrangements, composition
or extension; or
c. Curtice Burns shall make any assignment for
the benefit of creditors or shall apply for or consent
to the appointment of a receiver for Curtice Burns or
any of the property of Curtice Burns; or
d. A decree or order appointing a receiver of the
property of Curtice Burns shall be made and such decree
or order shall not have been vacated, stayed or set
aside within 90 days from the date of entry or granting
thereof; or
e. Curtice Burns shall vacate the Premises or
abandon the same during the term hereof; or
f. Curtice Burns shall make default in any
payment required to be paid by Curtice Burns hereunder
when due as herein provided and such default shall
continue for 30 days after notice thereof in writing by
Pro-Fac to Curtice Burns; or
g. Curtice Burns shall make default in any of the
other covenants and agreements herein contained to be
kept, observed and performed by Curtice Burns, and such
default shall continue for 30 days after notice thereof
in writing by Pro-Fac to Curtice Burns.
25. Remedies. Upon the occurrence of any one or
more of such events of default, Pro-Fac may terminate this
agreement. Upon termination of this agreement, Pro-Fac may
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re-enter the Premises and take possession of the Premises
and the Equipment, with or without process of law, and Pro-
Fac shall not be liable for any damages resulting therefrom.
Such re-entry and repossession shall not work a forfeiture
of any amounts to be paid and the covenants to be performed
by Curtice Burns during the full term hereof. Upon such
repossession of the Premises, Pro-Fac shall be entitled to
recover as liquidated damages and not as a penalty a sum of
money equal to the value of the amounts provided herein to
be paid by Curtice Burns to Pro-Fac for the remainder of the
term hereof. Should Curtice Burns default in payment of any
taxes, water charges, assessments, or any other charges to
be paid by Curtice Burns pursuant to paragraph 13, Pro-Fac
may if it so desires pay the same, and the amount so paid,
with interest thereon at the judgment rate then prevailing
in the State of New York from the date of payment, shall be
added to the next payment to be made by Curtice Burns.
However, any such payment by Pro-Fac shall not be deemed to
waive or release the default in the payment thereof by
Curtice Burns, or the right of Pro-Fac immediately to
terminate this agreement and recover possession of the
Premises and Equipment by reason of such default as
hereinabove provided.
26. Remedies Cumulative. No remedy herein or
otherwise conferred upon or reserved to Pro-Fac shall be
considered to exclude or suspend any other remedy, but the
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same shall be cumulative and shall be in addition to every
other remedy given hereunder now or hereafter existing at
law or in equity or by statute, and every power and remedy
given by this agreement to Pro-Fac may be exercised from
time to time and as often as occasion may arise or as may be
deemed expedient. Neither the receipt of any payment after
default, nor any delay or omission of Pro-Fac to exercise
any right or power arising from any default, shall impair
any such right or power or shall be construed to be a waiver
of any such default or any acquiescence therein. Neither
the rights herein given to receive, collect, sue for or
distrain for any payments due hereunder or to enforce the
terms, provisions and conditions of this agreement, or to
prevent the breach or nonobservance thereof, or the exercise
of any such right or of any other right or remedy hereunder
or otherwise granted or arising, shall in any way affect or
impair the right or power of Pro-Fac to declare this
agreement ended, and to terminate this agreement as provided
for herein, because of any default in or breach of the
covenants, provisions or conditions of this agreement.
27. No Waiver. No waiver of any breach of any of
the covenants herein shall be construed, taken or held to be
a waiver of any other breach or waiver, acquiescence in or
consent to any further or succeeding breach of the same
covenant.
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28. Condemnation. If any part of any of the
Premises shall be condemned and as a result thereof the
balance of such Premises can be used by Curtice Burns, this
agreement shall not terminate and Curtice Burns, pursuant to
plans submitted by Pro-Fac and at the expense of Pro-Fac,
shall repair and restore the Premises and all improvements
thereon. Curtice Burns shall promptly and diligently
proceed to make a complete architectural unity of the
remainder of the improvements in accordance with such plans
as are first approved by Pro-Fac. Curtice Burns shall have
no right to any condemnation award applicable to the
Premises. Pro-Fac shall receive and hold in trust the
amount of the award relating to the improvements on the
Premises and shall (to the extent permitted by the holder of
any mortgage on the Premises which may be entitled to such
award) disburse such award to Curtice Burns to apply to the
cost of said repairing or restoration in accordance with the
procedure set forth in paragraph 18. If Curtice Burns does
not make a complete architectural unit of the remainder of
the improvements within a reasonable period after such
taking or condemnation then, in addition to whatever other
remedies Pro-Fac may have either under this agreement, at
law or in equity, Pro-Fac may retain the entire award, and
the total amount payable by Curtice Burns to Pro-Fac under
paragraph 18 shall be reduced by the amount of such award so
retained, prorated over the remaining payments due. Except
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as hereinbefore provided, there shall be no abatement or
reduction in any payment due from Curtice Burns because of
such taking or condemnation.
29. Right to Contest Tax Assessments. Curtice
Burns shall have the right to review by legal proceedings,
promptly instituted and conducted at the expense of Curtice
Burns, any taxes, assessments, water rates, or other charges
imposed upon or against the Premises or Equipment, and in
case any such taxes, assessments, water rates or other
charges shall, as a result of such proceedings or otherwise,
be reduced, cancelled, set aside or to any extent discharged
or modified, Curtice Burns shall pay any amount that shall
be finally assessed or imposed against the Premises or
Equipment or adjudicated to be due and payable on any such
disputed or contested items. The term 'legal proceedings'
as here used shall be construed to include appropriate
appeals from any judgments, decrees or orders.
30. No Warranty by Pro-Fac. Curtice Burns
accepts the Premises and Equipment in their present
condition and without any representation or warranty by Pro-
Fac as to the condition of the Premises and Equipment, or as
to the use or occupancy which may be made thereof. Pro-Fac
shall not be responsible for any latent or other defect or
change in their condition, and the payments hereunder shall
in no case be withheld or diminished because of any defect
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or change in their condition, or because of any damage
occurring thereto during the term hereof.
31. Liens Against Premises. If any mechanics or
other liens or order for the payment of money shall be filed
against the Premises or Equipment by reason of or arising
out of any labor or material furnished or alleged to have
been furnished, or to be furnished, to or for Curtice Burns
at the Premises for or by reason of any change, alteration
or addition or the cost of expenses thereof, or any contract
relating thereto, or against Pro-Fac as owner thereof,
Curtice Burns shall cause the same to be cancelled and
discharged of record, by bond, or otherwise at the election
and expense of Curtice Burns. Curtice Burns shall also
defend on behalf of Pro-Fac at the sole cost and expense of
Curtice Burns any action, suit or proceeding which may be
brought thereon or for the enforcement of such lien, or
order, and Curtice Burns will pay any damages or discharge
any judgment entered therein and save harmless Pro-Fac from
any claim or damages resulting therefrom.
32. Alterations and Improvements. Curtice Burns
shall have the right to make alterations and improvements to
the Premises from time to time without the written consent
of Pro-Fac upon condition, however, that the cost of such
alterations or improvements shall not exceed the sum of
$150,000.00 for any such alteration or improvement. If any
such alteration or improvement shall cost more than
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$150,000.00 (or such other amount as may be agreed to by the
parties as appropriate), the written consent of Pro-Fac
shall be obtained before work is commenced. Pro-Fac shall
not withhold such consent unreasonably and covenants to
consent thereto, provided that such alteration or
improvement shall not tend to decrease the space or the
value of any building upon the Premises. All improvements
to the Premises shall become the property of Pro-Fac.
33. Proper Use. Curtice Burns covenants not to
use the buildings on the premises for any illegal or
unlawful purpose.
34. Additional Equipment. Should Curtice Burns
in its discretion deem it necessary for the continued
successful operation of the Facilities by Curtice Burns for
the purpose of the business of Curtice Burns to install
additional machinery or equipment of its own, Curtice Burns
may do so; such additional machinery or equipment shall not
be deemed the property of Pro-Fac and part of the Premises,
and Curtice Burns shall have the right to remove such
additional machinery and equipment at its own cost and
expense on the termination hereof.
35. Surrender of Premises and Equipment. At the
expiration of this agreement Curtice Burns will surrender
and deliver to Pro-Fac the Premises and Equipment in good
repair and condition, reasonable wear and tear excepted.
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36. Purchase Rights of Curtice Burns. In the
event of the termination of this agreement or at any time at
the option of Curtice Burns upon written notice of 60 days
to Pro-Fac, Curtice Burns shall have the right to purchase
the Facilities at the book value thereof at the time of
purchase. Upon the exercise of the option to purchase the
Facilities as specified in this paragraph, this agreement
shall also automatically terminate. Should Curtice Burns
exercise this option at a time of year when Pro-Fac is
obligated to process crops for its members, then
notwithstanding the exercise of the option by Curtice Burns
pursuant to this paragraph, Curtice Burns shall nevertheless
complete the processing of such crops for that year pursuant
to this agreement, which shall remain in effect until such
crops are processed and marketed.
37. Purchase of Trademarks by Pro-Fac. Should
this agreement be terminated for any reason and upon such
termination Curtice Burns does not purchase the Facilities
as herein provided, then Pro-Fac shall have the right to
purchase all trademarks, tradenames and copyrights of
Curtice Burns at their then book value.
38. Intangibles. Pro-Fac owns an undivided
interest in goodwill and other intangible assets obtained in
the course of the acquisition of various businesses by Pro-
Fac and Curtice Burns ('Intangibles'). The Intangibles do
not include any interest in trademarks or the goodwill
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associated with trademarks. In future business acquisitions
by the parties during the term of this agreement Pro-Fac
shall purchase an undivided interest in all intangibles
acquired with such businesses ('Future Intangibles'). Pro-
Fac shall pay for Future Intangibles an amount equal to the
same percentage of the entire purchase price for such Future
Intangibles that the adjusted deemed equity investment of
Pro-Fac bears to the combined adjusted deemed equity
investment of both Pro-Fac and Curtice Burns as defined in
paragraph 51 hereof. While the purchase price to be paid by
Pro-Fac for its interest in Future Intangibles shall be
based upon the price paid in the course of the acquisition
for all Future Intangibles (including trademarks and the
goodwill associated therewith), the undivided interest in
such Future Intangibles so acquired by Pro-Fac shall not
include any interest in such trademarks or the goodwill
associated therewith, except as provided in Paragraph 37
hereof.
39. License of Intangibles. Pro-Fac hereby
grants to Curtice Burns the exclusive right to use the
interest of Pro-Fac in the Intangibles and Future
Intangibles in conducting their business pursuant to this
agreement. For such use, Curtice Burns shall pay to Pro-Fac
annually the amount by which the interest of Pro-Fac in the
Intangibles and Future Intangibles is amortized each year.
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40. Purchase of Intangibles by Curtice Burns.
Should Curtice Burns purchase the facilities of Pro-Fac in
accordance with paragraph 36 hereof, Curtice Burns shall
also be obligated to repurchase from Pro-Fac at the then
book value thereof the interest of Pro-Fac in the
Intangibles and Future Intangibles.
41. Purchase of Intangibles by Pro-Fac. Should
Pro-Fac purchase the trademarks, tradenames and copyrights
of Curtice Burns and the goodwill associated therewith as
provided in paragraph 37 hereof, then at such time Pro-Fac
shall also be obligated to purchase the Curtice Burns
interest in the Intangibles and Future Intangibles at the
book value thereof at the time of purchase.
