<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 10, 1994
REGISTRATION NO. 33-56019
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
HUDSON FOODS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
DELAWARE 71-0427616
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1225 HUDSON ROAD
ROGERS, ARKANSAS 72756
(501) 636-1100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
JAMES T. HUDSON
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
HUDSON FOODS, INC.
1225 HUDSON ROAD
ROGERS, ARKANSAS 72756
(501) 636-1100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES OF ALL CORRESPONDENCE TO:
C. DOUGLAS BUFORD, JR., ESQ. JOEL S. KLAPERMAN, ESQ.
WRIGHT, LINDSEY & JENNINGS SHEARMAN & STERLING
200 WEST CAPITOL AVENUE, SUITE 2200 599 LEXINGTON AVENUE
LITTLE ROCK, ARKANSAS 72201 NEW YORK, NEW YORK 10022
(501) 371-0808 (212) 848-4000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
possible after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1) PER SHARE (2) PRICE(2) FEE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A common stock,
$.01 par value per
share................ 4,600,000 shares $21.19 $97,474,000 $33,612.00(3)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Includes 600,000 shares subject to the exercise of the Underwriters' over-
allotment option.
(2) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the high and low prices
reported for October 7, 1994.
(3) Filing fee of $33,612.00 paid upon the initial filing of the Registration
Statement on October 13, 1994.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus: one to be used
in connection with a United States and Canadian offering of the registrant's
Class A common stock (the "U.S. Prospectus") and one to be used in connection
with a concurrent international offering of the Class A common stock (the
"International Prospectus" and, together with the U.S. Prospectus, the
"Prospectuses"). The International Prospectus will be identical to the U.S.
Prospectus except that it will contain different front and back cover pages, a
different inside cover page and a different section entitled "Underwriting."
The U.S. Prospectus is included herein and is followed by those pages to be
used in the International Prospectus which differ from those in the U.S.
Prospectus. Each of the pages for the International Prospectus included herein
has been labeled "Alternate Page for International Prospectus."
If required pursuant to Rule 424(b) of the General Rules and Regulations
under the Securities Act of 1933, as amended, ten copies of each of the
Prospectuses in the forms in which they are used will be filed with the
Securities and Exchange Commission.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 10, 1994
PROSPECTUS
4,000,000 SHARES
LOGO
[LOGO OF HUDSON APPEARS HERE]
CLASS A COMMON STOCK
-----------
Of the 4,000,000 shares of Class A common stock offered hereby, 2,500,000
shares are being sold by Hudson Foods, Inc. ("Hudson" or the "Company") and
1,500,000 shares are being sold by certain stockholders of the Company (the
"Selling Stockholders"). See "Selling Stockholders." The Company will not
receive any proceeds from the sale of the shares by the Selling Stockholders.
Of the 4,000,000 shares of Class A common stock offered hereby, 3,200,000
shares are being offered in the United States and Canada by the U.S.
Underwriters (the "U.S. Offering") and 800,000 shares are being offered in a
concurrent offering outside the United States and Canada by the International
Underwriters (the "International Offering" and, together with the U.S.
Offering, the "Offerings"). The public offering price and the underwriting
discount per share are identical for the Offerings. See "Underwriting."
The Company's Class A common stock is listed on the New York Stock Exchange,
Inc. under the symbol "HFI." On November 8, 1994, the last reported sale price
of the Class A common stock on the New York Stock Exchange was $22 5/8. See
"Price Range of Common Stock."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2) SELLING STOCKHOLDERS (2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share................................. $ $ $ $
- ----------------------------------------------------------------------------------------------------------------
Total(3).................................. $ $ $ $
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities under the Securities Act
of 1933. See "Underwriting."
(2) Before deducting expenses of the offering estimated at $ payable
by the Company and $ payable by the Selling Stockholders.
(3) One of the Selling Stockholders has granted each of the U.S. Underwriters
and the International Underwriters an option exercisable within 30 days
after the date hereof to purchase up to 480,000 and 120,000 additional
shares of Class A common stock, respectively, solely to cover over-
allotments, if any. If such options are exercised in full, the total Price
to Public, Underwriting Discount and Proceeds to Selling Stockholders will
be $ , $ and $ , respectively. See
"Underwriting."
-----------
The shares of Class A common stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the shares of Class A common stock will be made in
New York, New York on or about , 1994.
-----------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
-----------
The date of this Prospectus is , 1994
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended, with respect to the
Class A common stock offered hereby. The Prospectus does not contain all the
information set forth in the Registration Statement and exhibits and schedules
thereto. For further information with respect to the Company and such Class A
common stock, reference is made to the Registration Statement and the exhibits
and schedules filed as part thereof. Statements contained in this Prospectus as
to the contents of any contract or any other document referred to are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference to such
exhibit.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Registration
Statement, including exhibits and schedules thereto, such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at
the Commission's following Regional Offices: 7 World Trade Center (13th Floor),
New York, New York 10048; and Suite 1400 Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. In addition, copies of such material can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at prescribed
rates.
The Company's Class A common stock is listed on the New York Stock Exchange.
Reports, proxy statements and other information concerning the Company can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference: (i) the Company's Annual Report on Form 10-K for the
fiscal year ended October 1, 1994; (ii) the Company's Annual Report on Form 10-
K for the fiscal year ended October 2, 1993; (iii) the Company's proxy
statement for its annual meeting of stockholders held on February 11, 1994;
(iv) the Company's Form 10-Q for the quarter ended January 1, 1994; (v) the
Company's Form 10-Q for the quarter ended April 2, 1994; (vi) the Company's
Form 10-Q for the quarter ended July 2, 1994; (vii) the description of the
Class A common stock contained in the Company's Form 8-A Registration Statement
filed January 22, 1986, as amended by Form 8 filed January 19, 1987; (viii) the
Company's Form 8-K filed October 13, 1994; and (ix) the Company's Form 8-K
filed October 28, 1994.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference into this Prospectus, and to be a part hereof from
the date of filing such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein, or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by reference
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference therein). Requests for such copies should be directed
to Tommy D. Reynolds, Secretary, Hudson Foods, Inc., P.O. Box 777, Rogers,
Arkansas 72757-0777, (501) 636-1100.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless indicated otherwise, the information
contained in this Prospectus assumes that the Underwriters' over-allotment
option is not exercised.
THE COMPANY
Hudson is a major U.S. producer of further-processed poultry and meat
products with sales for fiscal 1994 of over $1 billion. The Company was
established in 1972 as a regional poultry company selling commodity-type
products. Through sales growth and product line expansion, Hudson has grown
into one of the country's largest domestic poultry producers. In recent years
the Company has implemented a strategy to increase sales of further-processed
poultry products, to increase sales to targeted large customers under supply
and pricing arrangements that yield more stable profit margins and to diversify
its product line to include non-poultry products. The Company's product lines
and their percentage of total sales for fiscal 1994 were: chicken, 51.2%;
portioned entrees, 16.9%; luncheon meats, 15.8%; turkey, 10.9%; and other
products, 5.2%. The Company's products are marketed nationwide to club store
chains, fast food chains and full service restaurants, retail supermarket
chains, prepared food companies, and various institutional customers. Its
largest customers are Wal-Mart Stores, Inc. ("Wal-Mart"), including its Sam's
Club division, and the Burger King system. The Company is also a principal
supplier to the Boston Chicken system.
The Company continues to implement the following business strategies:
. Increasing sales of further-processed poultry products. The production
and sale of further-processed products reduces the influence of feed
grain costs on the Company's profitability. As additional processing is
performed, this cost becomes a decreasing percentage of a product's total
production cost. The sales prices of further-processed products also
fluctuate less than commodity poultry prices. In implementing this
strategy, Hudson has expanded, upgraded and modified most of its poultry
production facilities to accommodate the production of further-processed
items.
. Increasing sales represented by cost-plus or firm-price sales
arrangements. Sales under cost-plus or firm-price arrangements generally
lead to more stable margins. To increase its sales under such
arrangements, the Company has recently agreed to customize specific
production facilities to meet a portion of the production requirements of
the Burger King system and the Boston Chicken system. In turn, these
customers have entered into long-term supply agreements with cost-plus or
firm-price arrangements.
. Developing foodservice and club store sales. Sales to foodservice and
club store customers involve higher and more predictable volumes. In
recent years the Company expanded its production facilities and marketing
staff to focus on these customers. Over the past three fiscal years sales
to these customers have increased more than 51%.
. Diversifying the portioned entree and luncheon meat product lines. By
increasing the breadth of its product line, the Company is able to
develop new customers and further penetrate existing accounts. The
Company has implemented this strategy primarily through acquisition and
expansion of existing portioned entree and luncheon meat brands such as
Pierre(TM), Ohse(R), Schweigert(R) and Roegelein(R).
. Increasing international sales. Due to U.S. consumers' preference for
chicken breast meat the Company has targeted international markets to
generate sales of leg quarters. In 1992, the Company established an
international sales department to expand the volume of leg quarters and
other products sold abroad. As a result of this effort, sales in these
markets have grown from less than 1% of total sales in fiscal 1991 to
more than 5% for fiscal 1994.
. Assessing appropriate acquisition opportunities. The Company continues to
assess appropriate acquisition opportunities to satisfy growing customer
demands and to continue to broaden the Company's product base.
3
<PAGE>
On October 12, 1994, Hudson entered into a five-year, cost-plus supply
agreement with Boston Chicken, Inc., ("Boston Chicken") a franchisor and
operator of food service stores specializing in complete meals featuring
rotisserie roasted chicken. The agreement provides for Boston Chicken to
purchase 100% of the capacity of two Hudson chicken processing plants. One
plant in Dexter, Missouri will be expanded to process approximately 650,000
chickens per week and is expected to begin production for Boston Chicken in the
spring of 1995. The other plant will be part of an integrated chicken
processing complex to be built near Henderson, Kentucky. The Henderson plant is
expected to begin production for Boston Chicken in the spring of 1996, with
initial production averaging 325,000 chickens per week. When the Henderson
plant reaches full capacity, scheduled for 1998, its production is expected to
average 1.3 million chickens per week. The Company currently processes
approximately 4.3 million chickens per week.
The Company is nearing completion of a hamburger processing plant in
Columbus, Nebraska. The Burger King system has committed to purchase for a
multi-year period a majority of the capacity of this facility. These sales will
be made to the Burger King system at a formula price plus raw material costs.
In addition, the Company is a minority co-investor with the Burger King
Corporation and SBS Processing, Inc. in a second hamburger plant currently
being constructed in Petersburg, Virginia.
The Company's executive offices are located at 1225 Hudson Road, Rogers,
Arkansas 72756, and its telephone number is (501) 636-1100.
THE OFFERINGS
<TABLE>
<S> <C>
Class A common stock offered by the
Company.............................. 2,500,000 shares
Class A common stock offered by the
Selling Stockholders................. 1,500,000 shares
Common stock to be outstanding after
the Offerings:
Class A............................. 12,599,524 shares (1)
Class B............................. 7,002,834 shares
Use of proceeds....................... To finance capital expenditures and for
general corporate purposes
New York Stock Exchange symbol........ HFI
Dividend policy....................... Currently, $.03 per share per quarter on
Class A common stock and $.025 per share
per quarter on Class B common stock. See
"Dividend Policy."
</TABLE>
- --------
(1) Excludes 482,309 shares of Class A common stock reserved for issuance and
exercisable under the Company's stock option plans as of October 1, 1994.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data of the
Company for the five fiscal years ended October 1, 1994. The information has
been derived from the consolidated financial statements of the Company which
have been audited by Coopers & Lybrand L.L.P., independent certified public
accountants. This data should be read in conjunction with the Company's
consolidated financial statements and the notes thereto and "Management's
Discussion and Analysis of Results of Operations and Financial Condition." The
Company's fiscal year is a 52- or 53-week period ending each year on the
Saturday closest to September 30.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED (AS RESTATED)(1)
--------------------------------------------------------------------
SEPT. 29, 1990 SEPT. 28, 1991 OCT. 3, 1992 OCT. 2, 1993 OCT. 1, 1994
(52 WEEKS) (52 WEEKS) (53 WEEKS) (52 WEEKS) (52 WEEKS)
-------------- -------------- ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales................... $666,697 $765,292 $809,243 $920,545 $1,040,840
Gross profit............ 60,477 74,976 76,215 118,543 155,592
Operating income........ 16,830 21,196 7,775 33,922 51,139
Income before
income taxes........... 13,850 13,529 3,641 25,417 44,987
Net income.............. 8,712 8,542 2,170 15,905 26,992
Earnings per share:
Primary................ 0.60 0.58 0.15 1.01 1.62
Fully diluted.......... 0.60 0.58 0.15 1.01 1.61
Weighted average shares
outstanding:
Primary................ 14,621 14,733 14,303 15,751 16,632
Fully diluted.......... 14,621 14,733 14,303 15,751 16,732
Cash dividends per
share:
Class A................ $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12
Class B................ 0.10 0.10 0.10 0.10 0.10
Total dividends paid.... 1,537 1,513 1,503 1,706 1,796
OTHER FINANCIAL DATA:
Capital expenditures.... $ 32,446 $ 31,326 $ 46,960 $ 21,453 $ 49,161
Depreciation and
amortization........... 14,346 16,536 17,911 22,943 22,279
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 1, 1994
-----------------------
ACTUAL AS ADJUSTED(2)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital......................................... $100,096 $
Total assets............................................ 473,180
Long-term obligations, less current portion............. 75,169
Total stockholders' equity.............................. 209,189
</TABLE>
- --------
(1) Amounts for fiscal years 1990 through 1993 have been restated for the
adoption of Statement of Financial Accounting Standards No. 109. See
"Management's Discussion and Analysis of Results of Operations and
Financial Condition--Accounting Policies."
(2) Reflects the sale by the Company of the shares of Class A common stock in
the Offerings and the retirement subsequent to October 1, 1994 of $9.3
million of 8% Convertible Subordinated Debentures of which $5.5 million
were converted to 264,789 shares of common stock.
5
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of shares of Class A common
stock offered by the Company hereby are estimated to be $ million. The
Company will not receive any proceeds from the sale of 1,500,000 shares of
Class A common stock (2,100,000 shares of Class A common stock if the
Underwriters' over-allotment option is exercised in full) offered by the
Selling Stockholders.
The Company intends to use a portion of the net proceeds to finance the
construction of an integrated poultry processing complex near Henderson,
Kentucky, dedicated to production for Boston Chicken, and a hamburger
processing plant in Columbus, Nebraska, dedicated to production for the Burger
King system, and for general corporate purposes. Pending application of the
proceeds as described above, the Company intends to invest in short-term,
interest-bearing bank deposits, repurchase obligations and governmental
securities. See "Management's Discussion and Analysis of Results of Operations
and Financial Condition."
DIVIDEND POLICY
The Company's Board of Directors has declared cash dividends every fiscal
quarter since the Company's initial public offering in February 1986. Since
April 1987, the Board has declared quarterly dividends of $.03 per share of
Class A common stock and $.025 per share of Class B common stock. The Company's
certificate of incorporation restricts the per share dividends declared and
paid on Class B common stock to not more than 90% of the per share dividends
declared and paid on Class A common stock.
Payment of future dividends will depend upon the Company's financial
condition, results of operations and other factors deemed relevant by the Board
of Directors. Additionally, the Company has entered into certain loan
agreements that restrict its ability to pay dividends. The Company's primary
credit facility restricts dividend payments to a maximum of $2.75 million in
any fiscal year.
PRICE RANGE OF COMMON STOCK
The Company's Class A common stock is traded on the New York Stock Exchange
("NYSE") under the symbol "HFI." The following table sets forth on a per share
basis, for the period indicated, the high and low sales prices of the Class A
common stock as reported on the NYSE composite tape.
<TABLE>
<CAPTION>
FISCAL 1993 HIGH LOW
----------- ------- -------
<S> <C> <C>
First Quarter............................................. $14 $ 7 1/2
Second Quarter............................................ 15 3/8 10 3/8
Third Quarter............................................. 13 7/8 10 1/4
Fourth Quarter............................................ 11 3/8 10 1/4
<CAPTION>
FISCAL 1994
-----------
<S> <C> <C>
First Quarter............................................. 13 1/2 10 5/8
Second Quarter............................................ 16 5/8 11 1/8
Third Quarter............................................. 18 3/8 12 3/4
Fourth Quarter............................................ 25 1/8 17 7/8
<CAPTION>
FISCAL 1995
-----------
<S> <C> <C>
First Quarter (through November 8, 1994).................. 24 1/2 20 3/4
</TABLE>
On November 8, 1994, the closing price of the Class A common stock on the
NYSE was $22 5/8 per share. At November 7, 1994, 8,599,524 shares of Class A
common stock were outstanding; these shares were held by approximately 1,314
holders of record.
The Class B common stock is not traded on the NYSE or any other exchange, and
the Company is not aware of any public market for such shares. At November 7,
1994, 8,502,834 shares of Class B common stock were outstanding; these shares
were held by approximately 21 holders of record.
6
<PAGE>
CAPITALIZATION
The following table sets forth unaudited information regarding the
capitalization of the Company as of October 1, 1994, and as adjusted to give
effect to (i) the sale by the Company of the shares of the Class A common
stock in the Offerings and the application of the net proceeds therefrom, (ii)
conversion of 1.4 million shares of Class B common stock into an equivalent
number of shares of Class A common stock by certain Selling Stockholders for
sale in the Offerings, and (iii) the retirement, subsequent to October 1,
1994, of $9.3 million of 8% Convertible Subordinated Debentures, of which $5.5
million were converted to 263,837 shares of Class A common stock and $26,000
were converted to 952 shares of Class B common stock. This table should be
read in conjunction with "Selected Consolidated Financial Data" and the
Consolidated Financial Statements of the Company appearing elsewhere herein.
See "Index to Consolidated Financial Statements."
<TABLE>
<CAPTION>
OCT. 1, 1994
--------------------------
(DOLLARS IN THOUSANDS)
ACTUAL AS ADJUSTED
----------- -------------
<S> <C> <C>
Long-term obligations (less current portion)(1)...... $ 75,169 $
----------- -----------
Stockholders' equity:
Common stock:
Class A, $.01 par value, issued 9,233,893 shares
(13,397,730 shares as adjusted)(2)............... 92
Class B, $.01 par value, issued 8,501,882 shares
(7,102,834 shares as adjusted)................... 85
Additional capital................................. 97,505
Retained earnings.................................. 122,923
Treasury stock, at cost (933,854 Class A shares)... (11,416)
----------- -----------
Total stockholders' equity......................... 209,189
----------- -----------
Total capitalization................................. $ 284,358 $
=========== ===========
</TABLE>
- --------
(1) See Note 6 of Notes to Consolidated Financial Statements.
(2) Excludes 482,309 shares of Class A common stock reserved for issuance and
exercisable under the Company's stock option plans as of October 1, 1994.
7
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data of the
Company for the five fiscal years ended October 1, 1994. The information has
been derived from the consolidated financial statements of the Company which
have been audited by Coopers & Lybrand L.L.P., independent certified public
accountants. This data should be read in conjunction with the Company's
consolidated financial statements and the notes thereto and "Management's
Discussion and Analysis of Results of Operations and Financial Condition." The
Company's fiscal year is a 52- or 53-week period ending each year on the
Saturday closest to September 30.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED (AS RESTATED)(1)
--------------------------------------------------------------------
SEPT. 29, 1990 SEPT. 28, 1991 OCT. 3, 1992 OCT. 2, 1993 OCT. 1, 1994
(52 WEEKS) (52 WEEKS) (53 WEEKS) (52 WEEKS) (52 WEEKS)
-------------- -------------- ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales................... $666,697 $765,292 $809,243 $920,545 $1,040,840
Cost of sales........... 606,220 690,316 733,028 802,002 885,248
-------- -------- -------- -------- ----------
Gross profit............ 60,477 74,976 76,215 118,543 155,592
Selling................. 27,270 37,135 49,907 63,926 78,698
General and
administrative.......... 16,377 16,645 18,533 20,695 25,755
-------- -------- -------- -------- ----------
Operating income........ 16,830 21,196 7,775 33,922 51,139
Interest................ 7,571 9,073 8,476 7,975 6,152
Other, net.............. (4,591) (1,406) (4,342) 530 --
-------- -------- -------- -------- ----------
Income before income
taxes................... 13,850 13,529 3,641 25,417 44,987
Income tax expense...... 5,138 4,987 1,471 9,512 17,995
-------- -------- -------- -------- ----------
Net income.............. $ 8,712 $ 8,542 $ 2,170 $ 15,905 $ 26,992
======== ======== ======== ======== ==========
Earnings per share:
Primary................ $ 0.60 $ 0.58 $ 0.15 $ 1.01 $ 1.62
Fully diluted.......... 0.60 0.58 0.15 1.01 1.61
Weighted average shares
outstanding:
Primary................ 14,621 14,733 14,303 15,751 16,632
Fully diluted.......... 14,621 14,733 14,303 15,751 16,732
Cash dividends per
share:
Class A................ $ 0.12 $ 0.12 $ 0.12 $ 0.12 $ 0.12
Class B................ 0.10 0.10 0.10 0.10 0.10
Total dividends paid.... 1,537 1,513 1,503 1,706 1,796
OTHER FINANCIAL DATA:
Capital expenditures.... $ 32,446 $ 31,326 $ 46,960 $ 21,453 $ 49,161
Depreciation and
amortization............ 14,346 16,536 17,911 22,943 22,279
BALANCE SHEET DATA:
Working capital......... $ 89,822 $ 88,564 $ 81,475 $103,811 $ 100,096
Total assets............ 342,269 360,191 402,188 416,503 473,180
Long-term obligations,
less current portion.... 89,675 97,418 125,695 88,985 75,169
Total stockholders'
equity.................. 126,005 133,499 134,330 173,902 209,189
</TABLE>
- --------
(1) Amounts for fiscal years 1990 through 1993 have been restated for the
adoption of Statement of Financial Accounting Standards No. 109. See
"Management's Discussion and Analysis of Results of Operations and
Financial Condition--Accounting Policies."
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GENERAL
Historically, the Company's operating results have been heavily influenced by
two external factors: the cost to the Company of feed grains and the price
received by the Company for its commodity-based finished products. These two
factors have fluctuated significantly and independently. Inflation has not
materially affected results of operations.
In recent years the Company has undertaken a business strategy focused
largely on the following: increased production and sale of further-processed
poultry and other processed food products, and increased sales to larger
customers such as club store and fast food chains. This strategy decreased the
proportion of feed grain costs in relation to total cost of sales, which
reduced the impact of commodity cost fluctuations. In addition, the sales
prices of further-processed products are less sensitive to commodity poultry
price fluctuations. Another result of this strategy has been increased sales to
large customers under firm-price or cost-plus contracts utilizing dedicated
plant arrangements. Although an increase in feed grain costs or a decrease in
finished product prices could have an adverse effect on the Company, management
believes that the implementation of this strategy has reduced the Company's
vulnerability to such price fluctuations.
While the Company believes the above factors will result in more predictable
and stable profit margins, increased sales to large customers and sales of
further-processed products have tended to increase costs relating to
commissions, advertising, distribution, demonstration and storage expenses. For
example, introductions of new products in fiscal 1992 and 1993 into Sam's Club
stores, a division of Wal-Mart ("Sam's Club"), required the Company to sponsor
and pay for in-store product demonstrations, thereby increasing selling
expenses in those years. Although there can be no assurances, the Company
expects that future selling expenses as a percentage of sales will approximate
current levels.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
PERCENTAGE OF SALES
-----------------------------------------------------
FISCAL YEAR ENDED
-----------------------------------------------------
SEPT. 28, 1991 OCT. 3, 1992 OCT. 2, 1993 OCT. 1, 1994
(52 WEEKS) (53 WEEKS) (52 WEEKS) (52 WEEKS)
-------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales.................... 100.0% 100.0% 100.0% 100.0%
Cost of sales............ 90.2 90.6 87.1 85.1
----- ----- ----- -----
Gross profit............. 9.8 9.4 12.9 14.9
Selling.................. 4.8 6.1 6.9 7.5
General and
administrative.......... 2.2 2.3 2.3 2.5
----- ----- ----- -----
Operating income......... 2.8 1.0 3.7 4.9
Interest................. 1.2 1.0 0.9 0.6
Other, net............... (0.2) (0.5) 0.1 --
----- ----- ----- -----
Income before income
taxes................... 1.8 0.5 2.7 4.3
Income tax expense....... 0.7 0.2 1.0 1.7
----- ----- ----- -----
Net income............... 1.1 0.3 1.7 2.6
===== ===== ===== =====
</TABLE>
Fiscal 1994 Compared with Fiscal 1993
Sales from the Company's operations were $1,040.8 million for fiscal 1994, an
increase of $120.3 million, or 13.1%, over fiscal 1993. The sales increase
primarily resulted from the following:
. Chicken sales increased 17.3% to $533.4 million in fiscal 1994 from
$454.9 million in fiscal 1993 due to higher finished product prices, a
change in the product mix to include additional further-processed and
convenience products and a 13.7% increase in volume. The volume increase
was primarily due to increased sales in international markets.
9
<PAGE>
. Portioned entree sales increased 22.3% to $175.5 million in fiscal 1994
from $143.5 million in fiscal 1993 primarily due to higher finished
product prices and a 15.8% increase in volume which was primarily due to
new sales to the Burger King system and sales of meal kit products.
. Luncheon meat sales increased 3.0% to $164.7 million in fiscal 1994 from
$159.9 million in fiscal 1993 due to higher finished product prices.
. Turkey sales increased 12.5% to $113.2 million in fiscal 1994 from $100.6
million in fiscal 1993 due to higher finished product prices and sales of
additional further-processed products.
Cost of sales was $885.2 million for fiscal 1994, an increase of $83.2
million, or 10.4%, over fiscal 1993. As a percentage of sales, cost of sales
decreased to 85.1% in fiscal 1994 from 87.1% in fiscal 1993 primarily due to a
higher percentage of sales of further-processed products and improved operating
efficiencies. This improvement was partially offset by a 6.9% increase in feed
costs per ton.
Gross profit was $155.6 million for fiscal 1994, an increase of $37.0
million, or 31.3%, over fiscal 1993. As a percentage of sales, gross profit
increased to 14.9% in fiscal 1994 from 12.9% in fiscal 1993 largely due to the
improvements described above.
Selling and general and administrative expenses were $104.5 million in fiscal
1994, an increase of $19.8 million, or 23.4%, over fiscal 1993. As a percentage
of sales, selling and general and administrative expenses increased to 10.0% in
fiscal 1994 from 9.2% in fiscal 1993. This increase was due to higher
advertising, distribution, demonstration, and product handling expenses
primarily related to increased international sales, meal kit products and Sam's
Club sales. In addition, there was an increase in incentive compensation
accruals.
Operating income was $51.1 million in fiscal 1994, an increase of $17.2
million, or 50.8%, over fiscal 1993. This increase was primarily due to the
improvements in the Company's operations as described previously.
Interest expense was $6.2 million in fiscal 1994, a decrease of $1.8 million,
or 22.9%, from fiscal 1993. This decrease was due primarily to the redemption
of 14% Convertible Subordinated Debentures in the second quarter of fiscal
1993.
Fiscal 1993 Compared with Fiscal 1992
Sales from the Company's operations were $920.5 million for fiscal 1993, an
increase of $111.3 million, or 13.8%, over fiscal 1992. The sales increase
primarily resulted from the following:
. Chicken sales increased 10.2% to $454.9 million in fiscal 1993 from
$412.9 million in fiscal 1992 due to higher finished product prices,
changes in product mix to include additional further-processed and
convenience products and a 1.3% increase in volume which was primarily
due to new sales to the Burger King system, increased sales to Sam's Club
and the Company's entrance into new international markets such as Russia
and Eastern Europe, Mexico and Central America, Southeast Asia and the
Middle East.
. Portioned entree sales increased 34.4% to $143.5 million in fiscal 1993
from $106.8 million in fiscal 1992 due to higher finished product prices
and a 27.8% increase in volume. Volume increased due to increased sales
to Sam's Club and sales of new products such as meal kits and sandwiches.
. Luncheon meat sales increased 5.3% to $159.9 million in fiscal 1993 from
$151.9 million in fiscal 1992 due to increased volume of 5.5% which was
partially offset by a slight decline in finished product prices.
10
<PAGE>
. Turkey sales increased 28.6% to $100.6 million in fiscal 1993 from $78.2
million in fiscal 1992 primarily due to a 32.2% increase in volume
resulting from late Thanksgiving and Christmas orders placed after fiscal
1992 year-end and also increased sales of further-processed products such
as deli turkey breasts. This increase was partially offset by a slight
decline in finished product prices.
Cost of sales was $802.0 million for fiscal 1993, an increase of $69.0
million, or 9.4%, over fiscal 1992. As a percentage of sales, cost of sales
decreased to 87.1% in fiscal 1993 from 90.6% in fiscal 1992 primarily due to a
higher percentage of further-processed product sales, a 4.2% decrease in feed
costs per ton and improved operating efficiencies.
Gross profit increased to $118.5 million for fiscal 1993, an increase of
$42.3 million, or 55.5%, over fiscal 1992. As a percentage of sales, gross
profit increased to 12.9% in fiscal 1993 from 9.4% in fiscal 1992 largely due
to the improvements described above.
Selling and general and administrative expenses were $84.6 million in fiscal
1993, an increase of $16.2 million, or 23.6%, over fiscal 1992. As a percentage
of sales, selling and general and administrative expenses increased to 9.2% in
fiscal 1993 from 8.4% in fiscal 1992. This increase was due to higher
commissions, advertising, distribution, demonstration, rebates, storage and
product handling expenses relating to Sam's Club sales, meal kit and portioned
entree products and increased international sales.
Operating income was $33.9 million in fiscal 1993, an increase of $26.1
million, or 336.3%, over fiscal 1992. This increase was primarily due to the
improvements in the Company's operations discussed above.
Fiscal 1992 Compared with Fiscal 1991
Sales from the Company's operations were $809.2 million for fiscal 1992, an
increase of $44.0 million, or 5.7%, over fiscal 1991. The sales increase
primarily resulted from the following:
. Chicken sales increased 9.2% to $412.9 million in fiscal 1992 from $378.1
million in fiscal 1991 due to higher finished product prices, changes in
product mix to include additional further-processed and convenience
products and a 3.1% increase in volume which was primarily due to
increased sales to Sam's Club.
. Portioned entree sales increased 42.8% to $106.8 million in fiscal 1992
from $74.8 million in fiscal 1991 due to higher finished product prices
and a 31.7% increase in volume which was due to additional sales to Sam's
Club and sales of new products.
. Luncheon meat sales decreased 2.7% to $151.9 million in fiscal 1992 from
$156.1 million in fiscal 1991 due to lower finished product prices offset
by a 4.7% increase in volume.
. Turkey sales decreased 14.3% to $78.2 million in fiscal 1992 from $91.3
million in fiscal 1991 primarily due to a 14.2% decrease in volume
resulting from late Thanksgiving and Christmas orders placed after fiscal
1992 year-end.
Cost of sales was $733.0 million for fiscal 1992, an increase of $42.7
million, or 6.2%, over fiscal 1991. As a percentage of sales, cost of sales
increased to 90.6% in fiscal 1992 from 90.2% in fiscal 1991 primarily due to a
3.1% increase in feed costs per ton partially offset by sales of more further-
processed products.
Gross profit increased to $76.2 million for fiscal 1992, an increase of $1.2
million, or 1.7%, over fiscal 1991. As a percentage of sales, gross profit
decreased to 9.4% in fiscal 1992 from 9.8% in fiscal 1991, largely due to the
factors described above.
Selling and general and administrative expenses were $68.4 million in fiscal
1992, an increase of $14.7 million, or 27.3%, over fiscal 1991. As a percentage
of sales, selling and general and administrative expenses increased to 8.4% in
fiscal 1992 from 7.0% in fiscal 1991. This increase was due to higher
commissions, advertising, distribution, demonstration and storage expenses
relating to portioned entree, luncheon meat and Sam's Club sales.
11
<PAGE>
Operating income was $7.8 million in fiscal 1992, a decrease of $13.4
million, or 63.3%, from fiscal 1991. This decrease was primarily due to the
items discussed above.
Other, net for fiscal 1992, includes $3.9 million of casualty gains from
insurance proceeds received in excess of the book value of assets destroyed by
fire.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at October 1, 1994 was $100.1 million compared with $103.8
million at October 2, 1993 and the current ratio was 1.87 to 1 and 2.28 to 1 at
October 1, 1994 and October 2, 1993, respectively. The Company's total
capitalization, as represented by long-term obligations plus stockholders'
equity, was $284.4 million on October 1, 1994, compared with $262.9 million on
October 2, 1993. Long-term obligations represented 26.4% and 33.8% of total
capitalization on October 1, 1994 and October 2, 1993, respectively.
Notes payable due under the Company's unsecured credit agreements were $16.8
million on October 1, 1994 compared with no outstanding balance on October 2,
1993. Notes payable increased due to the higher levels of capital spending
during fiscal 1994. Total long-term obligations decreased $13.8 million as a
result of $8.1 million of 8% Convertible Subordinated Debentures that were
converted into Class A common stock and scheduled long-term debt repayments of
$5.7 million.
Class A common stock and additional capital increased $9.9 million to $97.6
million at October 1, 1994 from $87.7 million at October 2, 1993. The increase
was due primarily to $8.1 million of 8% Convertible Subordinated Debentures
converted into common stock, stock options exercised under the Company's Stock
Option Plan and stock issued under the Company's Employee Stock Purchase Plan
(from treasury stock).
The Company's cash flow provided by operating activities was $36.3 million
for fiscal 1994 compared with $29.0 million for fiscal 1993. The increase was
due primarily to higher net income.
For fiscal 1994 and 1993, the Company had capital expenditures of $49.2
million and $21.5 million, respectively. Those expenditures were primarily for
upgrading and expanding production facilities and related equipment. The
capital expenditures have been financed by operations, borrowings under the
Company's credit agreement and/or lease arrangements.
