UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 29, 1997 Commission File No. 0-14960
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
GOLDEN POULTRY COMPANY, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-1492075
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
244 Perimeter Center Parkway, N.E., Atlanta, Georgia 30346
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) (770) 393-
5050
N/A
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
OUTSTANDING AS OF
CLASS May 12, 1997
Common Stock, No
Par Value 14,628,435
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -
March 29, 1997 and June 29, 1996 . . 1
Consolidated Statements of Operations -
Three Months and Nine Months
Ended March 29, 1997 and
March 30, 1996 . . . . . . . . . . . 2
Consolidated Statements of Cash Flows -
Nine Months Ended March 29, 1997
and March 30, 1996. . . . . . . . . 3
Notes to Consolidated Financial
Statements . . . . . . . . . . . . 4 - 5
Item 2. Management's Discussion and Analysis of
Consolidated Results of Operations and
Financial Condition . . . . . . . . 6 - 7
Part II. Other Information
Item 5. Other Information . . . . . . . . . . . 8
Item 6. Exhibits and Reports on Form 8-K . . . 9
<TABLE>
Page 1
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
<CAPTION>
March 29,1997 June 29, 1996
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalent $ 3,664 2,599
Trade accounts receivable less allowance
for doubtful accounts of $67 at
Mar. 29, 1997 and $31 at June 29, 1996 24,873 23,654
Inventories (note 3) 63,794 54,903
Other 6,222 2,468
Total current assets 98,553 83,624
Property, plant and equipment, net 105,982 73,738
Other assets 4,198 6,617
$208,733 163,979
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 599 585
Short-term borrowings from Gold Kist
(note 4) 6,406 -
Accounts payable 33,969 26,292
Due to Gold Kist 699 1,207
Income taxes payable - 2,705
Accrued compensation and related expenses 7,397 8,300
Total current liabilities 49,070 39,089
Long-term debt, excluding current portion 31,266 4,840
Other liabilities 5,496 5,495
Total liabilities 85,832 49,424
Minority interest in consolidated partnership 11,148 10,198
Shareholders' equity:
Preferred stock, $1.00 par value.
Authorized 1,000 shares; no shares issued - -
Common stock, no stated par value.
Authorized 20,000 shares; issued 14,982
shares at March 29, 1997 and 14,882 at
June 29, 1996 66,133 65,464
Retained earnings 47,839 41,112
113,972 106,576
Less treasury stock, at cost, 358 shares
at March 29, 1997 and June 29, 1996 2,219 2,219
Total shareholders' equity 111,753 104,357
$208,733 163,979
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
Page 2
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
Mar. 29, Mar. 30, Mar. 29, Mar. 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $189,131 153,496 546,835 441,362
Cost of sales 183,220 147,838 517,546 410,085
Gross profit 5,911 5,658 29,289 31,277
Selling, administrative and
general expenses 5,287 4,743 16,210 15,294
Operating income 624 915 13,079 15,983
Other (expense) income:
Interest expense (274) (352) (892) (1,131)
Miscellaneous, net 33 32 91 187
(241) (320) (801) (944)
Earnings before minority
interest and income taxes 383 595 12,278 15,039
Minority interest in partnership
(gain)loss 435 828 (950) 1,133
Earnings before income taxes 818 1,423 11,328 16,172
Income tax expense 167 483 4,165 6,130
Net earnings $ 651 940 7,163 10,042
Net earnings per share $ .04 .06 .49 .69
Weighted average outstanding
shares 14,619 14,529 14,556 14,522
Cash dividends per share $ .01 .01 .03 .03
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<TABLE>
Page 3
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands)
<CAPTION>
Nine Months Ended
Mar. 29, Mar. 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 7,163 10,042
Non-cash items included in net earnings:
Depreciation 9,511 12,199
Minority interest in partnership gain (loss) 950 (1,133)
Deferred taxes (343) (636)
Other 126 236
Changes in operating assets and liabilities:
Trade accounts receivable (1,219) 382
Inventories (8,891) (4,905)
Accounts payable and accrued compensation and
related expenses 6,773 5,773
Due to Gold Kist (1,180) (3,220)
Income taxes (2,705) (1,853)
Other (3,523) (1,451)
Net cash provided by operating activities 6,662 15,434
Cash flows from investing activities:
Acquisitions of property, plant and equipment (39,421) (6,796)
Other 73 84
Net cash used in investing activities (39,348) (6,712)
Cash flows from financing activities:
Short-term borrowings, net, payable
to Gold Kist 7,078 372
Principal payments of long-term debt (560) (8,001)
Proceeds from long-term debt 27,000 -
Dividends paid (437) (436)
Issuance of common stock 670 -
Net cash provided by (used in)
financing activities 33,751 (8,065)
Net change in cash and cash equivalents 1,065 657
Cash and cash equivalents at beginning of period 2,599 2,720
Cash and cash equivalents at end of period $ 3,664 3,377
Supplemental disclosure of cash flow information:
Cash paid during the periods for:
Interest (net of amounts capitalized) $ 892 1,123
Income taxes $ 9,355 8,618
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
Page 4
GOLDEN POULTRY COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands)
(Unaudited)
1. The accompanying unaudited consolidated financial statements
reflect the accounts of Golden Poultry Company, Inc. and its
subsidiary and a majority owned partnership, Carolina Golden
Products Company (collectively, "the Company"). These
consolidated financial statements should be read in
conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations and the Notes
to Consolidated Financial Statements on pages 11 through 15
and pages 22 through 29, respectively, of the Company's
Annual Report in the previously filed Form 10-K for the year
ended June 29, 1996.
2. In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of normal recurring accruals) necessary to
present fairly the financial position, results of operations,
and cash flows. Results of operations for interim periods
are not necessarily indicative of results for the entire
year.
3. Inventories consist of the following:
<TABLE>
<CAPTION>
March 29, 1997 June 29, 1996
<S> <C> <C>
Live poultry $40,467 32,255
Feed, eggs, and supplies 15,099 13,069
Marketable products 8,228 9,579
$63,794 54,903
</TABLE>
4. The amounts outstanding represent borrowings by Carolina
Golden Products under a $15.0 million Revolving Credit
Agreement with Gold Kist.
5. In January 1993, certain Alabama member patrons of Gold Kist
Inc. filed a lawsuit in the Circuit Court of Jefferson
County, Alabama, Tenth Judicial Circuit against the Company
and Gold Kist Inc. and certain directors and officers of the
companies. (Ronald Pete Windham and Windham Enterprises,
Inc. on their behalf and on behalf of and for the use and
benefit of Gold Kist, Inc. and its shareholders/members v.
Harold O. Chitwood, individually in his capacity as an
officer of Gold Kist and a Director of Golden Poultry; et
al). The lawsuit alleges that the named defendants violated
their fiduciary duties by diverting corporate opportunities
from Gold Kist to the Company and Carolina Golden Products
Company in connection with the creation of the Company and
Carolina Golden Products Company and by permitting their
continued operations. Among the remedies requested were the
transfer of the Company's operations to Gold Kist. In March
1994, the Court certified the Windham litigation as a class
action. In September 1995, the Company and Carolina Golden
Products Company were dismissed from the litigation. On
October 25, 1995, the jury in the Windham case returned
verdicts in favor of the plaintiffs in the litigation. On
July 2, 1996, the Jefferson County, Alabama Circuit Court
Judge entered a memorandum opinion and non-final judgment in
the case directing Gold Kist to acquire the approximately 27%
of Company shares currently owned by investors so that all of
the issued and outstanding stock of the Company would be
owned by Gold Kist. The Court denied the plaintiffs' demands
for additional allocations and cash distributions to the
class members. On September 13, 1996, subsequent to Motions
for Reconsideration filed by the plaintiffs and Gold Kist,
the Court entered a Final Judgment and
Page 5
Decree amending its July 2, 1996 Order. The Final Judgment
and Decree, clarified and reaffirmed by order of the Court
dated November 4, 1996, relieves Gold Kist of the requirement
to acquire the 27% of Golden Poultry common stock not already
owned by Gold Kist. This Final Judgment and Decree requires
Gold Kist to acquire or redeem all Golden Poultry common
stock and/or stock options held or issued to Gold Kist
officers and directors. On December 16, 1996, the Final
Judgment and Decree became final and non-appealable.
Pursuant to the Final Judgment and Decree, Gold Kist
purchased 299,395 shares of Golden Poultry common stock owned
by Gold Kist officers and directors in December 1996 and
January 1997. The Company is also party to other various
legal and administrative proceedings, all of which management
believes constitute ordinary routine litigation incident to
the business conducted by the Company, or are not material in
amount.