MARKETING
42. Delivery of Crops. Pro-Fac agrees to sell
and deliver to Curtice Burns all crops of the type and in
the amounts set forth by acreage or tonnage in the raw
product section of the profit plan as approved each year by
the board of directors of each party during the term hereof
to be marketed in behalf of the grower-members of Pro-Fac
pursuant to the terms of the agreements between Pro-Fac and
its members. Subject only to its inability to do so because
of the vagaries of weather or other causes validly
preventing growing such crops as set forth in the agreements
between Pro-Fac and its members (the form of which shall be
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approved by Curtice Burns), Pro-Fac shall deliver to Curtice
Burns the crops described in the profit plan, and Curtice
Burns agrees to process and market such crops as herein
provided.
43. Marketing Discretion. Curtice Burns shall in
its discretion determine in what form the finished processed
products shall appear for marketing and what label or labels
shall appear on such finished processed products. Curtice
Burns shall establish the price at which it shall sell
products originating in whole or in part from Pro-Fac
products. To facilitate the marketing of the finished
products by Curtice Burns, title to the Pro-Fac crops shall
pass to Curtice Burns at the time such crops are graded and
accepted by Curtice Burns.
44. Agency. To the extent necessary to enable
Pro-Fac to receive crops from its members and deliver such
crops to Curtice Burns pursuant to the terms and conditions
of this agreement, Curtice Burns will act as agent for Pro-
Fac and charge the cost thereof to overhead as provided
herein. Curtice Burns will indemnify and save Pro-Fac
harmless from any loss or damage incurred in acting as such
agent.
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SETTLEMENT
45. Definitions. When used in this agreement, the
following terms shall have the definitions indicated:
a. 'Commercial market value' of crops sold by
Pro-Fac to Curtice Burns shall mean the price paid for
such crops by 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 marketing areas. Where such price cannot be
readily determined, then commercial market value shall
be determined by some other method acceptable to each
party. Commercial market value shall be determined as
provided in paragraph 46 hereof.
b. 'Pro-Fac products' shall mean all products
sold by Curtice Burns which were processed from crops
supplied by Pro-Fac. The determination of what is a
Pro-Fac product shall be made in an annual examination
of products made from crops supplied by Pro-Fac. If
made from crops supplied by Pro-Fac and from similar
crops purchased directly by Curtice Burns to supplement
and facilitate the marketing of crops by Pro-Fac, then
such product shall be considered to be a Pro-Fac
product, provided that the value of such crops
purchased by Curtice Burns for use in the product is
not greater than the value of crops supplied by Pro-Fac
for the product. If Pro-Fac supplied less than half
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the value of crops necessary to make the product, then
only that portion of the product actually made from
crops supplied by Pro-Fac shall be considered a Pro-Fac
product.
c. 'Net proceeds' shall mean the entire proceeds
received by Curtice Burns from the sale of Pro-Fac
products less the costs incurred by Curtice Burns in
its own behalf or in behalf of Pro-Fac in processing
and selling such products. Such costs shall be
determined in accordance with generally accepted
accounting practices in the food industry as modified
by past practices and accounting methods used by the
parties and shall include all variable product costs, a
pro rata share of plant and warehousing overhead costs
based upon the estimated usage of facilities and a pro
rata share of selling, general and administrative,
overhead and financial expenses. Such costs shall
include payments by Curtice Burns to Pro-Fac under this
agreement but shall not include commercial market value
paid pursuant to paragraph 48, any additional payment
for Pro-Fac crops pursuant to paragraph 49 or any
payment pursuant to paragraph 52.
d. 'Earnings (losses) on Pro-Fac products' shall
mean the amount by which the net proceeds received by
Curtice Burns from the sale of Pro-Fac products in any
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fiscal year exceeds or is less than the commercial
market value of crops supplied by Pro-Fac.
e. 'Commission' shall mean a commission due
Curtice Burns for its services in the processing and
marketing of all Pro-Fac products in the amount of 30%
of all earnings on Pro-Fac products. The remaining 70%
of all such earnings shall be due to Pro-Fac for its
crops as provided in paragraphs 48 and 49 herein. If
Curtice Burns incurs a loss on the sale of Pro-Fac
products then Curtice Burns shall not be entitled to
receive any commission.
46. Commercial Market Value. Commercial market
value shall be determined by a committee established jointly
by the boards of directors of Pro-Fac and Curtice Burns and
consisting of two members appointed by the president of Pro-
Fac, two members appointed by the chairman of the board of
Curtice Burns and a fifth member appointed by the other four
members of the committee.
47. Calculation of Earnings and Losses. The
determination of earnings and losses on Pro-Fac products and
of any commission due Curtice Burns as herein provided shall
be made on the basis of all Pro-Fac products considered in
the aggregate each year as of the end of the fiscal year for
each party.
48. Payment for Crops. Curtice Burns shall pay
to Pro-Fac as the minimum purchase price for the crops
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purchased from Pro-Fac each year the commercial market value
of those crops, together with any additional payment which
may be due Pro-Fac pursuant to paragraph 49 hereof. The due
date for payment of the purchase price shall coincide with
the time of payment for crops by Pro-Fac to its members.
49. Additional Payment for Crops. Curtice Burns
shall as of the end of each fiscal year remit to Pro-Fac all
earnings on the sale of Pro-Fac products, less the
commission due Curtice Burns on the sale of such products.
However, should the earnings on the sale of Pro-Fac products
less the commission exceed the amount allocated to Pro-Fac
pursuant to paragraphs 50, 52 and 53 hereof, then the
obligation of Curtice Burns to make payments as herein
provided shall be limited to the amount specified in said
paragraphs.
50. Division of Earnings. As further
consideration to Pro-Fac for the use of its facilities and
funds in the production and marketing of food products,
Curtice Burns shall pay annually to Pro-Fac a portion of its
earnings as herein provided.
51. Definitions for Division of Earnings. For
purposes of the computation of the division of earnings, the
following terms shall have the definitions indicated:
a. 'Curtice Burns products and services' shall
mean all products sold by Curtice Burns which are not
Pro-Fac products as defined in paragraph 45(b) and all
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services performed by Curtice Burns for others, except
those services performed for Pro-Fac for which Curtice
Burns is specifically paid by Pro-Fac.
b. 'Adjusted equity investment' shall as to
Curtice Burns mean the sum of:
(1) the par value of the outstanding common
stock of both classes as of the end of the fiscal
year preceding the year for which that
determination is to be made;
(2) the additional paid in capital as to
such stock;
(3) the retained earnings of Curtice Burns
as of the end of the fiscal year preceding the
year for which that determination is to be made;
and
(4) the par value and additional paid in
surplus of stock sold during the fiscal year for
which that determination is to be made, weighted
in proportion to the number of days during the
year for which the determination is to be made
that the proceeds from the sale of such stock are
available for use by Curtice Burns.
c. As to Pro-Fac 'adjusted deemed equity
investment' shall mean generally all funds of Pro-Fac
for which Pro-Fac does not receive interest from
Curtice Burns, more particularly the sum of:
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(1) the par value of the outstanding common
shares of Pro-Fac as of the end of the fiscal year
preceding the year from which that determination
is to be made, excluding the par value of any
shares subscribed but not paid for;
(2) the par value of common stock issued and
paid for during the fiscal year for which that determination
is to be made, weighted in proportion to the number of days
during the year for which the determination is to be made
that the proceeds from the sale of such stock are available
for use by Pro-Fac;
(3) the aggregate amount of all retains of
Pro-Fac, determined as of the end of the fiscal
year preceding the year for which that
determination is to be made, excluding, however,
retains which mature into preferred stock during
the fiscal year for which that determination is to
be made;
(4) all earnings of Pro-Fac as to which Pro-
Fac has paid income taxes, including earned
surplus and allocated tax paid reserves ('earned
surplus'), whether or not such earned surplus has
been allocated to the accounts of or for the
benefit of members or other patrons of Pro-Fac,
determined as of the end of the fiscal year
preceding the year for which that determination is
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to be made ('determination date'). However, for
purposes of this determination there shall only be
included in the earned surplus of Pro-Fac that
which originated within the five years preceding
the determination date;
(5) 20 percent of the commercial market
value of crops furnished by Pro-Fac for the crop
year applicable to the fiscal year for which the
determination is to be made, unless some other
amount is agreed to by the parties as appropriate
to take into consideration the delay in payment
for crops by Curtice Burns to Pro-Fac;
(6) the aggregate amount for all fiscal
years of Pro-Fac from that ended on March 31, 1962
through that ended on June 25, 1976 by which
payment by Curtice Burns to Pro-Fac for crops was
less than the commercial market value of such
crops; and
(7) the aggregate amount for all fiscal
years of Pro-Fac during the term hereof by which
Pro-Fac is paid less than the interest payable
under this agreement.
d. Notwithstanding the foregoing, the amount of
Pro-Fac adjusted deemed equity investment may be
modified by resolutions duly adopted by the boards of
directors of Pro-Fac and Curtice Burns during the
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fiscal year affected by revising the amount of funds on
which Curtice Burns pays interest to Pro-Fac. To the
extent that the amount of allocated tax paid reserves,
earned surplus or retained funds on which Curtice Burns
pays interest to Pro-Fac as provided in paragraphs 5
and 6 hereof, or the amount of funds derived from the
issuance of preferred stock on which Curtice Burns pays
interest as provided in paragraph 3-b hereof, is
reduced, then the adjusted deemed equity of Pro-Fac
shall be treated as increased by the amount of such
reduction. Conversely, to the extent that the amount
of allocated tax paid reserves, earned surplus or
retained funds on which Curtice Burns pays interest to
Pro-Fac as provided in paragraphs 5 and 6 hereof may be
increased, the adjusted deemed equity of Pro-Fac shall
be treated as decreased by the amount of such increase.
52. Payment of Earnings to be Divided. Subject
to the provisions of paragraph 53, Curtice Burns shall pay
to Pro-Fac as of the close of each fiscal year of Pro-Fac in
each year during the term of this agreement an amount based
upon the profits of Curtice Burns as herein provided. In
determining the earnings (or losses) of Curtice Burns, there
shall be included in such computation all earnings (or
losses) of all subsidiaries of Curtice Burns. The resultant
combined earnings or losses shall be allocated between the
parties in proportion to their respective aggregate adjusted
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equity and deemed equity investments as determined pursuant
to this agreement. From that portion so allocable to Pro-
Fac there shall be deducted the amount paid to Pro-Fac as
provided in paragraphs 48 and 49 hereof. The balance of the
combined earnings or losses of Curtice Burns allocable to
Pro-Fac pursuant to this paragraph shall be paid by Curtice
Burns to Pro-Fac. Should it be determined as herein
provided that a loss is allocable to Pro-Fac as a result of
the computations made pursuant to this paragraph, then
Curtice Burns shall make no payment to Pro-Fac pursuant to
this paragraph and the interest payable by Curtice Burns to
Pro-Fac shall be reduced by the amount of such loss
allocable to Pro-Fac.
53. Further Adjustments to Division of Earnings.
Notwithstanding the provisions of paragraph 52 herein, the
following additional adjustments shall be made in
determining the division of earnings:
a. In determining the earnings of Curtice Burns
there shall be taken into account and charged to the
operations of Curtice Burns the gain or loss on the
sale or other disposition of assets of Pro-Fac which
are leased to Curtice Burns.
b. The amount of any payment due Pro-Fac from
Curtice Burns pursuant to paragraph 52 shall be reduced
by 50% of any dividend received by Pro-Fac from the
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Springfield Bank for Cooperatives during the year for
which earnings are to be divided.