The Company recently announced plans to build a new chicken complex near
Henderson, Kentucky the capacity of which will be dedicated to Boston Chicken.
Additionally, during the third quarter of fiscal 1994, the Company began
construction of a beef processing plant in Columbus, Nebraska that will supply
hamburger patties to the Burger King system. It is expected that during fiscal
1995 capital expenditures for these and other projects will be approximately
$94.0 million. To achieve this level of capital expenditures, the Company will
be required to obtain waivers from certain lenders. Management believes that
such waivers will be obtained. However, there can be no assurance that such
waivers will be granted. The capital expenditures will be financed by
operations, borrowings under the Company's credit agreements, lease
arrangements and proceeds of the Offerings.
Historically, the Company's operations have been financed through internally
generated funds, borrowings, lease arrangements and the issuance of common
stock. On April 26, 1994, the Company entered into a $100 million unsecured
revolving credit agreement that expires June 30, 1997. At October 1, 1994, the
Company had available under this agreement $85.0 million. The credit agreement,
among other things, limits the payment of dividends to approximately $2.8
million in any fiscal year and limits annual capital expenditures and lease
obligations. It requires the maintenance of minimum levels of working capital
and tangible net worth and that the current ratio, leverage ratio and cash flow
coverage ratio be maintained at certain levels. It also limits the creation of
new secured debt to $25.0 million and new unsecured short-term debt with
parties outside the credit agreement to $20.0 million. Additionally, an event
of default will exist if the aggregate outstanding voting power of James T.
Hudson and his immediate family in the Company is reduced below 51%.
On May 18, 1994, the Company entered into an unsecured term loan agreement
with a financial institution giving the Company the right to borrow up to $50.0
million of senior notes fixed at a rate to be
12
<PAGE>
determined at drawdown. The Company had not borrowed under the agreement at
October 1, 1994. The agreement expires February 24, 1996.
On July 8, 1994, the Company entered into an unsecured short-term line of
credit agreement with a financial institution giving the Company the right to
borrow up to $10.0 million. The agreement expires June 1, 1995. At October 1,
1994, the Company had $10.0 million, payable on demand, outstanding under this
agreement. Additionally, on August 10, 1994, the Company entered into an
unsecured short-term line of credit agreement with a financial institution
giving the Company the right to borrow up to $10.0 million. Borrowings under
this agreement, if any, are due and payable within 30 days. The Company had not
borrowed under this agreement at October 1, 1994.
TAX MATTERS
The Internal Revenue Service has examined the Company's 1989 and 1990 federal
income tax returns and has issued a notice of deficiency asserting additional
taxes of $22.4 million and penalties of $5.8 million. If an assessment is
ultimately upheld, it will result in the acceleration of previously recorded
deferred income taxes. However, since most of the items in dispute relate to
the timing of the recognition of income or deductions, a portion of the income
taxes for years subsequent to 1990 would be refundable. Management is
contesting the notice of deficiency and the case has been docketed for a
hearing in early 1995 in federal tax court. Management believes that ultimate
resolution of these matters will not have a material impact on the Company's
financial position or results of operations.
ACCOUNTING POLICIES
Beginning in fiscal 1994, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes," which
requires that deferred tax liabilities and assets be recognized for any
difference between the tax basis of assets and liabilities and their financial
reporting amounts measured by using presently enacted tax laws and rates. The
Company elected to apply the provisions of SFAS 109 retroactively to September
28, 1986.
The Company uses the farm price method of inventory valuation for income tax
reporting which results in current deferred income taxes for financial
reporting. The Company anticipates that it will be able to maintain its
inventory at current levels and, accordingly, does not expect a significant
portion of the current deferred income tax to be paid in the near future.
13
<PAGE>
BUSINESS
GENERAL
Hudson is a major U.S. producer of further-processed poultry and meat
products with sales for fiscal 1994 of over $1 billion. The Company was
established in 1972 as a regional poultry company selling commodity-type
products. Through sales growth and product line expansion, Hudson has grown
into one of the country's largest domestic poultry producers. In recent years
the Company has implemented a strategy to increase sales of further-processed
poultry products, to increase sales to targeted large customers under supply
and pricing arrangements that yield more stable profit margins and to diversify
its product line to include non-poultry products. The Company's product lines
and their percentage of total sales for fiscal 1994 were: chicken, 51.2%;
portioned entrees, 16.9%; luncheon meats, 15.8%; turkey, 10.9%; and other
products, 5.2%. The Company's products are marketed nationwide to club store
chains, fast food chains and full service restaurants, retail supermarket
chains, prepared food companies, and various institutional customers. Its
largest customers are Wal-Mart, including Sam's Club, and the Burger King
system. The Company is also a principal supplier to the Boston Chicken system.
COMPANY HISTORY
The Company was organized in 1972 by James T. Hudson to purchase a broiler
processing plant in Noel, Missouri and other related assets from the Ralston
Purina Company. The Company's poultry operations grew in subsequent years
through a series of acquisitions including an integrated turkey operation in
1979 and a major poultry company in 1986 which doubled Hudson's size and made
it one of the nation's ten largest poultry producers. Between 1987 and 1990 the
Company expanded into luncheon meats with the acquisitions of three established
regional brands: Ohse, Schweigert and Roegelein. In 1990, the Company entered
the market for frozen portioned entrees through the acquisition of Pierre
Frozen Foods, Inc. ("Pierre") and expanded those operations in 1992 with the
purchase of an additional manufacturing plant.
RECENT EVENTS
On October 12, 1994, Hudson entered into a five-year, cost-plus supply
agreement with Boston Chicken, a franchisor and operator of food service stores
specializing in complete meals featuring rotisserie roasted chicken. The
agreement provides for Boston Chicken to purchase 100% of the capacity of two
Hudson chicken processing plants. One plant in Dexter, Missouri will be
expanded to process approximately 650,000 chickens per week and is expected to
begin production for Boston Chicken in the spring of 1995. The other plant will
be part of an integrated chicken processing complex to be built near Henderson,
Kentucky. The Henderson plant is expected to begin production for Boston
Chicken in the spring of 1996, with initial production averaging 325,000
chickens per week. When the Henderson plant reaches full capacity, scheduled
for 1998, its production is expected to average 1.3 million chickens per week.
The Company currently processes approximately 4.3 million chickens per week.
The Company is nearing completion of a hamburger processing plant in
Columbus, Nebraska. The Burger King system has committed to purchase for a
multi-year period a majority of the capacity of this facility. These sales will
be made to the Burger King system at a formula price plus raw material costs.
In addition, the Company is a minority co-investor with the Burger King
Corporation and SBS Processing, Inc. in a second hamburger plant currently
being constructed in Petersburg, Virginia.
14
<PAGE>
BUSINESS STRATEGY
The Company continues to implement the following business strategies:
. Increasing sales of further-processed poultry products. The production
and sale of further-processed products reduces the influence of feed
grain costs on the Company's profitability. As additional processing is
performed, this cost becomes a decreasing percentage of a product's total
production cost. The sales prices of further-processed products also
fluctuate less than commodity poultry prices. In implementing this
strategy, Hudson has expanded, upgraded and modified most of its poultry
production facilities to accommodate the production of further-processed
items.
. Increasing sales represented by cost-plus or firm-price sales
arrangements. Sales under cost-plus or firm-price arrangements generally
lead to more stable margins. To increase its sales under such
arrangements, the Company has recently agreed to customize specific
production facilities to meet a portion of the production requirements of
the Burger King system and the Boston Chicken system. In turn, these
customers have entered into long-term supply agreements with cost-plus or
firm-price arrangements.
. Developing foodservice and club store sales. Sales to foodservice and
club store customers involve higher and more predictable volumes. In
recent years the Company expanded its production facilities and marketing
staff to focus on these customers. Over the past three fiscal years sales
to these customers have increased more than 51%.
. Diversifying the portioned entree and luncheon meat product lines. By
increasing the breadth of its product line, the Company is able to
develop new customers and further penetrate existing accounts. The
Company has implemented this strategy primarily through acquisition and
expansion of existing portioned entree and luncheon meat brands such as
Pierre, Ohse, Schweigert and Roegelein.
. Increasing international sales. Due to U.S. consumers' preference for
chicken breast meat the Company has targeted international markets to
generate sales of leg quarters. In 1992, the Company established an
international sales department to expand the volume of leg quarters and
other products sold abroad. As a result of this effort, sales in these
markets have grown from less than 1% of total sales in fiscal 1991 to
more than 5% for fiscal 1994.
. Assessing appropriate acquisition opportunities. The Company continues to
assess appropriate acquisition opportunities to satisfy growing customer
demands and to continue to broaden the Company's product base.
PRODUCTS, MARKETING AND CUSTOMERS
The following table sets forth for the periods indicated the net sales of
each of the Company's major product lines.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------------------------------------------
SEPT. 28, 1991 OCT. 3, 1992 OCT. 2, 1993 OCT. 1, 1994
(52 WEEKS) (53 WEEKS) (52 WEEKS) (52 WEEKS)
-------------- ------------ ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Chicken(1)........... $378.1 $412.9 $454.9 $ 533.4
Portioned entrees.... 74.8 106.8 143.5 175.5
Luncheon meats....... 156.1 151.9 159.9 164.7
Turkey(1)............ 91.3 78.2 100.6 113.2
Other................ 65.0 59.4 61.6 54.0
------ ------ ------ --------
Total sales........ $765.3 $809.2 $920.5 $1,040.8
====== ====== ====== ========
</TABLE>
- --------
(1) The sales figures for chicken and turkey do not include poultry products
processed and sold as luncheon meats and portioned entrees.
15
<PAGE>
The following table sets forth for the periods indicated the net sales to
each of the Company's customer groups.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-----------------------------------------------------
SEPT. 28, 1991 OCT. 3, 1992 OCT. 2, 1993 OCT. 1, 1994
(52 WEEKS) (53 WEEKS) (52 WEEKS) (52 WEEKS)
-------------- ------------ ------------ ------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Foodservice and club
stores.................. $384.2 $441.8 $538.0 $ 580.5
Retail................... 302.0 290.0 307.3 381.0
Other.................... 79.1 77.4 75.2 79.3
------ ------ ------ --------
Total sales.............. $765.3 $809.2 $920.5 $1,040.8
====== ====== ====== ========
</TABLE>
Chicken. Per capita consumption of chicken in the United States has increased
73.5% from 1970 to 1993, as consumers have changed their diet toward foods with
lower fat, cholesterol and calorie content. Chicken consumption has also
increased as the convenience of further-processed chicken products has become
more important to consumers, and as fast food and full-service restaurants have
expanded their menus to satisfy demand for affordable, healthier foods. In
response to this demand, the Company offers a wide variety of further-processed
chicken products for convenient preparation and consumption at home and in
restaurants.
The Company's principal further-processed products are individually frozen
boneless and bone-in chicken pieces, breaded and fried chicken breast patties,
chicken breast tenderloins, chicken nuggets, buffalo-style wings and chicken
cordon bleu. These products are sold primarily to club stores under the
Hudson(R) brand name. Hudson's customers for individually frozen products
include the nation's leading club store chains, with the largest club store
customer being Sam's Club. Additionally, Hudson is a principal supplier of
chicken products to the Burger King system.
One of the Company's fastest growing further-processed products is fresh
rotisserie chicken. Hudson is a principal supplier of rotisserie chickens to
the Boston Chicken system and has recently announced an agreement to dedicate
the production of its Dexter, Missouri plant and its planned Henderson,
Kentucky plant to the requirements of that customer's system. See "Business--
Recent Events."
In addition to further-processed products, Hudson sells ice-packed and chill-
packed fresh chicken parts and whole birds. The Company's chill-packed products
are marketed under the Hudson brand name. Hudson's ice-packed products are sold
in bulk to small and medium-sized food retailers and franchisees of fast food
chains directly and through independent distributors.
U.S. consumer preference for chicken breast meat has led the Company to
develop a marketing strategy for leg quarters that targets international
markets, such as Russia and Eastern Europe, Mexico and Central America,
Southeast Asia and the Middle East. The Company has established a sales office
and distribution center in Gdynia, Poland and a sales office in Moscow, Russia.
Exports accounted for 5.8% of the Company's total sales during fiscal 1994.
Portioned Entrees. The Company entered the portioned entree business with its
acquisition of Pierre in 1990. This acquisition significantly broadened the
range of products offered by the Company, particularly to club store and
foodservice customers. The Company has continued to develop this business, and
portioned entree sales have grown from an annualized $49.1 million in fiscal
1990 to $175.5 million in fiscal 1994.
The Company's portioned entrees consist of a full line of portion-controlled
products including fried and flame-broiled hamburgers, sausage patties and
links, country-fried steak, chicken nuggets and chicken patties, meal kits and
related products. These products are distributed nationwide to club store
chains and
16
<PAGE>
foodservice customers such as restaurants, employee cafeterias, colleges and
universities, and health-care facilities. The Company is also one of the
nation's largest processors of United States Department of Agriculture ("USDA")
commodity beef and pork into further-processed products for school lunch
programs. In addition, the portioned entree division sells to vending machine
operators and sandwich makers that service convenience stores.
Luncheon Meats. The Company formed its luncheon meats division with the
acquisition in 1987 of Ohse Meat Products and the subsequent acquisitions of
the Schweigert and Roegelein luncheon meat brands. This division produces a
line of further-processed meat products including luncheon meats, wieners,
sausage, hams and bacon. Its principal customers consist of retail supermarket
chains, cooperative supermarket warehouses and club store chains, together with
foodservice customers such as restaurants, schools and other vendors. This
division is a major supplier of ham to the Burger King system. Products are
marketed under the Ohse, Schweigert and Roegelein brand names as well as
various private labels.
The luncheon meats division sells products, for example a line of
microwaveable sandwiches, made by the portioned entree division under all three
of its brand names. In turn, the luncheon meats division supplies certain
products to the portioned entree division. The Company believes this synergy
between the two divisions increases the profitability of both.
Turkey. Many of the factors that led to the increase in chicken consumption
in the United States also positively affected turkey consumption, which
increased 119.8% on a per capita basis from 1970 to 1993. In response to this
demand, in 1990 Hudson began the process of transforming the turkey division
from being solely a grower and seller of whole turkeys to becoming also a
supplier of further-processed turkey products, including smoked turkey, turkey
sausage, turkey pastrami, turkey salami, turkey bologna and turkey ham sold
under the Hudson brand name. The Company markets individually packaged whole
turkeys, both fresh and frozen, during seasonal peaks under the Hudson brand
name and private label. The Company's further-processed turkey products are
sold primarily to retail grocery chains, delicatessens, institutional
foodservice customers and club store chains. In addition, the Company has begun
exporting turkey products to Mexico.
Major Customers. The Company's sales to Wal-Mart in fiscal 1993 and fiscal
1994 constituted approximately 17.9% and 17.7% of total sales in those periods,
respectively. No other customer accounted for more than 10% of the Company's
sales in fiscal 1993 or fiscal 1994. However, due to recent agreements, the
Company believes that sales to the Burger King system will increase
significantly in fiscal 1995. The loss of either of these customers may have a
material adverse effect on the Company.
PRODUCTION AND FACILITIES
Chicken. The Company's chicken operations include breeding, hatching,
rearing, ingredient procurement, feed formulation and milling, veterinary and
other technical services, and related transportation and delivery services. The
Company contracts with independent growers to maintain the Company's flocks of
breeder chickens which have the capability of laying eggs. The Company
transfers the eggs to its hatcheries. The newly hatched broiler chicks are then
delivered to independent contract growers or Company owned farms where they are
raised until they reach processing weight, usually within seven weeks. During
the grow-out period, the Company provides growers with feed and other items, as
well as supervisory and technical assistance. The broilers are then transported
by the Company's trucks to its processing plants.
The Company currently processes approximately 4.3 million chickens per week,
yielding approximately 775 million pounds of dressed chicken on an annual
basis. In addition, from time to time the Company purchases chicken from
outside sources.
The Company operates six chicken processing plants devoted to various phases
of slaughtering, dressing, cutting, packaging, deboning and further-processing.
It operates six feed mills, seven broiler hatcheries and four protein
facilities.
Portioned Entrees. The Company produces its portion controlled products at
plants in Cincinnati, Ohio and Caryville, Tennessee which have annual
production capacity of approximately 100 million pounds. The Company purchases
its raw materials of beef and pork, and some poultry products, from outside
sources.
17
<PAGE>
Luncheon Meats. The Company produces luncheon meats, wieners and sausage
products at two plants, one in Topeka, Kansas, and one in Albert Lea,
Minnesota. All hams and bacon for the division are produced at the plant in
Wichita, Kansas. The three plants' annual production capacity for processed
meat products is approximately 170 million pounds. The Company purchases its
raw materials of beef and pork, and some poultry products, from outside
sources.
Turkey. The Company operates two turkey processing facilities in Springfield,
Missouri one of which is a further-processing plant. These facilities have an
annual capacity to produce 140 million pounds of turkey products.
COMPETITION
The primary competitive factors in the poultry industry include price,
product quality, product development, brand identification and customer
service. Hudson's poultry products compete primarily with other integrated
poultry companies. Some competitors have greater financial and marketing
resources than the Company. Although poultry is relatively inexpensive in
comparison with other meats, the Company also competes indirectly with the
producers of other meats and fish, as changes in the relative prices of these
foods may affect consumer buying patterns.
The Company's portioned entree division competes with regional and national
meat processing companies, some of which are divisions of fully integrated
companies. Its involvement in USDA commodity conversion programs has resulted
in increased marketing opportunities on a nationwide basis.
The Ohse, Schweigert and Roegelein brands compete primarily with national and
regional meat processing companies. Price and brand name recognition are
important factors in the business. Through a strong marketing program and a
consistent, quality product that is competitively priced, Ohse, Schweigert and
Roegelein have gained strong brand name recognition in their marketing areas.
REGULATION
The poultry industry is subject to significant government regulation,
particularly in the health and environmental areas by the USDA, the Food and
Drug Administration ("FDA") and the Environmental Protection Agency. The
Company anticipates increased regulation by the USDA concerning food safety as
well as by the FDA regarding the use of medication in feed. The Company's food
processing facilities are subject to on-site examination, inspection and
regulation by the USDA. The FDA inspects the production of the Company's feed
mills. Compliance with applicable regulations has not had a material adverse
effect upon the Company's earnings or competitive position in the past, and is
not anticipated to have a material adverse effect in the future. Management
believes that the Company is in substantial compliance with all applicable laws
and regulations relating to the operation of its facilities.
The Company takes all reasonable precautions to ensure that its flocks are
healthy and that its processing plants and other facilities operate in a
sanitary and environmentally sound manner. However, events beyond the control
of the Company, such as an outbreak of poultry disease in its flocks or the
adoption by the government of more stringent environmental regulations, could
adversely affect its operations.
CONTROL BY HUDSON FAMILY
As of November 7, 1994, there were 8,599,524 shares of Class A common stock
and 8,502,834 shares of Class B common stock outstanding. James T. Hudson and
his family currently own in excess of 99% of the outstanding shares of Class B
common stock. Each share of Class A common stock is entitled to one vote in
matters requiring a stockholder vote, while each share of Class B common stock
is entitled to ten votes. Consequently, Mr. Hudson and his family hold
sufficient voting power to control the outcome of matters submitted to a
stockholder vote, including approval of extraordinary corporate transactions
and the election of all directors, thereby insuring their ability to control
the future direction and management of the Company.
18
<PAGE>
MANAGEMENT
Set forth below are the names, ages, positions and certain other information
concerning the current directors and executive officers of the Company as of
October 1, 1994.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
---- --- ---------------------
<S> <C> <C>
James T. Hudson......... 70 Chairman of the Board of Directors and Chief Executive Officer
Michael T. Hudson....... 47 President, Chief Operating Officer and Director
Charles B. Jurgensmeyer. 50 Chief Financial Officer, Executive Vice President and Director
James R. Hudson......... 35 Vice President--Director of Transportation Division and Director
Donard W. Perkins....... 63 Vice President--Director of Broiler Division
James B. Clemmons....... 55 President--Ohse Foods Division
Joe E. Campbell......... 64 Vice President--Director of Acquisitions
Tommy D. Reynolds....... 40 Secretary and Treasurer
Elmer W. Shannon........ 73 Director
Jerry L. Hitt, M.D...... 48 Director
Kenneth N. May.......... 63 Director
Jane M. Helmich......... 42 Director
</TABLE>
James T. Hudson has served as Chairman of the Board and Chief Executive
Officer of the Company since its organization in February 1972. He was
President of the Company from its organization until October 1985. Prior to
1972, Mr. Hudson was with Ralston Purina for 26 years, the last seven as
Operating Director of the West Central Region. Mr. Hudson was also Chairman of
the Board of the National Broiler Council from 1982 to 1984 and is a past
President of the Arkansas Poultry Federation.
Michael T. Hudson has served as President of the Company since October 1985
and Chief Operating Officer since August 1987. Prior to joining the Company in
1972, he was employed for two years in the Southeast Region of Ralston Purina's
poultry operations. Since joining the Company, Mr. Hudson has served as Vice
President--Sales, Vice President--Sales and Marketing and Vice President--
Production and he has been a Director since 1972.
Charles B. Jurgensmeyer is Chief Financial Officer and Executive Vice
President of the Company. Prior to joining Hudson in 1972, he was employed in
the West Central Region of Ralston Purina's poultry operations for seven years,
primarily in finance and accounting positions. Mr. Jurgensmeyer has previously
served as Secretary/Treasurer and Controller of the Company and has been a
Director since July 1985.
James R. Hudson has been Vice President-Director of Transportation Division
of the Company since September 1992, and previously served as the Company's
Director of Fleet Operations from November 1984 until August 1992. Mr. Hudson
has been a Director since November 1992 and previously served as a Director
from July 1985 until December 1985.
Donard W. Perkins has served as Vice President-Director of the Broiler
Division since July 1988. Prior to joining the Company, he was Senior Vice
President--Processing, Sales & Marketing for Pilgrim's Pride Corporation from
1976 to May 1983; Vice President--General Manager of Spring Valley (a division
of Lane Poultry) from May 1983 to December 1986; and Senior Vice President--
Processing, Sales & Marketing for Cagle's Inc. from December 1986 until his
employment with the Company.
James B. Clemmons has served as President--Ohse Foods Division since December
1987. Prior to joining the Company, he was Product Manager for the Frozen Food
Division of Armour from 1980 to 1984; Senior Product Manager for the Frozen
Food Division of Armour from 1984 to 1985; and General Manager for the Frozen
Food Division of Armour from 1985 until his employment with the Company.
19
<PAGE>
Joe E. Campbell has served as Vice President--Director of Acquisitions since
October 1994 and served as Director of Foodservice Operations for Hudson Foods,
Inc. from November 1989 to October 1994. Prior to joining Hudson he was Vice
President and Chief Operating Officer for Holly Farms Food Service Inc. from
1980 to 1986, and President and Chief Executive Officer of Holly Farms Food
Service Inc. from 1986 until his employment with the Company.
Tommy D. Reynolds has been employed by the Company since May 1979 in various
accounting, auditing and finance positions. He has served as Secretary and
Treasurer since October 1992, and previously served as Assistant Secretary and
Assistant Treasurer since 1986. Mr. Reynolds is a certified public accountant
in the state of Arkansas.
Elmer W. Shannon began service with the Company in 1972 as Marketing Manager.
He retired as Vice President and Director of Marketing in April 1984 and was
subsequently retained by the Company as a consultant. Mr. Shannon has been a
Director since December 1986.
Jerry L. Hitt is a physician engaged in family practice at Rogers Medical
Center, Rogers, Arkansas since 1971. Dr. Hitt has been a Director since
November 1989.
Kenneth N. May is currently a consultant to the Company. Previously he was
Chairman and Chief Executive Officer of Holly Farms Foods, Inc. from January
1988 through August 1989; President and Chief Executive Officer of Holly Farms
Foods, Inc. from October 1985 through January 1988; and Vice President--
Research and Quality Assurance of Holly Farms Foods, Inc. from September 1973
through September 1985. Dr. May has been a Director since December 1989. Dr.
May also serves as a director of Embrex, Inc.
Jane M. Helmich is a homemaker and has been a Director since November 1992.
Michael T. Hudson, James R. Hudson and Jane M. Helmich are the children of
James T. Hudson.
20
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership by the Selling Stockholders of the Company's classes of
common stock as of November 7, 1994, and as adjusted to reflect the sale of
shares of Class A common stock offered hereby by the Company and the Selling
Stockholders (assuming the over-allotment option is not exercised).
CLASS A COMMON STOCK
<TABLE>
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY
OWNED
AFTER THE
PERCENT OF OFFERING
NUMBER OF SHARES CLASS OWNED SHARES BEING --------------
NAME BENEFICIALLY OWNED BENEFICIALLY(1) OFFERED(2) NUMBER %
- ---- ------------------ --------------- --------------- --------- ----
<S> <C> <C> <C> <C> <C>
DIRECTORS AND OFFICERS
James T.
Hudson(3)(4)(7)........ 8,038,385 51.4% 1,300,000 6,738,385 36.8%
James R.
Hudson(4)(5)(7)........ 505,800 5.6 100,000 405,800 3.1
Jane M.
Helmich(4)(5)(7)....... 538,585 5.9 100,000 438,585 3.4
CLASS B COMMON STOCK
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY
OWNED
SHARES BEING AFTER THE
PERCENT OF CONVERTED OFFERING
NUMBER OF SHARES CLASS OWNED TO CLASS A --------------
NAME BENEFICIALLY OWNED BENEFICIALLY(1) FOR OFFERING(2) NUMBER %
- ---- ------------------ --------------- --------------- --------- ----
<S> <C> <C> <C> <C> <C>
DIRECTORS AND OFFICERS
James T. Hudson(6)(7)... 8,500,000 99.9% 1,300,000 7,000,000 99.9%
James R. Hudson(7)...... 500,000 5.9 100,000 400,000 5.7
Jane M. Helmich(7)...... 500,000 5.9 100,000 400,000 5.7
</TABLE>
- --------
(1) Calculated based on 8,599,524 shares of Class A common stock outstanding
and 8,502,834 shares of Class B common stock outstanding as of November 7,
1994. However, for purposes of computing the beneficial ownership of any
individual, it was assumed that such individual had exercised all options
and/or made all conversions by which that individual had the right, within
60 days following November 7, 1994, to acquire shares of Class A common
stock.
(2) The certificate of incorporation allows the holders of Class B common
stock to convert such shares to an equal number of shares of Class A
common stock at any time. All shares of Class A common stock to be sold by
the Selling Stockholders in the Offerings will be converted from shares of
Class B common stock prior to consummation of the Offerings by the Selling
Stockholders.
(3) James T. Hudson holds 100 shares of Class A common stock in his own name.
He has rights under revocable proxies to vote 1,000,000 shares of Class A
common stock, which are held in blocks of 500,000 each by Charles B.
Jurgensmeyer and Gary L. Anderson, a former officer of the Company. Mr.
Hudson's wife holds 1,000 shares of Class A common stock in her own name.
Because of the revocable proxies and Mrs. Hudson's stock ownership, Mr.
Hudson is considered beneficially to own 1,001,000 shares of Class A
common stock. Mr. Hudson has disclaimed beneficial ownership of those
shares. Mr. Hudson also holds a total of 7,000,000 shares of Class B
common stock, which may be converted at any time into a like number of
shares of Class A common stock, and is thus considered to own the shares
of Class A common stock into which his shares of Class B common stock may
be converted.
(4) Includes shares of Class A common stock that the named individual may
acquire within the next 60 days by exercise of stock options, in the
following amounts: James T. Hudson, 37,285; James R. Hudson, 5,800; and
Jane M. Helmich, 37,285 (through the exercise of options held by her
husband, Larry E. Helmich).
(5) James R. Hudson and Jane M. Helmich each hold 500,000 shares of Class B
common stock, which may be converted at any time into a like number of
shares of Class A common stock. Mr. Hudson and Ms. Helmich are thus
considered beneficially to own the shares of Class A common stock into
which their shares of Class B common stock may be converted.
(6) James T. Hudson holds 7,000,000 shares of Class B common stock in his own
name. In addition, Mr. Hudson has rights under revocable proxies to vote
another 1,500,000 shares, which are held in blocks of 500,000 each by
Michael T. Hudson, James R. Hudson and Jane M. Helmich, and thus is
considered a beneficial owner of those shares. James T. Hudson cannot
convert these shares of Class B common stock to Class A common stock and,
therefore, such shares are not attributed to him as Class A common stock.
Mr. Hudson has disclaimed beneficial ownership of the shares for which he
holds revocable proxies.
(7) See "Management" for the position, office or other relationship such
person has with the Company.
21
<PAGE>
DESCRIPTION OF COMMON STOCK
The Company's certificate of incorporation permits the issuance of up to
40,000,000 shares each of Class A common stock, $.01 par value, and Class B
common stock, $.01 par value. On November 7, 1994, there were 9,533,378 shares
of Class A common stock issued (including 933,854 shares held in treasury) and
8,502,834 shares of Class B common stock issued and outstanding. The Transfer
Agent and Registrar for both classes of common stock is Chemical Trust Company
of Los Angeles, California.
The Class A common stock has one vote per share, while the Class B common
stock has ten votes per share in all matters submitted to a vote of the
Company's stockholders. Except as required by law or the certificate of
incorporation, holders of Class A or Class B common stock shall vote together
as a single class. Holders of Class A and Class B common stock are entitled to
receive such dividends and other distributions as may be determined by the
Board of Directors out of any funds of the Company legally available therefor;
provided, however, that no dividend may be declared and paid on the Class B
common stock unless a dividend is also declared and paid on the Class A common
stock, and, in such an event, the dividend per share of Class B common stock
may not exceed 90% of the dividend per share of Class A common stock. Certain
members of the Hudson family own substantially all of the Class B common stock
which concentrates voting control over the Company in James T. Hudson and the
Hudson family. The Class B common stock voting power is sufficient to, among
other things, approve or prevent extraordinary corporate transactions, such as
mergers, consolidations or sales of substantially all of the Company's assets
and to elect or remove the members of the Board of Directors.
Transfer of the Class B common stock may only be made to a "permitted
transferee" as defined in the Company's certificate of incorporation, but
shares of Class B common stock may be converted by the holder into an equal
number of shares of Class A common stock at any time. The Company may not issue
additional shares of Class B common stock without the approval of a majority of
the votes of the outstanding shares of Class A common stock and Class B common
stock, each voting separately as a class, except in connection with stock
splits and stock dividends. The board of directors and the holders of a
majority of the outstanding shares of Class B common stock may approve the
conversion of all of the Class B common stock into shares of Class A common
stock.
In the event of a liquidation of the Company, all assets available for
distribution after payment of all prior claims would be divided among and paid
ratably to the holders of Class A common stock and Class B common stock.
Subject to any conversion rights of the holders of Class B common stock,
holders of Class A and Class B common stock have no preemptive rights to
subscribe for or receive any part of the authorized stock of the Company,
additional or increased issues of stock of any class or of any obligations
convertible into any class or classes of stock. Further, no stockholder has the
right to cumulate votes in the election of directors.
22
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK
The following discussion concerns the material United States federal income
and estate tax consequences of the ownership and disposition of the Company's
Class A common stock (the "Common Stock") applicable to non-U.S holders of such
common stock. In general, a "Non-U.S. Holder" is any person holding Common
Stock other than (a) a citizen or resident of the United States, (b) a
corporation or partnership created or organized in the United States or under
the laws of the United States or of any State, or (c) an estate or trust whose
income is includable in gross income for United States federal income tax
purposes regardless of its source. The discussion is based on current
provisions of the Internal Revenue Code of 1986 (the "Code"), and
administrative and judicial interpretations of the Code as of the date hereof,
all of which are subject to change, and is for general information only. The
discussion does not address aspects of taxation other than United States
federal income and estate taxation and does not address all aspects of United
States federal income and estate taxation. The discussion does not consider any
specific facts or circumstances that may apply to a particular Non-U.S. Holder.
Accordingly, prospective investors are urged to consult their tax advisors
regarding the United States federal, state, local and non-U.S. income and other
tax consequences of holding and disposing of shares of Common Stock.
DIVIDENDS
In general, dividends with respect to the Common Stock paid to a Non-U.S.
Holder will be subject to United States federal withholding tax at a 30% rate
(or any lower rate prescribed by an applicable tax treaty) unless the dividends
are (a) effectively connected with a trade or business carried on by the Non-
U.S. Holder within the United States, and (b) if a tax treaty applies,
attributable to a permanent establishment maintained by the Non-U.S. Holder in
the United States. Dividends effectively connected with such a trade or
business and, if applicable, attributable to such a permanent establishment,
will generally not be subject to withholding (if the Non-U.S. Holder files
certain forms with the payor of the dividend) and generally will be subject to
United States federal income tax at the same rates applicable to U.S. holders.
In the case of a Non-U.S. Holder which is a corporation, such effectively
connected income also may be subject to the United States federal branch
profits tax (which is generally imposed on a foreign corporation on the
repatriation from the United States of effectively connected earnings and
profits) at a 30% rate (or any lower rate provided by an applicable income tax
treaty if certain requirements are met). To determine the applicability of a
tax treaty providing for a lower rate of withholding, dividends paid to an
address in a foreign country are presumed under current Treasury regulations to
be paid to a resident of that country in the absence of definite knowledge to
the contrary.
SALE OF COMMON STOCK
Generally, a Non-U.S. Holder will not be subject to United States federal
income tax on any gain realized upon the sale or other disposition of such
holder's common stock unless (a) the Company is or has been a "U.S. real
property holding corporation" for United States federal income tax purposes
and, provided the common stock continues to be regularly traded on an
established securities market (as defined in Treasury Regulations), the Non-
U.S. Holder held, directly or indirectly at any time during the five-year
period ending on the date of disposition, more than 5% of the Common Stock; (b)
the gain is effectively connected with a trade or business carried on by the
Non-U.S. Holder within the United States and, if a tax treaty applies,
attributable to a permanent establishment maintained by the Non-U.S. Holder in
the United States; (c) the Common Stock is disposed of by a Non-U.S. Holder who
is an individual, who holds the Common Stock as a capital asset and who is
present in the United States for 183 days or more in the taxable year of the
disposition and certain other requirements are met. At present, the Company has
made no determination as to whether it is a United States real property holding
corporation, and there can be no assurance that the Company is not now or will
not become, or be determined to be, such a corporation.