Page 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net sales
Net sales for the three and nine months ending March 29, 1997
increased 23.2% and 23.9%, respectively, as compared to the
comparable periods a year ago. The net sales increase for the
quarter ended March 29, 1997 was due primarily to a 22% increase
in pounds of poultry products sold and a 1% increase in average
selling prices. For the nine months ended March 29, 1997, the
Company sold approximately 783.1 million pounds of broiler
products as compared to 657.3 million in the same period last
year. The increase in broiler pounds sold was due to the Siler
City acquisition in July 1996 and changes in product mix.
Consolidated net sales include the net sales of Carolina Golden
Products Company, a consolidated partnership, which had net sales
of $51.0 million and $149.2 million, respectively, for the three
months and nine months ended March 29, 1997 as compared to $42.5
million and $123.4 million for the comparable periods a year ago.
The Company's food distribution facility in South Florida had net
sales of $8.7 million and $26.9 million, respectively, for the
three and nine months ended March 29, 1997 as compared to $9.0
million and $25.2 million for the same periods last fiscal year.
Cost of sales
Cost of sales, as a percentage of net sales, for the three and
nine months ended March 29, 1997 were 96.9% and 94.6%,
respectively, as compared to 96.3% and 92.9%, respectively, for
the comparable periods a year ago. The increase in the
percentage relationship was primarily the result of the increase
in feed ingredient costs. The 22.0% increase in pounds sold
during the current quarter contributed to the dollar increase in
cost of sales. For the quarter ended March 29, 1997, feed
ingredient costs were approximately 11% higher than in the
comparable quarter a year ago. The increase in the percentage
relationship was partially offset by the increase in average
selling prices.
Selling, administrative, and general expenses
Selling, administrative and general expenses, as a percentage of
net sales, were 2.8% and 3.0%, respectively, for the three and
nine months ended March 29, 1997 as compared to 3.1% and 3.5%,
respectively, for the comparable periods last fiscal year. The
decreases in the percentage relationships was primarily the
result of lower incentive compensation expense and the growth in
net sales.
Interest and other Income
Interest expense for the three months ended March 29, 1997 was
$274,000 as compared to $352,000 in the comparable quarter a year
ago. The Company recorded capitalized construction period
interest credits of $440,000 and $0, respectively, for the
quarters ended March 29, 1997 and March 28, 1996.
Minority interest in partnership (gain)loss
Minority interest in partnership loss of $435,000 for the three
months ended March 29, 1997 represents Gold Kist Inc.'s 49%
prorata share of the
Page 7
Carolina Golden Products Company's quarterly loss. For the
comparable quarter last fiscal year, Gold Kist's prorata share of
the loss was $828,000. The quarterly loss was due to lower
selling prices for fresh poultry products as compared to the
quarter ended December 28, 1996.
Earnings before income taxes
The Company had earnings before income taxes of $818,000 for the
three months ended March 29, 1997 as compared to $1.4 million for
the comparable period last fiscal year. The decline in earnings
before income taxes was due to increased feed ingredient costs
and was partially offset by slightly higher average selling
prices.
Income Taxes
The Company's combined Federal and state income tax rate was
36.8% for the nine months ended March 29, 1997 as compared to
37.9% for the same period a year ago. The decline resulted from
the use of state income tax credit carryforwards from fiscal
1996.
LIQUIDITY AND CAPITAL RESOURCES
At March 29, 1997, working capital, the current ratio, and
shareholders' equity were $49.5 million, 2.01 to 1 and $111.8
million, respectively, as compared to $44.5 million, 2.14 to 1
and $104.4 million, respectively, at June 29, 1996. The
Company's ratio of long-term debt to total capitalization was
21.9% at March 29, 1997 as compared to 4.4% at June 29, 1996.
The Company has revolving credit facilities with two commercial
banks totaling $45.0 million, of which $27.0 million was
outstanding at March 29, 1997. Also, the Company has a $15.0
million short-term credit facility with Gold Kist of which $6.4
million was outstanding at March 29,
1997.
Net cash provided by operating activities of $6.7 million for the
nine months ended March 29, 1997 resulted from net earnings
adjusted for noncash charges. Increased trade accounts receivable
and inventories at March 29, 1997 as compared to June 29, 1996
resulted from the acquisition of the Siler City, N.C. operation
in July 1996 and the impact of increased feed grain prices on
field inventories. Uses of cash for the nine months ended March
29, 1997 included $39.4 million in expenditures for property,
plant and equipment. Fiscal 1997 budgeted capital expenditures
are approximately $73.0 million.
Approximately 20% of the Company's net sales in the current
quarter were to one customer, a major retail grocery chain.
Management is unable to predict with any degree of certainty what
effect the loss of this major customer would have on future
results of operations and liquidity. However, the loss of the
customer would, in the opinion of management, adversely affect
results of operations if sales from the customer were not
replaced by comparable sales to other customers.
Management believes existing cash, amounts available under
existing credit arrangements, and expected cash to be provided
from operations will be sufficient to maintain cash flows
adequate for the Company's growth and operational objectives
during fiscal 1997.
Page 8
PART II: OTHER INFORMATION
Item 5. Other Information
On January 13, 1997, a committee of independent directors was
appointed by the Company s Board of Directors to begin
negotiations with Gold Kist concerning a possible merger of
Golden Poultry with a subsidiary of Gold Kist. Gold Kist owns
approximately 10,900,000 shares or 75% of Golden Poultry s
14,623,813 outstanding shares. Those negotiations have been
completed and an Agreement and Plan of Merger was executed on
April 22, 1997 (the Merger Agreement ) among Gold Kist, the
Company, Agri International, Inc. and Golden Poultry Acquisition
Corp.
Pursuant to the Merger Agreement, Gold Kist has agreed to pay
$14.25 per share in cash for each outstanding share of Common
Stock not already beneficially owned by Gold Kist. All of such
remaining shares of the Company s Common Stock are publicly
traded, and upon consummation of the purchase by Gold Kist, the
Company will no longer have any shares of Common Stock trading in
the public securities markets. The transaction will be effected
by a merger (the Merger ), pursuant to which Golden Poultry
Acquisition Corp., a wholly-owned subsidiary of Agri
International, Inc. that has been formed specifically for this
purpose, will be merged into the Company, with the Company as the
surviving corporation. The Merger Agreement has been approved by
the Boards of Directors of the Company and Gold Kist but is
expressly subject to the approval of a majority of the owners of
the Golden Poultry Common Stock not owned by Gold Kist.
The Company has agreed to prepare, file with the SEC and send
to all shareholders of the Company other than Gold Kist (the
Public Shareholders ) a proxy statement, requesting that each
such Public Shareholder vote in favor of the Merger Agreement and
the transactions contemplated thereby. Under applicable state
law and the Merger Agreement, approval of the Merger Agreement
requires two affirmative shareholder votes: (i) a majority of
the shares outstanding, which is assured because Gold Kist has
agreed to cause its 75% of the shares to vote affirmatively; and
(ii) a majority of the shares held by the Public Shareholders.
In addition to such vote requirements, Merger Agreement requires
that certain conditions be satisfied prior to consummation of the
Merger including, without limitation, that the investment
advisors engaged by Gold Kist and by the Company with regard to
the Merger shall have delivered, have reaffirmed, and not have
withdrawn the fairness opinions delivered by such advisors in
connection with the Merger. If the Merger has not been
consummated by September 30, 1997, either Gold Kist or the
Company may terminate the Merger Agreement. If the transactions
contemplated by the Merger Agreement are consummated, Gold Kist
will acquire the remaining Common Stock and the Company will
become an indirect wholly-owned subsidiary of Gold Kist.
Page 9
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
Designation of Exhibit
in this report Description of Exhibit
2 (b) Agreement and Plan of
Merger dated April 22,
1997, among the Company,
Gold Kist Inc.,
Agri International, Inc.
and Golden Poultry
Acquisition Corp.
27 Financial Data Schedule
(b) Reports on Form 8-K. Golden Poultry has not filed
any reports on Form 8-K during the three months
ended March 29, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
<PAGE>
GOLDEN POULTRY COMPANY, INC.
(Registrant)
Date May 12, 1997
Kenneth N. Whitmire
Chief Executive Officer
Date May 12, 1997
Langley C. Thomas, Jr.
Chief Financial Officer
Page 9
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
Designation of Exhibit
in this report Description of Exhibit
2 (b) Agreement and Plan of
Merger dated April 22,
1997, among the Company,
Gold Kist Inc.,
Agri International, Inc.
and Golden Poultry
Acquisition Corp.