54. Payments to Members of Pro-Fac. While
pursuant to paragraph 48 hereof Pro-Fac will receive from
Curtice Burns at least the commercial market value of all
crops purchased each year, Pro-Fac shall not be obligated to
pay out that amount to its members and others who sold those
crops to Pro-Fac. It is the intent of the parties hereto
that Pro-Fac will pay or allocate to its grower-members and
others entitled thereto the payments made by Curtice Burns
pursuant to this agreement to the extent deemed advisable by
the board of directors of Pro-Fac after retaining such funds
as may be necessary for the payment of any dividends which
may be declared and for the creation of such reserve funds
as may be deemed fair and reasonable.
MANAGEMENT
55. Management Services. Pro-Fac hereby employs
Curtice-Burns to supervise and manage the business and
properties of Pro-Fac, including the performance of its
responsibilities under this agreement and also including
responsibility for handling the business of Pro-Fac with the
Springfield Bank for Cooperatives and any other banks with
which Pro-Fac may do business.
56. Asset Management. Pro-Fac agrees that
Curtice-Burns shall have possession of its properties, both
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real and personal, money, all other assets and the business
of Pro-Fac during the term hereof for the purpose of
carrying on the business of Pro-Fac as authorized by its
certificate of incorporation and bylaws.
57. Financial Management. All moneys and
receipts derived from the business of Pro-Fac shall be the
property of Pro-Fac but shall be deposited in such
depositories in the name of Curtice-Burns as shall be
determined by resolution of the board of directors of
Curtice-Burns, subject to withdrawal by Curtice-Burns in the
course of Pro-Fac business.
58. Financial Agency. All checks, drafts, orders
or other instruments for the payment of money shall be
signed and endorsed by Curtice-Burns in the name of Pro-Fac.
59. Payment of Expenses. From revenue derived
from the operation of Pro-Fac business Curtice-Burns shall
pay all costs and expenses of such business, including, but
not limited to, taxes, insurance, interest, depreciation,
amortization, repairs, refunds, bonuses, legal and
accounting fees, licenses, transportation, service,
promotion, and any and all other expenses necessary or
incident to operate the business of and comply with the
legal commitments made by Pro-Fac.
60. Books of Account. All accounting records and
books of account necessary for Curtice-Burns to perform its
41
<PAGE>
obligations hereunder shall be kept at such office of
Curtice-Burns as it deems appropriate.
61. Standard of Care. Curtice-Burns will manage
the business of Pro-Fac according to the best ability of its
officers, but without accountability for mistakes or errors
of judgment or for any losses arising from negligence, fire,
water or casualty or from any other causes except for such
losses resulting from gross negligence or willful
misconduct.
62. Policy Established by Pro-Fac Board of
Directors. The supervision and management of the business
of Pro-Fac by Curtice-Burns pursuant to this agreement shall
be in accordance with the general policies formulated and
approved by the board of directors of Pro-Fac, which by this
agreement only delegates to Curtice-Burns the authority to
manage and operate the business of Pro-Fac in its normal
course, limited by the provisions of law as to the
delegation of authority by a corporate board of directors.
Curtice-Burns shall consult Pro-Fac and its board of
directors on any matter which, by reason of its size or its
nature, is not in the ordinary course of business.
63. Access to Records. Pro-Fac, through its
officers and board of directors, shall have free access to
all the books and records of both Curtice-Burns and Pro-Fac
related to the business of Pro-Fac. Curtice-Burns will also
make available to the Pro-Fac officers and board of
42
<PAGE>
directors such operating and financial statements as the
board may deem necessary and proper to keep Pro-Fac fully
informed of the operation of its business.
64. Hiring Authority. Curtice-Burns shall hire,
pay and at its pleasure discharge or transfer, supervise and
direct all persons employed in the business of Pro-Fac
during the term of this agreement. The chief executive
officer of Curtice-Burns, with the approval of the board of
directors of Pro-Fac, shall hire and discharge or transfer
the chief executive officer of Pro-Fac, who shall be an
officer of Pro-Fac with the title of general manager.
Employees handling money shall be bonded in accordance with
the requirements of the New York Cooperative Corporation Law
and in such amounts as may be determined by the board of
directors of Pro-Fac. Employees operating under this
agreement shall, for all purposes, be employees of Curtice-
Burns, shall be paid by Curtice-Burns, and shall be entitled
to welfare, pension and insurance and similar benefits,
either statutory or voluntary, on the same basis and under
the same rules as other employees of Curtice-Burns who are
similarly situated. Pro-Fac shall reimburse curtice-Burns
for the cost of such employees.
43
<PAGE>
GENERAL
65. Assignment. This agreement may not be
assigned by either party without the written consent of the
other.
66. Arbitration. Should any dispute arise under
this agreement, such dispute shall be resolved by three
arbitrators, one appointed by Pro-Fac, one appointed by
Curtice Burns and a third chosen by the two arbitrators so
selected by the parties. The determination by a majority of
the arbitrators shall be final.
67. Election of Directors. So long as this
agreement is in effect the nominating committee of the board
of directors of Curtice Burns shall nominate a person
designated by Pro-Fac for election each year as a director
of Curtice Burns, and the Pro-Fac board of directors shall
as provided in the Pro-Fac bylaws elect as a public director
of Pro-Fac the person so designated by Curtice Burns.
68. Not A Partnership. Nothing in this agreement
shall be construed to have created a partnership between the
parties hereto.
69. Amendment. This agreement may be amended or
modified only by a written statement of such amendment or
modification duly signed by each of the parties.
70. Headings. The headings preceding the text of
paragraphs of this agreement are for convenience only and
shall not be deemed part of this agreement.
44
<PAGE>
71. Applicable Law. This agreement shall be
governed by and construed in accordance with the laws of the
State of New York.
72. Renewal Option. Curtice Burns shall have the
right to extend this agreement for a period of five years
beginning June 28, 1997 upon written notice to Pro-Fac
before June 30, 1996. Thereafter, Curtice Burns shall also
have an additional right to extend this agreement for
another five years beginning June 29, 2002 upon written
notice to Pro-Fac no later than June 30, 2001. At the time
notice of renewal is given by Curtice Burns under either
option to renew, either party may propose a change in the
amounts to be paid by Curtice Burns as provided in
paragraph 52 hereof during the term of such renewal. The
amounts to be paid by Curtice Burns during such term shall
then be promptly negotiated by the parties. If the parties
are unable to agree, then the issue shall be settled by
arbitration as provided in paragraph 67. Any dispute
concerning such amounts to be paid pursuant to the
provisions of this paragraph shall in no way invalidate the
exercise of either renewal option by Curtice Burns, and upon
such exercise the agreement shall be deemed renewed, subject
only to the resolution of any dispute as to the amount to be
paid as herein provided.
45
<PAGE>
IN WITNESS WHEREOF the parties have each caused
this agreement to be entered into and executed as of
June 27, 1992.
Pro-Fac Cooperative, Inc.
By: /s/ Robert V. Call
-------------------------------
Robert V. Call, Jr. - President
By: /s/ Roy A. Myers
--------------------------------
Roy A. Myers - General Manager
Curtice Burns Foods, Inc.
By: /s/ Donald E. Pease
-------------------------------
Donald E. Pease
Chairman of the Board
By: /s/ David J. McDonald
-------------------------------
David J. McDonald - President
<PAGE>
EXHIBIT (c)(5)
In the matter of an arbitration between
CURTICE-BURNS FOODS, INC.,
Claimant,
-against-
PRO-FAC COOPERATIVE, INC.,
Respondent.
DEMAND FOR ARBITRATION
Pursuant to a written agreement called the
'Integrated Agreement' between Curtice-Burns Foods, Inc.
('Curtice Burns') and Pro-Fac Cooperative, Inc. ('Pro-Fac')
dated June 27, 1992 (the 'Integrated Agreement'), Curtice
Burns hereby demands arbitration of certain disputes arising
under the Integrated Agreement as set forth herein, in
accordance with Section 66 of the Integrated Agreement. A
copy of the Integrated Agreement is annexed hereto as
Exhibit A.
1. Curtice Burns is a corporation organized under
the laws of the State of New York, with its principal office
at 90 Linden Place, Rochester, New York. Its principal
business is the processing and sale, including marketing and
distribution, of various food products.
<PAGE>
2
2. Pro-Fac is an agricultural cooperative
corporation organized under the laws of the State of New
York. Its members are growers located in various states.
Pro-Fac's business consists of the marketing of its members'
crops.
3. Curtice Burns's business relationship with
Pro-Fac is governed by the Integrated Agreement, which sets
forth the respective rights and obligations of Curtice Burns
and Pro-Fac.
The Integrated Agreement
4. Pursuant to the Integrated Agreement, Curtice
Burns purchases from Pro-Fac agricultural crops produced and
delivered to Pro-Fac by its members. Under Section 42 of
the Integrated Agreement Curtice Burns agrees to process and
market 'crops of the type and in the amount set forth by
acreage and tonnage' in the 'profit plan' agreed to and
approved annually by the boards of directors of both Curtice
Burns and Pro-Fac.
5. Also under the Integrated Agreement, Pro-Fac
leases to Curtice Burns certain of the fixed and tangible
assets used in Curtice Burns's business. Such assets are
referred to in the Integrated Agreement as the 'Facilities'.
6. Section 36 of the Integrated Agreement gives
Curtice Burns the unconditional right 'at any time at the
<PAGE>
3
option of Curtice Burns upon written notice of 60 days to
Pro-Fac . . . to purchase the Facilities at book value
thereof at the time of purchase' (the 'Buyout Option').
Section 36 further provides that,
'Upon the exercise of the option to purchase the
Facilities as specified in this paragraph, this
agreement shall also automatically terminate.'
7. It is currently estimated that Curtice Burns's
total indebtedness to Pro-Fac upon termination of the
Integrated Agreement pursuant to Section 36 (the
'Termination Payment') would be approximately $266 million
as of June 24, 1994.
8. The Termination Payment represents the sum of
(i) the estimated book value of the Facilities as of
June 24, 1994, determined in accordance with generally
accepted accounting principles ('GAAP') (approximately
$141.8 million); (ii) the estimated book value as of
June 24, 1994, determined in accordance with GAAP, of Pro-
Fac's interest in the intangible assets associated with the
Facilities which Curtice Burns would be required under
Section 40 of the Integrated Agreement to purchase as part
of the buyout (approximately $24.8 million); (iii) the
amount required to repay certain long-term loans due Pro-Fac
upon termination of the Integrated Agreement (approximately
<PAGE>
4
$98.1 million) as of June 24, 1994; and (iv) approximately
$1.3 million of other amounts due Pro-Fac.
Curtice Burns's Restructuring
9. During 1993, Curtice Burns embarked on a major
restructuring program. As a first step, Curtice Burns
decided to eliminate two declining lines of business (potato
chips and meat snacks) that had long been losing substantial
amounts of money. In accordance with GAAP, Curtice Burns
was required to write down the book value of the fixed
assets and goodwill related to those lines of business by a
total of approximately $51.4 million. In addition to the
$51.4 million asset writedown, further charges relating to
the potato chips and meat snacks lines of business (totaling
$9.6 million) were also taken by Curtice Burns. The
$51.4 million asset writedown was allocated between Curtice
Burns and Pro-Fac, reducing the value of the potato chips
and meat snacks assets on the books of both Curtice Burns
and Pro-Fac by approximately $29.2 million. Those books
were duly audited by the independent accounting firm of
Price Waterhouse.