23
<PAGE>
ESTATE TAX
Common stock owned or treated as owned by an individual who is not a citizen
or domiciliary of the United States at the time of death will be includable in
the individual's gross estate for United States federal estate tax purposes,
unless an applicable tax treaty provides otherwise, and may be subject to
United States federal estate tax.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The Company must report annually to the Internal Revenue Service and to each
Non-U.S. Holder the amount of dividends paid to, and the tax withheld with
respect to, each Non-U.S. Holder. These reporting requirements apply regardless
of whether withholding was reduced by an applicable tax treaty. Copies of these
information returns also may be made available under the provisions of a
specific treaty or agreement to the tax authorities in the country in which the
Non-U.S. Holder resides. United States backup withholding tax (which generally
is a withholding tax imposed at the rate of 31% on certain payments to persons
that fail to furnish the information required under the United States
information reporting requirements) generally will not apply under existing
Treasury regulations to dividends paid on Common Stock to a Non-U.S. Holder who
is subject to United States federal withholding tax.
The payment of the proceeds from the disposition of the Company's Common
Stock to or through the United States office of a broker will be subject to
information reporting and backup withholding unless the owner certifies, among
other things, its status as a Non-U.S. Holder or otherwise establishes an
exemption. The payment of the proceeds from the disposition of Common Stock to
or though a non-U.S. office of a non-U.S. broker will not be subject to backup
withholding and generally will not be subject to information reporting. Under
the existing Treasury regulations, unless the broker has documentary evidence
in its files that the owner is a Non-U.S. Holder and certain other conditions
are met (or the owner otherwise establishes an exemption), information
reporting (but not backup withholding) will apply to dispositions through (a) a
non-U.S. office of a U.S. broker, and (b) a non-U.S. office of a non-U.S.
broker that is either a "controlled foreign corporation" for United States
federal income tax purposes or a person 50% or more of whose gross income from
all sources for a certain three-year period was effectively connected with a
United States trade or business.
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be refunded (or credited against the Non-U.S. Holder's
United States federal income tax liability, if any), provided that the required
information is furnished to the Internal Revenue Service.
24
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"U.S. Purchase Agreement") among the Company, the Selling Stockholders and
each of the underwriters named below (the "U.S. Underwriters"), and
concurrently with the sale of 800,000 shares of Common Stock to the
International Underwriters (as defined below), the Company and the Selling
Stockholders have severally agreed to sell to each of the U.S. Underwriters,
and each of the U.S. Underwriters has severally agreed to purchase, the
aggregate number of shares of Common Stock set forth opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
----------- ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...........................................
Donaldson, Lufkin & Jenrette Securities Corporation.............
A.G. Edwards & Sons, Inc........................................
---------
Total....................................................... 3,200,000
=========
</TABLE>
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation and A.G. Edwards & Sons, Inc. are acting as
representatives (the "U.S. Representatives") of the several U.S. Underwriters.
The Company and the Selling Stockholders have also entered into a purchase
agreement (the "International Purchase Agreement") with certain underwriters
outside the United States and Canada (the "International Underwriters") for
whom Merrill Lynch International Limited, Donaldson, Lufkin & Jenrette
Securities Corporation and A.G. Edwards & Sons, Inc. are acting as
representatives (the "International Representatives"). Subject to the terms
and conditions set forth in the International Purchase Agreement, and
concurrently with the sale of 3,200,000 shares of Common Stock to the U.S.
Underwriters, the Company and the Selling Stockholders have severally agreed
to sell to the International Underwriters, and the International Underwriters
severally have agreed to purchase, an aggregate of 800,000 shares of Common
Stock. The public offering price per share of Common Stock and the
underwriting discount per share of Common Stock are identical under the U.S.
Purchase Agreement and the International Purchase Agreement.
In the U.S. Purchase Agreement the several U.S. Underwriters have agreed,
subject to the terms and conditions set forth therein, to purchase all of the
shares of Common Stock being sold pursuant to such Agreement if any of the
shares of Common Stock being sold pursuant to such Agreement are purchased and
in the International Purchase Agreement the several International Underwriters
have agreed, subject to the terms and conditions set forth therein, to
purchase all the shares of Common Stock being sold pursuant to such agreement
if any of the shares of Common Stock being sold pursuant to such agreement are
purchased. Under certain circumstances, the commitments of nondefaulting U.S.
Underwriters and International Underwriters (collectively, the "Underwriters")
may be increased. The closings with respect to the sale of shares of Common
Stock to be purchased by the U.S. Underwriters and the International
Underwriters are conditioned upon one another.
The U.S. Underwriters propose initially to offer the shares of Common Stock
to the public at the public offering price set forth on the cover page of this
Prospectus and to certain dealers (who may include U.S. Underwriters) at such
price less a concession not in excess of $ per share of Common Stock. The
U.S. Underwriters may allow, and such dealers may reallow, a discount not in
excess of $ per share
25
<PAGE>
of Common Stock to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed.
James T. Hudson, one of the Selling Shareholders, has granted to the U.S.
Underwriters an option to purchase up to an aggregate of 480,000 additional
shares of Common Stock, and the International Underwriters an option to
purchase up to an aggregate of 120,000 shares of Common Stock, in each case
exercisable for 30 days after the date hereof, to cover overallotments, if
any, at the public offering price, less the underwriting discount. To the
extent that the U.S. Underwriters exercise this option, each of the U.S.
Underwriters will have a firm commitment, subject to certain conditions, to
purchase approximately the same percentage of such shares of Common Stock that
the number of shares of Common Stock to be purchased by it shown in the
foregoing table bears to the total number of shares of Common Stock initially
offered to the U.S. Underwriters hereby.
The U.S. Underwriters and the International Underwriters have entered into
an Intersyndicate Agreement (the "Intersyndicate Agreement") that provides for
the coordination of their activities. Pursuant to the Intersyndicate
Agreement, sales may be made between the U.S. Underwriters and the
International Underwriters of such number of shares of Common Stock as may be
mutually agreed. The price of any shares of Common Stock so sold shall be the
public offering price, less an amount not greater than the selling concession.
Under the terms of the Intersyndicate Agreement, the U.S. Underwriters and
any dealer to whom they sell shares of Common Stock will not offer to sell or
sell shares of Common Stock to persons who are non-United States or non-
Canadian persons or to persons they believe intend to resell to persons who
are non-United States or non-Canadian persons, and the International
Underwriters and any dealer to whom they sell shares of Common Stock will not
offer to sell or sell shares of Common Stock to United States or Canadian
persons or to persons they believe intend to resell to United States or
Canadian persons, except, in each case, for transactions pursuant to the
Intersyndicate Agreement.
The Company, each executive officer, director of the Company, and beneficial
owners of more than 5% of the outstanding shares of Common Stock, will agree,
for a period of 120 days after the commencement of the public offering of the
shares of Common Stock, not to sell, offer to sell, grant any option for the
sale of, or otherwise dispose of, any shares of Common Stock or securities
convertible into shares of Common Stock, without the prior written consent of
the U.S. Representatives.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the
Underwriters may be required to make in respect thereof.
LEGAL MATTERS
The validity of the shares of common stock offered hereby is being passed
upon for the Company by Wright, Lindsey & Jennings, Little Rock, Arkansas.
Certain legal matters will be passed upon for the Underwriters by Shearman &
Sterling, New York, New York.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated balance sheets as of October 2, 1993, as restated, and
October 1, 1994 and the consolidated statements of operations and cash flows
for each of the two years in the period ended October 2, 1993, as restated,
and the year ended October 1, 1994 included in this prospectus, have been
included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
auditing and accounting. The consolidated balance sheet as of October 3, 1992,
as restated,
26
<PAGE>
and the consolidated statements of operations and cash flows for the year
ended September 28, 1991, as restated, incorporated by reference in this
prospectus, have been incorporated herein in reliance on the report of Coopers
& Lybrand, independent accountants, given on the authority of that firm as
experts in auditing and accounting. With respect to the unaudited interim
financial information for the periods ended January 1, 1994, January 2, 1993,
April 2, 1994, April 3, 1993, July 2, 1994, and July 3, 1993 incorporated by
reference in this prospectus, the independent accountants have reported that
they have applied limited procedures in accordance with professional standards
for a review of such information. However, their separate report included in
the Company's quarterly reports on Form 10-Q for the quarter ended January 1,
1994, April 2, 1994 and July 2, 1994, and incorporated by reference herein,
states that they did not audit and they do not express an opinion on that
interim financial information. Accordingly, the degree of reliance on their
report on such information should be restricted in light of the limited nature
of the review procedures applied. The accountants are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
report on the unaudited interim financial information because that report is
not a "report" or a "part" of the registration statement prepared or certified
by the accountants within the meaning of Sections 7 and 11 of the Act.
27
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants......................................... F-2
Consolidated Balance Sheet as of October 2, 1993 and October 1, 1994...... F-3
Consolidated Statement of Operations for the years ended October 3, 1992,
October 2, 1993 and October 1, 1994...................................... F-4
Consolidated Statement of Cash Flows for the years ended October 3, 1992,
October 2, 1993 and October 1, 1994...................................... F-5
Notes to Consolidated Financial Statements................................ F-6
Supplemental Quarterly Financial Data (unaudited) for the years ended
October 2, 1993 and October 1, 1994...................................... F-14
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Hudson Foods, Inc.
We have audited the accompanying consolidated balance sheet of Hudson Foods,
Inc. and subsidiaries as of October 2, 1993, as restated, and October 1, 1994,
and the related consolidated statements of operations and cash flows for each
of the two years in the period ended October 2, 1993, as restated, and the year
ended October 1, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Hudson
Foods, Inc. and subsidiaries as of October 2, 1993, and October 1, 1994, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended October 1, 1994, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
October 26, 1994
F-2
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
OCTOBER 2,
1993
(AS RESTATED, OCTOBER 1,
SEE NOTE 7) 1994
------------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................ $ 3,891 $ 1,899
Receivables:
Trade............................................... 58,441 66,490
Other............................................... 219 481
-------- --------
58,660 66,971
Less allowance for doubtful accounts................. 1,208 1,463
-------- --------
57,452 65,508
Inventories.......................................... 116,497 135,501
Other................................................ 7,275 12,073
-------- --------
Total current assets................................. 185,115 214,981
Property, plant and equipment, net.................... 205,613 229,050
Excess cost of investment over net assets acquired,
net.................................................. 15,807 15,244
Other assets.......................................... 9,968 13,905
-------- --------
Total assets.......................................... $416,503 $473,180
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable........................................ $ -- $ 16,800
Current portion of long-term obligations............. 5,085 5,109
Accounts payable..................................... 31,555 41,188
Accrued liabilities.................................. 33,198 40,581
Deferred income taxes (Note 7)....................... 11,466 11,207
-------- --------
Total current liabilities............................ 81,304 114,885
-------- --------
Long-term obligations................................. 88,985 75,169
-------- --------
Deferred income taxes and deferred gain (Notes 7 and
9)................................................... 72,312 73,937
-------- --------
Commitments and contingencies (Note 9)
Stockholders' equity:
Common stock:
Class A, $.01 par value, issued 8,630,407 and
9,233,893 shares................................... 86 92
Class B, $.01 par value, issued and outstanding
8,502,052 and 8,501,882 shares..................... 85 85
Additional capital................................... 87,638 97,505
Retained earnings.................................... 97,727 122,923
-------- --------
185,536 220,605
Treasury stock, at cost (958,358 and 933,854 Class A
shares)............................................. (11,634) (11,416)
-------- --------
Total stockholders' equity........................... 173,902 209,189
-------- --------
Total liabilities and stockholders' equity............ $416,503 $473,180
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
--------------------------------
OCTOBER 3, OCTOBER 2, OCTOBER 1,
1992 1993 1994
(AS RESTATED,
SEE NOTE 7)
---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C> <C>
Sales...................................... $809,243 $920,545 $1,040,840
Cost of sales.............................. 733,028 802,002 885,248
-------- -------- ----------
Gross profit............................... 76,215 118,543 155,592
Selling expenses........................... 49,907 63,926 78,698
General and administrative expenses........ 18,533 20,695 25,755
-------- -------- ----------
Operating income........................... 7,775 33,922 51,139
-------- -------- ----------
Other expense (income):
Interest expense......................... 8,476 7,975 6,152
Other, net............................... (4,342) 530 --
-------- -------- ----------
Total other expense...................... 4,134 8,505 6,152
-------- -------- ----------
Income before income taxes................. 3,641 25,417 44,987
Income tax expense......................... 1,471 9,512 17,995
-------- -------- ----------
Net income................................. $ 2,170 $ 15,905 $ 26,992
======== ======== ==========
Earnings per share:
Primary.................................. $0.15 $1.01 $1.62
Fully diluted............................ 0.15 1.01 1.61
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
------------------------------------------
OCTOBER 3, OCTOBER 2, OCTOBER 1,
1992 1993 1994
(AS RESTATED, SEE NOTE 7)
------------ ------------ ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income...................... $ 2,170 $ 15,905 $26,992
Non-cash items included in net
income:
Depreciation.................. 16,701 21,629 21,246
Amortization.................. 1,210 1,314 1,033
Deferred income taxes......... 794 171 209
Other......................... -- (1,004) (2,777)
Changes in assets and
liabilities:
Trade and other receivables... (3,566) (10,667) (8,056)
Inventories................... (5,748) (8,461) (19,004)
Other......................... 1,452 (3,331) (4,798)
Accounts payable.............. 452 1,430 9,633
Accrued liabilities........... (5,709) 12,021 11,814
------------ ------------ -------
Cash flows provided by operating
activities..................... 7,756 29,007 36,292
------------ ------------ -------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property, plant and
equipment...................... (46,960) (21,453) (49,161)
Disposition of property, plant
and equipment, net............. 3,830 1,262 4,271
Proceeds from sale-leaseback
agreements (Note 9)............ -- 19,167 --
Acquisitions of businesses...... (4,701) (825) --
Other........................... (3,462) 523 (4,407)
------------ ------------ -------
Cash flows used for investing
activities..................... (51,293) (1,326) (49,297)
------------ ------------ -------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Additions (reductions) to notes
payable........................ 15,000 (15,000) 16,800
Additions to long-term
obligations.................... 34,631 3,370 --
Reductions of long-term
obligations.................... (4,002) (15,769) (5,635)
Dividends....................... (1,503) (1,706) (1,796)
Exercise of stock options and
other.......................... 164 1,366 1,644
------------ ------------ -------
Cash flows provided by (used
for) financing activities...... 44,290 (27,739) 11,013
------------ ------------ -------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS................. 753 (58) (1,992)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD.............. 3,196 3,949 3,891
------------ ------------ -------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD........................ $ 3,949 $ 3,891 $ 1,899
============ ============ =======
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Interest, net of amounts
capitalized.................... $ 11,623 $ 7,090 $ 6,321
Income taxes.................... 2,815 7,299 13,300
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Following is a summary of significant accounting policies employed by Hudson
Foods, Inc. and subsidiaries ("the Company") in the preparation of the
consolidated financial statements.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries.
CASH AND CASH EQUIVALENTS. The Company considers all highly liquid
investments purchased with a maturity of three months or less to be cash
equivalents. At October 2, 1993 and October 1, 1994, cash and cash equivalents
included temporary cash investments in certificates of deposit, U.S. treasury
bills, repurchase agreements and U.S. government agency securities of
$12,960,000 and $12,500,000, respectively. Cash equivalents are stated at cost,
which approximates market value, and have been used to offset book overdrafts.
CONCENTRATIONS OF CREDIT RISK. Financial instruments which potentially
subject the Company to concentrations of credit risk consist primarily of trade
receivables from large domestic companies. The Company generally does not
require collateral from its customers. Such credit risk is considered by
management to be limited due to the Company's broad customer base. In fiscal
years 1992, 1993 and 1994, one customer accounted for approximately 15.7%,
17.9% and 17.7% of consolidated sales, respectively.
INVENTORIES. Inventories are stated at the lower of cost (first-in, first-out
method) or market. Inventory cost includes the cost of raw materials and all
applicable costs of processing.
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment are stated at
cost. When assets are sold or retired, the costs of the assets and the related
accumulated depreciation are removed from the accounts and the resulting gains
or losses are recognized. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets. Interest costs of
approximately $2,874,000, $1,467,000 and $1,702,000 were capitalized during
1992, 1993 and 1994, respectively.
EARNINGS PER SHARE. Earnings per share are based on the weighted average
number of shares outstanding. The primary earnings per share computation
assumes that outstanding dilutive stock options were exercised and the proceeds
used to purchase common shares. Earnings per share, assuming full dilution,
gives effect to the conversion of outstanding convertible debentures and the
exercise of dilutive stock options. In addition, 1992 earnings per share
include the effect of the contingently issuable shares associated with the
acquisition of Pierre Frozen Foods, Inc.
EXCESS COST OF INVESTMENT OVER NET ASSETS ACQUIRED. The excess cost of
investment over net assets acquired is being amortized using the straight-line
method over periods ranging from 33 to 40 years. Accumulated amortization was
$3,729,000 and $4,244,000 at October 2, 1993 and October 1, 1994, respectively.
INCOME TAXES. The Company utilizes the asset and liability approach for
financial accounting and reporting for income taxes as set forth in Statement
of Financial Accounting Standards No. 109 ("SFAS 109"): Accounting for Income
Taxes. SFAS 109 utilizes the liability method and deferred income taxes are
recorded to reflect the expected tax consequences in future years of
differences between the tax basis of assets and liabilities and their financial
reporting amounts at each year-end.
FISCAL YEAR. The Company utilizes a 52-53 week accounting period which ends
on the Saturday closest to September 30.
F-6
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. INVENTORIES
<TABLE>
<CAPTION>
OCT. 2, OCT. 1,
1993 1994
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Field inventory--broilers and breeder stock............... $ 26,333 $ 29,248
Field inventory--turkeys and breeder stock................ 8,914 10,432
Feed, eggs and other...................................... 21,318 21,581
Finished products......................................... 59,932 74,240
-------- --------
Total................................................... $116,497 $135,501
======== ========
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
OCT. 2, OCT. 1,
1993 1994
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Land...................................................... $ 10,620 $ 10,644
Buildings and improvements................................ 162,606 165,482
Machinery and equipment................................... 126,505 131,433
Construction in progress.................................. 7,219 42,027
-------- --------
306,950 349,586
Less accumulated depreciation............................. 101,337 120,536
-------- --------
Total................................................... $205,613 $229,050
======== ========
</TABLE>
4. FINANCING ARRANGEMENTS
The Company's line of credit agreement (the "Agreement"), which expires June
30, 1997, provides for aggregate borrowings or letters of credit up to $100
million. At October 2, 1993, the Company had issued $7.2 million in letters of
credit, and at October 1, 1994, had $6.8 million of short-term debt outstanding
and had issued $8.2 million in letters of credit. The Agreement, among other
things, limits the payment of dividends to approximately $2.8 million in any
fiscal year and limits annual capital expenditures and lease obligations. It
requires the maintenance of minimum levels of working capital and tangible net
worth and that the current ratio, leverage ratio and cash flow coverage ratio
be maintained at certain levels. It also limits the creation of new secured
debt to $25.0 million and new unsecured short-term debt with parties outside
the credit agreement to $20.0 million. At October 2, 1993 and October 1, 1994,
$92.8 million and $85.0 million, respectively, was unused under the Agreement.
On May 18, 1994, the Company entered into an unsecured term loan agreement
with a financial institution giving the Company the right to borrow up to $50.0
million of senior notes with a fixed interest rate determined at the date of
initial borrowing. The Company had not borrowed under the agreement at October
1, 1994. The agreement expires February 24, 1996.
On July 8, 1994, the Company entered into an unsecured short-term line of
credit agreement with a financial institution giving the Company the right to
borrow up to $10.0 million. The agreement expires June 1, 1995. At October 1,
1994, the Company had $10.0 million, payable on demand, outstanding under this
agreement. Additionally, on August 10, 1994, the Company entered into an
unsecured short-term line of credit agreement with a financial institution
giving the Company the right to borrow up to $10.0 million. Borrowings under
this agreement, if any, are due and payable within 30 days. The Company had not
borrowed under this agreement at October 1, 1994.
F-7
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. ACCRUED LIABILITIES
<TABLE>
<CAPTION>
OCT. 2, OCT. 1,
1993 1994
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Payroll and benefits........................................ $18,098 $25,173
Income, property and other taxes............................ 4,963 2,455
Interest.................................................... 195 339
Other....................................................... 9,942 12,614
------- -------
Total..................................................... $33,198 $40,581
======= =======
</TABLE>
6. LONG-TERM OBLIGATIONS
<TABLE>
<CAPTION>
OCT. 2, OCT. 1,
1993 1994
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
8% Convertible Subordinated Debentures due 2006............. $17,436 $ 9,279
8.99% Notes payable to an insurance company due March 15,
1998....................................................... 16,031 15,302
9.99% Notes payable to an insurance company due April 12,
1997....................................................... 15,000 15,000
7.62% Notes payable to an insurance company due Sept. 1,
2002....................................................... 14,709 13,084
9.95% Note payable to a bank due June 30, 1999.............. 7,800 7,250
7.20%-7.64% Notes payable to a bank due Sept. 1, 2002....... 9,084 8,084
7.68% Notes payable to an insurance company due Sept. 1,
2002....................................................... 5,625 5,000
8.14% Notes payable to an insurance company due March 15,
1998....................................................... 5,201 4,980
Other--6%-9% payable in various maturities through 2002..... 3,184 2,299
------- -------
Total....................................................... 94,070 80,278
Less current portion of long-term obligations............... 5,085 5,109
------- -------
Long-term obligations....................................... $88,985 $75,169
======= =======
</TABLE>
On September 6, 1994, the Company called the 8% convertible subordinated
debentures. Bondholders had the option of redeeming their debentures at 101.6%
of the stated principle amount plus accrued interest, or converting their
debentures into Class A common stock at $21 per share. As of October 1, 1994,
the Company had converted $8.1 million of the debentures into 388,388 shares of
common stock. Subsequent to October 1, 1994, the Company converted an
additional $5.5 million of the debentures into 264,789 shares of common stock
and redeemed the remaining $3.8 million, recognizing a $132,000 loss on the
extinguishment.
Certain of the Company's loan agreements require the maintenance of minimum
working capital, and that net tangible asset, debt-to-equity and working
capital ratios be maintained at specified levels. Also, such loan agreements
contain limitations on capital expenditures, additional indebtedness and
payment of dividends.
The fair value of the Company's long-term obligations is based on discounted
future cash flows using current interest rates. The fair value of the Company's
long-term obligations at October 1, 1994, including current portion, is
estimated to be approximately $80.4 million.
At October 1, 1994, the aggregate amount of long-term obligations which will
become due during each of the next five fiscal years is as follows: $5,109,000
in 1995; $5,216,000 in 1996; $20,301,000 in 1997; $22,259,000 in 1998; and
$9,898,000 in 1999.
F-8
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. INCOME TAXES
Beginning in fiscal year 1994, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes," which
requires that deferred income tax liabilities and assets be recognized for
differences between the tax basis of assets and liabilities and their financial
reporting amounts, measured by using presently enacted tax laws and rates. The
Company elected to apply the provisions of SFAS 109 retroactively to September
28, 1986. As a result, a deferred tax liability and a corresponding increase in
property, plant and equipment of $13,535,000 was recognized for the difference
between the assigned values and the tax basis of assets and liabilities
previously acquired in 1986 (Corbett Enterprises, Inc.), 1987 (Thies Companies,
Inc.) and 1990 (Pierre Frozen Foods, Inc.). The adoption of SFAS 109 did not
effect net income or earnings per share since increases in depreciation
expense, due to adjustments for prior business combinations, were offset by the
amortization of the deferred income taxes.
Consolidated income tax expense for each of the three years in the period
ended October 1, 1994 consists of the following:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
---------------------
OCT. OCT.
3, 2, OCT. 1,
1992 1993 1994
---- ---- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C> <C>
Current provision:
Federal................................................ $ 606 $8,323 $16,067
State.................................................. 71 1,019 1,719
Deferred provision:
Federal................................................ 707 168 306
State.................................................. 87 2 (97)
------ ------ -------
Total income tax expense................................. $1,471 $9,512 $17,995
====== ====== =======
</TABLE>
Reconciliations of the statutory federal income tax rate with the effective
income tax rate for each of the three years in the period ended October 1, 1994
are as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------
OCT. 3, OCT. 2, OCT. 1,
1992 1993 1994
------- ------- -------
<S> <C> <C> <C>
Federal income tax rate................................ 34.0% 34.8% 35.0%
State income taxes, net of federal benefit............. 4.0 3.6 2.7
Nondeductible items related to business acquisitions,
net................................................... .9 .1 .1
Jobs/research tax credit............................... -- (2.1) (.7)
Other.................................................. 1.5 1.0 2.9
---- ---- ----
Effective income tax rate.............................. 40.4% 37.4% 40.0%
==== ==== ====
</TABLE>
F-9
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
An analysis of the Company's net current and long-term deferred tax
liabilities (assets) at October 2, 1993 and October 1, 1994 is as follows:
<TABLE>
<CAPTION>
OCT. 2, OCT. 1,
1993 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Current:
Inventory.................................................. $13,346 $15,057
Allowance for doubtful accounts............................ (530) (563)
Accrued liabilities........................................ (1,026) (3,037)
Other...................................................... (324) (250)
------- -------
Total current deferred income taxes...................... $11,466 $11,207
======= =======
Long-term:
Property, plant and equipment.............................. $22,806 $27,124
Change from the cash basis to the accrual basis of
accounting in 1988 for the "Family Farm" subsidiaries..... 38,159 38,159
Other...................................................... 1,616 1,700
------- -------
Total long-term deferred income taxes.................... $62,581 $66,983
======= =======
</TABLE>
The Internal Revenue Service has examined the Company's 1989 and 1990 Federal
income tax returns and has issued a notice of deficiency assessing additional
taxes of $22.4 million and penalties of $5.8 million. If an assessment is
ultimately upheld, it will result in the acceleration of previously recorded
deferred income taxes. However, since most of the items in dispute relate to
the timing of the recognition of income or deductions, a portion of the income
taxes for years subsequent to 1990 would be refundable. Management is
contesting the notice of deficiency and the case has been docketed for a
hearing in early 1995 in federal tax court. Management believes that ultimate
resolution of these matters will not have a material impact on the Company's
financial position or results of operations.
F-10
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. EMPLOYEE BENEFIT AND COMPENSATION PLANS
STOCK OPTION PLAN. The 1985 Stock Option Plan (the "Option Plan"), as
amended, reserves 1,200,000 and 300,000 shares of the Company's Class A common
stock for issuance as incentive stock options and nonqualified stock options,
respectively. The Option Plan provides for the grant of options to key
employees upon terms and conditions determined by a committee of the Board of
Directors.
Options expire no later than the tenth anniversary of the date of grant, and
are exercisable at a price which is at least 100% of the fair market value of
such shares on the date of grant (110% in the case of individuals holding at
least 10% of the Company's Class A common stock).
A summary of stock option activity related to the Option Plan for each of the
three years in the period ended October 1, 1994 is as follows:
<TABLE>
<CAPTION>
NUMBER NUMBER OF
OF OPTION PRICE SHARES
SHARES PER SHARE EXERCISABLE
------ ------------ -----------
<S> <C> <C> <C>
Outstanding at September 28, 1991............ 797,782 $5.06-$12.31 384,759
=======
Granted...................................... 21,000 $6.94
Exercised.................................... (31,200) $5.06-$ 7.13
Cancelled.................................... (13,900) $7.00-$10.00
--------
Outstanding at October 3, 1992............... 773,682 $5.06-$12.31 593,105
=======
Granted...................................... 344,650 $7.56-$10.69
Exercised.................................... (168,805) $5.06-$10.50
Cancelled.................................... (38,600) $6.94-$10.00
--------
Outstanding at October 2, 1993............... 910,927 $6.94-$12.31 569,394
=======
Granted...................................... -- --
Exercised.................................... (214,928) $7.00-$12.31
Cancelled.................................... (4,450) $7.13-$10.50
--------
Outstanding at October 1, 1994............... 691,549 $6.94-$10.69 482,309
======== =======
</TABLE>
EMPLOYEE STOCK PURCHASE PLAN. The Company has reserved 1,000,000 shares of
common stock for purchase under the 1990 Employee Stock Purchase Plan (the
"Purchase Plan"), the purpose of which is to make available to eligible
employees a means of purchasing shares of the Company's common stock at current
market prices. Under the terms of the Purchase Plan, the Company contributes an
amount annually, in cash or Class A stock, equal to 15% of the undistributed
total of participants' contributions for the past ten years. All full-time
employees of the Company (except those owning 10% or more of the Company's
Class A stock) are eligible to participate in the Purchase Plan.
RETIREMENT PLAN. In November 1985, the Company adopted a 401(k) Plan which,
as amended, provides for Company matching of 50% of employee contributions not
exceeding 4% of the participants' salary. The Company's contribution was
$723,000 in 1992; $919,000 in 1993; and $1,168,000 in 1994.
F-11
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. COMMITMENTS AND CONTINGENCIES
The Company leases distribution facilities, transportation and delivery
equipment, poultry farms, and other equipment under operating leases expiring
during the next five to ten years. Management expects that in the normal course
of business the leases will be renewed or replaced by other leases.
In November and December 1992, under sale-leaseback agreements, the Company
sold certain equipment with a net book value of $4.5 million for $19.2 million
cash. Annual payments under the operating lease agreements are $3.5 million.
The gain of $14.7 million is being amortized over the terms of the leases. At
October 2, 1993 and October 1, 1994, the unamortized portion of the deferred
gain is included in the balance sheet captions "accrued liabilities"
($2,777,000 for both years) and "deferred income taxes and deferred gain"
($9,731,000 and $6,954,000, respectively).
Total rental expense (net of amortized gain) was $21,158,000 in 1992;
$20,603,000 in 1993; and $23,042,000 in 1994.
At October 1, 1994, future minimum rental payments required under leases that
have initial or remaining noncancellable terms in excess of one year are as
follows: $18,727,000 in 1995; $16,762,000 in 1996; $13,619,000 in 1997;
$8,303,000 in 1998; and $4,347,000 in 1999.
The Company maintains a self-insurance program for employee health care and
workman's compensation costs. Self-insurance costs are accrued based upon the
aggregate of the liability for reported claims and an estimated liability for
claims incurred but not yet reported.
On March 16, 1993, the United States of America, by the Attorney General of
the United States acting at the request of the Environmental Protection Agency,
filed a civil complaint against the Company alleging violations of the Federal
Water Pollution Control Act (the "Act"). The complaint seeks, among other
things, an injunction preventing the Company from discharging wastewater in
violation of the Act from one of its processing facilities, and a civil penalty
of up to $25,000 per day for each violation of the Act. A trial has been
scheduled to commence in July 1995. In the event this matter results in an
unfavorable outcome, it is not possible to estimate the amount of civil
penalties or other expenditures, if any, that the court may award. The Company
continues to vigorously contest this matter. Management believes that the
outcome will not have a material adverse effect on the Company's consolidated
financial position or results of operations.
The Company is involved in litigation incidental to its business. Such
litigation is not considered by management to be significant.
10. RELATED PARTY TRANSACTIONS
Lease payments for transportation equipment made to the Company's chairman
amounted to $907,000 in 1992; $936,000 in 1993; and $956,000 in 1994.
Certain officers and employees of the Company own turkey and broiler farms
and enter into grower contracts with the Company which provide for the payment
of grower fees. The Company's arrangements with these officers and employees
are similar to contracts with unrelated growers and, as such, do not include an
ongoing commitment by the Company. Grower fees paid to these officers and
employees amounted to $891,000 in 1992; $651,000 in 1993; and $689,000 in 1994.
At October 2, 1993 and October 1, 1994, other current assets include $215,000
and $217,000, respectively, and other assets include $3,356,000 and $3,933,000,
respectively, of accounts and notes receivable from an officer and director and
entities controlled by this person.
11. SUBSEQUENT EVENT
On October 12, 1994, the Company announced plans for a public offering of up
to 2,500,000 shares of Class A common stock. The Company's proceeds from the
offering are intended to be used for capital expenditures, including the
construction of an integrated chicken processing complex near Henderson,
Kentucky. Also, the Company announced that certain of its major stockholders
will offer up to an additional 2,100,000 shares of Class A common stock. The
Company will not receive any proceeds from the sale of the shares by such major
stockholders.