27 Financial Data Schedule
(b) Reports on Form 8-K. Golden Poultry has not filed any
reports on Form 8-K during the three months ended March
29, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GOLDEN POULTRY COMPANY, INC.
(Registrant)
Date May 12, 1997 /s/ Kenneth N. Whitmire
Kenneth N. Whitmire
Chief Executive Officer
Date May 12, 1997 /s/Langley C. Thomas, Jr.
Langley C. Thomas, Jr.
Chief Financial Officer
<PAGE>
AGREEMENT AND PLAN OF MERGER
DATED AS OF
APRIL 22, 1997
AMONG
GOLDEN POULTRY COMPANY, INC.,
GOLD KIST INC.,
AGRI INTERNATIONAL, INC.
AND
GOLDEN POULTRY ACQUISITION CORP.
TABLE OF CONTENTS
ARTICLE I
THE MERGER
SECTION 1.1 Company Action 2
1.2 The Merger 2
1.3 Conversion of Shares 2
1.4 Surrender and Payment 3
1.5 Dissenting Shares 4
1.6 Stock Options 4
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1 Articles of Incorporation 4
2.2 Bylaws 4
2.3 Directors and Officers 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Corporate Existence and Power 5
3.2 Corporate Authorization 5
3.3 Governmental Authorization 5
3.4 Non-Contravention 5
3.5 Capitalization 6
3.6 Company Subsidiaries 6
3.7 SEC Filings 6
3.8 Financial Statements 6
3.9 Disclosure Documents 7
3.10 Finders' and Bankers' Fees 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 4.1 Corporate Existence and Power 7
4.2 Corporate Authorization 8
4.3 Governmental Authorization 8
4.4 Non-Contravention 8
4.5 Disclosure Documents 8
4.6 Finders' and Bankers' Fees 8
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1 Conduct of the Company 9
5.2 Shareholder Meeting;
Proxy Material 10
5.3 Access to Information 10
5.4 Other Potential Bidders 10
5.5 Notices of Certain Events 11
ARTICLE VI
COVENANTS OF BUYER
SECTION 6.1 Voting of Shares 11
6.2 Director and Officer Liability 11
6.3 Notices of Certain Events 12
6.4 Split Dollar Life Insurance 12
ARTICLE VII
COVENANTS OF BUYER AND THE COMPANY
SECTION 7.1 Best Efforts 12
7.2 Certain Filings 12
7.3 Public Announcements 13
7.4 Further Assurances 13
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1 Conditions to the Obligations
of Each Party 13
8.2 Additional Conditions to the
Obligations of Buyer and
Merger Subsidiary 14
8.3 Additional Conditions to the
Obligations of the Company 15
ARTICLE IX
TERMINATION
SECTION 9.1 Termination 15
9.2 Effect of Termination 16
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Definitions 16
10.2 Notices 18
10.3 No Survival of
Representations and
Warranties 19
10.4 Amendments; No Waivers 19
10.5 Fees and Expenses 20
10.6 Successors and Assigns 20
10.7 Governing Law 20
10.8 Severability 20
10.9 Captions 20
10.10 Interpretations 20
10.11 Counterparts; Effectiveness 21
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as
of April 22, 1997, by and among GOLDEN POULTRY
COMPANY, INC., a Georgia corporation (the "Company"),
GOLD KIST INC., a Georgia cooperative ("Gold Kist"),
AGRI INTERNATIONAL, INC., a Georgia corporation and a
wholly owned subsidiary of Gold Kist ("Agri") (Gold
Kist and Agri are sometimes referred to collectively
as "Buyer"), and GOLDEN POULTRY ACQUISITION CORP., a
Georgia corporation and a wholly owned subsidiary
of Agri ("Merger Subsidiary").
WHEREAS:
A. The authorized capital stock of the
Company consists of (i) 20,000,000 shares of
common stock, no par value (the "Company Common
Stock"), of which 14,628,435 shares were issued
and outstanding as of close of business on April
19, 1997, and (ii) 1,000,000 shares of Preferred
Stock, $1 par value (the "Preferred Stock"),
none of which shares are issued and outstanding
as of the date hereof.
B. Agri currently owns, and immediately
prior to the Effective Time will own, 10,901,802
shares of Company Common Stock representing 75%
of the total issued and outstanding Company
Common Stock.
C. A special negotiating committee of the
Board of Directors of the Company appointed on
January 23, 1997 and comprised entirely of
directors who are neither members of management
of the Company nor affiliated with Buyer or any
Affiliate of Buyer (other than the Company) (the
"Special Committee") has unanimously determined
that the Merger is fair to and in the best interests
of the shareholders of the Company other than Buyer
(the "Public Shareholders") and has unanimously
approved this Agreement and unanimously
recommends its approval and adoption by the
Board of Directors and by the shareholders of
the Company.
D. The Board of Directors of the Company,
based in part on the recommendation of the Special
Committee, determined that the Merger is fair
and in the best interests of the Public
Shareholders and has resolved to approve and
adopt this Agreement and the transactions
contemplated hereby and, subject to the terms
and conditions set forth herein, to recommend
the approval and adoption of this Agreement and
the Merger by the shareholders of the Company.
E. The Board of Directors of the Company, and Gold
Kist, Agri and Merger Subsidiary, subject to the
approvals of their respective Boards of
Directors, each have approved the merger of
Merger Subsidiary with and into the Company (the
"Merger") in accordance with the Georgia
Business Corporation Code (the "GBCC") with
respect to the Company, Agri and Merger
Subsidiary, and the Georgia Cooperative
Marketing Act (the "GCMA") with respect to Gold
Kist, and the terms and conditions provided
below, pursuant to which each Share (other than
Shares held by the Company as treasury stock,
Shares owned by Buyer immediately prior to the
Effective Time and Shares as to which appraisal
rights have been perfected) shall be converted
into the right to receive the Merger
Consideration.
F. Certain capitalized terms used herein
are defined in Section 10.1.
NOW, THEREFORE, in consideration of the premises
and the mutual covenants, representations,
warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 Company Action. The Company
represents that its Board of Directors, at a
meeting duly called and held and acting, in
part, on the unanimous recommendation of the
Special Committee, has (i) unanimously
determined that this Agreement and the
transactions contemplated hereby, including the
Merger, are fair to and in the best interests of
the Public Shareholders, (ii) unanimously
approved and adopted this Agreement and the
transactions contemplated hereby, including the
Merger, and (iii) unanimously resolved to
recommend approval and adoption of this
Agreement and the Merger by the Company's
shareholders, provided, that such recommendation
may be withdrawn, modified or amended by the
Board of Directors of the Company if the Board
deems such withdrawal, modification or amendment
necessary in light of its fiduciary obligations
to the Company's shareholders after consultation
with counsel.
SECTION 1.2 The Merger. (a) At the
Effective Time, Merger Subsidiary shall be
merged with and into the Company in accordance
with the GBCC, whereupon the separate existence
of Merger Subsidiary shall cease, and the
Company shall be the Surviving Corporation.
(b) As soon as practicable after satisfaction or,
to the extent permitted hereunder, waiver of all
conditions to the Merger, the Company and Merger
Subsidiary will file a certificate of merger
with the Secretary of State of the State of
Georgia and make all other filings or recordings
required by the GBCC in connection with the
Merger. The Merger shall become effective at
such time as such certificate of merger is duly
filed with the Secretary of State of the State
of Georgia or at such later time as is specified
in such certificate of merger (the "Effective
Time").
(c) From and after the Effective Time, the
Surviving Corporation shall possess all the
rights, privileges, powers and franchises and be
subject to all of the restrictions, disabilities
and duties of the Company and Merger Subsidiary,
all as provided under the GBCC.
SECTION 1.3 Conversion of Shares. At the
Effective Time:
(a) each share of Company Common Stock (a
"Share") outstanding immediately prior to the
Effective Time shall, except as otherwise
provided in Section 1.3(b) or as provided in
Section 1.5 with respect to Shares as to which
appraisal rights have been perfected, be
converted into the right to receive $14.25 in
cash, without interest (the "Merger
Consideration");
(b) each Share held by the Company as
treasury stock, and each Share held by Agri,
immediately prior to the Effective Time shall be
canceled, and no payment shall be made with
respect thereto; and
(c) each share of common stock of Merger
Subsidiary outstanding immediately prior to the
Effective Time shall be converted into and
become one share of common stock of the
Surviving Corporation with the same rights,
powers and privileges as the shares so converted
and shall constitute the only outstanding shares
of capital stock of the Surviving Corporation.