10. In addition to the orderly disposition of
unprofitable and declining lines of business, the Board of
Directors of Curtice Burns authorized management to pursue
the possible sale of Curtice Burns.
<PAGE>
5
11. In light of its possible acquisition by a
third party, in early 1994 Curtice Burns suggested that Pro-
Fac take such actions as it believed were necessary to
eliminate any obligations Pro-Fac may have to its growers to
market future crops beyond those crops Curtice Burns had
committed to purchase from Pro-Fac pursuant to the fiscal
1995 profit plan. By written notice dated March 28, 1994,
Pro-Fac notified its members that it was terminating certain
of the relevant marketing agreements and any obligations to
market future crops thereunder.
12. On May 31, 1994, Dean Foods Company ('Dean')
submitted a bid to purchase all of the issued and
outstanding common stock of Curtice Burns for $20.00 cash
per share.
13. Dean has represented that its offer has been
approved by its Board of Directors and is not subject to any
financing contingency. However, as a direct result of the
claims asserted by Pro-Fac, which are described below, Dean
has conditioned its offer on the execution of a binding
agreement between Pro-Fac and Curtice Burns settling the
issues between them, which agreement would clearly define
the amounts owed Pro-Fac upon exercise of the Buyout Option
and termination of the Integrated Agreement.
<PAGE>
6
Pro-Fac's Response to Curtice Burns's Restructuring
14. Pro-Fac was fully advised of Curtice Burns's
plans and of the probability that any sale of Curtice Burns
to a third party would entail the exercise of the Buyout
Option and termination of the Integrated Agreement pursuant
to Section 36. Notwithstanding the plain language of
Section 36 ('at any time at the option of Curtice Burns [it
may] purchase the facilities at book value'), Pro-Fac has
taken the position that Curtice Burns does not have the
right to buy out Pro-Fac at book value or at all.
Specifically, in a letter to the directors of Curtice Burns,
dated November 4, 1993, Pro-Fac stated that it was prepared
to acquire Curtice Burns for itself but threatened to
'embroil' Curtice Burns in dilatory, burdensome,
'acrimonious', 'long and costly litigation' if Curtice Burns
should attempt to exercise its rights under Section 36.
15. Furthermore, notwithstanding the plain
language of Section 42 (obligating Curtice Burns to process
only 'crops of the type and in the amounts set forth [in]
the profit plan as approved each year'), Pro-Fac has taken
the position that Curtice Burns is liable for the 'wrongful
termination' of an alleged obligation to purchase crops
beyond those already agreed to in the 1995 profit plan.
16. On June 7, 1994, Pro-Fac submitted a proposal
to buy Curtice Burns for $16.87 per share of Curtice-Burns's
<PAGE>
7
Class A and Class B common stock. In making its proposal
Pro-Fac reiterated its spurious claims under the Integrated
Agreement and suggested that Curtice Burns should accept the
Pro-Fac proposal--although the offer was at a lower price
than that Curtice Burns could obtain from a third party--
because Pro-Fac would 'relinquish' its claims after it had
acquired Curtice Burns.
17. On June 8, 1994, the Board of Directors of
Curtice Burns (the 'Board') rejected Pro-Fac's offer and
directed management to pursue the Dean proposal and
negotiate with Dean the terms of a definitive agreement.
The Board also instructed Curtice Burns's management to
negotiate the terms of an agreement with Pro-Fac settling
all disputes between Curtice Burns and Pro-Fac, as required
by Dean.
18. Following the June 8, 1994, Curtice Burns
board meeting, Pro-Fac issued public statements, including
statements disseminated over the news wires, publicly
asserting for the first time its position that in the event
of the sale of Curtice Burns to any third party Pro-Fac
would be entitled to half of the net proceeds of such a
sale. That position finds no support in any provision of
the Integrated Agreement and is contrary to its express
terms.
<PAGE>
8
19. Since the determination by the Board of
Curtice Burns on June 8, 1994, Curtice Burns has repeatedly
requested that Pro-Fac enter into discussions to settle all
issues between Curtice Burns and Pro-Fac as required by
Dean, including at presentations to the Pro-Fac Special
Committee and Board of Directors on June 28, 1994. Pro-Fac
has refused to enter into any such discussions and has
thereby utterly frustrated Curtice Burns's efforts to
consummate the deal with Dean.
The Present Controversy
20. A present controversy exists between Curtice
Burns and Pro-Fac regarding Curtice Burns's rights and
obligations under the Integrated Agreement.
a. First, notwithstanding the plain language
of Section 36 of the Integrated Agreement, Pro-Fac has
unequivocally manifested its intention not to perform
its obligation to transfer title to the Facilities and
its interest in the associated intangibles to Curtice
Burns upon 60 days' written notice and tender of the
book value thereof.
b. Second, notwithstanding that under
Section 42 of the Integrated Agreement Curtice Burns is
obligated to process and market only 'crops of the type
and in the amounts set forth by acreage and tonnage in
<PAGE>
9
the raw product section of the profit plan as approved
each year by the boards of directors of [Curtice Burns
and Pro-Fac]' (emphasis added), Pro-Fac has asserted,
and advised potential acquirors of Curtice Burns, that
Curtice Burns is liable to Pro-Fac for Curtice Burns's
'wrongful termination' of its obligation to purchase
crops from Pro-Fac beyond those crops specified in the
fiscal 1995 profit plan.
c. Third, notwithstanding the lack of any
support in the Integrated Agreement or otherwise, Pro-
Fac has asserted, and advised potential acquirors of
Curtice Burns, that Pro-Fac is entitled to one-half the
proceeds of any sale of Curtice Burns to any third
party.
21. Since Curtice Burns first announced its
restructuring plan, Pro-Fac has wrongfully and willfully
pursued a campaign to frustrate and disrupt Curtice Burns's
legitimate efforts to enhance its shareholder value,
including by raising the foregoing meritless claims. Pro-
Fac's objective in pursuing this strategy is to acquire
Curtice Burns for less than full value by eliminating
potential third-party bidders.
22. The foregoing actions constitute an
anticipatory breach of Pro-Fac's obligations under the
<PAGE>
10
Integrated Agreement and intentional interference with
advantageous business opportunities of Curtice Burns.
23. Pro-Fac's actions have caused and threaten to
continue to cause Curtice Burns and its shareholders to
sustain substantial losses. As a direct result of Pro-Fac's
anticipatory breach of, and wrongful refusal to abide by,
the terms of Section 36 of the Integrated Agreement and its
continued assertion of meritless claims against Curtice
Burns, Curtice Burns and its shareholders will lose the
opportunity to sell shares pursuant to the terms of Dean's
substantially superior May 31, 1994 proposal. Furthermore,
the business of Curtice Burns has been and continues to be
damaged by the uncertainty created by Pro-Fac's assertions
of baseless claims against Curtice Burns, uncertainty which
has adversely affected Curtice Burns's relations with its
customers, suppliers and employees. Unless a swift
resolution of the parties' dispute under the Integrated
Agreement is reached, Curtice Burns will sustain further
losses and lose other valuable opportunities.
WHEREFORE, Curtice Burns prays for:
(a) a declaration that, on the sixtieth day after
Curtice Burns gives written notice to Pro-Fac of its
intention to exercise its rights under Section 36, and
upon tender by Curtice Burns of the book value of the
Facilities and associated intangibles as of the time of
purchase, as determined by Curtice Burns's independent
<PAGE>
11
certified public accountants, Pro-Fac shall transfer,
and shall be deemed to have transferred, title to and
all interest in the Facilities and associated
intangibles to Curtice Burns;
(b) a declaration that the Integrated Agreement
and all of Curtice Burns's obligations to Pro-Fac
thereunder (other than its obligation to complete the
processing of crops for the year that includes the date
of termination if on such date Pro-Fac is obligated to
process crops for its members) are terminated as of the
date Pro-Fac shall be deemed to have transferred title
to and all interest in the Facilities and the
associated intangibles to Curtice Burns;
(c) a declaration that Curtice Burns is not
obligated under the Integrated Agreement to purchase
any crops from Pro-Fac except such crops as are of the
types and in the amounts set forth in the raw product
section of the fiscal 1995 profit plan as approved by
the Boards of Directors of Pro-Fac and Curtice Burns;
(d) an award of damages sustained by Curtice Burns
as the result of Pro-Fac's wrongful conduct, in an
amount to be determined by the arbitrators, but in no
event less than the difference in value between Dean's
$20 per share offer and the market price per share of
Curtice Burns's stock following any public announcement
that the Dean proposal has been withdrawn, together
with interest thereon;
(e) all costs, including reasonable attorneys'
fees, that Curtice Burns shall incur herein; and
<PAGE>
12
(f) such other and further relief as the
arbitrators deem just and proper.
Unless within twenty days after service of this
notice, Pro-Fac applies for a stay of arbitration, Pro-Fac
will thereafter be precluded from objecting that a valid
agreement was not made or has not been complied with and
from asserting in court the bar of a limitation of time.
July 8, 1994
/S/ Robert S. Rifkind
------------------------------
Robert S. Rifkind
CRAVATH, SWAINE & MOORE
Worldwide Plaza
825 Eighth Avenue
New York, NY
10019-7475
(212) 474-1000
- and -
/S/ Harry P. Trueheart
------------------------------
Harry P. Trueheart, III
NIXON, HARGRAVE, DEVANS &
DOYLE
Clinton Square
P.O. Box 1051
Rochester, NY 14603
(716) 263-1000
Attorneys for Curtice-Burns
Foods, Inc.
<PAGE>
Exhibit A
Integrated Agreement
[See Exhibit (c)(4) to Statement on Schedule 14D-1]
Exhibit (c)(6)
- --------------------------------------
In the matter of an arbitration
between
CURTICE-BURNS FOODS, INC.,
Claimant,
-against-
PRO-FAC COOPERATIVE, INC.,
Respondent and Counterclaimant.
- --------------------------------------
RESPONSE AND COUNTERDEMAND FOR ARBITRATION
BY PRO-FAC COOPERATIVE, INC.
Pro-Fac Cooperative Inc. ('Pro-Fac') submits this
response and counterdemand to the demand for arbitration by
Curtice-Burns Foods, Inc. ('Curtice-Burns') dated July 8,
1994.
Basic Facts
1. Pro-Fac and Curtice-Burns were formed as a
joint enterprise in 1961 (the 'Enterprise') and have operated
continuously since that time. The general terms of the
Enterprise are set forth in an Integrated Agreement between
them, which has been amended and restated from time to time
(the 'Agreement'). A copy of the Agreement is attached as
Exhibit A. The terms of the Enterprise have also been
<PAGE>
supplemented and interpreted by the operating experience and
practice of the parties working together under the Agreement
for over thirty years.
2. The Enterprise was organized by Agway Inc., a
farmers' supply cooperative ('Agway'), which owns nearly all
the class B shares of Curtice-Burns entitling it to elect 70%
of the Curtice-Burns board of directors. Agway thereby
controls Curtice-Burns.