F-12
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12.STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------------
CLASS A CLASS B
---------------- -----------------
NUMBER OF NUMBER OF ADDITIONAL RETAINED TREASURY
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS STOCK
--------- ------ --------- ------ ---------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 28,
1991................... 6,397,041 $64 8,503,758 $85 $62,277 $82,861 $(11,788)
Net income............. -- -- -- -- -- 2,170 --
Stock exchange......... 706 -- (706) -- -- -- --
Exercise of stock
options............... 31,200 -- -- -- 180 -- --
Purchase of common
stock................. -- -- -- -- -- -- (124)
Issuance of stock under
the Employee Stock
Purchase Plan......... -- -- -- -- 21 -- 87
Cash dividends:
Class A $.12 per
share................ -- -- -- -- -- (652) --
Class B $.10 per
share................ -- -- -- -- -- (851) --
--------- --- --------- --- ------- -------- --------
Balance at October 3,
1992................... 6,428,947 64 8,503,052 85 62,478 83,528 (11,825)
Net income............. -- -- -- -- -- 15,905 --
Stock exchange......... 1,000 -- (1,000) -- -- -- --
Exercise of stock
options............... 168,805 2 -- -- 1,193 -- --
Contingent payment for
1990 acquisition...... 35,603 -- -- -- (825) -- --
Conversion of 14%
debentures............ 1,996,052 20 -- -- 24,777 -- --
Issuance of stock under
the Employee Stock
Purchase Plan......... -- -- -- -- 15 -- 191
Cash dividends:
Class A $.12 per
share................ -- -- -- -- -- (856) --
Class B $.10 per
share................ -- -- -- -- -- (850) --
--------- --- --------- --- ------- -------- --------
Balance at October 2,
1993................... 8,630,407 86 8,502,052 85 87,638 97,727 (11,634)
Net income............. -- -- -- -- -- 26,992 --
Stock exchange......... 170 -- (170) -- -- -- --
Exercise of stock
options............... 214,928 2 -- -- 1,641 -- --
Conversion of 8%
debentures............ 388,388 4 -- -- 8,154 -- --
Issuance of stock under
the Employee Stock
Purchase Plan......... -- -- -- -- 72 -- 218
Cash Dividends:
Class A $.12 per
share................ -- -- -- -- -- (946) --
Class B $.10 per
share................ -- -- -- -- -- (850) --
--------- --- --------- --- ------- -------- --------
Balance at October 1,
1994................... 9,233,893 $92 8,501,882 $85 $97,505 $122,923 $(11,416)
========= === ========= === ======= ======== ========
</TABLE>
On February 6, 1987, the Company's Restated Certificate of Incorporation was
amended to create two classes of common stock. The amendment authorized the
issuance of up to 40,000,000 shares of Class A common stock, par value $.01 per
share, and 40,000,000 shares of Class B common stock, par value $.01 per share.
Upon adoption of the amendment, each outstanding share of common stock
converted automatically into a share of Class A common stock. During fiscal
1987, the Company concluded a one-time-only exchange offer in which holders of
Class A common stock were given the opportunity to exchange their shares for an
equivalent number of shares of Class B common stock. The Class B common stock
has ten votes per share in most matters submitted to a vote of the Company's
stockholders, while the Class A common stock has one vote per share. As a
result of the exchange offer, voting control of the Company rests with the
holders of Class B common stock. In addition, the dividend per share of Class B
common stock may not exceed 90 percent of the dividend per share of Class A
common stock. The number of outstanding Class A shares at October 2, 1993 and
October 1, 1994 were 7,672,049 and 8,300,039, respectively.
F-13
<PAGE>
HUDSON FOODS, INC. AND SUBSIDIARIES
SUPPLEMENTAL QUARTERLY FINANCIAL DATA (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED 1993
--------------------------------------------------------------------------
(AS RESTATED, SEE NOTE 7)
JANUARY 2 APRIL 3 JULY 3 OCTOBER 2 FISCAL 1993
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Sales .................. $231,691 $220,148 $224,887 $243,819 $920,545
Cost of sales........... 203,352 192,589 192,794 213,267 802,002
-------------- -------------- -------------- -------------- --------------
Gross profit............ 28,339 27,559 32,093 30,552 118,543
Selling................. 14,145 16,701 16,912 16,168 63,926
General and
administrative......... 4,811 5,132 5,320 5,432 20,695
-------------- -------------- -------------- -------------- --------------
Operating income........ 9,383 5,726 9,861 8,952 33,922
Other expense, net...... 2,456 2,576 1,719 1,754 8,505
-------------- -------------- -------------- -------------- --------------
Income before income
taxes.................. 6,927 3,150 8,142 7,198 25,417
Income tax expense...... 2,654 1,289 3,151 2,418 9,512
-------------- -------------- -------------- -------------- --------------
Net income.............. $ 4,273 $ 1,861 $ 4,991 $ 4,780 $ 15,905
============== ============== ============== ============== ==============
Earnings per share:
Primary................ $ .30 $ .12 $ .30 $ .29 $1.01
Fully diluted.......... .29 .13 .30 .29 1.01
Dividends:
Class A................ .030 .030 .030 .030 .12
Class B................ .025 .025 .025 .025 .10
Market price (high-low). $14-7 1/2 $15 3/8-10 3/8 $13 7/8-10 1/4 $11 3/8-10 1/4 $15 3/8-7 1/2
<CAPTION>
QUARTER ENDED 1994
--------------------------------------------------------------------------
JANUARY 1 APRIL 2 JULY 2 OCTOBER 1 FISCAL 1994
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Sales .................. $250,292 $256,327 $266,773 $267,448 $1,040,840
Cost of sales........... 212,646 222,284 224,352 225,966 885,248
-------------- -------------- -------------- -------------- --------------
Gross profit............ 37,646 34,043 42,421 41,482 155,592
Selling................. 19,257 18,839 20,223 20,379 78,698
General and
administrative......... 6,474 6,122 6,309 6,850 25,755
-------------- -------------- -------------- -------------- --------------
Operating income........ 11,915 9,082 15,889 14,253 51,139
Other expense, net...... 1,829 1,717 1,442 1,164 6,152
-------------- -------------- -------------- -------------- --------------
Income before income
taxes.................. 10,086 7,365 14,447 13,089 44,987
Income tax expense...... 3,991 2,993 5,616 5,395 17,995
-------------- -------------- -------------- -------------- --------------
Net income.............. $ 6,095 $ 4,372 $ 8,831 $ 7,694 $ 26,992
============== ============== ============== ============== ==============
Earnings per share:
Primary................ $ .37 $ .26 $ .53 $ .46 $1.62
Fully diluted.......... .36 .26 .52 .46 1.61
Dividends:
Class A................ .030 .030 .030 .030 .12
Class B................ .025 .025 .025 .025 .10
Market price (high-low). $13 1/2-10 5/8 $16 5/8-11 1/8 $18 3/8-12 3/4 $25 1/8-17 7/8 $25 1/8-10 5/8
</TABLE>
F-14
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING MADE HEREBY, AND INFORMATION OR
REPRESENTATIONS NOT HEREIN CONTAINED, IF GIVEN OR MADE, MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SO-
LICITATION OF AN OFFER TO BUY, SHARES IN ANY JURISDICTION WHERE, AS TO ANY
PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JU-
RISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUN-
DER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT
BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Prospectus Summary........................................................ 3
Use of Proceeds........................................................... 6
Dividend Policy........................................................... 6
Price Range of Common Stock............................................... 6
Capitalization............................................................ 7
Selected Consolidated Financial Data...................................... 8
Management's Discussion and Analysis of Results of Operations and
Financial Condition...................................................... 9
Business.................................................................. 14
Management................................................................ 19
Selling Stockholders...................................................... 21
Description of Common Stock............................................... 22
Certain United States Federal Tax Considerations for Non-U.S. Holders of
Common Stock............................................................. 23
Underwriting.............................................................. 25
Legal Matters............................................................. 26
Independent Public Accountants............................................ 26
Index to Consolidated Financial Statements................................ F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
4,000,000 SHARES
[LOGO OF HUDSON APPEARS HERE]
CLASS A COMMON STOCK
---------------
PROSPECTUS
---------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
, 1994
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. [ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS] +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 10, 1994
PROSPECTUS
4,000,000 SHARES
LOGO
[LOGO OF HUDSON APPEARS HERE]
CLASS A COMMON STOCK
-----------
Of the 4,000,000 shares of Class A common stock offered hereby, 2,500,000
shares are being sold by Hudson Foods, Inc. ("Hudson" or the "Company") and
1,500,000 shares are being sold by certain stockholders of the Company (the
"Selling Stockholders"). See "Selling Stockholders." The Company will not
receive any proceeds from the sale of the shares by the Selling Stockholders.
Of the 4,000,000 shares of Class A common stock offered hereby, 800,000
shares are being offered outside the United States and Canada by the
International Underwriters (the "International Offering") and 3,200,000 shares
are being offered in a concurrent offering in the United States and Canada by
the U.S. Underwriters (the "U.S. Offering" and, together with the International
Offering, the "Offerings"). The public offering price and the underwriting
discount per share are identical for the Offerings. See "Underwriting."
The Company's Class A common stock is listed on the New York Stock Exchange,
Inc. under the symbol "HFI." On November 8, 1994, the last reported sale price
of the Class A common stock on the New York Stock Exchange was $22 5/8. See
"Price Range of Common Stock."
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO
PUBLIC DISCOUNT (1) COMPANY (2) SELLING STOCKHOLDERS (2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share................................. $ $ $ $
- ----------------------------------------------------------------------------------------------------------------
Total(3).................................. $ $ $ $
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities under the Securities Act
of 1933. See "Underwriting."
(2) Before deducting expenses of the offering estimated at $ payable
by the Company and $ payable by the Selling Stockholders.
(3) One of the Selling Stockholders has granted each of the International
Underwriters and the U.S. Underwriters an option exercisable within 30 days
after the date hereof to purchase up to 120,000 and 480,000 additional
shares of Class A common stock, respectively, solely to cover over-
allotments, if any. If such options are exercised in full, the total Price
to Public, Underwriting Discount and Proceeds to Selling Stockholders will
be $ , $ and $ , respectively. See
"Underwriting."
-----------
The shares of Class A common stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw,
cancel or modify such offer and to reject orders in whole or in part. It is
expected that delivery of the shares of Class A common stock will be made in
New York, New York on or about , 1994.
-----------
MERRILL LYNCH INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
-----------
The date of this Prospectus is , 1994
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended, with respect to the
Class A common stock offered hereby. The Prospectus does not contain all the
information set forth in the Registration Statement and exhibits and schedules
thereto. For further information with respect to the Company and such Class A
common stock, reference is made to the Registration Statement and the exhibits
and schedules filed as part thereof. Statements contained in this Prospectus as
to the contents of any contract or any other document referred to are not
necessarily complete, and, in each instance, reference is made to the copy of
such contract or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference to such
exhibit.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The Registration
Statement, including exhibits and schedules thereto, such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at
the Commission's following Regional Offices: 7 World Trade Center (13th Floor),
New York, New York 10048; and Suite 1400 Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661. In addition, copies of such material can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at prescribed
rates.
The Company's Class A common stock is listed on the New York Stock Exchange.
Reports, proxy statements and other information concerning the Company can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
No action has been taken or will be taken in any jurisdiction by the Company
or any Underwriter that would permit a public offering of the Class A common
stock or possession or distribution of this Prospectus in any jurisdiction
where action for that purpose is required, other than the United States.
Persons into whose possession this Prospectus comes are required by the Company
and the Underwriters to inform themselves about and to observe any restrictions
as to the offering of the Class A common stock and the distribution of this
Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference: (i) the Company's Annual Report on Form 10-K for the
fiscal year ended October 1, 1994; (ii) the Company's Annual Report on Form 10-
K for the fiscal year ended October 2, 1993; (iii) the Company's proxy
statement for its annual meeting of stockholders held on February 11, 1994;
(iv) the Company's Form 10-Q for the quarter ended January 1, 1994; (v) the
Company's Form 10-Q for the quarter ended April 2, 1994; (vi) the Company's
Form 10-Q for the quarter ended July 2, 1994; (vii) the description of the
Class A common stock contained in the Company's Form 8-A Registration Statement
filed January 22, 1986, as amended by Form 8 filed January 19, 1987 and (viii)
the Company's Form 8-K filed October 13, 1994; and (ix) the Company's Form 8-K
filed October 28, 1994.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference into this Prospectus, and to be a part hereof from
the date of filing such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein, or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by reference
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference therein). Requests for such copies should be directed
to Tommy D. Reynolds, Secretary, Hudson Foods, Inc., P.O. Box 777, Rogers,
Arkansas 72757-0777, (501) 636-1100.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
UNDERWRITING
Subject to the terms and conditions set forth in a purchase agreement (the
"International Purchase Agreement") among the Company, the Selling
Stockholders and each of the underwriters named below (the "International
Underwriters"), and concurrently with the sale of 3,200,000 shares of Common
Stock to the U.S. Underwriters (as defined below), the Company and the Selling
Stockholders have severally agreed to sell to each of the International
Underwriters and each of the International Underwriters has severally agreed
to purchase, the aggregate number of shares of Common Stock set forth opposite
its name below.
<TABLE>
<CAPTION>
NUMBER
OF
UNDERWRITER SHARES
----------- -------
<S> <C>
Merrill Lynch International Limited...............................
Donaldson, Lufkin & Jenrette Securities Corporation...............
A.G. Edwards & Sons, Inc..........................................
-------
Total......................................................... 800,000
=======
</TABLE>
Merrill Lynch International Limited, Donaldson, Lufkin & Jenrette Securities
Corporation and A.G. Edwards & Sons, Inc. are acting as representatives (the
"International Representatives") of the several International Underwriters.
The Company and the Selling Stockholders have also entered into a purchase
agreement (the "U.S. Purchase Agreement") with certain underwriters inside the
United States and Canada (the "U.S. Underwriters") for whom Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation and A.G. Edwards & Sons, Inc. are acting as representatives (the
"U.S. Representatives"). Subject to the terms and conditions set forth in the
U.S. Purchase Agreement, and concurrently with the sale of 800,000 shares of
Common Stock to the International Underwriters, the Company and the Selling
Stockholders have severally agreed to sell to the U.S. Underwriters, and the
U.S. Underwriters severally have agreed to purchase, an aggregate of 3,200,000
shares of Common Stock. The public offering price per share of Common Stock
and the underwriting discount per share of Common Stock are identical under
the International Purchase Agreement and the U.S. Purchase Agreement.
In the International Purchase Agreement the several International
Underwriters have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
such Agreement if any of the shares of Common Stock being sold pursuant to
such Agreement are purchased and in the U.S. Purchase Agreement the several
U.S. Underwriters have agreed, subject to the terms and conditions set forth
therein, to purchase all the shares of Common Stock being sold pursuant to
such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances, the commitments of
nondefaulting U.S. Underwriters and International Underwriters (collectively,
the "Underwriters") may be increased. The closings with respect to the sale of
shares of Common Stock to be purchased by the U.S. Underwriters and the
International Underwriters are conditioned upon one another.
The International Underwriters propose initially to offer the shares of
Common Stock to the public at the public offering price set forth on the cover
page of this Prospectus and to certain dealers (who may include International
Underwriters) at such price less a concession not in excess of $ per share
of Common Stock. The International Underwriters may allow, and such dealers
may reallow, a discount not in excess of
25
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
$ per share of Common Stock to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
James T. Hudson, one of the Selling Shareholders, has granted to the
International Underwriters an option to purchase up to an aggregate of 120,000
additional shares of Common Stock, and the U.S. Underwriters an option to
purchase up to an aggregate of 480,000 shares of Common Stock, in each case
exercisable for 30 days after the date hereof, to cover overallotments, if any,
at the public offering price, less the underwriting discount. To the extent
that the International Underwriters exercise this option, each of the
International Underwriters will have a firm commitment, subject to certain
conditions, to purchase approximately the same percentage of such shares of
Common Stock that the number of shares of Common Stock to be purchased by it
shown in the foregoing table bears to the total number of shares of Common
Stock initially offered to the International Underwriters hereby.
The U.S. Underwriters and the International Underwriters have entered into an
Intersyndicate Agreement (the "Intersyndicate Agreement") that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement,
sales may be made between the U.S. Underwriters and the International
Underwriters of such number of shares of Common Stock as may be mutually
agreed. The price of any shares of Common Stock so sold shall be the public
offering price, less an amount not greater than the selling concession.
Under the terms of the Intersyndicate Agreement, the U.S. Underwriters and
any dealer to whom they sell shares of Common Stock will not offer to sell or
sell shares of Common Stock to persons who are non-United States or non-
Canadian persons or to persons they believe intend to resell to persons who are
non-United States or non-Canadian persons, and the International Underwriters
and any dealer to whom they sell shares of Common Stock will not offer to sell
or sell shares of Common Stock to United States or Canadian persons or to
persons they believe intend to resell to United States or Canadian persons,
except, in each case, for transactions pursuant to the Intersyndicate
Agreement.
Each International Underwriter has agreed that (i) it has not offered or sold
and will not offer or sell in the United Kingdom by means of any document any
shares of Common Stock offered hereby other than to persons whose ordinary
business it is to buy or sell shares of debentures, whether as principal or
agent or any shares of Common Stock offered hereby in circumstances which do
not constitute an offer to the public within the meaning of the Companies Act
1985, (ii) it has complied and will comply with all applicable provisions of
the Financial Services Act of 1986 with respect to anything done by it in
relation to the Common Stock in, from, or otherwise involving the United
Kingdom, and (iii) it has only issued or passed on and will only issue or pass
on to any person in the United Kingdom any document received by it in
connection with the issuance of Common Stock to a person who is of a kind
described in Article 9(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1988 or is a person to whom the document may
otherwise lawfully be issued or passed on.
The Company, each executive officer, director of the Company, and beneficial
owners of more than 5% of the outstanding shares of Common Stock, will agree,
for a period of 120 days after the commencement of the public offering of the
shares of Common Stock, not to sell, offer to sell, grant any option for the
sale of, or otherwise dispose of, any shares of Common Stock or securities
convertible into shares of Common Stock, without the prior written consent of
the U.S. Representatives.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the
Underwriters may be required to make in respect thereof.
LEGAL MATTERS
The validity of the shares of common stock offered hereby is being passed
upon for the Company by Wright, Lindsey & Jennings, Little Rock, Arkansas.
Certain legal matters will be passed upon for the Underwriters by Shearman &
Sterling, New York, New York.
26
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated balance sheets as of October 2, 1993, as restated, and
October 1, 1994 and the consolidated statements of operations and cash flows
for each of the two years in the period ended October 2, 1993, as restated,
and the year ended October 1, 1994 included in this prospectus, have been
included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
auditing and accounting. The consolidated balance sheet as of October 3, 1992,
as restated, and the consolidated statements of operations and cash flows for
the year ended September 28, 1991, as restated, incorporated by reference in
this prospectus, have been incorporated herein in reliance on the report of
Coopers & Lybrand, independent accountants, given on the authority of that
firm as experts in auditing and accounting. With respect to the unaudited
interim financial information for the periods ended January 1, 1994, January
2, 1993, April 2, 1994, April 3, 1993, July 2, 1994, and July 3, 1993
incorporated by reference in this prospectus, the independent accountants have
reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their
separate report included in the Company's quarterly reports on Form 10-Q for
the quarter ended January 1, 1994, April 2, 1994 and July 2, 1994, and
incorporated by reference herein, states that they did not audit and they do
not express an opinion on that interim financial information. Accordingly, the
degree of reliance on their report on such information should be restricted in
light of the limited nature of the review procedures applied. The accountants
are not subject to the liability provisions of Section 11 of the Securities
Act of 1933 for their report on the unaudited interim financial information
because that report is not a "report" or a "part" of the registration
statement prepared or certified by the accountants within the meaning of
Sections 7 and 11 of the Act.
27
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFERING MADE HEREBY, AND INFORMATION OR
REPRESENTATIONS NOT HEREIN CONTAINED, IF GIVEN OR MADE, MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDERS OR THE UN-
DERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICI-
TATION OF AN OFFER TO BUY, SHARES IN ANY JURISDICTION WHERE, AS TO ANY PERSON
TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDIC-
TION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN
ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
THERE ARE RESTRICTIONS ON THE OFFER AND SALE OF THE SHARES OF CLASS A COMMON
STOCK IN THE UNITED KINGDOM. ALL APPLICABLE PROVISIONS OF THE FINANCIAL SERV-
ICES ACT 1986 AND THE COMPANIES ACT 1985 WITH RESPECT TO ANYTHING DONE BY ANY
PERSON IN RELATION TO THE SHARES IN, FROM OR OTHERWISE INVOLVING THE UNITED
KINGDOM MUST BE COMPLIED WITH. SEE "UNDERWRITING."
IN THIS PROSPECTUS, REFERENCE TO "DOLLARS" AND "$" ARE TO UNITED STATES DOL-
LARS UNLESS STATED OTHERWISE.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Prospectus Summary........................................................ 3
Use of Proceeds........................................................... 6
Dividend Policy........................................................... 6
Price Range of Common Stock............................................... 6
Capitalization............................................................ 7
Selected Consolidated Financial Data...................................... 8
Management's Discussion and Analysis of Results of Operations and
Financial Condition...................................................... 9
Business.................................................................. 14
Management................................................................ 19
Selling Stockholders...................................................... 21
Description of Common Stock............................................... 22
Certain United States Federal Tax Considerations for Non-U.S. Holders of
Common Stock............................................................. 23
Underwriting.............................................................. 25
Legal Matters............................................................. 26
Independent Public Accountants............................................ 27
Index to Consolidated Financial Statements................................ F-1
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4,000,000 SHARES
LOGO
[LOGO OF HUDSON APPEARS HERE]
CLASS A COMMON STOCK
---------------
PROSPECTUS
---------------
MERRILL LYNCH
INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses of this offering in connection with this registration statement,
other than underwriting compensation, are estimated as follows:
<TABLE>
<S> <C>
SEC Registration Fee............................................ $ 33,612
NASD Filing Fee................................................. 10,248
Blue Sky Fees and Expenses...................................... 17,500
Accounting Fees and Expenses.................................... 60,000
Legal Fees and Expenses......................................... 150,000
Printing and Engraving.......................................... 160,000
Transfer Agent's Fees and Expenses.............................. 3,000
Miscellaneous................................................... --
--------
Total....................................................... $434,360
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Amended and Restated Certificate of Incorporation provides that
a director will not be personally liable for monetary damages to the Company or
its stockholders for each breach of fiduciary duty as a director involving any
act or omission of any such director occurring on or after February 6, 1987,
except for liability (i) for any breach of the director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
for paying a dividend or approving a stock repurchase or redemption in
violation of Section 174 of the Delaware Law, or (iv) for any transaction from
which the director derived an improper personal benefit. The Certificate of
Incorporation also provides that directors, officers and employees of the
Company may be indemnified as follows:
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
The corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including
II-1
<PAGE>
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation and except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only to
the extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.
Any indemnification under this paragraph (unless ordered by a court) shall be
made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth above. Such determination shall be made (1) by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
Expenses incurred by an officer or director in defending a civil or criminal
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding as authorized by the board
of directors in the specific case upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this paragraph. Such expenses incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the board of directors deems appropriate.
The Company's directors and officers are also covered by insurance policies
indemnifying them against certain civil liabilities, including liabilities
under the federal securities laws, which might be incurred by them in such
capacity.
Section 7 of each of the U.S. Purchase Agreement and the International
Purchase Agreement filed as Exhibits 1.1 and 1.2, respectively, provide that
the Underwriters named therein will indemnify and hold harmless the Company and
each director, officer or controlling person of the Company from and against
certain liabilities, including certain liabilities under the Securities Act of
1933, as amended.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 --Form of U.S. Purchase Agreement
1.2 --Form of International Purchase Agreement
*3.1 --Restated By-Laws of the Company, as amended to date.
*4.1 --Restated Certificate of Incorporation of Hudson Foods, Inc., Section 4 (Incorpo-
rated by reference from Hudson Foods, Inc. Form S-4 Registration Statement No.
33-15274, as amended, filed with the Securities and Exchange Commission on June
23, 1987).
*4.2 --Indenture, dated as of October 1, 1986, between Hudson Foods, Inc. and The First
National Bank of Boston (formerly Bank of America National Trust and Savings As-
sociation) (Incorporated by reference from Hudson Foods, Inc. Form S-1 Registra-
tion Statement No. 33-8889, as amended, filed with the Securities and Exchange
Commission on September 19, 1986).
5.1 --Opinion of Wright, Lindsey & Jennings regarding legality.
*15.1 --Letter regarding unaudited interim financial information.
23.1 --Consent of Wright, Lindsey & Jennings (contained in Exhibit 5.1 hereto).
23.2 --Consent of Coopers & Lybrand L.L.P., Independent Certified Public Accountants.
*24.1 --Powers of Attorney of Messrs. James T. Hudson, Michael T. Hudson, Charles B.
Jurgensmeyer, James R. Hudson, Elmer W. Shannon, Jerry L. Hitt, M.D., Kenneth N.
May and Ms. Jane M. Helmich.
27.1 --Financial Data Schedule (12 months).
</TABLE>
- --------
* Previously filed.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in the
form of prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
Registration Statement as of the time it was declared effective;
2. For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof; and
3. For purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 (and where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF ROGERS, STATE OF ARKANSAS, ON NOVEMBER 9, 1994.
Hudson Foods, Inc.
(Registrant)
/s/ Tommy D. Reynolds
By __________________________________
Tommy D. Reynolds
Secretary and Treasurer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman, Chief Executive
____________________________________ Officer and Director
James T. Hudson (Principal Executive
Officer)
* President, Chief Operating
____________________________________ Officer and Director
Michael T. Hudson
* Executive Vice President--
____________________________________ Finance (Principal
Charles B. Jurgensmeyer Financial and Accounting
Officer) and Director
* Director November 9, 1994
____________________________________
James R. Hudson
* Director
____________________________________
Jane M. Helmich
* Director
____________________________________
Elmer W. Shannon
* Director
____________________________________
Jerry L. Hitt, M.D.
* Director
____________________________________
</TABLE> Kenneth N. May
/s/ Tommy D. Reynolds
*By ___________________________
Tommy D. Reynolds, Attorney-
in-Fact
II-4
<PAGE>
EXHIBIT 1.1
DRAFT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HUDSON FOODS, INC.
(a Delaware corporation)
3,200,000 Shares of Class A Common Stock
U.S. PURCHASE AGREEMENT
-----------------------
Dated: November __, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
HUDSON FOODS, INC.
(a Delaware corporation)
3,200,000 Shares of Class A Common Stock
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
-----------------------
November __, 1994
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
A.G. Edwards & Sons, Inc.
As Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1201
Dear Sirs:
Hudson Foods, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to the underwriters named in Schedule A (the "U.S.
Underwriters"), for whom you are acting as representatives (the "U.S.
Representatives"), 2,000,000 authorized but unissued shares of the Company's
Class A Common Stock, par value $.01 per share (shares of which class of stock
of the Company are hereinafter referred to as "Common Stock"), and the
stockholders named in Schedule B (the "Selling Stockholders") propose to sell
severally an aggregate of 1,200,000 outstanding shares of Common Stock, as set
forth in the appropriate column on Schedule B, to the U.S. Underwriters. Such
shares of Common Stock, aggregating 3,200,000 shares, are to be sold to each
U.S. Underwriter, acting severally and not jointly, in such amounts as are set
forth in Schedule A opposite the name of such U.S. Underwriter. One of the
Selling Stockholders has also granted to the U.S. Underwriters, severally and
not jointly, the option described in Section 2 to purchase all or any part of
480,000 additional shares of Common Stock to cover over-allotments. The
aforesaid 3,200,000 shares of Common Stock (the "Initial U.S. Shares"), together
with all or any part of the 480,000 additional shares of Common Stock subject to
the option described in Section 2 (the "U.S. Option Shares"), are collectively
herein called the "U.S. Shares". The U.S. Shares are more fully described in
the U.S. Prospectus referred to below.
<PAGE>
2
It is understood that the Company and the Selling Stockholders are
concurrently entering into an agreement, dated the date hereof (the
"International Purchase Agreement"), providing for the issuance and sale by the
Company and the Selling Stockholders of an aggregate 800,000 shares of Common
Stock (the "Initial International Shares") through arrangements with certain
underwriters outside the United States (the "International Underwriters" which,
together with the U.S. Underwriters, shall be referred to as the
"Underwriters"), for whom Merrill Lynch International Limited, Donaldson, Lufkin
& Jenrette Securities Corporation and A.G. Edwards & Sons, Inc. are acting as
representatives (the "International Representatives"). One of the Selling
Stockholders has also granted to the International Underwriters an option to
purchase all or any part of 120,000 shares of Common Stock (the "International
Option Shares" which, together with the Initial International Shares, shall be
referred to as the "International Shares") to cover over-allotments. The U.S.
Shares and the International Shares are hereinafter collectively referred to as
the "Offered Shares."
The Company and the Selling Stockholders understand that the U.S.
Underwriters will simultaneously enter into an agreement with the International
Underwriters dated the date hereof (the "Intersyndicate Agreement") providing
for the coordination of certain transactions among the U.S. Underwriters and the
International Underwriters, under the direction of Merrill Lynch, Pierce, Fenner
& Smith Incorporated.
You have advised us that you and the other U.S. Underwriters, acting
severally and not jointly, desire to purchase the Initial U.S. Shares and, if
the U.S. Underwriters so elect, the U.S. Option Shares, and that you have been
authorized by the other U.S. Underwriters to execute this Agreement and the U.S.
Price Determination Agreement referred to below on their behalf.
The initial public offering price per share for the U.S. Shares and
the purchase price per share for the U.S. Shares shall be agreed upon by the
Company, the Selling Stockholders and the U.S. Representatives, acting on behalf
of the several U.S. Underwriters, and such agreement shall be set forth in a
separate written instrument substantially in the form of Exhibit A hereto (the
"U.S. Price Determination Agreement"). The U.S. Price Determination Agreement
may take the form of an exchange of any standard form of written
telecommunication between the Company, the Selling Stockholders and the U.S.
Representatives and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the U.S. Shares will be governed by this
Agreement, as supplemented by the U.S. Price Determination Agreement. From and
after the date of the execution and delivery of the U.S. Price Determination
Agreement, this Agreement shall be deemed to incorporate, and all references
herein to "this Agreement" shall be deemed to include, the U.S. Price
Determination Agreement.
<PAGE>
3
The initial public offering price per share and the purchase price per
share for the International Shares to be paid by the International Underwriters
pursuant to the International Purchase Agreement shall be set forth in a
separate agreement (the "International Price Determination Agreement"), the form
of which is attached to the International Purchase Agreement. The purchase
price per share for the International Shares to be paid by the several
International Underwriters shall be identical to the purchase price per share
for the U.S. Shares to be paid by the several U.S. Underwriters hereunder.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (Registration
No. 33-56019) covering the registration of the Offered Shares under the
Securities Act of 1933, as amended (the "1933 Act"), including the related
preliminary prospectuses, and either (A) has prepared and proposes to file,
prior to the effective date of such registration statement, an amendment to such
registration statement, including final prospectuses or (B) if the Company has
elected to rely upon Rule 430A ("Rule 430A") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations"), will prepare and
file prospectuses, in accordance with the provisions of Rule 430A and Rule
424(b) ("Rule 424(b)") of the 1933 Act Regulations, promptly after execution and
delivery of the U.S. Price Determination Agreement and the International Price
Determination Agreement. The information, if any, included in such prospectuses
that was omitted from the prospectuses included in such registration statement
at the time it becomes effective but that is deemed, pursuant to paragraph (b)
of Rule 430A, to be part of such registration statement at the time it becomes
effective is referred to herein as the "Rule 430A Information". Each prospectus
used before the time such registration statement becomes effective, and any
prospectus that omits the Rule 430A Information that is used after such
effectiveness and prior to the execution and delivery of the U.S. Price
Determination Agreement or the International Price Determination Agreement, is
herein called a "preliminary prospectus". Such registration statement,
including the exhibits thereto and the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, as amended at the
time it becomes effective and including, if applicable, the Rule 430A
Information, is herein called the "Registration Statement", and the
prospectuses, including the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the 1933 Act, forms of two prospectuses to be used
in connection with the offering and sale of U.S. Shares and International Shares
which are included in the Registration Statement at the time it becomes
effective are herein called the "U.S. Prospectus" and the "International
Prospectus", respectively, and collectively, the "Prospectuses" and,
individually, a "Prospectus", except that, if the final U.S. Prospectus or
International Prospectus, as the case may be, first furnished to the U.S.
Underwriters or the International Underwriters after the execution of the U.S.
Price Determination Agreement or the International Price Determination Agreement
for use in connection with the offering of the Offered Shares differs from the
prospectuses included in the Registration Statement at the time it becomes
effective (whether or not such prospectuses are required to be filed pursuant to
Rule 424(b)), the terms "U.S. Prospectus",
<PAGE>
4
"International Prospectus", "Prospectuses" and "Prospectus" shall refer to the
final U.S. Prospectus or International Prospectus, as the case may be, first
furnished to the U.S. Underwriters or the International Underwriters, as the
case may be, for such use. The U.S. Prospectus and International Prospectus are
identical except for differences in the outside front and back covers and the
section headed "Underwriting".
The Company and the Selling Stockholders understand that the U.S.
Underwriters propose to make a public offering of the U.S. Shares as soon as you
deem advisable after the Registration Statement becomes effective and the U.S.
Price Determination Agreement has been executed and delivered.
Section 1. Representations and Warranties. (a) The Company
------------------------------
represents and warrants to and agrees with each of the U.S. Underwriters that:
(i) The Company meets the requirements for use of Form S-3 under the
1933 Act and when the Registration Statement on such form shall become
effective and at all times subsequent thereto up to the Closing Time
referred to below (and, if any U.S. Option Shares are purchased, up to the
Date of Delivery referred to below), (A) the Registration Statement and any
amendments and supplements thereto will comply in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations; (B)
neither the Registration Statement nor any amendment or supplement thereto
will contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and (C) neither of the Prospectuses nor
any amendment or supplement thereto will include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, except that this representation and warranty
does not apply to statements or omissions made in reliance upon and in
conformity with information relating to any Underwriter furnished in
writing to the Company by or on behalf of any Underwriter through you
expressly for use in the Registration Statement or the Prospectuses. For
all purposes of this Agreement, the information provided in the fifth,
seventh and eighth full paragraphs in the section entitled "Underwriting"
set forth in the Prospectuses constitute the only information relating to
any U.S. Underwriter or International Underwriters furnished in writing to
the Company by the U.S. Representatives or the International
Representatives for use in the Registration Statement or Prospectuses.
(ii) The documents incorporated by reference in the Prospectuses
pursuant to Item 12 of Form S-3 under the 1933 Act, at the time they were
filed with the Commission, complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the rules and regulations of
<PAGE>
5
the Commission thereunder (the "1934 Act Regulations"), and, when read
together and with the other information in the Prospectuses, at the time
the Registration Statement becomes effective and at all times subsequent
thereto up to the Closing Time (and, if any U.S. Option Shares are
purchased, up to the Date of Delivery), will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading.