SECTION 1.4 Surrender and Payment. (a) At
or prior to the Effective Time, the Company
shall appoint SunTrust Bank, Atlanta as agent
(the "Exchange Agent") for the purpose of
exchanging certificates representing Shares for
the Merger Consideration. At the Effective
Time, Agri shall, and Gold Kist shall cause Agri
to, make available to the Exchange Agent the
Merger Consideration to be paid in respect of
all outstanding Shares entitled thereto as to
which appraisal rights have not been exercised.
At or prior to the Effective Time, the Company
or Surviving Corporation will send, or will
cause the Exchange Agent to send, to each holder
of Shares at the Effective Time a letter of
transmittal for use in such exchange (which
shall specify that the delivery shall be
effected, and risk of loss and title shall pass,
only upon proper delivery of the certificates
representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been
converted into a right to receive the Merger
Consideration, upon surrender to the Exchange
Agent of a certificate or certificates
representing such Shares, together with a
properly completed letter of transmittal
covering such Shares, will be entitled to
receive the Merger Consideration payable in
respect of such Shares. Until so surrendered,
each such certificate shall, after the Effective
Time, represent for all purposes, only the right
to receive such Merger Consideration.
(c) If any portion of the Merger Consideration
is to be paid to a Person other than the registered
holder of the Shares represented by the
certificate or certificates surrendered in
exchange therefor, it shall be a condition to
such payment that the certificate or
certificates so surrendered shall be properly
endorsed or otherwise be in proper form for
transfer and that the Person requesting such
payment shall pay to the Exchange Agent any
transfer or other taxes required as a result of
such payment to a Person other than the
registered holder of such Shares or establish to
the satisfaction of the Exchange Agent that such
tax has been paid or is not payable.
(d) After the Effective Time, there shall
be no further registration of transfers of
Shares. If, after the Effective Time,
certificates representing Shares are presented
to the Surviving Corporation, they shall be
canceled and exchanged for the Merger
Consideration provided for, and in accordance
with the procedures set forth, in this Article
I.
(e) Any portion of the Merger
Consideration made available to the Exchange
Agent pursuant to Section 1.4(a) that remains
unclaimed by the holders of Shares one year
after the Effective Time shall be returned
within one week after the end of such one year
period, without further action or request, to
the Buyer, and any such holder who has not
exchanged his Shares for the Merger
Consideration in accordance with this Section
prior to that time shall thereafter look only to
the Buyer for payment of the Merger
Consideration in respect of his Shares.
Notwithstanding the foregoing, neither Buyer nor
the Surviving Corporation shall be liable to any
holder of Shares for any amount paid to a public
official pursuant to applicable abandoned
property Laws. Any amounts remaining unclaimed
by holders of Shares two years after the
Effective Time (or such earlier date immediately
prior to such time as such amounts would
otherwise escheat to or become property of any
governmental entity) shall, to the extent
permitted by applicable Law, become the property
of the Buyer free and clear of any claims or
interest of any Person previously entitled
thereto; provided, however, that nothing herein
shall limit the obligations of the Buyer under
Section 1.4(b).
SECTION 1.5 Dissenting Shares.
Notwithstanding Section 1.3, Shares outstanding
immediately prior to the Effective Time and held
by a holder who has not voted in favor of the
Merger or consented thereto in writing and who
has demanded appraisal for such Shares in
accordance with the GBCC shall not be converted
into a right to receive the Merger
Consideration, but shall be converted into the
right to receive such consideration as may be
determined to be due in respect of such
dissenting Shares pursuant to Article 13 of the
GBCC; provided, however, that if the holder of
such dissenting Shares shall have failed to
perfect or shall have waived, rescinded or
otherwise lost (in each such instance, to the
reasonable satisfaction of the Surviving
Corporation) its status as a "dissenting
shareholder" pursuant to Article 13 of the GBCC,
then such holder of dissenting Shares shall
forfeit the right to dissent from the Merger and
such Shares shall thereupon be deemed to have
been converted into the right to receive, as of
the Effective Time, the Merger Consideration.
The Company shall give Buyer prompt notice of
any demands received by the Company for
appraisal of Shares, and Buyer shall have the
right to participate in all negotiations and
proceedings with respect to such demands. The
Company shall not, except with the prior written
consent of Buyer, make any payment with respect
to, or settle or offer to settle, any such
demands.
SECTION 1.6 Stock Options. Buyer and the
Company shall take all steps reasonably necessary
such that, pursuant to Section 7.1 of the Company's
1988 Long-Term Incentive Plan (the "Incentive
Plan"), the Company shall give written notice to
the holders of all options ("Options") granted
under the Incentive Plan that are outstanding on
the date hereof that (a) such Options shall be
exercisable in full on a date that is at least
thirty days prior to the date on which the
Effective Time is expected to occur, and (b)
that all Options that are not exercised during
such thirty-day period will terminate. In
addition, the written notice to each such holder
shall include an offer by Buyer to pay for the
cancellation of such holder's Options an amount
in cash determined by multiplying (1) the
excess, if any, of the Merger Consideration over
the applicable exercise price per share of the
Option by (2) the number of Shares such holder
could have purchased had such holder exercised
such Option in full immediately prior to the
Effective Time, and each such Option shall
thereafter be canceled.
ARTICLE II
THE SURVIVING CORPORATION
SECTION 2.1 Articles of Incorporation.
The articles of incorporation of the Company in
effect at the Effective Time shall be the
articles of incorporation of the Surviving
Corporation until amended in accordance with
applicable Law.
SECTION 2.2 Bylaws. The bylaws of the
Company in effect at the Effective Time shall be
the bylaws of the Surviving Corporation until
amended in accordance with applicable Law.
SECTION 2.3 Directors and Officers. From
and after the Effective Time, until successors
are duly elected or appointed and qualified in
accordance with applicable Law, (i) the
directors of Merger Subsidiary at the Effective
Time shall be the directors of the Surviving
Corporation, and (ii) the officers of the
Company at the Effective Time shall be the
officers of the Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer that:
SECTION 3.1 Corporate Existence and Power.
The Company is a corporation duly incorporated,
validly existing and in good standing under the
Laws of the State of Georgia, and has all
corporate powers and approvals required to
carry on its business as now conducted.
SECTION 3.2 Corporate Authorization. The
execution, delivery and performance by the
Company of this Agreement and the consummation
by the Company of the transactions contemplated
hereby are within the Company's corporate powers
and, except for any required approval by the
Company's shareholders in connection with the
consummation of the Merger, this Agreement will
have been duly authorized by all necessary
corporate action. This Agreement constitutes a
valid and binding agreement of the Company.
SECTION 3.3 Governmental Authorization.
The execution, delivery and performance by the
Company of this Agreement and the consummation
of the Merger by the Company require no action
by or in respect of, or filing with, any
Governmental Authority other than (i) the filing
of a certificate of merger in accordance with
the GBCC; and (ii) compliance with applicable
requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act").
SECTION 3.4 Non-Contravention. The
execution, delivery and performance by the
Company of this Agreement and the consummation
by the Company of the transactions contemplated
hereby do not and will not (i) contravene or
conflict with the articles of incorporation or
bylaws of the Company, or (ii) assuming
compliance with the matters referred to in
Section 3.3, contravene or conflict with or
constitute a violation of any provision of any
Law or Order binding upon or applicable to the
Company or any Company Subsidiary.
SECTION 3.5 Capitalization. The authorized
capital stock of the Company consists of 20,000,000
authorized shares of Company Common Stock and
1,000,000 authorized shares of Preferred Stock.
As of March 31, 1997, (a) 14,982,292 shares of
Company Common Stock were issued and
outstanding, (b) 358,479 shares of Company
Common Stock were held in the treasury of the
Company, and (c) 151,422 shares of Company
Common Stock were reserved for future issuance
pursuant to outstanding employee stock options
granted pursuant to the Incentive Plan. As of
March 31, 1997, (a) no shares of Preferred Stock
were issued and outstanding, and (b) no shares
of Preferred Stock were held in the treasury of
the Company. All outstanding shares of Company
Common Stock have been duly authorized and
validly issued and are fully paid and
nonassessable. Except as set forth
in this Section and except for changes since
March 31, 1997, resulting from the exercise of
employee stock options outstanding on such date,
there are outstanding (i) no shares of capital
stock or other voting securities of the Company,
(ii) no securities of the Company convertible
into or exchangeable for shares of capital stock
or voting securities of the Company, and (iii)
no options or other rights to acquire from the
Company, and no obligation of the Company to
issue, any capital stock, voting securities or
securities convertible into or exchangeable for
capital stock or voting securities of the
Company (the items in clauses (i), (ii) and
(iii) being referred to collectively as the
"Company Securities"). There are no outstanding
obligations of the Company or any Company
Subsidiary to repurchase, redeem or otherwise
acquire any Company Securities.