3. In the operation of the Enterprise, Curtice-
Burns, a food processor, receives investment capital and
other financing from Pro-Fac, a farmers' cooperative with
over 700 members. Pro-Fac bears the typical risks and enjoys
the rewards of an equity investment: Pro-Fac profits from
the success of the Enterprise and shares with Curtice-Burns
its losses. Pro-Fac and Curtice-Burns each also benefit
from, respectively, a steady market for, and supply of, the
crops used in Curtice-Burns's products.
4. Both Curtice-Burns's shareholders and the
members of Pro-Fac have invested substantial equity in the
Enterprise. The Curtice-Burns shareholders, including Agway,
have equity of approximately $80 million in the Enterprise.
The Pro-Fac members have approximately $150 million in equity
invested in the Enterprise. This includes approximately $80
million of common equity, referred to in the Agreement as
Pro-Fac's 'deemed equity' in Curtice-Burns. Pro-Fac also
uses its long term borrowing capacity to pass through low
cost financing from the federal farm credit system.
2
<PAGE>
5. Pro-Fac provides this capital, totalling
approximately $297 million as of June 1994, through its
deemed equity, loans, purchase and ownership of facilities
and intangibles, and deferrals of crop payments.
6. The Agreement includes complicated formulas to
determine the profit split of the Enterprise but primarily
allocates profit and losses in proportion to the deemed
equity of Pro-Fac and Curtice-Burns's shareholders' equity.
The Boards of Directors of both companies annually have
agreed, as permitted under Section 51(d) of the Agreement, to
split the profits and losses on a 50-50 basis.
7. Under the Agreement, Curtice-Burns is charged
with managing Pro-Fac. It thereby assumes fiduciary duties
to Pro-Fac in addition to its duties to its Class A and Class
B shareholders. Over the years, Curtice-Burns has
recommended and managed Pro-Fac's investments and managed the
Enterprise as a whole with the goal of balancing both current
income and long-term growth for Pro-Fac as well as the
Curtice-Burns shareholders. Pro-Fac's reasonable expectation
in acquiescing in the recommended investments and in allowing
Curtice-Burns to manage Pro-Fac was that Pro-Fac would get
its fair return, both currently and long-term, from these
investments.
8. As the businesses evolved, Curtice-Burns
expanded into food processing areas not directly relevant to
Pro-Fac farmers, such as meat snacks and chili. Pro-Fac
continued to accede to the investments as requested by
Curtice-Burns, purchasing these facilities in Pro-Fac's own
name and providing the initial capital, as well as much of
the working capital, in exchange for half of the profits and
losses of the Enterprise.
3
<PAGE>
9. The arrangement has been commonly
characterized by Curtice-Burns as a joint venture, including
in recent speeches and letters by the Chief Executive Officer
of Curtice-Burns. (Examples of these are attached as Exhibit
B.) The Agreement itself in some places refers to the
venture as a 'financing' arrangement and in others refers to
Pro-Fac's equity investment; it also states that the
arrangement is not a 'partnership'. These characterizations
were intended to comply with definitions of those terms in
tax law, and particularly to special provisions applicable to
farm cooperatives. These characterizations were agreed by
both parties to be beneficial to the Enterprise.
10. The real economic effect of the venture - for
example, the obligation by Pro-Fac to take half the losses on
asset sales - bears no resemblance to any conventional
financing mechanism. It has virtually all the basic
characteristics of a long-term equity investment and joint
venture.
11. The Agreement contains a provision for
termination, providing that Curtice-Burns can terminate the
Agreement and repay to Pro-Fac its book value of the assets
(Agreement, 'P' 36). The Agreement nowhere permits Curtice-
Burns, while managing Pro-Fac, to organize a transaction with
an extraordinary gain in such a manner as to keep Pro-Fac
from securing its half of the profit resulting from the
appreciation in value of Pro-Fac's investment. Nor is there
any provision in the Agreement that contemplates the sale or
liquidation of Curtice-Burns's share of the Enterprise, or
Pro-Fac's rights in that event.
4
<PAGE>
12. By its express terms, the Agreement, upon
termination, remains in effect through the end of the period
that Pro-Fac is obligated to process crops from its members.
That provision of Section 36 states:
this Agreement . . . shall remain in
effect until such crops are processed and
marketed.
Those commitments continue through June 1995 for about half
of the members, June 1996 for many more members, and longer
for certain new members.
13. The termination provision, which has remained
largely unchanged since 1961, was included in the Agreement
to provide a mechanism allowing Curtice-Burns to operate
independently if the then newly formed venture between
processors and growers did not prove workable. Upon
termination under the Agreement, Curtice-Burns is required to
pay Pro-Fac its book value. Book value is nowhere defined,
but the intent is to assure repayment to Pro-Fac of its
investment. The Agreement provides safeguards that would not
permit Curtice-Burns to have the unilateral right to reduce
what it has to pay Pro-Fac under this provision.
14. Pro-Fac has the right to terminate the
Agreement upon a default by Curtice-Burns. Under paragraph
25 of the Agreement, Pro-Fac is entitled to receive as
liquidated damages all amounts that would have been payable
through the term of the Agreement, without releasing Curtice-
Burns from its other obligations under the Agreement.
5
<PAGE>
The Existing Controversies
15. Agway, Curtice-Burns's controlling
shareholder, announced in
early 1993 that it intended to sell its interest in Curtice-
Burns to meet its own cash needs. At the time, the Curtice-
Burns stock was trading in the range of $12 to $13.50 per
share.
16. Curtice-Burns decided to pursue various
options, including a restructuring in which assets would be
sold and a sale of the company. Well aware that a sale of
assets would require dividing the profits with Pro-Fac,
Curtice-Burns acknowledged to Pro-Fac that it was trying to
plan a transaction to deny Pro-Fac its interest in the gain
and threatened that it would terminate the Agreement to
accomplish this goal. Pro-Fac strongly objected that this
plan was a breach of Curtice-Burns's ongoing contractual and
other duties.
17. Curtice-Burns demanded that unless Pro-Fac
offered to buy Curtice-Burns at almost double the previous
stock value, Pro-Fac could end up with only a fraction of its
current economic value in the Enterprise. During this period
Curtice-Burns also wrote down for financial reporting
purposes the value of certain businesses by approximately $60
million and asserted that this would lower Pro-Fac's book
value for purposes of its proposed termination by almost $30
million. The Agreement provides no basis to permit Curtice-
Burns to unilaterally reduce the book value; to permit such a
unilateral write-down is like granting a purchaser the power
to reduce the purchase price.
6
<PAGE>
18. The write-downs occurred at a time when, based
on the Dean Food's recent valuation, the value of the assets
(other than those written down) were more than $100 million
in excess of Pro-Fac's investment. Curtice-Burns's effort to
write down assets while at the same time planning an
extraordinary gain in such a way as to deny Pro-Fac its
profit from its years of investment in those assets
constitutes a violation of the Agreement as well as of basic
principles of fiduciary duty, good faith and fair dealing.
19. In July 1994, Curtice-Burns advised Pro-Fac
that it intended to write down approximately $10 million of
assets of the Nalley's division and further reduce the amount
it owes Pro-Fac on termination. This occurs at the same time
as Curtice-Burns has announced the sale of the remainder of
Nalley's for a profit of $90 million over the book value,
which Curtice-Burns intends to keep for itself.
20. Instead of discharging its fiduciary duty to
Pro-Fac, upon information and belief, Curtice-Burns
intentionally frustrated Pro-Fac's efforts to resolve the
change of control issue. In addition to the acts described
above, Curtice-Burns, contrary to established practice,
unilaterally terminated more than half of the crop purchases
(canceling nearly half of Pro-Fac's members) and, in the
auction it subsequently conducted for the sale of the
company, gave advantages to bidders other than Pro-Fac.
21. In June 1994, Curtice-Burns announced that it
had reached a tentative deal to sell itself to Dean Foods
Company for 'a maximum cash price of $20 per share.' Upon
information and belief, this price would be reduced by extra
amounts
7
<PAGE>
<PAGE>
determined to be owed Pro-Fac under either the profit
split or upon the rejection of Curtice-Burns's unilateral
attempt to adjust Pro-Fac's book value. Pro-Fac's 50% share
of the profits at a $20 sale price would be over $5.75 per
share or $50 million more than is set forth in paragraph 7 of
Curtice-Burns's Demand for Arbitration. Giving effect to
Pro-Fac's profit split, the Dean Foods offer is $14.25 per
share of Curtice-Burns.
22. Pro-Fac also made a bid for Curtice-Burns of
$17.00 ($16.87 after dilution for stock options), a price
which both reflected Curtice-Burns's legal obligations to
Pro-Fac under the Agreement and offered a significant premium
over the trading value of the shares when Agway first
announced its intention to sell.
First Claim: Pro-Fac's Right to the Profit Split
23. The intent of the Agreement is that Pro-Fac
and Curtice-Burns divide profits and losses. Pro-Fac
receives this split not, as Curtice-Burns implies, for
passing through a low cost source of financing, but because
Pro-Fac invested in all the Curtice-Burns businesses and took
its share of the risk of their success or failure.
24. So long as it is managing Pro-Fac's business,
Curtice-Burns has a fiduciary duty to organize and operate
the Enterprise in Pro-Fac's best interest as well as its own.
25. Curtice-Burns also owes Pro-Fac a duty of good
faith and fair dealing in Curtice-Burns's administration of,
and in its interpretation and compliance with, the Agreement.
8
<PAGE>
26. Whatever Curtice-Burns's contractual options
to terminate the relationship with Pro-Fac and continue in
business alone, it cannot, while managing Pro-Fac's
investment, lawfully organize a sale transaction to capture
all the accumulated gain in their investment for itself in a
virtually simultaneous transaction in which it terminates
Pro-Fac. Under the Agreement, Pro-Fac is entitled to its
profit split on the proposed sale of Curtice-Burns.
Second Claim: Continuation of Profit Split
While Crops are Processed
27. Under paragraph 36 of the Agreement, even
after termination the Agreement remains in effect for such
period as Pro-Fac has obligations to its members to process
and market crops. This provision requires Curtice-Burns to
honor the profit split, including the split of profits from
sales of businesses, as well as comply with its other duties
to Pro-Fac, at least through June 1996. Curtice-Burns, as
the manager of Pro-Fac, has negotiated those agreements with
Pro-Fac's members and cannot abandon them.
Third Claim: The Write-Downs Do Not Diminish
Pro-Fac's Book Value
28. The purpose of the buyout provision at book
value is to repay Pro-Fac its unrecovered investment in
assets used by Curtice-Burns in the business of the
Enterprise. The Agreement provides no support that book
value due to Pro-Fac is based on Curtice-Burns's book value
for financial reporting purposes as determined by
9
<PAGE>
<PAGE>
Curtice-Burns's management. Under the Agreement, write-downs are not
shared unless incurred in an actual sale of assets, which
requires Pro-Fac's consent. Such a write-down, if accepted
by Pro-Fac, would virtually wipe out the earned surplus Pro-
Fac has saved (and reinvested in the Enterprise) over the
life of the Enterprise. For these reasons, the accounting
write-downs by Curtice-Burns in fiscal 1993 do not reduce the
amounts owed Pro-Fac upon termination.
29. Further, Curtice-Burns cannot, consistent with
its duties, write down assets and charge those write-downs to
Pro-Fac at the same time that it is contemplating the sale of
other assets at a large gain, the benefit of which it does
not intend to share with Pro-Fac. Such conduct is contrary
to the purpose of the Agreement, breaches Curtice-Burns's
fiduciary duties to Pro-Fac, violates the duty of good faith
and fair dealing and constitutes manipulation and
unconscionable exploitation. It also constitutes a default
under the terms of the Agreement.