(iii) Coopers & Lybrand, who are reporting upon the audited financial
statements included or incorporated by reference in the Registration
Statement, are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iv) Each of this Agreement and the International Purchase Agreement
have been duly authorized, executed and delivered by the Company.
(v) The consolidated financial statements included or incorporated
by reference in the Registration Statement present fairly the consolidated
financial position of the Company and its subsidiaries as of the dates
indicated and the consolidated results of operations and the consolidated
cash flows of the Company and its subsidiaries for the periods specified.
Such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved. The financial statement schedules, if any, included in
the Registration Statement present fairly the information required to be
stated therein. The selected financial data included or incorporated by
reference in the Prospectuses present fairly the information shown therein
and have been compiled on a basis consistent with that of the audited
consolidated financial statements included or incorporated by reference in
the Registration Statement.
(vi) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware with corporate
power and authority under such laws to own, lease and operate its
properties and conduct its business as described in the Prospectuses; and
the Company is duly qualified to transact business as a foreign corporation
and is in good standing in each other jurisdiction in which it owns or
leases property of a nature, or transacts business of a type, that would
make such qualification necessary, except to the extent that the failure to
so qualify or be in good standing would not have a material adverse effect
on the Company and its subsidiaries, considered as one enterprise.
(vii) The Company's only subsidiaries are: Hudson Farms, Inc., an
Arkansas corporation, Ohse Transportation, Inc., a Kansas corporation and
Hudson Foods Poland s.p. zo.o., a Polish limited liability company
(collectively, the
<PAGE>
6
"Subsidiaries"). Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation with corporate power and authority under such laws to own,
lease and operate its properties and conduct its business; and each
Subsidiary is duly qualified to transact business as a foreign corporation
and is in good standing in each other jurisdiction in which it owns or
leases property of a nature, or transacts business of a type, that would
make such qualification necessary, except to the extent that the failure to
so qualify or be in good standing would not have a material adverse effect
on the Company and its Subsidiaries, considered as one enterprise. All of
the outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued and are fully paid and non-assessable and are
owned by the Company, directly or through one or more Subsidiaries, free
and clear of any pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind.
(viii) The Company had at the date indicated a duly authorized,
issued and outstanding capitalization as set forth in the Prospectuses
under the caption "Capitalization", the Offered Shares conform to the
description thereof contained or incorporated by reference in the
Prospectuses and such description conforms to the rights set forth in the
instruments defining the same.
(ix) The Offered Shares to be sold by the Company pursuant to this
Agreement and the International Purchase Agreement have been duly
authorized and, when issued and paid for in accordance with this Agreement
and the International Purchase Agreement, will be validly issued, fully
paid and non-assessable; no holder thereof will be subject to personal
liability by reason of being such a holder; such Offered Shares are not
subject to the preemptive rights of any stockholder of the Company; and all
corporate action required to be taken for the authorization, issue and sale
of such Offered Shares has been validly and sufficiently taken.
(x) The Offered Shares to be sold by the Selling Stockholders have
been duly authorized and validly issued and are fully paid and non-
assessable; and no holder thereof is or will be subject to personal
liability by reason of being such a holder.
(xi) All of the other outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; no holder thereof is or will be subject to personal
liability by reason of being such a holder; and none of the outstanding
shares of capital stock of the Company was issued in violation of the
preemptive rights of any stockholder of the Company.
(xii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectuses, except as otherwise stated
therein or
<PAGE>
7
contemplated thereby, there has not been (A) any material adverse change in
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business, (B)
any transaction entered into by the Company or any Subsidiary, other than
in the ordinary course of business, that is material to the Company and its
Subsidiaries, considered as one enterprise, or (C) any dividend or
distribution of any kind declared, paid or made by the Company on its
capital stock.
(xiii) Neither the Company nor any Subsidiary is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which it is a party or by
which it may be bound or to which any of its properties may be subject,
except for such defaults that would not have a material adverse effect on
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries, considered as one
enterprise. The execution and delivery of each of this Agreement and the
International Purchase Agreement by the Company, the issuance and delivery
of the Offered Shares, the consummation by the Company of the transactions
contemplated in this Agreement, the International Purchase Agreement and in
the Registration Statement and compliance by the Company with the terms of
each of this Agreement and the International Purchase Agreement have been
duly authorized by all necessary corporate action on the part of the
Company and do not and will not result in any violation of the charter or
by-laws of the Company or any Subsidiary, and do not and will not conflict
with, or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or
any Subsidiary under (A) any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which the Company or any
Subsidiary is a party or by which it may be bound or to which any of its
properties may be subject (except for such conflicts, breaches or defaults
or liens, charges or encumbrances that would not have a material adverse
effect on the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its Subsidiaries,
considered as one enterprise) or (B) any existing applicable law, rule,
regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any Subsidiary or any of their respective properties.
(xiv) No authorization, approval, consent or license of any
government, governmental instrumentality or court, domestic or foreign
(other than under the 1933 Act and the securities or blue sky laws of the
various states and the securities laws of any jurisdiction outside the
United States in which International Shares are offered or sold by the
International Underwriters pursuant to the International Purchase
<PAGE>
8
Agreement), is required for the valid authorization, issuance, sale and
delivery of the Offered Shares.
(xv) Except as disclosed in the Prospectuses, there is no action,
suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending or, to the
knowledge of the Company, threatened against or affecting the Company or
any Subsidiary that is required to be disclosed in the Prospectuses or that
could result in any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company
and its Subsidiaries, considered as one enterprise, or that could
materially and adversely affect the properties or assets of the Company and
its Subsidiaries, considered as one enterprise, or that could adversely
affect the consummation of the transactions contemplated in this Agreement
or the International Purchase Agreement; the aggregate of all pending legal
or governmental proceedings that are not described in the Prospectuses to
which the Company or any Subsidiary is a party or which affect any of their
respective properties, including ordinary routine litigation incidental to
the business of the Company or any Subsidiary, would not have a material
adverse effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its Subsidiaries,
considered as one enterprise.
(xvi) There are no contracts or documents of a character required to
be described in the Registration Statement or the Prospectuses or to be
filed as exhibits to the Registration Statement that are not described and
filed as required.
(xvii) The Company and the Subsidiaries each has good and marketable
title to all properties and assets described in the Prospectuses as owned
by it, free and clear of all liens, charges, encumbrances or restrictions,
except such as (A) are described in the Prospectuses or (B) are neither
material in amount nor materially significant in relation to the business
of the Company and its Subsidiaries, considered as one enterprise; all of
the leases and subleases material to the business of the Company and its
Subsidiaries, considered as one enterprise, and under which the Company or
any Subsidiary holds properties described in the Prospectuses, are in full
force and effect, and neither the Company nor any Subsidiary has any notice
of any material claim of any sort that has been asserted by anyone adverse
to the rights of the Company or any Subsidiary under any of the leases or
subleases mentioned above, or affecting or questioning the rights of the
Company or any Subsidiary to the continued possession of the leased or
subleased premises under any such lease or sublease.
(xviii) The Company and the Subsidiaries each owns, possesses or has
obtained all material governmental licenses, permits, certificates,
consents, orders,
<PAGE>
9
approvals and other authorizations necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as
presently conducted, and neither the Company nor any Subsidiary has
received any notice of proceedings relating to revocation or modification
of any such licenses, permits, certificates, consents, orders, approvals or
authorizations.
(xix) The Company and the Subsidiaries each owns or possesses, or can
acquire on reasonable terms, adequate patents, patent licenses, trademarks,
service marks and trade names necessary to carry on its business as
presently conducted, and neither the Company nor any Subsidiary has
received any notice of infringement of or conflict with asserted rights of
others with respect to any patents, patent licenses, trademarks, service
marks or trade names that in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could materially adversely affect
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries, considered as one
enterprise.
(xx) To the best knowledge of the Company, no labor problem exists
with its employees or with employees of the Subsidiaries or is imminent
that could adversely affect the Company and its Subsidiaries, considered as
one enterprise, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or the Subsidiaries'
principal suppliers, contractors or customers that could be expected to
materially adversely affect the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise.
(xxi) The Company has not taken and will not take, directly or
indirectly, any action designed to, or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Common Stock.
(xxii) Except as disclosed in the Registration Statement or except as
would not individually or in the aggregate have a material adverse effect
on the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries, considered as one
enterprise, (A) the Company and the Subsidiaries are each in compliance
with all applicable Environmental Laws, (B) the Company and the
Subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened Environmental Claims
against the Company or any of the Subsidiaries, and (D) there are no
circumstances with respect to any property or operations of the Company or
the Subsidiaries that could reasonably be anticipated to form the basis of
an Environmental Claim against the Company or the Subsidiaries.
<PAGE>
10
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any
judicial or administrative interpretation thereof including any judicial or
administrative order, consent decree or judgment, relating to the
environment, health, safety or any chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority. "Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigations or proceedings
relating in any way to any Environmental Law.
(b) Each of the Selling Stockholders severally represents and
warrants to, and agrees with, each U.S. Underwriter as follows:
(i) To the best knowledge of such Selling Stockholder, the
representations and warranties of the Company contained in Section 1(a) are
true and correct; such Selling Stockholder has reviewed and is familiar
with the Registration Statement as originally filed with the Commission and
the preliminary prospectuses contained therein and has no knowledge of any
material fact, condition or information not disclosed in such preliminary
prospectuses that has adversely affected or could adversely affect the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its Subsidiaries, considered as one
enterprise; to the best knowledge of such Selling Stockholder, such
preliminary prospectuses do not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and such Selling Stockholder is not prompted to sell
the Shares to be sold by such Selling Stockholder by any information
concerning the Company or any Subsidiary that is not set forth in the
Prospectuses.
(ii) When the Registration Statement shall become effective and at all
times subsequent thereto up to the Closing Time (and, if any U.S. Option
Shares are purchased, up to the Date of Delivery), (A) such parts of the
Registration Statement and any amendments and supplements thereto as
specifically refer to such Selling Stockholder will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading and (B) such parts of the Prospectuses as specifically refer to
such Selling Stockholder will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
<PAGE>
11
(iii) Such Selling Stockholder has duly executed and delivered, in
the form heretofore furnished to you, a Power of Attorney and Custody
Agreement (the "Custody Agreement") with James T. Hudson as custodian (the
"Custodian"), and ________________ and ________________ as attorneys-in-
fact (the "Attorneys-in-Fact"); the Attorneys-in-Fact are authorized to
execute and deliver this Agreement (including the U.S. Price Determination
Agreement) and the International Purchase Agreement (including the
International Price Determination Agreement) on behalf of such Selling
Stockholder and otherwise to act on behalf of such Selling Stockholder in
connection with this Agreement and the International Purchase Agreement,
and the Attorneys-in-Fact and the Custodian are each authorized to deliver
the Offered Shares to be sold by such Selling Stockholder pursuant to this
Agreement and the International Purchase Agreement and to accept payment
therefor.
(iv) All authorizations and consents necessary for the execution and
delivery by such Selling Stockholder of the Custody Agreement, the
execution and delivery by or on behalf of such Selling Stockholder of this
Agreement and the International Purchase Agreement and the sale and
delivery pursuant to this Agreement and the International Purchase
Agreement of the Offered Shares to be sold by such Selling Stockholder have
been given and are in full force and effect on the date hereof and will be
in full force and effect at the Closing Time and, if any U.S. Option Shares
or International Option Shares are purchased, on the Date of Delivery.
(v) The execution and delivery of each of this Agreement and the
International Purchase Agreement and the consummation of the transactions
contemplated in each of this Agreement and the International Purchase
Agreement will not result in a breach by such Selling Stockholder of, or
constitute a default by such Selling Stockholder under, any agreement,
instrument, decree, judgment or order to which such Selling Stockholder is
a party, to which the properties of such Selling Stockholder may be subject
or by which such Selling Stockholder may be bound.
(vi) Such Selling Stockholder will, at the Closing Time and, if any
U.S. Option Shares or International Option Shares are purchased, on the
Date of Delivery, have good and marketable title to the Offered Shares to
be sold by such Selling Stockholder pursuant to this Agreement and the
International Purchase Agreement, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind, other
than pursuant to this Agreement and the International Purchase Agreement;
such Selling Stockholder has full right, power and authority to sell,
transfer and deliver such Offered Shares pursuant to this Agreement and the
International Purchase Agreement; and upon delivery of such Offered Shares
and payment of the purchase price therefor as contemplated in this
Agreement and the International Purchase Agreement, each of the
Underwriters will receive good and marketable title to the Offered Shares
purchased by it from such Selling Stockholder,
<PAGE>
12
free and clear of any pledge, lien, security interest, charge, claim,
equity or encumbrance of any kind.
(vii) Certificates for all of the Offered Shares to be sold by such
Selling Stockholder pursuant to this Agreement and the International
Purchase Agreement, in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignment in blank
with signatures guaranteed, have been placed in custody with the Custodian
for the purpose of effecting delivery under this Agreement and the
International Purchase Agreement.
(viii) Such Selling Stockholder acknowledges that for a period of 120
days from the date hereof, such Selling Stockholder will not, without the
prior written consent of the U.S. Representatives and the International
Representatives, directly or indirectly, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any shares of Common Stock
or securities convertible into Common Stock, other than to the U.S.
Underwriters pursuant to this Agreement or the International Underwriters
pursuant to the International Purchase Agreement; provided that during such
period such Selling Stockholder may make gifts of shares of Common Stock or
securities convertible into Common Stock upon the condition that the donees
agree to be bound by the foregoing restriction in the same manner as it
applies to such Selling Stockholder.
(ix) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the price
of the Common Stock; and such Selling Stockholder has not distributed and
will not distribute any prospectus or other offering material in connection
with the offering and sale of the Shares other than any preliminary
prospectuses filed with the Commission or the Prospectuses or other
material permitted by the 1933 Act.
(c) Any certificate signed by any officer of the Company or any
Subsidiary and delivered to you or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each of the Underwriters
as to the matters covered thereby; and any certificate signed by or on behalf of
the Selling Stockholders as such and delivered to you or to counsel for the
Underwriters shall be deemed a representation and warranty by the Selling
Stockholders to each of the Underwriters as to the matters covered thereby.
Section 2. Sale and Delivery to the U.S. Underwriters; Closing. (a)
---------------------------------------------------
On the basis of the representations and warranties herein contained, and subject
to the terms and conditions herein set forth, the Company and each Selling
Stockholder agree, severally and not jointly, to sell to each U.S. Underwriter,
and each U.S. Underwriter agrees, severally
<PAGE>
13
and not jointly, to purchase from the Company and each Selling Stockholder, at
the purchase price per share for the Initial U.S. Shares to be agreed upon by
the U.S. Representatives, the Company and the Selling Stockholders in accordance
with Section 2(b) or 2(c), and set forth in the U.S. Price Determination
Agreement, (i) in the case of the Company, the number of Initial U.S. Shares
that bears the same relation to 2,000,000 as the number of Initial U.S. Shares
set forth opposite the name of such U.S. Underwriter in Schedule A bears to the
total number of Initial U.S. Shares (such proportion is hereinafter referred to
as such U.S. Underwriter's "underwriting obligation proportion") and (ii) in the
case of each Selling Stockholder, the underwriting obligation proportion of such
U.S. Underwriter of the aggregate number of Initial U.S. Shares as are proposed
to be sold by such Selling Stockholder and set forth opposite such Selling
Stockholder's name in the appropriate column on Schedule B, subject, in each
case, to such adjustments as the U.S. Representatives, in their discretion,
shall make to eliminate any sales or purchases of fractional shares. If the
Company elects to rely on Rule 430A, Schedules A and B may be attached to the
U.S. Price Determination Agreement.
(b) If the Company has elected not to rely upon Rule 430A, the initial
public offering price per share for the Initial U.S. Shares and the purchase
price per share for the Initial U.S. Shares to be paid by the several U.S.
Underwriters shall be agreed upon and set forth in the U.S. Price Determination
Agreement, dated the date hereof, and an amendment to the Registration Statement
containing such per share price information will be filed before the
Registration Statement becomes effective.
(c) If the Company has elected to rely upon Rule 430A, the initial
public offering price per share for the Initial U.S. Shares and the purchase
price per share for the Initial U.S. Shares to be paid by the several U.S.
Underwriters shall be agreed upon and set forth in the U.S. Price Determination
Agreement. In the event that the U.S. Price Determination Agreement has not
been executed by the close of business on the fourth business day following the
date on which the Registration Statement becomes effective, this Agreement shall
terminate forthwith, without liability of any party to any other party except
that Sections 7, 8 and 9 shall remain in effect.
(d) In addition, on the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth,
James T. Hudson, one of the Selling Stockholders, has granted an option to the
U.S. Underwriters, severally and not jointly, to purchase up to the additional
number of U.S. Option Shares set forth opposite his name in the appropriate
column of Schedule B at the same purchase price per share as shall be applicable
to the Initial U.S. Shares. The option hereby granted will expire 30 days after
the date upon which the Registration Statement becomes effective or, if the
Company has elected to rely upon Rule 430A, the date of the U.S. Price
Determination Agreement, and may be exercised, in whole or in part (but not more
than once), only for the purpose of covering over-allotments that may be made in
connection with the offering and distribution of
<PAGE>
14
the Initial U.S. Shares upon notice by you to James T. Hudson, c/o the Company
setting forth the number of U.S. Option Shares as to which the several U.S.
Underwriters are exercising the option, and the time and date of payment and
delivery thereof. Such time and date of delivery (the "Date of Delivery") shall
be determined by you but shall not be later than seven full business days after
the exercise of such option, nor in any event prior to the Closing Time. If the
option is exercised as to all or any portion of the U.S. Option Shares, the U.S.
Option Shares as to which the option is exercised shall be purchased by the U.S.
Underwriters, severally and not jointly, in their respective underwriting
obligation proportions.
(e) Payment of the purchase price for, and delivery of certificates
for, the Initial U.S. Shares shall be made at the offices of Shearman &
Sterling, 599 Lexington Avenue, New York, New York 10022, or at such other place
as shall be agreed upon by the Company, the Selling Stockholders and you, at
10:00 A.M. either (i) on the fifth full business day after the effective date of
the Registration Statement, or (ii) if the Company has elected to rely upon Rule
430A, the fifth full business day after execution of the U.S. Price
Determination Agreement (unless, in either case, postponed pursuant to Section
11 or 12), or at such other time not more than ten full business days thereafter
as you, the Company and the Selling Stockholders shall determine (such date and
time of payment and delivery being herein called the "Closing Time"). In
addition, in the event that any or all of the U.S. Option Shares are purchased
by the U.S. Underwriters, payment of the purchase price for, and delivery of
certificates for, such U.S. Option Shares shall be made at the offices of
Shearman & Sterling set forth above, or at such other place as the Company, the
Selling Stockholders and you shall determine, on the Date of Delivery as
specified in the notice from you to the Company. Payment shall be made to the
Company by certified or official bank check or checks in New York Clearing House
funds payable to the order of the Company and to the Selling Stockholders or to
a custodian or other representative of the Selling Stockholders by certified or
official bank check or checks in New York Clearing House funds payable to the
order of the Selling Stockholders, against delivery to you for the respective
accounts of the several U.S. Underwriters of certificates for the U.S. Shares to
be purchased by them.
(f) Certificates for the Initial U.S. Shares and U.S. Option Shares to
be purchased by the U.S. Underwriters shall be in such denominations and
registered in such names as you may request in writing at least two full
business days before the Closing Time or the Date of Delivery, as the case may
be. The certificates for the Initial U.S. Shares and U.S. Option Shares will be
made available in New York City for examination and packaging by you not later
than 10:00 A.M. on the business day prior to the Closing Time or the Date of
Delivery, as the case may be.
(g) It is understood that each U.S. Underwriter has authorized you,
for its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the
<PAGE>
15
U.S. Shares that it has agreed to purchase. You, individually and not as U.S.
Representatives, may (but shall not be obligated to) make payment of the
purchase price for the Initial U.S. Shares, or U.S. Option Shares, to be
purchased by any U.S. Underwriter whose check or checks shall not have been
received by the Closing Time or the Date of Delivery, as the case may be.
Section 3. Certain Covenants of the Company. The Company covenants
--------------------------------
with each U.S. Underwriter as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and, if the Company elects to rely upon Rule
430A and subject to Section 3(b) hereof, will comply with the requirements
of Rule 430A and will notify you immediately, and confirm the notice in
writing, (i) when the Registration Statement, or any post-effective
amendment to the Registration Statement, shall have become effective, or
any supplement to the Prospectuses or any amended Prospectuses shall have
been filed, (ii) of the receipt of any comments from the Commission, (iii)
of any request by the Commission to amend the Registration Statement or
amend or supplement the Prospectuses or for additional information and (iv)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of
the qualification of the Offered Shares for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for
any of such purposes. The Company will use every reasonable effort to
prevent the issuance of any such stop order or of any order preventing or
suspending such use and, if any such order is issued, to obtain the lifting
thereof at the earliest possible moment.
(b) The Company will not at any time file or make any amendment to the
Registration Statement, or any amendment or supplement (i) if the Company
has not elected to rely upon Rule 430A, to the Prospectuses (including
amendments of the documents incorporated by reference into the
Prospectuses) or (ii) if the Company has elected to rely upon Rule 430A, to
either the prospectuses included in the Registration Statement at the time
it becomes effective or to the Prospectuses (including documents
incorporated by reference into such prospectuses or to the Prospectuses),
of which you shall not have previously been advised and furnished a copy,
or to which you or counsel for the Underwriters shall reasonably object.
(c) The Company has furnished or will furnish to you and counsel for
the Underwriters without charge as many signed copies of the Registration
Statement as originally filed and of all amendments thereto, whether filed
before or after the Registration Statement becomes effective, copies of all
exhibits and documents filed
<PAGE>
16
therewith (including documents incorporated by reference into the
Prospectuses pursuant to Item 12 of Form S-3 under the 1933 Act) and signed
copies of all consents and certificates of experts, as you may reasonably
request and has furnished or will furnish to you, for each U.S.
Underwriter, one conformed copy of the Registration Statement as originally
filed and of each amendment thereto (including documents incorporated by
reference into the Prospectuses but without exhibits).
(d) The Company will deliver to each U.S. Underwriter, without charge,
from time to time until the effective date of the Registration Statement
(or, if the Company has elected to rely upon Rule 430A, until the date of
the U.S. Price Determination Agreement), as many copies of each preliminary
prospectus as such U.S. Underwriter may reasonably request, and the Company
hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will deliver to each U.S. Underwriter, without
charge, as soon as the Registration Statement shall have become effective
(or, if the Company has elected to rely upon Rule 430A, as soon as
practicable on or after the date of the U.S. Price Determination Agreement)
and thereafter from time to time as requested during the period when the
Prospectuses are required to be delivered under the 1933 Act, such number
of copies of the Prospectuses (as supplemented or amended) as such U.S.
Underwriter may reasonably request.
(e) The Company will comply to the best of its ability with the 1933
Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the
Offered Shares as contemplated in this Agreement and in the Prospectuses.
If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Offered Shares any event shall
occur or condition exist as a result of which it is necessary, in the
opinion of counsel for the Underwriters or counsel for the Company, to
amend the Registration Statement or amend or supplement the Prospectuses in
order that the Prospectuses will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, or if it shall be
necessary, in the opinion of either such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectuses in order
to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(b) hereof, such amendment or supplement as
may be necessary to correct such untrue statement or omission or to make
the Registration Statement or the Prospectuses comply with such
requirements.
(f) The Company will use its best efforts, in cooperation with the
U.S. Underwriters, to qualify the Offered Shares for offering and sale
under the applicable
<PAGE>
17
securities laws of such states and other jurisdictions as you may designate
and to maintain such qualifications in effect for a period of not less than
one year from the effective date of the Registration Statement; provided,
--------
however, that the Company shall not be obligated to file any general
-------
consent to service of process or to qualify as a foreign corporation or as
a dealer in securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. The Company will
file such statements and reports as may be required by the laws of each
jurisdiction in which the Offered Shares have been qualified as above
provided.
(g) The Company will make generally available to its security holders
as soon as practicable, but not later than 45 days after the close of the
period covered thereby, an earnings statement of the Company (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations),
covering a period of 12 months beginning after the effective date of the
Registration Statement and covering a period of 12 months beginning after
the effective date of any post-effective amendment to the Registration
Statement.
(h) The Company will use the net proceeds received by it from the sale
of the Offered Shares in the manner specified in the Prospectuses under the
caption "Use of Proceeds".
(i) The Company, during the period when the Prospectuses is required
to be delivered under the 1933 Act, will file promptly all documents
required to be filed with the Commission pursuant to Section 13 or 14 of
the 1934 Act subsequent to the time the Registration Statement becomes
effective.
(j) For a period of five years after the Closing Time, the Company
will furnish to you and, upon request, to each U.S. Underwriter, copies of
all annual reports, quarterly reports and current reports filed with the
Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as may
be designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to its stockholders or
security holders generally.
(k) For a period of 120 days from the date hereof, the Company will
not, without your prior written consent, directly or indirectly, sell,
offer to sell, grant any option for the sale of, or otherwise dispose of,
any Common Stock or securities convertible into Common Stock, other than to
the U.S. Underwriters pursuant to this Agreement and to the International
Underwriters pursuant to the International Purchase Agreement and other
than pursuant to employee benefit plans.
<PAGE>
18
(l) If the Company has elected to rely upon Rule 430A, it will take
such steps as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received for filing
by the Commission and, in the event that it was not, it will promptly file
such prospectus.
(m) The Company has complied and will comply with all the provisions
of Florida H.B. 1771, codified as Section 517.075 of the Florida statutes,
and all regulations promulgated thereunder relating to issuers doing
business in Cuba.
(n) The Company will cause each of its executive officers and
directors to enter into agreements with the U.S. Representatives and the
International Representatives to the effect that they will not, for a
period of 120 days after commencement of the public offering of the Offered
Shares, without the prior consent of the U.S. Representatives, sell, offer
to sell, grant any option for the sale of, or otherwise dispose of, any
Common Stock or securities convertible into Common Stock, other than to the
U.S. Underwriters and International Underwriters pursuant to this Agreement
and the International Purchase Agreement.
Section 4. Payment of Expenses. The Company and the Selling
-------------------
Stockholders will pay and bear all costs and expenses incident to the
performance of their obligations under this Agreement, including (a) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits), as originally filed and as amended, the
preliminary prospectuses and the Prospectuses and any amendments or supplements
thereto, and the cost of furnishing copies thereof to the Underwriters, (b) the
preparation, printing and distribution of this Agreement (including the U.S.
Price Determination Agreement, the Agreement among U.S. Underwriters), the
International Purchase Agreement (including the the International Price
Determination Agreement, the Agreement among International Underwriters and the
Intersyndicate Agreement between the U.S. Underwriters and the International
Underwriters), the certificates for the Offered Shares and the Blue Sky Survey,
(c) the delivery of the Offered Shares to the Underwriters, including any stock
transfer taxes payable upon the sale of the Offered Shares to the Underwriters
and the transfer of the Offered Shares between the U.S. Underwriters and the
International Underwriters, (d) the fees and disbursements of the Company's
counsel and accountants, (e) fees relating to the listing of the Offered Shares
on the New York Stock Exchange and (f) the qualification of the Offered Shares
under the applicable securities laws in accordance with Section 3(f) and any
filing for review of the offering with the National Association of Securities
Dealers, Inc., including filing fees and fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the Blue Sky
Survey.
If this Agreement is terminated by you in accordance with the
provisions of Section 5, 10(a)(i) or 12, the Company and the Selling
Stockholders shall reimburse the
<PAGE>
19
Underwriters for all their out-of-pocket expenses, including the fees and
disbursements of counsel for the Underwriters.
The provisions of this Section shall not affect any agreement that the
Company and the Selling Stockholders may make for the sharing of such costs and
expenses.
Section 5. Conditions of U.S. Underwriters' Obligations. In addition
--------------------------------------------
to the execution and delivery of the U.S. Price Determination Agreement, the
obligations of the several U.S. Underwriters to purchase and pay for the U.S.
Shares that they have respectively agreed to purchase pursuant to this Agreement
(including any U.S. Option Shares as to which the option granted in Section 2
has been exercised and the Date of Delivery determined by you is the same as the
Closing Time) are subject to the accuracy of the representations and warranties
of the Company and the Selling Stockholders contained herein (including those
contained in the U.S. Price Determination Agreement) or in certificates of any
officer of the Company or any Subsidiary or certificates by or on behalf of the
Selling Stockholders delivered pursuant to the provisions hereof, to the
performance by the Company and the Selling Stockholders of their obligations
hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date of this Agreement or, with your consent, at a
later time and date not later, however, than 5:30 P.M. on the first
business day following the date hereof, or at such later time or on such
later date as you may agree to in writing with the approval of a majority
in interest of the several U.S. Underwriters; and at the Closing Time no
stop order suspending the effectiveness of the Registration Statement shall
have been issued under the 1933 Act and no proceedings for that purpose
shall have been instituted or shall be pending or, to your knowledge or the
knowledge of the Company, shall be contemplated by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the satisfaction of counsel for the Underwriters. If
the Company has elected to rely upon Rule 430A, Prospectuses containing the
Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with
the requirements of Rule 430A).
(b) At the Closing Time, you shall have received a signed opinion of
Wright, Lindsey & Jennings, counsel for each of the Company and the Selling
Shareholders, dated as of the Closing Time, together with signed or
reproduced copies of such opinion for each of the other U.S. Underwriters,
in form and substance satisfactory to counsel for the Underwriters, to the
effect that:
<PAGE>
20
(i) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware
with corporate power and authority under such laws to own, lease and
operate its properties and conduct its business as described in the
Prospectuses.
(ii) The Company is duly qualified to transact business as a
foreign corporation and is in good standing in each other jurisdiction
in which it owns or leases property of a nature, or transacts business
of a type, that would make such qualification necessary, except to the
extent that the failure to so qualify or be in good standing would not
have a material adverse effect on the Company and its Subsidiaries,
considered as one enterprise.
(iii) Each Subsidiary is a corporation duly incorporated,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation with corporate power and authority
under such laws to own, lease and operate its properties and conduct
its business.
(iv) Each Subsidiary is duly qualified to transact business as
a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification
necessary, except to the extent that the failure to so qualify or be
in good standing would not have a material adverse effect on the
Company and its Subsidiaries, considered as one enterprise.
(v) The Offered Shares sold by the Company pursuant to the
provisions of this Agreement and the International Purchase Agreement
have been duly authorized and validly issued and are fully paid and
non-assessable; no holder thereof is subject to personal liability by
reason of being such a holder; such Offered Shares are not subject to
the preemptive rights of any stockholder of the Company, and all
corporate action required to be taken for the authorization, issue and
sale of such Offered Shares has been validly and sufficiently taken.
(vi) The Offered Shares sold by the Selling Stockholders
pursuant to the provisions of this Agreement and the International
Purchase Agreement have been duly authorized and validly issued and
are fully paid and non-assessable; no holder thereof is subject to
personal liability by reason of being such a holder; and none of such
Offered Shares was issued in violation of the preemptive rights of any
stockholder of the Company.
(vii) All of the other outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully
paid and
<PAGE>
21
non-assessable; no holder thereof is subject to personal liability by
reason of being such a holder; and none of the outstanding shares of
capital stock of the Company was issued in violation of the preemptive
rights of any stockholder of the Company.
(viii) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectuses under the heading
"Capitalization".
(ix) All of the outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued and are fully
paid and non-assessable; free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind; and none
of such shares was issued in violation of the preemptive rights of any
stockholder of the Subsidiaries.
(x) The Offered Shares conform in all material respects as to
legal matters to the description thereof in the Prospectuses.
(xi) Each of this Agreement (including the U.S. Price
Determination Agreement) and the International Purchase Agreement
(including the International Price Determination Agreement) has been
duly authorized, executed and delivered by the Company.
(xii) No authorization, approval, consent or license of any
government, governmental instrumentality or court, domestic or foreign
(other than under the 1933 Act and the securities or blue sky laws of
the various states and the securities laws of any jurisdiction in
which the International Shares are offered or sold by the
International Underwriters pursuant to the International Purchase
Agreement), is required for the valid authorization, issuance, sale
and delivery of the Offered Shares.
(xiii) Such counsel does not know of any statutes or
regulations, or any pending or threatened legal or governmental
proceedings, required to be described in the Prospectuses that are not
described as required, nor of any contracts or documents of a
character required to be described or referred to in the Registration
Statement or the Prospectuses or to be filed as exhibits to the
Registration Statement that are not described, referred to or filed as
required.
(xiv) The descriptions in the Prospectuses of the statutes,
regulations, legal or governmental proceedings, contracts and other
documents therein described are accurate and fairly summarize the
information required to be shown.
<PAGE>
22
(xv) The statements made in the Prospectuses under "Certain
United States Tax Consequences For Non-U.S. Shareholders" and
_________, to the extent that they constitute matters of law or legal
conclusions, have been reviewed by such counsel and fairly present the
information disclosed therein in all material respects.
(xvi) To the knowledge of such counsel, no default exists in
the performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, loan
agreement, note, lease or other agreement or instrument that is
described or referred to in the Registration Statement or the
Prospectuses or filed as an exhibit to the Registration Statement.
(xvii) The execution and delivery of this Agreement, the
issuance and delivery of the Offered Shares, the consummation by the
Company of the transactions contemplated in each of this Agreement,
the International Purchase Agreement and in the Registration Statement
and compliance by the Company with the terms of this Agreement and the
International Purchase Agreement do not and will not result in any
violation of the charter or by-laws of the Company or any Subsidiary,
and do not and will not conflict with, or result in a breach of any of
the terms or provisions of, or constitute a default under, or result
in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company or any Subsidiary under (A) any
contract, indenture, mortgage, loan agreement, note, lease or any
other agreement or instrument known to such counsel, to which the
Company or any Subsidiary is a party or by which it may be bound or to
which any of its properties may be subject (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise), (B) any
existing applicable law, rule or regulation (other than the securities
or blue sky laws of the various states and the securities laws of any
jurisdiction in which the International Shares are offered or sold by
the International Underwriters pursuant to the International Purchase
Agreement, as to which such counsel need express no opinion), or (C)
any judgment, order or decree known to such counsel of any government,
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of their
respective properties.