SECTION 3.6 Company Subsidiaries. All of
the outstanding capital stock of, or other
ownership interests in, each Company Subsidiary
owned by the Company is owned free and clear of
any Lien and free of any other limitation or
restriction (including any restriction on the
right to vote, sell or otherwise dispose of such
capital stock or other ownership interests).
There are no outstanding (i) securities of the
Company or any Company Subsidiary convertible
into or exchangeable for shares of capital stock
or other voting securities or ownership
interests in any Company Subsidiary, and (ii)
options or other rights to acquire from the
Company or, to the knowledge of the Company, any
Company Subsidiary, and no other obligation of
the Company or, to the knowledge of the Company,
any Company Subsidiary to issue, any capital
stock, voting securities or other ownership
interests in, or any securities convertible into
or exchangeable for any capital stock, voting
securities or ownership interests in, any
Company Subsidiary (the items in clauses (i) and
(ii) being referred to collectively as the
"Subsidiary Securities"). There are no
outstanding obligations of the Company or, to
the knowledge of the Company, any Company
Subsidiary to repurchase, redeem or otherwise
acquire any outstanding Subsidiary Securities.
SECTION 3.7 SEC Filings. The Company has
delivered to Buyer (i) the Annual Report on Form
10-K for its fiscal year ended June 29, 1996
(the "Company 10-K"), (ii) its proxy or
information statements relating to meetings of,
or actions taken without a meeting by, the
shareholders of the Company held since October
23, 1996, and (iii) all of its other reports,
statements, schedules and registration
statements filed with the Securities and
Exchange Commission (the "SEC") since June 29,
1996.
SECTION 3.8 Financial Statements. The
audited consolidated financial statements and
unaudited consolidated interim financial
statements of the Company included in the
Company 10-K and in the Quarterly Reports on
Form 10-Q filed for quarterly periods of fiscal
year 1997 (the "Company 10Qs") fairly present,
in conformity with GAAP (except as may be
indicated in the notes thereto), the
consolidated financial position of the Company
and its consolidated Company Subsidiaries as of
the dates thereof and their consolidated
statements of operations and of cash flows for
the periods then ended (subject to normal year-
end adjustments in the case of any unaudited
interim financial statements).
SECTION 3.9 Disclosure Documents. (a) Each
document required to be filed by the Company with
the SEC in connection with the transactions
contemplated by this Agreement (the "Company
Disclosure Documents"), including, without limitation,
the proxy statement of the Company (the "Company
Proxy Statement") to be filed with the SEC in
connection with the Merger, and any amendments
or supplements thereto will, when filed, comply
as to form in all material respects with the
applicable requirements of the Exchange Act.
(b) At the time the Company Proxy Statement or
any amendment or supplement thereto is first mailed
to shareholders of the Company, at the time such
shareholders vote on adoption of this Agreement,
and at the Effective Time, the Company Proxy
Statement, as supplemented or amended, if
applicable, will not contain any untrue
statement of a material fact or omit to state
any material fact necessary in order to make the
statements made therein, in the light of the
circumstances under which they were made, not
misleading. At the time of the filing of any
Company Disclosure Document other than the
Company Proxy Statement and at the time of any
distribution thereof, such Company Disclosure
Document will not contain any untrue statement
of a material fact or omit to state a material
fact necessary in order to make the statements
made therein, in the light of the circumstances
under which they were made, not misleading. The
representations and warranties contained in this
Section 3.9(b) will not apply to statements or
omissions included in any Company Disclosure
Documents (including, without limitation, the
Company Proxy Statement) based upon information
furnished to the Company in writing by Buyer
specifically for use therein.
SECTION 3.10 Finders' and Bankers' Fees.
Except for The Robinson-Humphrey Company, Inc.
("R-H"), a copy of whose engagement agreement
has been provided to Buyer, there is no
investment banker, broker, finder or other
intermediary which has been retained by or is
authorized to act on behalf of the Company, the
Special Committee or any Company Subsidiary who
might be entitled to any fee or commission from
Buyer or any of its Affiliates upon consummation
of the transactions contemplated by this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
SECTION 4.1 Corporate Existence and Power.
Each of Gold Kist, Agri and Merger Subsidiary is
a corporation duly incorporated, validly
existing and in good standing under the laws of
the State of Georgia, and each has all corporate
powers and all material governmental licenses,
authorizations, consents and approvals required
to consummate the transactions contemplated by
this Agreement. Since the date of its
incorporation, Merger Subsidiary has not engaged
in any material activities other than in
connection with or as contemplated by this
Agreement.
SECTION 4.2 Corporate Authorization. The
execution, delivery and performance by Gold Kist,
Agri and Merger Subsidiary of this Agreement and
the consummation by Gold Kist, Agri and Merger
Subsidiary of the transactions contemplated
hereby are within the corporate powers of Gold
Kist, Agri and Merger Subsidiary and, upon
approval and adoption of this Agreement by the
respective Board of Directors of each such
corporation, will have been duly authorized by
all necessary corporate action. This Agreement
constitutes a valid and binding agreement of Gold
Kist, Agri and Merger Subsidiary.
SECTION 4.3 Governmental Authorization.
The execution, delivery and performance by Gold
Kist, Agri and Merger Subsidiary of this
Agreement and the consummation by Gold Kist,
Agri and Merger Subsidiary of the transactions
contemplated by this Agreement require no action
by or in respect of, or filing with, any
Governmental Authority other than (i) the filing
of a certificate of merger in accordance with
the GBCC and (ii) compliance with any applicable
requirements of the Exchange Act.
SECTION 4.4 Non-Contravention. The
execution, delivery and performance by Gold
Kist, Agri and Merger Subsidiary of this
Agreement and the consummation by Gold Kist,
Agri and Merger Subsidiary of the transactions
contemplated hereby do not and will not (i)
contravene or conflict with the articles of
incorporation or bylaws of Gold Kist, Agri or
Merger Subsidiary, or (ii) assuming compliance
with the matters referred to in Section 4.3,
contravene or conflict with any material
provision of Law or Order binding upon or
applicable to Gold Kist, Agri or Merger
Subsidiary.
SECTION 4.5 Disclosure Documents. The
information with respect to Buyer and its
Affiliates that Buyer furnishes to the Company
in writing specifically for use in any Company
Disclosure Document will not contain any untrue
statement of a material fact or omit to state any
material fact necessary in order to make the
statements made therein, in the light of the
circumstances under which they were made, not
misleading (i) in the case of the Company Proxy
Statement at the time the Company Proxy Statement
or any amendment or supplement thereto is first
mailed to shareholders of the Company, at the time
the shareholders vote on adoption of this Agreement
and at the Effective Time, and (ii) in the case
of any Company Disclosure Document other than
the Company Proxy Statement, at the time of the
filing thereof and at the time of any
distribution thereof.
SECTION 4.6 Finders' and Bankers' Fees. There
is no investment banker, broker, finder or other
intermediary which has been retained by or is
authorized to act on behalf of Buyer who might
be entitled to any fee or commission from the
Company or any of the Company Subsidiaries if
the transactions contemplated by this Agreement
are not consummated.
ARTICLE V
COVENANTS OF THE COMPANY
The Company agrees that:
SECTION 5.1 Conduct of the Company. From
the date hereof until the Effective Time, the
Company and the Company Subsidiaries shall
conduct their business in the ordinary course
consistent with past practice and (except for
acts in connection with the Merger) shall use
their best efforts to preserve intact their
business organizations and relationships with
third parties and to keep available the services
of their present officers and employees.