Fourth Claim: Default by Curtice-Burns For Improper
Termination of Crops
30. For 33 years Curtice-Burns and Pro-Fac have
operated under an arrangement in which purchases of crops
each year are mutually determined, in good faith, after
deliberations by representatives of both Pro-Fac and Curtice-
Burns. This arrangement is required under Section 42 of the
Agreement. On March 25, 1994, Curtice-Burns sent a letter to
Pro-Fac without having had such meetings, purporting
unilaterally to terminate 70% by volume and 50% by value of
crops supplied by Pro-
10
<PAGE>
Fac. Curtice-Burns knew that such a
notice would require Pro-Fac to terminate those growers from
membership, or else be liable for crops for which it had no
market.
31. Curtice-Burns's actions came less than four
weeks prior to the date that Pro-Fac's final bid under
Curtice-Burns's bidding process was due. Pro-Fac at that
time was arranging financing for its bid, including raising
additional equity from its members. On information and
belief, Curtice-Burns believed that terminating Pro-Fac
members might impair Pro-Fac's ability to make a viable offer
to purchase Curtice-Burns.
32. Upon information and belief, the purpose of
this attempted termination was to try to gain a tactical
advantage by forcing Pro-Fac to terminate a number of its
members and to make the continued viability of Pro-Fac
questionable. In addition, by attempting to terminate the
supply of crops, Curtice-Burns, contrary to its ongoing
duties to Pro-Fac, sought to reduce the obligations a
potential buyer would have upon termination without regard to
the effect on Pro-Fac.
33. Such partial termination of Pro-Fac is not
permitted under Section 36 of the Agreement and violates
Section 42 and other provisions of the Agreement, as well as
Curtice-Burns's fiduciary duty and obligation of good faith
and fair dealing.
Fifth Claim: Default by
Curtice-Burns in Duty to Manage
34. The schemes and events set forth above
constitute a default in Curtice-Burns's obligation to manage
Pro-Fac.
11
<PAGE>
Responses to Curtice-Burns's Demand
35. Pro-Fac generally denies the allegations set
forth in Curtice-Burns's Demand for Arbitration. Pro-Fac
further observes that the declaratory relief seeks
inappropriately to have the panel interpret provisions of the
Agreement without regard to other provisions and to answer
abstract questions without consideration of the actual
circumstances. Pro-Fac specifically responds to certain
allegations as follows.
36. In response to Paragraph 6 of Curtice-Burns's
Demand, the Agreement nowhere give Curtice-Burns an
'unconditional right' to terminate at book value without
regard to the circumstances or Curtice-Burns's other duties
to Pro-Fac. Further, while the Agreement provides that it
shall 'automatically terminate' upon the exercise of the
option, the same paragraph also provides that 'this agreement
. . . shall remain in effect until such crops are processed
and marketed . . .', which would continue until at least June
1996.
37. In response to Paragraph 7, the book value and
other obligations required to be repaid by Curtice-Burns upon
a termination of the Agreement, exclusive of Pro-Fac's right
to the profit split, are approximately $297 million as of
June 24, 1994.
38. In response to Paragraph 8, Pro-Fac
specifically denies that the intent of the Agreement was that
book value for buy-out purposes should be adjusted by taking
write-downs under generally accepted accounting principles
for Curtice-Burns's financial reporting purposes. Moreover,
the Agreement was not designed to permit one party to
unilaterally reduce an obligation to the other party. Nor,
in the circumstances,
12
<PAGE>
would any write-down be valid without
also balancing it against write-ups that would be appropriate
for a liquidating dividend. Under Curtice-Burns's
interpretation, it could reorganize itself to maximize losses
to Pro-Fac without giving Pro-Fac the benefit of gains.
39. In response to Paragraph 14, Pro-Fac has
consistently advised Curtice-Burns that while it is managing
Pro-Fac it is a breach of Curtice-Burns's duties to plan a
transaction which is designed to deprive Pro-Fac of its
interest in the value of Pro-Fac's assets. The letter dated
November 4, 1993 is mischaracterized, and is attached hereto
as Exhibit C.
40. With respect to Paragraph 19, Pro-Fac has
continually made itself available to discuss resolution of
the terms including with Agway, with Curtice-Burns and with
Dean Foods to discuss an acceptable arrangement. Curtice-
Burns has ignored the meetings in the weeks before it filed
its Demand for Arbitration and has refused to permit Pro-Fac
to meet with Dean Foods, except for a perfunctory
presentation by Dean Foods to the Pro-Fac board of directors.
41. With respect to Paragraph 21, 22 and 23, Pro-
Fac denies each and every allegation.
WHEREFORE, Pro-Fac respectfully requests a
declaration:
1) that it is entitled to half the gains
from any sale in any transaction planned by
Curtice-Burns under the circumstances set forth
herein;
13
<PAGE>
2) that the book value of the assets is Pro-
Fac's investment in the assets, together with other
obligations due on proper termination, is
approximately $297 million at June 24, 1994 not
counting the profit split or, in the alternative,
that no write-down is appropriate in the
circumstances set forth herein;
3) that Curtice-Burns cannot further
unilaterally write down assets against Pro-Fac's
investment;
4) that Curtice-Burns by its conduct is in
default under the Agreement and has therefore
forfeited any right to buy out Pro-Fac, and Pro-Fac
is entitled to all the remedies set forth in the
Agreement, including, but not limited to,
liquidated damages estimated at more than $50
million; and
5) That Pro-Fac and its members are entitled
to damages as a result of the unlawful termination
of crops.
Pro-Fac also requests such other relief as the
panel finds proper.
Howard, Darby & Levin
By /s/ Philip K. Howard
-----------------------
Philip K. Howard
Attorneys for Pro-Fac
Cooperative, Inc.
1330 Avenue of the Americas
New York, New York 10019
(212) 841-1000
August 3, 1994
<PAGE>
Exhibit A
Integrated Agreement
[See Exhibit (c)(4) to Statement on Schedule 14D-1]
<PAGE>
Exhibit B
CBF Presentation - Pro-Fac Annual Meeting
Grand Rapids - January, 1993
Which Way to the Future?
(Slide 1 - Title) Good Afternoon, Ladies and Gentlemen. As
you can see from the title of this presentation, I'm not
going to spend time today on the past -- I'm going to look to
the future of this great and unique joint venture between
Curtice Burns Foods and Pro-Fac Co-operative. I see a very
exciting and successful future for our joint venture, if --
and only if -- we strengthen our will to accelerate the
changes we have already begun in our organization and in our
strategies so that we can cope more effectively with the
increased rate of change and the increased competitive
pressures now unfolding in the food business.
Actually, the future of the food business is here with us
today!
(Slide 2 - Sales Slowdown & Profit Pressure) Changes have
been occurring in the food business during the past ten years
at an accelerating rate, and as of today they have reached a
critical mass which is negatively impacting our joint venture
- -- slowing the rate of sales growth and placing significant
pressures on profitability. Here is what the future of the
food business looks like -- today!
<PAGE>
1. (Slide 3 - Industry Consolidation) First, there is the
consolidation of the industry. This has reached
critical mass in both areas of the industry -- our
competitors and our customers.
Consolidation of our customers has generated a reduced
number of very large customers who are beginning to
dominate the business -- either directly, or by the
manner in which they cause their competitors to emulate
their business practices. Wal-Mart now has over 1,800
stores stretching from coast to coast -- and their pie
filling business not only is a very large piece of
business for us, but also sets the pricing structure for
much of the remainder of our pie filling business. Food
Lion, a traditional grocery account which now stretches
from Florida to Pennsylvania and from the Carolinas to
Texas, is that new animal on the scene -- The 'Power
Buyer'.
Food Lion has centralized in one office their buying for
all of their 1,000 stores, and in selling to Food Lion
in this environment it has almost reached the point at
which they tell you what your price will be rather than
you tell them. Publix and Winn Dixie both have to
compete with Food Lion in much of their territory, and
as you might expect, these accounts -- who used to have
gentlemanly, good old boy buyers throughout their
divisionalized buying offices -- have now centralized
their buying to compete with Food Lion, and believe me,
there ain't no more Mr. Nice Guy.
<PAGE>
Doing business now with these giant accounts are giant
food companies -- our competitors. The top 50 food
processors in this country accounted for 65% of the
assets employed in the food business in 1980; in 1992,
they accounted for 87% of these assets.
So we have giant food processors beginning to dominate
doing business with giant food retailers and
wholesalers, while the mid-size companies -- such as our
nine operating divisions -- find it more and more
difficult to stand out in this environment.
2. (Slide 4 - Price Competition) Historically in the food
business, processors have been able to raise prices to
cover inflationary increases and protect margins.
Indeed, for much of the decade of the 80's, food
processors were able to raise prices beyond the rate of
inflation to increase margins. Those days are gone!
Driven by a number of factors -- in part by the current
recessionary economy, in larger measure by the shift in
consumer attitudes to an emphasis on value, and perhaps
in largest measure by their growing power over suppliers
-- our customers are putting unparalleled pressure on
holding supplier prices down, and with inflation still a
reality in our economy albeit at a lower rate, this
pricing pressure puts negative pressure on processor
margins.
<PAGE>
<PAGE>
As Dick Currie, Chairman of Loblaw Companies in Canada,
has repeatedly warned suppliers: We will no longer
accept your price increases. Period!
3. (Slide 5 - Private Label) The Europeanization of America
is well on its way -- at least in the grocery business.
Did you know that retailers doing 24% of grocery volume
in the United States are owned by European Companies?
In Europe, retailers have for several decades been
developing strong private labels which serve as their
means of differentiating themselves from their
competitors.
Visit a Marks & Spencers retail food outlet in the U.K.,
and you will find I would estimate 80 - 90% of the shelf
space occupied by their private label.
Visit a Loblaw store in Canada, and you will see the
most sophisticated private label program on this
continent -- a duel level private label program with a
President's Choice private label which provides quality
equal to or better than the brands at an equal or only
slightly lower price, and a No-Name store label program
which provides dramatic price reductions but at some
reduced quality level. One measure of the strength of
this program is the fact that Loblaw which owns only 25%
of the total grocery business, controls 50% of the
chocolate chip cookies business with their President's
Choice decadent chocolate chip cookie.
<PAGE>
What does this mean for food processors? It means that
the shelf of the future in large categories will contain
no more than one or two brands which have major consumer
franchises supported by heavy advertising, and one to
two private label entries. In smaller, niche
categories, there will probably only be private label
representation.
4. (Slide 6 - Zero Sum Game) And finally, it is important
to note that the food business is essentially a zero sum
game. By this I mean that there is no major growth in
the food business, beyond population growth -- which is
running around only 1% per year.
This is much more significant than it may appear at
first. The function of management is to increase
shareholder value, and you do this by increasing
dividends and generating stock appreciation for our CBF
investors -- and by increasing earnings above CMV and
increasing agricultural tonnage sales for our Pro-Fac
investors. Increases in dividends and earnings above
CMV and stock appreciation are driven by increased
earnings. In even a mildly inflationary economy, and
with stable to declining margins, it is impossible over
the long haul to cost reduce yourself to the kind of
profitability gains necessary to drive these factors.
You must get these profitability gains from sales
growth.
<PAGE>
However, if there is no market growth -- a zero-sum game
-- you must get your growth from your competitor -- you
must take it away from him. And believe me, he's trying
to do the same thing -- take it away from you.