(xviii) The Registration Statement became effective under the
1933 Act on the date of this Agreement; any required filing of the
Prospectuses or any supplement thereto pursuant to Rule 424(b) has
been made in the manner and
<PAGE>
23
within the time period required by Rule 424(b); and, to the knowledge
of such counsel, the Registration Statement is still effective, no
stop order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated under the 1933 Act.
(xix) The Registration Statement (including the Rule 430A
Information, if applicable) and the Prospectuses, excluding the
documents incorporated by reference therein, and each amendment or
supplement thereto (except for the financial statements and other
financial or statistical data included therein or omitted therefrom,
as to which such counsel need express no opinion), as of their
respective effective or issue dates, appear on their face to have been
appropriately responsive in all material respects to the requirements
of the 1933 Act and the 1933 Act Regulations.
(xx) The documents incorporated by reference in the
Prospectuses (except for the financial statements and other financial
or statistical data included therein or omitted therefrom, as to which
such counsel need express no opinion), as of the dates they were filed
with the Commission, appear on their face to have been appropriately
responsive in all material respects to the requirements of the 1934
Act and the 1934 Act Regulations.
(xxi) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for,
an investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
(xxii) Each of this Agreement, the International Purchase
Agreement and the Custody Agreement have been duly executed and
delivered by the Selling Stockholders or by an Attorney-in-Fact on
behalf of the Selling Stockholders, and each of the Selling
Stockholders has duly executed and delivered such Selling
Stockholder's respective Power of Attorney.
(xxiii) To the knowledge of such counsel, each Selling
Stockholder has valid and marketable title to the Offered Shares to be
sold by such Selling Stockholder pursuant to this Agreement and the
International Purchase Agreement, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind,
and has full right, power and authority to sell, transfer and deliver
such Offered Shares pursuant to this Agreement and the International
Purchase Agreement. By delivery of a certificate or certificates
therefor such Selling Stockholder will transfer to the Underwriters
who have purchased such Offered Shares pursuant to this Agreement and
the
<PAGE>
24
International Purchase Agreement (without notice of any defect in the
title of such Selling Stockholder and who are otherwise bona fide
purchasers for purposes of the Uniform Commercial Code) valid and
marketable title to such Offered Shares, free and clear of any adverse
claim.
(xxiv) Each Attorney-in-Fact has been duly authorized by each
Selling Stockholder to deliver the Offered Shares on behalf of such
Selling Stockholder in accordance with the terms of this Agreement and
the International Purchase Agreement.
(xxv) There are no transfer or similar taxes payable in
connection with the sale and delivery of the Offered Shares by the
Selling Stockholders to the Underwriters, except as specified in such
opinion.
(xxvi) In the course of acting as counsel to the Company and the
Selling Stockholders in connection with the public offering of the
Offered Shares, such counsel have participated in the preparation of
the Registration Statement and Prospectuses and are familiar with or
have participated in the preparation of the documents incorporated by
reference in the Prospectuses and no facts have come to the attention
of such counsel to lead them to believe (A) that the Registration
Statement (including the Rule 430A Information, if applicable) or any
amendment thereto (except for the financial statements and other
financial or statistical data included therein or omitted therefrom,
as to which such counsel need express no opinion), at the time the
Registration Statement or any such amendment became effective,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (B) that the Prospectuses or any
amendment or supplement thereto (except for the financial statements
and other financial or statistical data included therein or omitted
therefrom, as to which such counsel need express no opinion), at the
time the Prospectuses were issued, at the time any such amended or
supplemented prospectus was issued or at the Closing Time, included or
includes an untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading or (C) that the documents incorporated by reference in
the Prospectuses (except for the financial statements and other
financial or statistical data included therein or omitted therefrom,
as to which such counsel need express no opinion, and except to the
extent that any statement therein is modified or superseded in the
Prospectuses), as of the dates they were filed with the Commission,
contained an untrue statement of a material fact or omitted to state a
material fact
<PAGE>
25
required to be stated therein or necessary to make the statements
therein not misleading.
Such opinion shall be to such further effect with respect to other legal
matters relating to this Agreement and the International Purchase Agreement
and the sale of the Offered Shares pursuant to this Agreement and the
International Purchase Agreement as counsel for the Underwriters may
reasonably request. In giving such opinion, such counsel may rely, as to
all matters governed by the laws of jurisdictions other than the law of the
State of Arkansas, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon opinions of other counsel,
who shall be counsel satisfactory to counsel for the Underwriters, in which
case the opinion shall state that they believe you and they are entitled to
so rely. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and the Subsidiaries and
certificates of public officials; provided that such certificates have been
delivered to the U.S. Underwriters.
(c) At the Closing Time, you shall have received the favorable opinion
of Shearman & Sterling, counsel for the Underwriters, dated as of the
Closing Time, together with signed or reproduced copies of such opinion for
each of the other U.S. Underwriters, to the effect that the opinion
delivered pursuant to Sections 5(b) appears on its face to be appropriately
responsive to the requirements of this Agreement except, specifying the
same, to the extent waived by you, and with respect to the incorporation
and legal existence of the Company, the Offered Shares sold by the Company,
this Agreement, the International Purchase Agreement, the Registration
Statement, the Prospectuses, the documents incorporated by reference and
such other related matters as you may require. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the State of New York, the federal law of the United
States and the General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to you. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and
the Subsidiaries and certificates of public officials; provided that such
certificates have been delivered to the Underwriters.
(d) At the Closing Time, (i) the Registration Statement and the
Prospectuses, as they may then be amended or supplemented, shall contain
all statements that are required to be stated therein under the 1933 Act
and the 1933 Act Regulations and in all material respects shall conform to
the requirements of the 1933 Act and the 1933 Act Regulations, the Company
shall have complied in all material respects with Rule 430A (if it shall
have elected to rely thereon) and neither the Registration Statement nor
the Prospectuses, as they may then be amended or
<PAGE>
26
supplemented, shall contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) there shall not have been,
since the respective dates as of which information is given in the
Registration Statement, any material adverse change in the condition
(financial or otherwise), earnings, business affairs or business prospects
of the Company and its Subsidiaries, considered as one enterprise, whether
or not arising in the ordinary course of business, (iii) no action, suit or
proceeding shall be pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary that would be required to be set
forth in the Prospectuses other than as set forth therein and no
proceedings shall be pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary before or by any
government, governmental instrumentality or court, domestic or foreign,
that could result in any material adverse change in the condition
(financial or otherwise), earnings, business affairs or business prospects
of the Company and its Subsidiaries, considered as one enterprise, other
than as set forth in the Prospectuses, (iv) the Company shall have complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to the Closing Time and (v) the other
representations and warranties of the Company set forth in Section 1(a)
shall be accurate as though expressly made at and as of the Closing Time.
At the Closing Time, you shall have received a certificate of the President
or a Vice President, and the Treasurer of the Company, dated as of the
Closing Time, to such effect.
(e) At the Closing Time, the representations and warranties of each
Selling Stockholder set forth in Section 1(b) shall be accurate as though
expressly made at and as of the Closing Time. At the Closing Time, you
shall have received a certificate of or on behalf of each Selling
Stockholder, dated as of the Closing Time, to such effect with respect to
such Selling Stockholder.
(f) At the time that this Agreement is executed by the Company, you
shall have received from Coopers & Lybrand a letter, dated such date, in
form and substance satisfactory to you, together with signed or reproduced
copies of such letter for each of the other U.S. Underwriters, confirming
that they are independent public accountants with respect to the Company
within the meaning of the 1933 Act and applicable published 1933 Act
Regulations, and stating in effect that:
(i) in their opinion, the audited financial statements included
or incorporated by reference in the Registration Statement and the
Prospectuses comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the published
rules and regulations thereunder;
<PAGE>
27
(ii) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of a
reading of the unaudited interim consolidated financial statements of
the Company for the three month period ended January 1, 1994, the
three and six month periods ended April 2, 1994 and the three and nine
month periods ended July 2, 1994, included or incorporated by
reference in the Registration Statement and the Prospectuses
(collectively, the "10-Q Financials"), a reading of the latest
available unaudited interim consolidated financial statements of the
Company, a reading of the minutes of all meetings of the stockholders
and directors of the Company and its subsidiaries and the Compensation
and Audit Committees of the Company's Board of Directors since October
3, 1993, inquiries of certain officials of the Company and its
subsidiaries responsible for financial and accounting matters, a
limited review in accordance with standards established by the
American Institute of Certified Public Accountants with respect to the
10-Q Financials performed at the request of the Company, and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) the 10-Q Financials incorporated by reference in the
Registration Statement and the Prospectuses do not comply as to
form in all material respects with the accounting requirements of
the 1934 Act and the 1934 Act Regulations applicable to unaudited
financial statements included in Form 10-Q or are not in
conformity with generally accepted accounting principles applied
on a basis substantially consistent with that of the audited
financial statements included or incorporated by reference in the
Registration Statement and the Prospectuses;
(B) at October 1, 1994 and at a specified date not more than
five days prior to the date of this Agreement, there was any
change in the ___________________ of the Company and its
consolidated subsidiaries or any decrease in the
_________________ of the Company and its consolidated
subsidiaries or any increase in the_________/*/of the Company and
its consolidated subsidiaries, in each case as compared with
amounts shown in the latest unaudited balance sheet included in
the Registration Statement, except in each case for changes,
decreases or increases that the Registration Statement discloses
have occurred or may occur; or
(C) for the period from July 2, 1994 to October 1, 1994 and
for the period from October 2, 1994 to a specified date not more
than
- ---------------------------
/*/ Items to be selected by bankers.
<PAGE>
28
five days prior to the date of this Agreement, there was any
decrease in ___________, ___________ or _________/*/, in each
case as compared with the comparable period in the preceding
year, except in each case for any decreases that the Registration
Statement discloses have occurred or may occur;
(iii) based upon the procedures set forth in clause (ii) above
and a reading of the Selected Financial Data included in the
Registration Statement, nothing has come to their attention that gives
them reason to believe that the Selected Financial Data included in
the Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act
and the 1933 Act Regulations; and
(iv) in addition to the procedures referred to in clause (ii)
above, they have performed other specified procedures, not
constituting an audit, with respect to certain amounts, percentages,
numerical data and financial information appearing in the Registration
Statement, which have previously been specified by you and which shall
be specified in such letter, and have compared certain of such items
with, and have found such items to be in agreement with, the
accounting and financial records of the Company.
(g) At the Closing Time, you shall have received from Coopers &
Lybrand a letter, in form and substance satisfactory to you and dated as of
the Closing Time, to the effect that they reaffirm the statements made in
the letter furnished pursuant to Section 5(f), except that the specified
date referred to shall be a date not more than five days prior to the
Closing Time.
(h) At the Closing Time, counsel for the Underwriters shall have been
furnished with all such documents, certificates and opinions as they may
request for the purpose of enabling them to pass upon the issuance and sale
of the Offered Shares as contemplated in this Agreement and the
International Purchase Agreement and the matters referred to in Section
5(c) and in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company and the Selling
Stockholders, the performance of any of the covenants of the Company, or
the fulfillment of any of the conditions herein contained; and all
proceedings taken by the Company and the Selling Stockholders at or prior
to the Closing Time in connection with the authorization, issuance and sale
of the Offered Shares as contemplated in this Agreement and the
International Purchase Agreement shall be satisfactory in form and
substance to you and to counsel for the Underwriters.
- ---------------------------
/*/ Items to be selected by bankers.
<PAGE>
29
(i) The Offered Shares shall have been duly authorized for listing by
the New York Stock Exchange on the date of the U.S. Price Determination
Agreement and the International Price Determination Agreement.
(j) All of the Initial International Shares to be purchased by the
International Underwriters on such Closing Date shall have been sold to the
International Underwriters pursuant to the International Purchase
Agreement.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement, this Agreement may be
terminated by you on notice to the Company and the Selling Stockholders at any
time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party, except as provided in Section 4.
Notwithstanding any such termination, the provisions of Sections 7, 8 and 9
shall remain in effect.
Section 6. Conditions to Purchase of U.S. Option Shares. In the
--------------------------------------------
event that the U.S. Underwriters exercise their option granted in Section 2
hereof to purchase all or any of the U.S. Option Shares and the Date of Delivery
determined by you pursuant to Section 2 hereof is later than the Closing Time,
the obligations of the several U.S. Underwriters to purchase and pay for the
U.S. Option Shares that they shall have respectively agreed to purchase pursuant
to this Agreement are subject to the accuracy of the representations and
warranties of the Company and the Selling Stockholders herein contained, to the
performance by the Company and the Selling Stockholders of their obligations
hereunder and to the following further conditions:
(a) The Registration Statement shall remain effective at the Date of
Delivery, and, at the Date of Delivery, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under
the 1933 Act and no proceedings for that purpose shall have been instituted
or shall be pending or, to your knowledge or the knowledge of the Company,
shall be contemplated by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
satisfaction of counsel for the Underwriters.
(b) At the Date of Delivery, the provisions of Sections 5(d)(i)
through 5(d)(v) shall have been complied with at and as of the Date of
Delivery and, at the Date of Delivery, you shall have received a
certificate of the President or a Vice President, and the Treasurer of the
Company, dated as of the Date of Delivery, to such effect.
<PAGE>
30
(c) At the Date of Delivery, you shall have received the favorable
opinion of Wright, Lindsey & Jennings, counsel for each of the Company and
the Selling Stockholders, together with signed or reproduced copies of such
opinion for each of the other U.S. Underwriters, in each case in form and
substance satisfactory to counsel for the Underwriters, dated as of the
Date of Delivery, relating to the U.S. Option Shares and otherwise to the
same effect as the opinion required by Section 5(b).
(d) At the Date of Delivery, you shall have received the favorable
opinion of Shearman & Sterling, counsel for the Underwriters, dated as of
the Date of Delivery, relating to the U.S. Option Shares and otherwise to
the same effect as the opinion required by Section 5(c).
(e) At the Date of Delivery, you shall have received a letter from
Coopers & Lybrand, in form and substance satisfactory to you and dated as
of the Date of Delivery, to the effect that they reaffirm the statements
made in the letter furnished pursuant to Section 5(f), except that the
specified date referred to shall be a date not more than five days prior to
the Date of Delivery.
(f) At the Date of Delivery, counsel for the Underwriters shall have
been furnished with all such documents, certificates and opinions as they
may request for the purpose of enabling them to pass upon the issuance and
sale of the U.S. Option Shares as contemplated in this Agreement and the
matters referred to in Section 6(d) and in order to evidence the accuracy
and completeness of any of the representations, warranties or statements of
the Company or the Selling Stockholders, the performance of any of the
covenants of the Company, or the fulfillment of any of the conditions
herein contained; and all proceedings taken by the Company and the Selling
Stockholders at or prior to the Date of Delivery in connection with the
authorization, issuance and sale of the U.S. Option Shares as contemplated
in this Agreement shall be satisfactory in form and substance to you and to
counsel for the Underwriters.
(g) At the Date of Delivery, the representations and warranties of
James T. Hudson set forth in Section 1(b) hereof shall be accurate as
though expressly made at and as of the Date of Delivery and, at the Date of
Delivery, you shall have received a certificate of James T. Hudson, dated
as of the Date of Delivery, to such effect.
Section 7. Indemnification. (a) The Company and each Selling
---------------
Stockholder agree to indemnify and hold harmless each U.S. Underwriter and each
person, if any, who controls any U.S. Underwriter within the meaning of Section
15 of the 1933 Act as follows:
<PAGE>
31
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information, if
applicable, and all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading
or arising out of an untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectuses
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company and the Selling Stockholders; and
(iii) against any and all expense whatsoever, as incurred (including
fees and disbursements of counsel chosen by you), reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (i) or (ii)
above;
provided, however, that this indemnity agreement does not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
of the U.S. Underwriters expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information, if applicable, or any
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto).
The foregoing indemnity agreement with respect to any untrue statement
contained in or any omission from a preliminary prospectus shall not inure to
the benefit of any U.S. Underwriter (or any person who controls such U.S.
Underwriter within the meaning of Section 15 of the 1933 Act) from whom the
person asserting any such loss, liability, claim, damage or expense purchased
any of the Offered Shares that are the subject thereof if the Company shall
sustain the burden of proving that such person was not sent or
<PAGE>
32
given a copy of the Prospectuses (or the Prospectuses as amended or
supplemented) (in each case exclusive of the documents from which information is
incorporated by reference) at or prior to the written confirmation of the sale
of such Offered Shares to such person and the untrue statement contained in or
the omission from such preliminary prospectus was corrected in the Prospectuses
(or the Prospectuses as amended or supplemented).
The obligations of the Company and each Selling Stockholder pursuant
to this Section are joint and several; provided, however, that each Selling
-------- -------
Stockholder's aggregate liability under this Section shall be limited to an
amount equal to the net proceeds (after deducting the underwriting discount, but
before deducting expenses) received by such Selling Stockholder from the sale of
his or its Offered Shares pursuant to this Agreement.
(b) Each U.S. Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act, and each Selling Stockholder, against
any and all loss, liability, claim, damage and expense described in the
indemnity agreement in Section 7(a), as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration Statement (or any amendment thereto), including the Rule
430A Information, if applicable, or any preliminary prospectus or the U.S.
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such U.S.
Underwriter through you expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information, if applicable, or such
preliminary prospectus or the U.S. Prospectus (or any amendment or supplement
thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
on account of this indemnity agreement. An indemnifying party may participate
at its own expense in the defense of such action. In no event shall the
indemnifying party or parties be liable for the fees and expenses of more than
one counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
Section 8. Contribution. In order to provide for just and equitable
------------
contribution in circumstances under which the indemnity provided for in Section
7 is for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company, the Selling Stockholders
and the U.S. Underwriters shall contribute to the aggregate losses, liabilities,
claims, damages and expenses of the nature
<PAGE>
33
contemplated by such indemnity incurred by the Company, the Selling Stockholders
and one or more of the U.S. Underwriters, as incurred, in such proportions that
(a) the U.S. Underwriters are responsible for that portion represented by the
percentage that the underwriting discount appearing on the cover page of the
U.S. Prospectus bears to the initial public offering price appearing thereon and
(b) the Company and the Selling Stockholders, in the proportions that they have
agreed to indemnify, are responsible for the balance; provided, however, that no
-------- -------
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section,
each person, if any, who controls a U.S. Underwriter within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as such
U.S. Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement, and each person, if any, who controls the
Company or a Selling Stockholder within the meaning of Section 15 of the 1933
Act shall have the same rights to contribution as the Company or a Selling
Stockholder, as the case may be.
Section 9. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. The representations, warranties, indemnities, agreements and other
- --------
statements of the Selling Stockholders, the Company or its officers set forth in
or made pursuant to this Agreement and the International Purchase Agreement will
remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Selling Stockholders, the Company, any U.S.
Underwriter or any person who controls a Selling Stockholder, the Company or any
U.S. Underwriter within the meaning of Section 15 of the 1933 Act and will
survive delivery of and payment for the Offered Shares.
Section 10. Termination of Agreement. (a) You may terminate this
------------------------
Agreement, by notice to the Company and the Selling Stockholders, at any time at
or prior to the Closing Time (i) if there has been, since the respective dates
as of which information is given in the Registration Statement, any material
adverse change in the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its Subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or any outbreak of hostilities or escalation thereof or
other calamity or crisis the effect of which on the financial markets of the
United States is such as to make it, in your reasonable judgment, impracticable
to market the U.S. Shares or enforce contracts for the sale of the U.S. Shares
or (iii) if trading in any securities of the Company has been suspended by the
Commission, or if trading generally on either the American Stock Exchange or the
New York Stock Exchange or in the over-the-counter market has been suspended, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by such exchange or by order of the
<PAGE>
34
Commission or any other governmental authority or (iv) if a banking moratorium
has been declared by either federal, New York or Arkansas authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 4. Notwithstanding any such termination, the
provisions of Sections 7, 8 and 9 shall remain in effect.
(c) This Agreement may also terminate pursuant to the provisions of
Section 2, with the effect stated in such Section.
Section 11. Default by One or More of the U.S. Underwriters. If one
-----------------------------------------------
or more of the U.S. Underwriters shall fail at the Closing Time to purchase the
Initial U.S. Shares that it or they are obligated to purchase pursuant to this
Agreement (the "Defaulted U.S. Shares"), you shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
U.S. Underwriters, or any other underwriters, to purchase all, but not less than
all, of the Defaulted U.S. Shares in such amounts as may be agreed upon and upon
the terms set forth in this Agreement; if, however, you have not completed such
arrangements within such 24-hour period, then:
(a) if the number of Defaulted U.S. Shares does not exceed 10% of the
total number of Initial U.S. Shares, the non-defaulting U.S. Underwriters
shall be obligated to purchase the full amount thereof in the proportions
that their respective Initial U.S. Share underwriting obligation
proportions bear to the underwriting obligations of all non-defaulting U.S.
Underwriters, or
(b) if the number of Defaulted U.S. Shares exceeds 10% of the total
number of Initial U.S. Shares, this Agreement shall terminate without
liability on the part of any non-defaulting U.S. Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
In the event of any such default that does not result in a termination
of this Agreement, either you or the Company shall have the right to postpone
the Closing Time for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectuses or in any other
documents or arrangements. As used herein, the term "U.S. Underwriter" includes
any person substituted for an U.S. Underwriter under this Section 11.
<PAGE>
35
Section 12. Default by a Selling Stockholder or the Company. If any
-----------------------------------------------
Selling Stockholder shall fail at the Closing Time to sell and deliver the
number of Initial U.S. Shares that such Selling Stockholder is obligated to
sell, the U.S. Underwriters may, at your option, by notice from you to the
Company, either (a) terminate this Agreement without any liability on the part
of any non-defaulting party except to the extent provided in Section 4 or (b)
elect to purchase the Initial U.S. Shares that the Company and the remaining
Selling Stockholders have agreed to sell pursuant to this Agreement.
In the event of a default under this Section that does not result in
the termination of this Agreement, either you or the Company shall have the
right to postpone the Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or
Prospectuses or in any other documents or arrangements.
If the Company shall fail at the Closing Time to sell and deliver the
number of Offered Shares that it is obligated to sell, then this Agreement shall
terminate without any liability on the part of any non-defaulting party, except
to the extent provided in Section 4 and except that the provisions of Sections
7, 8 and 9 shall remain in effect.
No action taken pursuant to this Section shall relieve the Company or
any Selling Stockholder so defaulting from liability, if any, in respect of such
default.
Section 13. Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices to you or the U.S. Underwriters shall be directed to you, c/o Merrill
Lynch, Pierce, Fenner & Smith Incorporated, at Merrill Lynch World Headquarters,
North Tower, World Financial Center, New York, New York 10281, attention of
___________________________; notices to the Company shall be directed to it at
Hudson Foods, Inc., 1225 Hudson Road, Rogers, Arkansas 72756, attention of
Charles B. Jurgensmeyer, Chief Financial Officer; and notices to the Selling
Stockholders shall be directed to James T. Hudson at 1225 Hudson Road, Rogers,
Arkansas 72756.
Section 14. Parties. This Agreement is made solely for the benefit
-------
of the several U.S. Underwriters, the Company and the Selling Stockholders and,
to the extent expressed, any person who controls the Company, any Selling
Stockholder or any of the U.S. Underwriters within the meaning of Section 15 of
the 1933 Act, and the directors of the Company, its officers who have signed the
Registration Statement, and their respective executors, administrators,
successors and assigns and, subject to the provisions of Section 11, no other
person shall acquire or have any right under or by virtue of this Agreement.
The
<PAGE>
36
term "successors and assigns" shall not include any purchaser, as such
purchaser, from any of the several U.S. Underwriters of the U.S. Shares. All of
the obligations of the U.S. Underwriters hereunder are several and not joint.
Section 15. Representation of U.S. Underwriters. You will act for
-----------------------------------
the several U.S. Underwriters in connection with the transactions contemplated
by this Agreement, and any action under or in respect of this Agreement taken by
the U.S. Representatives jointly or by Merrill Lynch Pierce Fenner & Smith
Incorporated will be binding upon all U.S. Underwriters.
Section 16. Governing Law and Time. This Agreement shall be governed
----------------------
by the laws of the State of New York. Specified times of the day refer to New
York City time.
Section 17. Counterparts. This Agreement may be executed in one or
------------
more counterparts and when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Selling
Stockholders and the several U.S. Underwriters in accordance with its terms.
Very truly yours,
HUDSON FOODS, INC.
By
--------------------------------
Name:
Title:
<PAGE>
37
SELLING STOCKHOLDERS
NAMED IN SCHEDULE B
By
--------------------------------
Attorney-in-Fact
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
By: Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
By
---------------------------------------
Name:
Title:
Investment Banking Group
For themselves and as U.S. Representatives of the
- -------------------------------------------------
other U.S. Underwriters named in Schedule A.
-------------------------------------------
<PAGE>
HUDSON FOODS, INC.
(a Delaware corporation)
3,200,000 Shares of Class A Common Stock
U.S. PRICE DETERMINATION AGREEMENT
----------------------------------
November __, 1994
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
A.G. Edwards & Sons, Inc.
As Representatives of the several Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1201
Dear Sirs:
Reference is made to the U.S. Purchase Agreement dated October __,
1994 (the "U.S. Purchase Agreement") among Hudson Foods, Inc. (the "Company"),
the Selling Stockholders named in Schedule B thereto or hereto (the "Selling
Stockholders") and the several U.S. Underwriters named in Schedule A thereto or
hereto (the "U.S. Underwriters"), for whom Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation, and A.G. Edwards & Sons, Inc. are acting as representatives (the
"U.S. Representatives"). The U.S. Purchase Agreement provides for the purchase
by the U.S. Underwriters from the Company and the Selling Stockholders, subject
to the terms and conditions set forth therein, of an aggregate of 3,200,000
shares (the "Initial U.S. Shares") of the Company's Class A Common Stock, par
value $.01 per share. This Agreement is the U.S. Price Determination Agreement
referred to in the U.S. Purchase Agreement.
Pursuant to Section 2 of the U.S. Purchase Agreement, the undersigned
agree with the U.S. Representatives as follows:
<PAGE>
1. The initial public offering price per share for the Initial U.S.
Shares shall be $__________________.
2. The purchase price per share for the Initial U.S. Shares to be
paid by the several U.S. Underwriters shall be $________________,
representing an amount equal to the initial public offering price set forth
above, less $________________ per share.
The Company represents and warrants to each of the U.S. Underwriters
that the representations and warranties of the Company set forth in Section 1(a)
of the U.S. Purchase Agreement are accurate as though expressly made at and as
of the date hereof.
The Selling Stockholders represent and warrant to each of the U.S.
Underwriters that the representations and warranties of the Selling Stockholders
set forth in Section 1(b) of the U.S. Purchase Agreement are accurate as though
expressly made at and as of the date hereof.
As contemplated by Section 2 of the U.S. Purchase Agreement, attached
as Schedule A is a completed list of the several U.S. Underwriters and as
Schedule B is a completed list of the Selling Stockholders, which shall be a
part of this Agreement and the U.S. Purchase Agreement.
This Agreement shall be governed by the laws of the State of New York.
If the foregoing is in accordance with the understanding of the U.S.
Representatives of the agreement between the U.S. Underwriters, the Company and
the Selling Stockholders, please sign and return to the Company a counterpart
hereof, whereupon this instrument along with all counterparts and together with
the U.S. Purchase Agreement shall be a binding agreement between the U.S.
Underwriters, the Company and the Selling Stockholders in accordance with its
terms and the terms of the U.S. Purchase Agreement.
Very truly yours,
HUDSON FOODS, INC.
By
------------------------------
Name:
Title:
<PAGE>
SELLING STOCKHOLDERS NAMED
IN SCHEDULE B TO THE U.S.
PURCHASE AGREEMENT
By
------------------------------
Attorney-in-Fact
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
By: Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
By
--------------------------------------
Name:
Title:
Investment Banking Group
For themselves and as Representatives of the
- --------------------------------------------
other U.S. Underwriters named in Schedule A
-------------------------------------------
attached to the U.S. Purchase Agreement.
---------------------------------------
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Initial U.S. Shares
U.S Underwriter to be Purchased
--------------- -------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Donaldson, Lufkin & Jenrette Securities
Corporation
A.G. Edwards & Sons, Inc.
---------
Total 3,200,000
=========
</TABLE>
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
Number of
Number of Shares of
Initial U.S. Common
Shares Stock Subject
Selling Stockholders to be Sold to U.S. Option
-------------------- ------------ --------------
<S> <C> <C>
James T. Hudson 1,040,000 480,000
James R. Hudson 80,000 0
Jane M. Helmich 80,000 0
--------- -------
Total.......... 1,200,000 480,000
========= =======
</TABLE>
<PAGE>
EXHIBIT 1.2
DRAFT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HUDSON FOODS, INC.
(a Delaware corporation)
800,000 Shares of Class A Common Stock
INTERNATIONAL PURCHASE AGREEMENT
--------------------------------
Dated: November __, 1994
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
HUDSON FOODS, INC.
(a Delaware corporation)
800,000 Shares of Class A Common Stock
(Par Value U.S.$.01 Per Share)
INTERNATIONAL PURCHASE AGREEMENT
--------------------------------
November __, 1994
Merrill Lynch International Limited
Donaldson, Lufkin & Jenrette Securities Corporation
A.G. Edward & Sons, Inc.
As Representatives of the several Managers
c/o Merrill Lynch International Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England
Ladies and Gentlemen:
Hudson Foods, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to the managers named in Schedule A (collectively, the
"Managers"), for whom you are acting as Co-Lead Managers (the "Co-Lead
Managers"), 500,000 authorized but unissued shares of the Company's Class A
Common Stock, par value $.01 per share (shares of which class of stock of the
Company are hereinafter referred to as "Common Stock"), and the stockholders
named in Schedule B (the "Selling Stockholders") propose to sell severally an
aggregate of 300,000 outstanding shares of Common Stock, as set forth in the
appropriate column on Schedule B, to the Managers. Such shares of Common Stock,
aggregating 800,000 shares, are to be sold to each Manager, acting severally and
not jointly, in such amounts as are set forth in Schedule A opposite the name of
such Manager. One of the Selling Stockholders also grants to the Managers,
severally and not jointly, the option described in Section 2 to purchase all or
any part of 120,000 additional shares of Common Stock to cover over-allotments.
The aforesaid 800,000 shares of Common Stock (the "Initial International
Shares"), together with all or any part of the 120,000 additional shares of
Common Stock subject to the option described in Section 2 (the "International
Option Shares"), are collectively herein called the "International Shares". The
International Shares are more fully described in the International Prospectus
referred to below.
<PAGE>
2
It is understood that the Company and the Selling Stockholders are
concurrently entering into an agreement, dated the date hereof (the "U.S.
Purchase Agreement"), providing for the issuance and sale by the Company and the
Selling Stockholders of 3,200,000 shares of Common Stock (the "Initial U.S.
Shares") through arrangements with certain underwriters in the United States
(the "U.S. Underwriters" which, together with the Managers, shall be referred to
as the "Underwriters"), for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation and A.G.
Edwards & Sons, Inc. are acting as representatives (the "U.S. Representatives"),
and the grant by one of the Selling Stockholders to the U.S. Underwriters of an
option to purchase all or any part of 480,000 additional shares of Common Stock
(the "U.S. Option Shares") to cover over-allotments. The Initial U.S. Shares
and the U.S. Option Shares are hereinafter collectively referred to as the "U.S.
Shares". The U.S. Shares and the International Shares are hereinafter
collectively referred to as the "Offered Shares".
The Company understands that the Managers will simultaneously enter
into an agreement with the U.S. Underwriters dated the date hereof (the
"Intersyndicate Agreement") providing for the coordination of certain
transactions among the Managers and the U.S. Underwriters, under the direction
of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
You have advised us that you and the other Managers, acting severally
and not jointly, desire to purchase the International Shares and, if the
Managers so elect, the International Option Shares, and that you have been
authorized by the other Managers to execute this Agreement and the International
Price Determination Agreement referred to below on their behalf.
The initial public offering price per share for the International
Shares and the purchase price per share for the International Shares to be paid
by the several Managers shall be agreed upon by the Company and the Co-Lead
Managers, acting on behalf of the several Managers, and such agreement shall be
set forth in a separate written instrument substantially in the form of Exhibit
A hereto (the "International Price Determination Agreement"). The International
Price Determination Agreement may take the form of an exchange of any standard
form of written telecommunication between the Company and the Co-Lead Managers
and shall specify such applicable information as is indicated in Exhibit A
hereto. The offering of the International Shares will be governed by this
Agreement, as supplemented by the International Price Determination Agreement.
From and after the date of the execution and delivery of the International Price
Determination Agreement, this Agreement shall be deemed to incorporate, and all
references herein to "this Agreement" or "herein" shall be deemed to include,
the International Price Determination Agreement.
The initial public offering price per share and the purchase price per
share for the U.S. Shares to be paid by the U.S. Underwriters pursuant to the
U.S. Purchase Agreement shall be set forth in a separate agreement (the "U.S.
Price Determination
<PAGE>
3
Agreement"), the form of which is attached to the U.S. Purchase Agreement. The
purchase price per share for the U.S. Shares to be paid by the several U.S.