Without limiting the generality of the
foregoing, from the date hereof until the
Effective Time, without the consent of Buyer:
(a) the Company will not adopt or propose any
change in its articles of incorporation or bylaws;
(b) the Company will not, and will not permit
any Company Subsidiary to, acquire, whether by
purchase of equity securities, merger or
consolidation, any other Person or acquire a
material amount of assets of any other Person
except (i) pursuant to existing contracts or
commitments or (ii) in the ordinary course
consistent with the past practice;
(c) the Company will not, and will not permit
any Company Subsidiary to, sell, lease, license
or otherwise dispose of any material assets or
property except (i) pursuant to existing
contracts or commitments and (ii) in the
ordinary course consistent with past practice;
(d) except as otherwise contemplated
herein, the Company will not, and will not
permit any Company Subsidiary to, agree or
commit to do any of the foregoing;
(e) the Company will not authorize for
issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether
through the issuance or granting of options,
warrants, commitments, subscriptions, rights to
purchase or otherwise) any stock of any class or
any other securities or equity equivalents
(including, without limitation, any stock
options or stock appreciation rights), except as
required by outstanding options or stock
appreciation rights under the Incentive Plan as
in effect as of the date hereof, or amend any of
the terms of any such securities, options or
rights outstanding as of the date hereof, except
as specifically contemplated by this Agreement;
(f) the Company will not split, combine or
reclassify shares of its capital stock, declare,
set aside or pay any dividend or other
distribution (whether in cash, stock or property
or any combination thereof) in respect of its
capital stock (other than regular quarterly
dividends of not more than $.01 per share on
Company Common Stock declared and paid on dates
consistent with past practice), or redeem or
otherwise acquire any of its securities or any
securities of the Company Subsidiaries; and
(g) the Company will not, and will not permit
any Company Subsidiary to, except as may be required
by Law, enter into, adopt or amend or terminate
any bonus, profit sharing, compensation,
severance, termination, stock option, stock
appreciation right, restricted stock,
performance unit, stock equivalent, stock
purchase agreement, pension, retirement,
deferred compensation, employment, severance or
other employee benefit agreement, trust, plan,
fund or other arrangement for the benefit or
welfare of any director, officer of employee in
any manner, or (except for normal increases in
the ordinary course of business consistent with
past practice that, in the aggregate, do not
result in a material increase in benefits or
compensation expense to the Company, or as
required under existing agreements) increase in
any manner the compensation or fringe benefits
of any director, officer or employee or pay any
benefit not required by any plan and arrangement
as in effect as of the date hereof (including,
without limitation, the granting of
stock appreciation rights or performance units).
SECTION 5.2 Shareholder Meeting; Proxy
Material. The Company shall cause a meeting of
its shareholders (the "Company Shareholder
Meeting") to be duly called and held as soon as
reasonably practicable for the purpose of voting
on the approval and adoption of this Agreement
and the Merger. The directors of the Company,
acting in part on the unanimous recommendation
of the Special Committee, shall, subject to
their fiduciary duties after consultation with
counsel, recommend approval and adoption of this
Agreement and the Merger by the Company's
shareholders. In connection with such meeting,
but subject to the terms hereof, the Company (i)
will promptly prepare and file with the SEC,
will use its best efforts to have cleared by the
SEC and will thereafter mail to its shareholders
as promptly as practicable the Company Proxy
Statement and all other proxy materials for such
meeting, and will prepare and file the Schedule
13E-3 Transaction Statement required pursuant to
Section 13(e) of the Exchange Act (the "Schedule
13E-3"), (ii) will use its best efforts to
obtain the necessary approvals by its
shareholders of this Agreement and the
transactions contemplated hereby and (iii) will
otherwise comply with all legal requirements
applicable to such meeting.
SECTION 5.3 Access to Information. From
the date hereof until the Effective Time, the
Company will give Buyer, its counsel, financial
advisors, auditors and other authorized
representatives full access to the offices,
properties, books and records of the Company and
the Company Subsidiaries, will furnish to Buyer,
its counsel, financial advisors, auditors and
other authorized representatives such financial
and operating data and other information as such
Persons may reasonably request and will instruct
the Company's employees, counsel, financial
advisors and auditors to cooperate with Buyer in
its investigation of the business of the Company
and the Company Subsidiaries; provided that no
investigation pursuant to this Section shall
affect any representation or warranty given by
the Company to Buyer hereunder.
SECTION 5.4 Other Potential Bidders. The
Company shall, directly or indirectly, furnish
information and access, in each case in response
to unsolicited requests therefor, received prior
to or after the date of this Agreement, to the
same extent permitted by Section 5.3 hereof, to
any Person pursuant to appropriate
confidentiality agreements, and may participate
in discussions and negotiate with any such
Person concerning any merger, sale of assets,
sale of shares of capital stock or similar
transaction involving the Company or any Company
Subsidiary or division of the Company (any such
transaction being referred to herein as a
"Competing Transaction"), if the Special
Committee determines that such action is
necessary in light of its fiduciary obligations
to the Company's shareholders after consultation
with counsel. In addition, the Company shall
direct its officers and other appropriate
personnel to cooperate with and be reasonably
available to consult with any such Person.
Except as set forth above, the Company shall not
solicit, participate in or initiate discussions
or negotiations with, or provide any information
to, any Person (other than Buyer) concerning any
merger, sale of assets, sale of shares of
capital stock or similar transaction involving
the Company or any Company Subsidiary or
division of the Company.
SECTION 5.5 Notices of Certain Events. The
Company shall promptly notify Buyer of:
(i) any 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;
and
(ii) any notice or other communication from
any Governmental Authority in connection with
the transactions contemplated by this Agreement.
ARTICLE VI
COVENANTS OF BUYER
Buyer agrees that:
SECTION 6.1 Voting of Shares. In any vote
of the Company's shareholders with respect to
this Agreement and the transactions contemplated
hereby, Agri shall, and Gold Kist shall cause
Agri to, vote or cause to be voted all of the
Shares then outstanding and beneficially owned
by Agri in favor of the approval and adoption of
this Agreement and the transactions contemplated
hereby.
SECTION 6.2 Director and Officer
Liability. For six years from and after the
Effective Time, Buyer will or will cause the
Surviving Corporation to indemnify and hold
harmless the present and former officers and
directors of the Company and the Company
Subsidiaries in respect of acts or omissions
occurring at or prior to the Effective Time to
the extent provided under the Company's articles
of incorporation and bylaws in effect on the
date hereof; provided that such indemnification
shall be available to the extent permitted by
applicable Law. For such six years after the
Effective Time, Buyer will or will cause the
Surviving Corporation to provide officers' and
directors' liability insurance in respect of
acts or omissions occurring at or prior to the
Effective Time covering each such Person
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 of such policy in effect on
the date hereof, provided that if such coverage
is not obtainable at a cost less than or equal
to three times the amount per annum the Company
paid in its last full fiscal year, Buyer shall
or shall cause the Surviving Corporation to
purchase such lesser amount of coverage, on
terms as similar in coverage as practicable to
such coverage in effect on the date hereof, as
may be obtained having a per annum cost not to
exceed three times the amount per annum the
Company paid in its last full fiscal year, which
amount has been disclosed to Buyer.
SECTION 6.3 Notices of Certain Events. Buyer
shall promptly notify the Company of:
(i) any 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;
and
(ii) any notice or other communication from
any Governmental Authority in connection with
the transactions contemplated by this Agreement.
SECTION 6.4 Split Dollar Life Insurance.
The parties acknowledge that, pursuant to the
Split Dollar Plan, each of the following
directors of the Company has entered into a
Split Dollar Life Insurance Agreement with Gold
Kist (each a "Split Dollar Agreement"), and it
is possible that such director may not, in the
discretion of Gold Kist and such director,
continue as a director of the Company after the
Effective Time:
H.R. Holding
J.H. Levergood
J.W. McIntyre
W.W. Gaston
D.W. Sands
Gold Kist agrees that, at or before the
Effective Time, it shall execute and deliver to
each director listed immediately above an
amendment to such director's Split Dollar
Agreement providing that, consistent with Gold
Kist's discretion referenced in Section 6(a)(3)
of each Split Dollar Agreement, Gold Kist will
continue such Split Dollar Agreement for the
time period specified in Item 4, Schedule A of
such Split Dollar Agreement, regardless of
whether such director continues to be a director
of the Company or any other Affiliate of Gold
Kist for such time period.
ARTICLE VII
COVENANTS OF BUYER AND THE COMPANY
The parties hereto agree that:
SECTION 7.1 Best Efforts. Subject to the
terms and conditions of this Agreement, each
party will use its best efforts to take, or
cause to be taken, all actions and to do, or
cause to be done all things necessary, proper or
advisable under applicable Laws to consummate
the transactions contemplated by this Agreement.
SECTION 7.2 Certain Filings. The Company
and Buyer shall cooperate with one another (a)
in connection with the preparation of the
Company Disclosure Documents, (b) in determining
whether any action by or in respect of, or
filing with, any Governmental Authority is
required, or any actions, consents, approvals or
waivers are required to be obtained from parties
to any material contracts, in connection with
the consummation of the transactions
contemplated by this Agreement, and (c) in
seeking any such actions, consents, approvals or
waivers or making any such filings, furnishing
information required in connection therewith or
with the Company Disclosure Documents and
seeking timely to obtain any such actions,
consents, approvals or waivers.