(Slide 7 - Winners/Losers) What this means is really
quite simple: There are only two types of food
processors today and on into the future -- losers or
winners. You either give and you're a loser, or you
take and you're a winner!
Our joint venture has a long history of being a winner. From
the beginning of the joint venture up through the early 80's,
our strategy worked remarkably well. We bought small
regional food processors at bargain prices, improved
operating results, and used the increased earnings to keep
the cycle going.
(Slide 8 - Which Way to the Future?) In the mid-80's when
food company acquisition prices skyrocketed, this strategy
hit some very rocky ground. And as branded competition
intensified in the late 80's, our efforts to compete with the
major brands in this country met with only mixed success --
today we have more of our branded products going down in
share than we have steady or gaining in share. Clearly, we
must intensify our efforts to change in order to deal with
the realities of today's food business. Here is what we are
doing.
(Slide 9 - Corp. Strategy Review/Development) A task group
has been formed of senior officers -- including Roy Myers,
Pro-Fac's General Manager -- to review
<PAGE>
strategy options for Curtice Burns Foods, and to select the optimum strategy.
This group is seeking to bring to bear the best possible
resources in development of new strategies, including outside
strategic consulting organizations. This is not an easy task
- -- it will be an arduous and time consuming endeavor, and we
expect that it will not be completed until January '94.
The new initiative represents the realization that new
directions are required to deal with the realities of the
food business of today -- it represents the determination to
tighten our focus, to strengthen our commitment to certain
specific directions, and to implement with a cohesiveness and
intensity a strategy which will carry forward the winning
tradition of this great joint venture.
But January '94 is a long way off. What are we doing in the
meantime to grow the earnings and the agricultural tonnage of
this joint venture?
(Slide 10 - Clear the Decks) We are accelerating our efforts
to 'Clear the Decks'. We came into F'93 with three troubled
acquisitions.
In the case of our Lucca frozen entree business, the
consolidation with Nalley's U.S. which was completed at the
end of F'92 produced a dramatic reduction in the losses
generated by this business -- but the business was still
losing money, and it did not appear that we could fix the
problem. As a result, the Lucca business has been sold to a
firm with the synergies necessary to make that frozen entree
business profitable for
<PAGE>
them. Thanks to the efforts of Dave McDonald, the 'decks have been cleared'
with regard to the Lucca frozen entree business. We still have two remaining
significant problems, and Dave has aggressive programs
underway to get those businesses on a profitable footing in
the very near term -- and if that does not prove to be
practical, we will have to sell those businesses also.
Either way, we've got to get those problems behind us
relatively quickly -- we've got to 'clear the decks', so that
we can focus on moving this business forward.
(Slide 11 - Intensify Current Efforts) Additionally, we've
got to intensify the efforts currently underway to build our
sales volume and reduce our costs. These efforts are many
and varied, and they cut across all divisions. Roy Myers
touched on a number of the major cost reduction programs. In
the limited time I have this afternoon, it's impossible to
cover the full spectrum of division activities to grow their
sales volume. However, I would like to highlight three such
programs.
(Slide 12 - Nalley's U.S. Pickle Sales Volume) The first in
the Nalley U.S. pickle business. This is a classic example
of the successful collaboration of Pro-Fac and Curtice Burns
to build agricultural tonnage and earnings in the food
business. It began with the construction of a new pickle
plant in 1982. It continued with the acquisition of the
Farman Bros. Pickle Company in 1987, and the successful
integration of that business into the Nalley's operation.
The results speak for themselves -- a 35% increase in pickle
pound sales over that period of time. (Slide 13 - Nalley
Pickle
<PAGE>
Earnings) And in that same period of time the
earnings of our joint venture from the Nalley U.S. Pickle
business more than quadrupled.
Is this the end of the story? No way. Our progress in the
pickle business continues on a variety of fronts. Our
northwest cucumber growers are working with mechanical
harvesting to lower growing costs. Our Nalley's U.S. sales
and marketing team continues to develop programs to build
their volume. (Slide 14 - Nalley Plastic Jar) One example
is their test introduction of a plastic 46 oz. pickle jar --
the first in the industry.
For those consumers with concerns about breakage with the
large glass pickle jar -- particularly those consumers with
young children, research has indicated this shatterproof jar
will be a very attractive package.
(Slide 15 - Walla Walla Onion Dill and Dilliest Dill)
Nalley's continues to be active with new pickle products --
the latest being Nalley's Walla Onion Dills and Nalley's
Dilliest Dills, both continuing Nalley's regional selling
proposition: The unique Flavors of the Great Northwest.
Listen to this radio advertising with which Nalley's has
introduced these new products (Slide 16 - Video Tape of
Nalley's Jars and Audio of Radio Commercial).
(Slide 17 - Del Monte Co-Pack) To top it all off, Nalley's
U.S. management is just about to sign a multi-year contract
with the Del Monte Corporation to co-pack Del
<PAGE>
Monte's pickles, replacing the Vlasic Division of Campbell Soup as
co-packer. The contract calls for this production to begin
with the calendar '94 crop, although Nalley's management is
for obvious reasons pushing to begin with the calendar '93
crop.
The results will be very significant with regard to the
pickle business of our joint venture, with pound sales
increasing 16% beyond the levels which I showed you earlier
- -- and our joint venture earnings increasing 31%.
(Slide 18 - Nalley's Canada Earnings) Let's take a quick
trip north of Nalley's U.S. to Nalley's Canada, where as you
can see our joint venture earnings have increased 46% over
the last five years, setting all time historical records.
(Slide 19 - Nalley Chip and Snack Earnings) This has been
driven primarily by a dramatic earnings turnaround in the
Nalley Canada chip and snack business, which was in a loss
position five years ago and now accounts for over 60% of the
division's earnings.
(Slide 20 - Nalley's Canada Chip and Snack Volume) This
impressive gain in joint venture earnings has been driven by
a spectacular increase in pound sales volume -- as you can
see from this chart, the pound sales have almost quadrupled
in this same five-year period of time. These impressive
volume gains have been driven by a variety of creative and
aggressively pursued marketing and sales programs -- (Slide
20-A - Photo of Super Crunch) -- one of which is the
introduction of Nalley's Super Crunch Potato
<PAGE>
Chips which builds on the incredible popularity of the National Hockey
League in Canada.
Let's take a look at the advertising for this new product
line (Slide 21 - Super Crunch Commercial).
(Slide 22 - CMF Turn-Around) And now an example of how we
are intensifying our efforts to improve earnings which is
closer to home for most of you here. Comstock Michigan
Fruit, as you know, embarked on a major turn-around program
following a dramatic decline in earnings from F'88 to F'90.
As you will see here, the aggressive and creative efforts by
all members of our joint venture team are succeeding more
rapidly than we had expected -- the CMF turn-around is well
on its way!
(Slide 23 - Pie Filling Earnings) As you can see from this
chart, one of the main drivers of this turn-around is our pie
filling business, where joint venture earnings in F'93 will
set an all-time historical record.
(Slide 24 - Pie Filling Pound Sales) However, the pound
sales picture on CMF pie filling is not as strong -- while
pound sales are up 20% in F'93 over F'88, they are down 3%
versus their peak in F'90. We are not satisfied with this
trend, because we recognize our responsibility to the joint
venture to generate long-term gains in agricultural raw
material. Based on a suggestion which came to my attention
at a Michigan Regional Pro-Fac Meeting a couple of years ago,
we did some research on
<PAGE>
the idea of increasing the fruit content of our pie fillings.
(Slide 25-A - Photos of Increased Fruit Cherry Pie Filling)
Consumers reacted very well to the concept of a pie filling with
increased fruit content, marketed under the selling proposition of
'More Fruit -- More Flavor'.
Comstock entered two markets to test this selling proposition
in the Fall of '92, using the products and labels you see
here (Slide 25-B) -- in one test market completely replacing
the existing line with the increased fruit product, (Slide
25-C) and in the other test market adding the increased fruit
product as a line extension while leaving the present
products on the shelf. Let's take a look at the two
commercials used in these test markets -- remembering that
one is for the line extension and the other for a complete
replacement product. (Slide 26 - Increased Fruit Pie Filling
Commercials) It is at this point in time too early to read
the results of these test markets. Rest assured we will do
so at the earliest possible date, and if the results are
positive, expand as rapidly as possible.
We understand the very positive implications of this test for
those Pro-Fac members who supply fruit for our pie fillings.
(Slide 27 - CMF Turn-Around) We have seen a very exciting
turn-around in the earnings of the Comstock Michigan Fruit
Division during the past 2 1/2 years.
<PAGE>
(Slide 28 - Photo of CMF Mission/Culture Statement) One of
the major drivers of that turn-around is the new culture that
we are in the process of building within CMF. Let me read to
you a few of the key phrases from this Culture Statement:
'People in our organization should exhibit an indomitable
will to win, the flexibility to adapt to continuing change in
the marketplace, and the extra creativity and discipline
necessary to take advantage of our opportunities. In order
to encourage that commitment and support, we must create an
environment which respects the individual, empowers his or
her contribution through communication and training, treats
mistakes as a learning experience, and rewards success.'
(Slide 29 - Unbeatable Team Logo) We believe we have within
Comstock Michigan Fruit the capability to be 'THE UNBEATABLE
TEAM!'
(Slide 30 - Unbeatable Team Logo with CBF and Pro-Fac Logo)
I believe that we have within our joint venture -- Curtice
Burns Foods and Pro-Fac Co-operative -- the capability to be
The Unbeatable Team! Thank you.
<PAGE>
[Curtice-Burns Foods Memo-Head]
March 23, 1993
To: The Curtice Burns Foods Team
From: Bill Petty
Subject: Potential Purchase of Agway Interest in Curtice
Burns Foods
As many of you know, Agway Inc. has been thinking about
selling their interest in Curtice Burns Foods since last
fall. Agway's decision to consider the sale of its Curtice
Burns shares is part of their overall strategic plan of
focusing on their agriculture, consumer retailing, energy,
insurance and leasing businesses. Today the board of
directors of Agway authorized Agway management to actively
explore this sale.
The board of directors of Pro-Fac Cooperative, our joint
venture partner and the organization which finances Curtice
Burns Foods, has declared its desire to purchase the Agway
interest in Curtice Burns Foods. The objective of Pro-Fac's
purchase would be to preserve the present structure of the
unique and strong joint venture which is Curtice Burns Foods
and Pro-Fac Cooperative. Such a purchase would retain for
Pro-Fac's grower-members across the United States the
substantial benefits of this joint venture, including
development of markets for their raw product and sharing in
earnings of the joint venture. A Special Committee of the
Pro-Fac board has been formed to spearhead this purchase
effort.
A Special Committee of the Curtice Burns board of
directors has also been formed. Curtice Burns has, as I
believe many of you are aware, the right of first refusal on
the purchase of Agway's Curtice Burns Class B shares.
This situation has very positive possibilities for us,
in that it could put control of our future in the hands of
our own joint venture (the interest Agway is selling includes
99 percent of the Class B common stock, which elects two
thirds of the Curtice Burns board of directors). At the same
time, it has risk for us, in that outside interests could
possibly acquire control of Curtice Burns.
A decision by the Agway board to actually sell their
interest in Curtice Burns is of course dependent upon their
receiving an offer which is satisfactory to them regarding
price, terms, etc., whether from Pro-Fac or another source.