Underwriters shall be identical to the purchase price per share for the
International Shares to be paid by the several Managers hereunder.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (Registration
No. 33-56019) covering the registration of the Offered Shares under the
Securities Act of 1933, as amended (the "1933 Act"), including the related
preliminary prospectuses, and either (A) has prepared and proposes to file,
prior to the effective date of such registration statement, an amendment to such
registration statement, including final prospectuses or (B) if the Company has
elected to rely upon Rule 430A ("Rule 430A") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations"), will prepare and
file prospectuses, in accordance with the provisions of Rule 430A and Rule
424(b) ("Rule 424(b)") of the 1933 Act Regulations, promptly after execution and
delivery of the U.S. Price Determination Agreement and the International Price
Determination Agreement. The information, if any, included in such prospectuses
that was omitted from the prospectuses included in such registration statement
at the time it becomes effective but that is deemed, pursuant to paragraph (b)
of Rule 430A, to be part of such registration statement at the time it becomes
effective is referred to herein as the "Rule 430A Information". Each prospectus
used before the time such registration statement becomes effective, and any
prospectus that omits the Rule 430A Information that is used after such
effectiveness and prior to the execution and delivery of the U.S. Price
Determination Agreement or the International Price Determination Agreement, is
herein called a "preliminary prospectus". Such registration statement,
including the exhibits thereto and the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, as amended at the
time it becomes effective and including, if applicable, the Rule 430A
Information, is herein called the "Registration Statement", and the
prospectuses, including the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the 1933 Act, forms of two prospectuses to be used
in connection with the offering and sale of U.S. Shares and International Shares
which are included in the Registration Statement at the time it becomes
effective are herein called the "U.S. Prospectus" and the "International
Prospectus", respectively, and collectively, the "Prospectuses" and,
individually, a "Prospectus", except that, if the final U.S. Prospectus or
International Prospectus, as the case may be, first furnished to the U.S.
Underwriters or the International Underwriters after the execution of the U.S.
Price Determination Agreement or the International Price Determination Agreement
for use in connection with the offering of the Offered Shares differs from the
prospectuses included in the Registration Statement at the time it becomes
effective (whether or not such prospectuses are required to be filed pursuant to
Rule 424(b)), the terms "U.S. Prospectus", "International Prospectus",
"Prospectuses" and "Prospectus" shall refer to the final U.S. Prospectus or
International Prospectus, as the case may be, first furnished to the U.S.
Underwriters or the International Underwriters, as the case may be, for such
use. The U.S.
<PAGE>
4
Prospectus and International Prospectus are identical except for differences in
the outside front and back covers, the inside cover page and the section headed
"Underwriting".
The Company and the Selling Stockholders understand that the Managers
propose to make a public offering of the International Shares as soon as you
deem advisable after the Registration Statement becomes effective and the
International Price Determination Agreement has been executed and delivered.
Section 1. Representations and Warranties. (a) The Company
------------------------------
represents and warrants to and agrees with each of the Managers that:
(i) The Company meets the requirements for use of Form S-3 under the
1933 Act and when the Registration Statement on such form shall become
effective and at all times subsequent thereto up to the Closing Time
referred to below (and, if any International Option Shares are purchased,
up to the Date of Delivery referred to below), (A) the Registration
Statement and any amendments and supplements thereto will comply in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations; (B) neither the Registration Statement nor any amendment or
supplement thereto will contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and (C) neither of the
Prospectuses nor any amendment or supplement thereto will include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that this representation
and warranty does not apply to statements or omissions made in reliance
upon and in conformity with information relating to any Underwriter
furnished in writing to the Company by or on behalf of any Underwriter
through you expressly for use in the Registration Statement or the
Prospectuses. For all purposes of this Agreement, the information provided
in the fifth, seventh and eighth full paragraphs in the section entitled
"Underwriting" set forth in the Prospectuses constitute the only
information relating to any Manager or U.S. Underwriter furnished in
writing to the Company by the Co-Lead Managers or the U.S. Representatives
for use in the Registration Statement or Prospectuses.
(ii) The documents incorporated by reference in the Prospectuses
pursuant to Item 12 of Form S-3 under the 1933 Act, at the time they were
filed with the Commission, complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the rules and regulations of the Commission thereunder (the
"1934 Act Regulations"), and, when read together and with the other
information in the Prospectuses, at the time the Registration Statement
becomes effective and at all times subsequent thereto up to the Closing
<PAGE>
5
Time (and, if any International Option Shares are purchased, up to the Date
of Delivery), will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading.
(iii) Coopers & Lybrand, who are reporting upon the audited financial
statements included or incorporated by reference in the Registration
Statement, are independent public accountants as required by the 1933 Act
and the 1933 Act Regulations.
(iv) Each of this Agreement and the U.S. Purchase Agreement have been
duly authorized, executed and delivered by the Company.
(v) The consolidated financial statements included or incorporated by
reference in the Registration Statement present fairly the consolidated
financial position of the Company and its subsidiaries as of the dates
indicated and the consolidated results of operations and the consolidated
cash flows of the Company and its subsidiaries for the periods specified.
Such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved. The financial statement schedules, if any, included in
the Registration Statement present fairly the information required to be
stated therein. The selected financial data included or incorporated by
reference in the Prospectuses present fairly the information shown therein
and have been compiled on a basis consistent with that of the audited
consolidated financial statements included or incorporated by reference in
the Registration Statement.
(vi) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with corporate
power and authority under such laws to own, lease and operate its
properties and conduct its business as described in the Prospectuses; and
the Company is duly qualified to transact business as a foreign corporation
and is in good standing in each other jurisdiction in which it owns or
leases property of a nature, or transacts business of a type, that would
make such qualification necessary, except to the extent that the failure to
so qualify or be in good standing would not have a material adverse effect
on the Company and its subsidiaries, considered as one enterprise.
(vii) The Company's only subsidiaries are: Hudson Farms, Inc., an
Arkansas corporation, Ohse Transportation, Inc., a Kansas corporation and
Hudson Foods Poland s.p. zo.o., a Polish limited liability company
(collectively, the "Subsidiaries"). Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation with corporate power and authority under
such laws to own, lease and operate its properties and
<PAGE>
6
conduct its business; and each Subsidiary is duly qualified to transact
business as a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property of a nature, or transacts
business of a type, that would make such qualification necessary, except to
the extent that the failure to so qualify or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
considered as one enterprise. All of the outstanding shares of capital
stock of each Subsidiary have been duly authorized and validly issued and
are fully paid and non-assessable and are owned by the Company, directly or
through one or more Subsidiaries, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind.
(viii) The Company had at the date indicated a duly authorized,
issued and outstanding capitalization as set forth in the Prospectuses
under the caption "Capitalization", the Offered Shares conform to the
description thereof contained or incorporated by reference in the
Prospectuses and such description conforms to the rights set forth in the
instruments defining the same.
(ix) The Offered Shares to be sold by the Company pursuant to this
Agreement and the U.S. Purchase Agreement have been duly authorized and,
when issued and paid for in accordance with this Agreement and the U.S.
Purchase Agreement, will be validly issued, fully paid and non-assessable;
no holder thereof will be subject to personal liability by reason of being
such a holder; such Offered Shares are not subject to the preemptive rights
of any stockholder of the Company; and all corporate action required to be
taken for the authorization, issue and sale of such Offered Shares has been
validly and sufficiently taken.
(x) The Offered Shares to be sold by the Selling Stockholders have
been duly authorized and validly issued and are fully paid and non-
assessable; and no holder thereof is or will be subject to personal
liability by reason of being such a holder.
(xi) All of the other outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; no holder thereof is or will be subject to personal
liability by reason of being such a holder; and none of the outstanding
shares of capital stock of the Company was issued in violation of the
preemptive rights of any stockholder of the Company.
(xii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectuses, except as otherwise stated
therein or contemplated thereby, there has not been (A) any material
adverse change in the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its Subsidiaries,
considered as one enterprise, whether or not arising
<PAGE>
7
in the ordinary course of business, (B) any transaction entered into by the
Company or any subsidiary, other than in the ordinary course of business,
that is material to the Company and its Subsidiaries, considered as one
enterprise, or (C) any dividend or distribution of any kind declared, paid
or made by the Company on its capital stock.
(xiii) Neither the Company nor any Subsidiary is in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which it is a party or by
which it may be bound or to which any of its properties may be subject,
except for such defaults that would not have a material adverse effect on
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as one
enterprise. The execution and delivery of each of this Agreement and the
U.S. Purchase Agreement by the Company, the issuance and delivery of the
Offered Shares, the consummation by the Company of the transactions
contemplated in this Agreement, the U.S. Purchase Agreement and in the
Registration Statement and compliance by the Company with the terms of each
of this Agreement and the U.S. Purchase Agreement have been duly authorized
by all necessary corporate action on the part of the Company and do not and
will not result in any violation of the charter or by-laws of the Company
or any Subsidiary, and do not and will not conflict with, or result in a
breach of any of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any Subsidiary under (A) any
contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument to which the Company or any Subsidiary is a party
or by which it may be bound or to which any of its properties may be
subject (except for such conflicts, breaches or defaults or liens, charges
or encumbrances that would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its subsidiaries, considered as one
enterprise) or (B) any existing applicable law, rule, regulation, judgment,
order or decree of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any Subsidiary
or any of their respective properties.
(xiv) No authorization, approval, consent or license of any
government, governmental instrumentality or court, domestic or foreign
(other than under the 1933 Act and the securities or blue sky laws of the
various states and the securities laws of any jurisdiction outside the
United States in which the International Shares are offered or sold by the
Managers pursuant to this Agreement), is required for the valid
authorization, issuance, sale and delivery of the Offered Shares.
(xv) Except as disclosed in the Prospectuses, there is no action,
suit or proceeding before or by any government, governmental
instrumentality or court,
<PAGE>
8
domestic or foreign, now pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary that is
required to be disclosed in the Prospectuses or that could result in any
material adverse change in the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise, or that could materially and
adversely affect the properties or assets of the Company and its
Subsidiaries, considered as one enterprise, or that could adversely affect
the consummation of the transactions contemplated in this Agreement or the
U.S. Purchase Agreement; the aggregate of all pending legal or governmental
proceedings that are not described in the Prospectuses to which the Company
or any Subsidiary is a party or which affect any of their respective
properties, including ordinary routine litigation incidental to the
business of the Company or any Subsidiary, would not have a material
adverse effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its Subsidiaries,
considered as one enterprise.
(xvi) There are no contracts or documents of a character required
to be described in the Registration Statement or the Prospectuses or to be
filed as exhibits to the Registration Statement that are not described and
filed as required.
(xvii) The Company and the Subsidiaries each has good and marketable
title to all properties and assets described in the Prospectuses as owned
by it, free and clear of all liens, charges, encumbrances or restrictions,
except such as (A) are described in the Prospectuses or (B) are neither
material in amount nor materially significant in relation to the business
of the Company and its subsidiaries, considered as one enterprise; all of
the leases and subleases material to the business of the Company and its
Subsidiaries, considered as one enterprise, and under which the Company or
any Subsidiary holds properties described in the Prospectuses, are in full
force and effect, and neither the Company nor any Subsidiary has any notice
of any material claim of any sort that has been asserted by anyone adverse
to the rights of the Company or any Subsidiary under any of the leases or
subleases mentioned above, or affecting or questioning the rights of the
Company or any Subsidiary to the continued possession of the leased or
subleased premises under any such lease or sublease.
(xviii) The Company and the Subsidiaries each owns, possesses or has
obtained all material governmental licenses, permits, certificates,
consents, orders, approvals and other authorizations necessary to own or
lease, as the case may be, and to operate its properties and to carry on
its business as presently conducted, and neither the Company nor any
Subsidiary has received any notice of proceedings relating to revocation or
modification of any such licenses, permits, certificates, consents, orders,
approvals or authorizations.
<PAGE>
9
(xix) The Company and the Subsidiaries each owns or possesses, or can
acquire on reasonable terms, adequate patents, patent licenses, trademarks,
service marks and trade names necessary to carry on its business as
presently conducted, and neither the Company nor any Subsidiary has
received any notice of infringement of or conflict with asserted rights of
others with respect to any patents, patent licenses, trademarks, service
marks or trade names that in the aggregate, if the subject of an
unfavorable decision, ruling or finding, could materially adversely affect
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries, considered as one
enterprise.
(xx) To the best knowledge of the Company, no labor problem exists
with its employees or with employees of the Subsidiaries or is imminent
that could adversely affect the Company and its subsidiaries, considered as
one enterprise, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or the Subsidiaries'
principal suppliers, contractors or customers that could be expected to
materially adversely affect the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise.
(xxi) The Company has not taken and will not take, directly or
indirectly, any action designed to, or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Common Stock.
(xxii) Except as disclosed in the Registration Statement or except as
would not individually or in the aggregate have a material adverse effect
on the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its subsidiaries, considered as one
enterprise, (A) the Company and the Subsidiaries are each in compliance
with all applicable Environmental Laws, (B) the Company and the
Subsidiaries have all permits, authorizations and approvals required under
any applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or threatened Environmental Claims
against the Company or any of the Subsidiaries, and (D) there are no
circumstances with respect to any property or operations of the Company or
the Subsidiaries that could reasonably be anticipated to form the basis of
an Environmental Claim against the Company or the Subsidiaries.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any United States (or other
applicable jurisdiction's) federal, state, local or municipal statute, law,
rule, regulation, ordinance, code, policy or rule of common law and any
judicial or administrative interpretation thereof including any judicial or
administrative order, consent decree or judgment, relating to the
environment, health, safety or any chemical, material or
<PAGE>
10
substance, exposure to which is prohibited, limited or regulated by any
governmental authority. "Environmental Claims" means any and all
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigations or proceedings relating in any way to any Environmental Law.
(b) Each of the Selling Stockholders severally represents and
warrants to, and agrees with, each Manager as follows:
(i) To the best knowledge of such Selling Stockholder, the
representations and warranties of the Company contained in Section 1(a) are
true and correct; such Selling Stockholder has reviewed and is familiar
with the Registration Statement as originally filed with the Commission and
the preliminary prospectuses contained therein and has no knowledge of any
material fact, condition or information not disclosed in such preliminary
prospectuses that has adversely affected or could adversely affect the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its Subsidiaries, considered as one
enterprise; to the best knowledge of such Selling Stockholder, such
preliminary prospectuses do not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and such Selling Stockholder is not prompted to sell
the Shares to be sold by such Selling Stockholder by any information
concerning the Company or any Subsidiary that is not set forth in the
Prospectuses.
(ii) When the Registration Statement shall become effective and at
all times subsequent thereto up to the Closing Time (and, if any
International Option Shares are purchased, up to the Date of Delivery), (A)
such parts of the Registration Statement and any amendments and supplements
thereto as specifically refer to such Selling Stockholder will not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading and (B) such parts of the Prospectuses as specifically refer
to such Selling Stockholder will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading.
(iii) Such Selling Stockholder has duly executed and delivered, in
the form heretofore furnished to you, a Power of Attorney and Custody
Agreement (the "Custody Agreement") with James T. Hudson as custodian (the
"Custodian"), and _______________________ and _____________________ as
attorneys-in-fact (the "Attorneys-in-Fact"); the Attorneys-in-Fact are
authorized to execute and deliver this Agreement (including the
International Price Determination Agreement) and the U.S. Purchase
Agreement (including the U.S. Price Determination Agreement) on behalf of
<PAGE>
11
such Selling Stockholder and otherwise to act on behalf of such Selling
Stockholder in connection with this Agreement and the U.S. Purchase
Agreement, and the Attorneys-in-Fact and the Custodian are each authorized
to deliver the Offered Shares to be sold by such Selling Stockholder
pursuant to this Agreement and the U.S. Purchase Agreement and to accept
payment therefor.
(iv) All authorizations and consents necessary for the execution and
delivery by such Selling Stockholder of the Custody Agreement, the
execution and delivery by or on behalf of such Selling Stockholder of this
Agreement and the U.S. Purchase Agreement and the sale and delivery
pursuant to this Agreement and the U.S. Purchase Agreement of the Offered
Shares to be sold by such Selling Stockholder have been given and are in
full force and effect on the date hereof and will be in full force and
effect at the Closing Time and, if any International Option Shares or U.S.
Option Shares are purchased, on the Date of Delivery.
(v) The execution and delivery of each of this Agreement and the
U.S. Purchase Agreement and the consummation of the transactions
contemplated in each of this Agreement and the U.S. Purchase Agreement will
not result in a breach by such Selling Stockholder of, or constitute a
default by such Selling Stockholder under, any agreement, instrument,
decree, judgment or order to which such Selling Stockholder is a party, to
which the properties of such Selling Stockholder may be subject or by which
such Selling Stockholder may be bound.
(vi) Such Selling Stockholder will, at the Closing Time and, if any
International Option Shares or U.S. Option Shares are purchased, on the
Date of Delivery, have good and marketable title to the Offered Shares to
be sold by such Selling Stockholder pursuant to this Agreement and the U.S.
Purchase Agreement, free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind, other than pursuant to
this Agreement and the U.S. Purchase Agreement; such Selling Stockholder
has full right, power and authority to sell, transfer and deliver such
Offered Shares pursuant to this Agreement and the U.S. Purchase Agreement;
and upon delivery of such Offered Shares and payment of the purchase price
therefor as contemplated in this Agreement and the U.S. Purchase Agreement,
each of the Underwriters will receive good and marketable title to the
Offered Shares purchased by it from such Selling Stockholder, free and
clear of any pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind.
(vii) Certificates for all of the Offered Shares to be sold by such
Selling Stockholder pursuant to this Agreement and the U.S. Purchase
Agreement, in suitable form for transfer by delivery or accompanied by duly
executed instruments of transfer or assignment in blank with signatures
guaranteed, have been placed in custody with
<PAGE>
12
the Custodian for the purpose of effecting delivery under this Agreement
and the U.S. Purchase Agreement.
(viii) Such Selling Stockholder acknowledges that for a period of 120
days from the date hereof, such Selling Stockholder will not, without the
prior written consent of the Co-Lead Managers and the U.S. Representatives,
directly or indirectly, sell, offer to sell, grant any option for the sale
of, or otherwise dispose of, any shares of Common Stock or securities
convertible into Common Stock, other than to the Managers pursuant to this
Agreement or the U.S. Underwriters pursuant to the U.S. Purchase Agreement;
provided that during such period such Selling Stockholder may make gifts of
shares of Common Stock or securities convertible into Common Stock upon the
condition that the donees agree to be bound by the foregoing restriction in
the same manner as it applies to such Selling Stockholder.
(ix) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to, or that might be reasonably
expected to, cause or result in stabilization or manipulation of the price
of the Common Stock; and such Selling Stockholder has not distributed and
will not distribute any prospectus or other offering material in connection
with the offering and sale of the Offered Shares other than any preliminary
prospectuses filed with the Commission or the Prospectuses or other
material permitted by the 1933 Act.
(c) Any certificate signed by any officer of the Company or any
Subsidiary and delivered to you or to counsel for the Underwriters shall be
deemed a representation and warranty by the Company to each of the Underwriters
as to the matters covered thereby; and any certificate signed by or on behalf of
the Selling Stockholders as such and delivered to you or to counsel for the
Underwriters shall be deemed a representation and warranty by the Selling
Stockholders to each of the Underwriters as to the matters covered thereby.
Section 2. Sale and Delivery to the Managers; Closing. (a) On the
------------------------------------------
basis of the representations and warranties herein contained, and subject to the
terms and conditions herein set forth, the Company and each Selling Stockholder
agree, severally and not jointly, to sell to each Manager, and each Manager
agrees, severally and not jointly, to purchase from the Company and each Selling
Stockholder, at the purchase price per share for the Initial International
Shares to be agreed upon by the Co-Lead Managers, the Company and the Selling
Stockholders in accordance with Section 2(b) or 2(c), and set forth in the
International Price Determination Agreement, (i) in the case of the Company, the
number of Initial International Shares that bears the same relation to 500,000
as the number of Initial International Shares set forth opposite the name of
such Manager in Schedule A bears to the total number of Initial International
Shares (such proportion is hereinafter referred to as such Manager's
"underwriting obligation proportion") and (ii) in the case of each Selling
<PAGE>
13
Stockholder, the underwriting obligation proportion of such Manager of the
aggregate number of Initial International Shares as are proposed to be sold by
such Selling Stockholder and set forth opposite such Selling Stockholder's name
in the appropriate column on Schedule B, subject, in each case, to such
adjustments as the Co-Lead Managers, in their discretion, shall make to
eliminate any sales or purchases of fractional shares. If the Company elects to
rely on Rule 430A, Schedules A and B may be attached to the International Price
Determination Agreement.
(b) If the Company has elected not to rely upon Rule 430A, the initial
public offering price per share for the Initial International Shares and the
purchase price per share for the Initial International Shares to be paid by the
several Managers shall be agreed upon and set forth in the International Price
Determination Agreement, dated the date hereof, and an amendment to the
Registration Statement containing such per share price information will be filed
before the Registration Statement becomes effective.
(c) If the Company has elected to rely upon Rule 430A, the initial
public offering price per share for the Initial International Shares and the
purchase price per share for the Initial International Shares to be paid by the
several Managers shall be agreed upon and set forth in the International Price
Determination Agreement. In the event that the International Price
Determination Agreement has not been executed by the close of business on the
fourth business day following the date on which the Registration Statement
becomes effective, this Agreement shall terminate forthwith, without liability
of any party to any other party except that Sections 7, 8 and 9 shall remain in
effect.
(d) In addition, on the basis of the representations and warranties
herein contained, and subject to the terms and conditions herein set forth,
James T. Hudson, one of the Selling Stockholders, has granted an option to the
Managers, severally and not jointly, to purchase up to the additional number of
International Option Shares set forth opposite his name in the appropriate
column of Schedule B at the same purchase price per share as shall be applicable
to the Initial International Shares. The option hereby granted will expire 30
days after the date upon which the Registration Statement becomes effective or,
if the Company has elected to rely upon Rule 430A, the date of the International
Price Determination Agreement, and may be exercised, in whole or in part (but
not more than once), only for the purpose of covering over-allotments that may
be made in connection with the offering and distribution of the Initial
International Shares upon notice by you to James T. Hudson, c/o the Company
setting forth the number of International Option Shares as to which the several
Managers are exercising the option, and the time and date of payment and
delivery thereof. Such time and date of delivery (the "Date of Delivery") shall
be determined by you but shall not be later than seven full business days after
the exercise of such option, nor in any event prior to the Closing Time. If the
option is exercised as to all or any portion of the International Option Shares,
the International Option Shares as to which
<PAGE>
14
the option is exercised shall be purchased by the Managers, severally and not
jointly, in their respective underwriting obligation proportions.
(e) Payment of the purchase price for, and delivery of certificates
for, the Initial International Shares shall be made at the offices of Shearman &
Sterling, 599 Lexington Avenue, New York, New York 10022, or at such other place
as shall be agreed upon by the Company, the Selling Stockholders and you, at
10:00 A.M. either (i) on the fifth full business day after the effective date of
the Registration Statement, or (ii) if the Company has elected to rely upon Rule
430A, the fifth full business day after execution of the International Price
Determination Agreement (unless, in either case, postponed pursuant to Section
11 or 12), or at such other time not more than ten full business days thereafter
as you, the Company and the Selling Stockholders shall determine (such date and
time of payment and delivery being herein called the "Closing Time"). In
addition, in the event that any or all of the International Option Shares are
purchased by the Managers, payment of the purchase price for, and delivery of
certificates for, such International Option Shares shall be made at the offices
of Shearman & Sterling set forth above, or at such other place as the Company,
the Selling Stockholders and you shall determine, on the Date of Delivery as
specified in the notice from you to the Company. Payment shall be made to the
Company by certified or official bank check or checks in New York Clearing House
funds payable to the order of the Company and to the Selling Stockholders or to
a custodian or other representative of the Selling Stockholders by certified or
official bank check or checks in New York Clearing House funds payable to the
order of the Selling Stockholders, against delivery to you for the respective
accounts of the several Managers of certificates for the International Shares to
be purchased by them.
(f) Certificates for the Initial International Shares and
International Option Shares to be purchased by the Managers shall be in such
denominations and registered in such names as you may request in writing at
least two full business days before the Closing Time or the Date of Delivery, as
the case may be. The certificates for the Initial International Shares and
International Option Shares will be made available in New York City for
examination and packaging by you not later than 10:00 A.M. on the business day
prior to the Closing Time or the Date of Delivery, as the case may be.
(g) It is understood that each Manager has authorized you, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the International Shares that it has agreed to purchase. You,
individually and not as Co-Lead Managers, may (but shall not be obligated to)
make payment of the purchase price for the Initial International Shares, or
International Option Shares, to be purchased by any Manager whose check or
checks shall not have been received by the Closing Time or the Date of Delivery,
as the case may be.
<PAGE>
15
Section 3. Certain Covenants of the Company. The Company covenants
--------------------------------
with each Manager as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and, if the Company elects to rely upon Rule
430A and subject to Section 3(b) hereof, will comply with the requirements
of Rule 430A and will notify you immediately, and confirm the notice in
writing, (i) when the Registration Statement, or any post-effective
amendment to the Registration Statement, shall have become effective, or
any supplement to the Prospectuses or any amended Prospectuses shall have
been filed, (ii) of the receipt of any comments from the Commission, (iii)
of any request by the Commission to amend the Registration Statement or
amend or supplement the Prospectuses or for additional information and (iv)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of
the qualification of the Offered Shares for offering or sale in any
jurisdiction, or of the institution or threatening of any proceedings for
any of such purposes. The Company will use every reasonable effort to
prevent the issuance of any such stop order or of any order preventing or
suspending such use and, if any such order is issued, to obtain the lifting
thereof at the earliest possible moment.
(b) The Company will not at any time file or make any amendment to the
Registration Statement, or any amendment or supplement (i) if the Company
has not elected to rely upon Rule 430A, to the Prospectuses (including
amendments of the documents incorporated by reference into the
Prospectuses) or (ii) if the Company has elected to rely upon Rule 430A, to
either the prospectuses included in the Registration Statement at the time
it becomes effective or to the Prospectuses (including documents
incorporated by reference into such prospectuses or to the Prospectuses),
of which you shall not have previously been advised and furnished a copy,
or to which you or counsel for the Underwriters shall reasonably object.
(c) The Company has furnished or will furnish to you and counsel for
the Underwriters without charge as many signed copies of the Registration
Statement as originally filed and of all amendments thereto, whether filed
before or after the Registration Statement becomes effective, copies of all
exhibits and documents filed therewith (including documents incorporated by
reference into the Prospectuses pursuant to Item 12 of Form S-3 under the
1933 Act) and signed copies of all consents and certificates of experts, as
you may reasonably request and has furnished or will furnish to you, for
each Manager, one conformed copy of the Registration Statement as
originally filed and of each amendment thereto (including documents
incorporated by reference into the Prospectuses but without exhibits).
<PAGE>
16
(d) The Company will deliver to each Manager, without charge, from
time to time until the effective date of the Registration Statement (or, if
the Company has elected to rely upon Rule 430A, until the date of the
International Price Determination Agreement), as many copies of each
preliminary prospectus as such Manager may reasonably request, and the
Company hereby consents to the use of such copies for purposes permitted by
the 1933 Act. The Company will deliver to each Manager, without charge, as
soon as the Registration Statement shall have become effective (or, if the
Company has elected to rely upon Rule 430A, as soon as practicable on or
after the date of the International Price Determination Agreement) and
thereafter from time to time as requested during the period when the
Prospectuses are required to be delivered under the 1933 Act, such number
of copies of the Prospectuses (as supplemented or amended) as such Manager
may reasonably request.
(e) The Company will comply to the best of its ability with the 1933
Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the
Offered Shares as contemplated in this Agreement and in the Prospectuses.
If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Offered Shares any event shall
occur or condition exist as a result of which it is necessary, in the
opinion of counsel for the Underwriters or counsel for the Company, to
amend the Registration Statement or amend or supplement the Prospectuses in
order that the Prospectuses will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, or if it shall be
necessary, in the opinion of either such counsel, at any such time to amend
the Registration Statement or amend or supplement the Prospectuses in order
to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(b) hereof, such amendment or supplement as
may be necessary to correct such untrue statement or omission or to make
the Registration Statement or the Prospectuses comply with such
requirements.
(f) The Company will use its best efforts, in cooperation with the
Managers, to qualify the Offered Shares for offering and sale under the
applicable securities laws of such states and other jurisdictions as you
may designate and to maintain such qualifications in effect for a period of
not less than one year from the effective date of the Registration
Statement; provided, however, that the Company shall not be obligated to
-------- -------
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is
not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. The
Company will file such
<PAGE>
17
statements and reports as may be required by the laws of each jurisdiction
in which the Offered Shares have been qualified as above provided.
(g) The Company will make generally available to its security holders
as soon as practicable, but not later than 45 days after the close of the
period covered thereby, an earnings statement of the Company (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations),
covering a period of 12 months beginning after the effective date of the
Registration Statement and covering a period of 12 months beginning after
the effective date of any post-effective amendment to the Registration
Statement.
(h) The Company will use the net proceeds received by it from the sale
of the Offered Shares in the manner specified in the Prospectuses under the
caption "Use of Proceeds".
(i) The Company, during the period when the Prospectuses is required
to be delivered under the 1933 Act, will file promptly all documents
required to be filed with the Commission pursuant to Section 13 or 14 of
the 1934 Act subsequent to the time the Registration Statement becomes
effective.
(j) For a period of five years after the Closing Time, the Company
will furnish to you and, upon request, to each Manager, copies of all
annual reports, quarterly reports and current reports filed with the
Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as may
be designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to its stockholders or
security holders generally.
(k) For a period of 120 days from the date hereof, the Company will
not, without your prior written consent, directly or indirectly, sell,
offer to sell, grant any option for the sale of, or otherwise dispose of,
any Common Stock or securities convertible into Common Stock, other than to
the Managers pursuant to this Agreement and to the U.S. Underwriters
pursuant to the U.S. Purchase Agreement and other than pursuant to employee
benefit plans.
(l) If the Company has elected to rely upon Rule 430A, it will take
such steps as it deems necessary to ascertain promptly whether the form of
prospectus transmitted for filing under Rule 424(b) was received for filing
by the Commission and, in the event that it was not, it will promptly file
such prospectus.
(m) The Company has complied and will comply with all the provisions
of Florida H.B. 1771, codified as Section 517.075 of the Florida statutes,
and all regulations promulgated thereunder relating to issuers doing
business in Cuba.
<PAGE>
18
Section 4. Payment of Expenses. The Company and the Selling
-------------------
Stockholders will pay and bear all costs and expenses incident to the
performance of their obligations under this Agreement, including (a) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits), as originally filed and as amended, the
preliminary prospectuses and the Prospectuses and any amendments or supplements
thereto, and the cost of furnishing copies thereof to the Underwriters, (b) the
preparation, printing and distribution of this Agreement (including the
International Price Determination Agreement, the Agreement among Managers), the
U.S. Purchase Agreement (including the the U.S. Price Determination Agreement,
the Agreement among U.S. Underwriters and the Intersyndicate Agreement between
the Managers and the U.S. Underwriters), the certificates for the Offered Shares
and the Blue Sky Survey, (c) the delivery of the Offered Shares to the
Underwriters, including any stock transfer taxes payable upon the sale of the
Offered Shares to the Underwriters and the transfer of the Offered Shares
between the Managers and the U.S. Underwriters, (d) the fees and disbursements
of the Company's counsel and accountants, (e) fees relating to the listing of
the Offered Shares on the New York Stock Exchange and (f) the qualification of
the Offered Shares under the applicable securities laws in accordance with
Section 3(f) and any filing for review of the offering with the National
Association of Securities Dealers, Inc., including filing fees and fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the Blue Sky Survey.
If this Agreement is terminated by you in accordance with the
provisions of Section 5, 10(a)(i) or 12, the Company and the Selling
Stockholders shall reimburse the Underwriters for all their out-of-pocket
expenses, including the fees and disbursements of counsel for the Underwriters.
The provisions of this Section shall not affect any agreement that the
Company and the Selling Stockholders may make for the sharing of such costs and
expenses.
Section 5. Conditions of Managers' Obligations. In addition to the
-----------------------------------
execution and delivery of the International Price Determination Agreement, the
obligations of the several Managers to purchase and pay for the International
Shares that they have respectively agreed to purchase pursuant to this Agreement
(including any International Option Shares as to which the option granted in
Section 2 has been exercised and the Date of Delivery determined by you is the
same as the Closing Time) are subject to the accuracy of the representations and
warranties of the Company and the Selling Stockholders contained herein
(including those contained in the International Price Determination Agreement)
or in certificates of any officer of the Company or any Subsidiary or
certificates by or on behalf of the Selling Stockholders delivered pursuant to
the provisions hereof, to the performance by
<PAGE>
19
the Company and the Selling Stockholders of their obligations hereunder, and to
the following further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date of this Agreement or, with your consent, at a
later time and date not later, however, than 5:30 P.M. on the first
business day following the date hereof, or at such later time or on such
later date as you may agree to in writing with the approval of a majority
in interest of the several Managers; and at the Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act and no proceedings for that purpose shall have
been instituted or shall be pending or, to your knowledge or the knowledge
of the Company, shall be contemplated by the Commission, and any request on
the part of the Commission for additional information shall have been
complied with to the satisfaction of counsel for the Underwriters. If the
Company has elected to rely upon Rule 430A, Prospectuses containing the
Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with
the requirements of Rule 430A).
(b) At the Closing Time, you shall have received a signed opinion of
Wright, Lindsey & Jennings, counsel for each of the Company and the Selling
Stockholders, dated as of the Closing Time, together with signed or
reproduced copies of such opinion for each of the other Managers, in form
and substance satisfactory to counsel for the Underwriters, to the effect
that:
(i) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware
with corporate power and authority under such laws to own, lease and
operate its properties and conduct its business as described in the
Prospectuses.
(ii) The Company is duly qualified to transact business as a
foreign corporation and is in good standing in each other jurisdiction
in which it owns or leases property of a nature, or transacts business
of a type, that would make such qualification necessary, except to the
extent that the failure to so qualify or be in good standing would not
have a material adverse effect on the Company and its Subsidiaries,
considered as one enterprise.