SECTION 7.3 Public Announcements. Buyer
and the Company will consult with each other
before issuing any press release or making any
public statement with respect to this Agreement
and the transactions contemplated hereby and,
except as may be required by applicable Law or
any listing agreement with any national
securities exchange, will not issue any such
press release or make any such public statement
prior to such consultation.
SECTION 7.4 Further Assurances. At and
after the Effective Time, the officers and
directors of the Surviving Corporation will be
authorized to execute and deliver, in
the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale,
assignments or assurances and to take and do, in
the name and on behalf of the Company or Merger
Subsidiary, any other actions and things they
may deem desirable to vest, perfect or confirm
of record or otherwise in the Surviving
Corporation any and all right, title and
interest in, to and under any of the rights,
properties or assets of the Company acquired or
to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1 Conditions to the Obligations
of Each Party. The obligations of the Company,
Buyer and Merger Subsidiary to consummate the
Merger are subject to the satisfaction at or
prior to the Effective Time of the following
conditions, any or all of which may be waived,
in whole or in part, by each of the parties
intended to benefit therefrom, to the extent
permitted by applicable Law:
(a) this Agreement and the Merger shall
have been approved and adopted by the Board of
Directors of Gold Kist;
(b) this Agreement and the Merger shall have
been approved and adopted by a majority of all shares
of the Company Common Stock entitled to vote
thereon, in accordance with Section 14-2-1103 of
the GBCC, and by a majority of the shares of the
Company Common Stock entitled to vote thereon
held by the Public Shareholders, in accordance
with the conflicting interest "safe harbor"
provided by Section 14-2863 of the GBCC;
(c) no Governmental Authority shall have
enacted, issued, promulgated, enforced or
entered any Law or Order (whether temporary,
preliminary or permanent) which is in effect and
which has the effect of making the Merger
illegal or otherwise prohibiting consummation of
the Merger;
(d) all actions by or in respect of or filings
with any Governmental Authority required to permit
the consummation of the Merger shall have been
obtained, other than the filing of the requisite
articles or certificate of merger with the
Secretary of State of Georgia; and
(e) at the time of mailing of the Company
Proxy Statement, at the time of the Company
Shareholder Meeting and at the Effective Time, R-
H shall have reaffirmed in writing the fairness
opinion previously prepared and delivered by it
to the Special Committee and R-H shall not have
withdrawn such opinion; and
(f) there shall be no action, suit,
investigation or proceeding pending against, or
to the knowledge of the Company or Buyer,
threatened against or affecting, the Company,
Buyer or any of their respective officers or
directors, which in any manner challenges or seeks
to prevent, enjoin, alter or materially delay the
Merger or any of the other transactions contemplated
hereby.
SECTION 8.2 Additional Conditions to the
Obligations of Buyer and Merger Subsidiary. The
obligations of Buyer and Merger Subsidiary to
consummate the Merger are also subject to the
satisfaction at or prior to the Effective Time
of the following further conditions, any or all
of which may be waived, in whole or in part, by
each of the parties intended to benefit
therefrom, to the extent permitted by applicable
Law:
(a) the Company shall have performed in all
material respects all of its obligations hereunder
required to be performed by it at or prior to
the Effective Time, the representations and
warranties of the Company contained in this
Agreement and in any certificate delivered by
the Company pursuant hereto shall be true and
correct in all respects, except where the breach
or inaccuracy thereof would not, individually or
in the aggregate, have a Material Adverse
Effect, at and as of the Effective Time as if
made at and as of such time, except that those
representations and warranties which address
matters only as of a particular date shall
remain true and correct as of such date, and
Buyer shall have received a certificate signed
by the principal financial officer of the
Company to the foregoing effect;
(b) no Material Adverse Effect shall have
occurred;
(c) Buyer shall have received or be
satisfied that it will receive all consents and
approvals contemplated by Section 3.3 and any
other consents of third parties necessary in
connection with the consummation of the Merger
if the failure to obtain any such consent would
have a Material Adverse Effect;
(d) Buyer shall have received all
documents it may reasonably request relating to
the existence of the Company and the authority
of the Company to enter into this Agreement, all
in form and substance reasonably satisfactory to
Buyer; and
(e) at the time of mailing of the Company
Proxy Statement, at the time of the Company
Shareholder Meeting and at the Effective Time,
SunTrust Capital Markets, Inc., financial
adviser to Buyer, shall have reaffirmed in
writing the fairness opinion previously prepared
and delivered by it to the Board of Directors of
Buyer and SunTrust Capital Markets, Inc. shall
not have withdrawn such opinion.
SECTION 8.3 Additional Conditions to the
Obligations of the Company. The obligations of
the Company to consummate the Merger are also
subject to the satisfaction at or prior to the
Effective Time of the following further conditions,
any or all of which may be waived, in whole or in
part, by the Company to the extent permitted by
applicable Law:
(a) Buyer and Merger Subsidiary shall have
performed in all material respects all of their
respective obligations hereunder required to be
performed by them at or prior to the Effective
Time, the representations and warranties of
Buyer contained in this Agreement and in any
certificate delivered by Buyer or Merger
Subsidiary pursuant hereto shall be true and
correct in all material respects at and as of
the Effective Time as if made at and as of such
time, except that those representations and
warranties which address matters only as of a
particular date shall remain true and correct as
of such date, and the Company shall have
received a certificate signed by the President
or any Vice President of each of Buyer and
Merger Subsidiary to the foregoing effect;
(b) the Company shall have received all
documents it may reasonably request relating to
the existence of Buyer or Merger Subsidiary and
the authority of Buyer or Merger Subsidiary to
enter into this Agreement, all in form and
substance reasonably satisfactory to the
Company; and
(c) this Agreement and the Merger shall
have been approved and adopted by the Board of
Directors of each of Agri and Merger Subsidiary.
ARTICLE IX
TERMINATION
SECTION 9.1 Termination. This Agreement
may be terminated and the Merger may be
abandoned at any time prior to the Effective
Time (notwithstanding any approval of this
Agreement by the shareholders of the Company):
(a) by mutual written consent of the Company
and Buyer;
(b) by either the Company or Buyer, if the
Merger has not been consummated by September 30,
1997;
(c) by either the Company or Buyer, if
there shall be any Law that makes consummation
of the Merger illegal or otherwise prohibited or
if any Order enjoining Buyer or the Company from
consummating the Merger is entered and such
Order shall become final and nonappealable;
(d) by either the Company or Buyer if this
Agreement and the Merger shall fail to be approved
and adopted by the shareholders of the Company at
the Company Shareholder Meeting called for such
purpose, as set forth in Section 8.1(b) above;
(e) by Buyer or the Company (such
determination to be made on behalf of the
Company by the Special Committee in its sole
discretion), if, consistent with the terms of
this Agreement, the Board of Directors of the
Company or the Special Committee withdraws,
modifies or changes its recommendation of this
Agreement or the Merger in a manner adverse to
Buyer or Merger Subsidiary or shall have
resolved to do any of the foregoing or the Board
of Directors of the Company or the Special
Committee shall have recommended to the
shareholders of the Company any Competing
Transaction or resolved to do so.
SECTION 9.2 Effect of Termination. If
this Agreement is terminated pursuant to Section
9.1, this Agreement shall become void and of no
effect with no liability on the part of any
party hereto, except that the agreements
contained in Section 10.5 shall survive the
termination hereof; provided,
however, that, except as specifically provided
herein, nothing herein shall relieve any party
hereto of liability for any breach of this
Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Definitions. As used herein,
the following terms have the following
respective meanings (such meanings to be equally
applicable to both the singular and plural forms
of the terms defined):
"Affiliate" means, with respect to a
Person, any other Person that, directly or indirectly
through one or more intermediaries, controls, or
is controlled by, or is under common control
with, such given Person.
"Agreement" means this Agreement and
Plan of Merger, as the same may be supplemented,
modified or amended from time to time.
"Company Subsidiaries" means GP
Finance Corporation, a Delaware corporation, and
Carolina Golden Products Company, a Georgia
general partnership.
"Expenses" means all reasonable out-of-
pocket expenses (including, without limitation,
all fees and expenses of counsel, accountants,
investment bankers, experts and consultants
(which shall not include fees and expenses of
officers or directors of Buyer and/or Affiliates
thereof) and commitment fees and other financing
fees and expenses) incurred by Buyer, Merger
Subsidiary or the Company or on behalf of any
such party in connection with or related to the
authorization, preparation, negotiation,
execution and performance of this Agreement, the
preparation, printing, filing and mailing of the
Company Proxy Statement and Schedule 13E-3, the
solicitation of the shareholder approvals and
all other matters related to the consummation of
the transactions contemplated hereby.