We have no way of knowing how long it will take to bring this
possible purchase of Agway's interest to a conclusion, but we
will keep you informed of significant developments as they
occur.
<PAGE>
Right now, the best thing each of us can do is to focus
single-mindedly on the day-to-day challenges of building the
sales and earnings of each of our businesses. This is the
key to putting us in the strongest possible position for the
future. And it is what you all do so well - it's what makes
you THE UNBEATABLE TEAM!
J. William Petty
President
<PAGE>
Exhibit C
[Pro-Fac Letterhead]
November 4, 1993
To the Directors of Curtice Burns and Agway
Pro-Fac has recently been advised that unless it agrees
to several demands from Curtice Burns, at the meeting of the
Curtice Burns board on November 11 management will
recommended that Curtice Burns terminate its 32 year joint
venture with Pro-Fac.
Pro-Fac strongly believes that its relationship with
Curtice Burns has been good for both sides and should be
preserved if at all possible. An abrupt decision to
terminate the relationship, particularly in the absence of a
clear alternative course, does not appear prudent in any
circumstance. Such a termination would violate duties owed
to Pro-Fac by both Curtice Burns and Agway and will embroil
you in litigation over management of the joint venture.
Pro-Fac has bent over backwards to try to accommodate
the legitimate goals of Curtice Burns, including agreeing to
the sale of National Oats over the objection of our largest
member. Pro-Fac has also agreed to the sale of Hiland and
Meat Snacks on the same terms as National Oats, subject only
to those sale not being used to the detriment of Pro-Fac.
Curtice Burns and Agway, by contrast, have tried to shut Pro-
Fac out of the process, despite the clear need to involve
Pro-Fac in any sale of Curtice Burns.
The Special Committee of the Pro-Fac board has prepared
this statement for you in the hope that it will help you to
understand the position of Pro-Fac on these issues and to
show how they may be resolved without acrimonious litigation
over an attempt to terminate the Integrated Agreement.
Trust Between Venturers
Pro-Fac and Curtice Burns have long operated as a joint
venture between growers and processors for their mutual
benefit. Pro-Fac has always provided at least half the
equity and most of the borrowed funds used in the venture.
The mission statement adopted by the Curtice Burns board
appropriately states that Curtice Burns is to be operated for
the benefit of the members of Pro-Fac as well as for the
shareholders of Curtice Burns. Curtice Burns has stated that
to fulfil its mission it will '. . . assure
<PAGE>
the continuity of our successful relationship with Pro-
Fac...whose...members...share in the economic risks and
rewards of the enterprise.'
As part of the joint arrangements, Curtice Burns has
managed Pro-Fac for over three decades. Throughout that
period, at the recommendation of Curtice Burns, Pro-Fac has
consented to finance long-term investments at the expense of
current earnings. As you know, Pro-Fac has the contractual
right to a substantial share in the current earnings of the
business but agreed to those growth strategies because of
mutual expectations of the continuation of the joint
enterprise.
In recent months, Curtice Burns seems to have been
acting solely to further the interest of its shareholders,
disregarding the years of investments by Pro-Fac, reducing
the return to its members and instead favoring Agway and the
other shareholders of Curtice Burns. In fact, Agway has
advised us that it has instructed its directors of Curtice
Burns to conduct the business solely for the benefit of
shareholders of Curtice Burns, without any regard to Pro-Fac.
Having seen its growth strategy result in assets worth
substantially more than book value, Curtice Burns now is
attempting to deny Pro-Fac its rightful share of that value
and to penalize Pro-Fac by charging it with the Curtice
Burn's failures.
Pro-Fac Proposal
Pro-Fac continues to believe that its proposal to
acquire Curtice Burns at a substantial premium to market
provides the best solution for all parties.
Agway has complained that the proposal is contingent on
the sale of Nalley's at $217,000,000. But this is at the low
end of the Nalley values set forth by the Agway and Curtice
Burns' investment bankers. Moreover, Pro-Fac has offered to
give any overage to the shareholders. If the Curtice Burns
and Agway investment bankers are accurate in valuing Nalley's
at over $217 million, all shareholders would receive
approximately $22 per share.
Pro-Fac has requested the cooperation of management in
exploring the sale of Nalley's so that is may remove that
contingency from its offer. But Curtice Burns has said that
unless Pro-Fac agrees to a termination price, it will not
cooperate with Pro-Fac in the sale of Nalley's.
The attempts of Curtice Burns and Agway to prevent Pro-
Fac from perfecting its offer to buy the A and B shares of
Curtice Burns at a substantial premium over market violate
both their obligation to Pro-Fac in the joint venture and
their duty to negotiate any proposal for the benefit of the
non-Agway shareholders of Curtice Burns, who should be given
a chance to evaluate the Pro-Fac offer.
Nalley's may not be sold without the concurrence of both
Curtice Burns and Pro-Fac. They should cooperate to see
whether there is a buyer for Nalley's acceptable to both at a
price sufficient to meet the contingency in the Pro-Fac offer
to the
<PAGE>
shareholders of Curtice Burns. Pro-Fac has already
received substantial interest in Nalley's and Curtice Burns
should not stand in the way of discussions with any
responsible buyers.
Hiland and Meat Snacks
At the end of fiscal 1993, the Curtice Burns board
accepted a recommendation from management that it explore
termination of its relationship with Pro-Fac. At the same
time the value of Meat Snacks and Hiland was written down to
such an extent that it eliminated Pro-Fac earnings for the
year and caused a substantial reduction in Pro-Fac equity.
Now Curtice Burns proposes to take further advantage of the
write-down to reduce the cost of termination.
Pro-Fac has agreed to approve the sale of Hiland and
Meat Snacks, provided that the fact of the sale will not be
used against Pro-Fac in determining termination payments
under the integrated agreement. This condition is entirely
reasonable. Curtice Burns, on the other hand, is asking you
to approve a transaction which imposes substantial losses on
Pro-Fac (almost $30 million) without giving Pro-Fac its fair
share of the gain in appreciated companies. It cannot be
fair for Curtice Burns to take all of its book losses in one
year and reserve for itself the gains on appreciated assets -
- - assets that Pro-Fac financed -- only after Pro-Fac has been
terminated.
The arrangement for the sale of Hiland and Meat Snacks
proposed by Pro-Fac preserves both the ability of Curtice
Burns to maintain that the year-end write-down was proper and
that it should reduce the amount payable upon termination, as
well as the ability of Pro-Fac to argue to the contrary,
should it ever be necessary to determine the amount due on
termination. Neither side gives up anything from its current
position, and Hiland and Meat Snacks are sold to the benefit
of everybody.
Negotiation of the Termination Payments
Curtice Burns has been most insistent that the amount of
termination payment under the integrated agreement be
negotiated and agreed to now. By its unyielding insistence
on the necessity of an agreed-upon termination amount,
Curtice Burns gives the impression that it would gain a
valuable advantage from such agreement. The position of
Curtice Burns seems to be 'either you agree to a termination
price, or we will terminate you'. This position is wrong and
impractical.
In summary, Pro-Fac wants to maintain a market for crops
of its members and to be treated fairly in light of its
investment and reliance on joint management of its business
by Curtice Burns. It also shares the Curtice Burns objective
of greater profitability, and it believes that it is the
party willing to pay the highest price for the shares of
Curtice Burns.
We are prepared to move forward promptly to resolve the
outstanding issues between us, most notably approval of the
sale of Hiland and Meat Snacks under the
<PAGE>
conditions described
above. We also should cooperate to find a buyer for Nalley's
so that we may conclude negotiations for the sale of Curtice
Burns to Pro-Fac, the course of action we believe is in the
best interests of our members and your shareholders. Pro-Fac
is willing to consider any idea, including modifying the
integrated agreement.
The alternative -- an attempt to terminate the
integrated agreement -- will lead only to long and costly
litigation. Far from ending gridlock, it is likely to
intensify it through the hardening of attitudes that comes
with litigation.
Until recently, the relationship between Curtice Burns
and Pro-Fac has been that of productive partners. We want to
do whatever we can to restore that relationship. We hope
this letter will help to do so.
Very truly yours,
The Pro-Fac Special
Committee:
Robert V. Call, Jr.
Albert Fazio
Bruce Fox
Steven Koinzan
<PAGE>
EXHIBIT (c)(7)
CONFIDENTIAL
FOR SETTLEMENT PURPOSES
AGREEMENT, DATED AUGUST 16, 1994, BETWEEN CURTICE-BURNS
FOODS, INC. ('CURTICE BURNS') AND PRO-FAC COOPERATIVE,
INC. ('PRO-FAC').
The parties have agreed to arbitrate certain disputes
arising under the Integrated Agreement, dated June 27, 1992,
between them.
Accordingly, the parties agree as follows:
1. This Agreement shall become effective upon the
effectiveness of a merger agreement that provides for the
purchase by Pro-Fac (or a subsidiary of Pro-Fac) of Curtice
Burns. Upon the execution of this Agreement, the
arbitrators promptly will be informed of the terms of this
Agreement. In the event no such merger agreement is signed
on or before December 31, 1994 (as such date may be extended
in writing by the parties), this Agreement shall never
become effective and shall be for all purposes null and
void. Until its effectiveness, this Agreement shall not
create, amend, abrogate or discharge any rights or
obligations of any party and shall be treated as for
settlement purposes only; discussing or entering into this
Agreement shall not be used by either party as evidence of a
reasonable timetable.
2. The parties agree to the schedule for the conduct
of the arbitration as set forth on the annex to this
Agreement, subject to each party's right to seek extension
of time from the arbitrators for exceptional cause. The
schedule set forth on the annex sets forth generally the
steps required for the entry of an arbitration award and is
not intended to identify all possible actions or requests;
however, any supplemental steps, actions or requests must be
taken or made in a manner consistent with the completion of
the arbitration on the schedule set forth on the annex. The
parties agree to jointly instruct the arbitrators to render
a decision expeditiously, but no later than three weeks
following the conclusion of the hearing.
<PAGE>
2
3. The parties agree that each will pay the costs and
expenses of its selected arbitrator and the parties will
split equally the costs of the third arbitrator. The
parties agree to share equally the costs of daily
transcripts of depositions and the arbitration hearings.
Each party will otherwise pay its own expenses.
4. The arbitration proceeding will be conducted in New
York City in the offices of the parties' respective counsels
on alternate weeks. The parties will instruct the
arbitrators to be available, to the extent practicable, to
conduct the hearing until completion during consecutive
weeks, for not less than four days per week.
This Agreement has been duly executed by the
undersigned.
CURTICE-BURNS FOODS' INC.
By /s/ J. William Petty
------------------------
PRO-FAC COOPERATIVE, INC.
By /s/ Roy A. Myers
------------------------
General Manager
<PAGE>
Schedule
Commencing upon signing Merger Agreement
- ----------------------------------------
Within 1 week of signing Serve initial document requests
Within 3 weeks of signing Serve objections to document
requests
Within 4 weeks of signing Complete production of
documents
Within 6 weeks of signing Provide witness list
Within 8 weeks of signing Serve notices of non-expert
depositions
Commencing upon the termination of the Merger Agreement (but
not before the end of the eighth week after signing)
- --------------------------------------------------------------
Within 1 month of termination Exchange expert reports
(consistent with the
requirements for experts'
statements set forth in
Rule 26(a)(2)(B))
Within 6 weeks of termination Complete depositions,
including of experts
Within 2.5 months of termination Submit pre-trial briefs and
motions
Within 3.5 months of termination Complete hearing