(iii) Each Subsidiary is a corporation duly incorporated,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation with corporate power and authority
under such laws to own, lease and operate its properties and conduct
its business.
<PAGE>
20
(iv) Each Subsidiary is duly qualified to transact business as
a foreign corporation and is in good standing in each other
jurisdiction in which it owns or leases property of a nature, or
transacts business of a type, that would make such qualification
necessary, except to the extent that the failure to so qualify or be
in good standing would not have a material adverse effect on the
Company and its Subsidiaries, considered as one enterprise.
(v) The Offered Shares sold by the Company pursuant to the
provisions of this Agreement and the U.S. Purchase Agreement have been
duly authorized and validly issued and are fully paid and non-
assessable; no holder thereof is subject to personal liability by
reason of being such a holder; such Offered Shares are not subject to
the preemptive rights of any stockholder of the Company, and all
corporate action required to be taken for the authorization, issue and
sale of such Offered Shares has been validly and sufficiently taken.
(vi) The Offered Shares sold by the Selling Stockholders
pursuant to the provisions of this Agreement and the U.S. Purchase
Agreement have been duly authorized and validly issued and are fully
paid and non-assessable; no holder thereof is subject to personal
liability by reason of being such a holder; and none of such Offered
Shares was issued in violation of the preemptive rights of any
stockholder of the Company.
(vii) All of the other outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully
paid and non-assessable; no holder thereof is subject to personal
liability by reason of being such a holder; and none of the
outstanding shares of capital stock of the Company was issued in
violation of the preemptive rights of any stockholder of the Company.
(viii) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectuses under the heading
"Capitalization".
(ix) All of the outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued and are fully
paid and non-assessable; free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind; and none
of such shares was issued in violation of the preemptive rights of any
stockholder of the Subsidiaries.
(x) The Offered Shares conform in all material respects as to
legal matters to the description thereof in the Prospectuses.
<PAGE>
21
(xi) Each of this Agreement (including the International Price
Determination Agreement) and the U.S. Purchase Agreement (including
the U.S. Price Determination Agreement) has been duly authorized,
executed and delivered by the Company.
(xii) No authorization, approval, consent or license of any
government, governmental instrumentality or court, domestic or foreign
(other than under the 1933 Act and the securities or blue sky laws of
the various states and the securities laws of any jurisdiction in
which the International Shares are offered or sold by the Managers
pursuant to this Agreement), is required for the valid authorization,
issuance, sale and delivery of the Offered Shares.
(xiii) Such counsel does not know of any statutes or regulations,
or any pending or threatened legal or governmental proceedings,
required to be described in the Prospectuses that are not described as
required, nor of any contracts or documents of a character required to
be described or referred to in the Registration Statement or the
Prospectuses or to be filed as exhibits to the Registration Statement
that are not described, referred to or filed as required.
(xiv) The descriptions in the Prospectuses of the statutes,
regulations, legal or governmental proceedings, contracts and other
documents therein described are accurate and fairly summarize the
information required to be shown.
(xv) The statements made in the Prospectuses under "Certain
United States Tax Consequences For Non-U.S. Stockholders" and
_________, to the extent that they constitute matters of law or legal
conclusions, have been reviewed by such counsel and fairly present the
information disclosed therein in all material respects.
(xvi) To the knowledge of such counsel, no default exists in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, loan
agreement, note, lease or other agreement or instrument that is
described or referred to in the Registration Statement or the
Prospectuses or filed as an exhibit to the Registration Statement.
(xvii) The execution and delivery of this Agreement, the
issuance and delivery of the Offered Shares, the consummation by the
Company of the transactions contemplated in each of this Agreement,
the U.S. Purchase Agreement and in the Registration Statement and
compliance by the Company
<PAGE>
22
with the terms of this Agreement and the U.S. Purchase Agreement do
not and will not result in any violation of the charter or by-laws of
the Company or any Subsidiary, and do not and will not conflict with,
or result in a breach of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company or any Subsidiary under (A) any contract, indenture, mortgage,
loan agreement, note, lease or any other agreement or instrument known
to such counsel, to which the Company or any Subsidiary is a party or
by which it may be bound or to which any of its properties may be
subject (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not have a material adverse effect
on the condition (financial or otherwise), earnings, business affairs
or business prospects of the Company and its Subsidiaries, considered
as one enterprise), (B) any existing applicable law, rule or
regulation (other than the securities or blue sky laws of the various
states and the securities laws of any jurisdiction in which the
International Shares are offered or sold by the Managers pursuant to
this Agreement, as to which such counsel need express no opinion), or
(C) any judgment, order or decree known to such counsel of any
government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any Subsidiary or any
of their respective properties.
(xviii) The Registration Statement became effective under the
1933 Act on the date of this Agreement; any required filing of the
Prospectuses or any supplement thereto pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule
424(b); and, to the knowledge of such counsel, the Registration
Statement is still effective, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
are contemplated under the 1933 Act.
(xix) The Registration Statement (including the Rule 430A
Information, if applicable) and the Prospectuses, excluding the
documents incorporated by reference therein, and each amendment or
supplement thereto (except for the financial statements and other
financial or statistical data included therein or omitted therefrom,
as to which such counsel need express no opinion), as of their
respective effective or issue dates, appear on their face to have been
appropriately responsive in all material respects to the requirements
of the 1933 Act and the 1933 Act Regulations.
(xx) The documents incorporated by reference in the
Prospectuses (except for the financial statements and other financial
or statistical data included therein or omitted therefrom, as to which
such counsel need express
<PAGE>
23
no opinion), as of the dates they were filed with the Commission,
appear on their face to have been appropriately responsive in all
material respects to the requirements of the 1934 Act and the 1934 Act
Regulations.
(xxi) The Company is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for,
an "investment company", as such terms are defined in the Investment
Company Act of 1940, as amended.
(xxii) Each of this Agreement, the U.S. Purchase Agreement and
the Custody Agreement have been duly executed and delivered by the
Selling Stockholders or by an Attorney-in-Fact on behalf of the
Selling Stockholders, and each of the Selling Stockholders has duly
executed and delivered such Selling Stockholder's respective Power of
Attorney.
(xxiii) To the knowledge of such counsel, each Selling
Stockholder has valid and marketable title to the Offered Shares to be
sold by such Selling Stockholder pursuant to this Agreement and the
U.S. Purchase Agreement, free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind, and has
full right, power and authority to sell, transfer and deliver such
Offered Shares pursuant to this Agreement and the U.S. Purchase
Agreement. By delivery of a certificate or certificates therefor such
Selling Stockholder will transfer to the Underwriters who have
purchased such Offered Shares pursuant to this Agreement and the U.S.
Purchase Agreement (without notice of any defect in the title of such
Selling Stockholder and who are otherwise bona fide purchasers for
purposes of the Uniform Commercial Code) valid and marketable title to
such Offered Shares, free and clear of any adverse claim.
(xxiv) Each Attorney-in-Fact has been duly authorized by each
Selling Stockholder to deliver the Offered Shares on behalf of such
Selling Stockholder in accordance with the terms of this Agreement and
the U.S. Purchase Agreement.
(xxv) There are no transfer or similar taxes payable in
connection with the sale and delivery of the Offered Shares by the
Selling Stockholders to the Underwriters, except as specified in such
opinion.
(xxvi) In the course of acting as counsel to the Company and the
Selling Stockholders in connection with the public offering of the
Offered Shares, such counsel have participated in the preparation of
the Registration Statement and Prospectuses and are familiar with or
have participated in the
<PAGE>
24
preparation of the documents incorporated by reference in the
Prospectuses and no facts have come to the attention of such counsel
to lead them to believe (A) that the Registration Statement (including
the Rule 430A Information, if applicable) or any amendment thereto
(except for the financial statements and other financial or
statistical data included therein or omitted therefrom, as to which
such counsel need express no opinion), at the time the Registration
Statement or any such amendment became effective, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, (B) that the Prospectuses or any amendment or
supplement thereto (except for the financial statements and other
financial or statistical data included therein or omitted therefrom,
as to which such counsel need express no opinion), at the time the
Prospectuses were issued, at the time any such amended or supplemented
prospectus was issued or at the Closing Time, included or includes an
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading or (C) that the documents incorporated by reference in the
Prospectuses (except for the financial statements and other financial
or statistical data included therein or omitted therefrom, as to which
such counsel need express no opinion, and except to the extent that
any statement therein is modified or superseded in the Prospectuses),
as of the dates they were filed with the Commission, contained an
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
Such opinion shall be to such further effect with respect to other legal
matters relating to this Agreement and the U.S. Purchase Agreement and the
sale of the Offered Shares pursuant to this Agreement and the U.S. Purchase
Agreement as counsel for the Underwriters may reasonably request. In
giving such opinion, such counsel may rely, as to all matters governed by
the laws of jurisdictions other than the law of the State of Arkansas, the
federal law of the United States and the General Corporation Law of the
State of Delaware, upon opinions of other counsel, who shall be counsel
satisfactory to counsel for the Underwriters, in which case the opinion
shall state that they believe you and they are entitled to so rely. Such
counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and the Subsidiaries and
certificates of public officials; provided that such certificates have been
delivered to the Managers.
(c) At the Closing Time, you shall have received the favorable opinion
of Shearman & Sterling, counsel for the Underwriters, dated as of the
Closing Time,
<PAGE>
25
together with signed or reproduced copies of such opinion for each of the
other Managers, to the effect that the opinion delivered pursuant to
Sections 5(b) appears on its face to be appropriately responsive to the
requirements of this Agreement except, specifying the same, to the extent
waived by you, and with respect to the incorporation and legal existence of
the Company, the Offered Shares sold by the Company, this Agreement, the
U.S. Purchase Agreement, the Registration Statement, the Prospectuses, the
documents incorporated by reference and such other related matters as you
may require. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the
State of New York, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to you. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and the Subsidiaries
and certificates of public officials; provided that such certificates have
been delivered to the Underwriters.
(d) At the Closing Time, (i) the Registration Statement and the
Prospectuses, as they may then be amended or supplemented, shall contain
all statements that are required to be stated therein under the 1933 Act
and the 1933 Act Regulations and in all material respects shall conform to
the requirements of the 1933 Act and the 1933 Act Regulations, the Company
shall have complied in all material respects with Rule 430A (if it shall
have elected to rely thereon) and neither the Registration Statement nor
the Prospectuses, as they may then be amended or supplemented, shall
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) there shall not have been, since the
respective dates as of which information is given in the Registration
Statement, any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company
and its Subsidiaries, considered as one enterprise, whether or not arising
in the ordinary course of business, (iii) no action, suit or proceeding
shall be pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary that would be required to be set forth in the
Prospectuses other than as set forth therein and no proceedings shall be
pending or, to the knowledge of the Company, threatened against the Company
or any Subsidiary before or by any government, governmental instrumentality
or court, domestic or foreign, that could result in any material adverse
change in the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its Subsidiaries,
considered as one enterprise, other than as set forth in the Prospectuses,
(iv) the Company shall have complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Time and (v) the other representations and warranties of the
Company set forth in Section 1(a) shall be accurate as though expressly
made at and as of the Closing Time. At the Closing
<PAGE>
26
Time, you shall have received a certificate of the President or a Vice
President, and the Treasurer of the Company, dated as of the Closing Time,
to such effect.
(e) At the Closing Time, the representations and warranties of each
Selling Stockholder set forth in Section 1(b) shall be accurate as though
expressly made at and as of the Closing Time. At the Closing Time, you
shall have received a certificate of or on behalf of each Selling
Stockholder, dated as of the Closing Time, to such effect with respect to
such Selling Stockholder.
(f) At the time that this Agreement is executed by the Company, you
shall have received from Coopers & Lybrand a letter, dated such date, in
form and substance satisfactory to you, together with signed or reproduced
copies of such letter for each of the other Managers, confirming that they
are independent public accountants with respect to the Company within the
meaning of the 1933 Act and applicable published 1933 Act Regulations, and
stating in effect that:
(i) in their opinion, the audited financial statements included
or incorporated by reference in the Registration Statement and the
Prospectuses comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the published
rules and regulations thereunder;
(ii) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of a
reading of the unaudited interim consolidated financial statements of
the Company for the three month period ended January 1, 1994, the
three and six month periods ended April 2, 1994 and the three and nine
month periods ended July 2, 1994, included or incorporated by
reference in the Registration Statement and the Prospectuses
(collectively, the "10-Q Financials"), a reading of the latest
available unaudited interim consolidated financial statements of the
Company, a reading of the minutes of all meetings of the stockholders
and directors of the Company and its subsidiaries and the Compensation
and Audit Committees of the Company's Board of Directors since October
3, 1993, inquiries of certain officials of the Company and its
subsidiaries responsible for financial and accounting matters, a
limited review in accordance with standards established by the
American Institute of Certified Public Accountants with respect to the
10-Q Financials performed at the request of the Company, and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) the 10-Q Financials incorporated by reference in the
Registration Statement and the Prospectuses do not comply as to
form
<PAGE>
27
in all material respects with the accounting requirements of the
1934 Act and the 1934 Act Regulations applicable to unaudited
financial statements included in Form 10-Q or are not in
conformity with generally accepted accounting principles applied
on a basis substantially consistent with that of the audited
financial statements included or incorporated by reference in the
Registration Statement and the Prospectuses;
(B) at October 1, 1994 and at a specified date not more than
five days prior to the date of this Agreement, there was any
change in the ___________________ of the Company and its
consolidated subsidiaries or any decrease in the
_________________ of the Company and its consolidated
subsidiaries or any increase in the_________/*/ of the Company
and its consolidated subsidiaries, in each case as compared with
amounts shown in the latest unaudited balance sheet included in
the Registration Statement, except in each case for changes,
decreases or increases that the Registration Statement discloses
have occurred or may occur; or
(C) for the period from July 2, 1994 to October 1, 1994 and
for the period from October 2, 1994 to a specified date not more
than five days prior to the date of this Agreement, there was any
decrease in ___________, ___________ or _________/**/, in each
case as compared with the comparable period in the preceding
year, except in each case for any decreases that the Registration
Statement discloses have occurred or may occur;
(iii) based upon the procedures set forth in clause (ii) above
and a reading of the Selected Financial Data included in the
Registration Statement, nothing has come to their attention that gives
them reason to believe that the Selected Financial Data included in
the Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act
and the 1933 Act Regulations; and
(iv) in addition to the procedures referred to in clause (ii)
above, they have performed other specified procedures, not
constituting an audit, with respect to certain amounts, percentages,
numerical data and financial information appearing in the Registration
Statement, which have previously been specified by you and which shall
be specified in such letter, and have
- --------------
/*/ Items to be selected by bankers.
/**/ Items to be selected by bankers.
<PAGE>
28
compared certain of such items with, and have found such items to be
in agreement with, the accounting and financial records of the
Company.
(g) At the Closing Time, you shall have received from Coopers &
Lybrand a letter, in form and substance satisfactory to you and dated as of
the Closing Time, to the effect that they reaffirm the statements made in
the letter furnished pursuant to Section 5(f), except that the specified
date referred to shall be a date not more than five days prior to the
Closing Time.
(h) At the Closing Time, counsel for the Underwriters shall have been
furnished with all such documents, certificates and opinions as they may
request for the purpose of enabling them to pass upon the issuance and sale
of the Offered Shares as contemplated in this Agreement and the U.S.
Purchase Agreement and the matters referred to in Section 5(c) and in order
to evidence the accuracy and completeness of any of the representations,
warranties or statements of the Company and the Selling Stockholders, the
performance of any of the covenants of the Company, or the fulfillment of
any of the conditions herein contained; and all proceedings taken by the
Company and the Selling Stockholders at or prior to the Closing Time in
connection with the authorization, issuance and sale of the Offered Shares
as contemplated in this Agreement and the U.S. Purchase Agreement shall be
satisfactory in form and substance to you and to counsel for the
Underwriters.
(i) The Offered Shares shall have been duly authorized for listing by
the New York Stock Exchange on the date of the International Price
Determination Agreement and the U.S. Price Determination Agreement.
(j) All of the Initial U.S. Shares to be purchased by the U.S.
Underwriters on such Closing Date shall have been sold to the U.S.
Underwriters pursuant to the U.S. Purchase Agreement.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement, this Agreement may be
terminated by you on notice to the Company and the Selling Stockholders at any
time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party, except as provided in Section 4.
Notwithstanding any such termination, the provisions of Sections 7, 8 and 9
shall remain in effect.
Section 6. Conditions to Purchase of International Option Shares. In
-----------------------------------------------------
the event that the Managers exercise their option granted in Section 2 hereof to
purchase all or any of the International Option Shares and the Date of Delivery
determined by you pursuant to Section 2 hereof is later than the Closing Time,
the obligations of the several Managers to
<PAGE>
29
purchase and pay for the International Option Shares that they shall have
respectively agreed to purchase pursuant to this Agreement are subject to the
accuracy of the representations and warranties of the Company and the Selling
Stockholders herein contained, to the performance by the Company and the Selling
Stockholders of their obligations hereunder and to the following further
conditions:
(a) The Registration Statement shall remain effective at the Date of
Delivery, and, at the Date of Delivery, no stop order suspending the
effectiveness of the Registration Statement shall have been issued under
the 1933 Act and no proceedings for that purpose shall have been instituted
or shall be pending or, to your knowledge or the knowledge of the Company,
shall be contemplated by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
satisfaction of counsel for the Underwriters.
(b) At the Date of Delivery, the provisions of Sections 5(d)(i)
through 5(d)(v) shall have been complied with at and as of the Date of
Delivery and, at the Date of Delivery, you shall have received a
certificate of the President or a Vice President, and the Treasurer of the
Company, dated as of the Date of Delivery, to such effect.
(c) At the Date of Delivery, you shall have received the favorable
opinion of Wright, Lindsey & Jennings, counsel for each of the Company and
the Selling Stockholders, together with signed or reproduced copies of such
opinion for each of the other Managers, in each case in form and substance
satisfactory to counsel for the Underwriters, dated as of the Date of
Delivery, relating to the International Option Shares and otherwise to the
same effect as the opinion required by Section 5(b).
(d) At the Date of Delivery, you shall have received the favorable
opinion of Shearman & Sterling, counsel for the Underwriters, dated as of
the Date of Delivery, relating to the International Option Shares and
otherwise to the same effect as the opinion required by Section 5(c).
(e) At the Date of Delivery, you shall have received a letter from
Coopers & Lybrand, in form and substance satisfactory to you and dated as
of the Date of Delivery, to the effect that they reaffirm the statements
made in the letter furnished pursuant to Section 5(f), except that the
specified date referred to shall be a date not more than five days prior to
the Date of Delivery.
(f) At the Date of Delivery, counsel for the Underwriters shall have
been furnished with all such documents, certificates and opinions as they
may request for the purpose of enabling them to pass upon the issuance and
sale of the International
<PAGE>
30
Option Shares as contemplated in this Agreement and the matters referred to
in Section 6(d) and in order to evidence the accuracy and completeness of
any of the representations, warranties or statements of the Company or the
Selling Stockholders, the performance of any of the covenants of the
Company, or the fulfillment of any of the conditions herein contained; and
all proceedings taken by the Company and the Selling Stockholders at or
prior to the Date of Delivery in connection with the authorization,
issuance and sale of the International Option Shares as contemplated in
this Agreement shall be satisfactory in form and substance to you and to
counsel for the Underwriters.
(g) At the Date of Delivery, the representations and warranties of
each James T. Hudson set forth in Section 1(b) hereof shall be accurate as
though expressly made at and as of the Date of Delivery and, at the Date of
Delivery, you shall have received a certificate of James T. Hudson, dated
as of the Date of Delivery, to such effect.
Section 7. Indemnification. (a) The Company and each Selling
---------------
Stockholder agree to indemnify and hold harmless each Manager and each person,
if any, who controls any Manager within the meaning of Section 15 of the 1933
Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), including the Rule 430A Information, if
applicable, and all documents incorporated therein by reference, or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading
or arising out of an untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectuses
(or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company and the Selling Stockholders; and
<PAGE>
31
(iii) against any and all expense whatsoever, as incurred (including
fees and disbursements of counsel chosen by you), reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue statement
or omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under subparagraph (i) or (ii)
above;
provided, however, that this indemnity agreement does not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
of the Managers expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information, if applicable, or any
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto).
The foregoing indemnity agreement with respect to any untrue statement
contained in or any omission from a preliminary prospectus shall not inure to
the benefit of any Manager (or any person who controls such Manager within the
meaning of Section 15 of the 1933 Act) from whom the person asserting any such
loss, liability, claim, damage or expense purchased any of the Offered Shares
that are the subject thereof if the Company shall sustain the burden of proving
that such person was not sent or given a copy of the Prospectuses (or the
Prospectuses as amended or supplemented) (in each case exclusive of the
documents from which information is incorporated by reference) at or prior to
the written confirmation of the sale of such Offered Shares to such person and
the untrue statement contained in or the omission from such preliminary
prospectus was corrected in the Prospectuses (or the Prospectuses as amended or
supplemented).
The obligations of the Company and each Selling Stockholder pursuant
to this Section are joint and several; provided, however, that each Selling
-------- -------
Stockholder's aggregate liability under this Section shall be limited to an
amount equal to the net proceeds (after deducting the underwriting discount, but
before deducting expenses) received by such Selling Stockholder from the sale of
his or its Offered Shares pursuant to this Agreement.
(b) Each Manager severally agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act, and each Selling Stockholder, against any and all
loss, liability, claim, damage and expense described in the indemnity agreement
in Section 7(a), as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information, if
applicable, or any preliminary prospectus or the International Prospectus (or
any amendment
<PAGE>
32
or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by such Manager through you expressly for
use in the Registration Statement (or any amendment thereto), including the Rule
430A Information, if applicable, or such preliminary prospectus or the
International Prospectus (or any amendment or supplement thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
on account of this indemnity agreement. An indemnifying party may participate
at its own expense in the defense of such action. In no event shall the
indemnifying party or parties be liable for the fees and expenses of more than
one counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances.
Section 8. Contribution. In order to provide for just and equitable
------------
contribution in circumstances under which the indemnity provided for in Section
7 is for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company, the Selling Stockholders
and the Managers shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity incurred by
the Company, the Selling Stockholders and one or more of the Managers, as
incurred, in such proportions that (a) the Managers are responsible for that
portion represented by the percentage that the underwriting discount appearing
on the cover page of the International Prospectus bears to the initial public
offering price appearing thereon and (b) the Company and the Selling
Stockholders, in the proportions that they have agreed to indemnify, are
responsible for the balance; provided, however, that no person guilty of
-------- -------
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section, each person,
if any, who controls a Manager within the meaning of Section 15 of the 1933 Act
shall have the same rights to contribution as such Manager, and each director of
the Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company or a Selling Stockholder
within the meaning of Section 15 of the 1933 Act shall have the same rights to
contribution as the Company or a Selling Stockholder, as the case may be.
Section 9. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. The representations, warranties, indemnities, agreements and other
- --------
statements of the Selling Stockholders, the Company or its officers set forth in
or made pursuant to this Agreement
<PAGE>
33
and the U.S. Purchase Agreement will remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Selling
Stockholders, the Company, any Manager or any person who controls a Selling
Stockholder, the Company or any Manager within the meaning of Section 15 of the
1933 Act and will survive delivery of and payment for the Offered Shares.
Section 10. Termination of Agreement. (a) You may terminate this
------------------------
Agreement, by notice to the Company and the Selling Stockholders, at any time at
or prior to the Closing Time (i) if there has been, since the respective dates
as of which information is given in the Registration Statement, any material
adverse change in the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the financial markets
in the United States or any outbreak of hostilities or escalation thereof or
other calamity or crisis the effect of which on the financial markets of the
United States is such as to make it, in your reasonable judgment, impracticable
to market the International Shares or enforce contracts for the sale of the
International Shares or (iii) if trading in any securities of the Company has
been suspended by the Commission, or if trading generally on either the American
Stock Exchange or the New York Stock Exchange or in the over-the-counter market
has been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by such exchange or
by order of the Commission or any other governmental authority or (iv) if a
banking moratorium has been declared by either federal, New York or Arkansas
authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 4. Notwithstanding any such termination, the
provisions of Sections 7, 8 and 9 shall remain in effect.
(c) This Agreement may also terminate pursuant to the provisions of
Section 2, with the effect stated in such Section.
Section 11. Default by One or More of the Managers. If one or more
--------------------------------------
of the Managers shall fail at the Closing Time to purchase the Initial
International Shares that it or they are obligated to purchase pursuant to this
Agreement (the "Defaulted International Shares"), you shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the non-
defaulting Managers, or any other underwriters, to purchase all, but not less
than all, of the Defaulted International Shares in such amounts as may be agreed
upon and upon the terms set forth in this Agreement; if, however, you have not
completed such arrangements within such 24-hour period, then:
<PAGE>
34
(a) if the number of Defaulted International Shares does not exceed
10% of the total number of Initial International Shares, the non-defaulting
Managers shall be obligated to purchase the full amount thereof in the
proportions that their respective Initial International Share underwriting
obligation proportions bear to the underwriting obligations of all non-
defaulting Managers, or
(b) if the number of Defaulted International Shares exceeds 10% of the
total number of Initial International Shares, this Agreement shall
terminate without liability on the part of any non-defaulting Manager.
No action taken pursuant to this Section shall relieve any defaulting
Manager from liability in respect of its default.
In the event of any such default that does not result in a termination
of this Agreement, either you or the Company shall have the right to postpone
the Closing Time for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectuses or in any other
documents or arrangements. As used herein, the term "Manager" includes any
person substituted for a Manager under this Section 11.
Section 12. Default by a Selling Stockholder or the Company. If any
-----------------------------------------------
Selling Stockholder shall fail at the Closing Time to sell and deliver the
number of Initial International Shares that such Selling Stockholder is
obligated to sell, the Managers may, at your option, by notice from you to the
Company, either (a) terminate this Agreement without any liability on the part
of any non-defaulting party except to the extent provided in Section 4 or (b)
elect to purchase the Initial International Shares that the Company and the
remaining Selling Stockholders have agreed to sell pursuant to this Agreement.
In the event of a default under this Section that does not result in
the termination of this Agreement, either you or the Company shall have the
right to postpone the Closing Time for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or
Prospectuses or in any other documents or arrangements.
If the Company shall fail at the Closing Time to sell and deliver the
number of Offered Shares that it is obligated to sell, then this Agreement shall
terminate without any liability on the part of any non-defaulting party, except
to the extent provided in Section 4 and except that the provisions of Sections
7, 8 and 9 shall remain in effect.
No action taken pursuant to this Section shall relieve the Company or
any Selling Stockholder so defaulting from liability, if any, in respect of such
default.
<PAGE>
35
Section 13. Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices to you or the Managers shall be directed to you, c/o Merrill Lynch
International Limited, Ropemaker Place, 25 Ropemaker Street, London EC2Y 9LY,
England, attention of _________________________; notices to the Company shall be
directed to it at Hudson Foods, Inc., 1225 Hudson Road, Rogers, Arkansas 72756,
attention of Charles B. Jurgensmeyer, Chief Financial Officer; and notices to
the Selling Stockholders shall be directed to James T. Hudson at 1225 Hudson
Road, Rogers, Arkansas 72756.
Section 14. Parties. This Agreement is made solely for the benefit
-------
of the several Managers, the Company and the Selling Stockholders and, to the
extent expressed, any person who controls the Company, any Selling Stockholder
or any of the Managers within the meaning of Section 15 of the 1933 Act, and the
directors of the Company, its officers who have signed the Registration
Statement, and their respective executors, administrators, successors and
assigns and, subject to the provisions of Section 11, no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser, as such purchaser,
from any of the several Managers of the International Shares. All of the
obligations of the Managers hereunder are several and not joint.
Section 15. Representation of Managers. You will act for the several
--------------------------
Managers in connection with the transactions contemplated by this Agreement, and
any action under or in respect of this Agreement taken by the Co-Lead Managers
jointly or by Merrill Lynch International Limited will be binding upon all
Managers.
Section 16. Governing Law and Time. This Agreement shall be governed
----------------------
by the laws of the State of New York. Specified times of the day refer to New
York City time.
Section 17. Counterparts. This Agreement may be executed in one or
------------
more counterparts and when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Selling
Stockholders and the several Managers in accordance with its terms.
<PAGE>
36
Very truly yours,
HUDSON FOODS, INC.
By________________________
Name:
Title:
SELLING STOCKHOLDERS
NAMED IN SCHEDULE B
By________________________
Attorney-in-Fact
<PAGE>
37
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
By: Merrill Lynch International Limited
By________________________
Name:
Title:
Investment Banking Group
For themselves and as Co-Lead Managers of the
- ---------------------------------------------
other Managers named in Schedule A.
----------------------------------
<PAGE>
HUDSON FOODS, INC.
(a Delaware corporation)
800,000 Shares of Class A Common Stock
International Price Determination Agreement
-------------------------------------------
November __, 1994
MerrilL Lynch International Limited
Donaldson, Lufkin & Jenrette Securities Corporation
A.G. Edwards & Sons, Inc.
As Representatives of the several Underwriters
c/o Merrill Lynch International Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England
Dear Sirs:
Reference is made to the International Purchase Agreement dated
October __, 1994 (the "International Purchase Agreement") among Hudson Foods,
Inc. (the "Company"), the Selling Stockholders named in Schedule B thereto or
hereto (the "Selling Stockholders") and the several Managers named in Schedule A
thereto or hereto (the "Managers"), for whom Merrill Lynch International
Limited, Donaldson, Lufkin & Jenrette Securities Corporation and A.G. Edwards &
Sons, Inc. are acting as representatives (the "Co-Lead Managers"). The
International Purchase Agreement provides for the purchase by the Managers from
the Company and the Selling Stockholders, subject to the terms and conditions
set forth therein, of an aggregate of 800,000 shares (the "Initial International
Shares") of the Company's Class A Common Stock, par value U.S.$.01 per share.
This Agreement is the International Price Determination Agreement referred to in
the International Purchase Agreement.
Pursuant to Section 2 of the International Purchase Agreement, the
undersigned agree with the Co-Lead Managers as follows:
1. The initial public offering price per share for the Initial
International Shares shall be U.S.$__________________.
<PAGE>
2. The purchase price per share for the Initial International Shares
to be paid by the several Managers shall be U.S.$________________,
representing an amount equal to the initial public offering price set forth
above, less U.S.$________________ per share.
The Company represents and warrants to each of the Managers that the
representations and warranties of the Company set forth in Section 1(a) of the
International Purchase Agreement are accurate as though expressly made at and as
of the date hereof.
The Selling Stockholders represent and warrant to each of the Managers
that the representations and warranties of the Selling Stockholders set forth in
Section 1(b) of the International Purchase Agreement are accurate as though
expressly made at and as of the date hereof.
As contemplated by Section 2 of the International Purchase Agreement,
attached as Schedule A is a completed list of the several Managers and as
Schedule B is a completed list of the Selling Stockholders, which shall be a
part of this Agreement and the International Purchase Agreement.
This Agreement shall be governed by the laws of the State of New York.
If the foregoing is in accordance with the understanding of the Co-
Lead Managers of the agreement among the Managers, the Company and the Selling
Stockholders, please sign and return to the Company a counterpart hereof,
whereupon this instrument along with all counterparts and together with the
International Purchase Agreement shall be a binding agreement among the
Managers, the Company and the Selling Stockholders in accordance with its terms
and the terms of the International Purchase Agreement.
Very truly yours,
HUDSON FOODS, INC.
By________________________
Name:
Title:
<PAGE>
SELLING STOCKHOLDERS NAMED
IN SCHEDULE B TO THE
INTERNATIONAL PURCHASE
AGREEMENT
By________________________
Attorney-in-Fact
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
By: Merrill Lynch International Limited
By________________________
Name:
Title:
Investment Banking Group
For themselves and as Representatives of the
- --------------------------------------------
other Managers named in Schedule A
----------------------------------
attached to the International Purchase Agreement.
------------------------------------------------
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Initial International Shares
Manager to be Purchased
------- ---------------
<S> <C>
Merrill Lynch International Limited
Donaldson, Lufkin & Jenrette Securities
Corporation
A.G. Edwards & Sons, Inc.
__________
Total 800,000
========
</TABLE>
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
Number of
Number of Shares of
Initial Common
International Stock Subject
Shares to International
Selling Stockholders to be Sold Option
-------------------- ------------- ----------------
<S> <C> <C>
James T. Hudson 260,000 120,000
James R. Hudson 20,000 0
Jane M. Helmich 20,000 0
------- -------
Total.................... 300,000 120,000
======= =======
</TABLE>
<PAGE>
EXHIBIT 5.1
(LETTERHEAD OF WRIGHT, LINDSEY & JENNINGS APPEARS HERE)
November 8, 1994
Hudson Foods, Inc.
1225 Hudson Road
Rogers, Arkansas 72756
Gentlemen:
In our opinion, the 4,600,000 shares of Class A common stock being
registered under Registration Statement No. 33-56019, when sold, will
constitute legally issued, fully paid, and non-assessable shares of Hudson
Foods, Inc.
We consent to the inclusion of this opinion in the Registration Statement
and the reference to us under the caption "Legal Matters" in the Prospectus
included in the Registration Statement.
Very truly yours,
WRIGHT, LINDSEY & JENNINGS
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion and/or incorporation by reference in this
registration statement on Form S-3 (File No. 33-56019) of our reports dated
November 2, 1993 and October 26, 1994, on our audits of the consolidated
financial statements of Hudson Foods, Inc. We also consent to the reference to
our firm under the caption "Independent Public Accountants."
COOPERS & LYBRAND L.L.P.
Tulsa, Oklahoma
November 9, 1994
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-01-1994
<PERIOD-START> OCT-03-1994
<PERIOD-END> OCT-01-1994
<EXCHANGE-RATE> 1
<CASH> 1,899
<SECURITIES> 0
<RECEIVABLES> 66,971
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<COMMON> 177
0
0
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</TABLE>