"GAAP" means United States generally
accepted accounting principles consistently
applied.
"Governmental Authority" means any
federal, state, county, local, foreign or other
governmental or public agency, instrumentality,
commission, authority, board or body, and any
court, arbitrator, mediator or tribunal.
"Law" means any code, law, ordinance,
regulation, rule or statute of any Governmental
Authority.
"Lien" means any security interest, lien,
mortgage, deed to secure debt, deed of trust,
pledge, charge, conditional sale or other title
retention agreement, or other encumbrance of any
kind.
"Material Adverse Effect" means any
matter that would reasonably be expected to
affect materially and adversely the business,
condition (financial or otherwise) or results of
operations of the Company and the Company
Subsidiaries considered as a whole.
"Order" shall mean any administrative
decision or award, decree, injunction, judgment,
order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local or foreign
or other court, arbitrator, mediator, tribunal,
administrative agency or other Governmental
Authority.
"Person" means an individual, a
corporation, a partnership, an association, a
trust, a limited liability company or any other
entity or organization, including a government
or political subdivision or any agency or
instrumentality thereof.
"Split Dollar Plan" means the Gold
Kist Inc. Split Dollar Life Insurance Plan
effective March 1, 1995, which permits Gold
Kist, and the Company as a permitted affiliate
of Gold Kist, to assist certain directors and
officers of Gold Kist and its affiliates in
providing death benefits for their beneficiaries.
"Surviving Corporation" means the
Company as the surviving corporation resulting
from the Merger.
The following terms are defined in the
following Sections of this Agreement:
Term Section
"Agri" Opening Paragraph
"Buyer" Opening Paragraph
"Company" Opening Paragraph
"Company Common Stock" Recital A
"Company Disclosure Documents" 3.9(a)
"Company Proxy Statement" 3.9(a)
"Company Securities" 3.5
"Company Shareholder Meeting" 5.2
"Company 10-K" 3.7(a)
"Company 10-Qs" 3.8
"Competing Transaction" 5.4
"Exchange Act" 3.3
"Exchange Agent" 1.4(a)
"Effective Time" 1.2(b)
"GBCC" Recital E
"GCMA" Recital E
"Gold Kist" Opening Paragraph
"Incentive Plan" 1.6
"Merger" Recital E
"Merger Consideration" 1.3(a)
"Merger Subsidiary" Opening Paragraph
"Preferred Stock" Recital A
"Public Shareholders" Recital C
"R-H" 3.11
"Schedule 13E-3" 5.2
"SEC" 3.7(a)
"Share" 1.3(a)
"Special Committee" Recital C
"Split Dollar Agreement" 6.4
"Subsidiary Securities" 3.6
SECTION 10.2 Notices. Unless otherwise
specifically provided herein, any notice, demand,
request or other communication herein requested or
permitted to be given shall be in writing and
may be personally served, sent by overnight
courier service, or sent by telecopy with a
confirming copy sent by United States first-
class mail, each with any postage or delivery
charge prepaid. For the purposes hereof, the
addresses of the parties hereto (until notice of
a change thereof is delivered as provided in
this Section) shall be as follows:
If to the Company: Golden Poultry Company, Inc.
c/o John W. McIntyre
Suite 100
7 Piedmont Center
Atlanta, Georgia 30305
Telephone: 404-816-5206
Telecopy: 404-816-3537
With a copy (which shall Sutherland, Asbill & Brennan, L.L.P.
not constitute notice) to: 999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attn: Thomas C. Herman
Telephone: 404-853-8000
Telecopy: 404-853-8806
If to Buyer or Merger: Gold Kist Inc.
Subsidiary: 244 Perimeter Center Parkway, N.E.
Atlanta, Georgia 30346
Attn: Jack L. Lawing
Telephone: 770-393-5314
Telecopy: 770-393-5421
With a copy (which shall Alston & Bird LLP
not constitute notice) to: 1201 West Peachtree Street
Atlanta, Georgia 30309
Attn: B. Harvey Hill, Jr.
Telephone: 404-881-7446
Telecopy: 404-881-7777
Any notice provided hereunder shall be deemed to
have been given on the date delivered in person, or
on the next business day after deposit with an
overnight courier service, or on the date
received by telecopy transmissions.
SECTION 10.3 No Survival of
Representations and Warranties. The
representations and warranties contained herein
and in any certificate delivered pursuant
hereto shall not survive the Effective Time or
the termination of this Agreement.
SECTION 10.4 Amendments; No Waivers. (a)
Any provision of this Agreement may be amended
or waived prior to the Effective Time if, and
only if, such amendment or waiver is in writing
and signed by all parties hereto, or in the case
of a waiver, by the party against whom the
waiver is to be effective; provided that any
such amendment and any such waiver by the
Company shall have been approved by the Board of
Directors of the Company, acting on the
recommendation of the Special Committee; and
provided, further, that after the adoption of
this Agreement by the shareholders of the
Company, no such amendment or waiver shall,
without the further approval of such
shareholders, alter or change (i) the amount or
kind of consideration to be received in exchange
for any shares of capital stock of the Company
or (ii) any of the terms or conditions of this
Agreement if such alteration or change would
adversely affect the holders of any shares of
capital stock of the Company.
(b) No failure or delay by any party in
exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof
preclude any other or further exercise thereof
or the exercise of any other right, power or
privilege. The rights and remedies herein
provided shall be cumulative and not exclusive
of any rights or remedies provided by law.
SECTION 10.5 Fees and Expenses. Except as
otherwise provided in this Section, all Expenses
incurred in connection with this Agreement shall
be paid by the party incurring such Expense, provided
that, if the Merger is not consummated, all
printing expenses and filing fees associated
with the preparation and distribution of the
Company Proxy Statement shall be divided equally
between Buyer and the Company.
SECTION 10.6 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 that no party may assign, delegate or
otherwise transfer any of its rights or
obligations under this Agreement without the
consent of the other parties hereto except that
Buyer may transfer or assign, in whole or from
time to time in part, to one or more of its
Affiliates, its rights under this Agreement, but
any such transfer or assignment will not relieve
Buyer of its obligations under this Agreement or
prejudice the rights of shareholders to receive
the Merger Consideration for Shares properly
surrendered in accordance with Section 1.4. This
Agreement shall not be construed so as to confer
any right or benefit upon any person other than
the parties to this Agreement, and their
respective successors and assigns.
SECTION 10.7 Governing Law. Regardless of
the place or places where this Agreement may be
executed, delivered or consummated, this
Agreement shall be governed by and construed in
accordance with the Laws of the State of
Georgia, without regard to any applicable
conflicts of Laws.
SECTION 10.8 Severability. Any term or
provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or
affecting the validity or enforceability of any
of the terms or provisions of this Agreement in
any other jurisdiction. If any provision of
this Agreement is so broad as to be
unenforceable, the provision shall be
interpreted to be only so broad as is
enforceable.
SECTION 10.9 Captions. The captions
contained in this Agreement are for reference
purposes only and are not part of this
Agreement.
SECTION 10.10 Interpretations. Neither
this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against
any party, whether under any rule of
construction or otherwise. No party to this
Agreement shall be considered the draftsman.
The parties acknowledge and agree that this
Agreement has been reviewed, negotiated and
accepted by all parties and their attorneys and
shall be construed and interpreted according to
the ordinary meaning of the words used so as
fairly to accomplish the purposes and intentions
of all parties hereto.
SECTION 10.11 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 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, each of the parties has
caused this Agreement to be executed on its
behalf as of the day and year first above
written.
GOLDEN POULTRY COMPANY, INC.
Attest:
/s/ Jack L. Lawing By: /s/ John W. McIntyre
Secretary
Name: John W. McIntyre
Title: Chairman, Negotiating Committee
of the Board of Directors
GOLD KIST INC.
Attest:
/s/ Jack L. Lawing By: /s/ John Bekkers
Secretary
Name: John Bekkers
Title: President/Chief Operating Officer
AGRI INTERNATIONAL, INC.
Attest:
/s/ Jack L. Lawing By: /s/ John Bekkers
Secretary
Name: John Bekkers
Title: President
GOLDEN POULTRY ACQUISITION
CORP.
Attest:
By: /s/ Kenneth N. Whitmire
/s/ Jack L. Lawing
Secretary Name: Kenneth N. Whitmire
Title: Director
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